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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
job description. The employer has the burden of proving that the losses are Irah Burog. For it to be valid.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. In this case. b) efficiency and c) seniority. b) efficiency. its business to avoid further losses or mitigate expenses. it is not shown that Rivera and Macaspac’s positions were indeed unnecessary. The company alleged redundancy in their position as defense for dismissing them. Jake Ng. The characterization of an employee’s services as no longer necessary or sustainable. who was preventively suspended for alleged negligence in performance of duties and misrepresentation of bank rules and regulations.g. and the approval by the management of the restructuring. Ysan Castillo.. and 4) the alleged losses. Prudencio Tanjuan. Kristel Macatangay. Issue: Were the dismissals on the ground of redundancy valid? Held: No. and in this case. a) preferred status. Ÿ Golden Thread Knitting Industries vs. In this case. Issue: Was Panlilio’s dismissal on the ground of redundancy valid? Held: No. Evidence should have been presented to support this contention. and is not subject to the discretionary review on the aprt of the Labor Arbiter nor the NLRC. the retrenchment must be reasonably necessary and like to effectively prevent such losses. There was no substantial evidence to justify Panlilio’s dismissal on such ground. a Property Appraisal Specialist and a Department Officer-in-Charge. and c) seniority. 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. In exercising its right to retrench emplooyees. It is not enough for a company to merely declare that it has become overmanned. the losses expected must be substantial and not merely de minimis in extent. contrary to the ruling of the NLRC. 2) the losses are actual or reasonably imminent. 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. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac Criteria. decreased volume of business or dropping of a line or service activity. they were terminated due to retrenchment not redundancy.Selection of Employee Ÿ Panlilio vs. if already incurred. The fact alone that a mere portion of the business of an employer. 3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses. was one of those termininated. and the imminent losses sought to be forestalled are substantiated. 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. Monina Lagman. a Recreational Manager of Sheraton Hotel in oman. such as new staffing pattern. much less was the company’s claim supported by any evidence. Monette Mesa. Alpe Macalalad. and therefore properly terminable. 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. temporary employee). such as overhiring of workers. was dismissed 6 months after being hired on the ground that his position had become redundant. provided that violation of law or arbitrary or malicious action is not shown. the firm amy choose to close all. program. 283(c) of the Labor Code. such as but not limited to. Anna Tetangco 4 . Edlyn Santiago. NLRC (Eds) Facts: Moises Panlilio. The amount depends on the ground for the termination of employment. Retrenchment. one of which was the illegal dismissal of some union members. the expected losses must be reasonably imminent such as can be perceived objectively and in good faith by the employer. NLRC (Eds) Facts: Several charges were filed against Golden Thread Knitting Industries. Before any reduction of personnel becomes legal. viability of the newly created positions. Postal Savings Bank (Eds) Facts: Philippine Postal Savings Bank. Phil. or the expected imminent losses sought to be forestalled are proven by sufficient and convincing evidence. Jon Santos. The corp has sufficiently and convincingly established business reverses of the kind or the amount that would justify the retrenchment. Ÿ It is important for a company to have fair and reasonable criteria in implementing its redundancy Ÿ Tanjuan vs. in contrast to redundancy. The documents submitted do not present the necessary factors which would confirm that a position is indeed redundant. is shut down does not necessarily remove that measure from the ambit of the term “retrenchment” within the meaning of Sec. Dianne Miano. Charms Haw. Heidi Soria. is an exercise of business judgment on the part of the employer. however. feasibility studies/proposal. Ÿ In selecting the employees to be dismissed. Inc. not the whole of it. Such appraisal was not done in the instant case. such as but not limited to: a) less preferred status (e. or a part of. any claim of acutal or potential business losses must satisfy established standards as follows: 1) losses incurred are substantial and not de minimis. It is a measure of last resort when other less drastic means have been tried and found to be inadequate. Issue: Was Tanjuan’s dismissal illegal? Held: No. is an economic ground to reduce the number of employees.
Dianne Miano. efficiency. union and non-union members were treated alike. management must faithfully comply with the substantial and procedural requirements laid down by law and jurisprudence. Alpe Macalalad. There was also no proof that the program was designed to bust the union. Anna Tetangco 5 . Charms Haw. and c) seniority. Jake Ng. Asian Alcohol v. Issue: Were the private respondents illegally dismissed? Held: No. Monina Lagman. the notice shall be served at the worker's last known address. In this case. Reductions in work force to forestall business losses or stop the hemorrhaging of capital is allowed. b) efficiency. Under Art. and c) seniority. showing that the latter has accumulated losses and that there was no sign of its abating in the near future. physical fitness. NLRC The absence of criteria. real and substantial losses. age. In this case. In this case. such as status. Ysan Castillo. never contested the veracity of the audited financial documents offered by Asian Alcohol. “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. whichever is higher. actual and real. the audited financial statements submitted by the corp adequately supported their claim of actual. and that they were singled out for separation by reason of their active participation in the union. or standard for selection of dismissed employees renders the dismissals whimsical. NLRC Ÿ Employment of Independent Contractor. b) efficiency. Asian Alcohol’s management implemented an organizational plan and other cost-saving measures. 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. ?? The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. It is imperative for the employer to have fair and reasonable criteria in implementing its redundancy program. such as but not limited to a) preferred status. 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.Effect Asian Alcohol Corp vs. NLRC (Eds) Facts: Due to mounting business losses. xxx xxx xxx Sec. temporary employee). no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac. or if only expected are reasonably imminent are perceived objectively and in good faith by the employer. 2. Golden Thread Knitting Industries v. but substantial. Answer and hearing. Such requirements for retrenchment are: 1) that the retrenchment is reasonably necessary and likely to prevent business losses. serious. However. such as but not limited to: a) less preferred status (e. which. In cases of abandonment of work. Some of the dismissed union members filed a suit for illegal dismissal. Edlyn Santiago. The law allows an employer to downsize his business to meet clear and continuing economic threats. 283 of the Labor Code. Heidi Soria. Monette Mesa. The employer shall Irah Burog. 5. ?? 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. a fair and reasonable criteria must be used. actual and real. Jon Santos. Here. capricious and vindictive. seniority. Ÿ In selecting the employees to be dismissed. 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. if already incurred. claiming that Asian Alcohol used the retrenchment program as a subterfuge for union busting. and financial hardship for certain workers. 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. contrary to the respondents’ claim.g. Kristel Macatangay. Franco an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. Lopez Sugar Corp vs. Retrenchment must be undertaken by the employer before losses are actually sustained.Labor II serious. guidelines. private respondents. 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. as long as the requirements under the law are complied with. Besides. 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. Notice of dismissal. are not merely de minimis. whereby 21 union members and 51 non-union members were terminated on the ground that their positions had become redundant. 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.
and expected imminent losses sought to be forestalled. after less drastic means. or of automation. Where. Thus. conversion of the plant for a new production program or the introduction of new methods or more efficient machinery. 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. 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. Anna Tetangco 6 . whichever is higher. 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. allege any malfeasance or non-feasance on the part of the employee. Monette Mesa. shortage of materials. It is essentially required that the alleged losses in business operations be proven. The corp also failed to comply wikth the rule that retrenchment shall be a remedy of last resort. must also be proved by sufficient and convincing evidence. b) written notice to the employees and to the DOLE at least 1 month prior to the intended ndate of retrenchment. Such substantial loss apprehended must be reasonably imminent. Ÿ Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter. Retrenchment to prevent losses Irah Burog. be the Department of Labor and Employment and not an investigation or hearing to be held by the employer itself. The ground for retrenchment availed of was not sufficiently and convincingly established. (Wiltshire vs. there appears to us no need for an investigation and hearing to be conducted by the employer who does not. Jake Ng. NLRC) The three basic requisites for a valid retrenchment are: a) the retrenchment is necessary to prevent losses and such losses are proven. NLRC(Charms) C. resorted to by management during periods of business recession. The employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort. there are no allegations which the employee should refute and defend himself from. Distinction Redundancy and Retrenchment Ÿ AG & P United Bank and File Assn vs. however. Kristel Macatangay. In such case. Alleged losses if already realized. and c) payment of separation pay equivalent to 1 month pay or at least ½ month pay for every year of service. 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. would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination. (Wiltshire vs. NLRC) Defined FF Marine Corp vs. imminence can be perceived objectively and in good faith by the employer. 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". Section 5 gives the employee the right to answer and to defend himself against "the allegations stated against him in the notice of dismissal". Charms Haw. on the business and financial circumstances compelling retrenchment and resulting in redundancy. Retrenchment must also be reasonably necessary and likely to effectively prevent the expected losses. as in the instant case. industrial depression. the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee. 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. Edlyn Santiago. The losses expected should be substantial and not merely de minimis in extent. 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. The appropriate forum for such controversion would. The corp failed to adduce financial statements duly audited by independent external auditor. Alpe Macalalad. Heidi Soria. Monina Lagman. Again. Issue: Was the termination by virtue of the retrenchment program valid? Held: No. Ricardo Magno. to require petitioner Wiltshire to hold a hearing. or seasonal fluctuations or during lulls occasioned by lack of orders. at which private respondent would have had the right to be present. Lead Electrician for the corp. as such. 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. Dianne Miano. Ysan Castillo. to begin with.Labor II afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. (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".
As in the case of retrenchment. ACCI then sent its F & B Department employees individual letters informing them that their services were being terminated effective January 1. JAT hired private respondent Jose F. F & B Department had been incurring substantial losses in the aggregate amount of P8. Kristel Macatangay. and sold its equity in the Philippine Ÿ Irah Burog. the sales of heavy equipment declined because of the Asian currency crisis. this Court finds that the study report submitted by the internal auditor of petitioner. not to report for work starting on the first week of March 1998. Private respondent's "redundancy program.135. Ÿ Alabang Country Club vs. the company losses were duly established by the financial statements presented by both parties.727. is more precisely termed "retrenchment" because it is primarily intended to prevent serious business losses. Prior to the rendition of the decision of the Secretary of Labor and Employment. 1998 of its decision to permanently close its business and had submitted a termination report to the DOLE.T General Services vs." while denominated as such." which. Jake Ng. petitioners had notified private respondent and all other workers through written letters dated November 25. as implemented on March 1. In October 1997.00 in 1990 and was certain to become worse were it not for quick measures taken by petitioner. is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent.00. for which they signed documents of waiver." on the other hand. The closure of business operation by petitioners. Ysan Castillo. Consequently. some of whom were officers and members of the petitioner union. Both are mentioned in Art. Alpe Macalalad. 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. including private respondent. it must be proven that the losses incurred are substantial and actual or reasonably imminent. the Society began to experience serious financial difficulties when it incurred a deficit of P2 million. the only evidence submitted to prove its alleged losses. however. NLRC (Charms) Facts: In the proceedings before the NLRC. Charms Haw. Irene Campos-Ugalde. requested its Internal Auditor. 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. then President of ACCI. 283 of the Labor Code as just causes for the closing of establishments or reduction of personnel. As already stated. 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. 1 First. 1988. Jon Santos. Among these was a socalled "redundancy program. is one of the economic grounds for dismissing employees and is resorted to primarily to avoid or minimize business losses. NLRC Facts: Sometime in April 1997. Anna Tetangco 7 . the Society leased a property in Tayuman to a fastfood outlet.100. Consequently. The affected employees were given separation pay equivalent to one month pay for every year of service. Petitioner’s failure to prove that the closure of its F & B Department was due to substantial losses notwithstanding. for the closure of a business or a department due to serious business losses to be regarded as an authorized cause for terminating employees. in our view. cancelled its service agreement with a janitorial company. "Redundancy" exists when the services of an employee are in excess of what is required by an enterprise. Held: NO ILLEGAL DISMISSAL. 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. and that the condition of the company is not likely to improve in the near future. There was substantial proof that the company was incurring substantial losses.Labor II Facts: As a result of a deadlock in the negotiations for a collective bargaining agreement. the president of respondent company announced the adoption by the company of several cost-cutting measures to forestall impending financial losses. in 1989.000. Mascarinas as helper tasked to coordinate with the cleaning and delivery of the heavy equipment sold to customers. Heidi Soria. her report showed that from1989 to 1993. Edlyn Santiago. 4 "Retrenchment. contrary to the findings of the Labor Arbiter. Dianne Miano. it was shown that. The shortfall increased to P9. NLRC (Charms) Facts: Francisco Ferrer. There were no indications that an impending strike or any labor-related union activities precipitated the sudden closure of business. JAT indefinitely closed shop effective May 1998. Held: No Illegal Dismissal. the union declared a strike. JAT temporarily suspended its operations. Ÿ As did the appellate court. resulted in the layoff of around 177 employees.A. that the same increased through a period of time. Further. Held: No illegal dismissal. 1995. to conduct a study on the profitability of ACCI’s Food and Beverage Department (F & B Department). Coverage Philippine Tuberculosis Society vs. It advised its employees. 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. Monette Mesa. In the case at bar. Distinction Closure and Retrenchment Ÿ Ÿ J. which is allowed under Article 283 of the Labor Code. Monina Lagman.
for the law's phraseology explicitly uses the phrase "retrenchment to prevent losses." However. Anna Tetangco 8 . should invalidate the retrenchment. Alpe Macalalad. Finally. as such imminence can be perceived objectively and in good faith by the employer. Monette Mesa. Legazpi City. Ysan Castillo. and applied for exemption from minimum wage increases. On the contrary. Moreover. Held: ILLEGALLY DISMISSED. Charms Haw. 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. whether for profit or not. Procedure Ÿ Mayop Hotel & Restaurant vs. Jon Santos. financial statements. retrenchment as a measure adopted to stave off threats to its existence is available to it. Ÿ Balbalec vs. Held: ILLEGALLY DISMISSED. 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. 2 The retrenchment is the subject of the present suit. while waiting for the construction of a new Mayon Hotel & Restaurant at Peñaranda Street. and the reports of its external auditors for the years 1989 and 1990. both the past and forthcoming. to our mind. NLRC ruled: We noted with concern that the criteria used by the Society failed to consider the seniority factor in choosing those to be retrenched. we find substantial evidence that petitioners intended the termination to be permanent. 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. negotiated with the Government Service Insurance System for the restructuring of its obligations. 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. even if the scheme should result in savings for the employer. After all. retrenchment strikes at the very core of an individual's employment and the burden clearly falls upon the Irah Burog. 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. 1999. (2) The apprehended substantial losses must be reasonably imminent. pursuant to Article 286 of the Labor Code. therefore. 1989. a failure which.Labor II Long Distance Telephone Company (PLDT). Only nine (9) of the sixteen (16) employees continued working in the Mayon Restaurant at its new site. 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. 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. Jake Ng. (3) The retrenchment should reasonably necessary and likely to prevent effectively the expected losses. Petitioner presented to the NLRC the balance sheets." employer to prove economic or business losses with appropriate supporting evidence. its implementation of the scheme rendered the retrenchment invalid. Monina Lagman. Paulino Balbalec. The operation of the restaurant was continued in its new location at Elizondo Street. Things being equal. Heidi Soria. and implemented the retrenchment of one hundred sixteen (116) employees. Nor do we think the NLRC erred in holding that though the Society was justified in ordering a retrenchment. the hotel operations of the business were suspended on March 31. it disapproved the overtime pay of supervisory and managerial employees. the Rural Bank of Bangued dismissed three of its employees. While the closure of the hotel operations in April of 1997 may have been temporary. such as the respondent bank. even assuming arguendo that the cessation of employment on April 1997 was merely temporary. in the development of the countryside through its loan portfolios and other services to the rural folk. Legazpi City. Ÿ It need not be overemphasized that the State recognizes the pivotal role of small rural banks. it withdrew from the Pag-Ibig Fund Program. is simply unconscionable and violative of the senior employee's tenurial rights. retaining a newly hired employee and dismissing one who had occupied the position for years. We cannot. must be proven by sufficient and convincing evidence. Kristel Macatangay. Dianne Miano. to wit: (1) The losses expected and sought to be avoided must be substantial and not merely de minimis. Ÿ Although petitioner is a non-stock and non-profit organization. Second. obtained the waiver of personnel of their entitlement to wage differentials. 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. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of six (6) months. namely. as the omission immediately makes the selection process unfair and unreasonable. Edlyn Santiago. (4) The losses. since he would be paying the newcomer a relatively smaller wage. NLRC (Charms) Facts: On June 30. Indeed. say that the finding of the NLRC is unsupported by substantial evidence. we are satisfied that respondent bank undertook the drastic act of cutting down its workforce in order to prevent imminent substantial loss to its business.
The employer should have taken other measures prior or parallel to retrenchment to forestall losses. 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. a corporation engaged in the manufacture and export of ready-to-wear garments. Heidi Soria. Secondly. Alpe Macalalad. 2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of serve. Held: ILLEGAL DISMISSAL DUE TO FAILURE TO GIVE NOTICE.. be a certain degree of urgency for the retrenchment. represented by Lim. Anna Tetangco 9 . Monina Lagman. Franco Temporary Retrenchment Ÿ Sebugero vs. be reasonably necessary and likely to effectively prevent the expected losses. but certainly not the least important. the employees should either be recalled to work or permanently retrenched following the requirements of the law. thirdly. which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laidoff. it is recognized under Article 283 of the Labor Code. as such imminence can be perceived objectively and in good faith by the employer. and 4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. then petitioners should have complied with the requirements of written notice. in other words. Retrenchment is one of the authorized causes for the dismissal of employees. 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. the losses expected should be substantial and not merely de minimis in extent. Kristel Macatangay. Abelgas (Charms) Facts: On January 20. Dianne Miano. Monette Mesa. Because of the consequential nature of retrenchment. And even assuming that the closure was due to a reason beyond the control of the employer. Jon Santos. Jake Ng. The Court has laid down the following standards that a company must meet to justify retrenchment and to guard against abuse: “Firstly. alleged losses if already realized. cut other costs other than labor costs. 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. 1993. 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. After six months.Labor II Ÿ To say the least. 3) good faith in abolishing the redundant positions. Charms Haw. The “loss” referred to in this provision cannot be of just any kind or amount. the bonafide nature of the retrenchment would appear to be seriously in question. but more importantly. if it were true that the lay-off was temporary but then serious business losses prevented the reinstatement of respondents. NLRC (Charms) Facts: The petitioners were among the thirty-eight (38) regular employees of private respondent GTI Sportswear Corporation (hereinafter GTI). i. otherwise. the substantial loss apprehended must be reasonably imminent. section heads. and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. supervisors and department heads. Ÿ There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period or duration therefor. Lastly. whichever is higher. Lopez Sugar vs. To determine whether the petitioners were validly retrenched or were illegally dismissed. There should. informed the Department of Labor and Employment (‘DOLE’) of its intention to retrench some of its workers. it must. frequent machinery breakdown. must Ÿ Requirements. The intended retrenchment was grounded on purported financial difficulties occasioned by alleged lack of raw materials. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. it still has to accord its employees some relief in the form of severance pay. To remedy this situation or fill the hiatus. Edlyn Santiago. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character. A memorandum was thereafter issued by EMCO. and the expected imminent losses sought to be forestalled. Ysan Castillo. Resorted to by employers to avoid or minimize business losses. to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination. addressed to all its foremen. These employees cannot forever be temporarily laid-off. low market demand and expiration of permit to operate its sawmill department. 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.e. EMCO. 1993 and of March 2. Ÿ EMCO Plywood Corp vs.Standards Irah Burog. 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.
are not merely de minimis. Heidi Soria. efficiency. Held: Company losses were duly established by audited financial documents showing that the aquaculture operations of SMC’s Agribusiness Division accumulated losses resulting in the closure of its Calatrava Aquaculture Center in Negros Occidental. Ÿ The requirements are: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which. Ÿ San Miguel Corp vs. are reasonably imminent as perceived objectively and in good faith by the employer. (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. 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. actual and real. whichever is higher. Jon Santos. 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. regular or managerial employees). Tomas (Jake) Facts: A Memorandum was issued informing all employees that a comprehensive cost reduction program would be implemented by the Corporation. Monina Lagman. (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. Jake Ng. physical fitness. Any claim of actual or potential business losses must satisfy the following established standards: (1) the losses incurred are substantial. Ysan Castillo. whether they are temporary. Monette Mesa. 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. The failure of the employer to prove by convincing evidence any of the foregoing requirements will result in an illegal dismissal. seniority. expected losses. or if only expected. Federation of Free Workers(Heidi) Irah Burog.e. more than 100 new workers were hired.Labor II be proved by sufficient and convincing evidence. must be proved by sufficient and convincing evidence. Kristel Macatangay. as Blucor had failed to prove with clear and satisfactory evidence that legitimate business reasons existed to justify retrenchment. (3) the retrenchment can be fairly regarded as necessary and likely to be effective in preventing the expected losses. which led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant. (2) the losses are actual or reasonably imminent. however. For termination due to retrenchment to be valid. but substantial. Amarilla (Jake) Facts: Blucor notified Amarilla. Ÿ Philippine Carpet vs. not de minimis. The CA also found that the company had failed to show that retrenchment was reasonably necessary to avert substantial losses. Charms Haw. and 12 managers and supervisors were promoted. in order to give employees some time to prepare for the eventual loss of their jobs. Ÿ Not every loss incurred or expected to be incurred by an employer can justify retrenchment. and financial hardship for certain workers. if already incurred. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. age. vs. Alpe Macalalad. (3) that the employer pays the retrenched employees separation pay equivalent to one month pay or at least one-half month pay for every year of service. SMC has thus proven substantial business reverses justifying retrenchment of its employees.” Ÿ Blucor Minerals Corp. 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. or the expected imminent losses sought to be forestalled. the Middle East war and the 9/11 incident in the United States of America. if already incurred. and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. Edlyn Santiago. casual. and (4) sufficient and convincing evidence prove the alleged losses. After the retrenchment program was implemented. such as status (i. "on account of depressed business conditions brought about by the currency crisis in Southeast Asia. We believe that respondents acted in bad faith in terminating the employment of the members of petitioner Union. 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. serious. and the expected imminent losses sought to be forestalled. Petitioners failed to show any reasonable necessity for the retrenchment. The CA ruled that the dismissal was unjustified. including some of those who had been retrenched. Sto. Anna Tetangco 10 . as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination. Held: Respondents failed to adduce clear and convincing evidence to prove the confluence of the essential requisites for a valid retrenchment of its employees. and (d) the alleged losses. Aldiano and Parcon to the effect that Blucor is terminating their employment due to retrenchment.. Held: Decision of CA affirmed. Dianne Miano. if already incurred.
Ÿ Not every asserted possibility of loss is sufficient legal warrant for reduction of personnel. Held: Respondents assert that the company was taking losses of such magnitude which left its survival or future existence in the dark. it shut down three of these shops to avert serious business losses. to provide transportation services to personnel and dependents inside said facility. petitioner did not renew his contract because of "sliding incomes". thus petitioner cannot justify the nonpayment of separation pay. unjust. the company found no recourse but to shut down its outlets. petitioner Galace. since some. Joni’s Food Services (Jake) Facts: In the 1990s. Zambales. or under what circumstances. In its ordinary connotation. Monina Lagman. Tomas Ÿ Bogo Medellin Sugar Cane Planters vs. Jake Ng. respondents had no option but to lay off employees and eventually close shop. Heidi Soria. the employer becomes legally privileged to retrench and reduce the number of his employees. JFSI had 8 outlets for its coffee shop and restaurant business. NLRC (Jake) Facts: Petitioner SMJS had a contract with the U. In 1997. would be unduly oppressive. as found by the Court of Appeals. 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. closure to the Department of Labor and Employment (DOLE) and to the complainants who were then employed in the remaining branches or outlets. Charms Haw. in our view. One month before the target closure date of its remaining outlets. Phil. In other words. that petitioners failed to present adequate proof of such losses. what they Ÿ Cama vs. faced with dropping sales. and unfair to the employer. the remaining branches were also closed. JFSI shut down more outlets. the difficult question is determination of when.S. Alpe Macalalad. Held: Apparently. the possibility of incurring losses is constantly present. that law may well be vulnerable to constitutional attack as taking property from one man to give to another. the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have. Indeed. and not because of serious business losses. in the carrying on of business operations.Labor II Fact: Employer. he having suffered a net loss the prior year. indeed many. They that after the termination of the services of its members. As a consequence. 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. it held. To stem these serious losses. Jon Santos. Employer advised 110 casuals to report to its personnel office." Sliding Income Ÿ San Miguel Jeepney Service vs. allegedly to prevent losses due to major economic problems. When the said contract expired. Sto. To require an employer to be generous when it is no longer in a position to do so. in greater or lesser degree. Held: NLRC decision affirmed. The Court has held that the "loss' referred to in Article 283 cannot be just any kind or amount of loss. Naval Base Facility located in San Miguel. in other words. In the nature of things. leaving it with just three operating outlets at the end of 1998. Ysan Castillo. It is not. Kristel Macatangay. caused the retrenchment and retirement of a number of its employees. the services of the complainants were terminated. Petitioners herein are not entitled to separation pay under Article 283 of the Labor Code. due to financial difficulties. of the factors which impact upon the profitability or viability of such operations may be substantially outside the control of the employer. San Antonio. Monette Mesa. Dianne Miano. if such an intent were expressly written into the law. in fact. Carpet vs. NLRC (Jake) Facts: While Respondent Commission agreed with petitioners that management had the prerogative to terminate employment on account of business reversals. owner and general manager of SMJS. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. JFSI sent notices of Irah Burog. otherwise. Edlyn Santiago. not all business losses suffered by the employer would justify retrenchment under this article. 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. Thus. materialized. Anna Tetangco 11 . Thus. Article 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses. and exercising its privilege under the CBA entered into between petitioner and PLUANACUSIP. Bleak business conditions continued to plague the company and by the end of the first quarter of 1999. 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. Ÿ As petitioners themselves admitted. however. Ÿ Ÿ To justify retrenchment. the employer must prove serious business losses. "opted not to renew the existing contract nor bid on the new contract".
Held: The petitioner’s losses in 1997 and 1998 are not insignificant. Financial statements must be prepared and signed by independent auditors. Financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. 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. he would have been included in the first phase of its retrenchment program. Otherwise. The petitioner posits that even if respondent Paras had become a regular employee by November 26. 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. that the serious and actual business reverses suffered by the petitioner justified its resort to retrenchment of 700 of its employees. Otherwise. Considering that respondent Paras had just been regularized on November 24. Hence. Parenthetically. vs. Daguman (Jake) Facts: Petitioners aver that they were compelled to close the company’s brokerage department. much less serious business losses within the meaning of the law. although the more overriding consideration is. It is beyond cavil then. Monina Lagman. Jon Santos. The termination of the 531 affected employees was made effective a month from receipt of the termination letter. Essentially. 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. Heidi Soria. his reinstatement had become moot and academic because of its retrenchment program which was effected beginning February 1998. 1996. Held: The termination of private respondents was unjustified either as retrenchment to prevent losses because petitioners’ evidence to prove business losses was insufficient. Ÿ Danzas International vs. 1996. 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. Clearly. the payment of backwages should be computed up to February of 1998. of course. Since the losses incurred must be substantial and actual or reasonably imminent. good faith. Proof of Loss Ÿ The proof of actual declining gross and net revenues must be submitted. pursuant to the "last in first out policy" embedded in the CBA. Monette Mesa. in order to prevent further losses which threatened the company’s viability. it is an essential requirement that alleged losses in business operations must be proven convincingly.Labor II suffered were "sliding incomes". The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing. sliding incomes are not necessarily losses. Ÿ Business reverses or losses are recognized by law as an authorized cause for termination of employment. to which losses were allegedly traceable due to incorrect handling of sales. Caparoso (Kristel) Facts: Caparoso and Quindipan were employed as Irah Burog. In accordance with the CBA. Otherwise. Bogo Medelin vs. they may be assailed as self-serving. 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. Ÿ Ÿ Mitsubishi Motors vs. decreasing gross revenues. the employer closing his business is obligated to pay his employees their separation pay. such ground for termination would be susceptible to abuse by scheming employers. Still. Lopez Sugar vs. Dianne Miano. employees who were recently hired were the ones retrenched. 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. Chrysler (Jake) Facts: The petitioner asserts that assuming respondent Paras was illegally dismissed. Charms Haw. is not conclusive proof of serious business losses. the petitioner concludes. Alpe Macalalad. in other words. who Ÿ Composite Enterprises Inc. Ysan Castillo. by itself. Jake Ng. The labor arbiter and the NLRC both found that petitioners validly exercised their management prerogatives. Anna Tetangco 12 . the right of affected employees to separation pay is lost for obvious reasons. Edlyn Santiago. Kristel Macatangay. if the business losses that justify the closure of the establishment are duly proved. Federation of Free Workers A comparative statement of revenue and expenses for two years. NLRC might be merely feigning business losses or reverses in their business ventures to ease out employees. What the law speaks of is serious business losses or financial reverses. or closure of the establishment because the brokerage department did not actually cease operations. it is necessary that the employer show that the losses increased through a period of time and that the condition of the company is not likely to improve in the near future. The 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. he would have been included among those who had been retrenched had he not been dismissed.
and (d) the alleged losses. They were terminated from their work allegedly as a result of the expiration of contract which was on a month to month basis. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. there is no evidence at all that petitioner dismissed respondent because it actually ceased or suspended business operations. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. and the Department of Labor and Employment (DOLE) at least one month before the intended cessation of business. In other words. and (b) the cessation of business must be bona fide in character. The financial statements must be prepared and signed by independent auditors. (International) Corp. He filed a week long leave and found that he had osteoarthritis. Petitioner claims that respondent was laid off due to adverse business conditions it suffered at that time. Ysan Castillo. or only three days later from the date of the Memorandum. Caparoso and Quindipan filed a case for illegal dismissal. for the memorandum states that respondent’s contract of Irah Burog. Anna Tetangco 13 . There is no evidence that it complied with the one-month notice requirement. He filed for a month leave but SBT refused and it was during this that SBT terminated him. it failed to prove that such document was ever served upon respondent and the DOLE. profit and loss statements and annual income tax returns. attributing these to the Asian currency crisis. 1997. Monette Mesa. It is therefore incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not dismissed. it is not enough for a company to merely declare that it has implemented a retrenchment program. the employer clearly did not comply with the medical certificate requirement before Sahot’s dismissal was effected. heart enlargement. the notice is less than one month. if already incurred. In the absence of the required certification by a competent public health authority. his employment contract was not renewed. vs. and the expected imminent losses sought to be forestalled. or if dismissed. Ÿ To justify termination of employment under Article 283 of the Labor Code. Normally. Inc. Dianne Miano. Jake Ng. Burden of Proof Ÿ Sy vs. Charms Haw. NLRC. failing which these can be assailed as self-serving documents. the dismissal would be unjustified. It must produce adequate proof that such is the actual situation to justify the retrenchment of employees.. we ruled: Since the burden of proving the validity of the dismissal of the employee rests on the employer. Edlyn Santiago. Alpe Macalalad. it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee?s illness and thus defeat the public policy in the protection of labor. In the case at bar. the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with. in general. the condition of business losses is shown by audited financial documents like yearly balance sheets. Ÿ As this Court stated in Triple Eight integrated Services. the following substantial requirements must be met: (a) the losses expected should be substantial and not merely de minimis in extent. the employer must prove compliance with the following requirements: (a) a written notice must be served on the employees. this Court has ruled against the validity of the employee?s dismissal. Ÿ For retrenchment to be considered valid. Monina Lagman. 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. This Court will not sanction a dismissal premised on mere conjectures and Ÿ Raycor Aircontrol Systems vs. otherwise. Ÿ Worse. It is readily apparent that petitioner did not comply with any of the foregoing requirements. He filed an illegal dismissal case. Jon Santos. San Pedro (Kristel) Facts: Raycor hired Mario San Pedro as tinsmith operator for the duration of its contract with Uniwide. in particular. or it resorted to the dismissal of respondent and other employees to stave off cessation or suspension of its business. After the expiration of his contract he was rehired (this extended for 5 contracts). He found that his employers were not remitting his SSS contributions. 1997 Memorandum of termination of employment. Heidi Soria. After the 5th. must be proved by sufficient and convincing evidence. UTI. CA (Kristel) Facts: Sahot was hired as truck helper by the family owned SBT Trucking Corp. In the same case of Sevillana vs. employment is to expire on November 3. 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.Labor II deliverymen with Composite Enterprises. he started to incur absences due to several ailments the most severe of all being the pain in his left thigh. the latter should likewise bear the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. otherwise. When he was 59 years old.T. While petitioner claims that it issued to respondent an October 30. I. Kristel Macatangay. Moreover. and to the rehabilitation of Uniwide. that the dismissal was not illegal.
respondents failed to comply with the one-month notice requirement. Clearly."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. 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. The DOLE is the agency that will determine whether the planned retrenchment is justified & adequately supported by facts. Due to economic slowdown.15 This is the situation in the case at bar. having no viable projects. but what the law requires is a written notice to the employees concerned. A written notice given to the DOLE is required by law. respondents implemented cost-cutting measures resulting in the retrenchment or termination from the service of their employees. 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. Such requirement is mandatory. Cement Corp. because this time their lay-off is to become permanent. Kristel Macatangay. in other words. Following the provision of Article 283. shortened its Ÿ Irah Burog. But the burden imposed on petitioner National Bookstore does not stop here. respondent TP Cement. In fact. 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. GTI conveyed to the petitioners the impossibility of recalling them. The notice must be given at least 1 month in advance of the intended retrenchment. Heidi Soria. Ysan Castillo. 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. the retrenchment is defective. Ymasa and Gabriel filed a case for illegal dismissal. the evidence must be substantial and not arbitrary and must be founded on clearly established facts sufficient to warrant his separation from work. Records show that on December 3. Moreover. 1998. It must also show with convincing evidence that the dismissal was based on any of the just or authorized causes provided by law for termination of employment by an employer. Dianne Miano. Evidently. Sebugero vs. Charms Haw. only a situation where there is "retrenchment to prevent losses. Edlyn Santiago. if such an intent were expressly written into the law. these notices should have been served one month before. Monette Mesa.Labor II suspicions. Ÿ Article 283 entails. Monina Lagman. respondents sent petitioner and the DOLE separate notices of retrenchment effective December 30. IPI Phils. On 30 July 1992 it gave private respondents an opportunity to explain why they should not be dismissed for the loss of company funds. if he so desires. among others. 1998. actual losses need not set in prior to retrenchment. more than substantially observed this requirement. Ÿ National Bookstore Inc. including petitioner. 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. Ÿ Anent the first requisite. that law may well be vulnerable to constitutional attack as taking property from one man to Lopez Sugar Corp vs. (b) if the employer decides to terminate the services of the employee. 1998. vs. It is not. which private respondents immediately complied with by submitting their joint answer on 31 July 1992. 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. as correctly pointed out by the Labor Arbiter in his decision. Petitioner National Bookstore. Alpe Macalalad. the employer must notify him in writing of the decision to dismiss him. Anna Tetangco 14 . Jake Ng. 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. With respect to respondent TP Vinyl. When the required notices to the employees and to the DOLE are not given. 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. to enable the employees to look for other means of employment and therefore ease the impact of the loss of their jobs and incomes. As mandated by Article 283. stating clearly the reasons therefor. Federation of Free Workers corporate term from 50 years to 2 years and 7 months. They were terminated for gross neglect of duty and loss of confidenc. (Kristel) Facts: Benedicto Cajucom was the VP – Legal Affairs of IPI Cement. 1998. Thus. CA (Kristel) Facts: Maria Ymasa and Edna Gabriel were the head custodian and cashier of National Bookstore. it shifted its business from production to marketing and trading of Thai Petrochemical products. Jon Santos. or on November 30. and. it was dissolved on January 27. NLRC For an employer to validly terminate the service of Ÿ Cajucom VII vs. When effected Ÿ In its ordinary connotation.
. of Manila vs. Dr. petitioner was charged with unfair labor practice and illegal dismissal by private respondents. Held: Private respondent's contention that what the Court in an earlier case. IPGC took over the plywood plant coincidentally on the same day the ITC ceased operation of the plant. They alleged. (IPGC) leased a plywood plant to Industrial Timber Corp. Liability Ÿ Capitol Medical Center vs.. which prompted private respondents to retrench. vs. The Court also rejected the complaining employees' claim that the program was a mere scheme to bust the local union. 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. Under the first kind. More than a year after. whichever is higher. while it is true that the company hired or re-employed some of the dismissed workers. 283. Jon Santos. was untenable because the Court in said decision thoroughly passed upon the legality of respondent company's redundancy program. Abelgas Ÿ Industrial Timber Corp. 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. Ababon. They also signed releases indicating their conformity with petitioner's redundancy program. Clemente). Alpe Macalalad. EMCO vs. to avoid or minimize business losses. Ysan Castillo.Labor II his employees under Art. 2) Written notice to the employees and to DOLE at least one month prior to the intended date of retrenchment. involving the same parties. The requirement of notice must be given to both DOLE and the employees concerned 1 month before the intended date of retrenchment. there are three basic requisites for a valid retrenchment: 1) The retrenchment is necessary to prevent losses and such losses are proven. This is to allow the employees to look for other employment. (ITC) ITC employed 387 workers. The purpose of notice to the DOLE is to allow the department to assess whether the retrenchment is being done in good faith. NLRC (Monette) Facts: Petitioner corporation engaged in general construction work. Edlyn Santiago. upheld was only the legality of the redundancy program and not the legality of its implementation. 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. received all the benefits due them under the Labor Code. The Court even made an observation in said case that the program should have been more properly denominated as a "retrenchment" program because the reason for resorting to the dismissal by AG&P of its employees was economic in nature. and (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. Thelma Navarette-Clemente (Dr. Meris (Kristel) Facts: Dr. Ÿ Ÿ Moreover. among others. To save itself. under Article 283 of the Labor Code. 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. Just as no law forces anyone to go into business. Jake Ng. unfair labor practice and damages. while under the second kind. Meris received from Capitol’s president and chairman of the board. Kristel Macatangay. Dianne Miano. Charms Haw. Meris was the industrial service unit chief of Capitol Medical Center. and as long as he pays his employees their termination pay in the amount corresponding to their length of service.". the employer must sufficiently and convincingly prove its allegation of substantial losses. In sum. The employees. Monette Mesa. and instead ruled that the AG&P duly established its claim of company losses which was the basis of the questioned retrenchment program. no law can compel anybody to continue the same. reportedly incurred huge operating losses. a notice Irah Burog. Anna Tetangco 15 . 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. Heidi Soria. petitioner implemented a redundancy program wherein 177 employees occupying rank and file. (b) the cessation of business must be bona fide in character. filed a complaint against ITC and IPGC for illegal dismissal. The rehiring or re-employment does not negate the imminence of losses. managerial and staff positions were separated from employment. Ababon (Kristel) Facts: Industrial Plywood Group Corp. Monina Lagman. Dr. and 3) Payment of separation pay equivalent to 1 month OR at least ½ month pay for every year of service. i. 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. 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. et al.e. members of the AG&P United Rank and File Association. Re-Hiring Effect Atlantic Gulf and Pacific Co. whichever is higher.
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. And the burden of proving such falls upon the employer. The owner. San was previously engaged in the business of manufacturing biscuits and other related products. It would indeed be stretching the intent and spirit of the law if we were to unjustly interfere with the management’s prerogative to close or cease its business operations just because said business operation or undertaking is not suffering from any loss or simply to provide the workers continued employment. San shall provide Monde a list of all its present employees who shall be given preference in employment by the latter. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona Ÿ Irah Burog. 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. whichever comes first. 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. no law can compel anybody to continue in it. 283 is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. Meris is thus entitled to payment of separation pay at the rate of one (1) month salary for every year of his employment. Ruling: Explicit from Art. M. Jake Ng. 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. Meris not having been premised on a just or authorized cause. 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. fide in character. 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. Charms Haw. Monina Lagman.Y. 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. CA (Heidi) Facts: M. Macadams Metal Engineering vs. 1992 until the expiration of his term as Chief of ISU or his mandatory retirement. as no business or undertaking must be required to continue operating simply because it has to maintain its workers in employment. Macadams Meat Engineering(Heidi) Facts: Spouses Geronimo and Lydia V. This fact negated the obligation to pay backwages. and such act would be tantamount to a taking of property without due process of law. Heidi Soria. he is entitled to either reinstatement or separation pay if reinstatement is no longer viable. 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. Closing of Business. she declined to accept new projects and proceeded with the winding up of her business. as in the instant case. Anna Tetangco 16 . (a) service of a written notice to the employees and to the DOLE at least one month before the intended date thereof. 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. and to backwages. and that M. Accordingly. whichever is higher. In the general meeting of the workers. The records reveal that private respondents complied with the aforecited requirements. (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. Dianne Miano. for any bona fide reason. however. 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.Y. Ysan Castillo. Just as no law forces anyone to go into business. Sison decided to retire from business when she became sickly.283 Right Ÿ Espina vs. she announced her plan to close shop e. Monette Mesa. Jon Santos. Finally. proprietors of GBS and MAME explained the closure of MAME and GBS was because Lydia V. there was no illegal dismissal to speak of. The employer need only comply with the following requirements for a valid cessation of business operations. Instead private respondents were required to give separation pay which they already did. Edlyn Santiago. such exercise will be upheld. Ÿ D. and full backwages from the time of his dismissal from April 30.Y.Labor II advising him of the management’s decision to close or abolish the ISU and the consequent termination of his services as Chief. since private respondents cessation and closure of business was lawful. Clearly then. The determination to cease operations is a prerogative of management which the State does not usually interfere with.” Ÿ The termination of the services of Dr. Kristel Macatangay. no law can compel anybody to continue the same. Alpe Macalalad. Sison. Reinstatement. Dr. Monde. or one month pay. Her health did not improve despite proper medical attention. can lawfully close shop at anytime.
and reasonable Ÿ Irah Burog. It would.389. the closure then is due to serious business losses. 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. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. This mass of privileges comprises the so-called management prerogatives. On account of serious business losses which occurred in 1997 up to mid-1999 totaling around P127. Ysan Castillo. Heidi Soria. And the burden of proving such falls upon the employer. Galaxie decided to close down its business operations. Although they may be broad and unlimited in scope. whichever was higher. Considering the losses suffered by private respondent. as well as the computation of their termination pay.97 in 1999.480. Charms Haw. The social justice and protection to labor provisions in the Constitution dictate so. Edlyn Santiago. Alpe Macalalad. the petitioners had not presented evidence to the contrary. Ruling: This requisites of a valid retrenchment are: (a) the losses expected should be substantial and not merely de minimis in extent. it is logical for it to implement a retrenchment program to prevent further losses. And it posted the notice of closure on the corporate bulletin board. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character. Galaxie thus filed a written notice with the DOLE informing the latter of its intended closure and the consequent termination of its employees. if already incurred.00.Labor II Ÿ Cattista vs. NLRC (Heidi) Facts: Victoria’s Milling Corp. and the expected imminent losses sought to be forestalled. employers are also accorded rights and privileges to assure their selfdetermination and independence. In view of such decision. indeed. 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. 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. nor did they establish that the closure was motivated by Galaxie’s anti-union stance. Capitol Medical Center vs. 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. management subsequently held a conference with all 13 field workers to explain to them the reason for this move. the Labor Code does not impose any obligation upon the employer to pay separation benefits." Where.65 in 1997. 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.429. Having determined that private respondent suffered losses and had to resort to retrenchment of its employees in Hacienda Binanlutan to prevent further losses. Besides.000. 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. .000. P48.89 in 1998. Clearly then. Petitioners received their termination pay or retirement pay under the pension plan. this Court held that Article 283 governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "NOT due to serious business losses or financial reverses . and of the various demand notices of payments from creditor banks. Meris Work is a necessity that has economic significance deserving legal protection. must be proved by sufficient and convincing evidence. 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. Monette Mesa. . VMC's personnel reduction program was meant to reduce excessive labor costs in the company.204.785. NLRC. In any case. 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. In North Davao Mining Corporation v. Monina Lagman. 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. 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. Ÿ Galaxie Steel Workers Union vs. Kristel Macatangay.753. Dianne Miano. One of the rights accorded an employer is the right to close an establishment or undertaking. In a letter. Ÿ Employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. such exercise will be upheld. Respecting petitioners’ claim for separation pay is Article 283 of the Labor Code. Jon Santos. as long as he pays his employees their termination pay in the amount corresponding to their length of service. Jake Ng. On the other hand. and (d) the alleged losses. to wit: P65. (b) the substantial losses apprehended must be reasonably imminent. this Court holds that private respondent was within its rights in closing Hacienda Binanlutan and in terminating the service of petitioners. and P13. 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. Anna Tetangco 17 .
Five days later. Dianne Miano. That is its prerogative. Later on. 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.Labor II return of capital. 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. the union advised Cheniver that its members are not willing to go along with the transfer to the new site. Resignation is inconsistent with the filing of the said complaint. This mass of privileges comprises the so-called management prerogatives. thus the procedural requirement for terminating an employee does not come into play yet. in our view. otherwise. it would have been illogical for private respondents herein to resign and then file a complaint for illegal dismissal. 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. it would hire replacements. 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. Industrial Timber Corp vs. JAT General Services vs. Resignation must be voluntary and made with the intention of relinquishing the office. Alpe Macalalad. 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. One of the rights accorded an employer is the right to close an establishment or undertaking. In view of the impending transfer. not construable as resignation. 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. the labor federation informed petitioner that the employees decided to continue working for petitioner. Cheniver must pay his employees their termination pay in the amount corresponding to their length of service. Cheniver has to accord its employees some relief in the form of severance pay. not one reported for work at petitioner's new site. Charms Haw. Consequently. there appears no complete dissolution of Cheniver's business undertaking but the relocation of petitioner's plant to Batangas. Monette Mesa. otherwise. However. Ÿ Broadly speaking. Ordinarily. 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. Jake Ng. 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. 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. accompanied with an act of relinquishment. whichever is higher. Heidi Soria. Jon Santos. Cheniver wrote its employees to report to the new location within 7 days. does not appear convincing. NLRC (Heidi) Facts: Cheniver operates a printing business. NLRC that several employees namely. Edlyn Santiago. Cheniver gave its workers additional time within which to report to the new work place. Ysan Castillo. decided not to work at the new site but just opted to be paid financial assistance offered by petitioner. Anna Tetangco 18 . It must be stressed that the phrase "closure or cessation of operation of an establishment or undertaking not due to serious business losses or reverses" under Article 283 of the Labor Code includes both the complete cessation of all business operations and the cessation of only part of a company's business. Cheniver 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. they would be considered to have lost interest in their work and would be replaced. It appears Irah Burog. Now. Kristel Macatangay. There is no doubt that petitioner has legitimate reason to relocate its plant because of the expiration of the lease contract on the premises it occupied. Ÿ The phrase "closure or cessation of operations of establishment or undertaking" includes a partial or total closure or cessation. Since the closure of petitioner's business is not on account of serious business losses. Cheniver gave its employees up to the end of June 1992 to inform management of their willingness to go with Cheniver. Indeed. Suffice it to state that there is no termination of employment during the period of suspension. Earlier. 286. hence. Nonetheless. the State has the right to determine whether an employer's privilege is exercised in a manner that complies with the legal requirements and does not offend the protected rights of labor. But even though the transfer was due to a reason beyond its control. Cheniver informed its workers about the transfer of the company from its site in Makati to Batangas. As public respondent observed. amounts to cessation of petitioner's business operations in Makati. Monina Lagman. The right to close the operation of an establishment or undertaking is one of the authorized causes in terminating employment of workers. in our view is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. Although they may be broad and unlimited in scope. Cheniver's contention that private respondents resigned from their jobs. The complete closure of business operation by petitioners.
That would be a taking of property without due process of law. Edlyn Santiago. Undue interference with an employer’s judgment in the conduct of his business is uncalled for. the hospital management considered the union actions as tantamount to a strike. the employer may merge or consolidate its business with another. Even as the law is solicitous of the welfare of the employees. with union. vs. as long as he pays his employees their termination pay in the amount corresponding to their length of service.A. The operations of the hospital having come to a grinding halt. that its cessation of operation was really necessitated by its financial condition. by undertaking such suspension of operation.T vs. and that said condition would probably be alleviated or improved. is a charitable. no business can be required to continue operating at a loss. The parties formally commenced negotiations for the renewal of their CBA but the parties failed to reach an agreement. nurses and nurse aides who were members of the union abandoned their respective department and joined the picket line a week later. Kristel Macatangay. organized Me-Shurn Workers Union-FSM. 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. the law requires the employer to prove that it suffered substantial actual losses. Inc. It is not enough to merely raise this issue nor to discuss it only in passing. Heidi Soria. Thereafter the corporation declared that it will be temporarily lay off employees and cease operations. Monette Mesa. 10 days later.286 Basis San Pedro Hospital of Digos vs. Jake Ng. or its losses abated. Petitioner also alleged that the resident/consultant physicians abandoned the hospital because there were no more patients. In this instance. considering that it involves laying off employees for a period of six months. Monina Lagman. Ÿ The burden of proving that such a temporary suspension is bona fide falls upon the employer. 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. Jon Santos. Ysan Castillo. it must also protect the right of an employer to exercise what is clearly a management prerogative. The union had a pending application for registration BLR. Espina vs. A "Notice of Temporary Suspension of Operation" was issued by the hospital and submitted to the local office of the NCMB. Charms Haw. but to discourage the workers from organizing themselves into a union for more effective negotiations with management. the evidence belies any claim that the lay-off of respondents was merely temporary. On the contrary. corporation started placing on forced leave all the rank and file employees who were members of the union’s bargaining unit. The last patient was consequently discharged. non-profit medical and educational training Ÿ While the closure of the hotel operations may have been temporary. as in this case. NLRC Ÿ Temporary Cessation of Operation. nonstock. Doctors began leaving the hospital and the number of patients dwindled. the State is bound to intervene. Indeed. Dianne Miano. Similar notices were individually delivered to union members. what is more important. Me-Shurn Workers Union (Heidi) Facts: The regular rank and file employees of MeShurn Corp. as well as the resumption of business barely a month after. CA Requisite Mc-Shurn Corp. the determination to cease operations is a management prerogative that the State does not usually interfere in. Despite the NCMB's call for a conciliation conference. The cessation of a company’s operations shortly after the organization of a labor union. 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. But where it is manifest that the closure is motivated not by a desire to avoid further losses.Labor II absence of serious business losses or financial reverses. 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. Itr had a 3-year CBA covering from 1987 until 1990. 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. simply to maintain the workers in employment. and in the exercise of such management prerogative. Alpe Macalalad. J. Held: To justify the closure of a business and the termination of the services of the concerned employees. Anna Tetangco 19 . Ÿ Ÿ Concededly. The same principle applies in temporary suspension of operations. 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. there is substantial evidence that petitioners intended the Irah Burog. petitioner had to establish the fact of its precarious financial health. his means of livelihood. gives credence to the employees’ claim that the closure was meant to discourage union membership and to interfere in union activities. These acts constitute unfair labor practices. corporation. The union saturated petitioner's premises with streamers and picketed the hospital.
Labor II termination to be permanent. NLRC (Dianne) Facts: Federito B. In security services. His prolonged suspension. Apropos this responsibility. CA G. Mayon Hotel vs. not affect the employment relationship. the corporation should have presented clear and convincing evidence of imminent economic or business reversals as a form of affirmative defense in the proceedings. through Mr. Assuming arguendo. Alpe Macalalad. Also. due to non-payment of rentals. Pido was constructively dismissed. Section 3. When a security guard is placed on a "floating status. Ÿ In a similar case involving the same issue – the validity of the termination of SMC employees at the Mandaue Brewery – the Supreme Court. indeed. Anent the delay of seven days in the filing with the Court of Appeals of the petition. are binding upon the parties. Inc. Inc. DISEASE. Charms Haw. Digos E. had ripened to constructive dismissal. Special case of business transfers Nature of Labor Contract Ÿ Sundowner Devt Corp vs. Held: The Supreme Court finds that. clearly indicates that he did not abandon his work. pursuant to Art. Due to the grim economic consequences to the employee. the replaced security guard may be placed on temporary "off-detail" if there are no available posts under respondent’s existing contracts. Drilon (Dianne) Facts: Hotel Mabuhay. the dismissal is deemed unjustified. Mabuhay F. 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. Mendoza. valid and legal suspension of operation does not terminate but merely suspends the employee-employer relationship. signed by the employees concerned as reasonable settlements. a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila.284 Ÿ The requirement for a medical certificate cannot be dispensed with. Installation of Labor Savings Device Ÿ Abapo vs. otherwise it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee’s illness and thus defeat the public policy in the protection of labor. Ÿ Verily. He was later on suspended following his argument with Alcantara. failure to comply with any of the requirements shall be sufficient ground for the dismissal of the petition. As a consequence. leased the premises belonging to Santiago Syjuco. Pido was an employee of Cherubim Security and General Services.38 caliber revolver service firearm and duty detail order had already expired. 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. Otherwise. the petitioners admitted that there was indeed such delay. Dianne Miano. Effect on Employer-Employee Relationship Ÿ If a legitimate. Held: The installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. it led to the termination of the services of the SMC employees at the Mandaue Brewery. The Court of Appeals did not commit any grave abuse of discretion in dismissing the petition for non-compliance with Rule 46." he does not receive any salary or financial benefit provided by law. as in this case. along with a prayer for reinstatement. owing to respondent’s neglect to conclude the investigation. For as explicitly provided therein. several functions of its employees were declared redundant. Sy vs. Monette Mesa. 286. Monina Lagman. Justice Vicente V. Edlyn Santiago. a floating status requires the dire exigency of the employer's bona fide suspension of operation of a business or undertaking. However. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of 6 months. that said cessation of employment was merely temporary. His filing of a complaint for constructive dismissal. 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. The quitclaims and releases. vs. Floating Status Irah Burog. Inc. He had an altercation with Richard Alcantara of the Ayala Security Force arising from Alcantara’s statement that Pido’s security license for his . San Pedro Hospital vs. Mc-Shurn Workers Union Ÿ Pido vs. Eventually. Anna Tetangco 20 . 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. with more reason will an invalid and illegal suspension of operations. 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. Mc-Shurn Corp. Kristel Macatangay. held that the installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. Heidi Soria. 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. Ysan Castillo. Jake Ng. Jon Santos. which eventually led to his illegal constructive dismissal.
Had they found the 12-hour period too short. In addition. Sundowner wrote a letter-complaint to Syjuco. i.e. Dianne Miano. Jon Santos. neither of them complied. Procedural due process. Rule 1. Charms Haw. He was also required to submit a written explanation within 12 hours from receipt of the report. Held: The absorption of the employees of Mabuhay may not be imposed on Sundowner.. the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith. 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. In separate infraction reports. Book VI. labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise. Workers Assn. barricaded the entrance to the leased premises and denied Sundowner's officers. they should have requested for an extension of time. as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them. Villena was charged with disrespect to a superior officer and/or impolite/discourteous manner. However. the valid and authorized causes of employment termination under the Labor Code. Alpe Macalalad. Even if no hearing was conducted. Colcol was also served an infraction report where he was charged with insubordination and poor work performance. Held: The Supreme Court found that the dismissal of Villena and Colcol from the service was in accordance with the law.e. Thus. As a general rule. 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. he was dismissed for serious misconduct. incurred absences without official leave and slept while on duty. thus binding only between the parties. Ÿ The rule is that unless expressly assumed. In fine. 2(d). Ysan Castillo. In General Ÿ Due process under the Labor Code. Villena and Colcol filed separate complaints for illegal dismissal with prayer for reinstatement and monetary claims.Nature and Requirements 277 (b). National Union of Workers in Hotel. NLRC Essence of Due Process Solid Development Corp. they were both apprised of the particular acts or omissions constituting the charges against them. petitioners were given due process before they were dismissed. labor contracts being in personam. Requirements Irah Burog. 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. is only to consider them for reemployment in the operation of the business in the same premises. Subsequently. Colcol was eventually dismissed for insubordination and poor work performance. There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong. He was also required to submit a written explanation within 12 hours from receipt of the report. Monette Mesa. followed by a complaint for damages with preliminary injunction and/or temporary restraining order filed with the Regional Trial Court of Manila. They claimed that they were dismissed without just cause and without due process. Restaurant and Allied Services (NUWHRAIN) picketed the leased premises. and the same can only be restricted by law through the exercise of police power. Book VI. Sec. It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees. A labor contract merely creates an action in personam and does not create any real right which should be respected by third parties. Edlyn Santiago. the requirement of due process had been met since they were accorded a chance to explain their side of the controversy. Heidi Soria. civil or administrative proceedings. 2(d) 1. They were also required to submit their written explanation within 12 hours from receipt of the reports. vs. notices of termination were also sent to them informing them of the basis of their dismissal. Anna Tetangco 21 . (Dianne) Facts: Edgar Villena and Jerry Colcol were employees of Solid Development Corporation. Sec. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. Thereafter. it was Syjuco who found Sundowner and persuaded it to lease said premises. Kristel Macatangay. Rule 1. Constitutional due process protects the individual from the government and assures him of his rights in criminal. Hence. Yet. Further.. Solid Development Corp. Sundowner has no liability whatsoever to the employees of Mabuhay. Mabuhay had nothing to do with the negotiation and consummation of the lease contract between Sundowner and Syjuco. employees and guests free access to and egress from said premises. like Constitutional due process. has two aspects: substantive. 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. the report also mentioned that Villena frequently violated company rules. Jake Ng. Ÿ H.Labor II offered to sell its assets and personal properties in the premises to Sundowner to which it agreed. Meanwhile. A deed of assignment of said assets and personal properties was executed by Mabuhay in favor of Sundowner. Agabon vs. loss of confidence and gross habitual neglect of duty. the manner of dismissal. i. Monina Lagman. and procedural. and its responsibility if at all.
Proof beyond reasonable doubt of their misconduct is not required. Monina Lagman. not ordered to submit a position paper. informing them of the basis of their termination. notices were sent to them on March 19. filed a complaint against MAC for illegal dismissal brought about by its illegal closure of business.Labor II be heard. and eventually." There is no reason to set aside these factual findings of the Court of Appeals as they are supported by evidence on record. and breach of trust and confidence reposed on them by management. 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. Alpe Macalalad. on the other hand. Irah Burog. or as applied to administrative proceedings. (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. In this case. the results of which eventually led to their termination for “serious misconduct. and not notified that the case was submitted for resolution. a notice of termination was sent to him informing him of his termination from the service for serious misconduct and gross and habitual neglect of duty. 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. an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. De Vera admitted that she encashed several checks issued by her sister from the money collected from Central’s customers. which were then returned due to insufficiency of funds. Coop vs. A formal or trial-type hearing is not at all times and in all instances essential. 1999 at 11:30 a. Ÿ Ÿ There is no doubt that Central observed procedural due process in dismissing Macaraeg and De Vera. CA (Dianne) Facts: Rene Valiao was an employee of West Negros College. not given an opportunity to present his evidence. In fine. Jon Santos. Central Pangasinan Elec. 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. we hold that Arbiter Ortiguerra's Decision is void as against Carag for utter absence of due process. 1991. and (2) the second informs the employee of the employer's decision to dismiss him. They gave their own "answer/explanation" to the charges. and to have reported late almost every day for the period November to December 1991. and not necessarily that an actual hearing was conducted. Thus. 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. Monette Mesa. 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. Edlyn Santiago. they were both apprised of the particular acts or omissions constituting the charges against them. A hearing was also set. In separate memoranda dated February 4. they were given due process before they were dismissed. Ÿ The essence of due process is simply an opportunity to be heard. as reflected in the summary of tardiness and absences report. Ÿ Valiao vs. The requirement of a hearing. Macaraeg (Dianne) Facts: Geronima Macaraeg and Maribeth de Vera were employees of Central Pangasinan Electric Cooperative. Kristel Macatangay. not accorded a hearing. Heidi Soria. What is frowned upon is the absolute lack of notice and hearing. he received a suspension order without pay. not accorded a conciliatory conference. Carag was not issued summons. For an employee’s dismissal to be valid. 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. is complied with as long as there was an opportunity to be heard. Ÿ On the matter of due process. They were represented by counsel during the investigation. 1999 and signed by the General Manager. He was re-assigned from one position to another which was due to his tardiness and absences. Anna Tetangco 22 .m. Finally. 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.” Held: There exists a valid reason to dismiss both employees. It was error for the NLRC and the Court of Appeals to uphold Arbiter Ortiguerra's decision as against Carag. Charms Haw. Time and again. Ysan Castillo. on behalf of all of MAC's rank and file employees. 1999. As such. 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. 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. Jake Ng. NLRC (Dianne) Facts: National Federation of Labor Unions (NAFLU) and Mariveles Apparel Corporation Labor Union (MACLU). Dianne Miano. it is stressed that due process is simply an opportunity to Ÿ Carag vs. Held: Valiao’s dismissal from employment is valid and justified. They participated in the investigation conducted at petitioner’s board room on February 13.
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
Charms Haw. Magos countered it was necessary as sales were down. 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. By requiring him to submit a written explanation within 48 hours from receipt of the notice. and adding therein. and (4) the dismissal is for just or authorized cause but due process was not observed. Kristel Macatangay. Dianne Miano. 11 In the instant case. petitioner furnished private respondent notice as to the particular acts which constituted the ground for his dismissal. NLRC(Jon) Facts: Compacion was hired as driver for La Carlota. 1993 letter. this does not give petitioners an outright license to terminate private respondent. Edlyn Santiago. perhaps. Anna Tetangco 26 . Monina Lagman. and thereafter. a notice of the decision to dismiss. but it chose not to participate therein without any known justifiable cause. she was later promoted. should also be sent to private respondent. but when she was ate her new position she was charged with misappropriation was subsequently dismissed. Irah Burog. Jon Santos. which made a dishonest mark in his timecard by marking present on a day he is absent. vs. From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code. Ÿ Procedurally. Jake Ng.Labor II December 13. “J” Marketing Corp(Jon) Facts: Lavador is a daily paid employee of J Marketing. He was later dismissed by petitioner due to dishonesty. Heidi Soria. for an authorized cause under Article 283. or as applied to administrative proceedings. and private respondent should again be allowed to answer and be heard. Ÿ Ÿ Private respondent had been duly informed of the pendency of the illegal dismissal case. 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. Laguesma (Jon) Facts: CPWU is union with 92 members all of which are “cargadors” and paid on piece rate basis. above. pursuant to Section 5 above. or for health reasons under Article 284. respondent’s right to due process was not violated. Clearly. Magos was later terminated. Due process is not violated where a person is given the opportunity to be heard. NLRC (Jon) Facts: Buan and Torno are employees of Shoppes Manila. if after the said thirty-day period private respondent still did not give his explanation about the incident. an opportunity to explain one's side. he impliedly acknowledged his insubordination as shown in his petition. pursuant to Section 2. Hearing Ÿ Magos vs. When they formed a union they were barred and were replaced with non-union members. an inquiry why he did not give the explanation required in the January 4. Ÿ La Carlota Planters Assn Inc. 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. National Semi-Conductor Distribution vs. the company gave him the opportunity to be heard in his defense. Thus. Even though petitioner in this case never admitted the accusations of dishonesty against him. pursuant to Section 6 above. but an accident happened later in his career which caused his dismissal. vs. Alpe Macalalad. an employee must be given the twin requirements of due process-proper notice and hearing. Caurdenetan Piece Workers Union vs. They should have again sent a notice of dismissal to private respondent stating the particular acts or omission constituting the grounds for dismissal. and due process was observed. Ÿ What is most important is that before termination. NLRC (Jon) Facts: Philip Santos is an employee of petitioner. (3) the dismissal is without just or authorized cause and there was no due process. Ysan Castillo. a hearing or an opportunity to be heard and after hearing or opportunity to be heard. Monette Mesa. another notice about the decision of dismissal. Position Paper Ÿ Shoppes Manila Inc. (1) if the dismissal is based on a just cause under Article 282. (2) the dismissal is without just or authorized cause but due process was observed. Private respondent availed of this chance by submitting a written explanation. Andanar a supplier in Surigao complained that mas Magos was supplying PEPSI products in the region despite the agreement. 1995 was issued to respondent informing him of the management’s decision to terminate his services. but chooses not to give his side of the Ÿ Lavador vs. NLRC (Jon) Facts: Magos is a manager of PEPSI assigned in Surigao. Ÿ Ÿ The essence of due process is simply an opportunity to be heard. Ÿ The law requires the employer to afford his employee ample opportunity to be heard.
Heidi Soria. sustained injuries when strikers blocked her way to the premises of PLDT. were implicated in said incident.Procedural Ÿ Suico vs. Kristel Macatangay. Anna Tetangco 27 . Edlyn Santiago.Labor II They were charged of stealing items of “KAMISETA” and subsequently suspended and dismissed. Suico et al. In the course of his employment he misappropriated an amount sent by a seaman for his family. Due to the complaint of the seaman’s family he was given preventive suspension and was later dismissed. The last notices informed Suico. the law requires that (a) there be just and valid cause as provided under Article 282 of the Labor Code. Ÿ In order to effect a valid dismissal. whatever merit C. Held: Respondents failed to observe the necessary procedural safeguards. 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. failed to explain and were terminated. Under Systems Practice No. he was on watch standing duty and was doing nautical publications as required by standard maritime practice. and (b) the subsequent notice which informs the employee of the employer's decision to dismiss him. Monette Mesa. et al. with supporting documents and their affidavits.and (b) the employee be afforded an opportunity to be heard and to defend himself. consistent with our ruling in Agabon. 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. Ÿ Trial-type hearings are not required in labor cases and these may be decided on verified position papers. et al. Effect of Failure. The first notices sent to Suico. NLRC (Ysan) Facts: Fernando. He alleged that because of his refusal to obey the order. Jon Santos. Suico. of the decision to terminate their employment and cited the evidence upon which the decision was based. Alpe Macalalad. the employer must notify him in writing of the decision to dismiss him. Monina Lagman. The petitioner had failed to show that it had complied with the two-notice requirement: (a) a written notice containing a statement of the cause for the termination to afford the employee ample opportunity to be heard and defend himself with the assistance of his representative.Substantive. Notices from PLDT management were sent asking for an explanation of the said incident. Ÿ It should be emphasized. (b) if the employer decides to terminate the services of the employee. It is sufficient that the documents submitted by the parties have a bearing on the issue at hand and support the positions taken by them. He refused the order on the ground that it was not related to his duties as Third Officer. et al. et al. 94-016. vs. did not affect the validity or effectivity of the dismissal as the Ÿ CF Sharp Crew Management vs. Jake Ng. if he so desires. 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. This option is part of their right to due process. the Master made several negative reports against him. hatch stripping. FAILURE OF DUE PROCESS Sadagnot vs. respondents repatriated him to the Philippines. There is nothing in the records showing that respondents complied with the two-notice requirement. Ysan Castillo. Hence. Suico et al. if he so desires. In termination cases. where the rules of evidence apply with greater rigidity. PLDT complied with the two-notice requirement of due process. Zialcita (Jon) Facts: Zialcita was assigned as clerk of CF sharp.F sharp became the manning agency of LCL in the Philippines replacing Rizal Shipping. a deck work. the procedural deficiency in the dismissal of Suico. Reinier Pacific International Shipping Inc (Ysan) Facts: Sadagnot alleged that while on board MV Baotrans. Dianne Miano. Sadagnot alleged that when the order was issued. PLDT is bound to comply with the Systems Practice. that. 94-016. exercised their option under Systems Practice No. On 2 March 1996. set out in detail the nature and circumstances of the violations imputed to them. Cross Examination Ÿ CF Sharp Crew Management Inc. required them to explain their side and expressly warned them of the possibility of their dismissal should their explanation be found wanting. disappears when adduced in connection with labor cases. 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. Sharp’s argument might have in the context of ordinary civil actions. stating clearly the reason therefore. Espanola (Jon) Facts: C. Charms Haw. It is not necessary for the affiants to appear and testify and be cross-examined by the counsel for the adverse party. These two notices would have sufficed had it not been for the existence of Systems Practice No. the vessel's Master ordered him to perform Ÿ Irah Burog. however.F. Held: Apparently. The notices stipulated that failure to give an explanation would constitute waiver to be heard on the matter. Rizal on the otherhand filed a case for illegal recruitment against LCL and CF Sharp. a PLDT managerial employee.
NLRC. Agabon vs. notice to the employee should merely embody the particular acts or omissions constituting the grounds for which the dismissal is sought. vs. Monette Mesa. nor did it show that petitioner was given notice of his dismissal. Held: In the case at bar. Edlyn Santiago. Ÿ The present rule is set forth in the Agabon v. and. a prioritization schedule in the assignment of company vehicles is to be fixed based on the sales performance of the employees. 2. they were nonetheless given adequate opportunity to answer the charge. It did not narrate that it heard petitioner’s side.. et al. Other Procedural Matters Burden and Degree of Proof Burden Ÿ LBC Domestic Franchise Co. Their justification of their refusal to obey the lawful orders of their employer did not militate against their obvious disobedience. He was being directed to go on vacation leave and consume all his remaining leave credits. 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. Heidi Soria. Glaxxo-Wellcome Phils. The employee should be appraised of the particular acts and omissions for which the dismissal is sought. Charms Haw. he was served with a memorandum from LBC's Board Chairman. namely. but petitioner did not allow him. Florida (Ysan) Facts: While Florido was in the middle of a Team Leaders/Branch Managers' meeting. Ÿ Alladin Transit Corp. de Guzman and Cerezo in the present case deliberately disregarded or disobeyed a company policy. Held: Without a doubt. Roxas received another letter from the personnel department informing him of his preventive suspension for certain offenses. however. Alpe Macalalad. Both refused to surrender their vehicles and were thus sent notices of termination. Consistent with San Miguel Corporation v. Inc. Ÿ Verily. Nagkakaisang Empleyado ng Wellcome (Ysan) Facts: GLAXO-WELLCOME adopted a new Car Allocation Policy. NLRC the new car plan were those of union officers Cerezo and de Guzman. Jake Ng. vs. it was not proven by private respondent that it gave petitioner notice informing him of the cause of his impending dismissal. CA (Ysan) Facts: Roxas alleged that his sister had a quarrel with their personnel manager. 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. Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages. While he was on leave.. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. Incidentally.Labor II substantive bases thereof were never put in issue. therefore. Kristel Macatangay. included among the vehicles that had to be re-allocated in accordance with the priority schedule of Ÿ Irah Burog. Failure to do so would necessarily mean that the dismissal was not justified. Ubaldo. the better rule is to hold that the dismissal was for just cause but to impose sanctions on the employer. he was barred from entering the company’s premises. Platon. but did not receive a reply. As a result thereof. the failure to give the required notice does not invalidate the same. Anna Tetangco 28 . he received a letter from their personnel manager asking him to shed light about the SSS contribution that he allegedly did not remit. vs. and in the meantime. Under the circumstances. there was no necessity for an actual hearing. Monina Lagman. He was then instructed to take a leave of absence for a month. must be stiffer than that imposed in Wenphil. An employee may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of employment. Glaxo took into consideration the explanations they had offered. he shall turn over all his accountabilities to an officer of the company. which in fact they did. Such sanctions. Ÿ In cases involving dismissals for cause but without observance of the twin requirements of notice and hearing. Pursuant to the same. Ÿ In termination cases. but merely holds the employer liable for damages for violating said notice of requirement. Florido reluctantly complied with the order. Jon Santos. Ysan Castillo. Held: The Court agrees that the penalty of dismissal imposed upon respondent is disproportionate to the alleged infraction committed by the latter. Dianne Miano. inclusive of allowances. Where the dismissals are illegal. was illegal. the burden of proof rests upon the employer to show that the dismissal is for a valid and just cause. that where the dismissal is based on a just cause. several company cars had to be re-assessed and reassigned in favor of other employees more qualified under the priority list. Their written explanations admitted their refusal to obey petitioner’s directive to return the vehicles. He wrote a letter to the President of the company but he did not receive any reply. Roxas merely said he tried to report to the office. He alleged that he tried to answer the allegation and wrote a letter to the President of the company. upon the other hand. as well as the receipts for the Fundador Brandy giveaways. Under the provisions of the said car plan. In arriving at the decision to dismiss them.
Race was confined again for further treatment of his fractured left leg at another hospital. Mining Service Corp. Anna Tetangco 29 . Charms Haw. pre-drafted with blank spaces for dates of effectivity. but was not allowed to resume work afterwards.Labor II Degree Ÿ Art. Monina Lagman. the cause of action accrues from the time the employment of the worker was unjustly terminated. tried to convince the respondent to accept an amount of P50. Morales filed a motion to dismiss his complaint without prejudice. 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. et al. Candido Capulso filed a complaint for constructive illegal dismissal and illegal detention of P50 per day against Azcor. Prescription Period Ÿ Victory Liner Inc. Capulso had to go on sick leave due to bronchial asthma which he contracted as a ceramics worker. 282 (c) allows an employer to dismiss employees for willful breach of trust or loss of confidence. the respondent's filing of complaint for illegal dismissal on 1 September 1999 was well within the four-year prescriptive period. for breach of trust and loss of confidence as a measure of self-preservation against acts patently inimical to its interests. Alpe Macalalad. Heidi Soria. respondent has proved by substantial evidence the charge of pilferage against petitioner. Capulso's supposed resignation letters to Azcor and Filipinas Paso were identically worded. (Ysan) Facts: PMSC’s evidence disclose that Sawa. Edlyn Santiago. 1995. if to be considered at all. and were written in English. Consequently. Dianne Miano. a language Capulso was not conversant. instead of betrayed. 1146 of the Civil Code. 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. Race suffered a fractured left leg and was rushed to the hospital. the petitioner. Race (Ysan) Facts: While traversing Tarlac. Morales filed with Makati RTC a complaint for sum of money against Pablo Antonio. Macaraeg consolation for his dismissal but the latter rejected it. Ÿ Azcor Manufacturing vs. it must be unconditional and with the intent to operate as such. which was granted by the RTC in Aug. Moreover. Jake Ng. the bus he was driving was bumped by a Dagupan-bound bus. this time with QC RTC. Morales (Irah) Facts: On Dec. NLRC (Irah) Facts: Four months after his dismissal. et al. the four-year prescriptive period shall be counted and computed from the date of the employee's dismissal up to the date of the filing of complaint for unlawful termination of employment. it was only at this time that the respondent's cause of action accrued. It is sufficient that there is substantial basis for the loss of trust. vs. a managerial employee. During that same occasion. should be taken against him. In the case at bar. He was. Held: In the case at bar. Thus. His confinement therein lasted a month. PMSC’s Assistant Resident Manager for Administration. went to Victory's office to report for work. Azcor. Central Pangasinan vs. informed by the petitioner that he was considered resigned from his job. Held: To constitute resignation. Jon Santos. Proof beyond reasonable doubt of their misconduct is not required. Race. Phil. the fact that Salvador has been employed with the respondent for a long time. Kristel Macatangay. scooping fine ore from the stockpile and loading it on his private cargo truck. While the case filed in the Makati RTC was later dismissed without prejudice. Here. Monette Mesa. as his act of pilferage reflects a regrettable lack of loyalty which he should have strengthened. Thus. saw Salvador operating the company’s payloader. The complaint was thus filed well within the prescriptive period. 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. Thereafter. Ÿ The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker. Victory shouldered the doctor's professional fee and the operation. 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. One month after his release from the said hospital. the dismissal sought was not for the purpose of voluntarily abandoning Morales's Irah Burog. It is settled that in illegal dismissal cases. Indeed. 2001. Moreover. still limping heavily. On Sept. PMSC has every right to dismiss Salvador.000. As a consequence thereof. Antonio filed a motion to dismiss on the ground of prescription considering that actions based on oral contracts prescribe in six years. Frustrated at the snail's pace of his case. in fact. Held: Antonio's invocation of prescription is misplaced. 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.00 as a Ÿ Atonio M. Ÿ We reiterate that proof beyond reasonable doubt of the employee’s misconduct or dishonesty is not required to justify loss of confidence. He and his driver. in cases of this nature. medication and hospital expenses of the Race in the hospitals. Gresones. was on his way back to his office in the plant. Morales filed anew a complaint for the collection of sum of money. 2002. Ÿ Salvador vs. however. Ysan Castillo. said that Capulso resigned.
no action whatsoever was taken. At any rate. Held: Petitioner was illegally dismissed without even the politeness of a proper notice. Notably. Anna Tetangco 30 . We doubt if his offer would have been made if Ranara had not complained against him. Ÿ Prescription of an action refers to the time within which an action must be brought after the right of action has accrued. The wrong had been committed and the harm done. Edlyn Santiago. Ranara was simply told that he should not report back for work the following day. the acts complained of. (b) must relate to the performance of the employee's duties. Chang's sincerity is suspect. Alpe Macalalad. (a) it must be serious. inaction. a chemist/quality controller at Marival Trading. When he protested his replacement. Monette Mesa. His case remained pending before the CA for six long years. G. Abella was dismissed allegedly due to disrespectful insubordination and unprofessional conduct. But it does not simply mean a mere lapse of time. Understandably. he found that somebody else had been employed in his place. in a belated gesture of good will. denied the charges. thinking that the secretary had only spoken in jest. et al. Without cause and without any investigation. Moreover.Labor II claim. formal or otherwise. to invite Ranara back to work in his store. Rather. Heidi Soria. While generally an order of reinstatement carries with it an award of backwages. and to the payment of his full backwages. Her remarks were neither insulting nor offensive. Offer to reinstate Ÿ Ranara vs. filed a complaint for illegal dismissal and sought reinstatement with full back wages. and the liability did not abate as Irah Burog. NLRC (Irah) Facts: Vianney Abella. it was only after the complaint had been filed that it occurred to Chang. Jon Santos. filed a complaint for illegal dismissal against Marival. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges. as to sanction Abella’s unprofessional and disrespectful conduct. 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. he felt frustrated at the snail's pace at which his case was moving. Ÿ The fact that his employer later made an offer to reemploy him did not cure the vice of his earlier arbitrary dismissal. lack of interest. not those who sleep on their rights. but also absolve the employer from liability of backwages where good faith is evident. and to his other benefits or their monetary equivalent. Held: For misconduct or improper behavior to be a just cause or dismissal. or intent to abandon a lawful claim or cause of action. the offer of reinstatement could not correct the earlier illegal dismissal of the petitioner. Jake Ng. Morales's intention was to expedite the enforcement of his rights. offered to re-employ Ranara. the employer believed that Abella’s dismissal was based on a valid ground. Dianne Miano. The prescriptive statutes serve to protect those who are diligent and vigilant. In this case. Oro. a result of Chang's repentance. and (c) must show that the employee has become unfit to continue working for the employer. contending that it was Ranara who actually abandoned work when he stopped reporting. computed from the time his compensation was withheld from him up to the time of his actual reinstatement. These remedies give life to the worker’s constitutional right to security of tenure. On the contrary. alleging that she was dismissed without just cause and due process. he was even scolded for being "hard-headed" and not accepting his dismissal. who had been working as a driver with Oro Union Construction Supply. the employer. NLRC (Irah) Facts: Carlos Ranara. Ysan Castillo. SANCTIONS AND REMEDIES 14. thus allowing the statute of limitations to bar any subsequent suit.Twin Remedies Ÿ Marival Trading Inc. there must be a categorical showing that due to plaintiff's negligence. Monina Lagman. Kristel Macatangay. Subsequently. it must be stressed that not every case of illegal dismissal will automatically entail its grant.07 GENERAL RULE Nature and Remedies. As regards backwages. Ÿ Under Article 279 of the Labor Code. vs. Charms Haw. Chang. In this case. Private respondents incurred liability under the Labor Code from the moment Ranara was illegally dismissed. Her acts did not constitute serious misconduct as to justify her dismissal. Abella did not make false and malicious statements against her superior. 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. under the circumstances they were done. When he did so just the same. Abella allegedly disrupted a staff meeting by banging folders and forcefully throwing her bag (allegedly because she was angry about the rearrangement of her table and things without her permission) and even refused to leave when asked to do so. the court may not only mitigate. did not in any way pertain to Abella's duties as chemist/quality controller. The rationale behind the prescription of actions is to prevent fraudulent and stale claims from springing up at great distances of time. This militates against the propriety of granting Abella backwages. even moral and exemplary damages. inclusive of allowances. sincere or not.
Before proceeding to the meeting place. Cabatulan refused to sign the same. Cabatulan passed by the premises of J. Lourdes Belga. NEECO's general manager claimed that Cairlan was dismissed due to abandonment of work. Charms Haw. voluntarily resigned from employment. filed a complaint for illegal dismissal against NEECO. They did not voluntarily quit their jobs. Monina Lagman. Ÿ Where the dismissal is without just or authorized cause and there was no due process. Pheschem claimed that Moldez was dismissed due to grave and habitual neglect of duties (i. et al. inclusive of allowances. et al. He was assured to be rehired. 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.. Cabatulan was advised not to report for work in the meantime and await the arrival of the respondent spouses. 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. and other privileges and to his full backwages. Rather. Moldez alleged that he was at first suspended from work without pay for 7 days. which is a subsidiary of Lakpue.e. Cabatulan was given a pre-drafted voluntary resignation letter which he refused to sign. His suspension was subsequently extended.Labor II Ÿ Pheschem Industrial Corp vs. inclusive of allowances. but eight months had already passed with no word from Pheschem. Trucking but was refused admission by Alaan who was armed with an armalite rifle. vs. vs. The spouses and their children went on a world tour and entrusted the business operations to Cabatulan. Acuña. an assistant cashier of Tropical Biological Phils. which can hardly be considered a forbidden act or a dereliction of duty. An altercation ensued between Cabatulan and Alaan. Belga's absence for 16 days was justified considering that she had just Irah Burog. NLRC (Irah) Facts: For failure of NEECO's BOD to act on his termination. because of a disagreement in the purchase of some spare parts. et al. 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. wanted to see him. failure to inspect a bulldozer prior to its use) which resulted in damage to Pheschem's property and delay in its production. Ÿ Ÿ Cabatulan vs. Ÿ An employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights. Held: Belga was illegally dismissed. They employed Cabatulan as operations manager and purchasing officer. Held: Moldez was illegally dismissed. Great Southern Maritime Services Corp vs. they were transferred back home since their services were no longer needed. filed a complaint for illegal dismissal against Lakpue. Clearly. Before the expiration of their contracts. filed a complaint for illegal suspension and dismissal against Pheschem. Cabatulan agreed and immediately went home. they were forced to resign or were summarily dismissed without just cause. Great Southern. without being informed of its reason. were illegally dismissed. NLRC (Irah) Facts: Pablito Moldez.C. the law intended reinstatement to be the general rule. Belga (Irah) Facts: Ma. Heidi Soria. filed with the POEA a complaint for illegal dismissal against Great Southern Maritime. Cabatulan was informed that respondent Julio’s brother. et al. and payment of his full backwages. Edlyn Santiago. Held: Yes. Buat (Anna) Facts: The respondent spouses Julio and Cecilia Cosmiano were engaged in the trucking business. et al. Dianne Miano. Ÿ Nueva Ecija Electric Corp. Held: Respondents Acuña. Issue: W/N Cabatulan is entitled to backwages and separation pay. Tropical claimed that it terminated the services of Belga due to: (1) concealment of her pregnancy which is tantamount to dishonesty. Jon Santos. Ÿ The legal consequences of an illegal dismissal are reinstatement of the employee without loss of seniority rights and other privileges. NEECO alleged that Cairlan also worked for the Provincial Government of Nueva Ecija. 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. an operator of Pheschem's payloader and bulldozer at its quarrying site in Leyte. It is only when reinstatement is no longer feasible that payment of separation pay is awarded to an illegally dismissed employee. and other benefits or their monetary equivalent. Anna Tetangco 31 . delivered a child. et al. Eduardo Cairlan. Held: Cairlan was illegally dismissed. Belga's failure to formally inform Tropical of her pregnancy cannot be considered as grave conduct directly connected to her work. Julio’s security aide. Ysan Castillo. et al. and (2) insubordination for refusing to comply with directives to report for work and to explain her absence. Acuna (Irah) Facts: Respondents Acuña. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. With regard to the charge of disobeying a memorandum. which explains his repeated failure to report to work. a driver of NEECO. inclusive of allowances. Julio offered him 5k should he agree to sign the resignation letter. Jake Ng. alleged that they were deployed as croupiers (card dealers) for Ferry Casinos under a six-month contract. Kristel Macatangay. Employees who were illegally dismissed prior Ÿ Lakpue Drug Inc. Monette Mesa. Alpe Macalalad.
1989 were granted backwages up to three (3) years without deduction or qualification. hence. and attorney's fees. Thus. 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. Heidi Soria. private respondent Salazar was employed by Globe-Mackay as general systems analyst. even pending appeal. Petitioners insist that their monetary obligation. Jake Ng. 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. They posit the argument that with respondents' receipt of their separation pay. namely: backwages and reinstatement. the payment of separation pay. and claims for 13th month pay. Act No. in proper cases. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close. Edlyn Santiago. respondents had already found new employments and to award them further backwages would be tantamount to unjust enrichment. had already been fully satisfied. an illegally dismissed employee is entitled to either reinstatement. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights. overtime pay.Labor II to the effectivity of Rep. Ÿ Under the existing law. In this case. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. were formerly employed by Triad Security as security guards. they had opted not to seek reinstatement to their former jobs and elected instead to sever their employment with petitioner Triad Security. Backwages and separation pay are. while those illegally dismissed after. "the decision of the Labor Arbiter reinstating a dismissed or separated employee. Though there are specific circumstances where reinstatement is not a practicable remedy. service incentive leave pay. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed Irah Burog. Anna Tetangco 32 . However. illegal dismissal. premium pay for holiday and rest day. Ortega (Anna) Facts: Respondents Ortega. 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. therefore. petitioners maintain that there is no more basis to hold them liable for the accrued backwages stated in the 30 September 2002 computation. Upon learning of the complaint. et al. according to petitioners. if viable. Issue: W/N petitioner is still liable for backwages Held: Yes. NLRC (Anna) Facts: In May 1982. A more equitable settlement. 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. shall be immediately executory. Monina Lagman. respondents' services were terminated without the benefit of notice and hearing. holiday pay. The award of one does not preclude that of the other as this court had. 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. An illegally dismissed employee is entitled to two reliefs. 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. separation pay. Alpe Macalalad. allowances and other benefits. Under Article 223 of the Labor Code. In effect. 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. RATIONALE FOR THE REMEDIES Ÿ Globe-Mackay Cable v. or separation pay if reinstatement is no longer viable and backwages. 6715 on March 21. Dianne Miano. insofar as the reinstatement aspect is concerned. In fact. 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. Monette Mesa. Charms Haw. These are separate and distinct from each other. therefore. underpayment or nonpayment of allowance. It appeared in the course of investigation that Imelda Salazar violated company regulations by involving herself in transactions conflicting with the company's interests. illegal deductions. The respondents failed to comply with the order of reinstatement. moral and exemplary damages as well as night shift differential. Ysan Castillo. complainants' backwages accrued. as contained in the decision of the labor arbiter. Jon Santos. ordered the payment of both." 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. It bears emphasizing that the law mandates the prompt reinstatement of the dismissed or separated employee. Respondents filed a complaint for underpayment/nonpayment of salaries. separation pay is granted where reinstatement is no longer feasible because of strained relations between the employee and the employer. Ÿ Triad Security vs. The records of the case reveal that the decision ordered the respondents to reinstate the complainants to their former job as security guards and decreed that respondents shall pay to the complainants further backwages as they accrue until the order of reinstatement is complied with. Kristel Macatangay.
or that Reinstatement is the restoration to a state or condition from which one had been removed or separated. would perforce make her "whole. Anna Tetangco 33 . cause for the dismissal of private respondent. unless such position no longer exists. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. Secretary of Labor (Anna) Facts: SC rendered a decision ordering for Luna’s reinstatement and backwages. but also gives substance and meaning to the protection accorded by the Constitution to labor. Held: In its generally accepted sense. 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. position. the Labor Code not only recognizes the security of tenure granted by law to regular employees. much less a legal." And. . to wit: "An employee who is separated from work without just cause should be reinstated to his former position. in the case at bar.08 REINSTATEMENT Employee Right Ÿ Quijano v. However. looking to the past. Moldez) 14. Charms Haw. Heidi Soria. reinstatement is not possible . Facts:Petitioner Quijano was a warehouseman of respondent Mercury Drug. at the time of his reinstatement. Salazar was placed under preventive suspension for 1 month. Reinstatement pre-supposes that the previous position from which one had been removed still exists. in the former. vacation and sick leave benefits. Respondent Republic Bank sought reconsideration due to the fact that it was the old management who committed the unfair labor practice. Mercury Drug appealed with the NLRC which held that there was illegal dismissal. private respondent filed a complaint against petitioner for illegal suspension. reinstatement was erroneously ordered for the petitioner's shop was already closed. etc. Monina Lagman. corporate name.) of the old Republic Bank into the present Republic Planters Bank." there is an unfilled position more or less of a similar nature as the one previously occupied by the employee. lathemen. condition. could be returned. The law mandates the reinstatement of an illegally dismissed employee to his former position. the machineries were dismantled and transferred to a bodega and some of the machineries were sold. etc. As a necessary consequence of change of corporate personality (i. Jon Santos. but is now held by the incumbent manager who replaced Luna. her eventual separation from employment was not for cause. to give her back the income lost during the period of unemployment. Kristel Macatangay. tinsmith and carpenters. there was no closure of shop notwithstanding that the respondent Republic Bank was almost at the brink of financial ruin. Irah Burog. from which one had been removed" and in the latter. In providing foremost for the reinstatement of an illegally dismissed employee. Instead of submitting an explanation. drill press operators. Although the position formerly held by the herein complainant is now held by another. after petitioner notified her in writing that she was considered dismissed "in view of (her) inability to refute and disprove these findings. Book VI of the implementing Rules and Regulations of the Labor Code states. Monette Mesa." Held: By itself. Dianne Miano. Issue: W/N the new management is bound to reinstate the employees. NLRC held that Mercury Drug should pay him separation pay in lieu of reinstatement because of strained relations. the position previously held by the complainant Luna was not abolished. but as well. The Court held that "there being no more positions in the machine shop to which the dismissed employee. His services were terminated allegedly for disrespecting his superiors several times. Mercury Drug Corp (Anna).e. the bank suffered from the danger of financial collapse. for the dictionary meaning of the word "reinstate" is "to restore to a state. which she subsequently amended to include illegal dismissal. The Labor Arbiter held that he was illegally dismissed and ordered for his reinstatement. reinstatement is a restoration to a state from which one has been removed or separated. preventive suspension does not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. to restore the dismissed employee to her status before she lost her job. However. to offset the impending financial collapse. 13th month pay and damages. Rule 1. Ÿ The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is. . not only to be entitled to reinstatement. she had every right. There being no evidence to show an authorized.Labor II to inform her employer. Section 4. Ysan Castillo." Here. Edlyn Santiago. Both remedies. to full backwages. controlling stockholders. board membership. Jake Ng. Also. In the case. mostly welders. It is the return to the position from which he was removed and assuming again the functions of the office already held. 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. (Pheschem Industrial vs. a restructuring and reorganization of the management team of the Republic Planters Bank was effected. 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. Alpe Macalalad." Ÿ Defined Ÿ Union of Supervisors v.
Some unscrupulous employers. 282 (a) of the Labor Code. to act with justice. and ordering the dismissal of the complaint. 2003 (while petitioners' appeal in the NLRC was pending). 282-283. the date he actually reported back to work. in addition. Ysan Castillo. expedient or practical. Kristel Macatangay. The misery and pain attendant on the loss of jobs then could be avoided if there be Ÿ Rosario v. injuring him and a co-employee who was pacifying petitioner. 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. petitioner fought with the latter. his family to consider. At one time. an assurance of continuity in his source of income which a grant of separation pay could not provide. At any rate." But it is equally true that "the law. it would be more prudent to order payment of separation pay instead of reinstatement. 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. . however. The same can be remedied by payment of employee's full backwages from Irah Burog. Held: YES. [W]here a penalty less punitive would suffice. The Labor Arbiter held petitioner guilty of illegal dismissal and ordered for respondent’s reinstatement. the law recognizes the fact that continued employment gives to a worker. 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 furnished petitioner a written notice of his dismissal. Heidi Soria. Ÿ Supreme Steel Corp. Edlyn Santiago. Monette Mesa. 2001. not to render his act (dismissal or resignation. Over the years. Anna Tetangco 34 . Alpe Macalalad. Such is the notice requirement in Arts. authorizes neither oppression nor self-destruction of the employer. petitioner was deprived of the opportunity to respond thereto. Bardaje(Anna) Facts: Bardaje was petitioner’s warehouseman. Some are simply part of a procedure to be followed before a right granted to a party can be exercised. Held: YES. particularly where the illegally dismissed employee held a managerial or key position in the company. starting June 2002. While the case was on appeal. In the case at bar. especially to a lowly or menial laborer. Charms Haw. on March 26. According to respondent. And when respondent engaged the services of another driver. merely reinstated in the payroll. Ÿ Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a matter of right. respondent filed a Manifestation and Motion praying that petitioner be immediately ordered to pay his salary from June 2002 up to the present. Monina Lagman. Jon Santos. Held: Time and again. respondents are to admit back to work complainant under the same terms and conditions prevailing prior to his dismissal or at its option. in protecting the rights of the laborer. Issue: W/N there was illegal dismissal. the case law developed that where reinstatement is not feasible. Others are simply an application of the Justinian precept. And it is oppression to compel the employer to continue in employment one who is guilty or to force the employer to remain in operation when it is not economically in his interest to do so. The CA reversed the NLRC decision. However. embodied in the Civil Code. Petitioner's actuations clearly constituted willful disobedience and serious misconduct justifying his dismissal under Art. There is. or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences. as where reinstatement would only exacerbate the tension and strained relations between the parties. Without ruling on the motion. the time of dismissal until the court ruling that he was dismissed for a valid cause. the NLRC rendered its July 10. 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. In giving an illegally dismissed employee the right to reinstatement. As the reinstatement aspect is immediately executory even pending appeal by the employer. as the case may be) void. The Constitution bids the State to "afford full protection to labor. . Jake Ng. petitioner refused to drive for his employer's son. Consequently. give everyone his due. respondent fell short of the two-notice requirement in dismissing an employee. . Consequently. He charged petitioner for illegal dismissal. v." his illegally dismissed employee should just be given separation pay. petitioner opted to reinstate respondent in the payroll effective August 23. Not all notice requirements are requirements of due process. Dianne Miano. whatever missteps may be committed by labor ought not to be visited with a consequence so severe. Reinstatement is the remedy that most effectively restores the right of an employee to his employment before he was unjustly deprived of his job.Labor II Issue: W/N petitioner should be reinstated. and observe honesty and good faith toward one's fellowmen. 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. It is not only because of the law's concern for the workingman. we give primacy to the employee's right to reinstatement rather than the employer's claim that due to "strained relationship. However. petitioner refused to pay respondent's salary. Issue: W/N respondent should be reinstated. however. 2003 Decision reversing the Decision of the Labor Arbiter. but failed to furnish him written notice apprising him of the charges against him. Unemployment brings untold hardships and sorrows on those dependent on the wage-earner.
Branch No. The intent is to balance the scale of justice. the NLRC as an adjudicating body has the corresponding obligation to act promptly on all incidents brought before it. it is but a recognition of the inherent economic inequality between labor and management. The rationale of the law has been explained in Aris (Phil.) Inc. 6715. She availed of an educational plan from her employer. Heidi Soria. causing untold hardships to the dismissed employee. CAP decided to terminate petitioner. "In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee. petitioners should not be deprived of their means of livelihood. It was a mere procedural lapse which should not affect his substantive right to reinstatement. She pledged it to another person who later sold the plan to another. Under Article 223 of the Labor Code. Ÿ Article 223 (3rd paragraph) of the Labor Code. an award or order of reinstatement is self-executory. Anna Tetangco 35 . the Commission's failure. Josefina went to CAP to ask for help. or refusal. they had not been paid. Moldez Ÿ Rules on Reinstatement Rationale Ÿ Roquero v. to timely act on the matter is a serious oversight for which it should be admonished. she sold the plan to Josefina. THereafter. v.Labor II acceptance of the view that under all circumstances of this case. SC held that the dismissal was for a valid cause. where the Rules of Court are applicable only in order to effectuate the objectives of the Labor Code and not to defeat them. 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. Effect of failure to ask relief Ÿ General Baptist v. NLRC. Nor is this to condone what had been done by them For all this while. 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. Thus. He was dismissed from employment. The law in protecting the rights of the employees authorizes neither oppression nor selfdestruction of the employer. the law would readily be circumvented. XI. as amended by Section 12 of Republic Act No. it should have paid his salary during the period of appeal before the NLRC. Jon Santos. vs. Held: The order to reinstate is incompatible with a finding that the dismissal is for a valid cause. It should be made clear that when the law tilts the scale of justice in favor of labor. the burden of proving the just cause of dismissing an employee rests on the employer. While it is incumbent upon the party to take an active role in his case and not adopt a wait-and-see attitude. Alpe Macalalad. otherwise. The reinstatement aspect of the Labor Arbiter's decision. in violation of the PAL Code of Discipline. 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. to put the two parties on relatively equal positions. is a procedural lapse which cannot put to naught a right which he is entitled under a substantive law. After hearing petitioner's explanation. all the equities of the case must be accorded their due weight. Monette Mesa. Kristel Macatangay. it should not be overlooked that the benefits accorded to labor do not include compelling an employer to retain the services of an employee who has been shown to be a gross liability to the employer. Technicalities have no room in labor cases. CAP Philippines(Anna) Facts: Petitioner was an employee of CAP.. when petitioner SSPC opted for respondent's payroll reinstatement. Jake Ng. PAL (Alpe) Facts: Roquero was caught red handed possessing shabu. Amending the Labor Code. However. Ÿ Panuncillo v. she did not transfer the plan in Josefina's name. is immediately enforceable. 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. even if he was instigated to take drugs. NLRC (Alpe) Facts: Basa was terminated as President of the college because of non-compliance with his conditions of employment. albeit under appeal. Monina Lagman. Charms Haw. Edlyn Santiago. the law itself has laid down a Irah Burog. Dianne Miano. and his failure to do so would result in a finding that the dismissal is not justified. Ysan Castillo. He was found to be guilty of serious misconduct and has no right to be reinstated as ground equipment mechanic of PAL. since private respondent considered them separated from the service. Held: In termination cases. Issue: W/N petitioner is entitled for reinstatement. Petitioners question the decision of reinstatement because this was not raised in the pleadings. provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. 6715. Because of need. In this case. Pheschem Industrial Corp. 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. Davao City. and Section 2 of the NLRC Interim Rules on Appeals under RA No. Where a decision may be made to rest [on] informed judgment rather than rigid rules.
an award of separation pay equivalent to 1 month pay for every year of service.. Abella (Alpe) Facts: Abella was terminated due to a company-wide reorganization pursuant to its Manpower Reduction Program. 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. 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. the exclusive taxi concessionaire in NAIA. Anna Tetangco 36 . a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family. 33 Accordingly.. even if the order of reinstatement of the Labor Arbiter is reversed on appeal. Zamora (Alpe) Facts: Zamora was employed with Airphils as a Flight Deck Crew. Reinstatement to former position.. Ad imposible tenetur. the employee is not required to reimburse whatever salary he received for he is entitled to such. waiving “[a]ll other claims.. of a decision reinstating a dismissed or separated employee since that saving act is designed to stop. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. unless such position no longer exists at the time of his reinstatement. Then.” Ÿ Reinstatement presupposes that the previous position from which one had been removed still exists. an employee who is separated from his employment on a false or nonexistent cause is entitled to be reinstated to his former position because the separation is illegal. strike. On the other hand. Hence. vivifies and enhances the provisions of the 1987 Constitution on labor and the working man . However. the order of reinstatement embodied therein was already the subject of an alias writ of execution even pending appeal. In Roquero v. The SC held that Airphils is liable. with respect to decisions reinstating employees. The above-quoted rule enunciates reinstatement as the standard relief. more so if he actually rendered services during the period. Dianne Miano.. Infante (Alpe) Facts: Respondents were drivers of G & S." Ÿ PNOC-EDC v. in lieu of reinstatement. Although petitioner did not comply with this writ of execution. pending appeal. In Association of Independent Unions in the Philippines v. There is logic in this reasoning of the NLRC. — (a) An employee who is separated from work without just cause shall be reinstated to his former position. although temporarily since the appeal may be decided in favor of the appellant. Monina Lagman. however. given the lapse of considerable time from the occurrence of the Irah Burog. he was not promoted to the position of captain. Edlyn Santiago. 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. SEC. Monette Mesa. in lieu of reinstatement. The SC ruled that his complaint for illegal dismissal cannot hold because of a compromise he executed. the law itself has determined a sufficiently overwhelming reason for its execution pending appeal . damages and causes of action arising out of the instant case. The employer's remedy is to reinstate the employee to a substantially equivalent position without loss of seniority rights as provided for above. Kristel Macatangay. seventeen (17) years have elapsed since respondents were illegally dismissed. is in order. 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. After completing his training. by and pursuant to the same power (police power). the State may authorize an immediate implementation. NLRC. once more. Ysan Castillo. in this case. The SC ruled that the dismissal was illegal. or that there is an unfilled position more or less of a similar nature as this previously occupied by the employee. which the Constitution also expressly affirms with equal intensity. Ÿ Airphils Corp.. They were terminated for an allegedly illegal strike. The law itself can not exact compliance with what is impossible. Philippine Airlines. was deemed more practical and appropriate to all the parties concerned... Inc. where more than 8 years have passed since the petitioners therein staged an illegal strike and were found to have been unlawfully terminated. v. Ÿ If reinstatement is no longer possible. Charms Haw.. 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. if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality. Heidi Soria. In short. 4. Labor is an indispensable partner for the nation's progress and stability . the award of separation pay of 1 month salary for each year of service. Ÿ G & S Transport Corp. Jon Santos. the reinstatement of the illegally dismissed employee to his former position would neither be fair nor just.. If the position is no longer available for any other valid and justifiable reason.Labor II compassionate policy which. its intransigence made it liable nonetheless to the salaries of respondent pending appeal. Alpe Macalalad. v. Jake Ng.
13. we agree with NLRC that petitioner is entitled only to backwages. in lieu of reinstatement. Sec. retirement pay or whatever else is provided under the CBA or employment contract. However. The dismissal was declared to be illegal but reinstatement was not awarded. Ÿ It would seem. they were not given new assignments. which requires a deliberate and unjust refusal of an employee to resume his work. There is moreover. . . NLRC therefore did not err in denying the reinstatement of petitioner. a case worker. There is also no abandonment. . the petitioner must follow the laws which protect workers and uphold their security of tenure. (the former) in whom it has lost confidence. (the employer) under an atmosphere of antipathy and antagonism. v. of the Omnibus Rules Implementing the Labor Code provides that in the absence of a retirement plan. Construing this provision. the petitioner's contention that Mrs.” Issue: Was there an illegal dismissal? Held: Yes. However considering that petitioner has already reached the statutory retirement age of sixty (60). or may be retired by his employer. The parties to a case should not be forced into a Ÿ Sentinel Security Agency v. agreement or policy an employee may be retired upon reaching the age of sixty (60) years. of separation pay at the rate of one month's salary for every year of service. Querimit should be reinstated with backwages. He resigned but later withdrew his resignation. NLRC (Alpe) Facts: Querimit. Kristel Macatangay. Alpe Macalalad. (the employee) can be spared the agony of having to work anew with . "so that ." Ÿ Espejo v. Thus. A more equitable disposition is that which this Court has more than once made in other cases of the same nature: the award. Sentinel Security Agency issued a Relief and Transfer Order replacing the complainants and reassigning them to other clients. STRAINED RELATIONS Ÿ Pearl Buck Foundation v. Ÿ In such situation. (latter) does not have to endure the continued service of . was terminated after borrowing money from the mother of one of her wards. Heidi Soria. Monette Mesa. But when they reported for work. we held that an employee may retire. Charms Haw. Luna can still be reinstated because. However. The SC held that she should neither be reinstated nor given backwages because her violation was against the prudence required in her work in the foundation. and instead were told that they would be replaced “because [they] are already old. The SC affirmed the non-reinstatement. . He was asking to be reinstated but this was denied. . that the circumstances of this case render inappropriate Umlas' reinstatement to his former position. upon their reaching the retirement age. the Board considered him terminated and paid his unused vacation leave and transportation expenses. 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. All illegally dismissed employee who cannot be reinstated is granted separation pay and backwages. (Union of Supervisors vs. although his previous position is now held by another. As the petitioner appears to have lost its trust in private respondent. and the . Dianne Miano. NLRC (Alpe) Facts: Espejo worked as general manager for CISP. it would be an act of oppression to compel them to return to the status quo ante. of Labor) situation where a peaceful relationship is not feasible. .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. Ysan Castillo. Anna Tetangco 37 . Ÿ Commercial Motors Corp. Book VI. 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. who in turn is not seeking reinstatement. Jake Ng. Sec. upon reaching sixty (60). Monina Lagman. coupled w/ a clear absence of any intention of Irah Burog. as an item of relief. however. 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. Jon Santos. there is an unfilled position more or less of a similar nature as the one previously occupied. . but still binds the Agency to provide them. Ÿ There is likewise no basis for the NLRC ruling that Mrs. The relief and transfer order per se did not sever thte employment between the Agency and the complainants. we cannot compel it to retain employees who commit violations of trust relationships. Edlyn Santiago. We are aware that in any country where due process is strictly observed and where social justice is a compelling constitutional principle. NLRC (Alpe) Facts: Umlas was dismissed from Commercial Motors after being uncooperative and attempting to disrupt auditors investigating the loss of certain spare parts. .
He threatened to take drastic measures against her if she kept refusing to report for work the next summer. and that they abandoned the benefits of the compromise agreement by resorting to the NLRC.D. Ÿ No strained relations should arise from a valid and legal act of asserting one’s right. which has recruited new security guards. though her contract does not require her to do so. and that the continuation of such employment has become inconsistent with peace and Naga College Foundation Education Workers v. Edlyn Santiago. No strained relations should arise from a valid and legal act of asserting one’s right. who in turn filed a complaint against the former for conducting an illegal strike. backwages and damages against Naga College Foundation. The subject of the NLRC decision. The Executive Labor Arbiter (ELA) ordered reinstatement of the employees. Alpe Macalalad. after which the school served Sibal with a letter of termination effective immediately. Ÿ As a necessary consequence for the illegal dismissal. b merely paying his separation pay on the pretext that his relationship with his employer had already become strained. was ordered to work during the summer. NCF stopped paying accrued salaries after three installments. Issue: Did the petitioners give up their claims for reinstatement? Held: No. Howeer. NLRC denied their motion for execution on the ground that they gave up first motion for execution by entering into the compromise agreement. 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. CA (Eds) Facts: The NAMA-MCCH labor union asked the Metro Cebu Community Hospital (MCCH) to renew their CBA. Ysan Castillo. 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. Garcia all the more confirmed the discriminatory and oppressive treatment which he gave Sibal. for otherwise. otherwise an employee who shall assert his right could be easily separated from the service. They reported to the Agency for reassignment several times but were not given any. Jake Ng. Ÿ Bascon v. Therefore. a school nurse at the Notre Dame of Greater Manila. that they are so obnoxious to the person or business of the employer. For filing an LOA and not reporting to work that summer. Otherwise. Charms Haw. However. That is human nature. and was also assigned to teach health during SY 1981-1982. which was part of her regular working program as a school nurse. and that she was not entitled to extra compensation for teaching. Notre Dame of Greater Manila (Edsa) Facts: Delia Sibal. The alleged “strained relations” or “irritant factors” which the Labor Arbiter capitalized on in ordering separation pay instead had been totally elimintaed when. Anna Tetangco 38 . There is no basis for the ruling of the NLRC. should be such. about a month after Sibal’s termination. Jon Santos. then entered into an agreement with NCF for reinstatement. teachers and personnel of the school. Garcia for serious charges under P. The eventual replacement of Fr. separation pay is awarded in lieu of reinstatement. No supervening event rendering execution unjust can be considered. MCCH decided to defer Irah Burog. moved for the ouster of the school director Fr. the complainants are entitled to reinstatement and backwages. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. Such refusal is indicative of strained relations. on the other hand. reinstatement. Sibal filed a complaint for non-payment of compensation and vacation pay. she was not paid her vacation pay. in fact. The agency cannot reassign them to the Client. Pending appeal. Kristel Macatangay. Thus. backed by the Faculty Association. the complainants. Monette Mesa. the employees moved for execution.Labor II returning to his or her work. 176. Dianne Miano. hoping to obtain assistance. antagonism is likely to have already caused a severe strain in the relationship between them. Monina Lagman. refuse to accept other assignments. That complainants did not pray for reinstatement is not sufficient proof of abandonment. The latter do not pray for reinstatement. (Cabatulan v. And it was NCF who caused a strain in the relation of the parties. Ÿ The Cosmianos charged Cabatulan with qualified theft and even (tried to) coerce him into dropping the labor case against them. The school director claimed that the summer was the best time to update the students’ clinical records. Heidi Soria. but the NLF opposed the same. they refused to be reinstated. Issue: Was there strained relations as to make reinstatement with backwages impossible? Held: No. which they sought to enforce in the motion for execution was also their reinstatement. Bose (Eds) Facts: Petitioners filed a complaint with the NLRC for illegal dismissal. tranquility which is an ideal atmosphere in every workplace. The subject of the compromise agreement was the reinstatement ordered by the ELA. neither was she compensated for the extra teaching job. Petitioners did not occupy managerial or confidential positions which might be affected by any bad feeling resulting from the execution of the decision. Buat) Ÿ Sibal v. in order that it may justify the award of separation pay in lieu of reinstatement with backwages. Ÿ Ÿ The principle of “strained relations” cannot be applied indiscriminately. reinstatement is no longer feasible.
then a 12-day vacation leave. Besides. Jon Santos. Branch to save on gas expenses. Ÿ Mere payment of severance pay. v. It has been almost a decade since the incident that led to Uy’s dismissal. MCCH issued a notice of investigation. saying she would await the result of the grievance proceeding filed by her union. But he is not entitled to reinstatement. Mere allegation of strained relations to bar reinstatement is frowned upon. Gonzales was Chief of Security. Charms Haw. Upon being notified of the mass actions. cannot be applied indiscriminately. The medical certificate also proves that he was indisposed during the period in controversy. have no prerogative in the operation of the business. Ÿ The doctrine of “strained relations” is inapplicable to a situation where the employee has no say in the operation of the employer’s business. CA (Eds) Ÿ Irah Burog. Before the expiration of the 12 day vacation leave. Uy refused. Dianne Miano. Ÿ In illegal dismissal cases. Monette Mesa. Dr. Kristel Macatangay. She also alleged sexual harrassment on the part of her Senior Manager.” This may be invoked against employees whose positions demand trust and confidence. Here. which was denied. He was told to report back for work. There must be proof of such illegal acts. Zenaida Uy. The doctrine of “strained relations” should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Petitioners denied receiving said orders. then an emergency leave. The principle of strained relations. There now appears no basis for strained relations between the present management and Uy.” and the phrase cannot be given an overarching interpretation. Leo Gonzales. Instead. 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. Union members and officers staged mass actions inside the MCCH premises. She asked to be considered on leave since then. however. respectively. the latter filed a notice of strike. Ÿ Acesite Corp. an ordinary striking worker must have participated in the commission of illegal acts during the strike. He was eventually issued a Notice of Termination for continuously disregarding several advices to report back to work. he being in charge of the over-all security of the hotel. Despite DOLE certifications that NAMA-MCCH was not a registered labor org. which was not approved. otherwise. It was also sufficiently proven that Gonzales reported for work after the final notice but was refused entry. an unjustly dismissed employee can never be reinstated. NLRC (Eds) Facts: Due to a severe stomach disorder. which she could not do so since she had been barred from entering the bank premises. Issue: Was there illegal dismissal? Held: Yes. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. Anna Tetangco 39 . or whose differences with their employer are of such nature or degree as to preclude reinstatement. when reinstatement would no longer be beneficial to either pary in view of strained relations between them. Here. Otherwise. Petitioners herein are nurse and nursing aide. former teller of BPI. In order to be justly terminated. petitioenrs’ actual participation in the illegal strike was limited to wearing armbands and putting up placards which do not contain offensive words or symbols. and that she could not transfer as there was no proper turnover of her accountabilities. Heidi Soria. That is human nature. is allowed. thereby using up all leaves he was entitled to for the year. Neither can be construed as illegal acts. and were subsequently terminated from employment. Alpe Macalalad. Jr. Sagum v. Monina Lagman. BPI (Eds) Facts: For shouting at her Senior Manager. otherwise. whose position is one of trust and confidence. There is no proof that a telegram had indeed been sent to and received by Gonzales ordering him to report back to work. A complaint for illegal dismissal was filed. Laureano Gonzales. but he failed to do so. was ordered to transfer to the Plaza Cervantes Branch to defuse the tense situation at the Escolta Branch. and thus. no strained relations should arise from a valid and legal act of asserting one’s right. then an order to desist from participating in the mass actions. Thus. especially in the light that the same was issued by his rival in the political arena. Ysan Castillo. Edlyn Santiago. who would not have helped him cover up his absences Ÿ BPI Employees Union v.Labor II the CBA negotiations until there was a determination as to which union had the right to negotiate a new CBA. The other involved parties have long been assigned in another area or are no longer connected with BPI. Issue: Was Gonzales illegally dismissed? Held: Yes. and requested to be transferred to the Taft Ave. he filed for a 10-day emergency leave. took a 4-day sick leave. Jake Ng. otherwise.. Issue: Is Uy entitled to reinstatement with backwages? Held: Yes. They cannot also be considered as willful disobedience as they are not characterized by a perverse mental attitude on the part of petitioners in disobeying their employer’s order. Petitioners are entitled to reinstatement with full backwages. Every labor dispute almost always result in “strained relations. reinstatement to an illegally dismissed employee’s former position may be excused on the ground of “strained relations. He must therefore be paid separation pay of 1 month for every year of service instead. she was terminated for the shouting incident and refusal to tranfer to the Plaza Cervantes Branch. the Chief of Security of the Manila Pavillion Hotel (now the Holiday Inn Manila). reinstatement is no longer possible.
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. Three days later. A more equitabble disposition would be an award of separation pay equivalent to 1 month’s pay for every year of service. Virgilio Reyes. de Jesus maintained that she merely committed a mistake in trimming P. and to deny an employee’s right to be reinstated on the basis of the mere consistency of the employer’s stand that the dismissal was for cause is to make a mockery of the right of reinstatement under Art. In addition to backwages. NLRC (Eds) Facts: Upon reports by a private investigator that the “Union 76” lubricating oil which was being exclusively distributed by Jardine Davies. The SC found the imposition of the extreme penalty of dismissal against de Jesus as certainly harsh and grossly disproportionate to the negligence committed. Issue: Was there illegal dismissal? Held: Yes. 3853 by trimming the cloths' ribs. The finding by the CA of strained relations does not have any basis on the records. Monina Lagman. 279 of the Labor Code. There are no hard facts upon which to base the application of the doctrine of strained relationship.O. While an employer has the inherent right to discipline its employees. Alpe Macalalad. The three year period wherein backwages are awarded must be included in the computation of separation pay. Jon Santos. Reyes sued for illegal dismissal since the seized materials were actually legally claimed by Reyes’ younger brother. On August 15. or separation pay. The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its P. No. Number. nonetheless. Issue: Is Sagum entitled to reinstatement with backwages? Held: Yes. filed a complaint for illegal dismissal against IIEE and its officers.O. To protect labor's security of tenure. Jake Ng. are entitled to backwages up to 3 years without deduction or qualification.O. otherwise. Ÿ Employees illegally dismissed before March 21.NLRC (Charms) Facts: Private respondent Lourdes A. de Jesus worked on P. Petitioners' personnel department. Dianne Miano. Anna Tetangco 40 . Reyes was consequently dismissed for committing serious misconduct inimical to the interest of JDI. No. Kristel Macatangay. As reviser/trimmer. a fraction of at least 6 months being considered as one whole year. who was the legal tenant of the apartment. Nowhere was this raised in private respondents’ pleadings before the Labor Arbiter and the NLRC. especially where said employee holds a faithful and an untarnished twelveyear service record.. as evidenced by the subsequent judicial order releasing the articles seized during the search. 1989. Held: There was illegal dismissal. Ÿ The existence of strained relations is a factual finding and should be initially raised. DBR." and the phrase cannot be given an overarching interpretation. Charms Haw. Antagonism and imputations of criminal act caused a severe strain in the relationship between JDI and Reyes. No. Edlyn Santiago. JDI secured a search warrant which led to the seizure of alleged fake items in Reyes’ apartment. the doctrine of "strained relations" should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. 1992.O. No. Here. the principle of strained relations cannot be applied indiscriminately. and that such was being undertaken by JDI’s sales rep. if reinstatement is no longer viable.O. Moreover. 3853. One company. 3853 as it has the same style and design as P. if feasible. There was no factual basis for JDI’s distrust of Ÿ Pioneer Texturizing vs. reinstatement is not warranted. blended.O. packed and distributed. but not for dishonesty or tampering. Monette Mesa. Ysan Castillo. Heidi Soria. She was preventively suspended for 30 days. de Jesus is petitioners' reviser/trimmer since 1980. The owner of said articles was Donato. Every labor dispute almost always results in "strained relations. 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. IMPLEMENTATION = OPTIONS AND RATIONALE Options and Rationale Ÿ Jardine Davies v. was allegedly consistently being awarded majority of the printing contracts of IIEE.Labor II Facts: Marilyn Sagum. de Jesus based her assigned work on a paper note posted by petitioners. argued and proven before the Labor Arbiter. terminated her from employment and sent her a notice of termination dated September 18. an unjustly dismissed employee can never be reinstated. Inc. 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. 3853 allegedly required no trimming. they are entitled to either reinstatement. 1992. Sagum is correct that mere persistency in argument does not amount to proof. not to mention the considerable length of time Reyes has been out of JDI’s employ. we have always held Irah Burog. Reyes. was being illegally manufactured. Reyes’ brother. then terminated for gross negligence and loss of trust and confidence for alleged anomalies concerning the bidding of the printing of Part I of the Philippine Electrical Code. the Officer-in-Charge for the Executive Director of the Institute of Integrated Electrical Engineers of the Phils. In her handwritten explanation. Sagum’s dismissal was subsequently declared illegal. No.
but Tanpiengco insisted on his innocence claiming that he was coerced at knifepoint into admitting the theft. as maintained by petitioner. 223 is clear that an award for Ÿ Kiamco vs. i. but they also ignored the due process requirement of the law. to make an award of reinstatement immediately enforceable. Tanpiengco has since then become a regular employee. On 30 April 1990. the employer has to inform the employee of his choice. even pending appeal." from one of the balikbayan boxes inside the container yard. Monette Mesa. even if the employment contract signed by petitioner fixed the term of his employment. Edlyn Santiago. In either instance. Tanpiengco was accused of taking a T-shirt marked "Gesim Corp. The legislative intent is quite obvious. after a brief suspension. for some inexplicable reasons. i. Jon Santos. Finding petitioner's explanation unsatisfactory. Kristel Macatangay.. 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 Commission's inaction is a serious oversight for which it should be admonished. and the penalty it must impose should be commensurate to the offense involved and to the degree of its infraction. Tanpiengco was dismissed for pilferage which petitioner considered as breach of trust. on 28 October 1993. Ÿ Intl. Held: The NLRC correctly labeled petitioner as a project employee. Heidi Soria.e. 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. When it was time for him to clean himself he took his T-shirt which was hanging from a post. Anna Tetangco 41 . 1993. 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 Court found that private respondents not only failed to give a valid and justifiable reason to terminate Kiamco. The Supreme Court in the 1997 Pioneer case has laid down the doctrine that henceforth an order or award for reinstatement is self-executory.Labor II that this right must always be exercised humanely. placed petitioner under preventive suspension from 1 November 1993 to 30 November 1993 pending further investigation. petitioner filed before the NLRC a complaint for illegal suspension and dismissal with prayer for reinstatement and backwages. dishonesty and theft of property. Charms Haw. Monina Lagman. Container Services vs. even illegally. 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. meaning that it does not require a writ of execution much less a motion for its issuance." T-shirt valued at P100. 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. 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. which he allegedly committed. He was accosted by a security guard allegedly for behaving suspiciously. tucked it at his waist and proceeded to the washroom. NLRC (Charms) Facts: Petitioner was hired by private respondents as a technician. Ÿ As a consequence of this. the employee has no way of knowing if he has to report for work or not. In the instant case. Petitioner reported back to work but was prevented from entering the company premises. Alpe Macalalad. The provision of Art. 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.00. the immediate execution of a reinstatement order. he admitted to the investigating officer that he took the "Gesim Corp. private respondents did not conduct any investigation contending that it was not necessary since petitioner had ceased to be an employee ipso facto upon the expiration of his employment contract on 30 November 1993.. The last contract signed by petitioner fixed the term of his employment from 1 May 1993 to 30 November 1993. The reason is simple. petitioner must pay the salary of Tanpiengco which automatically accrued from notice of the Labor Arbiter's order of reinstatement until its ultimate reversal by the NLRC. NLRC (Charms) Facts: Petitioner employed private respondent Tanpiengco as a CFS Priority pursuant to a collective bargaining agreement with private respondent's labor union. Thus. petitioner received a Memorandum from private respondents demanding an explanation for administrative infractions. An award for reinstatement is self-executory. this did not give private respondents the unbridled authority to terminate petitioner upon the Irah Burog. Ysan Castillo. An application for a writ of execution and its issuance could be delayed for numerous reasons. Ÿ After receipt of the decision or resolution ordering the employee's reinstatement. Held: There was illegal dismissal and therefore should be reinstated. Dianne Miano. 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. However. On 7 March 1990 Tanpiengco was assigned at Bodega I. Falling to exercise the options in the alternative.e. The fact that an employee is not a regular employee does not mean that his employer can dismiss him anytime. private respondents. On October 20. Negros Occidental. The notification is based on practical considerations for without notice. Moreover. According to petitioner.
inter alia.500. the amount of monetary award due respondent Sadac is P2. 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. Finally. the mere fact that petitioner had been previously granted salary increases by reason of his excellent performance does not necessarily guarantee that he would have performed in the same manner and. respondent Sadac filed with the Labor Arbiter a Motion for Execution thereof. 26. the total amount of the monetary award is P6.456. On 26 June 1989. to the exclusion of the latter’s general salary increases and other claimed benefits which. on 10 August 1989. or by rightful expectation.030. it maintained. in the absence of any valid reason to terminate him. Sadac(Charms) Facts: Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank. Per its computation. as in the case of one’s salary or wage. however. As held by the Court of Appeals. On the ground of lack of confidence in respondent Sadac. can be attributed to the annual salary increases which he received equivalent to 15 percent (15%) of his monthly salary. Moreover. failed to show proof as to when the project was completed. Such decision became final and executory. representing his backwages and other benefits.59. Irah Burog. his monthly compensation amounted to P29. 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. Private respondents.Labor II expiration thereof. As of November 1989. when he was appointed as Vice President of petitioner Bank’s Legal Department and later as its General Counsel in December 1981. Monette Mesa. Jon Santos. when he was dismissed illegally. Ysan Castillo. thus. 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. qualify for the said increase later.98 only. Per respondent Sadac’s computation. Held: Are annual general increases in basic salary deemed component in the computation of full backwages? The weight of authority leans in petitioner Bank’s favor and against respondent Sadac’s claim for the inclusion of general increases in the computation of his backwages. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained. Respondent Sadac theorized that he started with a monthly compensation of P12. it could terminate at any time the services of respondent Sadac. Jake Ng. On 9 November 1989. Rule 138 of the Rules of Court. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. Alpe Macalalad.00 or more than twice his original compensation. however. as in the case of a wage increase under a wage order. Petitioner was specifically assigned to work in a particular project. petitioner Bank terminated the services of respondent Sadac. nine lawyers of petitioner Bank’s Legal Department. Therefore. Edlyn Santiago. and ultimately. and subsequently General Counsel thereof.981. because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased. Book V of the Implementing Rules of the Labor Code. Pursuant thereto. and. 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. claiming that the association between the parties was one of a client-lawyer relationship. Petitioner Bank disputed respondent Sadac’s computation. 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. Monina Lagman. he posited. the Court had the opportunity to elucidate on the reason for the grant of backwages. Charms Haw. The difference. were unsubstantiated. respondent Sadac was removed from his office and ordered disentitled to any compensation and other benefits. In a previous SC decision. respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded. we did not permit petitioner Bank to rely on Sec. Likewise. accused respondent Sadac of abusive conduct. in a letter-petition to the Chairman of the Board of Directors. Petitioner’s claim. is based simply on expectancy or his assumption that. either by virtue of a lawful decree or order.00 in August 1981. After learning of the filing of the complaint. petitioner Bank filed a Manifestation and Motion praying that the award in favor of respondent Sadac be computed and that after payment is made. Heidi Soria. private respondents should have retained his services until the actual completion of the project. petitioned for a change in leadership of the department.442. 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. Dianne Miano. In several cases. respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. however. Anna Tetangco 42 . they did not find that respondent Sadac’s dismissal was grounded on any of the causes stated in Article 282 of the Labor Code. petitioner Bank instructed respondent Sadac to deliver all materials in his custody in all cases in which the latter was appearing as its counsel of record. the Supreme Court modified the decision of the NLRC and ordered the reinstatement of petitioner and payment of his backwages. therefore. Ÿ Equitable Banking vs. petitioner Bank be ordered forever released from liability under said judgment. Rule XIV. they held respondent Sadac’s dismissal illegal. Kristel Macatangay. In reaction thereto. hence. under the rules of client and lawyer relationship.365. including the general increases which he should have earned during the period of his illegal termination. Consequently.
Payment of unpaid salaries is only ordered if there are still salaries collectible from his employer by reason of services already rendered. the challenged award of backwages is decidedly improper and contrary to law and jurisprudence. entitled to be reinstated to their former position as regular employees. Charms Haw. NLRC (Charms) Facts: Petitioner Adoracion Roxas is the president of St. According to the Court.Purpose Ÿ Tomas Claudio Memorial College vs. But where. The Labor Arbiter declared private respondent's dismissal as illegal and ordered her reinstated and paid full backwages and damages. She hired private respondent. It is not private compensation or damages. not merely probationary. Jon Santos. the Court held that petitioners are entitled to full backwages. 1991. inclusive of allowances and to their other benefits or their monetary equivalent computed from the time their compensation was withheld from them up to the time of their actual reinstatement. Monette Mesa. Ÿ When the term "backwages" was used in the NLRC decision. Nature . On January 3. Payment thereof is a form of relief that restores the income lost by reason of such unlawful dismissal. but awarded private respondent partial backwages. she found out that her table. but as regular employees. Heidi Soria. With the continuation of their employment beyond the original term. Edlyn Santiago. Backwages are generally granted on grounds of equity. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. Thus. Moreover. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. It held that after October 31. Jake Ng. not on a probationary status. Accordingly. but is awarded in furtherance and effectuation of the public objectives of the Labor Code. NLRC) Ÿ Viernes vs. Nor is it a redress of a private right but. therefore. She instituted a complaint for unfair labor practice. Ÿ St. (General Baptist Bible College vs. underpayment of wages and claim for indemnity against private respondent. Despite the expiration of their employment contract. The Labor Arbiter dismissed the complaints. Alpe Macalalad. petitioners were allowed by the private respondent to work until January 2. petitioners separately filed complaints for illegal dismissal. Dianne Miano.Labor II In short. the employment of petitioners is no longer on a fixed term basis. NLRC (Charms) Irah Burog. Petitioners contended that they were not apprentices but regular employees whose services were illegally and unjustly terminated in a manner that was whimsical and capricious. Moreover. Held: Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. the dismissal has been adjudged valid and lawful. private respondent invoked Article 283 of the Labor Code. 1990. Held: The term "backwages" has been defined as that for earnings lost by a worker due to his illegal dismissal. reinstatement would always bring with it payment of backwages but not necessarily payment of unpaid salaries. Ysan Castillo. private respondent terminated petitioners' employment. When private respondent became ill. chair and other belongings were moved to a corner of their office and she has been replaced by the daughter of petitioner Adoracion Roxas. Jurisprudence is filled to the brim with cases wherein backwages were awarded to an employee illegally dismissed. On appeal. Thus. 1991. there is no vested right to salary increases. When private respondent reported for work. 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. 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. what was actually meant was unpaid salaries. Unpaid salaries refer to those earned prior to dismissal whereas backwages refer to those earnings lost after illegal dismissal. NLRC (Charms) Facts: Private respondent electric cooperative hired petitioners as meter readers from October 8 to 21. The Supreme Court held that petitioners should be reinstated to their former position as meter readers. Monina Lagman. petitioners have become full-fledged regular employees. rather. as in this case of a pitiful employee rendered hapless by her lawyer's inaction or ignorance. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. against herein petitioners before the Labor Arbiter. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. Backwages. 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. refer to his supposed earnings had he not been illegally dismissed. which pertain to compensation due the employee for services actually rendered before termination. Esther Reyes on a contract basis. Anna Tetangco 43 . she went on a leave of absence with the approval by petitioner. Theresa’s School vs. 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 the other hand. Kristel Macatangay. 1990. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. The NLRC reversed the decision of the Labor Arbiter. Theresa's School of Novaliches Foundation. etc. on the other hand. illegal dismissal. they were.
The award of backwages is not conditioned on the employee’s ability or inability to. Alpe Macalalad. 1996. Ÿ The payment of backwages is generally granted on the ground of equity. Monina Lagman. Thus. 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. Jon Santos. he was promoted as "Liaison Officer" of the school with the Department of Education. Dianne Miano. Labor Arbiter Dennis D. The private respondent would thereby be enriching himself at the expense of the petitioner. Jake Ng. Held: Grant of backwages proper. where it held that when the employee's dismissal is for a just cause. Both the labor arbiter and the NLRC concluded that petitioner was illegally dismissed. earn any income. non-payment of overtime pay. 1996 until the judgment of the CA shall have become final and executory. 1996 to February 17. hence entitled to separation pay. 5251. The award of backwages is not conditioned on the employee's ability or inability to. sent a Memorandum to the private respondent informing him that his employment was already terminated. The petitioner relied on the declaration of this Court in the case of Cathedral School of Technology v. Trinidad. the private respondent was arrested by the Morong police authorities. The Labor Arbiter Lagoc found that petitioner was an employee of private respondent and was illegally dismissed from the service. Kristel Macatangay. Anna Tetangco 44 . 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. 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. without any warrant therefor. he is deemed to have opted for Irah Burog. and non-payment of wages or commission and separation pay. The private respondent has not yet been convicted by final judgment in Criminal Case No. 1996. but rejected the charge of unfair labor practice and dismissed. private respondent Pedro Natividad started working with petitioner Tomas Claudio Memorial College (TCMC) in Morong. 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. It is a form of relief that restores the income lost by reason of unlawful dismissal. 1997 for violations of the Dangerous Drugs Act. 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. However. respondent was detained from June 10. he is presumed innocent until his guilt is proved beyond reasonable doubt. The petitioner asserts that it is absurd for the petitioner to pay backwages to the private respondent while the latter was in jail. Indeed. but is awarded in furtherance and effectuation of the public objective of the Labor Code. for violation of the Dangerous Drugs Act (Republic Act No. It is not a private compensation or damages. A criminal complaint was later filed against him. Culture and Sports (DECS) and with the Commission on Higher Education (CHED) with the rank of Assistant Registrar. NLRC (Charms) Facts: In a complaint filed before the NLRC. the petitioner. through its president. 6425). after appropriate proceedings. likewise. for lack of merit. the private respondent was detained in Criminal Case No. been entitled to reinstatement as a consequence of his illegal dismissal from employment. and from November 21. illegal dismissal. 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. allowances and damages. and to other benefits or their monetary equivalent computed from the time compensation was withheld up to the time of actual reinstatement. Petitioner would have. since it would include that period of time when the latter was in jail. Charms Haw. petitioner charged private respondent Emmanuel Lo with unfair labor practice. Nor is it a redress of a private right. 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. Conformably then with Article 279 of the Labor Code. NLRC. back wages. otherwise she would be unjustly enriching herself at the expense of the employer. there can be no backwages even if she was denied due process. premium pay for holiday and rest day. earn any income. underpayment of salary. This is because the private. Aladdin F. It is evident that the award of back wages resulting from the illegal dismissal of an employee is a substantive right. The petitioner insists that backwages should not and cannot be awarded to the private respondent. 5137. 1996. Rizal. Juanon rendered a decision dismissing the complaint for lack of merit due to the absence of an employer-employee relationship between petitioner and private respondent. Edlyn Santiago. While it may be true that on June 11. the State Prosecutor found no probable cause for the detention of the private respondent and resolved to dismiss the case. in the interim. Petitioner seasonably appealed to the NLRC which in turn remanded the case to the Labor Arbiter. Monette Mesa.Labor II Facts: Sometime in 1983. Ysan Castillo. In the interim. inclusive of allowances. in the interim. On June 10. by expressly asking for separation pay. petitioner's other monetary claims. Effect Failure to Claim Ÿ Rolando Dela Cruz vs. In time. legal holiday pay. Heidi Soria. On 7 August 1992. 1996 up to July 5.
This pertains to that period from the date petitioner was dismissed from employment on 2 December 1990 until he could have been reinstated which. the same must be computed from the time petitioner was first employed by private respondent until the finality of this decision. substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. law and jurisprudence authorize a tribunal to consider errors. Besides. It is true that private respondent did not appeal the award of the Labor Arbiter awarding separation pay sans backwages. amounts to a "plain error" which we may rectify in this petition. Ÿ The Court. namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. 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.Labor II separation pay in lieu of reinstatement. that is. We are prompted to give out this last reminder because it is really unjust that a discharged employee should. Dianne Miano. taking into account the appeals separately interposed by petitioner and private respondent from the decision of the labor arbiter. remain inactive in the expectation that a windfall would come to him. for the reason that employees should not be permitted to enrich themselves at the expense of their employer. A contrary view would breed idleness. Anna Tetangco 45 . the deduction should be made up to the time judgment becomes final. with respect to the activity in which they are employed. carpenter. In this case. Dagui should likewise be considered a regular employee by the mere fact that he rendered service for the Tanjangcos for more than one year. These twin requirements of notice and hearing were undeniably absent in the case at bar. the employer said "Wala ka nang trabaho mula ngayon. however. Period. The award of separation pay is in lieu of reinstatement and not of backwages. Both bear the Irah Burog. Heidi Soria. It must be remembered that backwages and reinstatement are two reliefs that should be given to an illegally dismissed employee. Likewise. there is the "law's abhorrence for double compensation. in mitigation of the damages that the dismissed respondents are entitled to. As regards separation pay. with folded arms. who is legally entitled thereto having been illegally dismissed. No backwages were awarded. or separation pay if reinstatement is no longer viable. Monette Mesa. 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. beginning 1953 until 1982. Effect Failure to Order Ÿ Aurora Land etc. even if they are not assigned as errors on appeal. although unassigned. Thus. And these. 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. if viable. 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. Dagui was dismissed. if it finds that their consideration is necessary in arriving at a just decision of the case. electrician and mason were directly related to the business of petitioners as lessors of residential and apartment buildings. the failure of the Labor Arbiter and the NLRC to award backwages to the private respondent. Neither was there any hearing conducted in order to give Dagui the opportunity to be heard and defend himself. Jake Ng. There are two kinds of regular employees. (2) plain errors not specified. without giving him any written notice informing the cause for his termination. whether continuous or broken. Ysan Castillo." Second. plumber. Corollary then to the foregoing is the matter of computing both the back wages and the separation pay due petitioner. Edlyn Santiago." on the alleged ground that his work was unsatisfactory. Should the laborer decide that it is preferable not to return to work. Issue: (1) Whether Dagui is a regular employee (2) Whether or not he was illegally dismissed. Rules of procedure are mere tools designed to facilitate the attainment of justice. although Dagui did not bring any appeal regarding the matter. and (2) those who have rendered at least one year of service.Computation Ÿ First. They are separate and distinct from each other. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. Kristel Macatangay. and (2) backwages. if they involve (1) errors affecting the lower court's jurisdiction over the subject matter. The Supreme Court is clothed with ample authority to review matters. In other words. and the filing of this case. vs. in the interest of substantial justice. as in this case. Jon Santos. an illegally dismissed employee is entitled to (1) either reinstatement. In the event that reinstatement is no longer possible. Suddenly. separation pay is awarded to the employee. Monina Lagman. it is conducive to lack of initiative on the part of a laborer. and (3) clerical errors. The jobs assigned to private respondent as maintenance man. Held: Yes to both. To be reckoned for the former is the period of putative service. is bewildered why only an award for separation pay in lieu of reinstatement was made by both the Labor Arbiter and the NLRC. Alpe Macalalad. Charms Haw.
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. Dianne Miano. the shortest prescriptive period for the filing of all other actions for which the statute of limitations does not fix a period. The period of delay in instituting this ULP charge with claim for reinstatement and back wages. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. However. He suggested that instead of Irah Burog. Co. 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.As has been noted. Justice Teehankee concurs in the ruling that there shouldn’t be a deduction of earnings elsewhere from the backwages awarded. Heidi Soria. J. such general award for back wages tended to breed idleness on the part of a discharged employee who would "with folded arms. 1961. however. Monette Mesa. Jon Santos. 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. is four years. Jake Ng. As observed by the Court in another case. dissenting opinion:(Mercury Drug rule) I dissent. Kristel Macatangay. 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.. Ÿ TEEHANKEE. although within the prescriptive period. Anna Tetangco 46 . On the other hand. the minimum should have been fixed at 3 years pay-Monette TEEHANKEE. (Mercury Drug vs. Such general awards. eleven months. the Court applies the precedent recently set in Mercury Drug. from the specific result in the Ÿ *** Basically. Rationale. CIR 1974) arbitrary procedures (in the Mercury case. and obviates the twin evils of idleness on the part of the employee who would "with folded arms. and fifteen days without further disqualifications. 11 months and 15 days in the case at bar) "without further qualifications. generally led to long delays in the execution of the decision for back wages and reinstatement. Monina Lagman. J. 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. 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. the employer in the case at bar should be directed to pay private respondent Dayao back wages equivalent to one year. he dissents as to the period of computation. vs. As to the amount of backwages. 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. Edlyn Santiago." that is to say. As aforestated. Charms Haw. Ysan Castillo. Itogon-Suyoc vs. Alpe Macalalad. it is to be noted that unscrupulous employers have with unrelenting attrition against their unwanted employees who successfully obtained judgments For reinstatement with back wages seized upon the further proceedings in the industrial court (to determine the actual earnings of their wrongfully dismissed employees for purposes of deduction from the back wages award) to bold unduly protracted and extended hearings for each and every employee found entitled to back wages and thereby practically render nugatory such judgments and force the employees to agree to unconscionable settlements of their judgment award. as noted in the main opinion. the period was based on the remainder of the 4 year prescriptive period). due to protracted hearings and unavoidable delays and difficulties encountered in determining the earnings of the laid-off employees during the pendency of the case. should be deducted from the liability of the employer to him for back wages.. 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. 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.Labor II stamp of undesirability. which may delay the execution of the decision. This new principle formally adopted by the Court now in fixing the amount of back wages at a reasonable level without qualification and deduction so as to relieve the employees from proving their earnings during their layoffs and the employer from submitting counter-proofs. reasonable and mutually beneficial solution.
Only in one case was backpay a matter of right. Here. if any. their services were lawfully terminated by reason of the expiration of the periods of their respective contracts. Consequently. and decision in this Court). 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. etc. when an employer had declared a Ÿ Irah Burog. 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. 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. 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). Jon Santos. In addition.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. Hence. Thus. petitioners had the burden of proving that the termination of their services was legal. they were notified of petitioners' decision not to renew their contracts anymore. and that was. As probationary employees. In accordance with these provisions. signed contracts of employment with petitioner for a fixed duration.Labor II judgment at bar of awarding respondent back wages only in an amount equivalent to 1 year. Ÿ Pines City Educational Center vs. 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. Edlyn Santiago. a) The first labor relations law governing the award of backwages was Republic Act No. in the opinion of the Court of Industrial Relations (CIR). NLRC (Monette) Facts: Private respondents were all employed as high school and college teachers on probationary basis by Pines City Educational Center. 875. they cannot be removed from their positions unless for cause. Dianne Miano. 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. Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of employment are concerned. 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.. Monette Mesa. Thus. Monina Lagman. All the private respondents. the law abhors double compensation. Charms Haw. Kristel Macatangay. supra. Anna Tetangco 47 . 1964 and its en banc resolution of February 25. such was necessary to effectuate the policies of the Industrial Peace Act. Heidi Soria. except Roland Picart and Lucia Chan. 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. Normally. 1963 and obtained favorable judgment in the industrial court within a year as per said court's decision of January 17.. when it is considered that he pursued — with vigor his complaint after its filing on April 25. in ascertaining the total amount of backwages payable to them. should be deducted therefrom. 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. Alpe Macalalad. there was no illegal dismissal. as stressed in East Asiatic Co. 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.g. History of the different methods in the computation of backwages. 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. The petitioner’s contention that their evaluation of the teachers’ performance was poor was not presented by any written proofs or evidence. 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. Jake Ng. should be immediately effected upon finality of the judgment without waiting for the computation and determination of the back wages). a case for illegal dismissal was filed. 11 months and 15 days . they are likewise protected by the security of tenure provision of the Constitution. Due to the expiration of private respondents' contracts and their poor performance as teachers. backpay (the same as backwages) could be awarded where. Ysan Castillo. Ÿ However. We restate the underlying reason that employees should not be permitted to enrich themselves at the expense of their employer. Held: The Supreme Court made a distinction between employees who signed a fixed term of contract and those who did not. 1964 denying petitioner's motion for reconsideration. oppression or dilatory appeals) on the employer's part. the Industrial Peace Act.
in effect. Feati University (1974) and others. this Court found occasion in the case of Mercury Drug Co. A survey of cases from 1974 until 1989. CIR. 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.. 442 by limiting the award of backwages to three (3) years. as amended. above-quoted. it also had the implied power of mitigating (reducing) the backpay where backpay was allowed.A. 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.D. In sum. 442 (the Labor Code of the Philippines)." Under the abovequoted provision. 442) had taken effect. Ysan Castillo. c) 3 year backwages (Dissenting opinion of Justice Teehankee in Mercury Drug). et al. After the Labor Code (P. 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. (italics supplied). Monina Lagman. 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. namely. in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level. Republic Act No. inclusive of allowances." (italics supplied) In accordance with the above provision. to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). No. the employee's employment in other establishments during the period of illegal dismissal. Act No. in the exercise of its jurisdiction. 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. In labor cases decided during the effectivity of R. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. the award of backwages equivalent to three (3) years. — In case of regular employment. Alpe Macalalad. 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. Its posture on the award of backwages. No. should not. (See Itogon-Suyoc case). Justice Teehankee dissented from the majority view that the employee in said case should be awarded backwages only for a period of 1 year. Inc.D." However. The Court deems it appropriate. v. As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee. 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.D. the Court enforced the Mercury Drug rule and. Charms Haw.D. Edlyn Santiago. among them. the good faith of the employer. without qualification or deduction.. however. Kristel Macatangay. No. In an even later case (1987). 6715 took effect. — . depending on several circumstances. Security of Tenure. qualified the provision under P. .In order not to unduly delay the disposition of illegal dismissal cases. However. when the amendatory law to P.D. 875. 442. and during the effectivity of P. 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. to reconsider earlier rulings on the computation of backwages by now holding that comfortably with the evident legislative intent as expressed in Rep. the rule generally applied by the Court after the promulgation of the Mercury Drug case. d) Then came Presidential Decree No. be diminished or reduced by the earnings derived by him elsewhere Irah Burog. 6715. . Security of Tenure. amending the Labor Code. supports this conclusion. No. 279. 279. R. it became mandatory to award backwages to illegally dismissed regular employees. among them. 442 was still the Mercury Drug rule. as a general rule.A No. Former Justice Claudio Teehankee approved of this formula expressing that such method of computation is a "realistic.Labor II lockout without having first bargained collectively with his employees in accordance with the provisions of the Act. 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. 442. et al. e) On 21 March 1989. during the effectivity of P. Dianne Miano. the CIR increased or diminished the award of backpay.The proposal on the threeyear backwages was subsequently adopted in later cases. backwages to be awarded to an illegally dismissed employee. Anna Tetangco 48 . Monette Mesa. Jon Santos. b) Mercury Drug rule. 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. was expressed as follows: “ART. No. Heidi Soria. was nonetheless followed in said case. 6715 took effect. This notwithstanding. This ruling was grounded upon considerations of expediency in the execution of the decision. Thus. Article 279 thereof states in part: “ART. Jake Ng. 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. Feati University Faculty Club (PAFLU) v. 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.
therefore. However. Zip Venetian Blind and the later decision in 1989 of Soriano v. inclusive of allowances. 6715. The clear legislative intent of the amendment in Rep. Respondent issued to petitioner a letter. Monette Mesa. but Ÿ Irah Burog. must be applied without attempted or strained interpretation. The procedure adopted by respondent in dropping petitioner from the rolls substantially complied with the two-notice requirement. Thus. Gentallan. informing the subject of his separation from the service due to mental incapacity.Labor II during the period of his illegal dismissal. 6715 points to "full backwages" as meaning exactly that. as amended by Republic Act No. 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. and finally. during said periods. However. NLRC. Anna Tetangco 49 . second. 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. Metro Cebu Water (Monette) Facts: Metro Cebu Water District (MCWD) dismissed Romagos for mental incapacity. Such a doctrine is admittedly supported by the early case of National Labor Union v. the factual bases relied upon by respondent in declaring petitioner mentally unfit to work appear inadequate as they failed to comply with the elements and processes of the law. that another notice is issued by the appointing authority or head of office. where reinstatement is adjudged. Ysan Castillo. describing the former's continuing mental disorder and incapacity to work and citing the reports of his coworkers or immediate supervisor. Held: Dropping from the rolls due to mental incapacity is subject to the requirements of due process. whether the Labor Arbiter correctly awarded full backwages to Timbal. Charms Haw. However. that a written notice is issued by the subject's immediate supervisor. First. 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. Alpe Macalalad. Atienza. the provision calling for "full backwages" to illegally dismissed employees is clear." Thus. that it has been observed that the subject officer or employee has been behaving abnormally for an extended period. Bustamante vs. Jake Ng. Ÿ However. as confirmed by the head of office. Monina Lagman. requiring her to undergo psychiatric evaluation. Edlyn Santiago. Dianne Miano. it did sufficiently proved that petitioner's mental condition has rendered her incapacitated to work as to justify her being dropped from the rolls .. which took effect just five (5) days after Soriano was promulgated. petitioner was diagnosed to be suffering from Major Depression. as amended by Republic Act No. without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Issue: Whether there was proper procedure and substantial basis for MCWD to declare Romagos mentally unfit to work and drop her from the rolls. In other words. has made the employer bear a heavier burden than that pronounced in the Mercury Drug Rule. plain and free from ambiguity and. Act No. third. It may appear that Article 279 of the Labor Code. Act No. Kristel Macatangay. Rep. 6715. while litigating the legality (illegality) of his dismissal. the Court now recognizes that this doctrine is inconsistent with Article 279 of the Labor Code. before an officer or employee may be dropped from the rolls for mental incapacity. i. wherein the Court affirmed the disallowance of backwages or "financial assistance" in dismissals under the aforementioned circumstance.1996 Ÿ Romagos vs. Heidi Soria. a closer adherence to the legislative policy behind Rep.e. must still earn a living to support himself and family. 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. 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. Act No. 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. that it has been established through substantial evidence that such abnormal behavior manifests a continuing mental disorder and incapacity to work. These certifications hardly prove that petitioner's behavior manifests a continuing mental disorder and incapacity to work. The underlying reason for this ruling is that the employee. 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. 6715 effectively mitigated previous jurisprudence which had limited the extent to which illegally dismissed employees could claim for backwages. 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. We now turn to the second issue raised. respondent sufficiently established that petitioner suffers from a mental disorder. 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. Clearly. Jon Santos.All that the 1989 and 1991 medical certifications established is that. the following elements and process must obtain: first.
His entitlement to full backwages commenced from the time the petitioner refused his reinstatement. never left his office. Javier failed to report for work. 1989. An illegally dismissed employee who. respondent agency terminated her services for abandonment when she failed to report for work in her new assignment. in contemplation of the law. He failed to notify the SEMC of the reason for his absences. Anna Tetangco 50 . and (b) for committing rape. KPI thereby engaged in ULP. On August 9. 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. The Labor Arbiter declared the dismissal of the complainant not in accordance with law. the employee must have failed to report for work or must have been absent without valid or justifiable reason.Labor II perhaps Republic Act No. To constitute as such. respondent Javier’s acquittal for rape makes it more compelling to view the illegality of his dismissal. 1995. two requisites must concur: first. Heidi Soria. 1995. and second.# On November 27. petitioner received a letter from the agency informing her that she was re-assigned and required to report at the respondent's Manila office for further instructions. willful. even after notice to return. The complainants further contended that they were coerced and intimidated into signing letters of resignation. 1989. On November 10. Genalyn Barotilla. Del Monte vs. Torres as a security guard. Jon Santos. 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.396. Edlyn Santiago. we said that the rule enunciated in Pines Cityð no longer controls. 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. 6715 was enacted precisely for the employer to realize that the employee must be immediately restored to his former position. the private respondents should be reinstated. Puente (Jake) Facts: Respondent avers that he started working with Ÿ Irah Burog. Charms Haw. Held: The amount of P 105. Kristel Macatangay. Monina Lagman. Abandonment as a just ground for dismissal requires clear. 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. with the second element being the more determinative factor. Standard Electric Employees Union (Jake) Facts: On July 31. Held: As regular employees. Jake Ng. Held: Respondent Javier’s absence from August 9. CA (Jake) Facts: The employees alleged that they were illegally dismissed. and unjustified refusal of the employee to resume his employment.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. Alpe Macalalad. he was arrested and detained for the charge of rape upon complaint of his neighbor. and to impress the idea that immediate reinstatement is tantamount to a cost-saving measure in terms of overhead expense plus incremental productivity to the company which lies in the hands of the employer. Moreover. respondent was ordered to immediately reinstate Complainant to her former position as security guard without prejudice to reassignment in the exigency of the service. Monette Mesa. is not tantamount to abandonment. he immediately proceeded to the petitioner but was not accepted back to work. They also asserted that in interfering with their right to self-organization by deceitfully transferring them to an employment agency. respondent E & R security agency hired petitioner Chona P. 1995 cannot be deemed as an abandonment of his work. Ysan Castillo. 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. Dianne Miano. Ÿ Kay Products vs. 1989. deliberate. Ÿ The respondent agency's contention that there has been a change in the situation of the parties making execution inequitable because petitioner accepted employment from another agency without resigning from it is patently without merit. In the instant case. 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. Now. 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. Mere absence or failure to report for work. with full backwages from the time she was placed under preventive suspension on October 27. when respondent Javier was freed on May 24.ð Standard Electric vs. hence. Hence. 1996 by virtue of the judgment of acquittal dated May 17. In the recent ruling of the Court. 1995. and considering that they were illegally dismissed. 1989 up to the time of her reinstatement. Saldiar (2007) Ÿ Torres vs. Ÿ Ÿ Respondent Javier is not entitled to any salary during the period of his detention. 1996. the reckoning point for the grant of backwages started therefrom. NLRC (Jake) Facts: On January 5.
petitioners filed their Complaint against the University and its President. Benedicto was terminated from his position.Labor II Petitioner Filsystems. he was already 64 years old. Clarita's position was neither abolished. cost-cutting measures resulting in the termination from the service of their employees. On 25 March 1985. petitioners implemented Irah Burog. 1989. Ÿ Without a valid cause. pursuant to our ruling in Agabon. While petitioner Fuentes. She was replaced by another faculty member. Cajucom (Jake) Facts: As a result of the economic slowdown then experienced in this country. Otherwise. Ysan Castillo. Inc. Furthermore. Alpe Macalalad. respondent Obed Jose Meneses. However. on June 12. he was dismissed from his employment allegedly because he was a project employee. Held: That retrenchment was proper. confirmed by the CA. if the project or work is completed during the pendency of the ensuing suit for illegal dismissal. at that time the president of petitioner. Effect Inflation Ÿ Lantion vs. Anna Tetangco 51 . Under Article 283. 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. Petitioner Clarita Lantion.000. before the NLRC. Charms Haw. Dianne Miano. were not religiously followed. Reinstatement of petitioners with backwages is thus called for. Held: The dismissal of respondent from the service is by reason of retrenchment. Such compliance with the reportorial requirement confirms that respondent was a project employee. in case of retrenchment to prevent losses. Held: These factual findings of the NLRC. including respondent. petitioner Filomeno Lantion received a letter.000 plus 1% commission from collections of all advertising contracts consummated.. NLRC (Jake) Facts: On 10 November 1983. as marketing manager with a monthly compensation of P20. When Benedicto was illegally dismissed on October 11. 1998. the compulsory retirement age under the law. Jon Santos. Ÿ Benedicto was entitled to backwages only up to the time he reached 65 years old. Held: The contracts of employment of Puente attest to the fact that he was hired for specific projects. an authorized cause. terminating him as the Acting Vice-President and concurrently Executive Officer of the University effective 11 November 1983. Ÿ In respect of the argument that the inflation that has supervened justifies the imposition of interest. Since he was employed by petitioners for four years. 1995 to December 30. Reynaldo Benedicto was appointed by Ceferino Basilio. Those contracts expressly provided that his tenure of employment depended on the duration of any phase of the project or on the completion of the construction projects. 1994. His employment was coterminous with the completion of the projects for which he had been hired. The labor arbiter concluded that Benedicto was illegally dismissed. 1994 signed by Tomas Gomez III. dated 9 November 1983. 1999. And as far as Filomeno and Clarita Lantion are concerned. Monette Mesa. Monina Lagman. this Court has held that the effects of extraordinary Ÿ TPI Cement Corp vs. Benedicto was entitled to backwages only for the period he could have worked had he not been illegally dismissed. Jake Ng. Heidi Soria. In a letter dated October 11.000. was terminated as Secretary to the Legal Office on 21 November 1983. Petitioners were not rehired although they fall outside the exception provided. therefore. Since backwages are granted on grounds of equity for earnings lost by an employee due to his illegal dismissal. Edlyn Santiago. there can be no question. respondent is entitled to an award of separation pay equivalent to one-half (1/2) month’s pay for every year of service (with a fraction of at least six months considered one whole year). their temporary appointment to other positions could not have affected their permanent status pursuant to the ruling in the First GAUF Case. with a monthly salary of P80. are binding on us since they are supported by substantial evidence. Thus. was terminated as Dean of the Institute of Business and Agricultural Administration and Concurrent Head of the Department of Business. Ÿ Intercontinental Broadcasting vs. however. they shall be entitled to reinstatement with full back wages. petitioner regularly submitted to the labor department reports of the termination of services of project workers. 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. that since his work was not dependent on any project. that his work was not dependent on the completion or termination of any project. his employment with the petitioner company was continuous and without interruption for the past ten years. petitioners should be liable for violation of his right to due process and should pay him indemnity in the form of nominal damages. Finance. and Management effective 1 June 1984. or from June 1. The conditions laid down. The position of Vice-President continued to exist. which we fix at P20. Kristel Macatangay.00.00. that on October 1. Filomeno's sister-in-law. Ÿ We rule that the Court of Appeals erred in awarding him such backwages. Benedicto (Jake) Facts: In 1993.000. he should be paid P160. the employment of project employees cannot be terminated prior to expiration. a corporation engaged in construction business.00 as separation pay. Their positions were not affected by the re-organizational changes envisioned in the retrenchment program. wife of Filomeno. the general manager then of petitioner.
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. . the company was sustained and the complaint was dismissed for lack of merit but private respondent was awarded separation pay. petitioner pleaded that she never misappropriated the money collected and whatever was left of it. for equity finds no room for application where there is law. as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. Monette Mesa. perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables. Hence." As a general rule. . Monina Lagman. Kristel Macatangay. the fact that the same was approved or indorsed by petitioner. Ÿ Salavarria vs. after initial purchases were made. Jake Ng. on various dates.00 as "severance pay" which is synonymous with "separation pay. made her "in effect the author of the project. However. Gustilo. Held: We hold that the grant of separation pay in the case at bar is unjustified. on the ground of social justice. who attested to the veracity of the former's assertion. was accused by two complainants of having demanded and received from them the total amount of P3. respondent company. she was found guilty as charged and accordingly separated from the service. an employee who is dismissed for cause is not entitled to any financial assistance. Investigated and heard. Dianne Miano.Labor II inflation are not to be applied without an agreement between the parties and without an official declaration thereof by competent authorities.000. Charms Haw. Anna Tetangco 52 . habitual intoxication or an offense involving moral turpitude. Further. In support of this claim. it will actually become a prize for disloyalty. 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. 10. In PLDT v.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. It is grounded on the precepts of conscience and not on any sanction of positive law. it would be petitioner Salavarria. Ysan Castillo. Jon Santos. petitioner. . The private respondent has been dismissed for dishonesty. if it is to be considered at all. 14. 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. the employer may not be required to give the dismissed Irah Burog. 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. one of her students. Inc. Heidi Soria. 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. Moreover. NLRC. Ÿ We rule that the NLRC correctly awarded to petitioner the amount of P45. Edlyn Santiago. If regarded as a justification for moderating the penalty of dismissal. 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. . like theft or illicit sexual relations with a fellow worker. for example. was employed by Wyeth Philippines. were immediately returned to the student-leaders for proper reimbursement to the students concerned. not only for the collection of the contributions. Wyeth Philippines (Kristel) Facts: Alan D. an offense involving moral turpitude . equity has been defined as justice outside law. petitioner relied principally on a letter written by Ÿ Gustilo vs. as a pharmaceutical territory manager. maintaining that he was responsible. Where the reason for the valid dismissal is. having been effected without just cause. Redentor Salonga. Letran College (Jake) Facts: Petitioner contended that her dismissal was arbitrarily carried out. a traffic operator of the Philippine Long Distance Telephone Company. She went to the Ministry of Labor and Employment claiming she had been illegally removed. The fact that she has worked with the PLDT for more than a decade." Petitioner's infraction of a school policy warrants her dismissal. FINANCIAL ASSISTANCE Allowed Financial Assistance Ÿ PLDT vs. Petitioner's employment records show that respondent company.800. but for the canvass of the price of the religious items as well. regardless of who initiated the collections. After consideration of the evidence and arguments of the parties. Alpe Macalalad.. 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. equity considerations provide an exception. . Where the reason for the valid dismissal is. or financial assistance. NLRC (Jake) Facts: Marilyn Abucay. or whatever other name it is called. reprimanded and suspended him for habitually neglecting to submit his periodic reports. Held: If there is one person more knowledgeable of respondent's policy against illegal exactions from students. the employer may not be required to give the dismissed employee separation pay.
Monina Lagman. It appeared that Cagampan knowingly entered into an unauthorized contract for the installation of a transformer. private respondent was found by the Labor Arbiter and the NLRC to have been validly dismissed for violations of company rules. Hence. and Irah Burog. Jake Ng. In our view. Weighed on the scales of justice. (CENPELCO). working on board ship for almost 24 years. Heidi Soria. It is grounded on the precepts of conscience and not on any sanction of positive law. provide an exception. Inc. 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. NLRC (Kristel) Facts: Lito Cagampan was the Acting Power Use Coordinator of petitioner Central Pangasinan Electric Cooperative. Dianne Miano. if supported by substantial evidence. but that considering his age and health. the grant by the Court of separation benefits is hardly justifiable. Alpe Macalalad. In this case. Sedan sent a letter to petitioners applying for optional retirement. namely: (1) unauthorized acceptance of payments for new connection. Moreover.The union staged a strike. Edlyn Santiago. Anna Tetangco 53 . are accorded respect and even finality by this Court. since even the company said that the reason it refused his application for optional retirement was that it still needed his services. 15 Separation pay in such case is granted to stand as a "measure of social justice. Ÿ The rule is that financial assistance is allowed only in instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. he has no previous derogatory records. he shall not be entitled to termination pay without prejudice to applicable collective bargaining agreement or voluntary employer policy or practice. Such findings. Charms Haw. conscience and reason tip in favor of granting financial assistance to support him in the twilight of his life after long years of service. that he denies receiving the telegram asking him to report back to work. Financial assistance may be allowed as a measure of social justice and exceptional circumstances. and that he was not authorized to accept payment. Kristel Macatangay. with these special circumstances. however. for equity finds no room for application where there is law. Equity has been defined as justice outside law. this case is not the appropriate instance for generosity under the Labor Code nor under our prior decisions. 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. In this instance. is the employer of the faculty and staff members comprising the labor union DUCACOFSANAFTEU. hence the retirement benefits he would receive would ease his financial burden. Ÿ Pangasinan Electric Coop vs. 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. via the principle of "compassionate justice" for the working class. Equity considerations. The strike was declared illegal and the dismissal of the union members was ordered by the lower courts. Piñero's infraction is not so reprehensible nor unscrupulous as to warrant complete disregard of his long years of service. Ÿ Pinero vs. on the ground of social justice. we can call upon the same "social and compassionate justice" cited in several cases allowing financial assistance. These circumstances indubitably merit equitable concessions. He was dismissed from service. or whatever other name it is called. Ysan Castillo. and certain acts tantamount to serious misconduct.Labor II employee separation pay. and as an equitable concession. and (3) defrauding others by using the name of the company. Although meriting termination of employment. Rule I. (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. he preferred to stay home rather than risk further working in a ship at sea. citing as reason the death of his only daughter. Ÿ Section 7. 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. NLRC (Kristel) Facts: Dumaguete Cathedral College. The fact that private Ÿ Eastern Shipping Lines vs. Ÿ An employee who is dismissed for cause is generally not entitled to any financial assistance. Inc. Cagampan was found guilty of violating CENPELCO's Code of Ethics and Discipline. Jon Santos. being ethical rather than jural and belonging to the sphere of morals than of law. that he had given to the company the best years of his youth. that it would appear that he had served the company well.This was not granted despite several demands. or financial assistance. Monette Mesa. that he applied for optional retirement under the company's non-contributory plan when his daughter died and for his own health reasons. 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. an educational institution. that in those years there was not a single report of him transgressing any of the company rules and regulations..
the North Luzon Expressway (NLE) Security Services Investigation and Intelligence Unit discovered NLE flexbeams in the house of Alfonso Eusebio in Sipat. of which petitioner Benito D. a superior officer. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. No. Monette Mesa. NLRC. . as a janitor and later promoted to Leadsman. Soco vs. 80609. If an employee's length of service is to be regarded as a justification for moderating the penalty of dismissal. Mercantile Corp. Dianne Miano. August 23. NLRC (Kristel) Facts: Domingo Manreza was hired by the CDCP in 1972. Mariano Lopingco. At best it may mitigate the penalty but it certainly will not condone the offense. for having physically assaulted and verbally abused. Petitioner received a notice Irah Burog.R. having the main duty of removing and/or changing damaged flexbeams on the expressway. for serious misconduct) is legally indefensible. 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. in our view of this case. During the strike. of Davao. Both declared that the items were deposited there by Manreza and his companions. . an accounts payable clerk. NLRC (Kristel) Facts: Petitioner. 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. Where the reason for the valid dismissal is. Filipro. (2) redundancy. Ysan Castillo. of the Philippines vs. Nestle Philippines. and hearing. he is not entitled to separation pay. The only cases when separation pay shall be paid. Alpe Macalalad. where We held that: ". after due notice. . Ÿ Eastern Paper Mills vs." Since Manreza was found guilty of dishonesty for having stolen company property and was dismissed for cause. habitual intoxication or an offense involving moral turpitude. Monina Lagman. on the ground of social justice. vs. 148 SCRA 187. who was then the personnel and administrative manager of the company. (Articles 283 and 284. several of the striking employees threw stones at the trucks entering and leaving the company premises. are when the cause of termination was not attributable to the employee's fault but due to: (1) the installation of labor-saving devices. whose driver was rendered unconscious by a stone hitting him on the head. Inc. or whatever other name it is called. Inc. 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. . (4) cessation of the employer's business. although the employee was lawfully dismissed. investigation. NLRC and Marilyn Bucay.Labor II respondent served petitioner for more than twenty years with no negative record prior to his dismissal. or financial assistance. 1983. Chua was a member. "The policy of social justice is not intended to countenance wrong doing simply because it is committed by the underprivileged. (Emphasis supplied. declared a strike against the private respondent company. that doctrine was abandoned by this Court in the recent case of Philippine Long Distance Telephone Co. NLRC (Kristel) Facts: Union of Filipro Employees. for example. such gesture will actually become a prize for disloyalty. It contravenes Rule 1. Bulacan. It placed the complainant under preventive suspension for thirty (30) days. does not call for such award of benefits. Edlyn Santiago. One truck. 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. 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.) . since his violation reflects a regrettable lack of loyalty and worse. G. On May 24. Plaridel. Sec. 148 SCRA 526. like theft or illicit sexual relations with a fellow worker. Charms Haw. 145 SCRA 123). Ÿ An award of separation pay to an employee who was dismissed for a valid cause (in this case. 7. Heidi Soria. 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. Lariosa. and thereafter terminated his employment Ÿ It is true that in some earlier cases. rammed a private vehicle and crashed into a beauty parlor resulting in the death of three (3) persons and extensive damage to private property. Anna Tetangco 54 . the employer may not be required to give the dismissed employee separation pay. betrayal of the company. and also in the house of Nene Enriquez. vs. a violation of Section 7 (a) (10) of the CDCP Code of Employee Discipline. Kristel Macatangay. 1988. distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of undesirables. within full view and hearing of the other employees. dismissed the private respondent Eduardo Malabanan.) Ÿ Chua vs. (3) retrenchment. Jon Santos. Labor Code. Construction Corp vs. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it. The company found him guilty of stealing or unauthorized taking of company property. like the workers who have tainted the cause of labor with the blemishes of their own character. Jake Ng. Book VI of the Omnibus Rules Implementing the Labor Code. Not Allowed Ÿ Phil.
vs. 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. Charms Haw. cultivate. for example. should prevail. each of the petitioners received his separation pay equivalent to one-half month pay for every year of service. Edlyn Santiago. Separation pay for the employees was computed pursuant to the provisions of the CBA between SDPI and NFL. vacation leave. SDPI and NFL executed CBA in which they agreed that in case of permanent or temporary lay-off. Jake Ng. workers affected would be entitled to termination pay as provided by the Labor Code. the CBA. and improve the rubber plantations of ARCI as an agro-industrial development project. the NFL requested SDPI that the separation pay benefits for its members be segregated from regular workdays. However. It bears stressing that a CBA refers to the negotiated contract between the legitimate labor organization and the employer concerning wages. the Comprehensive Agrarian Reform Law (CARL) took effect. In the case at bar. which strike resulted in multiple deaths and extensive property damage. hours of work and all other terms and conditions of employment in the bargaining unit. accordingly. the parties. Jon Santos. unused sick leave and other benefits. respecting the terminations was sent by SDPI. or whatever other name it is called. A contrary rule would. like theft or illicit sexual relations with a fellow worker. Ysan Castillo. have the effect of rewarding rather than punishing the erring employee for his offense . Sulpico Liner (Heidi) 14. A fraction of at least 6 months shall be considered 1 whole year. Consequently. and other benefits. The petitioners never assailed the CBA as prejudicial to them or for having been in violation of Article 100 of the Labor Code. or financial assistance. administer. antagonism has caused a severe strain in their relationship. Dianne Miano. habitual intoxication or an offense involving moral turpitude. Etcuban vs. During the effectivity of the FMA between ARCI and SDPI.Labor II of dismissal from private respondent for having participated in the illegal strike. Where the reason for the valid dismissal is. and other benefits which were all lumped in one Metrobank check. allowances. .11 SEPARATION PAY When Alternative Ÿ Although Vital. is entitled to reinstatement. . Unless annulled. as the petitioner correctly argues. constituted serious misconduct on his part. The employees of the private respondent who were members of the NFL ratified the CBA which had been in force and effect for 3 years before the closure of the plantation. The 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. Monette Mesa. SDPI decided to terminate the FMA with ARCI and cease operation of the rubber plantation. whichever is higher. without the NFL initiating the revision thereof. the employer may not be required to give the dismissed employee separation pay. in addition to his full backwages. Heidi Soria. Monina Lagman. Anna Tetangco 55 . During the negotiations. CA (Heidi) Facts: SDPI was given the right to manage. . (Coca-cola Bottlers Phils. a letter to DOLE. management and union meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. petitioner's participation in the unlawful and violent strike. thus: Pursuant to the CBA. as a contract governing the employer and the employees respecting the terms of employment. SDPI served formal notices of termination to all the employees of the plantation. 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. Meanwhile. Simultaneously. they should have rejected the CBA. whichever is higher. permanent or temporary lay-off workers affected would be entitled to termination pay as provided by the Labor Code. on the ground of social justice. Alpe Macalalad. who was illegally dismissed. Kristel Macatangay. Vital) Ÿ National Federation of Labor vs. The parties opted to be bound by the provisions of the Labor Code and not by company policy. Ÿ We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. in relation to the Labor Code of the Philippines. processing of and marketing of its products and providing technical expertise. Ÿ Irah Burog. develop. specifically for planting rubber trees. 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. NFL was the duly registered bargaining agent of the daily-and-monthly-paid rank-and-file employees of SDPI in a rubber plantation. 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. Had the dailypaid rank-and-file employees deemed the same to be a diminution of their benefits.
2 which petitioner accepted the following day. it is very clear from the CBA that when an employee or worker voluntarily resigns due to. that is. 1986. (d) closing or cessation of business operations. Hanford denied Joseph's request on the ground that under the Labor Code.00. Jon Santos. Later. If petitioners could be liberal to those employees who retired.000. all doubts should be construed in favor of labor. as in fact. Joseph (Heidi) Facts: On July 17. Ysan Castillo. the general rule is that an employee who voluntarily resigns is not entitled to separation pay. when it is stipulated in the employment contract or CBA or such payment is authorized by the employer's practice or policy. On Aug. (c) retrenchment. the newly designated jefe de viaje of the ship. Sometime in 1994. discovered irregularities in the issuance of passage tickets. then he is entitled to a separation pay. we held that while it is true that under the Labor Code. Monina Lagman. retirement is not also a ground for the grant of separation pay. vs. 13th month pay and the cash conversion of her unused vacation and sick leave. (b) redundancy. Dianne Miano. Under the Labor Code. voluntary resignation is not one of the grounds which justifies the When not allowed Ÿ North Davao Mining Corp vs. NLRC finds application here. 1994 for loss of trust and confidence." Ÿ Hanford Phil. Kristel Macatangay." 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. this Court holds that there was sufficient basis for petitioner to lose trust and confidence in private respondent so as to justify his termination. 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. Moreover. Inasmuch as reason for which the petitioner was validly separated involves his integrity. respondent voluntarily tendered her resignation effective September 17. he is not worthy of compassion as to deserve at least separation pay for his length of service. and those whose services are terminated due to suspension or cessation of operation. Under the Code. among others. the NLRC and the Court of Appeals. Charms Haw. 1978. however. 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). separation pay may be awarded only in cases when the termination of employment is due to: (a) installation of labor saving devices. Edlyn Santiago. thus: "In the interpretation of an employer's program providing for separation benefits. which is especially required for the position of purser. It also informed him of his immediate preventive suspension until further notice. there is no reason why they should not also extend such liberality to respondent considering that she served petitioner for 21 years. Ectuban received a memorandum of even date relative to the irregularity in the "alleged involvement in anomaly of ticket issuance. workers are the intended beneficiaries of such program and our Constitution mandates a clear bias in favor of the working class. Irah Burog. NLRC (Heidi) Facts: North Davao was incorporated in 1974 as a 100% privately-owned company. employees or workers who may be separated without cause.. 19. As aptly held by the Labor Arbiter. Consequently. Our ruling in Philippine National Construction vs. 1998. Hanford then paid Joseph her last salary. NLRC and Margo Batister. 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. 13th month pay and other monetary benefits with the regional arbitrator. Anent the petitioner's request for separation pay. 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." such as voluntary resignation. in a surprise examination. Alpe Macalalad. Monette Mesa. "separation from the company without cause. (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees. Barely a week after the petitioner's preventive suspension and pending his administrative investigation. 1998. After all. Hanford hired Shirley Joseph as a sewer. the Court is constrained to deny the same. Jake Ng. At the time of his dismissal.Labor II Facts: Ectuban was employed by the Sulpicio Lines on January 30. 10. or (f) when an employee is illegally dismissed but reinstatement is no longer feasible. Ectuban was the Chief Purser of the M/V Surigao Princess receiving a monthly salary of P5. Anna Tetangco 56 . he filed a complaint against the respondent for illegal dismissal. On Nov. Ÿ In the instant case. Ÿ It is well to note that there is no provision in the Labor Code which grants separation pay to employees who voluntarily resign. grant of separation pay. as in this case. 1998. On June 30. records show that petitioners granted the employees mentioned earlier their separation pay upon their separation by reason of their retirement. 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. non-payment of overtime pay. In Hinatuan Mining Corporation and/or the Manager v. there is an exception. Heidi Soria. an employee who voluntarily resigns may not be granted separation pay. 1978 until his dismissal on June 10.
5 days' pay for every year of service. however. for obvious reasons. its remaining employees were separated and given the equivalent of 12. this arrangement lasted from 1981 up to 1990. Where. 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. Believing that the allowances they regularly received on a monthly basis during their employment should have been included in the computation thereof. authorizes neither oppression nor self-destruction of the employer. Davao Del Norte. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. Respondents contend that. "Pay" is not defined therein but "wage. Anna Tetangco 57 . petitioners were given separation pay. Heidi Soria.. in which the aggregate losses amounted to over P20 billion — the Labor Code does not impose any obligation upon the employer to pay separation benefits. Accordingly. the employees had to collect their salaries at a bank in Tagum. unequal treatment of employees. its cash flow could still have sustained the payment of such separation benefits. its vital lifeblood — its cashflow — literally dries up. However. it gave 30-days' separation pay to its employees when it was still a going concern even if it was already losing heavily. not by reason of discrimination. one cannot squeeze blood out of a dry stone. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. Kristel Macatangay. or commission basis. But when a business enterprise completely ceases operations. Art. the closure was due to business losses — as in the instant case. managerial and even a Vice Presidential positions in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Surigao del Sur. upon its death as a going business concern. Alpe Macalalad. out of sheer financial bankruptcy — a fact that is not controlled by management prerogatives. The law. the fact that less separation benefits were granted when the company finally met its business death cannot be characterized as discrimination.e. the basis for the claim of the additional separation benefit of 17. 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. 283 with Art. . "What exactly does the term connote?" We correlate Art. "wage" is defined in letter (f) as the remuneration or earnings..5-days' worth at that.Labor II North Davao completely ceased operations in May 31. a reward or recompense for services performed. capable of being expressed in terms of money. 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 . respondents tenaciously insist on the award of separation pay. should have elicited admiration instead of condemnation. in protecting the rights of the laborer. Monina Lagman. petitioners discriminated against them." the question arises.. Indeed. Under the facts and circumstances of the present case. Moreover. task. Specifically. Ÿ Art. 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. In the case before us. the grant of a lesser amount of separation pay to private respondent was done. Ysan Castillo.5 days is alleged discrimination. 248 (e) of said Code. i. they lodged a complaint for separation pay differentials. computed on their basic monthly pay. whichever is higher. from the beginning of its operations in 1981 until its closure in 1992. Monette Mesa. inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems. But to require it to continue being generous when it is no longer in a position to do so would certainly be unduly oppressive. 97 of the same Code on definition of terms.e. 1992 due to serious business reverses. Charms Haw. When it ceased operations. Dianne Miano. NLRC (Heidi) Facts: Petitioners numbering 116 occupied technical. during the life of the petitioner corporation. but rather. Jake Ng. by denying the same separation benefits to private respondents and the others similarly situated. Edlyn Santiago." Both words (as well as salary) generally refer to one and the same meaning. 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. or other method of calculating the Irah Burog. however designated. i. However. piece. Jon Santos. In the case of North Davao. Ÿ In case of retrenchment to prevent losses. . Computation Ÿ Millares vs. anchoring their claim solely on petitioner North Davao's long-standing policy of giving separation pay benefits equivalent to 30-days' pay. As already stated. it appears that. Since the law speaks of "pay. whether fixed or ascertained on a time.". Nor water out of parched land. Therefore. which policy had been in force in the years prior to its closure. which is proscribed as an unfair labor practice by Art. in addition to the commutation to cash of their unused vacation and sick leaves. unfair and most revolting to the conscience.e. some 58 kilometers from their workplace and about 2 1/2 hours' travel time by public transportation. i. Art. As a going concern. it had been giving separation pay equivalent to 30 days' pay for every year of service. Stated differently.
is the manager of NYK. which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done. NLRC) Ÿ NYK Intl vs. that it merely exercised its management prerogative when it resorted to retrenchment as a means of preventing losses. this fictional veil may be pierced whenever the corp personality is used as a means of perpetrating fraud or other illegal acts." we divide the discussion on the following — "customarily furnished. is included in "wage. once a vacancy occurs in the company-provided housing accommodations. Heidi Soria. It cited the case of AFP Mutual Benefit Association. unfair labor practice and damages against HMC. has a separate and distinct personality. which held that since a corporation is an artificial person. NLRC. The next day. being the "person acting in the interest of the employer. she notified petitioner that she was still recovering from her sickness. the fair and reasonable value thereof. In the case at bar. a measure fully explained to all its employees. On May 9. vs. Charms Haw. In this case Cathy Ng. NLRC (Heidi) Facts: Complainants-petitioners are employees of Hinatuan Mining Corporation (HMC) holding supervisory positions who organized the Hinatuan Mining Supervisory Union (HIMSU). The subject allowances do not form part of petitioners wages. Publico was refused entry for work and later informed of her dismissal. lodging. by legal fiction. NLRC (Heidi) Facts: Publico was a sewer of NYK. However." In order to ascertain whether the subject allowances form part of petitioner's "wages. HMC in opposition avers that the validity of the retrenchment was not in issue in the complaint filed by petitioners. When an employer customarily furnishes his employee board. Effect of Acceptance Ÿ Anino vs. however. in the technical sense only. "fair and reasonable value as determined by the Secretary of Labor.Labor II same. there was no reason at all for petitioners to resort to the above cases. or for services rendered or to be rendered and includes the fair and reasonable value. in the guise of retrenchment. lodging or other facilities. 1997. Inc. But in view of the previous discussion that the disputed allowances were not regularly received by petitioners herein. Complainants-petitioners then filed a complaint for illegal dismissal. Separation pay when awarded to an illegally dismissed employee in lieu of reinstatement or to a retrenched employee should be computed based not only on the basic salary but also on the regular allowances that the employee had been receiving. The 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. Anna Tetangco 58 . Ÿ What the Court finds apropos is our disquisition in A. because a corp. Ransom. a corporation and its president were directed by this Court to jointly and severally reinstate the illegally dismissed employees to their former positions and to pay the monetary awards. Dianne Miano. LIABILITY OF CORPORATE OFFICERS Liability Rule Ÿ Unless they have exceeded their authority. as determined by the Secretary of Labor." and. the employee concerned transfers to the company premises and his housing allowance is discontinued. On May 7. it must have an officer who can be presumed to be the employer. 1997. Monina Lagman. dismissed complainants-petitioners who are active leaders of the union. Waivers and quitclaims are generally looked upon with disfavor. Monette Mesa. More recently. (Bogo-Medellin vs. On the other hand. not personally liable for their official acts. C. the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation given only to employees who have personal cars. Jon Santos. Conformably with our ruling in A. therefore. 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. Alpe Macalalad. Irah Burog. Anent the issue on the quitclaims. corporate officers are as a GR. In a subsequent case. Ÿ In termination cases. admittedly. Ysan Castillo. the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer. respondent corporation did not submit an iota of evidence to show losses in its business operations and the economic havoc it would sustain imminently. Jake Ng. is the employer. Publico went home early despite refusal of petitioner because she was not feeling well. we ordered the corporate officers of the employer corporation to pay jointly and solidarily the private respondents' monetary award. as determined by the Secretary of Labor and Employment. Kristel Macatangay.C. In the case of the housing allowance. Ransom Labor Union-CCLU v. null and void. of board. lodging or other facilities. HMC. Edlyn Santiago. AFP-MBAIEU which ruled that such quitclaims are against public policy and. or other facilities customarily furnished by the employer to the employee." In other words the corporation." "Customary" is founded on long-established and constant practice connoting regularity." "board. 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.
000. Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis. Her resultant sufferings thus entitle her to an award of moral damages. (Collegio de San Juan de Letran-Calamba vs.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. 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.000. or constituted an act opposite to labor.’s fees because there is no showing that bad faith and malice attended her dismissal. even though the latter was the General Manager. Moral damages are recoverable only where the dismissal is attended by bad faith or fraud. in her capacity as manager and responsible officer of NYK. Monette Mesa. Given petitioner's business position or standing before and at the time of termination and petitioner's business and financial position. Despite the expiration of their employment contract. social and financial position of the offended party and the business or financial position of the offender are taken into account. On appeal. Indeed. private respondent terminated petitioners' employment. Jake Ng. she was terminated. this fictional veil may be pierced whenever the corporate personality is used as a means of perpetuating fraud or an illegal act. with the company for the monetary award. hence. or was done in a manner contrary to morals. 1991. petitioner was deprived of due process and denied "basic precepts of fairness" when she was terminated. Here. because a corporation. The Labor Arbiter dismissed the complaints. Villas) Ÿ Asia Pacific Chartering vs. Heidi Soria. corporate officers are. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. 1990. this petition for certiorari. However.Labor II she falls within the meaning of an "employer" as contemplated by the Labor Code. Jon Santos. Hence. Dianne Miano. cannot be exonerated from her joint and several liability in the payment of monetary award to private respondent. evading an existing obligation. 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. In determining the amount of moral damages recoverable. Thus. Tan’s real and personal property should not be burdened by such award. or is done contrary to morals. Edlyn Santiago. Pursuant to prevailing jurisprudence. however. (Tan vs. it must be shown that the dismissal of the employee was attended to by bad faith. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. has a personality separate and distinct from its officers. underpayment of wages and claim for indemnity against private respondent. the alias writ of execution for said award should be directed only against the company and not against Tan. To warrant award of moral damages. A dismissal may be contrary to law. corporate directors and officers are solidarily liable with the corporation. (Acesite Corp. 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. it does not necessarily establish bad faith. good customs or public policy.00 which it finds reasonable. Ÿ The Supreme Court held that the respondent was illegally dismissed. nor did he hold Tan liable. Ÿ 14. but by itself alone. good customs or public policy. petitioners separately filed complaints for illegal dismissal. where terminations of employment are done with malice or in bad faith. NLRC) dismissal with prayer for damages and attorney's fees. 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. The labor arbiter didn’t make any such finding. stockholders and members. petitioners were allowed by the private respondent to work until January 2. Alpe Macalalad. On the other hand. 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. Anna Tetangco 59 . In cases of illegal dismissal. as a general rule. the business. vs. The amount of exemplary damages awarded is accordingly reduced too to P250. Irah Burog. Therefore. Timbol) Unless they have exceeded their authority. Charms Haw. Ysan Castillo. by legal fiction.12 DAMAGES Moral/Exemplary Ÿ Villas is not entitled to moral and exemplary damages and atty. not personally liable for their official acts. this Court reduces the amount of moral damages awarded to P500. bad faith or malice was not proven. Monina Lagman. private respondent invoked Article 283 of the Labor Code. Cathy Ng. 1991. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. Thus. 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. Kristel Macatangay. or confusing a legitimate issue. or constitutes an act oppressive to labor. either jointly or severally. On January 3.
The NLRC. through its manning agent. entitled to be reinstated to their former position as regular employees. Irah Burog. this appeal. Heidi Soria. in which the employer-employee relation is merely incidental. 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. Jon Santos. they were. affirmed by the Court of Appeals. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employeremployee relations. 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. Kristel Macatangay. Ysan Castillo. the employer fails to comply with the requirements of due process. or collective bargaining agreements. Jake Ng. Anna Tetangco 60 . these relief must still be based on an action that has reasonable causal connection with matters. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. 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. claims for an employer's violation thereof are beyond the jurisdiction of the labor arbiter. Alpe Macalalad. the Court held that petitioners are entitled to full backwages. They have no jurisdiction over torts that have no reasonable causal connection to any of the claims provided for in the Labor Code. petitioner's claim for damages is not related to any other claim under Article 217. "Claims for damages under paragraph 4 of Article 217 must have a reasonable causal connection with any of the claims provided for in the article in order to be cognizable by the labor arbiter. Accordingly. According to the Court. but as regular employees. With the continuation of their employment beyond the original term. and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Monina Lagman. petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages Ÿ Tolosa vs. Capt. ruled that the labor commission had no jurisdiction over the subject matter filed by petitioner. to be the master of the Vessel named M/V Lady Dona. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. Dianne Miano. When petitioner filed a complaint with the POEA. While in command of the vessel. which has been violated or invaded by the defendant. Under Article 2221 of the Civil Code. not on a probationary status. While labor arbiters and the NLRC have jurisdiction to award not only relief provided by labor laws. NLRC. In other words. nominal damages are adjudicated in order that a right of the plaintiff. Charms Haw. Ÿ As a rule. Moreover. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code. which does not grant or specify a claim or relief. therefore. Edlyn Santiago. 1990. Tolosa contracted a fever and in the succeeding 12 days. 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. other labor statutes. overtime compensation or separation pay. petitioners have become full-fledged regular employees. Petitioner's action was recovery of damages based on a quasi-delict or tort. It must be noted that a worker's loss of earning capacity and blacklisting are not to be equated with wages. The enforcement of this labor standard rests with the labor secretary.Labor II Held: The Supreme Court held that petitioners should be reinstated to their former position as meter readers. Virgilio Tolosa who was hired by Qwana-Kaiun. Tolosa. or collective bargaining agreements. jurisdiction over the action lies with the regular courts — not with the NLRC or the labor arbiters. 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. but also damages under the Civil Code. however. It held that after October 31. not adjudication of a labor dispute to which jurisdiction of labor tribunals is limited. in effecting such dismissal. It is not the NLRC but the regular courts that have jurisdiction over actions for damages. his health rapidly deteriorated resulting in his death. Ÿ An employer becomes liable to pay indemnity to an employee who has been dismissed if. Hence. and other labor benefits that are generally cognized in labor disputes. transferred to the DOLE. Petitioner is actually suing shipmates Garate and Asis for gross negligence." In the present case. Thus. This provision is only a safety and health standard under Book IV of the same Code. other labor statutes. the employment of petitioners is no longer on a fixed term basis. Asia Bulk. and in which the cause of action proceeds from a different source of obligation such as a tort. NLRC (Dianne) Facts: Petitioner was the widow of Capt. may be vindicated or recognized. other labor statutes. not merely probationary. Held: The Supreme Court affirmed the appealed decision. 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. Moreover. the Labor Arbiter ruled in her favor. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. or collective bargaining agreements. Monette Mesa. and the said shipmates have no employer-employee relations with Capt.
On 8 June 1991. Dianne Miano. good customs or public policy. Exemplary damages may be awarded if the dismissal is effected in a wanton.000. Such were not sufficiently proven. 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. or is done in a manner contrary to good morals. Held: After careful perusal of the factual backdrop of the case. Hence. oppressive or malevolent manner. 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. Amador C. we are not convinced that private respondents acted in a wanton or oppressive manner.900." which we sought to deter in the Serrano ruling. the employer should indemnify the employee for the violation of his statutory rights. CA) Gonzales is not entitled to moral and exemplary damages.00). (Kay Products vs. fraud. The suspension of petitioner without prior investigation is akin to Irah Burog. the amount of P10. taking into special consideration the gravity of the due process violation of the employer. Actual or compensatory damages are not available as a matter of right to an employee dismissed for just cause but denied statutory due process. Alpe Macalalad.00) was dismissed from service as Deputy Executive Director after serving PTS for twenty-three (23) years. (Acesite Corp. Kristel Macatangay. Held: The Supreme Court rejected petitioner's claim for moral and exemplary damages. Maquiling filed a complaint against PTS for reinstatement or. The award of such damages is based not on the Labor Code but on Article 2220 of the Civil Code. taking into account the relevant circumstances. Dr. Sagum is another hapless employee whose dismissal was ruled to be illegal but. oppressive or malevolent manner. The dismissal. Monette Mesa. the lack of statutory due process should not nullify the dismissal. good customs or public policy.00 as exemplary damages are hereby awarded to each private respondent. as in the instant case. and Fe M.000. good customs or public policy. Heidi Soria. pay later. Maquiling. Maquiling vs Philippine Tuberculosis Society (Dianne) Facts: On 16 April 1968. was effected in a wanton. Exemplary damages on the other hand may be awarded only if the dismissal was effected in a wanton. 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.. Edward L. oppressive or malevolent manner to warrant an award for exemplary damages. moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor. Edlyn Santiago.000. Evidently. In the case at bar. Dr. Jake Ng. for payment of full backwages and separation pay in accordance with Article 279 of the Labor Code. Maquiling was employed by respondent Philippine Tuberculosis Society. as well as moral damages in the amount of five hundred thousand pesos (P500. Monina Lagman. Petitioner Marilyn T. Dr. PTS was remiss in its duty to observe procedural due process in effecting the dismissal of Dr. Barrientos. Maquiling shall only be entitled to an award for nominal damages.. the Supreme Court ruled that Dr. without her reinstatement forthcoming. in the alternative. Herrera. The award must be based on clear factual and legal bases and correspond to such pecuniary loss suffered by the employee as duly proven. or render it illegal. The measures undertaken were relevant to the company-wide audit and investigation conducted within the institute.00 as moral damages and P5. is still on the outside looking in. However. The amount of such damages is addressed to the sound discretion of the court. Jr. Ÿ This Court has consistently accorded the working class a right to recover damages for dismissals tainted with bad faith. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now. vs. then earning a monthly salary of thirteen thousand nine hundred pesos (P13. (IIEE). petitioner Dr. there is less degree of discretion to award actual or compensatory damages. Ysan Castillo. Jon Santos.Labor II before the labor arbiter. It may be also argued that actual or compensatory damages may be recovered in employment termination cases. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case. Thus. Antonio S. The instant controversy fails to show that the dismissal of the employee was attended by bad faith. Charms Haw. Engrs. Anna Tetangco 61 . Neither will an award for moral damages nor exemplary damages prosper. (PTS). or ineffectual. Indeed. Maquiling was indeed validly dismissed for just cause. no doubt. Jr. Inc. Exemplary damages may avail if the dismissal was effected in a wanton. or that the employer committed an act oppressive to labor to warrant an award for moral damages. Mendoza. NLRC) Ÿ Ÿ Sagum vs CA (Dianne) Facts: The instant case arose from the complaint of petitioner for illegal dismissal against private respondents Institute of Integrated Electrical Engineers of the Philippines. Maquiling. Calado.000. or was done in a manner contrary to morals. oppressive or malevolent manner as the private respondents were deprived of due process.00) and exemplary damages in the amount of one hundred thousand pesos (P100. Inc. However. Ÿ Ÿ Where the dismissal is for just cause.
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. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. Rule II. Monette Mesa. it provides a vindication or recognition of this fundamental right granted to the Ÿ Section 15. . assigned to the accounting department. we do not find the articles published in private respondent institute's publication. to be malicious as they were fact-based. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. As used herein. This rule shall not apply to the following employees: Irah Burog. regardless of their position. General Statement on coverage. That an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided therein. Subsequently. taking into account the relevant circumstances. At the very least. abusive language or any species of violence. the Supreme Court deemed it proper to fix the nominal damages at P30. Promoted. 1997. 287. 7641 which took effect on Jan. Lastly. He requested copies of pertinent documents to enable him to explain his side but petitioner corporation allegedly did not oblige. Dianne Miano. mental anguish or serious anxiety as the result of the actuations of the other party. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. Heidi Soria. 1997 and required to explain in 15 days why he should not be dismissed due to irregularities committed. he became branch manager from 1981 to 1990.000.Labor II preventive suspension which was necessary pending investigation of company records which she had access to. On November 18. He was placed under preventive suspension on October 16. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. Retail. 7. adopted a resolution terminating his employment effective October 16. 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. Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code. Inc. On June 11. Book VI. the term “Act” shall refer to Rep. who has served at least five (5) years in the said establishment. through an EXECOM meeting. Monina Lagman. 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. petitioner did not even allege that there was use of force. Retirement. Anna Tetangco 62 . Kristel Macatangay. 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. Edlyn Santiago. Exemptions. Alpe Macalalad. 1997 but the suspension was rescinded and he was assigned as general auditor. 1997. and auditor from 1990 to 1996. 1993. as when the latter committed an antisocial and oppressive abuse of its right to investigate and dismiss an employee. 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. Jake Ng. The Electrical Engineer. however. a fraction of at least six (6) months being considered as one whole year. he was required to appear before petitioner corporation's office and its Executive Committee pursuant to two letters. Held: Considering the prevailing circumstances in the case at bar.00. except to those specifically exempted under Section 2 hereof. SEC. 2. Unless the parties provide for broader inclusions. It was believed that this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. Ysan Castillo. After six months. respondent Cabanit was informed that he erred in recording US$40 and was later suspended from July 1-31. Omnibus Rules Rule II Retirement Benefits SECTION 1. designation or status and irrespective of the method by which their wages are paid. an employee upon reaching the age of sixty (60) years or more. petitioner corporation. Ÿ The award of moral and exemplary damages is proper when an illegally dismissed employee had been harassed and arbitrarily terminated by the employer. In case of retirement. 1997. he became its regular employee. Retirement ART. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment.Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. Act No. Jon Santos. Despite the presence of security guards. It is not enough that one merely suffered sleepless nights. Charms Haw. The amount of such damages is addressed to the sound discretion of the court. latter under the Labor Code and its Implementing Rules. This rule shall apply to all employees in the private sector.
Jake Ng. SEC. series of 1994) 2. compulsory retirement. or other method of calculating the same. further. including GOCC’s if they are covered by the Civil Service Law and its regulations. SEC.3 One-half month salary of employees who are paid by results. Retirement under CBA/contract. For covered workers who are paid by results and do not have a fixed monthly rate.2 Components of One-half (½) Month Salary.1 Employees of the National Government and its political subdivisions. c) “Agricultural establishment/operations” refers to an employer which is engaged in agriculture. 4. as determined by the Secretary of Labor and Employment. lodging. It shall lose its retail character qualified for exemption if it is engaged in both retail and wholesale of goods.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. tobacco. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who Irah Burog. and any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming operations. Edlyn Santiago. Retirement benefits.Labor II 2.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment. The term does not include cost of living allowance. 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. 3. This term refers to all farming activities in all its branches and it includes. among others. No.3 Upon retirement of an employee. abaca. As used herein. service and agricultural establishment or operations regularly employing not more than ten (10) employees.O. his services may be continued or extended on a case to case basis upon agreement of the employer and employee. 4. the cultivations and tillage of the soil. however. Anna Tetangco 63 .For the purpose of determining the minimum retirement pay due an employee under this Rule. 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.2 Domestic helpers and persons in the personal service of another. growing and harvesting of any agricultural or horticultural commodities. Jon Santos.: a) 15 days salary of the employee based on his latest salary rate. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and hours. 3. the employer shall pay the deficiency. piece or commission basis. 5. an employee shall be retired upon reaching the age of sixty-five (65) years. 4. c) One-twelfth of the 13th month pay due the employee. 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. 3. subject to the provisions of Rule VII-A. or other facilities customarily furnished by the employer to his employees. . regular holidays and mandatory fulfillment of a military or civic duty. 5. That an employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. Alpe Macalalad.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. Kristel Macatangay. SEC. Charms Haw. task. Heidi Soria.1 In the absence of an applicable agreement or retirement plan. As used in this subsection: a) “Retail establishment” is one principally engaged in the sale of goods to end-users for personal or household use. the culture of fish and other aquatic products in farms or ponds. raising of livestock or poultry. a fraction of at least 6 months being considered as one whole year. and Provided. the term “one-half month salary” shall include all the ff. Monette Mesa. pineapple. Optional. 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. 5. of food. cultivation. That if such benefits are less.4 Service requirement. 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.2 In case of retirement under this section. dairying. Where there is no such plan or agreement referred to in the immediately preceding subsection. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. 4. whether optional or compulsory.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. 4.3 Employees of retail. Dianne Miano. 3. 20. production.1 Optional retirement. and includes the fair and reasonable value. but does not include the manufacture and/or processing of sugar. (Deleted by D. Ysan Castillo. aquatic or other farm products. b) The cash equivalent of not more than five (5) days of service incentive leave. 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. 2.2 Compulsory retirement. . whether such payments are fixed or ascertained on a time. In case the employer’s contribution is less than the retirement benefits provided under this Rule. Monina Lagman. 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. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). coconut. 5.
Kristel Macatangay. individual/collective agreements or employment practices or policies. drifts. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. further. As used herein. 4. if the following requirements are met: i) The benefit plan must be approved by the BIR. “employees”. 9 dated May 4. Where there is no such plan or agreement referred to in the immediately preceding subsection. SEC. Relations to agreements and regulations. Optional Retirement and Compulsory Retirement 2. 1998) SEC. Monina Lagman. a fraction of at least 6 months being considered as one whole year. 288 of the Labor Code of the Philippines. 3. 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. to wit: Pensions. subject to the provisions of Section 4 hereof on the payment of retirement benefits. SEC. 4. That the said employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. . 1986 are met.Pensions. and Provided. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and Irah Burog. or “covered workers” shall mean underground mine employee/s. 1 Coverage. Monette Mesa. crosscuts. supplements or payments as provided in existing laws.3 Where both the employer and the employee contribute to a retirement fund in accordance with CBA or other applicable employment contract.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of underground mine employees in the establishment.2 In case of retirement under this section. Retirement benefits. Jon Santos. Edlyn Santiago. The ADS is the average salary for the last twelve (12) months reckoned from the date of their retirement.1 Optional retirement. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits.. 1. Jake Ng. That if such benefits are less. 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. working places whether abandoned or in use beneath the earth’s surface for the purpose of searching for and extracting mineral deposits. As used herein. Effectivity. 1993 when the Act went into force. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. 8. an underground mine employee shall be retired upon reaching the age of sixty-five (65) years. 6. Charms Haw. 3. except the following: a) Retirement benefits received by officials and employees of private firms under a reasonable private benefit plan maintained by the employer. This rule took effect on January 7. 2(b) item (1) of Revenue Regulations No. 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. the term “one-half month salary” shall include all the ff. Anna Tetangco 64 . The retirement pay provided in the Act may be exempted from tax if the requirements set by the BIR under Sec. This Rule shall apply to all underground mine employees as contemplated under RA No. holidays and mandatory fulfillment of a military or civic duty. Alpe Macalalad. Penal Provision. the terms “employee”. 2. Dianne Miano. tunnels. For these purpose. SEC. 8558. Rule II-A (Dep. retirement and separation pay constitute compensation subject to withholding. Violations thereof shall be subject to the penal provisions provided under Art. SEC. however.Labor II are paid by results. 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. 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. SEC. All rules and regulations. The term “Act” refers to RA 7641 as amended by RA 8558. divided by the number of actual working days in that particular period.: a) 15 days salary of the employee based on his latest salary rate.2 Components of One-half (½) Month Salary. an underground mine employee refers to any person employed to extract mineral deposits underground or to work in excavations or workings such as shads. 3. . 3. Heidi Soria. 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. the employer shall pay the deficiency.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. 7. 2. 2. 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. winzes. 9.1 In the absence of an applicable employment contract.3 Service requirement. SEC.2 Compulsory retirement. retirement and separation pay. 4. Exemption from tax. raises. In case the employer’s contribution is less than the retirement benefits provided under this Rule. Order No. Retirement under CBA/contract.The minimum length of at least 5 years required for entitlement to retirement pay shall include authorized absences and vacations.For the purpose of determining the minimum retirement pay due an employee under this Rule. 12-86 dated Aug. Ysan Castillo.
"Nothing in this Article shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices. an employee upon reaching the age of sixty (60) years or more. Monette Mesa. otherwise known as the Labor Code of the Philippines. Edlyn Santiago. a fraction of at least six (6) months being considered as one whole year.Labor II hours. The retirement pay provided in the Act may be exempted consistent with the requirements set by the BIR. 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. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act." SECTION 2. 442.Retirement. who has served at least five (5) years in the said establishment. Monina Lagman. of actual working period. 5. 8558 AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. or other facilities customarily furnished by the employer to his employees.3 One-half month salary of employees who are paid by results. or other method of calculating the same. as determined by the Secretary of Labor and Employment. 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. lodging. Benjamin Biete and Hermogenes Mamayson ("petitioners") are former supervisors of respondent Philex Mining Corporation ("Philex"). as amended. Philex adopted several measures including reducing personnel through early voluntary retirement and retrenchment programs. SEC. c) One-twelfth of the 13th month pay due the employee. 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. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. Penal Provision. To save costs. 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 ADS is the twelve (12) month of their retirement. "An underground mining employee upon reaching the age of fifty (50) years or more. 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 workforce audit showed that Irah Burog. 4. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. 6. Relations to agreements and regulations. of food. Dianne Miano. bargaining agreement or other applicable employment contract. supplements or payments as provided in existing laws. "Unless the parties provide for broader inclusions. 1998 when the RA 8558 went into force. subject to the provisions of Rule VII-A. may retire and shall be entitled to all the retirement benefits provided for in this Article. Ysan Castillo. 15. All rules and regulations. Exemption from tax. 288 of the Labor Code of the Philippines. For covered workers who are paid by results and do not have a fixed monthly rate. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. 1998. and includes the fair and reasonable value. Violations thereof shall be subject to the penal provisions provided under Art. Franco Mallare. 1998 Published in Malaya and Manila Times on March 7. In 1992. — Any employee may be retired upon reaching the retirement age established in the collective Definition Ÿ Ariola vs Philex Mining Corp. "Retail. is hereby amended to read as follows: "ART. Alpe Macalalad. "Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who are paid by results. "In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. b) The cash equivalent of five (5) days of service incentive leave. Jake Ng.01 Retirement REPUBLIC ACT NO. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. but not beyond sixty (60) years which is hereby declared the compulsory retirement age for underground mine workers. Heidi Soria. Jon Santos. Kristel Macatangay. 8. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). individual/collective agreements or employment practices or policies. That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. AS AMENDED. Philex sustained financial losses in its operations. SEC. This rule took effect on March 2. who has served at least five (5) years as underground mine worker. 442. 9. piece or commission basis.Article 287 of Presidential Decree No. 287. task. The term does not include cost of living allowance. Anna Tetangco 65 . (Dianne) Facts: Petitioners Roberto Ariola. SEC. Effectivity. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. whether such payments are fixed or ascertained on a time. however. Approved: February 26. "In case of retirement. whichever comes earlier. SEC. Charms Haw.
Petitioners are thus entitled to reinstatement with full backwages. also known as the provision on Social Justice and Human Rights. Philex's financial condition before and at the time of petitioners' retrenchment justified petitioners' retrenchment. citing "company policy. Monette Mesa. which allegedly evidence receipt of “retirement gratuities. Heidi Soria. 1993. Cordillera Administrative Region. Thus. petitioners.” do not suffice brief exchange of letters between petitioner and respondent followed. All of them signed Deeds of Release and Quitclaim in Philex's favor. On 14 May 1993. respondent Reuters implemented a Irah Burog. through its Human Resources Development Office. of its plan to retrench 241 employees. respondent Reuters Limited. Dianne Miano. Jon Santos. Edlyn Santiago. At this point. Ysan Castillo. On October 1.173. received from Philex termination notices informing them of their retrenchment under their respective MOAs effective 30 June 1993. 1983. It is also for this reason that we modify the award of backwages in her favor. Philex paid them separation pay. we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII. Held: Petitioners' retrenchment was illegal. . In a letter dated December 3. However. separation pay equal to one-half month pay for every year of service. Anna Tetangco 66 . Jake Ng. Article 283 of the Labor Code governs retrenchment to prevent losses. reinstatement is out of the question. in lieu of reinstatement. Philex informed the Department of Labor and Employment ("DOLE"). Ÿ By themselves. This ballooned to P283.000 in 1993. Baguio City. respondent. an employer is free to impose a retirement age less than 65 for as long as it has the employees' consent. 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. after reviewing the assailed decision together with the rules and regulations of respondent's retirement plan." 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. leaving 241 positions for retrenchment. petitioner. 30 April 1993. the vouchers in question. Charms Haw. The following day. But respondent stood pat on its decision to retire her. . An independent auditor confirmed Philex's claim of financial losses. 1993 up to her compulsory retirement age. the union representing the supervisory employees also signed a Memorandum of Agreement ("supervisors' MOA") with Philex similarly prescribing the criteria for retrenchment. after reaching a certain age agrees to sever his or her employment with the former. Article 287 of the Labor Code provides: ART." Respondent required certain documents in connection with petitioner's impending retirement. For this reason. 1992. 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. a voluntary agreement between the employer and the employee whereby the latter. In the present case.Labor II Philex had 310 "excess positions. On 1 June 1993. By its express language. hired Marilyn Odchimar Gerlach. the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. 287. Ÿ Jaculbe vs Silliman University (Dianne) Facts: Sometime in 1958. Thus. Kristel Macatangay. 1982. However. at which time she would be 57 years old. having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her. On 29 April 1993. we grant her separation pay in lieu of reinstatement. 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. Alpe Macalalad. as its local correspondent. Petitioner is now 71 years old and therefore well over the statutory compulsory retirement age." Philex re-assigned some of the employees belonging to this group while others took early retirement. A Types Ÿ Gerlach vs Reuters Limited (Dianne) Facts: On February 15. (Reuters). If reinstatement is no longer possible because the positions petitioners held no longer exist. petitioner began working for respondent's university medical center as a nurse. . finding that Philex suffered an operational loss of P33. to be computed from the time of her illegal dismissal on November 18.000 in 1992. a company engaged in news dissemination with offices worldwide. As already stated. Phils. with six other supervisors and 49 rank-and-file employees. Philex could ill afford to experiment with other cost-cutting measures before resorting to retrenchment as the situation called for immediate and drastic action. the amounts petitioners received as net separation pay should be deducted from their backwages. Stated conversely. Retirement — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. Monina Lagman. respondent was guilty of illegal dismissal.743. beyond Philex's projected loss of P187 million. Philex shall pay backwages as computed above plus. employees are free to accept the employer's offer to lower the retirement age if they feel they can get a better deal with the retirement plan presented by the employer. informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18. Ÿ Retirement is the result of a bilateral act of the parties.
On January 23. she opted not to contribute to the fund. The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them. may be granted by agreement of the employees and their employer or as a voluntary act on the part of the employer. the company's contribution to the fund is 10% of the basic monthly salary of each participant. It is this third type of retirement scheme which covers respondent's Plan. Monina Lagman. Charms Haw. respondent assigned petitioner as a journalist to Reuters Singapore. Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code. Before leaving. Rachel Addison. specifically that her home base will always be the Philippines. like the Social Security Act. However. However. Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code. which is in accord with the above provision. It is very clear that from the very start of her first assignment overseas. 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.04. in the instant case. Thereafter. but an employee-participant may volunteer to contribute a percentage of his basic monthly salary to the fund. Kristel Macatangay. Significantly. provides: "Sec. they demanded retirement benefits. Retirement. Jon Santos. Inc. 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. Drilon. In Llora Motors. she questioned the amount she received as well as her entitlement to a disturbance grant. It follows that the amount of retirement benefits of a retiring employee assigned abroad is based on his notional salary. On March 1. 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. 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. vs. Article 287 of the Labor Code reads: "Article 287. and is computed at least one month salary or at the rate of one-half month salary for every year of service. Section 14(a). 1984." Thus. Basis Ÿ Aquino vs. Reuters' Eastern Region Staff Manager.228. petitioner received her retirement benefits under the Plan in the amount of P79. The first type is compulsory and contributory in character. a money claim against respondent. not on her notional salary. Jake Ng. Issue: Having received the separation pay. Dianne Miano. petitioner's theory that the computation of her retirement benefits should be based on her basic annual salary while stationed abroad is untenable. Ÿ There are three kinds of retirement schemes. under the Plan. 1991. Heidi Soria. Petitioner was automatically covered by the Plan by reason of her age and length of service. Alpe Macalalad. 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. where not mandated by law. which amount was determined by the trustee bank (Bank of the Philippine Island) in accordance with the provisions of the Plan. petitioner filed with the Office of the Labor Arbiter. . apprised her of the details of her forthcoming assignment. Ysan Castillo. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. She worked in Reuters Philippines up to December 23." 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. Consequently. Retirement benefits. In case of retirement. Held: We agree with the Court of Appeals that petitioner's retirement benefits must be based on her notional Philippine salary. Nonetheless. — (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 . respondent apprised her that the company's contribution to the Plan is based on her notional Philippine salary. Eventually. NCR. Retirement benefits are intended to help the employee enjoy the remaining years of his Irah Burog. respondent based petitioner's retirement benefits on its Plan and established policy. were the petitioners still entitled to the retirement benefits? Held: Yes. and they received separation pay double that required by the Labor Code. The Plan is funded by the company. which include retrenchment. 1983. invoking the retirement plan of the company which they said was contractual rather than statutory. NLRC (Monina) Facts: The petitioners’ services were terminated on the ground of retrenchment. Monette Mesa. . 14. Ÿ Retirement benefits. The third type is one that is voluntarily given by the employer. contending that her retirement benefits must be computed on the basis of her actual salary abroad.Labor II local Retirement Benefit Plan (Plan) for its Philippinehired employees. (b) a collective bargaining or (c) other agreements. both actual and notional. In fact. Edlyn Santiago. expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. The computation was based on her notional salary. whichever is higher. 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. Anna Tetangco 67 .
intimidated or deceived into signing the Release and Undertaking. corporation employed employees and of them was Divina Lopez. Jake Ng. All terminations other than for cause will be governed by the applicable provision of the Labor Code of the Philippines. it is but natural that PNOC shall disregard petitioner’s length of service in another company for the computation of his retirement benefits. 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. 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. Anna Tetangco 68 . then said employee is entitled to the benefits embodied in the agreement in addition to whatever benefits are mandated by statute. — No retirement benefits are payable in instances of resignations or terminations for a cause. 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. Creditable service referred to in the retirement plan is the retiree’s continuous years of service with the company. PNOC acquired and took over the shipping business of LUSTEVECO. Charms Haw. B 2. 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. and are a form of reward for his loyalty and service to the employer. 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. Ysan Castillo. that an employee who resigns voluntarily after he has qualified for optional early retirement under Art. a private domestic corporation. morals. When the corporation suffered losses. Edlyn Santiago. Gamogamo vs. In the case at bar. except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. In addition. Here. Resignations and Terminations. Alpe Macalalad. 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. Since the retirement pay solely comes from PNOC’s funds. The provisions of the NSC's retirement plan which petitioner admitted applies to her. the 5-year expansion program and the Integrated Steel Mill Project. especially where there are strong equitable considerations as in this case. With the inclusion of the provision abovementioned in the retirement plan. whether the retirement plan expressly prohibits the payment of retirement benefits to employees terminated for cause Held: No.“ Although the CBA is silent as regards the grant or denial of retirement benefits to retrenched employees. Kristel Macatangay. We cannot presume that it forms an implicit part of either the CBA or the law. ostensibly. When a manpower reduction was implemented. lessening the burden of worrying for his financial support. It was turned down. IV. it also behooves us to protect the sanctity of contracts that do Irah Burog. Jon Santos. Since retirement pay solely comes from company funds in this case. While it is our duty to prevent the exploitation of employees. Monina Lagman. Ÿ Retirement (benefits) result from voluntary agreement between the employees and the employer whereby the former. 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. Afterwhich he was hired by LUSTEVECO. the retirement plan is succinct in denying such benefits. petitioner requested to be included in the retrenchment schedule. We discern nothing from the record that would suggest that petitioner was coerced. no necessity of expressly providing that retirement pay and retrenchment pay are mutually exclusive.Labor II life. Interpretation Ÿ Lopez vs. therefore. the NSC explicitly disallows payment of retirement benefits in case of retrenchment. it is but natural that it should disregard Gamogamo’s service in another company for the computation of his retirement benefits. Monette Mesa. however. Issue: whether. good customs. The retirement plan is a binding agreement. 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. PNOC Shipping and Transport Corp (Monina) Facts: Gamogamo was first employed with DOH (as dentist) for 14 years. there is no such provision. be upheld. and (2) where the terms of settlement are unconscionable on their face. Subsequently. petitioner is qualified to receive benefits granted by the GSIS by his employment in DOH. issued a memo announcing retrenchment and one of the affected employees was Lopez. Settled is the rule that not all quitclaims are per se invalid or against public policy. provided. Heidi Soria. thus. “E. not being contrary to law. Consequently. There is. does not give petitioner the right to her claimed benefits. 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. for the purpose of computing an employee’s retirement pay. public order or public policy and must. Dianne Miano. National Steel Corp (Monina) Facts: National Steel Corporation embarked on 2 massive projects. after reaching a certain age. agrees to sever his employment with the latter.
Association of International Shipping Lines (Monina) Facts: When the Association of International Shipping Lines Inc. under the law should be given separation pay. The Court will not disturb this finding for upon review of the said quitclaims. 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. under the law should give separation pay. Heidi Soria. Ysan Castillo. It appears that when the private respondents sought the implementation of Section I. Edlyn Santiago. what each actually received is a separation pay. because by the terms of those very same retirement plans invoked by him. pursuant to the CBA. petitioner was placed by the Central Bank under a conservator for protecting its assets. Petitioners then filed with the Labor Arbiter a complaint for payment of retirement benefits because they alleged that what each received was a separation pay and not retirement benefits. Issue: whether the 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. may be ascribed to the Commission. 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. to resolve the issue. the retirement age of 65 applied only to employees in the U. they are no longer entitled to retirement benefits. Article X thereof. 1982. Anna Tetangco 69 . it is apparent that the amount is representative of all the claims of petitioners. pertaining to uniform allowance. Kristel Macatangay. NLRC (Monina) Facts: Mai Philippines dismissed its Custom Engineering Manager Rodolfo Nolasco. NLRC (Monina) Facts: At the time the controversy started. such interpretation cannot be made here. suffered substantial losses. Jon Santos. he had already reached the age of 60 years. Charms Haw. and Nolasco's claim — that under MAI's retirement plans.A. As a result of said complaint. and there is no reason to invalidate their Releases and Quitclaims. however. The NLRC and the Labor Arbiter ruled that the amount received by petitioners as shown in their quitclaims represent all the retirement benefits due them. and Puerto Rico. Here. it is obvious that the conservator had no authority whatsoever to disallow the implementation of Quitclaims. it adopted an organizational streamlining program that resulted in retrenchment or termination from service of 17 workers. Monina Lagman. The same however. No provision in the CBA authorizes the grant to petitioners of retirement benefits in addition to their retrenchment pay. which is the retirement age fixed by the Labor Code. 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. Private respondent company in its notice of termination to petitioners stated that the latter would receive their separation pay. vs. only received their retirement benefits plus other benefits which represent the totality of their claims from private respondent company. resulting in an impasse between the petitioner bank and the private respondent union. Jake Ng. Salomon vs. Ÿ Ÿ While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be benefited. Issue: whether or not Nolasco is entitled to retirement benefits Held: No. in light of clear lack of consensual and statutory basis of the grant of retirement benefits to the petitioners. Private respondent thus. This dismissal was held to be illegal and it was declared that Nolasco be reinstated. for as of that day. Ÿ Retirement laws are to be liberally construed in favor of the persons intended to be benefited. the acting conservator of the petitioner expressed her objection to such plan. It is also noteworthy that at the time of the filing of the second complaint Nolasco was already 60 years old. Nolasco reached the compulsory retirement age of 60 years set by the Labor Code. Consequently. Dianne Miano. its refusal. petitioners were separated from the service for cause. It is a fact that petitioners were involuntarily separated from service and thus. Age Ÿ MAI Phils. did not materialize as petitioners questioned the propriety of their retrenchment before the NCMB. amounting to grave abuse of discretion. Given such facts. petitioners instead of receiving their separation pay.Labor II not contravene our law. Accordingly and considering their Releases and Irah Burog. Article XI of the CBA regarding the retirement plan and Section 4. decided to file a case against the petitioner for unfair labor practice and for flagrant violation of the CBA provisions. The deadlock continued for at least six months when the private respondent. the retirement age is 65 — is wrong.S. and that is. However. Monette Mesa. Alpe Macalalad. Yet a serious mistake. specifically cited by him. 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. Rationale Ÿ Producers Bank vs.
Petitioner filed for optional retirement upon reaching the age of 60. 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. Monina Lagman. must be met at the time of retirement at which juncture the right to retirement benefits. 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. As such. the dominant influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the under-privileged worker. Heidi Soria. Thus. and these benefits shall terminate with the death of the beneficiary except in the presence of an eligible surviving spouse and/or children. Accordingly. when an employee has retired but his benefits under the law or the CBA have not yet been given. Jake Ng. he still retains. be recognized. could not have been 'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales commissions. Section 1 and Article X. he was excommunicated. Here. its benefits are designed for those who have devoted their lives to the work of the SDA. a continuing consideration for services rendered. the basis in computing his retirement benefits is his latest salary rate of P10. and are a form of reward for his loyalty. Kristel Macatangay. Monette Mesa. as embodied in the CBA. Dianne Miano. they do not effect any sale of article at all. Brion was adjudged by the SDA in 1983 to be qualified for retirement. As correctly ruled by public respondent NLRC. Section 4 of the CBA. if the employee is eligible. any commission which they receive is certainly not the basic salary which measures the standard or amount of work of complainant as Unit Manager. they were not pleading for generosity but were merely demanding that their rights.919. direct or necessary relation to the amount of work he actually performed. vests on him. is the principle that when the conflicting interests of labor and capital are weighed on the scales of social justice. the commissions which petitioner received were not part of his salary structure but were profit-sharing payments and had no clear. Brion was provided a monthly amount of retirement benefit. and the Court cannot give its imprimatur for retirement. Issue: Petitioner asserts since the employees have retired. It may be argued that petitioner may have exerted efforts in pushing the salesmen to close more sale transactions. 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. He eventually retired. Charms Haw. The very essence of retirement is the termination of the employer-employee relationship. affect his employment status especially when it involves all rights and benefits due to him. the "overriding commissions" paid to him by Universal Robina Corp. however. Edlyn Santiago. under the SDA's retirement plan. releasing him from the burden of worrying for his financial support. Unit Managers are not salesmen. but the actual sale transactions brought about by the individual efforts of the salesmen. However. Ysan Castillo. the retirement of an employee does not. Reyes did not agree with the computation of the company and hence filed a complaint. Jon Santos. Therefore. 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.22 as the commissions he received are in the form of profit-sharing payments specifically excluded by the foregoing rules. It is intended to help the employee enjoy the remaining years of his life. in itself. one of which is the protection of the labor union. what is also well-settled. the additional payments made to petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business. it is not the criterion which would entitle him to a commission. as it were. such that when it began paying Brion retirement benefits in said Eligibility Ÿ Reyes vs. NLRC (Monina) Facts: Rogelio Reyes was employed as salesman at Universal Robina’s Corporation Grocery Division. As was the practice of SDA. to the point of being trite. It bears repeating that apart from the nonimpairment clause. for the purpose of prosecuting his claims. In fine. as a consequence of which no employee-employer relationship exists anymore between it and the employees. Sometime. especially considering that the ideals of social justice and protection of labor are guaranteed not only by the Labor Code.Labor II Article XI. Hence. 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. This negated the very concept of retirement. Anna Tetangco 70 . When the retired employees were requesting that their retirement benefits be granted. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted. private respondent no longer had the personality to file the complaint for them. the status of an employee entitled to the protection of the Labor Code. but more importantly by the fundamental law of the land. Union Mission (Monina) Facts: Brion became a member of respondent church 7th Day Adventist Church (SDA) sometime in 1949 until 1983 when he retired. Held: Petitioner's contention in untenable. as well as an effective inducement for remaining with the corporation. since these must be protected as though there had been no interruption of service. 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. South Phil. Alpe Macalalad. However. Ÿ Brion vs.
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. Monina Lagman. In those two instances. is the result of a bilateral act of the parties. he must have met the stated conditions of eligibility with respect to the nature of employment. The CBA in the case at bar contains no such infirmities which must be stricken down. As we held in Cipriano and Aquino. on the other hand. 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.Labor II year. Jake Ng. 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. He now files a case for the collection of his retirement Irah Burog. there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. as amended. if the employee is eligible.02 ACCRUAL OF BENEFITS Accrual Ÿ Cruz vs. or retirement benefits prescribed by the Retirement Plan. provides. before a right to retirement benefits or pension vests in an employee. Anna Tetangco 71 . Charms Haw. as amended. 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. age. whichever is higher. the employee to be terminated may be unwilling to part from service. Ysan Castillo. 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. as amended. Cainta Catholic School Employees Union (Oreo) Facts: A CBA was entered into by the school and the union on March of 1986. Upon reaching 65 he stopped working. Jon Santos. While in all three cases. vests in him. Alpe Macalalad. The union filed a notice of strike and subsequently picketed in front of the school. Monette Mesa. Retirement. 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. 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. Ÿ Ÿ We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment of Llagas and Javier. one of which requires the retiree to devote his life to the service of the church even after retirement. Heidi Soria. in case of retrenchment or cessation of operations. and the other of which sanctions the severance by the retiree of his employment thereto at retirement. Pursuant to the existing CBA. Global Communications (Oreo) Facts: PGC is in the business of telex and telegram. Edlyn Santiago. the employees’ right to payment of retirement benefits and/or separation pay is governed by the Retirement Plan of the parties. There is no essential difference between the CBA provision in this case and those we affirmed in Pantranco and Progressive. In other words. it must have been convinced that Brion had devoted his life to the work of the SDA. Cruz however despite receiving separation pay asks for his retirement benefits. Ÿ Llora Motors vs. 15. Kristel Macatangay. the same being higher than what Article 283 of the Labor Code. affected employees. Under Article 283 of the Labor Code. Under Section 4. it is indispensable that the employer establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. whichever is higher. This is a condition precedent to his acquisition of rights. Under the Retirement Plan before us. Dianne Miano. Here. arising as it did from a management prerogative granted by the mutuallynegotiated CBA between the School and the Union. the last three (3) years of which must be continuous. 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. are always given termination or separation pay equivalent to one month pay or at least ½ month pay for every year of service. this Court will not hesitate to adopt the latter interpretation. Ÿ Petitioners are entitled only to either the separation pay provided under Article 283 of the Labor Code. respondent opted to pay petitioners separation benefits computed under the Retirement Plan. Twenty years is a more than ideal length of service an employee can render to one employer. 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. Where two constructions of a retirement plan are possible. Phil. Article VI 12 of respondent’s Retirement Plan. Ground Termination Cainta Catholic School v. petitioners are not entitled to both separation pay and retirement benefits. and length of service. 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.
expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits (Allied Investigation Bureau. is for the legislature to remedy. It is a money. The asymmetry in the law in granting separation pay to employees who have served the company for at least one year but denying retirement benefits to those who have reached retirement age in the absence of agreements granting the same. GVM on the other hand denies having such liability. NLRC) 15. is not intended to pay a worker for actual services rendered of for actual performance. Ÿ What needs to be stressed.03 PRIVATE PLAN Employer Obligation GVM Security & Protective Agency vs. After being paid his cash deposit he executed a quitclaim. Charms Haw. 91 SCRA 265 ). 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. then payments under such retirement plan may be credited against the termination pay that is due. v. Anna Tetangco 72 . Thus. in other words. 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. Llora in its answer contend that Alviar abandoned his work. What Section 14 of Implementing Rule I may be seen to be saying is that where termination pay is otherwise payable to an employee under an applicable provision of the Labor Code. Inc. benefit or bounty given to the worker. the purpose of which is to reward employees who have rendered satisfactory service to the company. Edlyn Santiago. releasing him from the burden of worrying for his financial support. like Article 287 of the Labor Code. Inc. however. Respondent is not asking for retirement benefits due him under the Social Security Law. Ÿ Ÿ As stressed in Llora Motors. therefore. Dianne Miano. 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. (Sta. is that Section 14 of Implementing Rule I.Labor II benefits and ECOLA underpayments. Drilon. like the Social Security Act. and an additional or consensual retirement plan exists. Inc. He now files for monetary claims including his retirement benefits. Retirement benefits.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. Jon Santos. Catalina College vs. Monina Lagman. 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. to certain conditions. He does not claim that there is a collective bargaining agreement or other applicable. 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. contract or an established company policy. subject. 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. however. Irah Burog. Gratuity. The third type is one that is voluntarily given by the employer. Ople. Monette Mesa. 15. There are three kinds of retirement schemes. granting him retirement benefits. Heidi Soria.. on the other hand are intended to help the employee enjoy the remaining years of his life. The first type is compulsory and contributory in character. and are a form of reward for his loyalty to the employer. Kristel Macatangay. Section 14 itself speaks of an employee "who is retired pursuant to a bona-fide retirement plan or in accordance with the applicable individual or collective agreement or established employer policy. Jake Ng. Alpe Macalalad. v. supra). Ysan Castillo. NLRC (Oreo) Facts: Dulce an employee of GVM resigned after 28 years of service.
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