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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
Ÿ Golden Thread Knitting Industries vs. The fact alone that a mere portion of the business of an employer. such as but not limited to: a) less preferred status (e. is shut down does not necessarily remove that measure from the ambit of the term “retrenchment” within the meaning of Sec.. and in this case. Issue: Was Tanjuan’s dismissal illegal? Held: No. 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. Anna Tetangco 4 .g. such as overhiring of workers. not the whole of it. a) preferred status. is an exercise of business judgment on the part of the employer. Ÿ It is important for a company to have fair and reasonable criteria in implementing its redundancy Ÿ Tanjuan vs. The corp has sufficiently and convincingly established business reverses of the kind or the amount that would justify the retrenchment. Dianne Miano. contrary to the ruling of the NLRC. Kristel Macatangay. In exercising its right to retrench emplooyees. was dismissed 6 months after being hired on the ground that his position had become redundant. The amount depends on the ground for the termination of employment. It is a measure of last resort when other less drastic means have been tried and found to be inadequate. Evidence should have been presented to support this contention. Inc. In this case. a Recreational Manager of Sheraton Hotel in oman. a Property Appraisal Specialist and a Department Officer-in-Charge. Retrenchment. Such appraisal was not done in the instant case. It is not enough for a company to merely declare that it has become overmanned. such as but not limited to. Heidi Soria. Jake Ng. a fair and reasonable criteria must be used. It must produce adequate proof that such is the actual situation in order to justify the dismissal of the affected employees for redundancy. in contrast to redundancy. much less was the company’s claim supported by any evidence. b) efficiency and c) seniority. was one of those termininated. the firm amy choose to close all. and c) seniority. b) efficiency.Selection of Employee Ÿ Panlilio vs. or the expected imminent losses sought to be forestalled are proven by sufficient and convincing evidence. the losses expected must be substantial and not merely de minimis in extent. such as new staffing pattern. Jon Santos. provided that violation of law or arbitrary or malicious action is not shown. 2) the losses are actual or reasonably imminent. NLRC (Eds) Facts: Moises Panlilio. the retrenchment must be reasonably necessary and like to effectively prevent such losses. In this case. Ysan Castillo.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. and the approval by the management of the restructuring. Phil. For it to be valid. The company alleged redundancy in their position as defense for dismissing them. program. The documents submitted do not present the necessary factors which would confirm that a position is indeed redundant. and the imminent losses sought to be forestalled are substantiated. 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. who was preventively suspended for alleged negligence in performance of duties and misrepresentation of bank rules and regulations. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac Criteria. job description. Monina Lagman. and therefore properly terminable. is an economic ground to reduce the number of employees. it is not shown that Rivera and Macaspac’s positions were indeed unnecessary. Issue: Was Panlilio’s dismissal on the ground of redundancy valid? Held: No. Prudencio Tanjuan. any claim of acutal or potential business losses must satisfy established standards as follows: 1) losses incurred are substantial and not de minimis. The employer has the burden of proving that the losses are Irah Burog. Issue: Were the dismissals on the ground of redundancy valid? Held: No. Postal Savings Bank (Eds) Facts: Philippine Postal Savings Bank. Edlyn Santiago. viability of the newly created positions. the expected losses must be reasonably imminent such as can be perceived objectively and in good faith by the employer. however. and 4) the alleged losses. Before any reduction of personnel becomes legal. feasibility studies/proposal. Ÿ In selecting the employees to be dismissed. one of which was the illegal dismissal of some union members. they were terminated due to retrenchment not redundancy. Charms Haw. Alpe Macalalad. temporary employee). its business to avoid further losses or mitigate expenses. and is not subject to the discretionary review on the aprt of the Labor Arbiter nor the NLRC. or a part of. 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 characterization of an employee’s services as no longer necessary or sustainable. if already incurred. Monette Mesa. 3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses. There was no substantial evidence to justify Panlilio’s dismissal on such ground. 283(c) of the Labor Code. decreased volume of business or dropping of a line or service activity. NLRC (Eds) Facts: Several charges were filed against Golden Thread Knitting Industries.
a fair and reasonable criteria must be used. are not merely de minimis. 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. In this case. never contested the veracity of the audited financial documents offered by Asian Alcohol. There was also no proof that the program was designed to bust the union. real and substantial losses. or if only expected are reasonably imminent are perceived objectively and in good faith by the employer. NLRC (Eds) Facts: Due to mounting business losses. guidelines. 283 of the Labor Code. 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. 2. xxx xxx xxx Sec. actual and real. claiming that Asian Alcohol used the retrenchment program as a subterfuge for union busting. Lopez Sugar Corp vs. Answer and hearing. temporary employee). Heidi Soria. Issue: Were the private respondents illegally dismissed? Held: No. and financial hardship for certain workers. Monina Lagman. and c) seniority. whereby 21 union members and 51 non-union members were terminated on the ground that their positions had become redundant. Golden Thread Knitting Industries v. efficiency. Anna Tetangco 5 . age. Monette Mesa. whichever is higher. Asian Alcohol’s management implemented an organizational plan and other cost-saving measures. The law allows an employer to downsize his business to meet clear and continuing economic threats. Ÿ In selecting the employees to be dismissed. which. Ysan Castillo. 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.g. b) efficiency. the audited financial statements submitted by the corp adequately supported their claim of actual. In cases of abandonment of work. capricious and vindictive. such as but not limited to a) preferred status. Alpe Macalalad. Kristel Macatangay. the notice shall be served at the worker's last known address. private respondents. as long as the requirements under the law are complied with. “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. physical fitness. Some of the dismissed union members filed a suit for illegal dismissal. but substantial. 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. NLRC The absence of criteria. Besides. Under Art.Effect Asian Alcohol Corp vs. Notice of dismissal. Such requirements for retrenchment are: 1) that the retrenchment is reasonably necessary and likely to prevent business losses. Reductions in work force to forestall business losses or stop the hemorrhaging of capital is allowed. and c) seniority. The employer shall Irah Burog. ?? 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. and that they were singled out for separation by reason of their active participation in the union. showing that the latter has accumulated losses and that there was no sign of its abating in the near future. In this case. seniority. Jon Santos. Here. union and non-union members were treated alike. NLRC Ÿ Employment of Independent Contractor. b) efficiency. Dianne Miano. or standard for selection of dismissed employees renders the dismissals whimsical. Retrenchment must be undertaken by the employer before losses are actually sustained. if already incurred. 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. actual and real. 2) that the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment. In this case. 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. management must faithfully comply with the substantial and procedural requirements laid down by law and jurisprudence. Charms Haw.Labor II serious. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac. such as status. ?? The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. Asian Alcohol v. such as but not limited to: a) less preferred status (e. 5. Jake Ng. contrary to the respondents’ claim. Franco an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. Edlyn Santiago. However. It is imperative for the employer to have fair and reasonable criteria in implementing its redundancy program. serious.
must also be proved by sufficient and convincing evidence. allege any malfeasance or non-feasance on the part of the employee. industrial depression. Ricardo Magno. as such. It is essentially required that the alleged losses in business operations be proven. Monette Mesa. The corp failed to adduce financial statements duly audited by independent external auditor. It is such allegations by the employer and any counter-allegations that the employee may wish to make that need to be heard before dismissal is effected. The ground for retrenchment availed of was not sufficiently and convincingly established. The corp also failed to comply wikth the rule that retrenchment shall be a remedy of last resort. (Wiltshire vs. In such case. Kristel Macatangay. Charms Haw. after less drastic means. Heidi Soria. 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. Where. the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee. Such substantial loss apprehended must be reasonably imminent. It is precisely for this reason that an employer seeking to terminate services of an employee or employees because of "closure of establishment and reduction of personnel". Alleged losses if already realized. (emphasis supplied) We note that Section 2 of Rule XIV quoted above requires the notice to specify "the particular acts or omissions constituting the ground for his dismissal". Ÿ Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter. imminence can be perceived objectively and in good faith by the employer. Jon Santos. 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. Ysan Castillo. Issue: Was the termination by virtue of the retrenchment program valid? Held: No. there are no allegations which the employee should refute and defend himself from. and expected imminent losses sought to be forestalled. Again. to require petitioner Wiltshire to hold a hearing. Section 5 gives the employee the right to answer and to defend himself against "the allegations stated against him in the notice of dismissal". Monina Lagman. The employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort. however. or seasonal fluctuations or during lulls occasioned by lack of orders. or of automation. on the business and financial circumstances compelling retrenchment and resulting in redundancy. would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination. NLRC) The three basic requisites for a valid retrenchment are: a) the retrenchment is necessary to prevent losses and such losses are proven. Alpe Macalalad. 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. at which private respondent would have had the right to be present. The losses expected should be substantial and not merely de minimis in extent. Lead Electrician for the corp. 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. Anna Tetangco 6 .Labor II afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. was one of those terminated. 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 appropriate forum for such controversion would. Distinction Redundancy and Retrenchment Ÿ AG & P United Bank and File Assn vs. to begin with. Thus. and c) payment of separation pay equivalent to 1 month pay or at least ½ month pay for every year of service. resorted to by management during periods of business recession. Edlyn Santiago. (Wiltshire vs. conversion of the plant for a new production program or the introduction of new methods or more efficient machinery. NLRC(Charms) C. be the Department of Labor and Employment and not an investigation or hearing to be held by the employer itself. as in the instant case. whichever is higher. NLRC) Defined FF Marine Corp vs. Dianne Miano. Thus. 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. Retrenchment to prevent losses Irah Burog. Jake Ng. shortage of materials. there appears to us no need for an investigation and hearing to be conducted by the employer who does not. b) written notice to the employees and to the DOLE at least 1 month prior to the intended ndate of retrenchment. Retrenchment must also be reasonably necessary and likely to effectively prevent the expected losses.
JAT hired private respondent Jose F. is more precisely termed "retrenchment" because it is primarily intended to prevent serious business losses. not to report for work starting on the first week of March 1998. Anna Tetangco 7 . As already stated. in 1989. is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. Held: No Illegal Dismissal. and that the condition of the company is not likely to improve in the near future. Irene Campos-Ugalde. requested its Internal Auditor. 1 First. Private respondent's "redundancy program.T General Services vs. her report showed that from1989 to 1993. Prior to the rendition of the decision of the Secretary of Labor and Employment. to conduct a study on the profitability of ACCI’s Food and Beverage Department (F & B Department). Dianne Miano. Mascarinas as helper tasked to coordinate with the cleaning and delivery of the heavy equipment sold to customers. the Labor Code recognizes retrenchment as one of the authorized causes for terminating the employer-employee relationship and the decision to retrench or not to retrench is a management prerogative. some of whom were officers and members of the petitioner union. The closure of business operation by petitioners. 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. it must be proven that the losses incurred are substantial and actual or reasonably imminent. that the same increased through a period of time. the union declared a strike. Alpe Macalalad. Charms Haw. NLRC (Charms) Facts: In the proceedings before the NLRC. Distinction Closure and Retrenchment Ÿ Ÿ J. Jake Ng. 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. Held: No illegal dismissal. "Redundancy" exists when the services of an employee are in excess of what is required by an enterprise. ACCI then sent its F & B Department employees individual letters informing them that their services were being terminated effective January 1. 283 of the Labor Code as just causes for the closing of establishments or reduction of personnel.00 in 1990 and was certain to become worse were it not for quick measures taken by petitioner. JAT indefinitely closed shop effective May 1998. As in the case of retrenchment. Ÿ Alabang Country Club vs. then President of ACCI. The affected employees were given separation pay equivalent to one month pay for every year of service. Among these was a socalled "redundancy program.000. this Court finds that the study report submitted by the internal auditor of petitioner. Coverage Philippine Tuberculosis Society vs.00. which is allowed under Article 283 of the Labor Code." while denominated as such. is one of the economic grounds for dismissing employees and is resorted to primarily to avoid or minimize business losses.135." on the other hand. however. the sales of heavy equipment declined because of the Asian currency crisis. the Society began to experience serious financial difficulties when it incurred a deficit of P2 million. Heidi Soria. JAT temporarily suspended its operations. Jon Santos. and sold its equity in the Philippine Ÿ Irah Burog. Consequently. 1998 of its decision to permanently close its business and had submitted a termination report to the DOLE. Both are mentioned in Art. the president of respondent company announced the adoption by the company of several cost-cutting measures to forestall impending financial losses. including private respondent. In the case at bar. contrary to the findings of the Labor Arbiter. 4 "Retrenchment. NLRC Facts: Sometime in April 1997. Petitioner’s failure to prove that the closure of its F & B Department was due to substantial losses notwithstanding. cancelled its service agreement with a janitorial company. in our view. There was substantial proof that the company was incurring substantial losses. 1995. Consequently. Further. It advised its employees. Edlyn Santiago. There were no indications that an impending strike or any labor-related union activities precipitated the sudden closure of business. Ysan Castillo.727. NLRC (Charms) Facts: Francisco Ferrer. Ÿ As did the appellate court. 1988." which. In October 1997.100. for which they signed documents of waiver. Kristel Macatangay. as implemented on March 1. resulted in the layoff of around 177 employees. the only evidence submitted to prove its alleged losses. petitioners had notified private respondent and all other workers through written letters dated November 25. The shortfall increased to P9. 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. 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.Labor II Facts: As a result of a deadlock in the negotiations for a collective bargaining agreement. the Society leased a property in Tayuman to a fastfood outlet. Held: NO ILLEGAL DISMISSAL.A. F & B Department had been incurring substantial losses in the aggregate amount of P8. Monette Mesa. it was shown that. 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.
We cannot. 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. for the law's phraseology explicitly uses the phrase "retrenchment to prevent losses. While the closure of the hotel operations in April of 1997 may have been temporary. and the reports of its external auditors for the years 1989 and 1990. Second. 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. Ÿ It need not be overemphasized that the State recognizes the pivotal role of small rural banks. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of six (6) months. we find substantial evidence that petitioners intended the termination to be permanent.Labor II Long Distance Telephone Company (PLDT). Procedure Ÿ Mayop Hotel & Restaurant vs. pursuant to Article 286 of the Labor Code. financial statements. Heidi Soria. 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. 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. while waiting for the construction of a new Mayon Hotel & Restaurant at Peñaranda Street. the hotel operations of the business were suspended on March 31. (4) The losses. Nor do we think the NLRC erred in holding that though the Society was justified in ordering a retrenchment. and implemented the retrenchment of one hundred sixteen (116) employees. 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. whether for profit or not. as the omission immediately makes the selection process unfair and unreasonable. say that the finding of the NLRC is unsupported by substantial evidence. to wit: (1) The losses expected and sought to be avoided must be substantial and not merely de minimis. Ÿ Balbalec vs. Indeed. 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. it disapproved the overtime pay of supervisory and managerial employees. Anna Tetangco 8 . a failure which. After all. 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. The operation of the restaurant was continued in its new location at Elizondo Street. since he would be paying the newcomer a relatively smaller wage. the Rural Bank of Bangued dismissed three of its employees. 1999. Ÿ Although petitioner is a non-stock and non-profit organization. On the contrary. NLRC (Charms) Facts: On June 30. (2) The apprehended substantial losses must be reasonably imminent. its implementation of the scheme rendered the retrenchment invalid. (3) The retrenchment should reasonably necessary and likely to prevent effectively the expected losses. as such imminence can be perceived objectively and in good faith by the employer. is simply unconscionable and violative of the senior employee's tenurial rights. Legazpi City. Things being equal. obtained the waiver of personnel of their entitlement to wage differentials. Edlyn Santiago. and applied for exemption from minimum wage increases. Legazpi City. Held: ILLEGALLY DISMISSED. therefore. it withdrew from the Pag-Ibig Fund Program. namely. Petitioner presented to the NLRC the balance sheets. retrenchment as a measure adopted to stave off threats to its existence is available to it." However. 1989. Paulino Balbalec. Finally. Only nine (9) of the sixteen (16) employees continued working in the Mayon Restaurant at its new site. Alpe Macalalad." employer to prove economic or business losses with appropriate supporting evidence. Charms Haw. should invalidate the retrenchment. negotiated with the Government Service Insurance System for the restructuring of its obligations. even if the scheme should result in savings for the employer. Held: ILLEGALLY DISMISSED. such as the respondent bank. Monette Mesa. to our mind. Dianne Miano. retrenchment strikes at the very core of an individual's employment and the burden clearly falls upon the Irah Burog. even assuming arguendo that the cessation of employment on April 1997 was merely temporary. 2 The retrenchment is the subject of the present suit. Jon Santos. Jake Ng. 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. Ysan Castillo. in the development of the countryside through its loan portfolios and other services to the rural folk. Monina Lagman. both the past and forthcoming. Moreover. must be proven by sufficient and convincing evidence. Held: Article 283 not only contemplates the termination of employment of workers or employees to minimize established business losses but also to prevent impending losses. 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. Kristel Macatangay. retaining a newly hired employee and dismissing one who had occupied the position for years.
Because of the consequential nature of retrenchment. Retrenchment is one of the authorized causes for the dismissal of employees. Charms Haw. Alpe Macalalad. Ysan Castillo. but more importantly. represented by Lim. 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. Held: ILLEGAL DISMISSAL DUE TO FAILURE TO GIVE NOTICE. A memorandum was thereafter issued by EMCO. Jake Ng. be reasonably necessary and likely to effectively prevent the expected losses. addressed to all its foremen. These employees cannot forever be temporarily laid-off. 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. 1993 and of March 2. cut other costs other than labor costs. if it were true that the lay-off was temporary but then serious business losses prevented the reinstatement of respondents.Labor II Ÿ To say the least. EMCO. it must. And even assuming that the closure was due to a reason beyond the control of the employer. The “loss” referred to in this provision cannot be of just any kind or amount. The intended retrenchment was grounded on purported financial difficulties occasioned by alleged lack of raw materials. informed the Department of Labor and Employment (‘DOLE’) of its intention to retrench some of its workers. alleged losses if already realized.. i. Dianne Miano. as such imminence can be perceived objectively and in good faith by the employer. frequent machinery breakdown. Anna Tetangco 9 . and 4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. Ÿ EMCO Plywood Corp vs. Heidi Soria. To remedy this situation or fill the hiatus. otherwise. it is recognized under Article 283 of the Labor Code. be a certain degree of urgency for the retrenchment. supervisors and department heads. 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 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. Lopez Sugar vs.e. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character. Franco Temporary Retrenchment Ÿ Sebugero vs. to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination. must Ÿ Requirements. it still has to accord its employees some relief in the form of severance pay. Monina Lagman. the employees should either be recalled to work or permanently retrenched following the requirements of the law. thirdly. section heads. and the expected imminent losses sought to be forestalled. Monette Mesa. which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laidoff. Lastly. whichever is higher. 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. Secondly. 2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of serve. 3) good faith in abolishing the redundant positions. Abelgas (Charms) Facts: On January 20. Jon Santos. Resorted to by employers to avoid or minimize business losses. To determine whether the petitioners were validly retrenched or were illegally dismissed. the losses expected should be substantial and not merely de minimis in extent. NLRC (Charms) Facts: The petitioners were among the thirty-eight (38) regular employees of private respondent GTI Sportswear Corporation (hereinafter GTI). the substantial loss apprehended must be reasonably imminent. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. The Court has laid down the following standards that a company must meet to justify retrenchment and to guard against abuse: “Firstly. a corporation engaged in the manufacture and export of ready-to-wear garments. 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. There should. 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. 1993. low market demand and expiration of permit to operate its sawmill department. Edlyn Santiago. Kristel Macatangay. in other words. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. but certainly not the least important. then petitioners should have complied with the requirements of written notice. the bonafide nature of the retrenchment would appear to be seriously in question.Standards Irah Burog. The employer should have taken other measures prior or parallel to retrenchment to forestall losses. After six months.
more than 100 new workers were hired. (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. Monette Mesa. or the expected imminent losses sought to be forestalled. serious. or if only expected. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. and (4) sufficient and convincing evidence prove the alleged losses. whether they are temporary. For termination due to retrenchment to be valid. Ÿ Not every loss incurred or expected to be incurred by an employer can justify retrenchment. Heidi Soria. Anna Tetangco 10 . if already incurred. efficiency. Federation of Free Workers(Heidi) Irah Burog. the Middle East war and the 9/11 incident in the United States of America. 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. if already incurred. Aldiano and Parcon to the effect that Blucor is terminating their employment due to retrenchment. are not merely de minimis. physical fitness. Monina Lagman. and 12 managers and supervisors were promoted. (3) the retrenchment can be fairly regarded as necessary and likely to be effective in preventing the expected losses. We believe that respondents acted in bad faith in terminating the employment of the members of petitioner Union. are reasonably imminent as perceived objectively and in good faith by the employer. casual. Petitioners failed to show any reasonable necessity for the retrenchment. Charms Haw. 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. 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. (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. Ysan Castillo. however. and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. or that a fair and reasonable criteria had been used in selecting the employees to be retrenched. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the Nature of Loss Lopez Sugar vs. age. Jake Ng. in order to give employees some time to prepare for the eventual loss of their jobs. Edlyn Santiago. which led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant. The CA ruled that the dismissal was unjustified. After the retrenchment program was implemented. expected losses. SMC has thus proven substantial business reverses justifying retrenchment of its employees. must be proved by sufficient and convincing evidence. Sto. The CA also found that the company had failed to show that retrenchment was reasonably necessary to avert substantial losses. Ÿ The requirements are: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which. Amarilla (Jake) Facts: Blucor notified Amarilla. Held: Decision of CA affirmed. such as status (i.. The failure of the employer to prove by convincing evidence any of the foregoing requirements will result in an illegal dismissal. (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.Labor II be proved by sufficient and convincing evidence. seniority. as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination. including some of those who had been retrenched. Ÿ San Miguel Corp vs. (2) the losses are actual or reasonably imminent. as Blucor had failed to prove with clear and satisfactory evidence that legitimate business reasons existed to justify retrenchment. the law requires that written notices of the intended retrenchment be served by the employer on the worker and on the DOLE at least one month before the actual date of the retrenchment. 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. Tomas (Jake) Facts: A Memorandum was issued informing all employees that a comprehensive cost reduction program would be implemented by the Corporation. but substantial. Jon Santos. Ÿ Philippine Carpet vs. "on account of depressed business conditions brought about by the currency crisis in Southeast Asia. vs. whichever is higher. Held: Company losses were duly established by audited financial documents showing that the aquaculture operations of SMC’s Agribusiness Division accumulated losses resulting in the closure of its Calatrava Aquaculture Center in Negros Occidental. if already incurred. not de minimis. and the expected imminent losses sought to be forestalled. actual and real. regular or managerial employees). Kristel Macatangay. and (d) the alleged losses. Any claim of actual or potential business losses must satisfy the following established standards: (1) the losses incurred are substantial. Dianne Miano. and financial hardship for certain workers. Alpe Macalalad.” Ÿ Blucor Minerals Corp.
Alpe Macalalad. They that after the termination of the services of its members. Naval Base Facility located in San Miguel. One month before the target closure date of its remaining outlets. owner and general manager of SMJS. To require an employer to be generous when it is no longer in a position to do so. In 1997. materialized. NLRC (Jake) Facts: Petitioner SMJS had a contract with the U. It is not. caused the retrenchment and retirement of a number of its employees. that petitioners failed to present adequate proof of such losses. Carpet vs. faced with dropping sales. Jake Ng. Held: Respondents assert that the company was taking losses of such magnitude which left its survival or future existence in the dark. and not because of serious business losses. Charms Haw. To stem these serious losses. in greater or lesser degree. the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have. As a consequence. Petitioners herein are not entitled to separation pay under Article 283 of the Labor Code.S. would be unduly oppressive. it held. indeed many. Sto. petitioner Galace. Monette Mesa. the remaining branches were also closed. however. not all business losses suffered by the employer would justify retrenchment under this article. the employer becomes legally privileged to retrench and reduce the number of his employees. in the carrying on of business operations. The Court has held that the "loss' referred to in Article 283 cannot be just any kind or amount of loss. NLRC (Jake) Facts: While Respondent Commission agreed with petitioners that management had the prerogative to terminate employment on account of business reversals. due to financial difficulties. Anna Tetangco 11 . Joni’s Food Services (Jake) Facts: In the 1990s. the services of the complainants were terminated. In its ordinary connotation.Labor II Fact: Employer. allegedly to prevent losses due to major economic problems. Employer advised 110 casuals to report to its personnel office. Dianne Miano. JFSI sent notices of Irah Burog. in fact. Edlyn Santiago." Sliding Income Ÿ San Miguel Jeepney Service vs. he having suffered a net loss the prior year. Bleak business conditions continued to plague the company and by the end of the first quarter of 1999. JFSI had 8 outlets for its coffee shop and restaurant business. "opted not to renew the existing contract nor bid on the new contract". what they Ÿ Cama vs. San Antonio. or under what circumstances. the difficult question is determination of when. In the nature of things. the company found no recourse but to shut down its outlets. In other words. Held: Apparently. Kristel Macatangay. Tomas Ÿ Bogo Medellin Sugar Cane Planters vs. and exercising its privilege under the CBA entered into between petitioner and PLUANACUSIP. in our view. Phil. in other words. Jon Santos. as found by the Court of Appeals. since some. JFSI shut down more outlets. Monina Lagman. Ÿ As petitioners themselves admitted. petitioner did not renew his contract because of "sliding incomes". 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. closure to the Department of Labor and Employment (DOLE) and to the complainants who were then employed in the remaining branches or outlets. it shut down three of these shops to avert serious business losses. of the factors which impact upon the profitability or viability of such operations may be substantially outside the control of the employer. Article 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses. Thus. leaving it with just three operating outlets at the end of 1998. Thus. Ÿ Ÿ To justify retrenchment. When the said contract expired. Zambales. 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. unjust. if such an intent were expressly written into the law. to provide transportation services to personnel and dependents inside said facility. otherwise. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. 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. thus petitioner cannot justify the nonpayment of separation pay. 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. Ÿ Not every asserted possibility of loss is sufficient legal warrant for reduction of personnel. Indeed. Held: NLRC decision affirmed. Heidi Soria. and unfair to the employer. that law may well be vulnerable to constitutional attack as taking property from one man to give to another. the possibility of incurring losses is constantly present. the employer must prove serious business losses. respondents had no option but to lay off employees and eventually close shop. Ysan Castillo.
vs. Daguman (Jake) Facts: Petitioners aver that they were compelled to close the company’s brokerage department. Otherwise. Considering that respondent Paras had just been regularized on November 24. In accordance with the CBA. Jake Ng. although the more overriding consideration is. Federation of Free Workers A comparative statement of revenue and expenses for two years. they may be assailed as self-serving. It is beyond cavil then. Ÿ Business reverses or losses are recognized by law as an authorized cause for termination of employment. Financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. What the law speaks of is serious business losses or financial reverses. 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. Jon Santos. Kristel Macatangay. Parenthetically. to which losses were allegedly traceable due to incorrect handling of sales. the payment of backwages should be computed up to February of 1998. Held: The termination of private respondents was unjustified either as retrenchment to prevent losses because petitioners’ evidence to prove business losses was insufficient. Monina Lagman. The labor arbiter and the NLRC both found that petitioners validly exercised their management prerogatives. Alpe Macalalad. Ÿ Danzas International 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. Charms Haw. his reinstatement had become moot and academic because of its retrenchment program which was effected beginning February 1998. if the business losses that justify the closure of the establishment are duly proved. in order to prevent further losses which threatened the company’s viability. the employer closing his business is obligated to pay his employees their separation pay. he would have been included in the first phase of its retrenchment program. 1996. Anna Tetangco 12 . it is an essential requirement that alleged losses in business operations must be proven convincingly. Edlyn Santiago. pursuant to the "last in first out policy" embedded in the CBA. of course. Proof of Loss Ÿ The proof of actual declining gross and net revenues must be submitted. or closure of the establishment because the brokerage department did not actually cease operations. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing. Hence. Essentially. that the serious and actual business reverses suffered by the petitioner justified its resort to retrenchment of 700 of its employees. the right of affected employees to separation pay is lost for obvious reasons. Caparoso (Kristel) Facts: Caparoso and Quindipan were employed as Irah Burog. much less serious business losses within the meaning of the law. Monette Mesa. good faith. 1996. the petitioner concludes. 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. 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. 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. Otherwise. 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. Lopez Sugar vs. is not conclusive proof of serious business losses. in other words. decreasing gross revenues. Ÿ Ÿ Mitsubishi Motors vs. Held: The petitioner’s losses in 1997 and 1998 are not insignificant. Chrysler (Jake) Facts: The petitioner asserts that assuming respondent Paras was illegally dismissed. who Ÿ Composite Enterprises Inc. Still. such ground for termination would be susceptible to abuse by scheming employers. Bogo Medelin vs. NLRC might be merely feigning business losses or reverses in their business ventures to ease out employees. Clearly. Dianne Miano. Otherwise. he would have been included among those who had been retrenched had he not been dismissed. by itself. Since the losses incurred must be substantial and actual or reasonably imminent. 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. Heidi Soria. employees who were recently hired were the ones retrenched. sliding incomes are not necessarily losses. Financial statements must be prepared and signed by independent auditors. Ysan Castillo.Labor II suffered were "sliding incomes". The termination of the 531 affected employees was made effective a month from receipt of the termination letter. 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. The petitioner posits that even if respondent Paras had become a regular employee by November 26.
This Court will not sanction a dismissal premised on mere conjectures and Ÿ Raycor Aircontrol Systems vs. we ruled: Since the burden of proving the validity of the dismissal of the employee rests on the employer. Jon Santos. Burden of Proof Ÿ Sy vs. In the same case of Sevillana vs.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. He filed an illegal dismissal case. and (d) the alleged losses. After the 5th. When he was 59 years old. the employer clearly did not comply with the medical certificate requirement before Sahot’s dismissal was effected. Anna Tetangco 13 . He filed a week long leave and found that he had osteoarthritis. in particular. Charms Haw. Inc. Alpe Macalalad. Ÿ For retrenchment to be considered valid. While petitioner claims that it issued to respondent an October 30. and to the rehabilitation of Uniwide. I. Caparoso and Quindipan filed a case for illegal dismissal. vs. In the absence of the required certification by a competent public health authority. He found that his employers were not remitting his SSS contributions.. Heidi Soria. UTI. Edlyn Santiago. 1997. or if dismissed. The financial statements must be prepared and signed by independent auditors. this Court has ruled against the validity of the employee?s dismissal. it failed to prove that such document was ever served upon respondent and the DOLE. it is not enough for a company to merely declare that it has implemented a retrenchment program. It is readily apparent that petitioner did not comply with any of the foregoing requirements. heart enlargement. In other words. otherwise. attributing these to the Asian currency crisis. in general. for the memorandum states that respondent’s contract of Irah Burog. San Pedro (Kristel) Facts: Raycor hired Mario San Pedro as tinsmith operator for the duration of its contract with Uniwide. Monette Mesa. NLRC. CA (Kristel) Facts: Sahot was hired as truck helper by the family owned SBT Trucking Corp. the dismissal would be unjustified.Labor II deliverymen with Composite Enterprises. 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. Ysan Castillo. and the expected imminent losses sought to be forestalled. It must produce adequate proof that such is the actual situation to justify the retrenchment of employees. the condition of business losses is shown by audited financial documents like yearly balance sheets. Ÿ Worse. He filed for a month leave but SBT refused and it was during this that SBT terminated him. and (b) the cessation of business must be bona fide in character. 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 that it complied with the one-month notice requirement. profit and loss statements and annual income tax returns. if already incurred. or it resorted to the dismissal of respondent and other employees to stave off cessation or suspension of its business. his employment contract was not renewed. failing which these can be assailed as self-serving documents. Petitioner claims that respondent was laid off due to adverse business conditions it suffered at that time. he started to incur absences due to several ailments the most severe of all being the pain in his left thigh. 1997 Memorandum of termination of employment. the following substantial requirements must be met: (a) the losses expected should be substantial and not merely de minimis in extent. the latter should likewise bear the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. Normally. must be proved by sufficient and convincing evidence. Moreover. the employer must prove compliance with the following requirements: (a) a written notice must be served on the employees. otherwise. and the Department of Labor and Employment (DOLE) at least one month before the intended cessation of business. Kristel Macatangay. the notice is less than one month. Ÿ As this Court stated in Triple Eight integrated Services. Ÿ To justify termination of employment under Article 283 of the Labor Code. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. employment is to expire on November 3. or only three days later from the date of the Memorandum. After the expiration of his contract he was rehired (this extended for 5 contracts). the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with. that the dismissal was not illegal. Monina Lagman. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. 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. Jake Ng. They were terminated from their work allegedly as a result of the expiration of contract which was on a month to month basis. there is no evidence at all that petitioner dismissed respondent because it actually ceased or suspended business operations. In the case at bar. Dianne Miano. (International) Corp.
The DOLE is the agency that will determine whether the planned retrenchment is justified & adequately supported by facts. or on November 30. 1998. which private respondents immediately complied with by submitting their joint answer on 31 July 1992. the evidence must be substantial and not arbitrary and must be founded on clearly established facts sufficient to warrant his separation from work. 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. Petitioner National Bookstore. The notice must be given at least 1 month in advance of the intended retrenchment. 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. having no viable projects. respondents implemented cost-cutting measures resulting in the retrenchment or termination from the service of their employees. 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. 1998. 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. 1998. It is not. Jon Santos. shortened its Ÿ Irah Burog. 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. IPI Phils. these notices should have been served one month before. Heidi Soria. the retrenchment is defective. as correctly pointed out by the Labor Arbiter in his decision."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. because this time their lay-off is to become permanent. Thus. but what the law requires is a written notice to the employees concerned. the phrase "to prevent losses" means that retrenchment or termination of the services of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. Ÿ Anent the first requisite. Ysan Castillo. if such an intent were expressly written into the law. Such requirement is mandatory. Ÿ Article 283 entails. In fact. Records show that on December 3. that law may well be vulnerable to constitutional attack as taking property from one man to Lopez Sugar Corp vs. Ymasa and Gabriel filed a case for illegal dismissal. to enable the employees to look for other means of employment and therefore ease the impact of the loss of their jobs and incomes. 1998. NLRC For an employer to validly terminate the service of Ÿ Cajucom VII vs. But the burden imposed on petitioner National Bookstore does not stop here. Edlyn Santiago. On 30 July 1992 it gave private respondents an opportunity to explain why they should not be dismissed for the loss of company funds. and. more than substantially observed this requirement. only a situation where there is "retrenchment to prevent losses. Due to economic slowdown. As mandated by Article 283. if he so desires. 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. Sebugero vs. it shifted its business from production to marketing and trading of Thai Petrochemical products. respondent TP Cement. Monette Mesa. Alpe Macalalad. Jake Ng. Kristel Macatangay. A written notice given to the DOLE is required by law. it was dissolved on January 27. including petitioner. CA (Kristel) Facts: Maria Ymasa and Edna Gabriel were the head custodian and cashier of National Bookstore. Cement Corp. Ÿ National Bookstore Inc. Charms Haw. among others. Dianne Miano. respondents failed to comply with the one-month notice requirement. respondents sent petitioner and the DOLE separate notices of retrenchment effective December 30. 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.Labor II suspicions. Clearly. Moreover. the employer must notify him in writing of the decision to dismiss him. in other words. When effected Ÿ In its ordinary connotation. 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. Following the provision of Article 283. actual losses need not set in prior to retrenchment. (Kristel) Facts: Benedicto Cajucom was the VP – Legal Affairs of IPI Cement. When the required notices to the employees and to the DOLE are not given. (b) if the employer decides to terminate the services of the employee. Evidently. GTI conveyed to the petitioners the impossibility of recalling them. stating clearly the reasons therefor. vs. With respect to respondent TP Vinyl. Anna Tetangco 14 . Federation of Free Workers corporate term from 50 years to 2 years and 7 months. Monina Lagman.15 This is the situation in the case at bar. They were terminated for gross neglect of duty and loss of confidenc.
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. and 3) Payment of separation pay equivalent to 1 month OR at least ½ month pay for every year of service. Ÿ Ÿ Moreover. whichever is higher. Re-Hiring Effect Atlantic Gulf and Pacific Co. which prompted private respondents to retrench. there are three basic requisites for a valid retrenchment: 1) The retrenchment is necessary to prevent losses and such losses are proven. (ITC) ITC employed 387 workers. Meris (Kristel) Facts: Dr. Liability Ÿ Capitol Medical Center vs. The purpose of notice to the DOLE is to allow the department to assess whether the retrenchment is being done in good faith. The employees. Jake Ng. Thelma Navarette-Clemente (Dr. NLRC (Monette) Facts: Petitioner corporation engaged in general construction work.e. while it is true that the company hired or re-employed some of the dismissed workers.". 283. Heidi Soria. Dianne Miano. Ababon. To save itself. Under the first kind. Monette Mesa. Edlyn Santiago. Charms Haw. 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. . among others. Ysan Castillo. The rehiring or re-employment does not negate the imminence of losses. under Article 283 of the Labor Code. received all the benefits due them under the Labor Code. filed a complaint against ITC and IPGC for illegal dismissal.. was untenable because the Court in said decision thoroughly passed upon the legality of respondent company's redundancy program. members of the AG&P United Rank and File Association. and as long as he pays his employees their termination pay in the amount corresponding to their length of service. (IPGC) leased a plywood plant to Industrial Timber Corp. Dr. unfair labor practice and damages. 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. whichever is higher. Just as no law forces anyone to go into business.Labor II his employees under Art. (b) the cessation of business must be bona fide in character. EMCO vs. 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. Clemente). The Court also rejected the complaining employees' claim that the program was a mere scheme to bust the local union. The requirement of notice must be given to both DOLE and the employees concerned 1 month before the intended date of retrenchment. In sum. no law can compel anybody to continue the same. Alpe Macalalad. Abelgas Ÿ Industrial Timber Corp. They alleged. Kristel Macatangay. i. 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. Dr. Monina Lagman. petitioner implemented a redundancy program wherein 177 employees occupying rank and file. involving the same parties. They also signed releases indicating their conformity with petitioner's redundancy program. 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. Jon Santos. 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. while under the second kind. upheld was only the legality of the redundancy program and not the legality of its implementation. Anna Tetangco 15 . More than a year after. the employer must sufficiently and convincingly prove its allegation of substantial losses. IPGC took over the plywood plant coincidentally on the same day the ITC ceased operation of the plant. 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. vs. petitioner was charged with unfair labor practice and illegal dismissal by private respondents. This is to allow the employees to look for other employment. and instead ruled that the AG&P duly established its claim of company losses which was the basis of the questioned retrenchment program. Held: Private respondent's contention that what the Court in an earlier case. Meris was the industrial service unit chief of Capitol Medical Center. of Manila vs. managerial and staff positions were separated from employment. et al. a notice Irah Burog. Meris received from Capitol’s president and chairman of the board. 2) Written notice to the employees and to DOLE at least one month prior to the intended date of retrenchment. Ababon (Kristel) Facts: Industrial Plywood Group Corp. to avoid or minimize business losses. reportedly incurred huge operating losses. 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.
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. Just as no law forces anyone to go into business. 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. since private respondents cessation and closure of business was lawful. (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. whichever comes first. Charms Haw. with a fraction of at least six (6) months being considered as one(1) year. 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. 1992 until the expiration of his term as Chief of ISU or his mandatory retirement. fide in character. Ruling: Explicit from Art. M. 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. Jake Ng. Heidi Soria. 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. Monina Lagman. Sison. Closing of Business. Finally. there was no illegal dismissal to speak of. The owner. This fact negated the obligation to pay backwages. Meris not having been premised on a just or authorized cause. he is entitled to either reinstatement or separation pay if reinstatement is no longer viable. no law can compel anybody to continue in it. Sison decided to retire from business when she became sickly. proprietors of GBS and MAME explained the closure of MAME and GBS was because Lydia V. such exercise will be upheld. 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.Y. Macadams Meat Engineering(Heidi) Facts: Spouses Geronimo and Lydia V. Instead private respondents were required to give separation pay which they already did. And the burden of proving such falls upon the employer. The determination to cease operations is a prerogative of management which the State does not usually interfere with. The records reveal that private respondents complied with the aforecited requirements. or one month pay. Her health did not improve despite proper medical attention. CA (Heidi) Facts: M. In the general meeting of the workers. for any bona fide reason. as no business or undertaking must be required to continue operating simply because it has to maintain its workers in employment. no law can compel anybody to continue the same. Macadams Metal Engineering vs. Monde. Kristel Macatangay.283 Right Ÿ Espina vs. Edlyn Santiago. can lawfully close shop at anytime.Y. she declined to accept new projects and proceeded with the winding up of her business. she announced her plan to close shop e. and such act would be tantamount to a taking of property without due process of law. Dianne Miano. Monette Mesa. 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. 283 is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. Ÿ D. and full backwages from the time of his dismissal from April 30. Reinstatement. and to backwages. and that M. Alpe Macalalad. San shall provide Monde a list of all its present employees who shall be given preference in employment by the latter. Ÿ Just as no law forces anyone to go into business. The announcement in advance was intended to give the workers ample time to look for alternative employment. The employer need only comply with the following requirements for a valid cessation of business operations. Meris is thus entitled to payment of separation pay at the rate of one (1) month salary for every year of his employment. however. It would indeed be stretching the intent and spirit of the law if we were to unjustly interfere with the management’s prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss or simply to provide the workers continued employment.Y. 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. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona Ÿ Irah Burog. Clearly then. Accordingly. (a) service of a written notice to the employees and to the DOLE at least one month before the intended date thereof. San was previously engaged in the business of manufacturing biscuits and other related products.Labor II advising him of the management’s decision to close or abolish the ISU and the consequent termination of his services as Chief.” Ÿ The termination of the services of Dr. Dr. Jon Santos. whichever is higher. Ysan Castillo. 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. Anna Tetangco 16 . as in the instant case.
. On the other hand. 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. 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 .000. and the expected imminent losses sought to be forestalled. this Court holds that private respondent was within its rights in closing Hacienda Binanlutan and in terminating the service of petitioners. as well as the computation of their termination pay. employers are also accorded rights and privileges to assure their selfdetermination and independence. and reasonable Ÿ Irah Burog. Heidi Soria. NLRC. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character. nor did they establish that the closure was motivated by Galaxie’s anti-union stance." Where. NLRC (Heidi) Facts: Galaxie Steel Corporation is a corporation engaged in the business of manufacturing and sale of re-bars and steel billets which are used primarily in the construction of high-rise buildings. and of the various demand notices of payments from creditor banks. Clearly then. Considering the losses suffered by private respondent. Charms Haw. Having determined that private respondent suffered losses and had to resort to retrenchment of its employees in Hacienda Binanlutan to prevent further losses. Ÿ Employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. 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. 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. In any case. Anna Tetangco 17 . management subsequently held a conference with all 13 field workers to explain to them the reason for this move. such exercise will be upheld. 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. NLRC (Heidi) Facts: Victoria’s Milling Corp. Monina Lagman.89 in 1998. And the burden of proving such falls upon the employer. And it posted the notice of closure on the corporate bulletin board. On account of serious business losses which occurred in 1997 up to mid-1999 totaling around P127.753. . the Labor Code does not impose any obligation upon the employer to pay separation benefits.480. This mass of privileges comprises the so-called management prerogatives.97 in 1999. if already incurred.Labor II Ÿ Cattista vs. 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. Petitioners received their termination pay or retirement pay under the pension plan. indeed. Capitol Medical Center vs. must be proved by sufficient and convincing evidence. the closure then is due to serious business losses. Galaxie thus filed a written notice with the DOLE informing the latter of its intended closure and the consequent termination of its employees. Although they may be broad and unlimited in scope. 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. Jake Ng.00.000. Besides. whichever was higher. In a letter. One of the rights accorded an employer is the right to close an establishment or undertaking. (b) the substantial losses apprehended must be reasonably imminent. 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. Meris Work is a necessity that has economic significance deserving legal protection. Article 283 of the Labor Code is clear that an employer may close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses. Ÿ Galaxie Steel Workers Union vs. 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. as long as he pays his employees their termination pay in the amount corresponding to their length of service. Dianne Miano. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses.204. and P13. In view of such decision. Edlyn Santiago. the petitioners had not presented evidence to the contrary. The social justice and protection to labor provisions in the Constitution dictate so. VMC's personnel reduction program was meant to reduce excessive labor costs in the company. Galaxie decided to close down its business operations. Kristel Macatangay. Ruling: This requisites of a valid retrenchment are: (a) the losses expected should be substantial and not merely de minimis in extent.785. Jon Santos. Monette Mesa.389. P48. it is logical for it to implement a retrenchment program to prevent further losses. Alpe Macalalad. Respecting petitioners’ claim for separation pay is Article 283 of the Labor Code.429. and (d) the alleged losses. to wit: P65. In North Davao Mining Corporation v. Ysan Castillo. 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. It would.65 in 1997.
amounts to cessation of petitioner's business operations in Makati. Monette Mesa. Industrial Timber Corp vs. not one reported for work at petitioner's new site. it would hire replacements. Cheniver must pay his employees their termination pay in the amount corresponding to their length of service. Cheniver gave its workers additional time within which to report to the new work place. in our view is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. Indeed. Resignation must be voluntary and made with the intention of relinquishing the office. not construable as resignation. hence. 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. NLRC that several employees namely. Edlyn Santiago. Later on. Since the closure of petitioner's business is not on account of serious business losses. Five days later. Ÿ The phrase "closure or cessation of operations of establishment or undertaking" includes a partial or total closure or cessation. 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. Cheniver informed its workers about the transfer of the company from its site in Makati to Batangas. 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. Earlier. Dianne Miano. Ysan Castillo. Jake Ng. Suffice it to state that there is no termination of employment during the period of suspension. in our view. 286. Ordinarily. thus the procedural requirement for terminating an employee does not come into play yet. does not appear convincing. 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. decided not to work at the new site but just opted to be paid financial assistance offered by petitioner. accompanied with an act of relinquishment. the union advised Cheniver that its members are not willing to go along with the transfer to the new site. there appears no complete dissolution of Cheniver's business undertaking but the relocation of petitioner's plant to Batangas. There is no doubt that petitioner has legitimate reason to relocate its plant because of the expiration of the lease contract on the premises it occupied. they would be considered to have lost interest in their work and would be replaced. Cheniver has to accord its employees some relief in the form of severance pay. Now. 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. whichever is higher. In view of the impending transfer. As public respondent observed. 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. 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. This mass of privileges comprises the so-called management prerogatives. Cheniver's contention that private respondents resigned from their jobs. Ÿ Broadly speaking. One of the rights accorded an employer is the right to close an establishment or undertaking. But even though the transfer was due to a reason beyond its control. 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. Heidi Soria. Monina Lagman. 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. Charms Haw. Kristel Macatangay. the labor federation informed petitioner that the employees decided to continue working for petitioner. 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. let it be noted that the termination of employment by reason of closure or cessation of business is authorized under Article 283 of the Labor Code. However. otherwise. Consequently. Resignation is inconsistent with the filing of the said complaint. The right to close the operation of an establishment or undertaking is one of the authorized causes in terminating employment of workers. That is its prerogative. JAT General Services vs. Anna Tetangco 18 . otherwise. NLRC (Heidi) Facts: Cheniver operates a printing business.Labor II return of capital. 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. Although they may be broad and unlimited in scope. It appears Irah Burog. 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. Alpe Macalalad. Nonetheless. Cheniver wrote its employees to report to the new location within 7 days. Cheniver gave its employees up to the end of June 1992 to inform management of their willingness to go with Cheniver.
as in this case. Espina vs. the determination to cease operations is a management prerogative that the State does not usually interfere in. It is not enough to merely raise this issue nor to discuss it only in passing. A "Notice of Temporary Suspension of Operation" was issued by the hospital and submitted to the local office of the NCMB. as well as the resumption of business barely a month after. 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. Alpe Macalalad.286 Basis San Pedro Hospital of Digos vs. The cessation of a company’s operations shortly after the organization of a labor union.Labor II absence of serious business losses or financial reverses. but only 14 out of the 74 rank-and-file employees/union members acknowledged receipt thereof. on account of its alleged inability to meet the export quota required by the BOI. J. Thereafter the corporation declared that it will be temporarily lay off employees and cease operations.T vs. 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. his means of livelihood. the hospital management considered the union actions as tantamount to a strike. is a charitable. Indeed. corporation. The last patient was consequently discharged. nonstock. The operations of the hospital having come to a grinding halt. considering that it involves laying off employees for a period of six months. the State is bound to intervene. Heidi Soria. Undue interference with an employer’s judgment in the conduct of his business is uncalled for. Despite the NCMB's call for a conciliation conference. that its cessation of operation was really necessitated by its financial condition. nurses and nurse aides who were members of the union abandoned their respective department and joined the picket line a week later. Doctors began leaving the hospital and the number of patients dwindled. Inc. The union saturated petitioner's premises with streamers and picketed the hospital. by undertaking such suspension of operation. The same principle applies in temporary suspension of operations. Charms Haw. Similar notices were individually delivered to union members. Held: To justify the closure of a business and the termination of the services of the concerned employees. Itr had a 3-year CBA covering from 1987 until 1990. it must also protect the right of an employer to exercise what is clearly a management prerogative. That would be a taking of property without due process of law. In this instance. the law requires the employer to prove that it suffered substantial actual losses. CA Requisite Mc-Shurn Corp. as long as he pays his employees their termination pay in the amount corresponding to their length of service. Ÿ The burden of proving that such a temporary suspension is bona fide falls upon the employer. Monina Lagman. Petitioner also alleged that the resident/consultant physicians abandoned the hospital because there were no more patients. 10 days later. Ysan Castillo. Ÿ Ÿ Concededly. and that said condition would probably be alleviated or improved. there is substantial evidence that petitioners intended the Irah Burog. Monette Mesa. considering that the dismissal of an employee from work involves not only the loss of his position but. Secretary of Labor (Heidi) Facts: Pedro Hospital of Digos. the employer may merge or consolidate its business with another. corporation started placing on forced leave all the rank and file employees who were members of the union’s bargaining unit. what is more important. but to discourage the workers from organizing themselves into a union for more effective negotiations with management. or its losses abated. Edlyn Santiago. organized Me-Shurn Workers Union-FSM. Anna Tetangco 19 . The parties formally commenced negotiations for the renewal of their CBA but the parties failed to reach an agreement. NLRC Ÿ Temporary Cessation of Operation. Jake Ng. 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. with union. On the contrary. These acts constitute unfair labor practices. simply to maintain the workers in employment. But where it is manifest that the closure is motivated not by a desire to avoid further losses. Kristel Macatangay. non-profit medical and educational training Ÿ While the closure of the hotel operations may have been temporary. the evidence belies any claim that the lay-off of respondents was merely temporary. Me-Shurn Workers Union (Heidi) Facts: The regular rank and file employees of MeShurn Corp. Even as the law is solicitous of the welfare of the employees. The union had a pending application for registration BLR. It has been ruled that an employer may adopt policies or changes or adjustments in the operations to insure profit to itself or protect the investments of its stockholders. vs. and in the exercise of such management prerogative. no business can be required to continue operating at a loss. gives credence to the employees’ claim that the closure was meant to discourage union membership and to interfere in union activities. Dianne Miano. petitioner had to establish the fact of its precarious financial health.A. Jon Santos.
the corporation should have presented clear and convincing evidence of imminent economic or business reversals as a form of affirmative defense in the proceedings. Held: The installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. Inc. Justice Vicente V. When a security guard is placed on a "floating status. Held: The Supreme Court finds that. Monette Mesa. 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. indeed. Dianne Miano. which eventually led to his illegal constructive dismissal. along with a prayer for reinstatement. Eventually. San Pedro Hospital vs. not affect the employment relationship. held that the installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. Floating Status Irah Burog. Edlyn Santiago. 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. Mc-Shurn Workers Union Ÿ Pido vs. In security services. Drilon (Dianne) Facts: Hotel Mabuhay." he does not receive any salary or financial benefit provided by law.Labor II termination to be permanent. Mendoza. that said cessation of employment was merely temporary. failure to comply with any of the requirements shall be sufficient ground for the dismissal of the petition. DISEASE. are binding upon the parties. 286. Apropos this responsibility. leased the premises belonging to Santiago Syjuco. Mabuhay F. 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. Charms Haw. Jon Santos. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of 6 months.284 Ÿ The requirement for a medical certificate cannot be dispensed with. Effect on Employer-Employee Relationship Ÿ If a legitimate. the petitioners admitted that there was indeed such delay. He had an altercation with Richard Alcantara of the Ayala Security Force arising from Alcantara’s statement that Pido’s security license for his . His prolonged suspension. Anent the delay of seven days in the filing with the Court of Appeals of the petition. a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila. As a consequence. Otherwise. Pido was an employee of Cherubim Security and General Services. valid and legal suspension of operation does not terminate but merely suspends the employee-employer relationship. Jake Ng. 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. the dismissal is deemed unjustified. 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. Monina Lagman. Ÿ In a similar case involving the same issue – the validity of the termination of SMC employees at the Mandaue Brewery – the Supreme Court. The Court of Appeals did not commit any grave abuse of discretion in dismissing the petition for non-compliance with Rule 46. Sy vs. The quitclaims and releases. with more reason will an invalid and illegal suspension of operations. pursuant to Art. His filing of a complaint for constructive dismissal. Ysan Castillo. Digos E. Mayon Hotel vs. Mc-Shurn Corp. the replaced security guard may be placed on temporary "off-detail" if there are no available posts under respondent’s existing contracts. Assuming arguendo. it led to the termination of the services of the SMC employees at the Mandaue Brewery. due to non-payment of rentals. Alpe Macalalad. several functions of its employees were declared redundant. signed by the employees concerned as reasonable settlements. Also. had ripened to constructive dismissal. owing to respondent’s neglect to conclude the investigation. Inc. through Mr. 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. Kristel Macatangay. For as explicitly provided therein. Section 3. He was later on suspended following his argument with Alcantara. Special case of business transfers Nature of Labor Contract Ÿ Sundowner Devt Corp vs. CA G. clearly indicates that he did not abandon his work. NLRC (Dianne) Facts: Federito B. 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. Inc. Due to the grim economic consequences to the employee. Installation of Labor Savings Device Ÿ Abapo vs. Pido was constructively dismissed. a floating status requires the dire exigency of the employer's bona fide suspension of operation of a business or undertaking. Ÿ Verily. However. Anna Tetangco 20 . vs.38 caliber revolver service firearm and duty detail order had already expired. Heidi Soria. as in this case.
Further. Yet. they should have requested for an extension of time. They were also required to submit their written explanation within 12 hours from receipt of the reports. However. Book VI. Held: The absorption of the employees of Mabuhay may not be imposed on Sundowner. Monina Lagman. employees and guests free access to and egress from said premises. As a general rule. In addition. Subsequently. Restaurant and Allied Services (NUWHRAIN) picketed the leased premises. Sec. Kristel Macatangay. Meanwhile. labor contracts being in personam. like Constitutional due process.Labor II offered to sell its assets and personal properties in the premises to Sundowner to which it agreed. the valid and authorized causes of employment termination under the Labor Code. Mabuhay had nothing to do with the negotiation and consummation of the lease contract between Sundowner and Syjuco. Thus. notices of termination were also sent to them informing them of the basis of their dismissal.Nature and Requirements 277 (b). has two aspects: substantive. Colcol was also served an infraction report where he was charged with insubordination and poor work performance. There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong. the report also mentioned that Villena frequently violated company rules. the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. Edlyn Santiago. Heidi Soria. Alpe Macalalad. he was dismissed for serious misconduct. (Dianne) Facts: Edgar Villena and Jerry Colcol were employees of Solid Development Corporation. Hence. 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. Workers Assn.e. Held: The Supreme Court found that the dismissal of Villena and Colcol from the service was in accordance with the law. Ÿ The rule is that unless expressly assumed. Constitutional due process protects the individual from the government and assures him of his rights in criminal. barricaded the entrance to the leased premises and denied Sundowner's officers. civil or administrative proceedings. He was also required to submit a written explanation within 12 hours from receipt of the report. the manner of dismissal.. A labor contract merely creates an action in personam and does not create any real right which should be respected by third parties. In separate infraction reports. Villena was charged with disrespect to a superior officer and/or impolite/discourteous manner. neither of them complied. as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them. 2(d) 1.e. Rule 1.. They claimed that they were dismissed without just cause and without due process. i. 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. Villena and Colcol filed separate complaints for illegal dismissal with prayer for reinstatement and monetary claims. Sundowner has no liability whatsoever to the employees of Mabuhay. Sec. Agabon vs. thus binding only between the parties. Colcol was eventually dismissed for insubordination and poor work performance. vs. is only to consider them for reemployment in the operation of the business in the same premises. Procedural due process. Ysan Castillo. In General Ÿ Due process under the Labor Code. Ÿ H. Thereafter. NLRC Essence of Due Process Solid Development Corp. loss of confidence and gross habitual neglect of duty. 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. the requirement of due process had been met since they were accorded a chance to explain their side of the controversy. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. Jon Santos. Sundowner wrote a letter-complaint to Syjuco. 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. and the same can only be restricted by law through the exercise of police power. 2(d). Dianne Miano. incurred absences without official leave and slept while on duty. Even if no hearing was conducted. and procedural. Anna Tetangco 21 . labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise. they were both apprised of the particular acts or omissions constituting the charges against them. petitioners were given due process before they were dismissed. i. A deed of assignment of said assets and personal properties was executed by Mabuhay in favor of Sundowner. it was Syjuco who found Sundowner and persuaded it to lease said premises. Solid Development Corp. He was also required to submit a written explanation within 12 hours from receipt of the report. Charms Haw. Monette Mesa. followed by a complaint for damages with preliminary injunction and/or temporary restraining order filed with the Regional Trial Court of Manila. National Union of Workers in Hotel. It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees. In fine. Jake Ng. Rule 1. Had they found the 12-hour period too short. Book VI. Requirements Irah Burog. and its responsibility if at all.
They gave their own "answer/explanation" to the charges. and (2) the second informs the employee of the employer's decision to dismiss him. Carag was not issued summons. filed a complaint against MAC for illegal dismissal brought about by its illegal closure of business. not accorded a hearing. informing them of the basis of their termination. and to have reported late almost every day for the period November to December 1991. A formal or trial-type hearing is not at all times and in all instances essential. A hearing was also set. they were given due process before they were dismissed. Kristel Macatangay. as reflected in the summary of tardiness and absences report. and eventually. which were then returned due to insufficiency of funds. 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. or as applied to administrative proceedings. Charms Haw. They were represented by counsel during the investigation. Alpe Macalalad. 1991. As such.Labor II be heard. 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. it is stressed that due process is simply an opportunity to Ÿ Carag vs. 1999 at 11:30 a. Ÿ On the matter of due process. Article 282(c) of the Labor Code allows an employer to dismiss employees for willful breach of trust or loss of confidence. Macaraeg was then the cashier who also took part in the illicit transactions. Anna Tetangco 22 . 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. NLRC (Dianne) Facts: National Federation of Labor Unions (NAFLU) and Mariveles Apparel Corporation Labor Union (MACLU). and breach of trust and confidence reposed on them by management. not ordered to submit a position paper. Time and again. Macaraeg (Dianne) Facts: Geronima Macaraeg and Maribeth de Vera were employees of Central Pangasinan Electric Cooperative. Central Pangasinan Elec. 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. In this case. and not necessarily that an actual hearing was conducted. Ÿ The essence of due process is simply an opportunity to be heard. Ÿ Ÿ There is no doubt that Central observed procedural due process in dismissing Macaraeg and De Vera. 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. not given an opportunity to present his evidence. they were both apprised of the particular acts or omissions constituting the charges against them. Jon Santos. 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." There is no reason to set aside these factual findings of the Court of Appeals as they are supported by evidence on record. (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. 1999 and signed by the General Manager. Irah Burog. 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. Held: Valiao’s dismissal from employment is valid and justified. Monina Lagman. on behalf of all of MAC's rank and file employees. They participated in the investigation conducted at petitioner’s board room on February 13. In fine.” Held: There exists a valid reason to dismiss both employees. For an employee’s dismissal to be valid. on the other hand. not accorded a conciliatory conference. Dianne Miano. Thus. Edlyn Santiago. CA (Dianne) Facts: Rene Valiao was an employee of West Negros College. an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. and not notified that the case was submitted for resolution. He was re-assigned from one position to another which was due to his tardiness and absences. 1999. is complied with as long as there was an opportunity to be heard. Ÿ Valiao vs. he received a suspension order without pay. In separate memoranda dated February 4.m. Proof beyond reasonable doubt of their misconduct is not required. It was error for the NLRC and the Court of Appeals to uphold Arbiter Ortiguerra's decision as against Carag. What is frowned upon is the absolute lack of notice and hearing. Monette Mesa. notices were sent to them on March 19. the results of which eventually led to their termination for “serious misconduct. Finally. we hold that Arbiter Ortiguerra's Decision is void as against Carag for utter absence of due process. Coop vs. The requirement of a hearing. Heidi Soria. Jake Ng. De Vera admitted that she encashed several checks issued by her sister from the money collected from Central’s customers. Ysan Castillo. 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. 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.
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
which made a dishonest mark in his timecard by marking present on a day he is absent. an inquiry why he did not give the explanation required in the January 4. and (4) the dismissal is for just or authorized cause but due process was not observed. Ÿ What is most important is that before termination. When they formed a union they were barred and were replaced with non-union members. Ÿ The law requires the employer to afford his employee ample opportunity to be heard. Ysan Castillo. They should have again sent a notice of dismissal to private respondent stating the particular acts or omission constituting the grounds for dismissal. (3) the dismissal is without just or authorized cause and there was no due process. he impliedly acknowledged his insubordination as shown in his petition. Jake Ng. respondent’s right to due process was not violated. Private respondent availed of this chance by submitting a written explanation. the company gave him the opportunity to be heard in his defense. a hearing or an opportunity to be heard and after hearing or opportunity to be heard.Labor II December 13. Clearly. Ÿ Ÿ The essence of due process is simply an opportunity to be heard. He was later dismissed by petitioner due to dishonesty. (2) the dismissal is without just or authorized cause but due process was observed. if after the said thirty-day period private respondent still did not give his explanation about the incident. Ÿ La Carlota Planters Assn Inc. Thus. a notice of the decision to dismiss. Irah Burog. National Semi-Conductor Distribution vs. and due process was observed. but chooses not to give his side of the Ÿ Lavador vs. NLRC (Jon) Facts: Buan and Torno are employees of Shoppes Manila. Alpe Macalalad. Monina Lagman. pursuant to Section 2. Kristel Macatangay. but an accident happened later in his career which caused his dismissal. and adding therein. and thereafter. pursuant to Section 5 above. Jon Santos. Edlyn Santiago. this does not give petitioners an outright license to terminate private respondent. vs. Charms Haw. an opportunity to explain one's side. but when she was ate her new position she was charged with misappropriation was subsequently dismissed. Caurdenetan Piece Workers Union vs. she was later promoted. Monette Mesa. Hearing Ÿ Magos vs. above. Even though petitioner in this case never admitted the accusations of dishonesty against him. should also be sent to private respondent. for an authorized cause under Article 283. NLRC(Jon) Facts: Compacion was hired as driver for La Carlota. Magos was later terminated. NLRC (Jon) Facts: Philip Santos is an employee of petitioner. 1995 was issued to respondent informing him of the management’s decision to terminate his services. 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. 1993 letter. an employee must be given the twin requirements of due process-proper notice and hearing. perhaps. petitioner furnished private respondent notice as to the particular acts which constituted the ground for his dismissal. Anna Tetangco 26 . Ÿ Procedurally. The phrase "ample opportunity" mentioned in the above-cited provision is meant every kind of assistance that management must accord to the employee to enable him to prepare adequately for his defense. NLRC (Jon) Facts: Magos is a manager of PEPSI assigned in Surigao. Ÿ Ÿ Private respondent had been duly informed of the pendency of the illegal dismissal case. 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. pursuant to Section 6 above. Dianne Miano. Laguesma (Jon) Facts: CPWU is union with 92 members all of which are “cargadors” and paid on piece rate basis. “J” Marketing Corp(Jon) Facts: Lavador is a daily paid employee of J Marketing. (1) if the dismissal is based on a just cause under Article 282. and private respondent should again be allowed to answer and be heard. Position Paper Ÿ Shoppes Manila Inc. Magos countered it was necessary as sales were down. 11 In the instant case. Andanar a supplier in Surigao complained that mas Magos was supplying PEPSI products in the region despite the agreement. another notice about the decision of dismissal. By requiring him to submit a written explanation within 48 hours from receipt of the notice. Due process is not violated where a person is given the opportunity to be heard. or for health reasons under Article 284. 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. Heidi Soria. vs. but it chose not to participate therein without any known justifiable cause. or as applied to administrative proceedings.
Monina Lagman. 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. vs. The last notices informed Suico. Suico.F. if he so desires. These two notices would have sufficed had it not been for the existence of Systems Practice No. 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.Procedural Ÿ Suico vs. 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. did not affect the validity or effectivity of the dismissal as the Ÿ CF Sharp Crew Management vs. Ÿ In order to effect a valid dismissal.and (b) the employee be afforded an opportunity to be heard and to defend himself. the procedural deficiency in the dismissal of Suico. Held: Respondents failed to observe the necessary procedural safeguards. The notices stipulated that failure to give an explanation would constitute waiver to be heard on the matter. where the rules of evidence apply with greater rigidity. Charms Haw. On 2 March 1996. et al. In the course of his employment he misappropriated an amount sent by a seaman for his family. Ÿ It should be emphasized. Reinier Pacific International Shipping Inc (Ysan) Facts: Sadagnot alleged that while on board MV Baotrans. NLRC (Ysan) Facts: Fernando. Heidi Soria. Jake Ng. FAILURE OF DUE PROCESS Sadagnot vs. Kristel Macatangay. It is not necessary for the affiants to appear and testify and be cross-examined by the counsel for the adverse party. disappears when adduced in connection with labor cases. PLDT complied with the two-notice requirement of due process. In termination cases. whatever merit C. There is nothing in the records showing that respondents complied with the two-notice requirement. et al. 94-016. PLDT is bound to comply with the Systems Practice. 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. Due to the complaint of the seaman’s family he was given preventive suspension and was later dismissed. required them to explain their side and expressly warned them of the possibility of their dismissal should their explanation be found wanting. Espanola (Jon) Facts: C.F sharp became the manning agency of LCL in the Philippines replacing Rizal Shipping. if he so desires. Sadagnot alleged that when the order was issued.Labor II They were charged of stealing items of “KAMISETA” and subsequently suspended and dismissed. 94-016. Ysan Castillo. sustained injuries when strikers blocked her way to the premises of PLDT. He refused the order on the ground that it was not related to his duties as Third Officer. he was on watch standing duty and was doing nautical publications as required by standard maritime practice. Ÿ Trial-type hearings are not required in labor cases and these may be decided on verified position papers. the vessel's Master ordered him to perform Ÿ Irah Burog. Alpe Macalalad. Cross Examination Ÿ CF Sharp Crew Management Inc. however. 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. Sharp’s argument might have in the context of ordinary civil actions. Held: Apparently. Rizal on the otherhand filed a case for illegal recruitment against LCL and CF Sharp. the Master made several negative reports against him. Under Systems Practice No. the employer must notify him in writing of the decision to dismiss him. Effect of Failure. This option is part of their right to due process. respondents repatriated him to the Philippines. hatch stripping. stating clearly the reason therefore. Suico et al. Monette Mesa. Notices from PLDT management were sent asking for an explanation of the said incident. Edlyn Santiago. Jon Santos. a PLDT managerial employee. Anna Tetangco 27 . consistent with our ruling in Agabon. and (b) the subsequent notice which informs the employee of the employer's decision to dismiss him.Substantive. Suico et al. with supporting documents and their affidavits. Dianne Miano. set out in detail the nature and circumstances of the violations imputed to them. 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. et al. He alleged that because of his refusal to obey the order. were implicated in said incident. Hence. 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. that. (b) if the employer decides to terminate the services of the employee. et al. of the decision to terminate their employment and cited the evidence upon which the decision was based. The first notices sent to Suico. a deck work. exercised their option under Systems Practice No.
An employee may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of employment. Other Procedural Matters Burden and Degree of Proof Burden Ÿ LBC Domestic Franchise Co. and. The employee should be appraised of the particular acts and omissions for which the dismissal is sought. Under the circumstances. Under the provisions of the said car plan. Kristel Macatangay. the failure to give the required notice does not invalidate the same. Platon. Ÿ In termination cases. Agabon vs. Dianne Miano. CA (Ysan) Facts: Roxas alleged that his sister had a quarrel with their personnel manager. Held: In the case at bar. He alleged that he tried to answer the allegation and wrote a letter to the President of the company. however. he was barred from entering the company’s premises. Ÿ In cases involving dismissals for cause but without observance of the twin requirements of notice and hearing. was summoned by the Chairman to explain the receipts prepared and signed by respondent for the liquidation of cash advances in connection with the purchase of the hams. He was then instructed to take a leave of absence for a month. he shall turn over all his accountabilities to an officer of the company. Such sanctions. Where the dismissals are illegal. Nagkakaisang Empleyado ng Wellcome (Ysan) Facts: GLAXO-WELLCOME adopted a new Car Allocation Policy. It did not narrate that it heard petitioner’s side. Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages. Consistent with San Miguel Corporation v. but merely holds the employer liable for damages for violating said notice of requirement. namely. but did not receive a reply. Ÿ The present rule is set forth in the Agabon v. vs. Roxas received another letter from the personnel department informing him of his preventive suspension for certain offenses. nor did it show that petitioner was given notice of his dismissal. NLRC the new car plan were those of union officers Cerezo and de Guzman. it was not proven by private respondent that it gave petitioner notice informing him of the cause of his impending dismissal. 2. which in fact they did. et al. Alpe Macalalad.. Glaxxo-Wellcome Phils. Both refused to surrender their vehicles and were thus sent notices of termination. notice to the employee should merely embody the particular acts or omissions constituting the grounds for which the dismissal is sought. Roxas merely said he tried to report to the office.Labor II substantive bases thereof were never put in issue. Florido reluctantly complied with the order. therefore. he received a letter from their personnel manager asking him to shed light about the SSS contribution that he allegedly did not remit. Edlyn Santiago. a prioritization schedule in the assignment of company vehicles is to be fixed based on the sales performance of the employees. vs. He wrote a letter to the President of the company but he did not receive any reply. Held: The Court agrees that the penalty of dismissal imposed upon respondent is disproportionate to the alleged infraction committed by the latter. he was served with a memorandum from LBC's Board Chairman. Monina Lagman. Glaxo took into consideration the explanations they had offered. upon the other hand. Florida (Ysan) Facts: While Florido was in the middle of a Team Leaders/Branch Managers' meeting. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. the better rule is to hold that the dismissal was for just cause but to impose sanctions on the employer. Ÿ Alladin Transit Corp. vs. Failure to do so would necessarily mean that the dismissal was not justified. and in the meantime. He was being directed to go on vacation leave and consume all his remaining leave credits. they were nonetheless given adequate opportunity to answer the charge. NLRC. Ubaldo. there was no necessity for an actual hearing. 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. must be stiffer than that imposed in Wenphil. that where the dismissal is based on a just cause. was illegal. Monette Mesa. As a result thereof.. While he was on leave. Their justification of their refusal to obey the lawful orders of their employer did not militate against their obvious disobedience. inclusive of allowances. Incidentally. Charms Haw. Their written explanations admitted their refusal to obey petitioner’s directive to return the vehicles. Jon Santos. several company cars had to be re-assessed and reassigned in favor of other employees more qualified under the priority list. but petitioner did not allow him. Ysan Castillo. Ÿ Verily. Held: Without a doubt. the burden of proof rests upon the employer to show that the dismissal is for a valid and just cause. de Guzman and Cerezo in the present case deliberately disregarded or disobeyed a company policy. Jake Ng. Anna Tetangco 28 . Inc. included among the vehicles that had to be re-allocated in accordance with the priority schedule of Ÿ Irah Burog. In arriving at the decision to dismiss them. Pursuant to the same. Heidi Soria. as well as the receipts for the Fundador Brandy giveaways.
et al. Charms Haw. Antonio filed a motion to dismiss on the ground of prescription considering that actions based on oral contracts prescribe in six years. it must be unconditional and with the intent to operate as such. Edlyn Santiago. scooping fine ore from the stockpile and loading it on his private cargo truck. 2002. Morales filed a motion to dismiss his complaint without prejudice. should be taken against him. 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. which was granted by the RTC in Aug. Race (Ysan) Facts: While traversing Tarlac. Candido Capulso filed a complaint for constructive illegal dismissal and illegal detention of P50 per day against Azcor. still limping heavily. tried to convince the respondent to accept an amount of P50. Here. saw Salvador operating the company’s payloader. a managerial employee. 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. Morales filed anew a complaint for the collection of sum of money. Capulso had to go on sick leave due to bronchial asthma which he contracted as a ceramics worker. (Ysan) Facts: PMSC’s evidence disclose that Sawa. Frustrated at the snail's pace of his case. In the case at bar. As a consequence thereof. Kristel Macatangay. NLRC (Irah) Facts: Four months after his dismissal. The complaint was thus filed well within the prescriptive period. Monette Mesa. in cases of this nature. Race. Thus. PMSC’s Assistant Resident Manager for Administration. Consequently. medication and hospital expenses of the Race in the hospitals. pre-drafted with blank spaces for dates of effectivity. respondent has proved by substantial evidence the charge of pilferage against petitioner. the bus he was driving was bumped by a Dagupan-bound bus. Race suffered a fractured left leg and was rushed to the hospital. Macaraeg consolation for his dismissal but the latter rejected it.000. the cause of action accrues from the time the employment of the worker was unjustly terminated. Gresones. Thus. On Sept. Azcor. and were written in English. Held: In the case at bar. as his act of pilferage reflects a regrettable lack of loyalty which he should have strengthened. Ÿ Azcor Manufacturing vs. Phil. instead of betrayed. 282 (c) allows an employer to dismiss employees for willful breach of trust or loss of confidence. 2001. informed by the petitioner that he was considered resigned from his job. went to Victory's office to report for work. Ÿ The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker. Anna Tetangco 29 . the dismissal sought was not for the purpose of voluntarily abandoning Morales's Irah Burog.Labor II Degree Ÿ Art.00 as a Ÿ Atonio M. Dianne Miano. but was not allowed to resume work afterwards. Moreover. 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. Race was confined again for further treatment of his fractured left leg at another hospital. PMSC has every right to dismiss Salvador. Thereafter. a language Capulso was not conversant. Capulso's supposed resignation letters to Azcor and Filipinas Paso were identically worded. Ÿ We reiterate that proof beyond reasonable doubt of the employee’s misconduct or dishonesty is not required to justify loss of confidence. Monina Lagman. vs. Ysan Castillo. It is settled that in illegal dismissal cases. While the case filed in the Makati RTC was later dismissed without prejudice. Indeed. Prescription Period Ÿ Victory Liner Inc. was on his way back to his office in the plant. Mining Service Corp. His confinement therein lasted a month. for breach of trust and loss of confidence as a measure of self-preservation against acts patently inimical to its interests. 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. Moreover. Held: To constitute resignation. the respondent's filing of complaint for illegal dismissal on 1 September 1999 was well within the four-year prescriptive period. 1146 of the Civil Code. this time with QC RTC. During that same occasion. it was only at this time that the respondent's cause of action accrued. He was. Ÿ Salvador vs. Morales filed with Makati RTC a complaint for sum of money against Pablo Antonio. in fact. 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. It is sufficient that there is substantial basis for the loss of trust. 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. He and his driver. 1995. if to be considered at all. Held: Antonio's invocation of prescription is misplaced. said that Capulso resigned. Jon Santos. the petitioner. et al. Proof beyond reasonable doubt of their misconduct is not required. however. Central Pangasinan vs. Jake Ng. One month after his release from the said hospital. Alpe Macalalad. Morales (Irah) Facts: On Dec. Victory shouldered the doctor's professional fee and the operation. the fact that Salvador has been employed with the respondent for a long time. Heidi Soria.
and the liability did not abate as Irah Burog. Chang. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges. NLRC (Irah) Facts: Vianney Abella. Held: For misconduct or improper behavior to be a just cause or dismissal. The wrong had been committed and the harm done. filed a complaint for illegal dismissal against Marival. in a belated gesture of good will. This militates against the propriety of granting Abella backwages. Alpe Macalalad. the offer of reinstatement could not correct the earlier illegal dismissal of the petitioner. sincere or not.Labor II claim. inaction. As regards backwages. Jon Santos. His case remained pending before the CA for six long years. contending that it was Ranara who actually abandoned work when he stopped reporting. On the contrary. 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. Edlyn Santiago. a result of Chang's repentance. The rationale behind the prescription of actions is to prevent fraudulent and stale claims from springing up at great distances of time. Heidi Soria. Ÿ Under Article 279 of the Labor Code. SANCTIONS AND REMEDIES 14. But it does not simply mean a mere lapse of time. to invite Ranara back to work in his store. G. Oro. Notably. Without cause and without any investigation. it was only after the complaint had been filed that it occurred to Chang. Monina Lagman. In this case. thinking that the secretary had only spoken in jest. 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.07 GENERAL RULE Nature and Remedies. Private respondents incurred liability under the Labor Code from the moment Ranara was illegally dismissed. When he did so just the same. Understandably. under the circumstances they were done. and (c) must show that the employee has become unfit to continue working for the employer. denied the charges. Moreover. and to his other benefits or their monetary equivalent. Ÿ Prescription of an action refers to the time within which an action must be brought after the right of action has accrued. it must be stressed that not every case of illegal dismissal will automatically entail its grant. Her remarks were neither insulting nor offensive. NLRC (Irah) Facts: Carlos Ranara. Her acts did not constitute serious misconduct as to justify her dismissal. the court may not only mitigate. Jake Ng. Abella was dismissed allegedly due to disrespectful insubordination and unprofessional conduct. he felt frustrated at the snail's pace at which his case was moving. as to sanction Abella’s unprofessional and disrespectful conduct. We doubt if his offer would have been made if Ranara had not complained against him. a chemist/quality controller at Marival Trading. Abella allegedly disrupted a staff meeting by banging folders and forcefully throwing her bag (allegedly because she was angry about the rearrangement of her table and things without her permission) and even refused to leave when asked to do so. The prescriptive statutes serve to protect those who are diligent and vigilant. Rather. the acts complained of. Dianne Miano. Anna Tetangco 30 . Abella did not make false and malicious statements against her superior. but also absolve the employer from liability of backwages where good faith is evident. Ranara was simply told that he should not report back for work the following day. not those who sleep on their rights. These remedies give life to the worker’s constitutional right to security of tenure. (a) it must be serious. he was even scolded for being "hard-headed" and not accepting his dismissal. offered to re-employ Ranara. Chang's sincerity is suspect. (b) must relate to the performance of the employee's duties. Offer to reinstate Ÿ Ranara vs. did not in any way pertain to Abella's duties as chemist/quality controller.Twin Remedies Ÿ Marival Trading Inc. and to the payment of his full backwages. Monette Mesa. Ÿ The fact that his employer later made an offer to reemploy him did not cure the vice of his earlier arbitrary dismissal. computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Morales's intention was to expedite the enforcement of his rights. or intent to abandon a lawful claim or cause of action. filed a complaint for illegal dismissal and sought reinstatement with full back wages. While generally an order of reinstatement carries with it an award of backwages. thus allowing the statute of limitations to bar any subsequent suit. even moral and exemplary damages. he found that somebody else had been employed in his place. no action whatsoever was taken. the employer believed that Abella’s dismissal was based on a valid ground. formal or otherwise. there must be a categorical showing that due to plaintiff's negligence. In this case. the employer. alleging that she was dismissed without just cause and due process. lack of interest. Charms Haw. Subsequently. When he protested his replacement. Ysan Castillo. who had been working as a driver with Oro Union Construction Supply. At any rate. Kristel Macatangay. vs. et al. Held: Petitioner was illegally dismissed without even the politeness of a proper notice. inclusive of allowances.
NEECO's general manager claimed that Cairlan was dismissed due to abandonment of work. NLRC (Irah) Facts: For failure of NEECO's BOD to act on his termination. Ÿ Where the dismissal is without just or authorized cause and there was no due process. Tropical claimed that it terminated the services of Belga due to: (1) concealment of her pregnancy which is tantamount to dishonesty. It is only when reinstatement is no longer feasible that payment of separation pay is awarded to an illegally dismissed employee. Charms Haw. Trucking but was refused admission by Alaan who was armed with an armalite rifle. Held: Yes. Ÿ Nueva Ecija Electric Corp. Great Southern Maritime Services Corp vs. filed a complaint for illegal dismissal against Lakpue. Jake Ng. Cabatulan was informed that respondent Julio’s brother. Belga's absence for 16 days was justified considering that she had just Irah Burog.e. Edlyn Santiago. Heidi Soria. Great Southern. Held: Moldez was illegally dismissed. Monina Lagman. Dianne Miano. Eduardo Cairlan. An altercation ensued between Cabatulan and Alaan. Ysan Castillo. He was assured to be rehired. Julio offered him 5k should he agree to sign the resignation letter. 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. Pheschem claimed that Moldez was dismissed due to grave and habitual neglect of duties (i. failure to inspect a bulldozer prior to its use) which resulted in damage to Pheschem's property and delay in its production. wanted to see him. et al. Cabatulan passed by the premises of J. Employees who were illegally dismissed prior Ÿ Lakpue Drug Inc. filed a complaint for illegal dismissal against NEECO. Acuna (Irah) Facts: Respondents Acuña. Anna Tetangco 31 . Jon Santos. inclusive of allowances. which can hardly be considered a forbidden act or a dereliction of duty. they were forced to resign or were summarily dismissed without just cause. et al. Held: Respondents Acuña. voluntarily resigned from employment. vs. and (2) insubordination for refusing to comply with directives to report for work and to explain her absence. Issue: W/N Cabatulan is entitled to backwages and separation pay. Buat (Anna) Facts: The respondent spouses Julio and Cecilia Cosmiano were engaged in the trucking business. but eight months had already passed with no word from Pheschem. Before proceeding to the meeting place. They did not voluntarily quit their jobs. were illegally dismissed. because of a disagreement in the purchase of some spare parts. Held: Belga was illegally dismissed. vs. Ÿ The legal consequences of an illegal dismissal are reinstatement of the employee without loss of seniority rights and other privileges. They employed Cabatulan as operations manager and purchasing officer. they were transferred back home since their services were no longer needed. Before the expiration of their contracts. His suspension was subsequently extended. delivered a child. Cabatulan was advised not to report for work in the meantime and await the arrival of the respondent spouses. Monette Mesa. alleged that they were deployed as croupiers (card dealers) for Ferry Casinos under a six-month contract. without being informed of its reason. et al.Labor II Ÿ Pheschem Industrial Corp vs. Belga's failure to formally inform Tropical of her pregnancy cannot be considered as grave conduct directly connected to her work. et al. 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. Kristel Macatangay. et al. et al. the law intended reinstatement to be the general rule. filed with the POEA a complaint for illegal dismissal against Great Southern Maritime. Moldez alleged that he was at first suspended from work without pay for 7 days. Cabatulan was given a pre-drafted voluntary resignation letter which he refused to sign. and other privileges and to his full backwages. Lourdes Belga. which is a subsidiary of Lakpue. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. a driver of NEECO. inclusive of allowances. Held: Cairlan was illegally dismissed. NLRC (Irah) Facts: Pablito Moldez. Article 279 of the Labor Code mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages. Belga (Irah) Facts: Ma. et al. and payment of his full backwages. With regard to the charge of disobeying a memorandum. Alpe Macalalad. Clearly. Cabatulan refused to sign the same. and other benefits or their monetary equivalent. Rather. Acuña. inclusive of allowances.. Ÿ Ÿ Cabatulan vs. Cabatulan was summoned to the Cosmiano residence and was told that his services were no longer needed in the business. denied the charges and averred that Acuña. Ÿ An employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights.C. NEECO alleged that Cairlan also worked for the Provincial Government of Nueva Ecija. filed a complaint for illegal suspension and dismissal against Pheschem. The spouses and their children went on a world tour and entrusted the business operations to Cabatulan. an operator of Pheschem's payloader and bulldozer at its quarrying site in Leyte. an assistant cashier of Tropical Biological Phils. Cabatulan agreed and immediately went home. Julio’s security aide. which explains his repeated failure to report to work.
illegal dismissal. overtime pay. In fact. therefore. It appeared in the course of investigation that Imelda Salazar violated company regulations by involving herself in transactions conflicting with the company's interests. or separation pay if reinstatement is no longer viable and backwages. service incentive leave pay. et al. shall be immediately executory. according to petitioners. respondents had already found new employments and to award them further backwages would be tantamount to unjust enrichment. 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. Edlyn Santiago. Backwages and separation pay are. separation pay is granted where reinstatement is no longer feasible because of strained relations between the employee and the employer. 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. were formerly employed by Triad Security as security guards. 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. Petitioners insist that their monetary obligation. An illegally dismissed employee is entitled to two reliefs. In effect. holiday pay. Though there are specific circumstances where reinstatement is not a practicable remedy. The respondents failed to comply with the order of reinstatement. The award of one does not preclude that of the other as this court had. Issue: W/N petitioner is still liable for backwages Held: Yes. in proper cases. while those illegally dismissed after. Monina Lagman. NLRC (Anna) Facts: In May 1982. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights. illegal deductions. if viable. Kristel Macatangay. private respondent Salazar was employed by Globe-Mackay as general systems analyst. Ÿ Under the existing law. respondents' services were terminated without the benefit of notice and hearing. Heidi Soria. as contained in the decision of the labor arbiter. However. separation pay. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed Irah Burog. petitioners maintain that there is no more basis to hold them liable for the accrued backwages stated in the 30 September 2002 computation. They posit the argument that with respondents' receipt of their separation pay. Anna Tetangco 32 . hence. Alpe Macalalad. Monette Mesa. moral and exemplary damages as well as night shift differential. Act No. Jon Santos. RATIONALE FOR THE REMEDIES Ÿ Globe-Mackay Cable v. Ÿ Triad Security vs. therefore. 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.Labor II to the effectivity of Rep. These are separate and distinct from each other. It bears emphasizing that the law mandates the prompt reinstatement of the dismissed or separated employee. 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. and claims for 13th month pay. "the decision of the Labor Arbiter reinstating a dismissed or separated employee. Ysan Castillo. insofar as the reinstatement aspect is concerned. Upon learning of the complaint. had already been fully satisfied. Thus. Respondents filed a complaint for underpayment/nonpayment of salaries. Ortega (Anna) Facts: Respondents Ortega. 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. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. Dianne Miano. namely: backwages and reinstatement. an illegally dismissed employee is entitled to either reinstatement. Charms Haw. and attorney's fees. A more equitable settlement. distinct reliefs granted to one who was illegally dismissed from employment. as when the relations between the employer and employee have been so severely strained that it is no longer fitting to order reinstatement or when the employee decides not to be reinstated. Under Article 223 of the Labor Code. even pending appeal. allowances and other benefits. In this case. ordered the payment of both. premium pay for holiday and rest day. underpayment or nonpayment of allowance. Jake Ng. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close. 6715 on March 21." 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. the payment of separation pay. complainants' backwages accrued. they had opted not to seek reinstatement to their former jobs and elected instead to sever their employment with petitioner Triad Security. 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. 1989 were granted backwages up to three (3) years without deduction or qualification. 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.
Mercury Drug appealed with the NLRC which held that there was illegal dismissal. Although the position formerly held by the herein complainant is now held by another. tinsmith and carpenters. etc. Instead of submitting an explanation. The law mandates the reinstatement of an illegally dismissed employee to his former position. to full backwages. or that Reinstatement is the restoration to a state or condition from which one had been removed or separated. Kristel Macatangay. would perforce make her "whole." Ÿ Defined Ÿ Union of Supervisors v. Reinstatement pre-supposes that the previous position from which one had been removed still exists. Secretary of Labor (Anna) Facts: SC rendered a decision ordering for Luna’s reinstatement and backwages. but is now held by the incumbent manager who replaced Luna. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. lathemen. reinstatement is not possible . Section 4. 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. 13th month pay and damages. to restore the dismissed employee to her status before she lost her job. Ysan Castillo.e. but as well." And. Rule 1." Held: By itself. not only to be entitled to reinstatement. 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. Also. As a necessary consequence of change of corporate personality (i. Dianne Miano. drill press operators. Monette Mesa. Anna Tetangco 33 . condition. NLRC held that Mercury Drug should pay him separation pay in lieu of reinstatement because of strained relations. could be returned.Labor II to inform her employer.08 REINSTATEMENT Employee Right Ÿ Quijano v. Irah Burog. cause for the dismissal of private respondent. but also gives substance and meaning to the protection accorded by the Constitution to labor. reinstatement was erroneously ordered for the petitioner's shop was already closed. . Jon Santos. position. unless such position no longer exists. . in the case at bar. mostly welders. in the former. the Labor Code not only recognizes the security of tenure granted by law to regular employees. Issue: W/N the new management is bound to reinstate the employees. to give her back the income lost during the period of unemployment. after petitioner notified her in writing that she was considered dismissed "in view of (her) inability to refute and disprove these findings. much less a legal. board membership. Moldez) 14. preventive suspension does not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. corporate name. Heidi Soria. Held: In its generally accepted sense. The Labor Arbiter held that he was illegally dismissed and ordered for his reinstatement. Salazar was placed under preventive suspension for 1 month. which she subsequently amended to include illegal dismissal. However. His services were terminated allegedly for disrespecting his superiors several times. Mercury Drug Corp (Anna). etc. Jake Ng.) of the old Republic Bank into the present Republic Planters Bank. Ÿ The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is. Charms Haw. (Pheschem Industrial vs. for the dictionary meaning of the word "reinstate" is "to restore to a state. looking to the past. Alpe Macalalad. Both remedies. from which one had been removed" and in the latter. The Court held that "there being no more positions in the machine shop to which the dismissed employee. Monina Lagman. the bank suffered from the danger of financial collapse. a restructuring and reorganization of the management team of the Republic Planters Bank was effected. there was no closure of shop notwithstanding that the respondent Republic Bank was almost at the brink of financial ruin. There being no evidence to show an authorized. vacation and sick leave benefits. the position previously held by the complainant Luna was not abolished. Respondent Republic Bank sought reconsideration due to the fact that it was the old management who committed the unfair labor practice. In providing foremost for the reinstatement of an illegally dismissed employee. to offset the impending financial collapse. However." there is an unfilled position more or less of a similar nature as the one previously occupied by the employee. Edlyn Santiago." Here. to wit: "An employee who is separated from work without just cause should be reinstated to his former position. It is the return to the position from which he was removed and assuming again the functions of the office already held. reinstatement is a restoration to a state from which one has been removed or separated. Book VI of the implementing Rules and Regulations of the Labor Code states. private respondent filed a complaint against petitioner for illegal suspension. at the time of his reinstatement. Facts:Petitioner Quijano was a warehouseman of respondent Mercury Drug. her eventual separation from employment was not for cause. 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. the machineries were dismantled and transferred to a bodega and some of the machineries were sold. she had every right. controlling stockholders. In the case.
injuring him and a co-employee who was pacifying petitioner. especially to a lowly or menial laborer. and observe honesty and good faith toward one's fellowmen. not to render his act (dismissal or resignation. Dianne Miano.Labor II Issue: W/N petitioner should be reinstated. The misery and pain attendant on the loss of jobs then could be avoided if there be Ÿ Rosario v. 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. 2003 Decision reversing the Decision of the Labor Arbiter. petitioner was deprived of the opportunity to respond thereto. respondent filed a Manifestation and Motion praying that petitioner be immediately ordered to pay his salary from June 2002 up to the present. it would be more prudent to order payment of separation pay instead of reinstatement. There is. the date he actually reported back to work. as the case may be) void. He charged petitioner for illegal dismissal. Issue: W/N respondent should be reinstated. however." his illegally dismissed employee should just be given separation pay. However. It is not only because of the law's concern for the workingman. 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. his family to consider. the case law developed that where reinstatement is not feasible. In giving an illegally dismissed employee the right to reinstatement. Unemployment brings untold hardships and sorrows on those dependent on the wage-earner. petitioner fought with the latter. but failed to furnish him written notice apprising him of the charges against him. in protecting the rights of the laborer. And when respondent engaged the services of another driver. Ysan Castillo. respondents are to admit back to work complainant under the same terms and conditions prevailing prior to his dismissal or at its option. While the case was on appeal. Ÿ Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a matter of right. The Labor Arbiter held petitioner guilty of illegal dismissal and ordered for respondent’s reinstatement. Held: YES. The same can be remedied by payment of employee's full backwages from Irah Burog. At any rate. Edlyn Santiago. Issue: W/N there was illegal dismissal. in addition. As the reinstatement aspect is immediately executory even pending appeal by the employer. 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. Respondent furnished petitioner a written notice of his dismissal. Consequently. [W]here a penalty less punitive would suffice. Without ruling on the motion. . Some unscrupulous employers. on March 26. Kristel Macatangay. At one time. the law recognizes the fact that continued employment gives to a worker. According to respondent. Alpe Macalalad. we give primacy to the employee's right to reinstatement rather than the employer's claim that due to "strained relationship. Such is the notice requirement in Arts. as where reinstatement would only exacerbate the tension and strained relations between the parties. In the case at bar. Others are simply an application of the Justinian precept. 282-283. . Monette Mesa. Bardaje(Anna) Facts: Bardaje was petitioner’s warehouseman. to act with justice. Jake Ng. v. 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. 2001. Heidi Soria. petitioner opted to reinstate respondent in the payroll effective August 23. whatever missteps may be committed by labor ought not to be visited with a consequence so severe. the NLRC rendered its July 10. . embodied in the Civil Code. The CA reversed the NLRC decision. Some are simply part of a procedure to be followed before a right granted to a party can be exercised. Monina Lagman. or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences. he was instructed to deliver bags of cement to Felix Hardware but delivered the same to one Eduardo Interior. the omission does not render petitioner's dismissal invalid but merely ineffectual. respondent fell short of the two-notice requirement in dismissing an employee. Petitioner's actuations clearly constituted willful disobedience and serious misconduct justifying his dismissal under Art. particularly where the illegally dismissed employee held a managerial or key position in the company. petitioner refused to pay respondent's salary. starting June 2002. the time of dismissal until the court ruling that he was dismissed for a valid cause. authorizes neither oppression nor self-destruction of the employer." But it is equally true that "the law. an assurance of continuity in his source of income which a grant of separation pay could not provide. Jon Santos. The Constitution bids the State to "afford full protection to labor. and ordering the dismissal of the complaint. Consequently. Anna Tetangco 34 . Over the years. petitioner refused to drive for his employer's son. merely reinstated in the payroll. however. Reinstatement is the remedy that most effectively restores the right of an employee to his employment before he was unjustly deprived of his job. Held: Time and again. expedient or practical. 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. Ÿ Supreme Steel Corp. 2003 (while petitioners' appeal in the NLRC was pending). Held: YES. However. give everyone his due. Charms Haw. 282 (a) of the Labor Code. Not all notice requirements are requirements of due process.
6715. 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. Alpe Macalalad. THereafter. It was a mere procedural lapse which should not affect his substantive right to reinstatement. Kristel Macatangay. The reinstatement aspect of the Labor Arbiter's decision. NLRC. Jon Santos. PAL (Alpe) Facts: Roquero was caught red handed possessing shabu. albeit under appeal. Branch No. Ysan Castillo. Under Article 223 of the Labor Code. Dianne Miano. is a procedural lapse which cannot put to naught a right which he is entitled under a substantive law. the burden of proving the just cause of dismissing an employee rests on the employer. Technicalities have no room in labor cases. vs. Held: The order to reinstate is incompatible with a finding that the dismissal is for a valid cause. Edlyn Santiago. to timely act on the matter is a serious oversight for which it should be admonished. is immediately enforceable. in violation of the PAL Code of Discipline.Labor II acceptance of the view that under all circumstances of this case. Effect of failure to ask relief Ÿ General Baptist v. She pledged it to another person who later sold the plan to another. v. the law itself has laid down a Irah Burog. as amended by Section 12 of Republic Act No. XI. she did not transfer the plan in Josefina's name. an award or order of reinstatement is self-executory. the NLRC as an adjudicating body has the corresponding obligation to act promptly on all incidents brought before it. causing untold hardships to the dismissed employee. since private respondent considered them separated from the service. While it is incumbent upon the party to take an active role in his case and not adopt a wait-and-see attitude. it should have paid his salary during the period of appeal before the NLRC. even if he was instigated to take drugs. 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. Held: In termination cases. The intent is to balance the scale of justice. 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. SC held that the dismissal was for a valid cause. the law would readily be circumvented. However. or refusal. Amending the Labor Code. Because of need. Charms Haw. Jake Ng. Where a decision may be made to rest [on] informed judgment rather than rigid rules. Issue: W/N petitioner is entitled for reinstatement. The law in protecting the rights of the employees authorizes neither oppression nor selfdestruction of the employer. it is but a recognition of the inherent economic inequality between labor and management. all the equities of the case must be accorded their due weight. He was dismissed from employment. Thus. He was found to be guilty of serious misconduct and has no right to be reinstated as ground equipment mechanic of PAL. Nor is this to condone what had been done by them For all this while. otherwise. Anna Tetangco 35 . and Section 2 of the NLRC Interim Rules on Appeals under RA No. She availed of an educational plan from her employer. Heidi Soria. she sold the plan to Josefina. Monina Lagman. NLRC (Alpe) Facts: Basa was terminated as President of the college because of non-compliance with his conditions of employment. It is a settled principle that technicalities have no place in labor cases as rules of procedure are designed primarily to give substance and meaning to the objectives of the Labor Code to accord protection to labor. It should be made clear that when the law tilts the scale of justice in favor of labor. Ÿ Article 223 (3rd paragraph) of the Labor Code. Petitioners question the decision of reinstatement because this was not raised in the pleadings. petitioners should not be deprived of their means of livelihood. Davao City. the Commission's failure. CAP Philippines(Anna) Facts: Petitioner was an employee of CAP. they had not been paid.) Inc.. 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. The rationale of the law has been explained in Aris (Phil. where the Rules of Court are applicable only in order to effectuate the objectives of the Labor Code and not to defeat them. Moldez Ÿ Rules on Reinstatement Rationale Ÿ Roquero v. when petitioner SSPC opted for respondent's payroll reinstatement. "In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee. and his failure to do so would result in a finding that the dismissal is not justified. Pheschem Industrial Corp. In this case. After hearing petitioner's explanation. Josefina went to CAP to ask for help. to put the two parties on relatively equal positions. provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. Monette Mesa. 6715. 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. Ÿ Panuncillo v.
Inc. If the position is no longer available for any other valid and justifiable reason. was deemed more practical and appropriate to all the parties concerned. seventeen (17) years have elapsed since respondents were illegally dismissed. where more than 8 years have passed since the petitioners therein staged an illegal strike and were found to have been unlawfully terminated. The SC ruled that the dismissal was illegal. Monina Lagman. 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.. more so if he actually rendered services during the period.. the employee is not required to reimburse whatever salary he received for he is entitled to such. Kristel Macatangay. Jake Ng. They were terminated for an allegedly illegal strike. the award of separation pay of 1 month salary for each year of service. damages and causes of action arising out of the instant case. SEC. Alpe Macalalad. in lieu of reinstatement.. the order of reinstatement embodied therein was already the subject of an alias writ of execution even pending appeal. in lieu of reinstatement.. its intransigence made it liable nonetheless to the salaries of respondent pending appeal. Anna Tetangco 36 . NLRC. unless such position no longer exists at the time of his reinstatement. he was not promoted to the position of captain. The SC ruled that his complaint for illegal dismissal cannot hold because of a compromise he executed. There is logic in this reasoning of the NLRC. Then. of a decision reinstating a dismissed or separated employee since that saving act is designed to stop. Ÿ If reinstatement is no longer possible. v. however. given the lapse of considerable time from the occurrence of the Irah Burog. Jon Santos. 33 Accordingly. waiving “[a]ll other claims.. In Roquero v. v. Abella (Alpe) Facts: Abella was terminated due to a company-wide reorganization pursuant to its Manpower Reduction Program. Philippine Airlines.. In Association of Independent Unions in the Philippines v. The law itself can not exact compliance with what is impossible. an employee who is separated from his employment on a false or nonexistent cause is entitled to be reinstated to his former position because the separation is illegal.. Hence. Ÿ G & S Transport Corp.” Ÿ Reinstatement presupposes that the previous position from which one had been removed still exists." Ÿ PNOC-EDC v. Reinstatement to former position. Heidi Soria. The SC held that Airphils is liable. The above-quoted rule enunciates reinstatement as the standard relief. On the other hand. once more. Monette Mesa. Labor is an indispensable partner for the nation's progress and stability .. strike. the reinstatement of the illegally dismissed employee to his former position would neither be fair nor just. or that there is an unfilled position more or less of a similar nature as this previously occupied by the employee. Infante (Alpe) Facts: Respondents were drivers of G & S. Although petitioner did not comply with this writ of execution. although temporarily since the appeal may be decided in favor of the appellant. a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family. — (a) An employee who is separated from work without just cause shall be reinstated to his former position. Ad imposible tenetur. the law itself has determined a sufficiently overwhelming reason for its execution pending appeal .. Ÿ Airphils Corp. Zamora (Alpe) Facts: Zamora was employed with Airphils as a Flight Deck Crew. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. After completing his training. even if the order of reinstatement of the Labor Arbiter is reversed on appeal. However. which the Constitution also expressly affirms with equal intensity. The employer's remedy is to reinstate the employee to a substantially equivalent position without loss of seniority rights as provided for above. vivifies and enhances the provisions of the 1987 Constitution on labor and the working man . the State may authorize an immediate implementation. Dianne Miano. 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. an award of separation pay equivalent to 1 month pay for every year of service. 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. in this case. Ysan Castillo. Edlyn Santiago.Labor II compassionate policy which. In short.. 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. by and pursuant to the same power (police power). 4. is in order. the exclusive taxi concessionaire in NAIA. Charms Haw. with respect to decisions reinstating employees. 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. if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality. pending appeal.
Jon Santos. (the employer) under an atmosphere of antipathy and antagonism. upon their reaching the retirement age. (the former) in whom it has lost confidence." Ÿ Espejo v. There is moreover. However. who in turn is not seeking reinstatement. Ÿ In such situation. agreement or policy an employee may be retired upon reaching the age of sixty (60) years. and the . The relief and transfer order per se did not sever thte employment between the Agency and the complainants. Anna Tetangco 37 . Alpe Macalalad. He resigned but later withdrew his resignation. that the circumstances of this case render inappropriate Umlas' reinstatement to his former position. Ÿ Commercial Motors Corp. However. of Labor) situation where a peaceful relationship is not feasible. Edlyn Santiago. 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. as an item of relief. . We are aware that in any country where due process is strictly observed and where social justice is a compelling constitutional principle. Monette Mesa. 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. coupled w/ a clear absence of any intention of Irah Burog. . there is an unfilled position more or less of a similar nature as the one previously occupied. STRAINED RELATIONS Ÿ Pearl Buck Foundation 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. As the petitioner appears to have lost its trust in private respondent. the Board considered him terminated and paid his unused vacation leave and transportation expenses. Heidi Soria. The dismissal was declared to be illegal but reinstatement was not awarded. NLRC (Alpe) Facts: Querimit. All illegally dismissed employee who cannot be reinstated is granted separation pay and backwages. Construing this provision. (latter) does not have to endure the continued service of . the petitioner must follow the laws which protect workers and uphold their security of tenure. Kristel Macatangay. There is also no abandonment. Sentinel Security Agency issued a Relief and Transfer Order replacing the complainants and reassigning them to other clients. He was asking to be reinstated but this was denied. The parties to a case should not be forced into a Ÿ Sentinel Security Agency v. . NLRC (Alpe) Facts: Umlas was dismissed from Commercial Motors after being uncooperative and attempting to disrupt auditors investigating the loss of certain spare parts. 13. "so that . we agree with NLRC that petitioner is entitled only to backwages. A more equitable disposition is that which this Court has more than once made in other cases of the same nature: the award. . Luna can still be reinstated because. we held that an employee may retire. (Union of Supervisors vs. The SC affirmed the non-reinstatement. . of the Omnibus Rules Implementing the Labor Code provides that in the absence of a retirement plan. Jake Ng.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. Monina Lagman. Querimit should be reinstated with backwages. upon reaching sixty (60). Ÿ There is likewise no basis for the NLRC ruling that Mrs. or may be retired by his employer. (the employee) can be spared the agony of having to work anew with . a case worker. However considering that petitioner has already reached the statutory retirement age of sixty (60). but still binds the Agency to provide them. Ysan Castillo. . Ÿ It would seem. it would be an act of oppression to compel them to return to the status quo ante. however. Book VI. and instead were told that they would be replaced “because [they] are already old. was terminated after borrowing money from the mother of one of her wards. although his previous position is now held by another. Thus. NLRC (Alpe) Facts: Espejo worked as general manager for CISP. Sec. retirement pay or whatever else is provided under the CBA or employment contract. we cannot compel it to retain employees who commit violations of trust relationships. NLRC therefore did not err in denying the reinstatement of petitioner. in lieu of reinstatement. Dianne Miano. v. . Sec. But when they reported for work. 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. . they were not given new assignments. Charms Haw. of separation pay at the rate of one month's salary for every year of service.” Issue: Was there an illegal dismissal? Held: Yes. which requires a deliberate and unjust refusal of an employee to resume his work. the petitioner's contention that Mrs.
(Cabatulan v. The agency cannot reassign them to the Client. Thus. Ÿ As a necessary consequence for the illegal dismissal. The alleged “strained relations” or “irritant factors” which the Labor Arbiter capitalized on in ordering separation pay instead had been totally elimintaed when. Therefore. Petitioners did not occupy managerial or confidential positions which might be affected by any bad feeling resulting from the execution of the decision. NCF stopped paying accrued salaries after three installments. they refused to be reinstated. Such refusal is indicative of strained relations. Anna Tetangco 38 . Bose (Eds) Facts: Petitioners filed a complaint with the NLRC for illegal dismissal. on the other hand. teachers and personnel of the school. otherwise an employee who shall assert his right could be easily separated from the service.D. she was not paid her vacation pay. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. reinstatement. Charms Haw. the employees moved for execution. antagonism is likely to have already caused a severe strain in the relationship between them. backwages and damages against Naga College Foundation. reinstatement is no longer feasible. For filing an LOA and not reporting to work that summer. 176. He threatened to take drastic measures against her if she kept refusing to report for work the next summer. There is no basis for the ruling of the NLRC. Buat) Ÿ Sibal v. Alpe Macalalad. NLRC denied their motion for execution on the ground that they gave up first motion for execution by entering into the compromise agreement. which has recruited new security guards. that they are so obnoxious to the person or business of the employer. The eventual replacement of Fr. Jon Santos. and that she was not entitled to extra compensation for teaching. was ordered to work during the 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. the complainants are entitled to reinstatement and backwages. Pending appeal. Ÿ No strained relations should arise from a valid and legal act of asserting one’s right. They reported to the Agency for reassignment several times but were not given any. but the NLF opposed the same. hoping to obtain assistance. and was also assigned to teach health during SY 1981-1982. and that the continuation of such employment has become inconsistent with peace and Naga College Foundation Education Workers v. That complainants did not pray for reinstatement is not sufficient proof of abandonment. Howeer. a school nurse at the Notre Dame of Greater Manila. MCCH decided to defer Irah Burog. The Executive Labor Arbiter (ELA) ordered reinstatement of the employees. Monette Mesa. neither was she compensated for the extra teaching job. for otherwise. and that they abandoned the benefits of the compromise agreement by resorting to the NLRC. No strained relations should arise from a valid and legal act of asserting one’s right. Issue: Was there strained relations as to make reinstatement with backwages impossible? Held: No. Ÿ Bascon v. And it was NCF who caused a strain in the relation of the parties. 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. CA (Eds) Facts: The NAMA-MCCH labor union asked the Metro Cebu Community Hospital (MCCH) to renew their CBA. separation pay is awarded in lieu of reinstatement. refuse to accept other assignments. which they sought to enforce in the motion for execution was also their reinstatement. should be such. in fact.Labor II returning to his or her work. Issue: Did the petitioners give up their claims for reinstatement? Held: No. Dianne Miano. moved for the ouster of the school director Fr. Jake Ng. Ÿ Ÿ The principle of “strained relations” cannot be applied indiscriminately. Monina Lagman. Ysan Castillo. b merely paying his separation pay on the pretext that his relationship with his employer had already become strained. Garcia for serious charges under P. However. tranquility which is an ideal atmosphere in every workplace. The subject of the NLRC decision. That is human nature. after which the school served Sibal with a letter of termination effective immediately. The school director claimed that the summer was the best time to update the students’ clinical records. The latter do not pray for reinstatement. No supervening event rendering execution unjust can be considered. Garcia all the more confirmed the discriminatory and oppressive treatment which he gave Sibal. which was part of her regular working program as a school nurse. Otherwise. who in turn filed a complaint against the former for conducting an illegal strike. about a month after Sibal’s termination. Ÿ The Cosmianos charged Cabatulan with qualified theft and even (tried to) coerce him into dropping the labor case against them. The subject of the compromise agreement was the reinstatement ordered by the ELA. Heidi Soria. the complainants. Edlyn Santiago. then entered into an agreement with NCF for reinstatement. in order that it may justify the award of separation pay in lieu of reinstatement with backwages. backed by the Faculty Association. Notre Dame of Greater Manila (Edsa) Facts: Delia Sibal. though her contract does not require her to do so. Kristel Macatangay. Sibal filed a complaint for non-payment of compensation and vacation pay.
then a 12-day vacation leave. Alpe Macalalad. Ÿ Acesite Corp. It was also sufficiently proven that Gonzales reported for work after the final notice but was refused entry. She also alleged sexual harrassment on the part of her Senior Manager. A complaint for illegal dismissal was filed. she was terminated for the shouting incident and refusal to tranfer to the Plaza Cervantes Branch. 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. The doctrine of “strained relations” should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. have no prerogative in the operation of the business. he being in charge of the over-all security of the hotel. Laureano Gonzales. It has been almost a decade since the incident that led to Uy’s dismissal. otherwise. when reinstatement would no longer be beneficial to either pary in view of strained relations between them. thereby using up all leaves he was entitled to for the year. CA (Eds) Ÿ Irah Burog. BPI (Eds) Facts: For shouting at her Senior Manager. There must be proof of such illegal acts. Monina Lagman. Here. Branch to save on gas expenses.. Besides. He must therefore be paid separation pay of 1 month for every year of service instead. Ysan Castillo. Jon Santos. which was not approved. saying she would await the result of the grievance proceeding filed by her union. The medical certificate also proves that he was indisposed during the period in controversy. Anna Tetangco 39 . but he failed to do so. and that she could not transfer as there was no proper turnover of her accountabilities. NLRC (Eds) Facts: Due to a severe stomach disorder. reinstatement is no longer possible. Issue: Was there illegal dismissal? Held: Yes. and requested to be transferred to the Taft Ave. Sagum v. Jake Ng. Petitioners herein are nurse and nursing aide. Jr. v. 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. an unjustly dismissed employee can never be reinstated. The other involved parties have long been assigned in another area or are no longer connected with BPI. Mere allegation of strained relations to bar reinstatement is frowned upon.” This may be invoked against employees whose positions demand trust and confidence. Thus. Dianne Miano. Heidi Soria. former teller of BPI. then an order to desist from participating in the mass actions. Instead. an ordinary striking worker must have participated in the commission of illegal acts during the strike. the latter filed a notice of strike. Every labor dispute almost always result in “strained relations. was ordered to transfer to the Plaza Cervantes Branch to defuse the tense situation at the Escolta Branch. Otherwise. Uy refused. Charms Haw. took a 4-day sick leave. he filed for a 10-day emergency leave. Gonzales was Chief of Security. Petitioners are entitled to reinstatement with full backwages. Issue: Is Uy entitled to reinstatement with backwages? Held: Yes. Despite DOLE certifications that NAMA-MCCH was not a registered labor org. Petitioners denied receiving said orders. There now appears no basis for strained relations between the present management and Uy. which was denied. and were subsequently terminated from employment. whose position is one of trust and confidence. 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. Neither can be construed as illegal acts. Ÿ Mere payment of severance pay. reinstatement to an illegally dismissed employee’s former position may be excused on the ground of “strained relations. no strained relations should arise from a valid and legal act of asserting one’s right. MCCH issued a notice of investigation. Leo Gonzales. and thus. Before the expiration of the 12 day vacation leave. or whose differences with their employer are of such nature or degree as to preclude reinstatement. In order to be justly terminated. Here. Zenaida Uy. But he is not entitled to reinstatement. respectively. She asked to be considered on leave since then. cannot be applied indiscriminately. Union members and officers staged mass actions inside the MCCH premises. The principle of strained relations. petitioenrs’ actual participation in the illegal strike was limited to wearing armbands and putting up placards which do not contain offensive words or symbols. however. There is no proof that a telegram had indeed been sent to and received by Gonzales ordering him to report back to work. the Chief of Security of the Manila Pavillion Hotel (now the Holiday Inn Manila). Ÿ In illegal dismissal cases. Monette Mesa. Kristel Macatangay. He was told to report back for work. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. otherwise. Issue: Was Gonzales illegally dismissed? Held: Yes. Edlyn Santiago. which she could not do so since she had been barred from entering the bank premises.Labor II the CBA negotiations until there was a determination as to which union had the right to negotiate a new CBA.” and the phrase cannot be given an overarching interpretation. then an emergency leave. Dr. That is human nature. who would not have helped him cover up his absences Ÿ BPI Employees Union v. Upon being notified of the mass actions. otherwise. is allowed. especially in the light that the same was issued by his rival in the political arena. He was eventually issued a Notice of Termination for continuously disregarding several advices to report back to work.
3853. The SC found the imposition of the extreme penalty of dismissal against de Jesus as certainly harsh and grossly disproportionate to the negligence committed. Charms Haw. 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.. 3853 allegedly required no trimming. as evidenced by the subsequent judicial order releasing the articles seized during the search. Sagum’s dismissal was subsequently declared illegal.O. de Jesus worked on P. Virgilio Reyes. 3853 as it has the same style and design as P. The owner of said articles was Donato. if feasible. Antagonism and imputations of criminal act caused a severe strain in the relationship between JDI and Reyes. while those illegally dismissed after are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement. IMPLEMENTATION = OPTIONS AND RATIONALE Options and Rationale Ÿ Jardine Davies v.Labor II Facts: Marilyn Sagum. Ysan Castillo. Ÿ The existence of strained relations is a factual finding and should be initially raised. Sagum is correct that mere persistency in argument does not amount to proof. the doctrine of "strained relations" should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. blended. argued and proven before the Labor Arbiter.O. JDI secured a search warrant which led to the seizure of alleged fake items in Reyes’ apartment. especially where said employee holds a faithful and an untarnished twelveyear service record. if reinstatement is no longer viable. de Jesus maintained that she merely committed a mistake in trimming P. the Officer-in-Charge for the Executive Director of the Institute of Integrated Electrical Engineers of the Phils. 1992. There was no factual basis for JDI’s distrust of Ÿ Pioneer Texturizing vs. She was preventively suspended for 30 days. There are no hard facts upon which to base the application of the doctrine of strained relationship. Reyes. 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 by trimming the cloths' ribs.O. Every labor dispute almost always results in "strained relations. filed a complaint for illegal dismissal against IIEE and its officers. Dianne Miano. Reyes’ brother. The three year period wherein backwages are awarded must be included in the computation of separation pay.O. 1989. 1992. de Jesus based her assigned work on a paper note posted by petitioners. not to mention the considerable length of time Reyes has been out of JDI’s employ. Anna Tetangco 40 . Reyes was consequently dismissed for committing serious misconduct inimical to the interest of JDI. terminated her from employment and sent her a notice of termination dated September 18. As reviser/trimmer. The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its P. Issue: Was there illegal dismissal? Held: Yes. are entitled to backwages up to 3 years without deduction or qualification. NLRC (Eds) Facts: Upon reports by a private investigator that the “Union 76” lubricating oil which was being exclusively distributed by Jardine Davies. nonetheless. Nowhere was this raised in private respondents’ pleadings before the Labor Arbiter and the NLRC. Here. Monina Lagman." and the phrase cannot be given an overarching interpretation. Alpe Macalalad. Number. Edlyn Santiago. a fraction of at least 6 months being considered as one whole year. Moreover. was being illegally manufactured. otherwise. but not for dishonesty or tampering. Reyes sued for illegal dismissal since the seized materials were actually legally claimed by Reyes’ younger brother. On August 15. de Jesus is petitioners' reviser/trimmer since 1980. Inc. DBR. 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. Three days later. packed and distributed. Monette Mesa. No. Kristel Macatangay. Petitioners' personnel department. One company. The finding by the CA of strained relations does not have any basis on the records. No. an unjustly dismissed employee can never be reinstated. No. or separation pay. To protect labor's security of tenure.O. In addition to backwages. and that such was being undertaken by JDI’s sales rep. In her handwritten explanation. we have always held Irah Burog. they are entitled to either reinstatement. No. reinstatement is not warranted. While an employer has the inherent right to discipline its employees. 279 of the Labor Code. No. Jake Ng.NLRC (Charms) Facts: Private respondent Lourdes A. Ÿ Employees illegally dismissed before March 21. A more equitabble disposition would be an award of separation pay equivalent to 1 month’s pay for every year of service. Jon Santos. 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. the principle of strained relations cannot be applied indiscriminately.O. who was the legal tenant of the apartment. Issue: Is Sagum entitled to reinstatement with backwages? Held: Yes. Held: There was illegal dismissal. Heidi Soria. was allegedly consistently being awarded majority of the printing contracts of IIEE.
On 30 April 1990. The provision of Article 223 is clear that an award for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The Supreme Court in the 1997 Pioneer case has laid down the doctrine that henceforth an order or award for reinstatement is self-executory. On 7 March 1990 Tanpiengco was assigned at Bodega I. i. Charms Haw. Ysan Castillo.00. The notification is based on practical considerations for without notice. dishonesty and theft of property. 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. this did not give private respondents the unbridled authority to terminate petitioner upon the Irah Burog. However. An award for reinstatement is self-executory. Finding petitioner's explanation unsatisfactory. The fact that an employee is not a regular employee does not mean that his employer can dismiss him anytime. NLRC (Charms) Facts: Petitioner employed private respondent Tanpiengco as a CFS Priority pursuant to a collective bargaining agreement with private respondent's labor union. after a brief suspension. 223 is clear that an award for Ÿ Kiamco vs. Moreover. In the instant case. According to petitioner. the employee has no way of knowing if he has to report for work or not. 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." from one of the balikbayan boxes inside the container yard. reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. NLRC (Charms) Facts: Petitioner was hired by private respondents as a technician..e. Petitioner reported back to work but was prevented from entering the company premises. Tanpiengco was dismissed for pilferage which petitioner considered as breach of trust. the employer has to inform the employee of his choice. but Tanpiengco insisted on his innocence claiming that he was coerced at knifepoint into admitting the theft. Held: The NLRC correctly labeled petitioner as a project employee. but they also ignored the due process requirement of the law. The last contract signed by petitioner fixed the term of his employment from 1 May 1993 to 30 November 1993.. as maintained by petitioner. On October 20. The Court found that private respondents not only failed to give a valid and justifiable reason to terminate Kiamco. Edlyn Santiago. for some inexplicable reasons. tucked it at his waist and proceeded to the washroom. Container Services vs. placed petitioner under preventive suspension from 1 November 1993 to 30 November 1993 pending further investigation.Labor II that this right must always be exercised humanely. Held: There was illegal dismissal and therefore should be reinstated. i. Ÿ After receipt of the decision or resolution ordering the employee's reinstatement. petitioner as the employer was duty-bound to choose forthwith whether to readmit Tanpiengco or to reinstate him in the payroll and to inform Tanpiengco of its choice to enable the latter to act accordingly. the immediate execution of a reinstatement order. The Commission's inaction is a serious oversight for which it should be admonished. 1993. An application for a writ of execution and its issuance could be delayed for numerous reasons. Jake Ng. the NLRC failed to act on Tanpiengco's motion for the issuance of a writ to execute the Labor Arbiter's reinstatement order. Tanpiengco has since then become a regular employee. The provision of Art. Ÿ Intl. The reason is simple. Falling to exercise the options in the alternative. Thus. Negros Occidental. Anna Tetangco 41 . meaning that it does not require a writ of execution much less a motion for its issuance. even if the employment contract signed by petitioner fixed the term of his employment. 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. Tanpiengco was accused of taking a T-shirt marked "Gesim Corp. to make an award of reinstatement immediately enforceable. Dianne Miano. petitioner received a Memorandum from private respondents demanding an explanation for administrative infractions.e. The legislative intent is quite obvious." T-shirt valued at P100. Alpe Macalalad. Monette Mesa. petitioner filed before the NLRC a complaint for illegal suspension and dismissal with prayer for reinstatement and backwages. on 28 October 1993. Monina Lagman. 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. He was accosted by a security guard allegedly for behaving suspiciously. Jon Santos. 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. When it was time for him to clean himself he took his T-shirt which was hanging from a post. private respondents. which he allegedly committed. even illegally. even pending appeal. Ÿ As a consequence of this. and the penalty it must impose should be commensurate to the offense involved and to the degree of its infraction. Kristel Macatangay. 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. In either instance. Heidi Soria. he admitted to the investigating officer that he took the "Gesim Corp.
Per its computation. thus. Moreover. the Court had the opportunity to elucidate on the reason for the grant of backwages. Charms Haw. As held by the Court of Appeals. Sadac(Charms) Facts: Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank. Heidi Soria. Consequently. including the general increases which he should have earned during the period of his illegal termination. we did not permit petitioner Bank to rely on Sec.Labor II expiration thereof. Anna Tetangco 42 . however. Per respondent Sadac’s computation. 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. As of November 1989.365. can be attributed to the annual salary increases which he received equivalent to 15 percent (15%) of his monthly salary. 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. and subsequently General Counsel thereof. and. Edlyn Santiago. is based simply on expectancy or his assumption that. in a letter-petition to the Chairman of the Board of Directors.030. Alpe Macalalad.00 or more than twice his original compensation. representing his backwages and other benefits. petitioner Bank terminated the services of respondent Sadac. were unsubstantiated. private respondents should have retained his services until the actual completion of the project. therefore. Petitioner was specifically assigned to work in a particular project. Pursuant thereto. Jon Santos. Petitioner’s claim. accused respondent Sadac of abusive conduct.98 only. Therefore. they did not find that respondent Sadac’s dismissal was grounded on any of the causes stated in Article 282 of the Labor Code. respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded. petitioner Bank be ordered forever released from liability under said judgment.500. Private respondents. 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. In a previous SC decision. or by rightful expectation. On 26 June 1989. In several cases. 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. Dianne Miano. the Supreme Court modified the decision of the NLRC and ordered the reinstatement of petitioner and payment of his backwages. petitioned for a change in leadership of the department. his monthly compensation amounted to P29. Such decision became final and executory. Respondent Sadac theorized that he started with a monthly compensation of P12. petitioner Bank filed a Manifestation and Motion praying that the award in favor of respondent Sadac be computed and that after payment is made.456. either by virtue of a lawful decree or order. After learning of the filing of the complaint. under the rules of client and lawyer relationship. respondent Sadac filed with the Labor Arbiter a Motion for Execution thereof. qualify for the said increase later. 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. because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased.442. the total amount of the monetary award is P6. however. Kristel Macatangay. Petitioner Bank disputed respondent Sadac’s computation. Monette Mesa. Ÿ Equitable Banking vs. as in the case of one’s salary or wage. Ysan Castillo. he posited. Rule 138 of the Rules of Court. when he was dismissed illegally. On the ground of lack of confidence in respondent Sadac. respondent Sadac was removed from his office and ordered disentitled to any compensation and other benefits. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. Monina Lagman.00 in August 1981. hence. 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. they held respondent Sadac’s dismissal illegal.59. respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. to the exclusion of the latter’s general salary increases and other claimed benefits which. in the absence of any valid reason to terminate him. claiming that the association between the parties was one of a client-lawyer relationship. however. Likewise. failed to show proof as to when the project was completed. Irah Burog. Rule XIV. 26. 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 5.981. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained. as in the case of a wage increase under a wage order. inter alia. it could terminate at any time the services of respondent Sadac. The difference. it maintained. on 10 August 1989. Finally. In reaction thereto. Book V of the Implementing Rules of the Labor Code. 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. 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. and ultimately. On 9 November 1989. Jake Ng. when he was appointed as Vice President of petitioner Bank’s Legal Department and later as its General Counsel in December 1981. the amount of monetary award due respondent Sadac is P2. nine lawyers of petitioner Bank’s Legal Department.
Jon Santos. she found out that her table. Thus. Thus. Held: The term "backwages" has been defined as that for earnings lost by a worker due to his illegal dismissal. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. petitioners were allowed by the private respondent to work until January 2. 1991. petitioners have become full-fledged regular employees. Jake Ng. the employment of petitioners is no longer on a fixed term basis. Theresa’s School vs. private respondent terminated petitioners' employment. Held: Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis. Alpe Macalalad. The NLRC reversed the decision of the Labor Arbiter. the Court held that petitioners are entitled to full backwages. Despite the expiration of their employment contract. 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. entitled to be reinstated to their former position as regular employees. 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. Ÿ When the term "backwages" was used in the NLRC decision. It is not private compensation or damages. When private respondent became ill. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. The Supreme Court held that petitioners should be reinstated to their former position as meter readers. When private respondent reported for work. Dianne Miano. Monina Lagman. the dismissal has been adjudged valid and lawful. against herein petitioners before the Labor Arbiter. Monette Mesa. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. 1990. 1991. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. private respondent invoked Article 283 of the Labor Code. The Labor Arbiter declared private respondent's dismissal as illegal and ordered her reinstated and paid full backwages and damages. Jurisprudence is filled to the brim with cases wherein backwages were awarded to an employee illegally dismissed. Edlyn Santiago. Moreover. not merely probationary. Payment thereof is a form of relief that restores the income lost by reason of such unlawful dismissal. NLRC (Charms) Facts: Petitioner Adoracion Roxas is the president of St. She hired private respondent. 1990. On January 3. but awarded private respondent partial backwages. 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. not on a probationary status. rather. Ÿ St. Anna Tetangco 43 . According to the Court. 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. etc. Unpaid salaries refer to those earned prior to dismissal whereas backwages refer to those earnings lost after illegal dismissal.Labor II In short. as in this case of a pitiful employee rendered hapless by her lawyer's inaction or ignorance. what was actually meant was unpaid salaries. Esther Reyes on a contract basis. which pertain to compensation due the employee for services actually rendered before termination. therefore. The Labor Arbiter dismissed the complaints. Backwages. refer to his supposed earnings had he not been illegally dismissed. she went on a leave of absence with the approval by petitioner. on the other hand. With the continuation of their employment beyond the original term. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. Charms Haw. reinstatement would always bring with it payment of backwages but not necessarily payment of unpaid salaries. Accordingly.Purpose Ÿ Tomas Claudio Memorial College vs. Ysan Castillo. but is awarded in furtherance and effectuation of the public objectives of the Labor Code. petitioners separately filed complaints for illegal dismissal. On the other hand. Nature . the challenged award of backwages is decidedly improper and contrary to law and jurisprudence. but as regular employees. NLRC (Charms) Irah Burog. She instituted a complaint for unfair labor practice. Theresa's School of Novaliches Foundation. chair and other belongings were moved to a corner of their office and she has been replaced by the daughter of petitioner Adoracion Roxas. Nor is it a redress of a private right but. they were. NLRC (Charms) Facts: Private respondent electric cooperative hired petitioners as meter readers from October 8 to 21. Moreover. 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. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. Payment of unpaid salaries is only ordered if there are still salaries collectible from his employer by reason of services already rendered. Kristel Macatangay. Backwages are generally granted on grounds of equity. 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. On appeal. (General Baptist Bible College vs. But where. It held that after October 31. Heidi Soria. NLRC) Ÿ Viernes vs. there is no vested right to salary increases. underpayment of wages and claim for indemnity against private respondent. illegal dismissal.
Indeed. Culture and Sports (DECS) and with the Commission on Higher Education (CHED) with the rank of Assistant Registrar. 1996 to February 17. where it held that when the employee's dismissal is for a just cause. Edlyn Santiago. respondent was detained from June 10. 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. It is evident that the award of back wages resulting from the illegal dismissal of an employee is a substantive right. he is deemed to have opted for Irah Burog. and non-payment of wages or commission and separation pay. 1997 for violations of the Dangerous Drugs Act. It is not a private compensation or damages. Ysan Castillo. The award of backwages is not conditioned on the employee’s ability or inability to. The Labor Arbiter Lagoc found that petitioner was an employee of private respondent and was illegally dismissed from the service. It is a form of relief that restores the income lost by reason of unlawful dismissal. Anna Tetangco 44 . inclusive of allowances. 1996. the State Prosecutor found no probable cause for the detention of the private respondent and resolved to dismiss the case. he was promoted as "Liaison Officer" of the school with the Department of Education.Labor II Facts: Sometime in 1983. 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. 1996 until the judgment of the CA shall have become final and executory. Ÿ The payment of backwages is generally granted on the ground of equity. for lack of merit. Petitioner seasonably appealed to the NLRC which in turn remanded the case to the Labor Arbiter. 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. Petitioner would have. 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. Aladdin F. 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. 1996. earn any income. the petitioner. Held: Grant of backwages proper. Thus. otherwise she would be unjustly enriching herself at the expense of the employer. likewise. Monina Lagman. Labor Arbiter Dennis D. 1996. the private respondent was detained in Criminal Case No. NLRC (Charms) Facts: In a complaint filed before the NLRC. 5251. On June 10. Juanon rendered a decision dismissing the complaint for lack of merit due to the absence of an employer-employee relationship between petitioner and private respondent. the private respondent was arrested by the Morong police authorities. private respondent Pedro Natividad started working with petitioner Tomas Claudio Memorial College (TCMC) in Morong. NLRC. On 7 August 1992. Dianne Miano. allowances and damages. legal holiday pay. In the interim. However. 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. since it would include that period of time when the latter was in jail. The private respondent has not yet been convicted by final judgment in Criminal Case No. This is because the private. for violation of the Dangerous Drugs Act (Republic Act No. In time. The petitioner asserts that it is absurd for the petitioner to pay backwages to the private respondent while the latter was in jail. in the interim. hence entitled to separation pay. petitioner's other monetary claims. Kristel Macatangay. A criminal complaint was later filed against him. and from November 21. underpayment of salary. illegal dismissal. without any warrant therefor. While it may be true that on June 11. but is awarded in furtherance and effectuation of the public objective of the Labor Code. 5137. by expressly asking for separation pay. The private respondent would thereby be enriching himself at the expense of the petitioner. 6425). back wages. The petitioner insists that backwages should not and cannot be awarded to the private respondent. Conformably then with Article 279 of the Labor Code. Alpe Macalalad. The award of backwages is not conditioned on the employee's ability or inability to. Charms Haw. Rizal. sent a Memorandum to the private respondent informing him that his employment was already terminated. non-payment of overtime pay. Heidi Soria. Nor is it a redress of a private right. 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. premium pay for holiday and rest day. there can be no backwages even if she was denied due process. petitioner charged private respondent Emmanuel Lo with unfair labor practice. 1996 up to July 5. Jake Ng. through its president. Effect Failure to Claim Ÿ Rolando Dela Cruz vs. and to other benefits or their monetary equivalent computed from the time compensation was withheld up to the time of actual reinstatement. but rejected the charge of unfair labor practice and dismissed. The petitioner relied on the declaration of this Court in the case of Cathedral School of Technology v. Trinidad. Both the labor arbiter and the NLRC concluded that petitioner was illegally dismissed. Monette Mesa. been entitled to reinstatement as a consequence of his illegal dismissal from employment. in the interim. earn any income. he is presumed innocent until his guilt is proved beyond reasonable doubt. after appropriate proceedings. Jon Santos.
Ysan Castillo. is bewildered why only an award for separation pay in lieu of reinstatement was made by both the Labor Arbiter and the NLRC. that is. for the reason that employees should not be permitted to enrich themselves at the expense of their employer. The award of separation pay is in lieu of reinstatement and not of backwages. Both bear the Irah Burog. The jobs assigned to private respondent as maintenance man. Ÿ The Court. In this case. These twin requirements of notice and hearing were undeniably absent in the case at bar. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. We are prompted to give out this last reminder because it is really unjust that a discharged employee should. Monina Lagman. Dianne Miano. however. It must be remembered that backwages and reinstatement are two reliefs that should be given to an illegally dismissed employee. Anna Tetangco 45 . separation pay is awarded to the employee. Likewise. law and jurisprudence authorize a tribunal to consider errors. it is conducive to lack of initiative on the part of a laborer. Corollary then to the foregoing is the matter of computing both the back wages and the separation pay due petitioner. Edlyn Santiago. Jake Ng. Dagui was dismissed. the same must be computed from the time petitioner was first employed by private respondent until the finality of this decision. Should the laborer decide that it is preferable not to return to work. namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. electrician and mason were directly related to the business of petitioners as lessors of residential and apartment buildings. In other words. if they involve (1) errors affecting the lower court's jurisdiction over the subject matter. Issue: (1) Whether Dagui is a regular employee (2) Whether or not he was illegally dismissed. Kristel Macatangay. In the event that reinstatement is no longer possible. amounts to a "plain error" which we may rectify in this petition. in the interest of substantial justice. without giving him any written notice informing the cause for his termination. remain inactive in the expectation that a windfall would come to him. This pertains to that period from the date petitioner was dismissed from employment on 2 December 1990 until he could have been reinstated which. if viable. if it finds that their consideration is necessary in arriving at a just decision of the case. Besides. although unassigned. and (2) backwages. Thus. Heidi Soria. Rules of procedure are mere tools designed to facilitate the attainment of justice. taking into account the appeals separately interposed by petitioner and private respondent from the decision of the labor arbiter. Monette Mesa. Suddenly. in mitigation of the damages that the dismissed respondents are entitled to. A contrary view would breed idleness. Charms Haw. carpenter. even if they are not assigned as errors on appeal. there is the "law's abhorrence for double compensation. There are two kinds of regular employees. As regards separation pay.Labor II separation pay in lieu of reinstatement. who is legally entitled thereto having been illegally dismissed. The Supreme Court is clothed with ample authority to review matters. Effect Failure to Order Ÿ Aurora Land etc. or separation pay if reinstatement is no longer viable. although Dagui did not bring any appeal regarding the matter. with respect to the activity in which they are employed. Alpe Macalalad. To be reckoned for the former is the period of putative service. plumber. an illegally dismissed employee is entitled to (1) either reinstatement." on the alleged ground that his work was unsatisfactory. the failure of the Labor Arbiter and the NLRC to award backwages to the private respondent. And these. substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. as in this case. Held: Yes to both. the employer said "Wala ka nang trabaho mula ngayon. and (2) those who have rendered at least one year of service. Dagui should likewise be considered a regular employee by the mere fact that he rendered service for the Tanjangcos for more than one year. It is true that private respondent did not appeal the award of the Labor Arbiter awarding separation pay sans backwages. They are separate and distinct from each other. Neither was there any hearing conducted in order to give Dagui the opportunity to be heard and defend himself. Period. (2) plain errors not specified. No backwages were awarded. beginning 1953 until 1982. Jon Santos. with folded arms. 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. whether continuous or broken." Second. the deduction should be made up to the time judgment becomes final. and the filing of this case. 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.Computation Ÿ First. 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. 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. and (3) clerical errors. vs.
Such general awards. Kristel Macatangay. Alpe Macalalad. 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. Monette Mesa. should be deducted from the liability of the employer to him for back wages. such general award for back wages tended to breed idleness on the part of a discharged employee who would "with folded arms. Heidi Soria. 1961. CIR 1974) arbitrary procedures (in the Mercury case. On the other hand. from the specific result in the Ÿ *** Basically. the period was based on the remainder of the 4 year prescriptive period). reasonable and mutually beneficial solution. Rationale. 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. the employer in the case at bar should be directed to pay private respondent Dayao back wages equivalent to one year. vs. J. As aforestated. Justice Teehankee concurs in the ruling that there shouldn’t be a deduction of earnings elsewhere from the backwages awarded. 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. is four years. which may delay the execution of the decision. 11 months and 15 days in the case at bar) "without further qualifications. Jake Ng. However. and obviates the twin evils of idleness on the part of the employee who would "with folded arms." that is to say. Itogon-Suyoc vs. Jon Santos. He suggested that instead of Irah Burog. 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. however. As to the amount of backwages. as noted in the main opinion. This new principle formally adopted by the Court now in fixing the amount of back wages at a reasonable level without qualification and deduction so as to relieve the employees from proving their earnings during their layoffs and the employer from submitting counter-proofs.As has been noted. dissenting opinion:(Mercury Drug rule) I dissent. Ÿ TEEHANKEE. the Court applies the precedent recently set in Mercury Drug. Dianne Miano. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. Monina Lagman. the shortest prescriptive period for the filing of all other actions for which the statute of limitations does not fix a period. Ysan Castillo. As observed by the Court in another case. eleven months. (Mercury Drug vs. 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. Edlyn Santiago. 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. Co. Charms Haw.. the minimum should have been fixed at 3 years pay-Monette TEEHANKEE. 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. generally led to long delays in the execution of the decision for back wages and reinstatement. 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. he dissents as to the period of computation. Anna Tetangco 46 ..Labor II stamp of undesirability. 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. and fifteen days without further disqualifications. 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. J. The period of delay in instituting this ULP charge with claim for reinstatement and back wages. remain inactive in the expectation that a windfall would come to him" and attrition and protracted delay in satisfying such award on the part of unscrupulous employers who have seized upon the further proceedings to determine the actual earnings of the wrongfully dismissed or laid-off employees to hold unduly extended hearings for each and every employee awarded backwages and thereby render practically nugatory such award and compel the employees to agree to unconscionable settlements of their backwages award in order to satisfy their dire need. although within the prescriptive period.
they were notified of petitioners' decision not to renew their contracts anymore. should be immediately effected upon finality of the judgment without waiting for the computation and determination of the back wages). Jon Santos. the law abhors double compensation. We restate the underlying reason that employees should not be permitted to enrich themselves at the expense of their employer. 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. 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. Ysan Castillo. 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.. Due to the expiration of private respondents' contracts and their poor performance as teachers. Ÿ However. should be deducted therefrom. there was no illegal dismissal. supra. 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. 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. Hence. such was necessary to effectuate the policies of the Industrial Peace Act. backpay (the same as backwages) could be awarded where. Thus. signed contracts of employment with petitioner for a fixed duration. Dianne Miano. their services were lawfully terminated by reason of the expiration of the periods of their respective contracts. a) The first labor relations law governing the award of backwages was Republic Act No. 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. Consequently. Alpe Macalalad. History of the different methods in the computation of backwages. they cannot be removed from their positions unless for cause. petitioners had the burden of proving that the termination of their services was legal.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.g. As probationary employees. 875. Edlyn Santiago. Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of employment are concerned. the Industrial Peace Act. Normally. Only in one case was backpay a matter of right.Labor II judgment at bar of awarding respondent back wages only in an amount equivalent to 1 year. Jake Ng. 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. All the private respondents. 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. In accordance with these provisions. and decision in this Court). In addition. 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. 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. Charms Haw. a case for illegal dismissal was filed. in ascertaining the total amount of backwages payable to them. in the opinion of the Court of Industrial Relations (CIR). Monina Lagman. if any.. Here. except Roland Picart and Lucia Chan. Ÿ Pines City Educational Center vs. they are likewise protected by the security of tenure provision of the Constitution. 11 months and 15 days . The petitioner’s contention that their evaluation of the teachers’ performance was poor was not presented by any written proofs or evidence. 1964 and its en banc resolution of February 25. With respect to private respondents who did not sign any contract fixing the periods of their employment nor to have knowingly and voluntarily agreed upon fixed periods of employment. Held: The Supreme Court made a distinction between employees who signed a fixed term of contract and those who did not. 1963 and obtained favorable judgment in the industrial court within a year as per said court's decision of January 17. Anna Tetangco 47 . when it is considered that he pursued — with vigor his complaint after its filing on April 25. etc. Heidi Soria. oppression or dilatory appeals) on the employer's part. Thus. Monette Mesa. Kristel Macatangay. 1964 denying petitioner's motion for reconsideration. 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. NLRC (Monette) Facts: Private respondents were all employed as high school and college teachers on probationary basis by Pines City Educational Center. when an employer had declared a Ÿ Irah Burog. and that was.
the good faith of the employer. No. c) 3 year backwages (Dissenting opinion of Justice Teehankee in Mercury Drug). the rule generally applied by the Court after the promulgation of the Mercury Drug case. This ruling was grounded upon considerations of expediency in the execution of the decision. CIR. In labor cases decided during the effectivity of R. As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee.. 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 employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. 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. 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.In order not to unduly delay the disposition of illegal dismissal cases. R. or the probability that the employee could have realized net earnings from outside employment if he had exercised due diligence to search for outside employment. Anna Tetangco 48 . e) On 21 March 1989.Labor II lockout without having first bargained collectively with his employees in accordance with the provisions of the Act. was nonetheless followed in said case. however. 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. However. Feati University Faculty Club (PAFLU) v. Kristel Macatangay. Thus. After the Labor Code (P. the Court enforced the Mercury Drug rule and. et al. and during the effectivity of P. among them. Heidi Soria. 6715 took effect. the Court still followed the Mercury Drug rule to avoid the necessity of a hearing on earnings obtained elsewhere by the employee during the period of illegal dismissal. 279. during the effectivity of P. The Court deems it appropriate. Jon Santos.D. 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. be diminished or reduced by the earnings derived by him elsewhere Irah Burog. 442) had taken effect. Alpe Macalalad. as amended. 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. 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. was expressed as follows: “ART. 875. when the amendatory law to P. This notwithstanding." Under the abovequoted provision. as a general rule. v. b) Mercury Drug rule. No. The law specifically declared that the award of backwages was to be computed from the time compensation was withheld from the employee up to the time of his reinstatement. this Court found occasion in the case of Mercury Drug Co. 6715 took effect. in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level. to reconsider earlier rulings on the computation of backwages by now holding that comfortably with the evident legislative intent as expressed in Rep. qualified the provision under P. it also had the implied power of mitigating (reducing) the backpay where backpay was allowed. without qualification or deduction. — In case of regular employment. Justice Teehankee dissented from the majority view that the employee in said case should be awarded backwages only for a period of 1 year.D. In sum. Republic Act No. No. 279. above-quoted.The proposal on the threeyear backwages was subsequently adopted in later cases. should not. et al. 442. Its posture on the award of backwages. — . Monina Lagman. No. Article 279 thereof states in part: “ART." (italics supplied) In accordance with the above provision. . (italics supplied). Feati University (1974) and others. inclusive of allowances. amending the Labor Code. Dianne Miano. A survey of cases from 1974 until 1989. 442 by limiting the award of backwages to three (3) years. Act No. Edlyn Santiago. the employee's employment in other establishments during the period of illegal dismissal. Inc. Ysan Castillo. 442. Security of Tenure.D. it became mandatory to award backwages to illegally dismissed regular employees. 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.A No. Security of Tenure. in the exercise of its jurisdiction. 442 (the Labor Code of the Philippines). in effect. d) Then came Presidential Decree No. backwages to be awarded to an illegally dismissed employee. . 6715.. No. supports this conclusion. Jake Ng. to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). an illegally dismissed employee is entitled to his full backwages from the time his compensation was withheld from him (which as a rule is from the time of his illegal dismissal) up to the time of his actual reinstatement. In an even later case (1987). 442 was still the Mercury Drug rule. the award of backwages equivalent to three (3) years. the CIR increased or diminished the award of backpay. depending on several circumstances. Monette Mesa. among them.D.A.D. Charms Haw. Former Justice Claudio Teehankee approved of this formula expressing that such method of computation is a "realistic. namely. (See Itogon-Suyoc case)." However.
i.1996 Ÿ Romagos vs. informing the subject of his separation from the service due to mental incapacity.Labor II during the period of his illegal dismissal. 6715 effectively mitigated previous jurisprudence which had limited the extent to which illegally dismissed employees could claim for backwages. the provision calling for "full backwages" to illegally dismissed employees is clear.All that the 1989 and 1991 medical certifications established is that. third. However. where reinstatement is adjudged. Such a doctrine is admittedly supported by the early case of National Labor Union v. Jake Ng. These certifications hardly prove that petitioner's behavior manifests a continuing mental disorder and incapacity to work. 6715. must be applied without attempted or strained interpretation. 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. Thus. must still earn a living to support himself and family. Jon Santos. during said periods. Dianne Miano. 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. 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. before an officer or employee may be dropped from the rolls for mental incapacity. while litigating the legality (illegality) of his dismissal. Alpe Macalalad. has made the employer bear a heavier burden than that pronounced in the Mercury Drug Rule. Rep. Bustamante vs. However. that it has been established through substantial evidence that such abnormal behavior manifests a continuing mental disorder and incapacity to work. In other words. Ÿ However. requiring her to undergo psychiatric evaluation. 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. Anna Tetangco 49 . second. that another notice is issued by the appointing authority or head of office. describing the former's continuing mental disorder and incapacity to work and citing the reports of his coworkers or immediate supervisor. Clearly. Edlyn Santiago. and finally. but Ÿ Irah Burog. The procedure adopted by respondent in dropping petitioner from the rolls substantially complied with the two-notice requirement. 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. Gentallan. It may appear that Article 279 of the Labor Code. However. as confirmed by the head of office. therefore. without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Kristel Macatangay. NLRC. Heidi Soria. 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. 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. which took effect just five (5) days after Soriano was promulgated. 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. it did sufficiently proved that petitioner's mental condition has rendered her incapacitated to work as to justify her being dropped from the rolls . that it has been observed that the subject officer or employee has been behaving abnormally for an extended period. Respondent issued to petitioner a letter. Held: Dropping from the rolls due to mental incapacity is subject to the requirements of due process. 6715 points to "full backwages" as meaning exactly that. whether the Labor Arbiter correctly awarded full backwages to Timbal. Act No. Monette Mesa. as amended by Republic Act No. It is now provided in the Labor Code that "[a]n employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. The clear legislative intent of the amendment in Rep. Metro Cebu Water (Monette) Facts: Metro Cebu Water District (MCWD) dismissed Romagos for mental incapacity. the Court now recognizes that this doctrine is inconsistent with Article 279 of the Labor Code. inclusive of allowances. The underlying reason for this ruling is that the employee. respondent sufficiently established that petitioner suffers from a mental disorder. 6715. Ysan Castillo." Thus. Charms Haw. First. We now turn to the second issue raised. Act No. Monina Lagman.e. as amended by Republic Act No. 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. the following elements and process must obtain: first. Atienza. Act No. petitioner was diagnosed to be suffering from Major Depression. that a written notice is issued by the subject's immediate supervisor.. a closer adherence to the legislative policy behind Rep. plain and free from ambiguity and. wherein the Court affirmed the disallowance of backwages or "financial assistance" in dismissals under the aforementioned circumstance. 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.
deliberate. 1995. and second. Heidi Soria. They also asserted that in interfering with their right to self-organization by deceitfully transferring them to an employment agency. 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. CA (Jake) Facts: The employees alleged that they were illegally dismissed. Hence. Del Monte vs. in contemplation of the law. 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. respondent Javier’s acquittal for rape makes it more compelling to view the illegality of his dismissal. On November 10. Abandonment as a just ground for dismissal requires clear. An illegally dismissed employee who. Held: As regular employees.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. Jake Ng. Dianne Miano. is not tantamount to abandonment. 1989. willful. respondent E & R security agency hired petitioner Chona P. 1995. he immediately proceeded to the petitioner but was not accepted back to work.396. Now. with the second element being the more determinative factor. Ÿ Kay Products vs. Edlyn Santiago. 1989. Ÿ Ÿ Respondent Javier is not entitled to any salary during the period of his detention. The complainants further contended that they were coerced and intimidated into signing letters of resignation.Labor II perhaps Republic Act No. hence. 1996. Jon Santos.# On November 27. and unjustified refusal of the employee to resume his employment. Anna Tetangco 50 . Mere absence or failure to report for work. Monette Mesa. 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. KPI thereby engaged in ULP. NLRC (Jake) Facts: On January 5. Torres as a security guard. respondent was ordered to immediately reinstate Complainant to her former position as security guard without prejudice to reassignment in the exigency of the service. the private respondents should be reinstated. 1996 by virtue of the judgment of acquittal dated May 17. Ÿ Illegally dismissed employees are entitled to backwages plus other benefits computed from the time compensation was withheld up to the time of actual reinstatement. Javier failed to report for work. Held: The amount of P 105. Monina Lagman. respondent agency terminated her services for abandonment when she failed to report for work in her new assignment. His entitlement to full backwages commenced from the time the petitioner refused his reinstatement. he was arrested and detained for the charge of rape upon complaint of his neighbor. never left his office. 1995. the reckoning point for the grant of backwages started therefrom. To constitute as such. Puente (Jake) Facts: Respondent avers that he started working with Ÿ Irah Burog. In the instant case. Alpe Macalalad. Charms Haw. Kristel Macatangay. Standard Electric Employees Union (Jake) Facts: On July 31. 6715 was enacted precisely for the employer to realize that the employee must be immediately restored to his former position. Ysan Castillo. the employee must have failed to report for work or must have been absent without valid or justifiable reason. He failed to notify the SEMC of the reason for his absences. 1995 cannot be deemed as an abandonment of his work. with full backwages from the time she was placed under preventive suspension on October 27. and considering that they were illegally dismissed. 1989. Held: Respondent Javier’s absence from August 9. On August 9. and (b) for committing rape. 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. two requisites must concur: first. when respondent Javier was freed on May 24. 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. Genalyn Barotilla. 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. The Labor Arbiter declared the dismissal of the complainant not in accordance with law. even after notice to return. 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. 1989 up to the time of her reinstatement. 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. 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.ð Standard Electric vs. we said that the rule enunciated in Pines Cityð no longer controls. In the recent ruling of the Court. Moreover. Saldiar (2007) Ÿ Torres vs.
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. Anna Tetangco 51 . dated 9 November 1983.000. are binding on us since they are supported by substantial evidence. Held: The dismissal of respondent from the service is by reason of retrenchment. Reynaldo Benedicto was appointed by Ceferino Basilio.000.Labor II Petitioner Filsystems. Petitioners were not rehired although they fall outside the exception provided. wife of Filomeno. Under Article 283. 1995 to December 30. however. She was replaced by another faculty member. 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. petitioners implemented Irah Burog. the compulsory retirement age under the law. Petitioner Clarita Lantion. his employment with the petitioner company was continuous and without interruption for the past ten years. was terminated as Dean of the Institute of Business and Agricultural Administration and Concurrent Head of the Department of Business. Held: The contracts of employment of Puente attest to the fact that he was hired for specific projects. in case of retrenchment to prevent losses. there can be no question. The position of Vice-President continued to exist. petitioner regularly submitted to the labor department reports of the termination of services of project workers. Reinstatement of petitioners with backwages is thus called for. 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). And as far as Filomeno and Clarita Lantion are concerned. The conditions laid down. 1994 signed by Tomas Gomez III.00. Since backwages are granted on grounds of equity for earnings lost by an employee due to his illegal dismissal. Benedicto was entitled to backwages only for the period he could have worked had he not been illegally dismissed. Filomeno's sister-in-law. on June 12. petitioner Filomeno Lantion received a letter. they shall be entitled to reinstatement with full back wages. Inc. if the project or work is completed during the pendency of the ensuing suit for illegal dismissal. Jon Santos. confirmed by the CA. the employment of project employees cannot be terminated prior to expiration. Cajucom (Jake) Facts: As a result of the economic slowdown then experienced in this country. Monina Lagman. In a letter dated October 11. petitioners filed their Complaint against the University and its President. their temporary appointment to other positions could not have affected their permanent status pursuant to the ruling in the First GAUF Case. Heidi Soria. an authorized cause. Held: These factual findings of the NLRC. Ÿ Benedicto was entitled to backwages only up to the time he reached 65 years old. On 25 March 1985. before the NLRC. 1998. Furthermore. were not religiously followed. Such compliance with the reportorial requirement confirms that respondent was a project employee. therefore. and Management effective 1 June 1984. or from June 1. Alpe Macalalad. including respondent. petitioners should be liable for violation of his right to due process and should pay him indemnity in the form of nominal damages. that his work was not dependent on the completion or termination of any project. Otherwise. The labor arbiter concluded that Benedicto was illegally dismissed. that on October 1. Ÿ Without a valid cause. at that time the president of petitioner. 1989. Since he was employed by petitioners for four years. Ÿ In respect of the argument that the inflation that has supervened justifies the imposition of interest. with a monthly salary of P80. the general manager then of petitioner. Held: That retrenchment was proper. a corporation engaged in construction business. this Court has held that the effects of extraordinary Ÿ TPI Cement Corp vs. he was already 64 years old. pursuant to our ruling in Agabon. Effect Inflation Ÿ Lantion vs. Charms Haw. that since his work was not dependent on any project. When Benedicto was illegally dismissed on October 11. Dianne Miano. Clarita's position was neither abolished. 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. cost-cutting measures resulting in the termination from the service of their employees. he was dismissed from his employment allegedly because he was a project employee. While petitioner Fuentes. Ysan Castillo. Edlyn Santiago. NLRC (Jake) Facts: On 10 November 1983.. as marketing manager with a monthly compensation of P20. Ÿ We rule that the Court of Appeals erred in awarding him such backwages. Monette Mesa. However. Jake Ng. Their positions were not affected by the re-organizational changes envisioned in the retrenchment program.00. respondent Obed Jose Meneses. was terminated as Secretary to the Legal Office on 21 November 1983. 1994. he should be paid P160.000 plus 1% commission from collections of all advertising contracts consummated. Ÿ Intercontinental Broadcasting vs.00 as separation pay. Finance. Thus. Kristel Macatangay. His employment was coterminous with the completion of the projects for which he had been hired.000. Benedicto was terminated from his position. terminating him as the Acting Vice-President and concurrently Executive Officer of the University effective 11 November 1983. 1999. which we fix at P20. Benedicto (Jake) Facts: In 1993.
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. She went to the Ministry of Labor and Employment claiming she had been illegally removed. Gustilo. 10.Labor II inflation are not to be applied without an agreement between the parties and without an official declaration thereof by competent authorities. FINANCIAL ASSISTANCE Allowed Financial Assistance Ÿ PLDT vs. a traffic operator of the Philippine Long Distance Telephone Company. it will actually become a prize for disloyalty.00 in consideration of her promise to facilitate approval of their applications for telephone installation. being ethical rather than jural and belonging to the sphere of morals than of law. 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. equity has been defined as justice outside law. Redentor Salonga.. 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. was accused by two complainants of having demanded and received from them the total amount of P3. 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. Anna Tetangco 52 . like theft or illicit sexual relations with a fellow worker. she was found guilty as charged and accordingly separated from the service. The private respondent has been dismissed for dishonesty. the employer may not be required to give the dismissed employee separation pay. maintaining that he was responsible. Further. made her "in effect the author of the project. reprimanded and suspended him for habitually neglecting to submit his periodic reports. petitioner pleaded that she never misappropriated the money collected and whatever was left of it." As a general rule. 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. Dianne Miano. . Inc.800. Investigated and heard. Monina Lagman. . was employed by Wyeth Philippines. as a pharmaceutical territory manager. but for the canvass of the price of the religious items as well. as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. or whatever other name it is called. equity considerations provide an exception. Heidi Soria. However. Petitioner's employment records show that respondent company. the employer may not be required to give the dismissed Irah Burog." Petitioner's infraction of a school policy warrants her dismissal. for example. Ÿ We rule that the NLRC correctly awarded to petitioner the amount of P45. on various dates. petitioner. after initial purchases were made. if it is to be considered at all. Kristel Macatangay. Edlyn Santiago. NLRC. on the ground of social justice. perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. Jake Ng. Moreover. an offense involving moral turpitude . Wyeth Philippines (Kristel) Facts: Alan D. respondent company. or financial assistance. Ysan Castillo. Held: We hold that the grant of separation pay in the case at bar is unjustified. for equity finds no room for application where there is law.00 as "severance pay" which is synonymous with "separation pay. not only for the collection of the contributions. Hence. 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. habitual intoxication or an offense involving moral turpitude. Alpe Macalalad. It is grounded on the precepts of conscience and not on any sanction of positive law. were immediately returned to the student-leaders for proper reimbursement to the students concerned. Letran College (Jake) Facts: Petitioner contended that her dismissal was arbitrarily carried out. In PLDT v. In support of this claim. Where the reason for the valid dismissal is. If regarded as a justification for moderating the penalty of dismissal. 14. the company was sustained and the complaint was dismissed for lack of merit but private respondent was awarded separation pay. Monette Mesa. After consideration of the evidence and arguments of the parties. it would be petitioner Salavarria. NLRC (Jake) Facts: Marilyn Abucay. .. Ÿ Salavarria vs. the fact that the same was approved or indorsed by petitioner. .000. one of her students. 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. Jon Santos. an employee who is dismissed for cause is not entitled to any financial assistance. . The fact that she has worked with the PLDT for more than a decade. Charms Haw. Where the reason for the valid dismissal is. Held: If there is one person more knowledgeable of respondent's policy against illegal exactions from students. regardless of who initiated the collections. having been effected without just cause. who attested to the veracity of the former's assertion. petitioner relied principally on a letter written by Ÿ Gustilo vs.
Ÿ The rule is that financial assistance is allowed only in instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. since even the company said that the reason it refused his application for optional retirement was that it still needed his services. Moreover. that in those years there was not a single report of him transgressing any of the company rules and regulations. Heidi Soria. In our view. Rule I. or whatever other name it is called. are accorded respect and even finality by this Court. conscience and reason tip in favor of granting financial assistance to support him in the twilight of his life after long years of service. Ysan Castillo. and Irah Burog. that he denies receiving the telegram asking him to report back to work. provide an exception. via the principle of "compassionate justice" for the working class.. Ÿ Section 7. 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. He was dismissed from service. we can call upon the same "social and compassionate justice" cited in several cases allowing financial assistance. on the ground of social justice. and that he was not authorized to accept payment. Sedan sent a letter to petitioners applying for optional retirement. he preferred to stay home rather than risk further working in a ship at sea. Monina Lagman. Charms Haw. Alpe Macalalad. hence the retirement benefits he would receive would ease his financial burden. 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. Equity has been defined as justice outside law.Labor II employee separation pay.The union staged a strike. Hence. or financial assistance. Jake Ng. this case is not the appropriate instance for generosity under the Labor Code nor under our prior decisions. NLRC (Kristel) Facts: Dumaguete Cathedral College. It appeared that Cagampan knowingly entered into an unauthorized contract for the installation of a transformer. the grant by the Court of separation benefits is hardly justifiable. however. citing as reason the death of his only daughter. he has no previous derogatory records. and certain acts tantamount to serious misconduct. In this case. but that considering his age and health. 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. The fact that private Ÿ Eastern Shipping Lines vs. working on board ship for almost 24 years. private respondent was found by the Labor Arbiter and the NLRC to have been validly dismissed for violations of company rules. (2) dishonest or unauthorized activity whether for personal gain or not." If the cause for the termination of employment cannot be considered as one of mere inefficiency or incompetence but an act that constitutes an utter disregard for the interest of the employer or a palpable breach of trust in him. These circumstances indubitably merit equitable concessions. Although meriting termination of employment. if supported by substantial evidence. Cagampan was found guilty of violating CENPELCO's Code of Ethics and Discipline. Equity considerations. Anna Tetangco 53 . he shall not be entitled to termination pay without prejudice to applicable collective bargaining agreement or voluntary employer policy or practice. Inc. Edlyn Santiago. 15 Separation pay in such case is granted to stand as a "measure of social justice. that he applied for optional retirement under the company's non-contributory plan when his daughter died and for his own health reasons. Ÿ An employee who is dismissed for cause is generally not entitled to any financial assistance. Jon Santos. Weighed on the scales of justice. Dianne Miano. Ÿ Pangasinan Electric Coop vs. Financial assistance may be allowed as a measure of social justice and exceptional circumstances. an educational institution. Piñero's infraction is not so reprehensible nor unscrupulous as to warrant complete disregard of his long years of service. that he had given to the company the best years of his youth. 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: Lito Cagampan was the Acting Power Use Coordinator of petitioner Central Pangasinan Electric Cooperative. namely: (1) unauthorized acceptance of payments for new connection. Such findings. 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. is the employer of the faculty and staff members comprising the labor union DUCACOFSANAFTEU. The strike was declared illegal and the dismissal of the union members was ordered by the lower courts. for equity finds no room for application where there is law. Monette Mesa. Kristel Macatangay. It is grounded on the precepts of conscience and not on any sanction of positive law. with these special circumstances. and (3) defrauding others by using the name of the company.This was not granted despite several demands. being ethical rather than jural and belonging to the sphere of morals than of law. (CENPELCO). In this instance. Inc. that it would appear that he had served the company well. and as an equitable concession. Ÿ Pinero vs.
. having the main duty of removing and/or changing damaged flexbeams on the expressway. Petitioner received a notice Irah Burog. he is not entitled to separation pay. Filipro. Both declared that the items were deposited there by Manreza and his companions. Charms Haw. 148 SCRA 526. or (5) when the employee is suffering from a disease and his continued employment is prohibited by law or is prejudicial to his health and to the health of his co-employees. (4) cessation of the employer's business. NLRC (Kristel) Facts: Union of Filipro Employees. who was then the personnel and administrative manager of the company. since his violation reflects a regrettable lack of loyalty and worse. on the ground of social justice. for having physically assaulted and verbally abused. Inc. and thereafter terminated his employment Ÿ It is true that in some earlier cases. . August 23. vs. for serious misconduct) is legally indefensible. rammed a private vehicle and crashed into a beauty parlor resulting in the death of three (3) persons and extensive damage to private property. Edlyn Santiago. Ÿ Eastern Paper Mills vs. of which petitioner Benito D. The only cases when separation pay shall be paid.) . If an employee's length of service is to be regarded as a justification for moderating the penalty of dismissal. At best it may mitigate the penalty but it certainly will not condone the offense. Mercantile Corp. several of the striking employees threw stones at the trucks entering and leaving the company premises. of the Philippines vs. G. does not call for such award of benefits. like theft or illicit sexual relations with a fellow worker. (2) redundancy. Mariano Lopingco. and hearing. (Articles 283 and 284. 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. Jon Santos. "The policy of social justice is not intended to countenance wrong doing simply because it is committed by the underprivileged. betrayal of the company. Chua was a member. 145 SCRA 123). the employer may not be required to give the dismissed employee separation pay. It placed the complainant under preventive suspension for thirty (30) days. 1988. The company found him guilty of stealing or unauthorized taking of company property. whose driver was rendered unconscious by a stone hitting him on the head. Nestle Philippines. No. habitual intoxication or an offense involving moral turpitude. Sec. 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. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. a superior officer. NLRC (Kristel) Facts: Petitioner. NLRC and Marilyn Bucay.R. distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of undesirables. Inc. a violation of Section 7 (a) (10) of the CDCP Code of Employee Discipline. Book VI of the Omnibus Rules Implementing the Labor Code. It contravenes Rule 1. 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. 7.Labor II respondent served petitioner for more than twenty years with no negative record prior to his dismissal. Monette Mesa. that doctrine was abandoned by this Court in the recent case of Philippine Long Distance Telephone Co. 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. Jake Ng. Anna Tetangco 54 . investigation. after due notice. 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.) Ÿ Chua vs. in our view of this case. although the employee was lawfully dismissed. Lariosa. Not Allowed Ÿ Phil. Heidi Soria. Monina Lagman. Kristel Macatangay. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it. Ÿ An award of separation pay to an employee who was dismissed for a valid cause (in this case. NLRC. for example. 80609. where We held that: ". Ysan Castillo. On May 24. Where the reason for the valid dismissal is. 1983. or financial assistance. and also in the house of Nene Enriquez. like the workers who have tainted the cause of labor with the blemishes of their own character. (Emphasis supplied. (3) retrenchment. or whatever other name it is called. Soco vs. During the strike. Alpe Macalalad. an accounts payable clerk. are when the cause of termination was not attributable to the employee's fault but due to: (1) the installation of labor-saving devices. the North Luzon Expressway (NLE) Security Services Investigation and Intelligence Unit discovered NLE flexbeams in the house of Alfonso Eusebio in Sipat. ." Since Manreza was found guilty of dishonesty for having stolen company property and was dismissed for cause. NLRC (Kristel) Facts: Domingo Manreza was hired by the CDCP in 1972. . Construction Corp vs. vs. within full view and hearing of the other employees. Plaridel. such gesture will actually become a prize for disloyalty. dismissed the private respondent Eduardo Malabanan. One truck. Bulacan. declared a strike against the private respondent company. as a janitor and later promoted to Leadsman. 148 SCRA 187. Labor Code. of Davao. Dianne Miano.
Ysan Castillo. they should have rejected the CBA. the parties. Etcuban vs. as the petitioner correctly argues. 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. Consequently. Monette Mesa. develop. SDPI served formal notices of termination to all the employees of the plantation. processing of and marketing of its products and providing technical expertise. allowances. However. like theft or illicit sexual relations with a fellow worker. Dianne Miano. is entitled to reinstatement. The petitioners simultaneously executed individual "Release and Quitclaim" following the explanation to them by executive labor of the nature and legal effects of the said quitclaims. CA (Heidi) Facts: SDPI was given the right to manage. SDPI decided to terminate the FMA with ARCI and cease operation of the rubber plantation. Had the dailypaid rank-and-file employees deemed the same to be a diminution of their benefits. Kristel Macatangay. Monina Lagman. (Coca-cola Bottlers Phils. Ÿ Irah Burog. Edlyn Santiago. The petitioners never assailed the CBA as prejudicial to them or for having been in violation of Article 100 of the Labor Code.Labor II of dismissal from private respondent for having participated in the illegal strike. permanent or temporary lay-off workers affected would be entitled to termination pay as provided by the Labor Code. management and union meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. 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. as a contract governing the employer and the employees respecting the terms of employment. unused sick leave and other benefits. Unless annulled. and improve the rubber plantations of ARCI as an agro-industrial development project. cultivate. antagonism has caused a severe strain in their relationship. hours of work and all other terms and conditions of employment in the bargaining unit. Simultaneously. Charms Haw. . vs. Separation pay for the employees was computed pursuant to the provisions of the CBA between SDPI and NFL. which strike resulted in multiple deaths and extensive property damage. During the negotiations. without the NFL initiating the revision thereof. in relation to the Labor Code of the Philippines. specifically for planting rubber trees. thus: Pursuant to the CBA. . each of the petitioners received his separation pay equivalent to one-half month pay for every year of service. 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. Vital) Ÿ National Federation of Labor vs. the CBA. for example. 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. and other benefits which were all lumped in one Metrobank check. the employer may not be required to give the dismissed employee separation pay. .11 SEPARATION PAY When Alternative Ÿ Although Vital. in addition to his full backwages. Jon Santos. or financial assistance. Anna Tetangco 55 . Heidi Soria. accordingly. It bears stressing that a CBA refers to the negotiated contract between the legitimate labor organization and the employer concerning wages. 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. and other benefits. the Comprehensive Agrarian Reform Law (CARL) took effect. a letter to DOLE. A fraction of at least 6 months shall be considered 1 whole year. constituted serious misconduct on his part. 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. A contrary rule would. Meanwhile. whichever is higher. the NFL requested SDPI that the separation pay benefits for its members be segregated from regular workdays. petitioner's participation in the unlawful and violent strike. should prevail. administer. Where the reason for the valid dismissal is. vacation leave. Alpe Macalalad. Jake Ng. respecting the terminations was sent by SDPI. on the ground of social justice. workers affected would be entitled to termination pay as provided by the Labor Code. whichever is higher. have the effect of rewarding rather than punishing the erring employee for his offense . or whatever other name it is called. 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. Sulpico Liner (Heidi) 14. During the effectivity of the FMA between ARCI and SDPI. who was illegally dismissed. SDPI and NFL executed CBA in which they agreed that in case of permanent or temporary lay-off. habitual intoxication or an offense involving moral turpitude. In the case at bar.
Monette Mesa. 1978. Later. Edlyn Santiago. an employee who voluntarily resigns may not be granted separation pay. which is especially required for the position of purser. this Court holds that there was sufficient basis for petitioner to lose trust and confidence in private respondent so as to justify his termination. 1994 for loss of trust and confidence. NLRC (Heidi) Facts: North Davao was incorporated in 1974 as a 100% privately-owned company. he is not worthy of compassion as to deserve at least separation pay for his length of service. Dianne Miano. when it is stipulated in the employment contract or CBA or such payment is authorized by the employer's practice or policy. NLRC and Margo Batister. respondent voluntarily tendered her resignation effective September 17. 1978 until his dismissal on June 10. In Hinatuan Mining Corporation and/or the Manager v. 10. Hanford hired Shirley Joseph as a sewer. that is. If petitioners could be liberal to those employees who retired. all doubts should be construed in favor of labor. however. On Aug. Consequently. 19. he filed a complaint against the respondent for illegal dismissal. among others. Anna Tetangco 56 . the Court is constrained to deny the same. voluntary resignation is not one of the grounds which justifies the When not allowed Ÿ North Davao Mining Corp vs. 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). NLRC finds application here. Monina Lagman. thus: "In the interpretation of an employer's program providing for separation benefits. 1998. Under the Labor Code. the newly designated jefe de viaje of the ship. At the time of his dismissal. Under the Code. 1998. records show that petitioners granted the employees mentioned earlier their separation pay upon their separation by reason of their retirement.. grant of separation pay. or (f) when an employee is illegally dismissed but reinstatement is no longer feasible. Irah Burog. Heidi Soria. 1986. as in fact. 1998. As aptly held by the Labor Arbiter. Moreover. separation pay may be awarded only in cases when the termination of employment is due to: (a) installation of labor saving devices. Hanford denied Joseph's request on the ground that under the Labor Code. 2 which petitioner accepted the following day.Labor II Facts: Ectuban was employed by the Sulpicio Lines on January 30. we held that while it is true that under the Labor Code. Ectuban received a memorandum of even date relative to the irregularity in the "alleged involvement in anomaly of ticket issuance. (d) closing or cessation of business operations. Charms Haw. then he is entitled to a separation pay. there is an exception." 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. in a surprise examination. Jon Santos. discovered irregularities in the issuance of passage tickets. (c) retrenchment." Ÿ Hanford Phil. "separation from the company without cause. there is no reason why they should not also extend such liberality to respondent considering that she served petitioner for 21 years. (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees.00. Jake Ng. retirement is not also a ground for the grant of separation pay. On Nov. 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. Sometime in 1994. employees or workers who may be separated without cause. it is very clear from the CBA that when an employee or worker voluntarily resigns due to. 13th month pay and the cash conversion of her unused vacation and sick leave. as in this case. vs. 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.000. After all. Ysan Castillo. 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. 13th month pay and other monetary benefits with the regional arbitrator. Ÿ It is well to note that there is no provision in the Labor Code which grants separation pay to employees who voluntarily resign. Inasmuch as reason for which the petitioner was validly separated involves his integrity. 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. the NLRC and the Court of Appeals. Alpe Macalalad. the general rule is that an employee who voluntarily resigns is not entitled to separation pay. Anent the petitioner's request for separation pay. Ÿ In the instant case. Hanford then paid Joseph her last salary. non-payment of overtime pay. It also informed him of his immediate preventive suspension until further notice. Joseph (Heidi) Facts: On July 17. Kristel Macatangay. Barely a week after the petitioner's preventive suspension and pending his administrative investigation." such as voluntary resignation. Our ruling in Philippine National Construction vs. (b) redundancy. On June 30. workers are the intended beneficiaries of such program and our Constitution mandates a clear bias in favor of the working class. Ectuban was the Chief Purser of the M/V Surigao Princess receiving a monthly salary of P5. and those whose services are terminated due to suspension or cessation of operation.
248 (e) of said Code. Dianne Miano. Charms Haw.5-days' worth at that. should have elicited admiration instead of condemnation. from the beginning of its operations in 1981 until its closure in 1992. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. authorizes neither oppression nor self-destruction of the employer. Under the facts and circumstances of the present case. the grant of a lesser amount of separation pay to private respondent was done. Accordingly..". But when a business enterprise completely ceases operations. unfair and most revolting to the conscience. As a going concern.e. but rather. this arrangement lasted from 1981 up to 1990. in addition to the commutation to cash of their unused vacation and sick leaves. i. whether fixed or ascertained on a time. Art. i. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses." the question arises. Jon Santos. which policy had been in force in the years prior to its closure.5 days' pay for every year of service. it gave 30-days' separation pay to its employees when it was still a going concern even if it was already losing heavily. a reward or recompense for services performed. respondents tenaciously insist on the award of separation pay. the closure was due to business losses — as in the instant case. i. . Moreover. it appears that. Ysan Castillo. Therefore. Believing that the allowances they regularly received on a monthly basis during their employment should have been included in the computation thereof. however. Edlyn Santiago. As already stated. out of sheer financial bankruptcy — a fact that is not controlled by management prerogatives. task. . However. managerial and even a Vice Presidential positions in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Surigao del Sur. "wage" is defined in letter (f) as the remuneration or earnings. petitioners discriminated against them. the basis for the claim of the additional separation benefit of 17. Specifically. When it ceased operations. Heidi Soria. 1992 due to serious business reverses. during the life of the petitioner corporation. Anna Tetangco 57 . Ÿ In case of retrenchment to prevent losses. Jake Ng.. 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. 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. "What exactly does the term connote?" We correlate Art. "Pay" is not defined therein but "wage. However. however designated. one cannot squeeze blood out of a dry stone. its remaining employees were separated and given the equivalent of 12. for obvious reasons. Monina Lagman. Computation Ÿ Millares vs.e. some 58 kilometers from their workplace and about 2 1/2 hours' travel time by public transportation. NLRC (Heidi) Facts: Petitioners numbering 116 occupied technical. or other method of calculating the Irah Burog. piece. Monette Mesa. capable of being expressed in terms of money. the fact that less separation benefits were granted when the company finally met its business death cannot be characterized as discrimination. anchoring their claim solely on petitioner North Davao's long-standing policy of giving separation pay benefits equivalent to 30-days' pay. or commission basis. which is proscribed as an unfair labor practice by Art. Respondents contend that.. whichever is higher. inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems. Alpe Macalalad. Stated differently. In the case of North Davao.5 days is alleged discrimination.e. Where. upon its death as a going business concern. 97 of the same Code on definition of terms. not by reason of discrimination. Kristel Macatangay. Ÿ Art. it had been giving separation pay equivalent to 30 days' pay for every year of service.Labor II North Davao completely ceased operations in May 31. petitioners were given separation pay. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive. in which the aggregate losses amounted to over P20 billion — the Labor Code does not impose any obligation upon the employer to pay separation benefits." Both words (as well as salary) generally refer to one and the same meaning. Nor water out of parched land. the employees had to collect their salaries at a bank in Tagum. 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 . by denying the same separation benefits to private respondents and the others similarly situated. In the case before us. The law. 283 with Art. Since the law speaks of "pay. 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. its cash flow could still have sustained the payment of such separation benefits. computed on their basic monthly pay. they lodged a complaint for separation pay differentials. Indeed. Davao Del Norte. Art. unequal treatment of employees. its vital lifeblood — its cashflow — literally dries up. 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. in protecting the rights of the laborer.
is the employer. NLRC. Ysan Castillo. On May 7." "board. Monette Mesa. this fictional veil may be pierced whenever the corp personality is used as a means of perpetrating fraud or other illegal acts.Labor II same. NLRC) Ÿ NYK Intl vs. there was no reason at all for petitioners to resort to the above cases. the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer. 1997. which held that since a corporation is an artificial person. NLRC (Heidi) Facts: Publico was a sewer of NYK. Ransom Labor Union-CCLU v. a measure fully explained to all its employees. the employee concerned transfers to the company premises and his housing allowance is discontinued. HMC in opposition avers that the validity of the retrenchment was not in issue in the complaint filed by petitioners. is the manager of NYK. Kristel Macatangay. Publico went home early despite refusal of petitioner because she was not feeling well. lodging or other facilities. null and void. or for services rendered or to be rendered and includes the fair and reasonable value." In order to ascertain whether the subject allowances form part of petitioner's "wages. because a corp. as determined by the Secretary of Labor and Employment. Charms Haw. Complainants-petitioners then filed a complaint for illegal dismissal. of board. unfair labor practice and damages against HMC. Ransom. corporate officers are as a GR. Publico was refused entry for work and later informed of her dismissal. Effect of Acceptance Ÿ Anino vs. is included in "wage. In the case of the housing allowance. It cited the case of AFP Mutual Benefit Association." and. as determined by the Secretary of Labor. "fair and reasonable value as determined by the Secretary of Labor. When an employer customarily furnishes his employee board. Conformably with our ruling in A. 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. Heidi Soria. admittedly. 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. 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. she notified petitioner that she was still recovering from her sickness. has a separate and distinct personality. lodging or other facilities. respondent corporation did not submit an iota of evidence to show losses in its business operations and the economic havoc it would sustain imminently. The next day. vs. Ÿ In termination cases. the fair and reasonable value thereof. Ÿ What the Court finds apropos is our disquisition in A. that it merely exercised its management prerogative when it resorted to retrenchment as a means of preventing losses. being the "person acting in the interest of the employer. AFP-MBAIEU which ruled that such quitclaims are against public policy and. we ordered the corporate officers of the employer corporation to pay jointly and solidarily the private respondents' monetary award. In a subsequent case. HMC. 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. The subject allowances do not form part of petitioners wages. or other facilities customarily furnished by the employer to the employee.C." we divide the discussion on the following — "customarily furnished. once a vacancy occurs in the company-provided housing accommodations. C. Jake Ng." "Customary" is founded on long-established and constant practice connoting regularity. Anent the issue on the quitclaims." In other words the corporation. Alpe Macalalad. the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation given only to employees who have personal cars. On May 9. In the case at bar. by legal fiction. Monina Lagman. 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. lodging. in the guise of retrenchment. which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done. therefore. In this case Cathy Ng. in the technical sense only. LIABILITY OF CORPORATE OFFICERS Liability Rule Ÿ Unless they have exceeded their authority. NLRC (Heidi) Facts: Complainants-petitioners are employees of Hinatuan Mining Corporation (HMC) holding supervisory positions who organized the Hinatuan Mining Supervisory Union (HIMSU). dismissed complainants-petitioners who are active leaders of the union. 1997. Irah Burog. Dianne Miano. But in view of the previous discussion that the disputed allowances were not regularly received by petitioners herein. however. Edlyn Santiago. More recently. not personally liable for their official acts. Waivers and quitclaims are generally looked upon with disfavor. Jon Santos. Inc. On the other hand. (Bogo-Medellin vs. However. it must have an officer who can be presumed to be the employer. Anna Tetangco 58 .
with the company for the monetary award. Anna Tetangco 59 . (Collegio de San Juan de Letran-Calamba vs. either jointly or severally. nor did he hold Tan liable. where terminations of employment are done with malice or in bad faith. even though the latter was the General Manager. Ysan Castillo. in her capacity as manager and responsible officer of NYK. On appeal. petitioner was deprived of due process and denied "basic precepts of fairness" when she was terminated. Monette Mesa. 1991. 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. underpayment of wages and claim for indemnity against private respondent. 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. 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. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. Timbol) Unless they have exceeded their authority. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal.000. the business. Given petitioner's business position or standing before and at the time of termination and petitioner's business and financial position. corporate officers are. this petition for certiorari. social and financial position of the offended party and the business or financial position of the offender are taken into account. In determining the amount of moral damages recoverable. Thus. or was done in a manner contrary to morals. or is done contrary to morals. good customs or public policy. has a personality separate and distinct from its officers. 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. NLRC) dismissal with prayer for damages and attorney's fees. it must be shown that the dismissal of the employee was attended to by bad faith. Pursuant to prevailing jurisprudence. this fictional veil may be pierced whenever the corporate personality is used as a means of perpetuating fraud or an illegal act. evading an existing obligation. The amount of exemplary damages awarded is accordingly reduced too to P250. hence. cannot be exonerated from her joint and several liability in the payment of monetary award to private respondent. However. Tan’s real and personal property should not be burdened by such award. Alpe Macalalad. On January 3. Despite the expiration of their employment contract. vs. Heidi Soria. or constitutes an act oppressive to labor. because a corporation. Moral damages are recoverable only where the dismissal is attended by bad faith or fraud.00. 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. it does not necessarily establish bad faith. Here. Jon Santos. Edlyn Santiago. this Court reduces the amount of moral damages awarded to P500. (Acesite Corp. Hence. she was terminated.’s fees because there is no showing that bad faith and malice attended her dismissal. the alias writ of execution for said award should be directed only against the company and not against Tan.Labor II she falls within the meaning of an "employer" as contemplated by the Labor Code. Cathy Ng. or constituted an act opposite to labor. Charms Haw. or confusing a legitimate issue. Her resultant sufferings thus entitle her to an award of moral damages. not personally liable for their official acts. Ÿ 14. Jake Ng. The Labor Arbiter dismissed the complaints. 1990. corporate directors and officers are solidarily liable with the corporation. 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. Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis.000. On the other hand. Therefore. bad faith or malice was not proven. (Tan vs. Kristel Macatangay. Dianne Miano.00 which it finds reasonable.12 DAMAGES Moral/Exemplary Ÿ Villas is not entitled to moral and exemplary damages and atty. good customs or public policy. stockholders and members. Ÿ The Supreme Court held that the respondent was illegally dismissed. private respondent invoked Article 283 of the Labor Code. In cases of illegal dismissal. by legal fiction. however. Irah Burog. Villas) Ÿ Asia Pacific Chartering vs. petitioners separately filed complaints for illegal dismissal. as a general rule. 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. Monina Lagman. To warrant award of moral damages. Thus. petitioners were allowed by the private respondent to work until January 2. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. but by itself alone. Indeed. The labor arbiter didn’t make any such finding. A dismissal may be contrary to law. private respondent terminated petitioners' employment. 1991.
but as regular employees. In other words. 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. Thus. however. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. Tolosa contracted a fever and in the succeeding 12 days. not adjudication of a labor dispute to which jurisdiction of labor tribunals is limited. It is not the NLRC but the regular courts that have jurisdiction over actions for damages. petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages Ÿ Tolosa vs. 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. Ÿ An employer becomes liable to pay indemnity to an employee who has been dismissed if. Tolosa. Under Article 2221 of the Civil Code. Kristel Macatangay. in which the employer-employee relation is merely incidental. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. they were. and other labor benefits that are generally cognized in labor disputes. 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. It must be noted that a worker's loss of earning capacity and blacklisting are not to be equated with wages. According to the Court. nominal damages are adjudicated in order that a right of the plaintiff. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employeremployee relations. the employer fails to comply with the requirements of due process. Monina Lagman. or collective bargaining agreements. Dianne Miano. When petitioner filed a complaint with the POEA. Heidi Soria. the fact that the petitioners were allowed to continue working after the expiration of their employment contract was evidence of the necessity and desirability of their service to private respondent's business. not on a probationary status. Held: The Supreme Court affirmed the appealed decision. and not for the purpose of indemnifying the plaintiff for any loss suffered by him. other labor statutes. Hence. The NLRC. therefore. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. claims for an employer's violation thereof are beyond the jurisdiction of the labor arbiter. "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. The enforcement of this labor standard rests with the labor secretary. overtime compensation or separation pay. 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. Jon Santos. these relief must still be based on an action that has reasonable causal connection with matters. Jake Ng. Asia Bulk. the employment of petitioners is no longer on a fixed term basis. Petitioner's action was recovery of damages based on a quasi-delict or tort. Ÿ As a rule. through its manning agent." In the present case. Accordingly. Virgilio Tolosa who was hired by Qwana-Kaiun. affirmed by the Court of Appeals. the Labor Arbiter ruled in her favor. While in command of the vessel. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. While labor arbiters and the NLRC have jurisdiction to award not only relief provided by labor laws. to be the master of the Vessel named M/V Lady Dona. Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code. Edlyn Santiago. They have no jurisdiction over torts that have no reasonable causal connection to any of the claims provided for in the Labor Code. in effecting such dismissal. NLRC (Dianne) Facts: Petitioner was the widow of Capt. 1990. petitioners have become full-fledged regular employees. this appeal. or collective bargaining agreements. NLRC. Alpe Macalalad. Ysan Castillo. and in which the cause of action proceeds from a different source of obligation such as a tort. entitled to be reinstated to their former position as regular employees. transferred to the DOLE. 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. which has been violated or invaded by the defendant. With the continuation of their employment beyond the original term. and the said shipmates have no employer-employee relations with Capt. Charms Haw. other labor statutes. This provision is only a safety and health standard under Book IV of the same Code. which does not grant or specify a claim or relief. other labor statutes. may be vindicated or recognized. not merely probationary. his health rapidly deteriorated resulting in his death. Monette Mesa. Petitioner is actually suing shipmates Garate and Asis for gross negligence. Anna Tetangco 60 .Labor II Held: The Supreme Court held that petitioners should be reinstated to their former position as meter readers. Irah Burog. the Court held that petitioners are entitled to full backwages. Moreover. Moreover. or collective bargaining agreements. but also damages under the Civil Code. jurisdiction over the action lies with the regular courts — not with the NLRC or the labor arbiters. It held that after October 31. Capt. ruled that the labor commission had no jurisdiction over the subject matter filed by petitioner. petitioner's claim for damages is not related to any other claim under Article 217.
oppressive or malevolent manner to warrant an award for exemplary damages. as in the instant case.900. Held: After careful perusal of the factual backdrop of the case. good customs or public policy. In the case at bar.00). Engrs.00 as exemplary damages are hereby awarded to each private respondent. Ysan Castillo. without her reinstatement forthcoming. Thus. taking into special consideration the gravity of the due process violation of the employer.. Maquiling filed a complaint against PTS for reinstatement or. (IIEE). The measures undertaken were relevant to the company-wide audit and investigation conducted within the institute. The amount of such damages is addressed to the sound discretion of the court.000. Antonio S. Anna Tetangco 61 . the Supreme Court ruled that Dr. 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. Actual or compensatory damages are not available as a matter of right to an employee dismissed for just cause but denied statutory due process. It may be also argued that actual or compensatory damages may be recovered in employment termination cases. Jr. no doubt. moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor. as well as moral damages in the amount of five hundred thousand pesos (P500. The suspension of petitioner without prior investigation is akin to Irah Burog. Inc. taking into account the relevant circumstances.00) was dismissed from service as Deputy Executive Director after serving PTS for twenty-three (23) years. (Kay Products vs. Maquiling. The award of such damages is based not on the Labor Code but on Article 2220 of the Civil Code. 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. good customs or public policy. we are not convinced that private respondents acted in a wanton or oppressive manner. Maquiling was employed by respondent Philippine Tuberculosis Society. for payment of full backwages and separation pay in accordance with Article 279 of the Labor Code. or is done in a manner contrary to good morals. Amador C. was effected in a wanton. the employer should indemnify the employee for the violation of his statutory rights. good customs or public policy. Maquiling. Exemplary damages may be awarded if the dismissal is effected in a wanton. The instant controversy fails to show that the dismissal of the employee was attended by bad faith. petitioner Dr. Ÿ This Court has consistently accorded the working class a right to recover damages for dismissals tainted with bad faith. Heidi Soria.. Such were not sufficiently proven. However. Dr. oppressive or malevolent manner. oppressive or malevolent manner as the private respondents were deprived of due process. Indeed. then earning a monthly salary of thirteen thousand nine hundred pesos (P13. Monette Mesa. Exemplary damages on the other hand may be awarded only if the dismissal was effected in a wanton. CA) Gonzales is not entitled to moral and exemplary damages. Inc. Calado. Sagum is another hapless employee whose dismissal was ruled to be illegal but. The award must be based on clear factual and legal bases and correspond to such pecuniary loss suffered by the employee as duly proven. Evidently. Maquiling shall only be entitled to an award for nominal damages. PTS was remiss in its duty to observe procedural due process in effecting the dismissal of Dr. Charms Haw. there is less degree of discretion to award actual or compensatory damages. or render it illegal. is still on the outside looking in. and Fe M. or that the employer committed an act oppressive to labor to warrant an award for moral damages.000." which we sought to deter in the Serrano ruling. the amount of P10. Ÿ Ÿ Where the dismissal is for just cause. Alpe Macalalad.00 as moral damages and P5. Herrera. Jon Santos. 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. (Acesite Corp. 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. Held: The Supreme Court rejected petitioner's claim for moral and exemplary damages. On 8 June 1991. Edlyn Santiago. oppressive or malevolent manner. in the alternative. Edward L. Jake Ng. (PTS).000. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now. Kristel Macatangay. Dianne Miano. Hence. Jr. the lack of statutory due process should not nullify the dismissal. However. vs. The dismissal.00) and exemplary damages in the amount of one hundred thousand pesos (P100.Labor II before the labor arbiter. Monina Lagman.000. or was done in a manner contrary to morals. Exemplary damages may avail if the dismissal was effected in a wanton. Barrientos. Dr. pay later. Dr. Mendoza. Maquiling vs Philippine Tuberculosis Society (Dianne) Facts: On 16 April 1968. Maquiling was indeed validly dismissed for just cause. Petitioner Marilyn T. Neither will an award for moral damages nor exemplary damages prosper. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case. or ineffectual.
who has served at least five (5) years in the said establishment. After six months. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. 1993. The amount of such damages is addressed to the sound discretion of the court. Ÿ The award of moral and exemplary damages is proper when an illegally dismissed employee had been harassed and arbitrarily terminated by the employer. Monina Lagman. Exemptions. he became branch manager from 1981 to 1990.Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. Jon Santos. That an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided therein. mental anguish or serious anxiety as the result of the actuations of the other party. In case of retirement. regardless of their position. abusive language or any species of violence. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. He requested copies of pertinent documents to enable him to explain his side but petitioner corporation allegedly did not oblige. as when the latter committed an antisocial and oppressive abuse of its right to investigate and dismiss an employee.00. Jake Ng. Promoted. Heidi Soria. He was placed under preventive suspension on October 16. and auditor from 1990 to 1996. through an EXECOM meeting. Ysan Castillo. Act No. 287. to be malicious as they were fact-based. designation or status and irrespective of the method by which their wages are paid. Inc. Anna Tetangco 62 . On June 11. an employee upon reaching the age of sixty (60) years or more. 1997. This rule shall apply to all employees in the private sector. General Statement on coverage. Kristel Macatangay. Unless the parties provide for broader inclusions. Alpe Macalalad. Book VI. 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. 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. 7641 which took effect on Jan. Held: Considering the prevailing circumstances in the case at bar. we do not find the articles published in private respondent institute's publication. It was believed that this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. Charms Haw. except to those specifically exempted under Section 2 hereof. Omnibus Rules Rule II Retirement Benefits SECTION 1. 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.000. respondent Cabanit was informed that he erred in recording US$40 and was later suspended from July 1-31. he became its regular employee. the term “Act” shall refer to Rep. 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.Labor II preventive suspension which was necessary pending investigation of company records which she had access to. Despite the presence of security guards. 1997 and required to explain in 15 days why he should not be dismissed due to irregularities committed. Retirement ART. petitioner corporation. he was required to appear before petitioner corporation's office and its Executive Committee pursuant to two letters. It is not enough that one merely suffered sleepless nights. assigned to the accounting department. a fraction of at least six (6) months being considered as one whole year. adopted a resolution terminating his employment effective October 16. Lastly. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. latter under the Labor Code and its Implementing Rules. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. it provides a vindication or recognition of this fundamental right granted to the Ÿ Section 15. On November 18. 2. taking into account the relevant circumstances. Edlyn Santiago. The Electrical Engineer. however. 7. Subsequently. 1997. At the very least. petitioner did not even allege that there was use of force. . Retirement. As used herein. 1997 but the suspension was rescinded and he was assigned as general auditor. 1997. Dianne Miano. the Supreme Court deemed it proper to fix the nominal damages at P30. 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. Rule II. This rule shall not apply to the following employees: Irah Burog. Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code. SEC. Retail. Monette Mesa. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment.
and Provided. b) The cash equivalent of not more than five (5) days of service incentive leave. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and hours. coconut. Ysan Castillo. growing and harvesting of any agricultural or horticultural commodities. cultivation.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment. subject to the provisions of Rule VII-A. 2. 4. however. 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. Kristel Macatangay. tobacco. This term refers to all farming activities in all its branches and it includes.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.1 Optional retirement. Jake Ng. or other facilities customarily furnished by the employer to his employees. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who Irah Burog. 4. Retirement under CBA/contract.1 In the absence of an applicable agreement or retirement plan. Edlyn Santiago. or other method of calculating the same. and includes the fair and reasonable value.3 Upon retirement of an employee.3 Employees of retail. raising of livestock or poultry. Heidi Soria. compulsory retirement.O. . (Deleted by D. That if such benefits are less. In case the employer’s contribution is less than the retirement benefits provided under this Rule. 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 in this subsection: a) “Retail establishment” is one principally engaged in the sale of goods to end-users for personal or household use. regular holidays and mandatory fulfillment of a military or civic duty.Labor II 2.2 Compulsory retirement.3 One-half month salary of employees who are paid by results. the term “one-half month salary” shall include all the ff. b) “Service establishment” is one principally engaged in the sale of service to individuals for their own or household use and is generally recognized as such. 3. The term does not include cost of living allowance. pineapple. task. 3. SEC. including GOCC’s if they are covered by the Civil Service Law and its regulations. but does not include the manufacture and/or processing of sugar. Charms Haw. abaca. his services may be continued or extended on a case to case basis upon agreement of the employer and employee. c) One-twelfth of the 13th month pay due the employee. 5. Jon Santos. the cultivations and tillage of the soil. further. aquatic or other farm products. production. Anna Tetangco 63 . Optional. . 4. the employer shall pay the deficiency. Monette Mesa. an employee shall be retired upon reaching the age of sixty-five (65) years. Monina Lagman. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). of food. piece or commission basis. 3. That an employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. the culture of fish and other aquatic products in farms or ponds.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. 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. 5. 5.1 Employees of the National Government and its political subdivisions. It shall lose its retail character qualified for exemption if it is engaged in both retail and wholesale of goods. 4.4 Service requirement.2 In case of retirement under this section. Dianne Miano. and any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming operations.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. 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. As used herein. among others. 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.: a) 15 days salary of the employee based on his latest salary rate. as determined by the Secretary of Labor and Employment. 4. lodging. SEC. whether such payments are fixed or ascertained on a time. series of 1994) 2. 20. 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. Retirement benefits. dairying. c) “Agricultural establishment/operations” refers to an employer which is engaged in agriculture. For covered workers who are paid by results and do not have a fixed monthly rate.2 Components of One-half (½) Month Salary. Where there is no such plan or agreement referred to in the immediately preceding subsection.2 Domestic helpers and persons in the personal service of another. a fraction of at least 6 months being considered as one whole year. No. Alpe Macalalad. service and agricultural establishment or operations regularly employing not more than ten (10) employees. 5.For the purpose of determining the minimum retirement pay due an employee under this Rule. SEC. whether optional or compulsory.
The ADS is the average salary for the last twelve (12) months reckoned from the date of their retirement.1 In the absence of an applicable employment contract. Order No. winzes. SEC. That if such benefits are less. 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. drifts. if the following requirements are met: i) The benefit plan must be approved by the BIR. SEC. 1 Coverage. further. 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. Relations to agreements and regulations. 4. Jake Ng.2 Compulsory retirement. 3. Penal Provision. SEC. 2. The retirement pay provided in the Act may be exempted from tax if the requirements set by the BIR under Sec. Retirement benefits. retirement and separation pay constitute compensation subject to withholding. 1.1 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. a fraction of at least 6 months being considered as one whole year. the term “one-half month salary” shall include all the ff. This Rule shall apply to all underground mine employees as contemplated under RA No. “employees”. 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. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. Jon Santos.Labor II are paid by results.3 Where both the employer and the employee contribute to a retirement fund in accordance with CBA or other applicable employment contract. 12-86 dated Aug. Anna Tetangco 64 . and Provided. 9 dated May 4. Kristel Macatangay. 3. the underground mine employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any CBA and other agreements: Provided.Pensions. Retirement under CBA/contract. retirement and separation pay. 2. or “covered workers” shall mean underground mine employee/s. . . The term “Act” refers to RA 7641 as amended by RA 8558. tunnels. to wit: Pensions. SEC. 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. As used herein. In case the employer’s contribution is less than the retirement benefits provided under this Rule. individual/collective agreements or employment practices or policies. working places whether abandoned or in use beneath the earth’s surface for the purpose of searching for and extracting mineral deposits. an underground mine employee shall be retired upon reaching the age of sixty-five (65) years. That the said employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule.2 Components of One-half (½) Month Salary. except the following: a) Retirement benefits received by officials and employees of private firms under a reasonable private benefit plan maintained by the employer. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. SEC. 2(b) item (1) of Revenue Regulations No. 1986 are met. Charms Haw. 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. 4. Exemption from tax. 8. crosscuts. Ysan Castillo. Effectivity. 8558. 3. 4. As used herein. Violations thereof shall be subject to the penal provisions provided under Art. 6. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. 1993 when the Act went into force. Monina Lagman. Alpe Macalalad. however. Edlyn Santiago. 3.3 Service requirement. 9.The minimum length of at least 5 years required for entitlement to retirement pay shall include authorized absences and vacations. Dianne Miano. divided by the number of actual working days in that particular period. supplements or payments as provided in existing laws. 7. SEC. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and Irah Burog. This rule took effect on January 7..: a) 15 days salary of the employee based on his latest salary rate. Heidi Soria.1 Optional retirement. subject to the provisions of Section 4 hereof on the payment of retirement benefits.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of underground mine employees in the establishment. the employer shall pay the deficiency.2 In case of retirement under this section. SEC. 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. Rule II-A (Dep. an underground mine employee refers to any person employed to extract mineral deposits underground or to work in excavations or workings such as shads. Where there is no such plan or agreement referred to in the immediately preceding subsection.For the purpose of determining the minimum retirement pay due an employee under this Rule. holidays and mandatory fulfillment of a military or civic duty. 288 of the Labor Code of the Philippines. Monette Mesa. For these purpose. 1998) SEC. the terms “employee”. All rules and regulations. Optional Retirement and Compulsory Retirement 2. raises. 2.
Exemption from tax. 442. c) One-twelfth of the 13th month pay due the employee. SEC. "An underground mining employee upon reaching the age of fifty (50) years or more. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who are paid by results. A workforce audit showed that Irah Burog. Violations thereof shall be subject to the penal provisions provided under Art. as amended. Dianne Miano.3 One-half month salary of employees who are paid by results. AS AMENDED. 15. 1998. or other facilities customarily furnished by the employer to his employees. For covered workers who are paid by results and do not have a fixed monthly rate. Ysan Castillo. a fraction of at least six (6) months being considered as one whole year. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. "Unless the parties provide for broader inclusions. 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. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). of actual working period. Charms Haw. "Retail. however.Retirement. SEC. bargaining agreement or other applicable employment contract. Benjamin Biete and Hermogenes Mamayson ("petitioners") are former supervisors of respondent Philex Mining Corporation ("Philex"). but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. task. or other method of calculating the same. may retire and shall be entitled to all the retirement benefits provided for in this Article. and includes the fair and reasonable value. Effectivity. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. 6. The term does not include cost of living allowance. That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. whether such payments are fixed or ascertained on a time. The ADS is the twelve (12) month of their retirement. 8558 AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. but not beyond sixty (60) years which is hereby declared the compulsory retirement age for underground mine workers. 5. In 1992. Kristel Macatangay. who has served at least five (5) years as underground mine worker. is hereby amended to read as follows: "ART.Article 287 of Presidential Decree No. otherwise known as the Labor Code of the Philippines. Penal Provision. "In case of retirement. 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. 1998 when the RA 8558 went into force. 8. 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. (Dianne) Facts: Petitioners Roberto Ariola. as determined by the Secretary of Labor and Employment. Jake Ng. 4. lodging. Monina Lagman. whichever comes earlier. Approved: February 26. Jon Santos. individual/collective agreements or employment practices or policies. Philex adopted several measures including reducing personnel through early voluntary retirement and retrenchment programs. Relations to agreements and regulations. The retirement pay provided in the Act may be exempted consistent with the requirements set by the BIR.01 Retirement REPUBLIC ACT NO. To save costs. Philex sustained financial losses in its operations. Monette Mesa. SEC. "Nothing in this Article shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices." SECTION 2. 1998 Published in Malaya and Manila Times on March 7. 288 of the Labor Code of the Philippines. Heidi Soria. of food. an employee upon reaching the age of sixty (60) years or more. Franco Mallare. 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. 442. All rules and regulations. piece or commission basis. Edlyn Santiago. SEC. "Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code.Labor II hours. "In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. Alpe Macalalad. 287. b) The cash equivalent of five (5) days of service incentive leave. supplements or payments as provided in existing laws. This rule took effect on March 2. subject to the provisions of Rule VII-A. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. 9. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. — Any employee may be retired upon reaching the retirement age established in the collective Definition Ÿ Ariola vs Philex Mining Corp. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. 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. Anna Tetangco 65 . who has served at least five (5) years in the said establishment.
Stated conversely. at which time she would be 57 years old. 30 April 1993. In the present case. Philex shall pay backwages as computed above plus. All of them signed Deeds of Release and Quitclaim in Philex's favor. . On 14 May 1993. Charms Haw. Philex paid them separation pay. For this reason. leaving 241 positions for retrenchment. However." 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. an employer is free to impose a retirement age less than 65 for as long as it has the employees' consent. 1992. reinstatement is out of the question. Held: Petitioners' retrenchment was illegal. 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. hired Marilyn Odchimar Gerlach. received from Philex termination notices informing them of their retrenchment under their respective MOAs effective 30 June 1993. we grant her separation pay in lieu of reinstatement. Thus. separation pay equal to one-half month pay for every year of service. On 29 April 1993. Ÿ Jaculbe vs Silliman University (Dianne) Facts: Sometime in 1958. we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII. petitioners. Petitioner is now 71 years old and therefore well over the statutory compulsory retirement age. Phils. However. Ÿ By themselves. a voluntary agreement between the employer and the employee whereby the latter. petitioner. Edlyn Santiago. the amounts petitioners received as net separation pay should be deducted from their backwages. Article 287 of the Labor Code provides: ART. 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. after reviewing the assailed decision together with the rules and regulations of respondent's retirement plan.000 in 1992. The following day. At this point. which allegedly evidence receipt of “retirement gratuities. If reinstatement is no longer possible because the positions petitioners held no longer exist. the union representing the supervisory employees also signed a Memorandum of Agreement ("supervisors' MOA") with Philex similarly prescribing the criteria for retrenchment. As already stated. informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18. the vouchers in question. of its plan to retrench 241 employees.173. respondent Reuters Limited. 1982." Philex re-assigned some of the employees belonging to this group while others took early retirement. Baguio City. 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. Philex could ill afford to experiment with other cost-cutting measures before resorting to retrenchment as the situation called for immediate and drastic action. Kristel Macatangay. citing "company policy. Heidi Soria.743. respondent Reuters implemented a Irah Burog. Jake Ng. Thus. . A Types Ÿ Gerlach vs Reuters Limited (Dianne) Facts: On February 15. respondent was guilty of illegal dismissal. 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.000 in 1993. . Alpe Macalalad. On 1 June 1993.” do not suffice brief exchange of letters between petitioner and respondent followed. petitioner began working for respondent's university medical center as a nurse. By its express language. the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her.Labor II Philex had 310 "excess positions. to be computed from the time of her illegal dismissal on November 18. Monina Lagman. Petitioners are thus entitled to reinstatement with full backwages. 1993. It is also for this reason that we modify the award of backwages in her favor. after reaching a certain age agrees to sever his or her employment with the former. Article 283 of the Labor Code governs retrenchment to prevent losses. 1993 up to her compulsory retirement age. beyond Philex's projected loss of P187 million. Ÿ Retirement is the result of a bilateral act of the parties. through its Human Resources Development Office. Jon Santos. Dianne Miano. a company engaged in news dissemination with offices worldwide. also known as the provision on Social Justice and Human Rights. Cordillera Administrative Region. in lieu of reinstatement. Monette Mesa. On October 1." Respondent required certain documents in connection with petitioner's impending retirement. Ysan Castillo. In a letter dated December 3. respondent. Retirement — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. finding that Philex suffered an operational loss of P33. (Reuters). 1983. Anna Tetangco 66 . with six other supervisors and 49 rank-and-file employees. 287. This ballooned to P283. An independent auditor confirmed Philex's claim of financial losses. as its local correspondent. But respondent stood pat on its decision to retire her. Philex informed the Department of Labor and Employment ("DOLE"). Philex's financial condition before and at the time of petitioners' retrenchment justified petitioners' retrenchment.
Retirement. whichever is higher. It is this third type of retirement scheme which covers respondent's Plan. Consequently. The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them. which is in accord with the above provision. she questioned the amount she received as well as her entitlement to a disturbance grant. . Retirement benefits. 1983. 14. Charms Haw. and they received separation pay double that required by the Labor Code. contending that her retirement benefits must be computed on the basis of her actual salary abroad. The third type is one that is voluntarily given by the employer. We have held that it is a statutory right designed to provide the employee with the wherewithal during the period that he is looking for another employment. Dianne Miano. Jon Santos. It follows that the amount of retirement benefits of a retiring employee assigned abroad is based on his notional salary. invoking the retirement plan of the company which they said was contractual rather than statutory. Monina Lagman. not on her notional salary. like the Social Security Act. Article 287 of the Labor Code reads: "Article 287. Heidi Soria. On January 23. Rachel Addison. petitioner's theory that the computation of her retirement benefits should be based on her basic annual salary while stationed abroad is untenable. but an employee-participant may volunteer to contribute a percentage of his basic monthly salary to the fund. were the petitioners still entitled to the retirement benefits? Held: Yes. apprised her of the details of her forthcoming assignment. Monette Mesa. respondent assigned petitioner as a journalist to Reuters Singapore. and is computed at least one month salary or at the rate of one-half month salary for every year of service. 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. Jake Ng. 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. vs. Before leaving.228. respondent based petitioner's retirement benefits on its Plan and established policy. where not mandated by law. Inc. However. Ÿ There are three kinds of retirement schemes. she opted not to contribute to the fund. In fact. Drilon. . 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. provides: "Sec. However. may be granted by agreement of the employees and their employer or as a voluntary act on the part of the employer. 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. The computation was based on her notional salary. Eventually. NLRC (Monina) Facts: The petitioners’ services were terminated on the ground of retrenchment. Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code. under the Plan. The first type is compulsory and contributory in character. Significantly.04. Ysan Castillo. On March 1. She worked in Reuters Philippines up to December 23. It is very clear that from the very start of her first assignment overseas. In Llora Motors. Retirement benefits are intended to help the employee enjoy the remaining years of his Irah Burog. which include retrenchment. Thereafter. Edlyn Santiago. which amount was determined by the trustee bank (Bank of the Philippine Island) in accordance with the provisions of the Plan. a money claim against respondent. Held: We agree with the Court of Appeals that petitioner's retirement benefits must be based on her notional Philippine salary. expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. petitioner received her retirement benefits under the Plan in the amount of P79. Petitioner was automatically covered by the Plan by reason of her age and length of service. (b) a collective bargaining or (c) other agreements.Labor II local Retirement Benefit Plan (Plan) for its Philippinehired employees. — (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 . — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. respondent apprised her that the company's contribution to the Plan is based on her notional Philippine salary. Ÿ Retirement benefits. Kristel Macatangay. the company's contribution to the fund is 10% of the basic monthly salary of each participant." Thus. The Plan is funded by the company." 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. Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code. both actual and notional. specifically that her home base will always be the Philippines. Section 14(a). Nonetheless. Anna Tetangco 67 . Reuters' Eastern Region Staff Manager. 1984. 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. Basis Ÿ Aquino vs. 1991. Issue: Having received the separation pay. petitioner filed with the Office of the Labor Arbiter. they demanded retirement benefits. NCR. in the instant case. Alpe Macalalad. In case of retirement.
after reaching a certain age. Issues: whether Lopez is entitled to retirement benefits even though at the time of the retrenchment she has not yet reached the mandatory retirement age. Ÿ Retirement (benefits) result from voluntary agreement between the employees and the employer whereby the former. Resignations and Terminations. Consequently. Settled is the rule that not all quitclaims are per se invalid or against public policy. the NSC explicitly disallows payment of retirement benefits in case of retrenchment. It was turned down. When a manpower reduction was implemented. Alpe Macalalad. whether the retirement plan expressly prohibits the payment of retirement benefits to employees terminated for cause Held: No. issued a memo announcing retrenchment and one of the affected employees was Lopez. PNOC Shipping and Transport Corp (Monina) Facts: Gamogamo was first employed with DOH (as dentist) for 14 years. All terminations other than for cause will be governed by the applicable provision of the Labor Code of the Philippines. In the case at bar. corporation employed employees and of them was Divina Lopez. Interpretation Ÿ Lopez vs. however. Jon Santos. With the inclusion of the provision abovementioned in the retirement plan. Since the retirement pay solely comes from PNOC’s funds. and (2) where the terms of settlement are unconscionable on their face. 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. Dianne Miano. morals. it also behooves us to protect the sanctity of contracts that do Irah Burog. Monina Lagman. The retirement plan is a binding agreement. lessening the burden of worrying for his financial support. for the purpose of computing an employee’s retirement pay. then said employee is entitled to the benefits embodied in the agreement in addition to whatever benefits are mandated by statute. 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. 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. be upheld. the retirement plan is succinct in denying such benefits. There is. the 5-year expansion program and the Integrated Steel Mill Project. Monette Mesa. We cannot presume that it forms an implicit part of either the CBA or the law. IV. 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. While it is our duty to prevent the exploitation of employees. thus. Subsequently. Since retirement pay solely comes from company funds in this case. Afterwhich he was hired by LUSTEVECO. petitioner requested to be included in the retrenchment schedule. Charms Haw. Issue: whether. Creditable service referred to in the retirement plan is the retiree’s continuous years of service with the company. especially where there are strong equitable considerations as in this case. Anna Tetangco 68 . The provisions of the NSC's retirement plan which petitioner admitted applies to her. a private domestic corporation. except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person.“ Although the CBA is silent as regards the grant or denial of retirement benefits to retrenched employees. 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. Here. provided. and are a form of reward for his loyalty and service to the employer. good customs. 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. does not give petitioner the right to her claimed benefits.Labor II life. B 2. Heidi Soria. ostensibly. PNOC acquired and took over the shipping business of LUSTEVECO. petitioner is qualified to receive benefits granted by the GSIS by his employment in DOH. Kristel Macatangay. no necessity of expressly providing that retirement pay and retrenchment pay are mutually exclusive. agrees to sever his employment with the latter. not being contrary to law. it is but natural that PNOC shall disregard petitioner’s length of service in another company for the computation of his retirement benefits. therefore. intimidated or deceived into signing the Release and Undertaking. — No retirement benefits are payable in instances of resignations or terminations for a cause. When the corporation suffered losses. it is but natural that it should disregard Gamogamo’s service in another company for the computation of his retirement benefits. the totalization principle in RA 7699 cannot be availed of because it is resorted to only when retiree does not qualify for benefits in either or both the SSS and GSIS. Jake Ng. National Steel Corp (Monina) Facts: National Steel Corporation embarked on 2 massive projects. In addition. 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. Edlyn Santiago. Gamogamo vs. “E. We discern nothing from the record that would suggest that petitioner was coerced. Ysan Castillo. public order or public policy and must. there is no such provision. that an employee who resigns voluntarily after he has qualified for optional early retirement under Art.
Article X thereof.S. Consequently. petitioners instead of receiving their separation pay. Dianne Miano. under the law should be given separation pay. for as of that day. because by the terms of those very same retirement plans invoked by him. amounting to grave abuse of discretion. petitioner was placed by the Central Bank under a conservator for protecting its assets. Accordingly and considering their Releases and Irah Burog. Here. to resolve the issue. may be ascribed to the Commission. pursuant to the CBA. NLRC (Monina) Facts: At the time the controversy started. and Puerto Rico. which is the retirement age fixed by the Labor Code. Age Ÿ MAI Phils. 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. No provision in the CBA authorizes the grant to petitioners of retirement benefits in addition to their retrenchment pay.A. 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.Labor II not contravene our law. decided to file a case against the petitioner for unfair labor practice and for flagrant violation of the CBA provisions. 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. specifically cited by him. Rationale Ÿ Producers Bank vs. petitioners were separated from the service for cause. its refusal. It is a fact that petitioners were involuntarily separated from service and thus. Private respondent thus. vs. such interpretation cannot be made here. As a result of said complaint. Ÿ Ÿ While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be benefited. Alpe Macalalad. Article XI of the CBA regarding the retirement plan and Section 4. Nolasco reached the compulsory retirement age of 60 years set by the Labor Code. It is also noteworthy that at the time of the filing of the second complaint Nolasco was already 60 years old. pertaining to uniform allowance. suffered substantial losses. Ysan Castillo. Yet a serious mistake. Issue: whether or not Nolasco is entitled to retirement benefits Held: No. Issue: whether the grant of “retirement benefits” to petitioners as shown in their quitclaims precludes their availment of retirement benefits pursuant to the CBA Held: A perusal of the provision of petitioners' CBA on retirement readily shows that the same is optional on the employees who have served private respondent company for at least 15 years. resulting in an impasse between the petitioner bank and the private respondent union. The same however. they are no longer entitled to retirement benefits. Anna Tetangco 69 . 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. in light of clear lack of consensual and statutory basis of the grant of retirement benefits to the petitioners. Monina Lagman. Jon Santos. and there is no reason to invalidate their Releases and Quitclaims. only received their retirement benefits plus other benefits which represent the totality of their claims from private respondent company. 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. Given such facts. It appears that when the private respondents sought the implementation of Section I. The Court will not disturb this finding for upon review of the said quitclaims. 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. Monette Mesa. and Nolasco's claim — that under MAI's retirement plans. the retirement age is 65 — is wrong. it adopted an organizational streamlining program that resulted in retrenchment or termination from service of 17 workers. Heidi Soria. Private respondent company in its notice of termination to petitioners stated that the latter would receive their separation pay. NLRC (Monina) Facts: Mai Philippines dismissed its Custom Engineering Manager Rodolfo Nolasco. he had already reached the age of 60 years. 1982. the acting conservator of the petitioner expressed her objection to such plan. Salomon vs. and that is. Charms Haw. did not materialize as petitioners questioned the propriety of their retrenchment before the NCMB. the retirement age of 65 applied only to employees in the U. Ÿ Retirement laws are to be liberally construed in favor of the persons intended to be benefited. under the law should give separation pay. however. what each actually received is a separation pay. Kristel Macatangay. This dismissal was held to be illegal and it was declared that Nolasco be reinstated. it is apparent that the amount is representative of all the claims of petitioners. However. The deadlock continued for at least six months when the private respondent. Jake Ng. Edlyn Santiago. it is obvious that the conservator had no authority whatsoever to disallow the implementation of Quitclaims.
In fine. It is intended to help the employee enjoy the remaining years of his life. Petitioner filed for optional retirement upon reaching the age of 60. As correctly ruled by public respondent NLRC. but more importantly by the fundamental law of the land. releasing him from the burden of worrying for his financial support. the commissions which petitioner received were not part of his salary structure but were profit-sharing payments and had no clear. Section 4 of the CBA. and the Court cannot give its imprimatur for retirement. be recognized. 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. such that when it began paying Brion retirement benefits in said Eligibility Ÿ Reyes vs. Kristel Macatangay. private respondent no longer had the personality to file the complaint for them. Monina Lagman. if the employee is eligible. Jon Santos. Hence. NLRC (Monina) Facts: Rogelio Reyes was employed as salesman at Universal Robina’s Corporation Grocery Division. they do not effect any sale of article at all. However. must be met at the time of retirement at which juncture the right to retirement benefits. Brion was provided a monthly amount of retirement benefit. However. As such. It may be argued that petitioner may have exerted efforts in pushing the salesmen to close more sale transactions. Brion was adjudged by the SDA in 1983 to be qualified for retirement. under the SDA's retirement plan. since these must be protected as though there had been no interruption of service. however. 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. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted. it is not the criterion which would entitle him to a commission. Issue: Petitioner asserts since the employees have retired. Charms Haw. could not have been 'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales commissions. Edlyn Santiago.Labor II Article XI. 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. Dianne Miano. Here. the "overriding commissions" paid to him by Universal Robina Corp. Sometime. The very essence of retirement is the termination of the employer-employee relationship. 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. one of which is the protection of the labor union. When the retired employees were requesting that their retirement benefits be granted. It bears repeating that apart from the nonimpairment clause. Alpe Macalalad. they were not pleading for generosity but were merely demanding that their rights. what is also well-settled. for the purpose of prosecuting his claims. Accordingly. affect his employment status especially when it involves all rights and benefits due to him. Ÿ Brion vs. Reyes did not agree with the computation of the company and hence filed a complaint. as well as an effective inducement for remaining with the corporation. the basis in computing his retirement benefits is his latest salary rate of P10. Jake Ng. Unit Managers are not salesmen. direct or necessary relation to the amount of work he actually performed. he was excommunicated. as embodied in the CBA. Anna Tetangco 70 . when an employee has retired but his benefits under the law or the CBA have not yet been given. Monette Mesa. Therefore. he still retains. as it were. as a consequence of which no employee-employer relationship exists anymore between it and the employees. but the actual sale transactions brought about by the individual efforts of the salesmen. any commission which they receive is certainly not the basic salary which measures the standard or amount of work of complainant as Unit Manager. Union Mission (Monina) Facts: Brion became a member of respondent church 7th Day Adventist Church (SDA) sometime in 1949 until 1983 when he retired. its benefits are designed for those who have devoted their lives to the work of the SDA. Ysan Castillo.919. is the principle that when the conflicting interests of labor and capital are weighed on the scales of social justice. This negated the very concept of retirement. He eventually retired. the dominant influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the under-privileged worker. Section 1 and Article X. especially considering that the ideals of social justice and protection of labor are guaranteed not only by the Labor Code. the retirement of an employee does not. As was the practice of SDA. The collection made by the salesmen from the sale transactions was the profit of private respondent from which petitioner had a share in the form of a commission. 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. Heidi Soria. and are a form of reward for his loyalty. a continuing consideration for services rendered. the status of an employee entitled to the protection of the Labor Code. vests on him. the additional payments made to petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business.22 as the commissions he received are in the form of profit-sharing payments specifically excluded by the foregoing rules. 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. in itself. Held: Petitioner's contention in untenable. South Phil. Thus.
Ÿ Petitioners are entitled only to either the separation pay provided under Article 283 of the Labor Code. and length of service. While in all three cases. He now files a case for the collection of his retirement Irah Burog. the same being higher than what Article 283 of the Labor Code. the employees’ right to payment of retirement benefits and/or separation pay is governed by the Retirement Plan of the parties. 15. Upon reaching 65 he stopped working. 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. The union filed a notice of strike and subsequently picketed in front of the school. provides. Cruz however despite receiving separation pay asks for his retirement benefits. before a right to retirement benefits or pension vests in an employee. in case of retrenchment or cessation of operations. Cainta Catholic School Employees Union (Oreo) Facts: A CBA was entered into by the school and the union on March of 1986. arising as it did from a management prerogative granted by the mutuallynegotiated CBA between the School and the Union. Ysan Castillo. Global Communications (Oreo) Facts: PGC is in the business of telex and telegram. Dianne Miano. Under Section 4. Kristel Macatangay. 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.02 ACCRUAL OF BENEFITS Accrual Ÿ Cruz vs. or retirement benefits prescribed by the Retirement Plan. affected employees. Article VI 12 of respondent’s Retirement Plan. Ÿ Llora Motors vs. Ÿ Ÿ We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment of Llagas and Javier. Monina Lagman. this Court will not hesitate to adopt the latter interpretation. whichever is higher. 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. 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. Alpe Macalalad. Phil. are always given termination or separation pay equivalent to one month pay or at least ½ month pay for every year of service. Pursuant to the existing CBA. Where two constructions of a retirement plan are possible. 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. as amended. is the result of a bilateral act of the parties. petitioners are not entitled to both separation pay and retirement benefits. 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. respondent opted to pay petitioners separation benefits computed under the Retirement Plan. Monette Mesa. 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. Retirement. whichever is higher.Labor II year. There is no essential difference between the CBA provision in this case and those we affirmed in Pantranco and Progressive. he must have met the stated conditions of eligibility with respect to the nature of employment. As we held in Cipriano and Aquino. the last three (3) years of which must be continuous. it is indispensable that the employer establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. the employee to be terminated may be unwilling to part from service. Anna Tetangco 71 . After the election of union officers the school retired some of its official who rendered atleast 20 years of service as stated in the CBA. In other words. Under the Retirement Plan before us. Under Article 283 of the Labor Code. Twenty years is a more than ideal length of service an employee can render to one employer. vests in him. 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. Charms Haw. This is a condition precedent to his acquisition of rights. there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. In those two instances. The CBA in the case at bar contains no such infirmities which must be stricken down. as amended. Here. age. 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. it must have been convinced that Brion had devoted his life to the work of the SDA. and the other of which sanctions the severance by the retiree of his employment thereto at retirement. Heidi Soria. as amended. on the other hand. if the employee is eligible. Jon Santos. one of which requires the retiree to devote his life to the service of the church even after retirement. Edlyn Santiago. Ground Termination Cainta Catholic School v. Jake Ng.
Monina Lagman. 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. supra). 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. 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. Inc. Gratuity. like the Social Security Act.. Anna Tetangco 72 .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. in other words. GVM on the other hand denies having such liability. Alpe Macalalad. benefit or bounty given to the worker. and an additional or consensual retirement plan exists. Inc. Ysan Castillo. Drilon. He now files for monetary claims including his retirement benefits. He does not claim that there is a collective bargaining agreement or other applicable. Jon Santos. and are a form of reward for his loyalty to the employer. subject. Edlyn Santiago. like Article 287 of the Labor Code. is for the legislature to remedy.03 PRIVATE PLAN Employer Obligation GVM Security & Protective Agency vs. however. then payments under such retirement plan may be credited against the termination pay that is due. contract or an established company policy. Llora in its answer contend that Alviar abandoned his work. Retirement benefits. Catalina College vs. however. therefore. 91 SCRA 265 ). Jake Ng. to certain conditions. (Sta. granting him retirement benefits. Ÿ What needs to be stressed. is not intended to pay a worker for actual services rendered of for actual performance. 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. the purpose of which is to reward employees who have rendered satisfactory service to the company. Thus. releasing him from the burden of worrying for his financial support. v. Charms Haw. Kristel Macatangay. Respondent is not asking for retirement benefits due him under the Social Security Law. 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. Inc. NLRC (Oreo) Facts: Dulce an employee of GVM resigned after 28 years of service. 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. Dianne Miano. 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.Labor II benefits and ECOLA underpayments. NLRC) 15. There are three kinds of retirement schemes. Irah Burog. The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them (Llora Motors. on the other hand are intended to help the employee enjoy the remaining years of his life. 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. is that Section 14 of Implementing Rule I. v. The first type is compulsory and contributory in character. 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. Ÿ Ÿ As stressed in Llora Motors. Ople. 15. Heidi Soria. Monette Mesa. After being paid his cash deposit he executed a quitclaim. The third type is one that is voluntarily given by the employer. It is a money.
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