Labor II

OTHER CAUSES. BUSINESS RELATED CAUSES Recognition of Right- Business Related Causes/ Protection Ÿ Agabon vs. NLRC (Monette) Facts: Agabon was dismissed for abandonment of work (subcontracting for another company). The court held that the cause for the dismissal was valid but the company failed to follow notice requirements. The company reasoned that it would be useless because the Agabons did not reside there anymore. Held: This is not a valid excuse because the twin notice requirements are mandatory. The dismissal is upheld but the company should be held liable for nominal damages, for the violation of his right to statutory due process. Ÿ The law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests. where terminated due to massive retrenchment of the company to forestall serious business losses and/or closure of operations. Issue: When, or under what circumstances, the employer becomes legally privileged to retrench and reduce the number of employees? Held: The ff. are general standards in terms of which the acts of petitioner employer must be appraised: Firstly, the losses expected should be substantial and not merely de minimis in extent. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. Thirdly, must be reasonably necessary and likely to effectively prevent the expected losses. Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. Ÿ To impart operational meaning to the constitutional policy of providing “full protection” to labor, the employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means – e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc.

Ÿ Uichico vs. NLRC (Monette) Facts: The case is an illegal dismissal case filed by workers of Crispa, Inc. who were terminated on the ground of retrenchment due to alleged serious business losses suffered by the company. Held: The Statement of Profit and Losses submitted by Crispa, Inc. to prove its alleged losses, without the accompanying signature of a certified public accountant or audited by an independent auditor, are not credible. This is not the kind of sufficient and convincing evidence necessary to discharge the burden of proof required to establish the alleged losses suffered by Crispa. The corporate directors and officers of Crispa are solidarily liable with the corporation for the termination of employment done with malice or in bad faith. In this case, it is undisputed that they have a direct hand in the illegal dismissal of respondent employees. Ÿ The law recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors which would endanger its existence or stability. In spite of overwhelming support granted by the social justice provisions of our Constitution in favor of labor, the fundamental law itself guarantees, even during the process of tilting the scales of social justice towards workers and employees, "the right of enterprises to reasonable returns of investment and to expansion and growth.

Business Services of the Future Today vs. CA (Monette) Facts: The employee was terminated on the ground of severe business losses. The employers believe, however, that since the employee was also a stockholder, there was no need to notify DOLE of the closure since as stockholder, he was presumed to have taken part in the decision to close the business. Held: Notice of closure to the DOLE is mandatory. It allows the DOLE to ascertain whether the closure and/or dismissals were done in good faith and not a pretext for evading obligations to the employees. This requirement protects the workers’ right to security of tenure. Failure to comply with this requirement taints the dismissal. An exceptions is when the employee consented to his retrenchment, the required prior notice to the DOLE is not necessary as the employee thereby acknowledges the existence of a valid cause for termination of his employment. However, there is no evidence to show that the employee consented to his dismissal and for these reasons the petitioners should have submitted a written notice of BSFTI’s closure to the DOLE. The NLRC and the Court of Appeals were unanimous in finding that the closure was bona fide. As in the case of Agabon, nominal damages were awarded to vindicate employee’s right to due process. Ÿ A. Installation of Labor Saving Devices- 283

Ÿ Filipinas vs. Gatbalayan (Monette) Facts: Another illegal dismissal case by the workers who

Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 1

Labor II
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. B. Redundancy- 283 (above) Business Judgment Ÿ Wiltshire File vs. NLRC (Monette) Facts: Ong was dismissed because of serious business losses. In the termination letter, the ground alleged was redundancy of the position. Ong countered that there could be no redundancy because nobody except himself, in the company was then performing the same duties. Held: Dismissal was valid. The losses were proven by the company and most importantly, company finally closed its doors and terminated all its operations. SC considered that finally shutting down business operations constitutes strong confirmatory evidence of financial distress. Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. That no other person was holding the same position that employee held, does not show that his position had not become redundant. Ÿ The characterization of private respondent's services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of petitioner company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. The determination of the continuing necessity of a particular officer or position in a business corporation is management's prerogative, and the courts will not interfere with the exercise of such so long as no abuse of discretion or merely arbitrary or malicious action on the part of management is shown. Ÿ Asufrin vs. San Miguel Corp (Monette) Facts: An illegal dismissal case which stemmed from SMC’s new marketing system known as the "pre-selling scheme". As a consequence, all positions of route sales and warehouse personnel were declared redundant. Held: Dismissal was invalid. In selecting employees to be dismissed, a fair and reasonable criteria must be used, such as but not limited to (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority. In the case at bar, no criterion whatsoever was adopted by the employee. Furthermore, SMC has not shown how the cessation of the employees’ services would contribute to the ways and means of improving efficiency and cutting distribution overhead and other related costs. Ÿ In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof that such is the actual situation to justify the dismissal of the affected employees for redundancy.

Ÿ Soriano Jr. vs. NLRC (Monette) Facts: PLDT utilized high technology equipment in its operation such as computers and digital switches which necessarily resulted in the reduction of the demand for the services of a Switchman. Held: Dismissal was valid. PLDT submitted the relevant documents attesting redundancy of employing switchmen and it has also paid separation pay to the dismissed workers. Ÿ PLDT, as employer, has the recognized right and prerogative to select the persons to be hired and to designate the work as well as the employee or employees to perform it. This includes the right of the PLDT to determine the employees to be retained or discharged and who among the applicants are qualified and competent for a vacant position. The rationale for this principle is that respondent PLDT is in the best position to ascertain what is proper for the advancement of its interest. Thus, this Court cannot interfere in the wisdom and soundness of the PLDT’s decision as to who among the Switchmen should be retained or discharged or who should be transferred to vacant positions, as long as such was made in good faith and not for the purpose of curbing the rights of an employee. Financial loss Ÿ Ecareal vs. NLRC (Monette) Facts: Escareal’s position as Pollution Control and Safety

Ÿ

Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 2

Labor II
Manager was declared redundant. Held: Illegal dismissal. Philippine Refining Company (PRC)had no valid and acceptable basis to declare the position redundant as the same may not be considered superfluous. Ÿ If the aim was to generate savings in terms of the salaries that PRC would not be paying the petitioner any more as a result of the streamlining of operations for improved efficiency, such a move could hardly be justified in the face of PRC’s hiring frsh graduates for various positions. Besides, there would seem no compelling reason to save money by removing such an important position. As shown by their recent financial statements, PRCs net profits has steadily increased. While concededly, Art. 283 of the Labor Code does not require that the employer should be suffering financial losses before he can terminate the services of an employee on the ground of redundancy, it does not mean either that a company which is doing well can effect such a dismissal whimsically or capriciously. The fact that a company is suffering from business losses merely provides stronger justification for the termination. Law Required Position Position of Pollution Control and Safety Manager is required by law. Thus, it cannot be gainsaid that the services of the petitioner are in excess of what is reasonably required by the enterprise. Escareal vs. NLRC When Redundancy Ÿ Lopez Sugar Corp vs. Franco (Eds) Facts: Lopez Sugar Corp. issued a Memorandum for the adoption of a special retirement program for selected supervisory and middle level managers, allegedly due to over-staffing and duplication of functions. Private respondents, all supervisory employees of the Corp who organized a labor union which was currently undergoing CBA negotiations with the corp, were included in its coverage and terminated from employment. Issue: Was the termination of respondents by virtue of the special retirement program valid? Held: No. The corp illegally dismissed the private respondents by including them in its special retirement program, thus debilitating the union, rendering it pliant by decapacitating its leadership. The so-called “downsizing of the departments based on the SGV Study Report was a farce—capricious and arbitrary. No standard, criteria or guidelines for the selection of the dismissed employoees was made known to them, and all that they were told was that they had been selected for termination. Ÿ Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet the demands on the enterprise. A redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line or phasing out of a service activity priorly undertaken by the business. Tierra International Construction Corp. vs. NLRC (Eds) Facts: Isidro Olivar, a shift supervisor for shipping company FEBROE, was dismissed from service and repatriated to the Philippines 6 months before his contract expired. Ground for dismissal: promotion of economy, efficiency and profitability in operations, and reduction of personnel whose positions are redundant or surplusage and/or reassignment of personnel to other available useful positions. Issue: Was the termination of Olivar for a just and valid cause? Held: Yes. Olivar’s position was deleted due to a decrease in scope of work assigned to FEBROE’s Base Operating Support Contract. Unfortunately, there were no other available positions for which he could qualify. Other positions were also abolished, including both U.S. and Third Country Nations positions, showing that he was not singled out and his termination was not arbitrary or malicious. Ÿ Ÿ Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position(s) may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The law does not make any distinction between a technical and a nontechnical position for purposes of determining the validity of termination due to redundancy. Neither does the law nor the stipulations of the employment contract here involved require that junior employees should first be terminated. In redundancy, what is looked into is the position itself, the nature of the services performed by the employees and the necessity of such position.

Ÿ Edge Apparel vs. NLRC (Eds) Facts: Edge Apparel, Inc. dismissed some of its employees pursuant to a retrenchment program. Upon advice of the DOLE Regional Director, they received the separation pay benefits offered, but they still filed a complaint for illegal dismissal, alleging that the retrenchment program was a mere subterfuge used to give a semblance of regularity and validity to the dismissal.

Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 3

Ÿ It is important for a company to have fair and reasonable criteria in implementing its redundancy Ÿ Tanjuan vs. Jake Ng. It is not enough for a company to merely declare that it has become overmanned. Alpe Macalalad. Evidence should have been presented to support this contention. feasibility studies/proposal.. or the expected imminent losses sought to be forestalled are proven by sufficient and convincing evidence. 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. a Recreational Manager of Sheraton Hotel in oman. such as but not limited to. much less was the company’s claim supported by any evidence. In this case.g. and the approval by the management of the restructuring. NLRC (Eds) Facts: Moises Panlilio. is an economic ground to reduce the number of employees. Jon Santos. in contrast to redundancy. they were terminated due to retrenchment not redundancy. a) preferred status. Monina Lagman. Kristel Macatangay. a fair and reasonable criteria must be used. was one of those termininated.Selection of Employee Ÿ Panlilio vs. it is not shown that Rivera and Macaspac’s positions were indeed unnecessary. if already incurred. Before any reduction of personnel becomes legal. decreased volume of business or dropping of a line or service activity. It is a measure of last resort when other less drastic means have been tried and found to be inadequate. 2) the losses are actual or reasonably imminent. the expected losses must be reasonably imminent such as can be perceived objectively and in good faith by the employer. Postal Savings Bank (Eds) Facts: Philippine Postal Savings Bank. job description. 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. There was no substantial evidence to justify Panlilio’s dismissal on such ground. and 4) the alleged losses. Charms Haw. b) efficiency and c) seniority. such as overhiring of workers. Inc.Labor II Issue: What is the amount of the separation pay due to the respondents? Held: They are only entitled to severance compensation equivalent to ½ month pay for every year of service. and c) seniority. 283(c) of the Labor Code. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac Criteria. contrary to the ruling of the NLRC. For it to be valid. viability of the newly created positions. Prudencio Tanjuan. provided that violation of law or arbitrary or malicious action is not shown. the losses expected must be substantial and not merely de minimis in extent. any claim of acutal or potential business losses must satisfy established standards as follows: 1) losses incurred are substantial and not de minimis. Issue: Was Panlilio’s dismissal on the ground of redundancy valid? Held: No. Phil. was dismissed 6 months after being hired on the ground that his position had become redundant. Issue: Were the dismissals on the ground of redundancy valid? Held: No. The company alleged redundancy in their position as defense for dismissing them. 3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses. Heidi Soria. however. 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. or a part of. is an exercise of business judgment on the part of the employer. Such appraisal was not done in the instant case. and the imminent losses sought to be forestalled are substantiated. In this case. The fact alone that a mere portion of the business of an employer. the firm amy choose to close all. It must produce adequate proof that such is the actual situation in order to justify the dismissal of the affected employees for redundancy. and therefore properly terminable. such as but not limited to: a) less preferred status (e. The documents submitted do not present the necessary factors which would confirm that a position is indeed redundant. Edlyn Santiago. Dianne Miano. The employer has the burden of proving that the losses are Irah Burog. one of which was the illegal dismissal of some union members. NLRC (Eds) Facts: Several charges were filed against Golden Thread Knitting Industries. is shut down does not necessarily remove that measure from the ambit of the term “retrenchment” within the meaning of Sec. not the whole of it. b) efficiency. and in this case. such as new staffing pattern. temporary employee). Ÿ In selecting the employees to be dismissed. its business to avoid further losses or mitigate expenses. The amount depends on the ground for the termination of employment. Anna Tetangco 4 . The characterization of an employee’s services as no longer necessary or sustainable. a Property Appraisal Specialist and a Department Officer-in-Charge. program. the retrenchment must be reasonably necessary and like to effectively prevent such losses. who was preventively suspended for alleged negligence in performance of duties and misrepresentation of bank rules and regulations. and is not subject to the discretionary review on the aprt of the Labor Arbiter nor the NLRC. In exercising its right to retrench emplooyees. Monette Mesa. The corp has sufficiently and convincingly established business reverses of the kind or the amount that would justify the retrenchment. Issue: Was Tanjuan’s dismissal illegal? Held: No. Ÿ Golden Thread Knitting Industries vs. Ysan Castillo. Retrenchment.

b) efficiency. never contested the veracity of the audited financial documents offered by Asian Alcohol. 283 of the Labor Code. Retrenchment must be undertaken by the employer before losses are actually sustained. union and non-union members were treated alike. Here. guidelines. “retrenchment to prevent losses” is also allowed. Reductions in work force to forestall business losses or stop the hemorrhaging of capital is allowed. serious. 4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure. Ysan Castillo. Franco an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. as long as the requirements under the law are complied with. Edlyn Santiago. or if only expected are reasonably imminent are perceived objectively and in good faith by the employer. Charms Haw. and c) seniority. actual and real. are not merely de minimis. whichever is higher. such as but not limited to: a) less preferred status (e. Heidi Soria. The law allows an employer to downsize his business to meet clear and continuing economic threats. management must faithfully comply with the substantial and procedural requirements laid down by law and jurisprudence. Monette Mesa. actual and real. ?? 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. Dianne Miano. Issue: Were the private respondents illegally dismissed? Held: No. NLRC (Eds) Facts: Due to mounting business losses. ?? The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. In this case. which. but substantial. private respondents. It is imperative for the employer to have fair and reasonable criteria in implementing its redundancy program. Monina Lagman. There was also no proof that the program was designed to bust the union. and 5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. xxx xxx xxx Sec. The employer shall Irah Burog. Answer and hearing. Asian Alcohol’s management implemented an organizational plan and other cost-saving measures. Jake Ng. 5. capricious and vindictive. whereby 21 union members and 51 non-union members were terminated on the ground that their positions had become redundant. Golden Thread Knitting Industries v. contrary to the respondents’ claim. Anna Tetangco 5 . Besides. Procedure Requirement Ÿ Retrenchment and redundancy are just causes for the employer to terminate the services of workers to preserve the viability of the business. The 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. efficiency.Effect Asian Alcohol Corp vs. In this case. Some of the dismissed union members filed a suit for illegal dismissal.Labor II serious. such as but not limited to a) preferred status. the audited financial statements submitted by the corp adequately supported their claim of actual. real and substantial losses. 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. 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. claiming that Asian Alcohol used the retrenchment program as a subterfuge for union busting. In cases of abandonment of work. Jon Santos. and financial hardship for certain workers. 2. such as status. the notice shall be served at the worker's last known address. Under Art. or standard for selection of dismissed employees renders the dismissals whimsical.g. if already incurred. However. In this case. b) efficiency. 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. 2) that the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment. age. Ÿ In selecting the employees to be dismissed. Asian Alcohol v. temporary employee). Lopez Sugar Corp vs. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac. a fair and reasonable criteria must be used. NLRC Ÿ Employment of Independent Contractor. NLRC The absence of criteria. Such requirements for retrenchment are: 1) that the retrenchment is reasonably necessary and likely to prevent business losses. showing that the latter has accumulated losses and that there was no sign of its abating in the near future. Notice of dismissal. Kristel Macatangay. and c) seniority. seniority. Alpe Macalalad. and that they were singled out for separation by reason of their active participation in the union. physical fitness.

b) written notice to the employees and to the DOLE at least 1 month prior to the intended ndate of retrenchment. was one of those terminated. a requirement which is obviously applicable where the ground for dismissal is the commission of some act or omission falling within Article 282 of the Labor Code. NLRC) The three basic requisites for a valid retrenchment are: a) the retrenchment is necessary to prevent losses and such losses are proven. (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". NLRC) Defined FF Marine Corp vs. Such substantial loss apprehended must be reasonably imminent. The corp also failed to comply wikth the rule that retrenchment shall be a remedy of last resort. The appropriate forum for such controversion would. resorted to by management during periods of business recession. Kristel Macatangay. It is essentially required that the alleged losses in business operations be proven. must also be proved by sufficient and convincing evidence. Ÿ Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter. NLRC(Charms) C. 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. Ysan Castillo. The losses expected should be substantial and not merely de minimis in extent. however. Where. 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. as in the instant case. 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. Alleged losses if already realized. Thus. as such. at which private respondent would have had the right to be present. 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. 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". Retrenchment to prevent losses Irah Burog. Monette Mesa. to require petitioner Wiltshire to hold a hearing.Labor II afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. (Wiltshire vs. Distinction Redundancy and Retrenchment Ÿ AG & P United Bank and File Assn vs. Issue: Was the termination by virtue of the retrenchment program valid? Held: No. and c) payment of separation pay equivalent to 1 month pay or at least ½ month pay for every year of service. Heidi Soria. 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. 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. Jon Santos. The ground for retrenchment availed of was not sufficiently and convincingly established. or of automation. imminence can be perceived objectively and in good faith by the employer. would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination. Charms Haw. whichever is higher. industrial depression. Section 5 gives the employee the right to answer and to defend himself against "the allegations stated against him in the notice of dismissal". The employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort. to begin with. Monina Lagman. allege any malfeasance or non-feasance on the part of the employee. conversion of the plant for a new production program or the introduction of new methods or more efficient machinery. Edlyn Santiago. be the Department of Labor and Employment and not an investigation or hearing to be held by the employer itself. Lead Electrician for the corp. Alpe Macalalad. and expected imminent losses sought to be forestalled. Anna Tetangco 6 . Dianne Miano. In such case. shortage of materials. there are no allegations which the employee should refute and defend himself from. or seasonal fluctuations or during lulls occasioned by lack of orders. on the business and financial circumstances compelling retrenchment and resulting in redundancy. (Wiltshire vs. The corp failed to adduce financial statements duly audited by independent external auditor. Retrenchment must also be reasonably necessary and likely to effectively prevent the expected losses. Ricardo Magno. the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee. Thus. Jake Ng. there appears to us no need for an investigation and hearing to be conducted by the employer who does not. after less drastic means. Again.

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

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

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

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

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

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

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

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

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

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

as well as the computation of their termination pay. 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. 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. 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. .Labor II Ÿ Cattista vs. the closure then is due to serious business losses. Charms Haw. Monette Mesa." Where. and reasonable Ÿ Irah Burog. Having determined that private respondent suffered losses and had to resort to retrenchment of its employees in Hacienda Binanlutan to prevent further losses. this Court held that Article 283 governs the grant of separation benefits "in case of closures or cessation of operation" of business establishments "NOT due to serious business losses or financial reverses . and of the various demand notices of payments from creditor banks. Ÿ Galaxie Steel Workers Union vs. this Court holds that private respondent was within its rights in closing Hacienda Binanlutan and in terminating the service of petitioners. as long as he pays his employees their termination pay in the amount corresponding to their length of service. It would. Jon Santos. On the other hand.429. 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. nor did they establish that the closure was motivated by Galaxie’s anti-union stance.480. and (d) the alleged losses.000. Besides. Galaxie decided to close down its business operations. to wit: P65. it is logical for it to implement a retrenchment program to prevent further losses.97 in 1999. 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. and the expected imminent losses sought to be forestalled. The social justice and protection to labor provisions in the Constitution dictate so. (b) the substantial losses apprehended must be reasonably imminent. In North Davao Mining Corporation v. In a letter. VMC's personnel reduction program was meant to reduce excessive labor costs in the company. Although they may be broad and unlimited in scope. the Labor Code does not impose any obligation upon the employer to pay separation benefits. NLRC (Heidi) Facts: Victoria’s Milling Corp. Ÿ Employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. Ruling: This requisites of a valid retrenchment are: (a) the losses expected should be substantial and not merely de minimis in extent.00. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character. decided to permanently stop and close its sugarcane operations in Hacienda Binanlutan "due to low sugar prices which affected the viability and profitability of said hacienda" and convert it instead into an ipil-ipil plantation. This mass of privileges comprises the so-called management prerogatives. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses.000. Petitioners received their termination pay or retirement pay under the pension plan. NLRC. Kristel Macatangay. P48. employers are also accorded rights and privileges to assure their selfdetermination and independence.65 in 1997. In view of such decision.753.785. Monina Lagman. whichever was higher. Respecting petitioners’ claim for separation pay is Article 283 of the Labor Code. Jake Ng. indeed. On account of serious business losses which occurred in 1997 up to mid-1999 totaling around P127. Considering the losses suffered by private respondent. Anna Tetangco 17 . Capitol Medical Center vs. One of the rights accorded an employer is the right to close an establishment or undertaking. such exercise will be upheld. 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.89 in 1998. 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. management subsequently held a conference with all 13 field workers to explain to them the reason for this move. 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. Clearly then. Dianne Miano. if already incurred.389. . And it posted the notice of closure on the corporate bulletin board. And the burden of proving such falls upon the employer. 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. Galaxie thus filed a written notice with the DOLE informing the latter of its intended closure and the consequent termination of its employees. the right to close 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. In any case.204. must be proved by sufficient and convincing evidence. Alpe Macalalad. Meris Work is a necessity that has economic significance deserving legal protection. Ysan Castillo. the petitioners had not presented evidence to the contrary. Edlyn Santiago. Heidi Soria.

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

The last patient was consequently discharged. NLRC Ÿ Temporary Cessation of Operation. Anna Tetangco 19 . Held: To justify the closure of a business and the termination of the services of the concerned employees. as in this case. J. These acts constitute unfair labor practices. The parties formally commenced negotiations for the renewal of their CBA but the parties failed to reach an agreement. A "Notice of Temporary Suspension of Operation" was issued by the hospital and submitted to the local office of the NCMB. Jon Santos.A. Alpe Macalalad. Me-Shurn Workers Union (Heidi) Facts: The regular rank and file employees of MeShurn Corp. Indeed. The union had a pending application for registration BLR. is a charitable. his means of livelihood. considering that it involves laying off employees for a period of six months. As long as the company’s exercise of the same is in good faith and not for the purpose of defeating/circumventing the rights of the employees under the law or a valid agreement such exercise will be upheld. It is not enough to merely raise this issue nor to discuss it only in passing. but to discourage the workers from organizing themselves into a union for more effective negotiations with management. nurses and nurse aides who were members of the union abandoned their respective department and joined the picket line a week later. Edlyn Santiago. Even as the law is solicitous of the welfare of the employees. there is substantial evidence that petitioners intended the Irah Burog. it must also protect the right of an employer to exercise what is clearly a management prerogative. or sell or dispose all or substantially all of its assets and properties which may bring about the dismissal or termination of its employees in the process. as long as he pays his employees their termination pay in the amount corresponding to their length of service. The operations of the hospital having come to a grinding halt. Dianne Miano. Monina Lagman. that its cessation of operation was really necessitated by its financial condition. Similar notices were individually delivered to union members. Monette Mesa. 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. 10 days later. and that said condition would probably be alleviated or improved. Itr had a 3-year CBA covering from 1987 until 1990. Ÿ Ÿ Concededly. corporation. Ÿ The burden of proving that such a temporary suspension is bona fide falls upon the employer. Ysan Castillo. Kristel Macatangay. organized Me-Shurn Workers Union-FSM. non-profit medical and educational training Ÿ While the closure of the hotel operations may have been temporary. or its losses abated. Doctors began leaving the hospital and the number of patients dwindled. Undue interference with an employer’s judgment in the conduct of his business is uncalled for. Espina vs. nonstock. The union saturated petitioner's premises with streamers and picketed the hospital. the determination to cease operations is a management prerogative that the State does not usually interfere in. and in the exercise of such management prerogative.Labor II absence of serious business losses or financial reverses.T vs. what is more important. Heidi Soria. The same principle applies in temporary suspension of operations. by undertaking such suspension of operation. Inc. the employer may merge or consolidate its business with another. corporation started placing on forced leave all the rank and file employees who were members of the union’s bargaining unit. gives credence to the employees’ claim that the closure was meant to discourage union membership and to interfere in union activities. as well as the resumption of business barely a month after. the hospital management considered the union actions as tantamount to a strike. simply to maintain the workers in employment. CA Requisite Mc-Shurn Corp. the law requires the employer to prove that it suffered substantial actual losses. That would be a taking of property without due process of law. on account of its alleged inability to meet the export quota required by the BOI. but only 14 out of the 74 rank-and-file employees/union members acknowledged receipt thereof. But where it is manifest that the closure is motivated not by a desire to avoid further losses. no business can be required to continue operating at a loss. the evidence belies any claim that the lay-off of respondents was merely temporary.286 Basis San Pedro Hospital of Digos vs. vs. Petitioner also alleged that the resident/consultant physicians abandoned the hospital because there were no more patients. the State is bound to intervene. considering that the dismissal of an employee from work involves not only the loss of his position but. In this instance. Despite the NCMB's call for a conciliation conference. Jake Ng. petitioner had to establish the fact of its precarious financial health. Charms Haw. 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. Secretary of Labor (Heidi) Facts: Pedro Hospital of Digos. The cessation of a company’s operations shortly after the organization of a labor union. On the contrary. Thereafter the corporation declared that it will be temporarily lay off employees and cease operations. with union.

For as explicitly provided therein. Justice Vicente V." he does not receive any salary or financial benefit provided by law. Also. Held: The Supreme Court finds that. Monina Lagman. Ÿ In a similar case involving the same issue – the validity of the termination of SMC employees at the Mandaue Brewery – the Supreme Court. Charms Haw. Anent the delay of seven days in the filing with the Court of Appeals of the petition. Held: The installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. leased the premises belonging to Santiago Syjuco. the corporation should have presented clear and convincing evidence of imminent economic or business reversals as a form of affirmative defense in the proceedings. Installation of Labor Savings Device Ÿ Abapo vs. Anna Tetangco 20 . Alpe Macalalad.Labor II termination to be permanent. indeed. Ysan Castillo. signed by the employees concerned as reasonable settlements. Sy vs. 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. Heidi Soria. Inc. Due to the grim economic consequences to the employee. Inc. Mc-Shurn Corp. Floating Status Irah Burog. When a security guard is placed on a "floating status. through Mr. due to non-payment of rentals. The quitclaims and releases. which eventually led to his illegal constructive dismissal. He had an altercation with Richard Alcantara of the Ayala Security Force arising from Alcantara’s statement that Pido’s security license for his . Mabuhay F. valid and legal suspension of operation does not terminate but merely suspends the employee-employer relationship. 286. As a consequence. the replaced security guard may be placed on temporary "off-detail" if there are no available posts under respondent’s existing contracts. as in this case. 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. several functions of its employees were declared redundant. Special case of business transfers Nature of Labor Contract Ÿ Sundowner Devt Corp vs. that said cessation of employment was merely temporary. NLRC (Dianne) Facts: Federito B. CA G. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of 6 months. 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. with more reason will an invalid and illegal suspension of operations. a floating status requires the dire exigency of the employer's bona fide suspension of operation of a business or undertaking. Drilon (Dianne) Facts: Hotel Mabuhay. Apropos this responsibility. Pido was an employee of Cherubim Security and General Services. His prolonged suspension. Ÿ Verily. clearly indicates that he did not abandon his work. Section 3.284 Ÿ The requirement for a medical certificate cannot be dispensed with. are binding upon the parties. San Pedro Hospital vs. He was later on suspended following his argument with Alcantara. The Court of Appeals did not commit any grave abuse of discretion in dismissing the petition for non-compliance with Rule 46.38 caliber revolver service firearm and duty detail order had already expired. Jon Santos. held that the installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. along with a prayer for reinstatement. it led to the termination of the services of the SMC employees at the Mandaue Brewery. Pido was constructively dismissed. had ripened to constructive dismissal. Edlyn Santiago. the dismissal is deemed unjustified. Kristel Macatangay. Inc. However. Dianne Miano. a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila. Effect on Employer-Employee Relationship Ÿ If a legitimate. Otherwise. DISEASE. Mayon Hotel vs. failure to comply with any of the requirements shall be sufficient ground for the dismissal of the petition. owing to respondent’s neglect to conclude the investigation. pursuant to Art. His filing of a complaint for constructive dismissal. In security services. 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. Mendoza. not affect the employment relationship. Monette Mesa. Assuming arguendo. 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. the petitioners admitted that there was indeed such delay. Mc-Shurn Workers Union Ÿ Pido vs. vs. Jake Ng. Digos E. 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. 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. Eventually.

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

In separate memoranda dated February 4. Article 282(c) of the Labor Code allows an employer to dismiss employees for willful breach of trust or loss of confidence. we hold that Arbiter Ortiguerra's Decision is void as against Carag for utter absence of due process. The requirement of a hearing. 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. (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. In fine.Labor II be heard. 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. Held: Valiao’s dismissal from employment is valid and justified. 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. the results of which eventually led to their termination for “serious misconduct. Ysan Castillo. They gave their own "answer/explanation" to the charges. Irah Burog. not ordered to submit a position paper. on the other hand. notices were sent to them on March 19. Anna Tetangco 22 . 1991. not accorded a conciliatory conference. 1999. which were then returned due to insufficiency of funds. 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. NLRC (Dianne) Facts: National Federation of Labor Unions (NAFLU) and Mariveles Apparel Corporation Labor Union (MACLU). They were represented by counsel during the investigation. Jon Santos. Ÿ Ÿ There is no doubt that Central observed procedural due process in dismissing Macaraeg and De Vera. or as applied to administrative proceedings. Macaraeg was then the cashier who also took part in the illicit transactions. not given an opportunity to present his evidence. and breach of trust and confidence reposed on them by management. Thus. 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. and not notified that the case was submitted for resolution. Coop vs. CA (Dianne) Facts: Rene Valiao was an employee of West Negros College. is complied with as long as there was an opportunity to be heard. it is stressed that due process is simply an opportunity to Ÿ Carag vs. Central Pangasinan Elec. he received a suspension order without pay. Ÿ On the matter of due process. For an employee’s dismissal to be valid. filed a complaint against MAC for illegal dismissal brought about by its illegal closure of business. and (2) the second informs the employee of the employer's decision to dismiss him. 1999 at 11:30 a. Ÿ Valiao vs.” Held: There exists a valid reason to dismiss both employees. Kristel Macatangay. not accorded a hearing. He was re-assigned from one position to another which was due to his tardiness and absences. Finally. A hearing was also set. A formal or trial-type hearing is not at all times and in all instances essential. Jake Ng. they were given due process before they were dismissed. an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. they were both apprised of the particular acts or omissions constituting the charges against them.m. and to have reported late almost every day for the period November to December 1991. Monina Lagman. Macaraeg (Dianne) Facts: Geronima Macaraeg and Maribeth de Vera were employees of Central Pangasinan Electric Cooperative. informing them of the basis of their termination. 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. As such. Charms Haw. Monette Mesa. They participated in the investigation conducted at petitioner’s board room on February 13. Ÿ The essence of due process is simply an opportunity to be heard. In this case. on behalf of all of MAC's rank and file employees. Carag was not issued summons. and not necessarily that an actual hearing was conducted. It was error for the NLRC and the Court of Appeals to uphold Arbiter Ortiguerra's decision as against Carag. 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. as reflected in the summary of tardiness and absences report. 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. Proof beyond reasonable doubt of their misconduct is not required. 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. Dianne Miano. De Vera admitted that she encashed several checks issued by her sister from the money collected from Central’s customers. 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. Time and again. Heidi Soria. Edlyn Santiago. What is frowned upon is the absolute lack of notice and hearing. 1999 and signed by the General Manager. Alpe Macalalad.

Labor II
Ÿ The essence of due process is that a party be afforded a reasonable opportunity to be heard and to submit any evidence he may have in support of his defense. Where, as in this case, sufficient opportunity to be heard either through oral arguments or position paper and other pleadings is not accorded a party to a case, there is undoubtedly a denial of due process. Ÿ King of Kings Transport Inc. vs. Mamac (Monina) Facts: Mamac was employed as a bus conductor. He was terminated form work because of irregularities (fraud) he caused like declaring sold tickets as returned tickets causing the bus company to lose income. Mamac received a letter then terminating him from his work. The lower courts affirmed the dismissal but ordered the bus company to pay full backwages for violation of the twin notice requirement and 13th month pay. Held: Notice requirements were not followed by the bus company. The respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal appraisal of the charges against an employee does not comply with the first notice requirement. In addition, no hearing was also conducted. Therefore as held in the case of Agabon vs. NLRC, noncompliace with the due process requirements entitles the employee to receive nominal damages. To clarify, the following should be considered in terminating the services of employees: (1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. Ÿ (2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.

Right to Counsel Ÿ Salaw vs. NLRC (Monina) Facts: Espero Santos Salawa was employed as a credit investigator-appraiser. His duties included inspecting, investigating, appraising, and identifying the company’s foreclosed assets giving valuation to its real properties mortgaged to the respondents. The Criminal Investigation Service of the Philippine Constabulary extracted from the petitioner without the assistance of counsel a Sworn Statement which made it appear that petitioner in cahoots with a co-employee, sold 20 sewing machines and electric generators which had been foreclosed by the respondent bank and divided the proceeds thereof in equal shares. When petitioner signified his readiness to appear before the PDIC, private respondent sent him a letter stating that he is requested to come without counsel or representative. The petitioner was terminated for alleged serious misconduct or willful disobedience and fraud or willful breach of the trust reposed on him. Held: Salaw was denied the assistance of counsel hence violated due process of law. It is true that administrative and quasi-judicial bodies are not bound by the technical rules of procedure in the adjudication of cases. However, the right to counsel, a very basic requirement of substantive due process, has to be observed. Indeed, the right to counsel and to due process of law are two of the fundamental rights guaranteed by the constitution to any person under investigation, be the proceeding administrative, civil or criminal. Significantly, the dismissal of the petitioner from his employment was characterized by undue haste and the admission by petitioner which was extracted without counsel cannot be used as evidence against petitioner. Notice Ÿ It is clear that there was an utter absence of opportunity to be heard at the arbitration level, as the procedure adopted by the Labor Arbiter virtually prevented private respondents from explaining matters fully and presenting their side of the controversy. They had no chance whatsoever to at least acquaint the Labor Arbiter with whatever defenses they might have to the charge that they illegally dismissed Carag. In fact, private respondents presented their position paper and documentary evidence only for the first time on appeal to the NLRC. Carag vs. NLRC

Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 23

Labor II
(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment. Collegio de San Juan de Letran Calamba vs. Villas (Monina) Facts: Belen Villas was employed as high school teacher. She applied for a study leave. It was granted but there were conditions imposed by the school where she was working that she needs to submit certification that she really studied. However, the first semester where she was on leave, her masteral studies did not push through and instead took up a course on the Old Testament. During the second semester, she already started his masteral studies. The President of the school where she was working alleged that her failure to enroll during the first semester was a violation of the conditions of the study leave. Hence, she was dismissed. Held: We affirm the findings of the Court of Appeals that there was no violation of the conditions of the study leave grant. Thus, respondent could not be charged with serious misconduct warranting her dismissal as a teacher in petitioner School. Petitioner has failed to convince us that the three alleged violations of the study leave grant constituted serious misconduct which justified the termination of respondent’s employment. Ÿ Ÿ Petitioner also failed to comply with the procedural requirements for a valid dismissal. As earlier noted, the law requires the employer to give the worker to be dismissed two written notices before terminating his employment. Considering that these notices are mandatory, the absence of one renders any management decision to terminate null and void. Petitioner failed to give respondent the first notice which should have informed the latter of the former’s intention to dismiss her. The next letter from the petitioner, dated June 3, 1996, already informed respondent that she was considered resigned effective schoolyear 1996-1997. These letters did not comply with the requirements of the law that the first written notice must apprise the employee that his termination is being considered due to a certain act or omission. These letters merely required petitioner to submit proof of her studies and respondent could not have reasonably inferred from them that her dismissal was being considered by the petitioner. The fact that there was a hearing conducted by the grievance committee pursuant to the collective bargaining agreement did not work in petitioner’s favor because this was done after petitioner had informed respondent that she was already considered resigned from her teaching job. Besides, the rights of an employee to be informed of his proposed dismissal are personal to him and, therefore, the notice to the union was not notice to the employee. Ÿ Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. Agabon vs. NLRC

Ÿ Sta. Catalina College vs. NLRC (Monina) Facts: Hilaria was hired as an elementary teacher at the petitioner school in 1955 until 1970. In 1970, she applied for and was granted a 1 year leave of absence without pay on account of the illness of her mother. In the meantime, she was employed as a teacher at another school. In 1982, she applied anew at petitioner school. During the commencement exercise of petitioner school she was awarded a plaque of appreciation for 30 years of service. When she reached the compulsory retirement age of 65, petitioner school pegged her retirement benefits only from her service on 1982-1997. Hilaria then filed a complaint for non-payment of retirement benefits. Held: Hilaria abandoned her work. Hilaria cannot be credited for her services in 1955-1970 in the determination of her retirement benefits. For, after her one year leave of absence expired in 1971 without her requesting for extension thereof as in fact she had not been heard from until she resurfaced in 1982 when she reapplied with petitioner school, she abandoned her teaching position as in fact she was employed elsewhere in the interim and effectively relinquished the retirement benefits accumulated during the said period. Abandonment of work being a just cause for terminating the services of Hilaria, petitioner school was under no obligation to serve a written notice to her. Two Notice Rule Ÿ Caingat vs. NLRC (Monina) Facts: Petitioner became the General Manager of Sta. Lucia Realty Development sister companies both organized to service the malls and subdivisions owned by Sta. Lucia. He was allowed to use 10% of the total payroll of Sta.Lucia’s sister company to defray operating expenses. However, the Finance Manager discovered that petitioner deposited company funds in the latter’s personal account and used the funds to pay his credit

Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 24

Labor II
card purchases, trip abroads, etc. Without conducting an investigation, the sister company filed a complaint in court while petitioner filed with the Labor Arbiter a complaint for illegal dismissal. Held: Nonetheless, while dismissal may truly be justified by loss of confidence, we agree with the Labor Arbiter and NLRC that management failed to observe fully the procedural requirement of due process for the termination of petitioner’s employment. Ÿ In this case, the respondents only sent the first notice, gleaned from the June 20, 1996 memorandum. There was no second notice. Neither the public notice in the Philippine Daily Inquirer, a newspaper of general circulation, nor the demand letter could constitute substantial compliance. What the public notice did was to inform the public that petitioner was already separated as of June 20, 1996, the same day he was suspended. never gave respondent Galay an opportunity to explain herself, hence denying her due process. In sum, we find that Galay was illegally dismissed, because petitioners failed to show adequately that a valid cause for terminating respondent exists, and because petitioners failed to comply with the twin requirement of notice and hearing. Ÿ Genuino Ice Co. vs. Magpantay (Monina) Facts: Alfonso Magpantay (respondent) was employed as a machine operator with Genuino Ice Company, Inc. (petitioner) from March 1988 to December 1995. Respondent filed against petitioner a complaint for illegal dismissal. In his Position Paper, respondent alleged that he was dismissed from service effective immediately by virtue of a memorandum, after which he was not allowed anymore to enter the company premises. Respondent bewailed that his termination from employment was done without due process. Petitioner countered that he was not illegally dismissed, since the dismissal was based on a valid ground, i.e., he led an illegal strike at petitioners sister company, Genuino Agro Industrial Development Corporation, which lasted from November 18 to 22, 1995, resulting in big operation losses on the latter?s part. Held: Due to his refusal to report to the Cavite plant, petitioner reiterated its order transferring respondent in its Memorandum, where respondent was also warned that his failure to report to the Cavite plant will be considered as an absence without leave (AWOL) and insubordination. Respondent was required to comply with the order within 24 hours from receipt, otherwise, disciplinary action will be imposed on respondent. Respondent replied with a request that he remain in the Otis plant since a transfer to the Cavite plant will entail additional expenditure and travel time on his part. Petitioner again wrote respondent inviting him to appear before the Plant Level Investigation on December 11, 1995 for the latter to be able to clarify his reasons for refusing the transfer. Finally, petitioner issued its Memorandum informing respondent of its decision to terminate his services. Ÿ Prior to the Memorandum, petitioner sent respondent several memoranda apprising him of the possible implications of his refusal to comply with the order of transfer. Thus, in its Memorandum dated November 24, 1995, petitioner notified respondent that his continued non-compliance with the order of transfer might bring about disciplinary action. Respondent replied to this memorandum, stating the reasons for his refusal. Petitioner sent another Memorandum asking respondent to appear for further clarification of his reasons for refusing the transfer. Despite the meeting, and since respondent, apparently, stubbornly refused to heed petitioner’s order, it was then that the Memorandum dated

Ÿ Heavylift Manila vs. CA (Monina) Facts: Heavylift thru a letter signed by its Finance Manager informed respondent of her low performance rating and the negative feedback from her team members regarding her work attitude. The letter also notified her that she was being relieved of her other functions except the development of the new access program. Subsequently, respondent was terminated for alleged loss of confidence. Held: An employee who cannot get along with his coemployees is detrimental to the company for he can upset and strain the working environment. Without the necessary teamwork and synergy, the organization cannot function well. Thus, management has the prerogative to take the necessary action to correct the situation and protect its organization. When personal differences between employees and management affect the work environment, the peace of the company is affected. Thus, an employee's attitude problem is a valid ground for his termination. It is a situation analogous to loss of trust and confidence that must be duly proved by the employer. Similarly, compliance with the twin requirement of notice and hearing must also be proven by the employer. However, we are not convinced that in the present case, petitioners have shown sufficiently clear and convincing evidence to justify Galay's termination. Ÿ In our view, neither does the February 23, 1999 letter constitute the required notice. The letter did not inform her of the specific acts complained of and their corresponding penalty. The law requires the employer to give the worker to be dismissed two written notices before terminating his employment, namely, (1) a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employer's decision to dismiss him.[22] Additionally, the letter

Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 25

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

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

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

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

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

Monina Lagman. Great Southern. Ÿ Where the dismissal is without just or authorized cause and there was no due process. Jon Santos. Belga's failure to formally inform Tropical of her pregnancy cannot be considered as grave conduct directly connected to her work. inclusive of allowances. Held: Moldez was illegally dismissed. 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. Ÿ An employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights. Buat (Anna) Facts: The respondent spouses Julio and Cecilia Cosmiano were engaged in the trucking business. Pheschem claimed that Moldez was dismissed due to grave and habitual neglect of duties (i. filed a complaint for illegal dismissal against NEECO. Held: Yes. an assistant cashier of Tropical Biological Phils.Labor II Ÿ Pheschem Industrial Corp vs. Cabatulan was summoned to the Cosmiano residence and was told that his services were no longer needed in the business. the law intended reinstatement to be the general rule. which explains his repeated failure to report to work. Clearly. NLRC (Irah) Facts: For failure of NEECO's BOD to act on his termination. a driver of NEECO. Great Southern Maritime Services Corp vs. inclusive of allowances. an operator of Pheschem's payloader and bulldozer at its quarrying site in Leyte. Julio offered him 5k should he agree to sign the resignation letter. Rather. Alpe Macalalad. alleged that they were deployed as croupiers (card dealers) for Ferry Casinos under a six-month contract. He was assured to be rehired. and other privileges and to his full backwages. vs. Before proceeding to the meeting place. 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. NLRC (Irah) Facts: Pablito Moldez. Lourdes Belga. Anna Tetangco 31 . but eight months had already passed with no word from Pheschem. were illegally dismissed.e. The spouses and their children went on a world tour and entrusted the business operations to Cabatulan. They did not voluntarily quit their jobs. 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. An altercation ensued between Cabatulan and Alaan. Cabatulan passed by the premises of J. NEECO alleged that Cairlan also worked for the Provincial Government of Nueva Ecija. Belga's absence for 16 days was justified considering that she had just Irah Burog. Employees who were illegally dismissed prior Ÿ Lakpue Drug Inc. Held: Respondents Acuña. Heidi Soria.C. et al. Cabatulan was informed that respondent Julio’s brother. NEECO's general manager claimed that Cairlan was dismissed due to abandonment of work. failure to inspect a bulldozer prior to its use) which resulted in damage to Pheschem's property and delay in its production. inclusive of allowances. and (2) insubordination for refusing to comply with directives to report for work and to explain her absence. wanted to see him. et al. His suspension was subsequently extended. Ÿ The legal consequences of an illegal dismissal are reinstatement of the employee without loss of seniority rights and other privileges. Cabatulan refused to sign the same. Monette Mesa. delivered a child. Belga (Irah) Facts: Ma. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. filed a complaint for illegal suspension and dismissal against Pheschem. Charms Haw. Ÿ Ÿ Cabatulan vs. denied the charges and averred that Acuña. voluntarily resigned from employment. and payment of his full backwages. they were transferred back home since their services were no longer needed. et al. et al. Eduardo Cairlan. Kristel Macatangay. Trucking but was refused admission by Alaan who was armed with an armalite rifle. Cabatulan agreed and immediately went home. et al. Tropical claimed that it terminated the services of Belga due to: (1) concealment of her pregnancy which is tantamount to dishonesty. Held: Belga was illegally dismissed. Cabatulan was advised not to report for work in the meantime and await the arrival of the respondent spouses. Ÿ Nueva Ecija Electric Corp. Edlyn Santiago. Moldez alleged that he was at first suspended from work without pay for 7 days. filed with the POEA a complaint for illegal dismissal against Great Southern Maritime. which can hardly be considered a forbidden act or a dereliction of duty. Acuna (Irah) Facts: Respondents Acuña. They employed Cabatulan as operations manager and purchasing officer. and other benefits or their monetary equivalent. Issue: W/N Cabatulan is entitled to backwages and separation pay. With regard to the charge of disobeying a memorandum.. vs. et al. et al. Held: Cairlan was illegally dismissed. because of a disagreement in the purchase of some spare parts. Before the expiration of their contracts. without being informed of its reason. filed a complaint for illegal dismissal against Lakpue. Acuña. Cabatulan was given a pre-drafted voluntary resignation letter which he refused to sign. which is a subsidiary of Lakpue. Julio’s security aide. Jake Ng. Dianne Miano. It is only when reinstatement is no longer feasible that payment of separation pay is awarded to an illegally dismissed employee. they were forced to resign or were summarily dismissed without just cause. Ysan Castillo.

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

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

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

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

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

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

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

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

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

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

After learning of the filing of the complaint. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. Consequently. because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased. 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. is based simply on expectancy or his assumption that. however. qualify for the said increase later. and subsequently General Counsel thereof. 26. respondent Sadac was removed from his office and ordered disentitled to any compensation and other benefits. Edlyn Santiago. On the ground of lack of confidence in respondent Sadac. in a letter-petition to the Chairman of the Board of Directors. Rule 138 of the Rules of Court. Petitioner Bank disputed respondent Sadac’s computation.00 or more than twice his original compensation. to the exclusion of the latter’s general salary increases and other claimed benefits which. Jon Santos. Per its computation.00 in August 1981. respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded. representing his backwages and other benefits.981. the amount of monetary award due respondent Sadac is P2. Moreover. in the absence of any valid reason to terminate him. Jake Ng. 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. petitioner Bank be ordered forever released from liability under said judgment. failed to show proof as to when the project was completed. it maintained.59. As of November 1989.500. and ultimately. or by rightful expectation. As held by the Court of Appeals. Heidi Soria. Petitioner was specifically assigned to work in a particular project. Private respondents. 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. Such decision became final and executory. and. 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. it could terminate at any time the services of respondent Sadac. on 10 August 1989.365. the Supreme Court modified the decision of the NLRC and ordered the reinstatement of petitioner and payment of his backwages. Kristel Macatangay. Petitioner’s claim.98 only. his monthly compensation amounted to P29. Anna Tetangco 42 . can be attributed to the annual salary increases which he received equivalent to 15 percent (15%) of his monthly salary. as in the case of one’s salary or wage. In reaction thereto. they held respondent Sadac’s dismissal illegal. were unsubstantiated. the Court had the opportunity to elucidate on the reason for the grant of backwages. Pursuant thereto.030. Ÿ Equitable Banking vs. Likewise. Therefore. when he was dismissed illegally. the total amount of the monetary award is P6. as in the case of a wage increase under a wage order.456. however. On 9 November 1989. he posited. Monette Mesa. respondent Sadac filed with the Labor Arbiter a Motion for Execution thereof. Sadac(Charms) Facts: Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank. Rule XIV. they did not find that respondent Sadac’s dismissal was grounded on any of the causes stated in Article 282 of the Labor Code. nine lawyers of petitioner Bank’s Legal Department. On 26 June 1989. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained. The base figure to be used in the computation of backwages is pegged at the wage rate at the time of the employee’s dismissal. inclusive of regular allowances that the employee had been receiving such as the emergency living allowances and the 13th month pay mandated under the law. The difference.Labor II expiration thereof. under the rules of client and lawyer relationship. Finally. petitioner Bank filed a Manifestation and Motion praying that the award in favor of respondent Sadac be computed and that after payment is made. petitioned for a change in leadership of the department. when he was appointed as Vice President of petitioner Bank’s Legal Department and later as its General Counsel in December 1981. Ysan Castillo. Book V of the Implementing Rules of the Labor Code. petitioner Bank terminated the services of respondent Sadac. It was similarly found that petitioner Bank disregarded the procedural requirements in terminating respondent Sadac’s employment as so required by Section 2 and Section 5. Respondent Sadac theorized that he started with a monthly compensation of P12. claiming that the association between the parties was one of a client-lawyer relationship. it is probable that he would similarly have been given high ratings and salary increases but for his transfer to another position in the company. In a previous SC decision. thus.442. 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. Charms Haw. however. accused respondent Sadac of abusive conduct. therefore. inter alia. we did not permit petitioner Bank to rely on Sec. Irah Burog. Per respondent Sadac’s computation. either by virtue of a lawful decree or order. respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. private respondents should have retained his services until the actual completion of the project. Alpe Macalalad. Monina Lagman. including the general increases which he should have earned during the period of his illegal termination. Dianne Miano. In several cases. hence.

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

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

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

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

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

b) Mercury Drug rule.D. . Monina Lagman. it also had the implied power of mitigating (reducing) the backpay where backpay was allowed. Monette Mesa. 6715 took effect. Inc. v. during the effectivity of P." However. 11 months and 15 days which represented the remainder of the prescriptive period after deducting the period corresponding to the delay incurred by the employee in filing the complaint for unfair labor practice and reinstatement. above-quoted. Its posture on the award of backwages. 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. as amended. 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 was still the Mercury Drug rule. c) 3 year backwages (Dissenting opinion of Justice Teehankee in Mercury Drug). 442. Alpe Macalalad. No. However.The proposal on the threeyear backwages was subsequently adopted in later cases.D. Security of Tenure. and during the effectivity of P. The Court deems it appropriate.D. was nonetheless followed in said case. to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed employee (hereinafter the 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. This notwithstanding. In an even later case (1987). As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee. 6715 took effect. Jake Ng. (italics supplied). 442 by limiting the award of backwages to three (3) years. In labor cases decided during the effectivity of R. No.A." (italics supplied) In accordance with the above provision. this Court found occasion in the case of Mercury Drug Co. 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. should not. No. Anna Tetangco 48 . however. namely. without qualification or deduction. in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level. as a general rule. among them. Heidi Soria. 442 (the Labor Code of the Philippines). A survey of cases from 1974 until 1989. CIR.In order not to unduly delay the disposition of illegal dismissal cases. 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.A No.D. 6715. Dianne Miano. Thus. — . the award of backwages equivalent to three (3) years. Justice Teehankee dissented from the majority view that the employee in said case should be awarded backwages only for a period of 1 year. the good faith of the employer. et al. In sum. 442. d) Then came Presidential Decree No. to reconsider earlier rulings on the computation of backwages by now holding that comfortably with the evident legislative intent as expressed in Rep. This ruling was grounded upon considerations of expediency in the execution of the decision. Feati University Faculty Club (PAFLU) v. Security of Tenure.. Former Justice Claudio Teehankee approved of this formula expressing that such method of computation is a "realistic. 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. Ysan Castillo." Under the abovequoted provision. . in the exercise of its jurisdiction. 875. the employee's employment in other establishments during the period of illegal dismissal. 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. the rule generally applied by the Court after the promulgation of the Mercury Drug case. From this ruling came the burden of disposing of an illegal dismissal case on its merits and of determining whether or not the computation of the award of backwages is correct.D. Republic Act No. qualified the provision under P. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. among them. Jon Santos. (See Itogon-Suyoc case). amending the Labor Code. depending on several circumstances. Edlyn Santiago. 279. in effect. Article 279 thereof states in part: “ART. Act No. 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. Kristel Macatangay. 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. et al. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. No. the Court enforced the Mercury Drug rule and. Charms Haw. R. was expressed as follows: “ART. Feati University (1974) and others. the CIR increased or diminished the award of backpay.Labor II lockout without having first bargained collectively with his employees in accordance with the provisions of the Act. when the amendatory law to P. 442) had taken effect.. No. it became mandatory to award backwages to illegally dismissed regular employees. backwages to be awarded to an illegally dismissed employee. After the Labor Code (P. supports this conclusion. inclusive of allowances. — In case of regular employment. e) On 21 March 1989. be diminished or reduced by the earnings derived by him elsewhere Irah Burog. 279.

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

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. Ÿ Kay Products vs. To constitute as such. His entitlement to full backwages commenced from the time the petitioner refused his reinstatement. 1995. 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. The Labor Arbiter declared the dismissal of the complainant not in accordance with law. NLRC (Jake) Facts: On January 5. willful. Abandonment as a just ground for dismissal requires clear. Monina Lagman. 1995. Javier failed to report for work. Hence. On November 10. 1989. the reckoning point for the grant of backwages started therefrom. 1995 cannot be deemed as an abandonment of his work. Jake Ng. and second. the employee must have failed to report for work or must have been absent without valid or justifiable reason. 1989. two requisites must concur: first. respondent was ordered to immediately reinstate Complainant to her former position as security guard without prejudice to reassignment in the exigency of the service. respondent Javier’s acquittal for rape makes it more compelling to view the illegality of his dismissal. In the instant case. deliberate. Dianne Miano. Ÿ Ÿ Respondent Javier is not entitled to any salary during the period of his detention. Moreover. 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. Kristel Macatangay. hence. 1996.00 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. Now. Charms Haw. CA (Jake) Facts: The employees alleged that they were illegally dismissed. 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. Mere absence or failure to report for work. Edlyn Santiago. Held: As regular employees. 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. even after notice to return. with full backwages from the time she was placed under preventive suspension on October 27. Monette Mesa. 1989 up to the time of her reinstatement. Standard Electric Employees Union (Jake) Facts: On July 31. with the second element being the more determinative factor. 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. Puente (Jake) Facts: Respondent avers that he started working with Ÿ Irah Burog. in contemplation of the law. Ysan Castillo. Del Monte vs. 6715 was enacted precisely for the employer to realize that the employee must be immediately restored to his former position. 1996 by virtue of the judgment of acquittal dated May 17. Held: Respondent Javier’s absence from August 9. 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. Torres as a security guard. when respondent Javier was freed on May 24. 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.Labor II perhaps Republic Act No. Held: The amount of P 105. respondent E & R security agency hired petitioner Chona P. Alpe Macalalad. Heidi Soria. he was arrested and detained for the charge of rape upon complaint of his neighbor. he immediately proceeded to the petitioner but was not accepted back to work. KPI thereby engaged in ULP.396. Anna Tetangco 50 . Saldiar (2007) Ÿ Torres vs. respondent agency terminated her services for abandonment when she failed to report for work in her new assignment. In the recent ruling of the Court. 1989. and considering that they were illegally dismissed. Jon Santos. and unjustified refusal of the employee to resume his employment.ð Standard Electric vs. we said that the rule enunciated in Pines Cityð no longer controls. Genalyn Barotilla. The complainants further contended that they were coerced and intimidated into signing letters of resignation. On August 9. never left his office. They also asserted that in interfering with their right to self-organization by deceitfully transferring them to an employment agency. 1995. and (b) for committing rape. He failed to notify the SEMC of the reason for his absences. An illegally dismissed employee who. 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. is not tantamount to abandonment. the private respondents should be reinstated.# On November 27. 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.

a corporation engaged in construction business. with a monthly salary of P80. were not religiously followed. Jake Ng. 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. Held: These factual findings of the NLRC. Inc. there can be no question. Kristel Macatangay. he was already 64 years old. including respondent. this Court has held that the effects of extraordinary Ÿ TPI Cement Corp vs. petitioner regularly submitted to the labor department reports of the termination of services of project workers. that on October 1. Held: The dismissal of respondent from the service is by reason of retrenchment. petitioner Filomeno Lantion received a letter. which we fix at P20. the general manager then of petitioner. Benedicto was terminated from his position. petitioners should be liable for violation of his right to due process and should pay him indemnity in the form of nominal damages. Petitioners were not rehired although they fall outside the exception provided. Monette Mesa. before the NLRC. Since he was employed by petitioners for four years.00 as separation pay. petitioners filed their Complaint against the University and its President. Benedicto was entitled to backwages only for the period he could have worked had he not been illegally dismissed. NLRC (Jake) Facts: On 10 November 1983. Furthermore. he was dismissed from his employment allegedly because he was a project employee. an authorized cause. The labor arbiter concluded that Benedicto was illegally dismissed. Ysan Castillo. as marketing manager with a monthly compensation of P20.00. 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. are binding on us since they are supported by substantial evidence. Anna Tetangco 51 . Benedicto (Jake) Facts: In 1993. dated 9 November 1983. 1998.000. 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). the employment of project employees cannot be terminated prior to expiration. Their positions were not affected by the re-organizational changes envisioned in the retrenchment program. Alpe Macalalad. 1994. they shall be entitled to reinstatement with full back wages. if the project or work is completed during the pendency of the ensuing suit for illegal dismissal. was terminated as Secretary to the Legal Office on 21 November 1983. Filomeno's sister-in-law. that since his work was not dependent on any project. The conditions laid down.00. The position of Vice-President continued to exist. 1995 to December 30. When Benedicto was illegally dismissed on October 11. was terminated as Dean of the Institute of Business and Agricultural Administration and Concurrent Head of the Department of Business. petitioners implemented Irah Burog.Labor II Petitioner Filsystems. However. terminating him as the Acting Vice-President and concurrently Executive Officer of the University effective 11 November 1983. at that time the president of petitioner. respondent Obed Jose Meneses. therefore. wife of Filomeno. or from June 1. he should be paid P160. his employment with the petitioner company was continuous and without interruption for the past ten years. their temporary appointment to other positions could not have affected their permanent status pursuant to the ruling in the First GAUF Case. Ÿ We rule that the Court of Appeals erred in awarding him such backwages. Thus. confirmed by the CA. Effect Inflation Ÿ Lantion vs. cost-cutting measures resulting in the termination from the service of their employees. Otherwise. Monina Lagman. Ÿ Benedicto was entitled to backwages only up to the time he reached 65 years old. on June 12. Reynaldo Benedicto was appointed by Ceferino Basilio. in case of retrenchment to prevent losses. the compulsory retirement age under the law. Charms Haw. Jon Santos. Finance. 1994 signed by Tomas Gomez III. On 25 March 1985.000. She was replaced by another faculty member. pursuant to our ruling in Agabon. Held: That retrenchment was proper. Such compliance with the reportorial requirement confirms that respondent was a project employee. His employment was coterminous with the completion of the projects for which he had been hired. however. Clarita's position was neither abolished. Ÿ Without a valid cause. Ÿ In respect of the argument that the inflation that has supervened justifies the imposition of interest. Cajucom (Jake) Facts: As a result of the economic slowdown then experienced in this country. Reinstatement of petitioners with backwages is thus called for. 1999. 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. Since backwages are granted on grounds of equity for earnings lost by an employee due to his illegal dismissal. Held: The contracts of employment of Puente attest to the fact that he was hired for specific projects. Under Article 283. and Management effective 1 June 1984.000.000 plus 1% commission from collections of all advertising contracts consummated. While petitioner Fuentes. Heidi Soria. In a letter dated October 11. And as far as Filomeno and Clarita Lantion are concerned. 1989. Ÿ Intercontinental Broadcasting vs. Dianne Miano.. Edlyn Santiago. that his work was not dependent on the completion or termination of any project. Petitioner Clarita Lantion.

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

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

after due notice. for having physically assaulted and verbally abused. Kristel Macatangay. Construction Corp vs. Alpe Macalalad. . Plaridel. Where the reason for the valid dismissal is. (2) redundancy. Bulacan. whose driver was rendered unconscious by a stone hitting him on the head. One truck. NLRC (Kristel) Facts: Domingo Manreza was hired by the CDCP in 1972. distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of undesirables. Monette Mesa. Book VI of the Omnibus Rules Implementing the Labor Code. During the strike. Mariano Lopingco. (4) cessation of the employer's business. and also in the house of Nene Enriquez. Not Allowed Ÿ Phil. having the main duty of removing and/or changing damaged flexbeams on the expressway. in our view of this case. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it. 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. 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. he is not entitled to separation pay. (Emphasis supplied. "The policy of social justice is not intended to countenance wrong doing simply because it is committed by the underprivileged. within full view and hearing of the other employees. Nestle Philippines. 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. It contravenes Rule 1. 148 SCRA 187. 1983. does not call for such award of benefits. Ÿ Eastern Paper Mills vs. NLRC and Marilyn Bucay. Charms Haw. habitual intoxication or an offense involving moral turpitude. Anna Tetangco 54 . like theft or illicit sexual relations with a fellow worker. If an employee's length of service is to be regarded as a justification for moderating the penalty of dismissal. Inc. or (5) when the employee is suffering from a disease and his continued employment is prohibited by law or is prejudicial to his health and to the health of his co-employees. an accounts payable clerk. . and thereafter terminated his employment Ÿ It is true that in some earlier cases. dismissed the private respondent Eduardo Malabanan. No. investigation. Jon Santos. NLRC. Petitioner received a notice Irah Burog. (Articles 283 and 284. that doctrine was abandoned by this Court in the recent case of Philippine Long Distance Telephone Co. G. 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. for example. Inc. Soco vs. Monina Lagman. 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. 145 SCRA 123). Edlyn Santiago. August 23. Labor Code. Sec. Mercantile Corp. or whatever other name it is called. NLRC (Kristel) Facts: Union of Filipro Employees.) . Chua was a member.Labor II respondent served petitioner for more than twenty years with no negative record prior to his dismissal. The company found him guilty of stealing or unauthorized taking of company property. vs. (3) retrenchment. vs. like the workers who have tainted the cause of labor with the blemishes of their own character." Since Manreza was found guilty of dishonesty for having stolen company property and was dismissed for cause. Filipro.R. of which petitioner Benito D. . 80609. 7. although the employee was lawfully dismissed. on the ground of social justice. rammed a private vehicle and crashed into a beauty parlor resulting in the death of three (3) persons and extensive damage to private property.) Ÿ Chua vs. Ÿ An award of separation pay to an employee who was dismissed for a valid cause (in this case. since his violation reflects a regrettable lack of loyalty and worse. Dianne Miano. Heidi Soria. for serious misconduct) is legally indefensible. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. At best it may mitigate the penalty but it certainly will not condone the offense. On May 24. Ysan Castillo. the employer may not be required to give the dismissed employee separation pay. a superior officer. a violation of Section 7 (a) (10) of the CDCP Code of Employee Discipline. It placed the complainant under preventive suspension for thirty (30) days. betrayal of the company. or financial assistance. are when the cause of termination was not attributable to the employee's fault but due to: (1) the installation of labor-saving devices. several of the striking employees threw stones at the trucks entering and leaving the company premises. 1988. of Davao. 148 SCRA 526. of the Philippines vs. and hearing. NLRC (Kristel) Facts: Petitioner. Jake Ng. as a janitor and later promoted to Leadsman. The only cases when separation pay shall be paid. who was then the personnel and administrative manager of the company. . Lariosa. declared a strike against the private respondent company. Both declared that the items were deposited there by Manreza and his companions. the North Luzon Expressway (NLE) Security Services Investigation and Intelligence Unit discovered NLE flexbeams in the house of Alfonso Eusebio in Sipat. such gesture will actually become a prize for disloyalty. where We held that: ".

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

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

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

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

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

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

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

Kristel Macatangay. who has served at least five (5) years in the said establishment. This rule shall not apply to the following employees: Irah Burog. 7641 which took effect on Jan. After six months. Charms Haw. he was required to appear before petitioner corporation's office and its Executive Committee pursuant to two letters. 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. 7. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. Ysan Castillo. 287. regardless of their position. On November 18. As used herein. Edlyn Santiago. Omnibus Rules Rule II Retirement Benefits SECTION 1. Alpe Macalalad.Labor II preventive suspension which was necessary pending investigation of company records which she had access to. Held: Considering the prevailing circumstances in the case at bar. SEC. Inc. Subsequently. The Electrical Engineer. 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. . petitioner did not even allege that there was use of force. through an EXECOM meeting. respondent Cabanit was informed that he erred in recording US$40 and was later suspended from July 1-31. Retail. It is not enough that one merely suffered sleepless nights. In case of retirement. assigned to the accounting department. and auditor from 1990 to 1996.Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. The amount of such damages is addressed to the sound discretion of the court. Heidi Soria.00. Despite the presence of security guards. Jon Santos. however. This rule shall apply to all employees in the private sector. except to those specifically exempted under Section 2 hereof. Retirement ART. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. 1993. That an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided therein. Ÿ The award of moral and exemplary damages is proper when an illegally dismissed employee had been harassed and arbitrarily terminated by the employer. as when the latter committed an antisocial and oppressive abuse of its right to investigate and dismiss an employee. designation or status and irrespective of the method by which their wages are paid. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code. 1997. General Statement on coverage. Monette Mesa. mental anguish or serious anxiety as the result of the actuations of the other party. 2. the term “Act” shall refer to Rep. Rule II. Unless the parties provide for broader inclusions. it provides a vindication or recognition of this fundamental right granted to the Ÿ Section 15. 1997 and required to explain in 15 days why he should not be dismissed due to irregularities committed. Anna Tetangco 62 . he became its regular employee. a fraction of at least six (6) months being considered as one whole year. we do not find the articles published in private respondent institute's publication.000. Act No. 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. 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. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. 1997. an employee upon reaching the age of sixty (60) years or more. abusive language or any species of violence. he became branch manager from 1981 to 1990. On June 11. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. Monina Lagman. petitioner corporation. Jake Ng. He requested copies of pertinent documents to enable him to explain his side but petitioner corporation allegedly did not oblige. 1997 but the suspension was rescinded and he was assigned as general auditor. latter under the Labor Code and its Implementing Rules. Promoted. It was believed that this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. Book VI. to be malicious as they were fact-based. adopted a resolution terminating his employment effective October 16. He was placed under preventive suspension on October 16. At the very least. Dianne Miano. the Supreme Court deemed it proper to fix the nominal damages at P30. 1997. Exemptions. 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. taking into account the relevant circumstances. Lastly. Retirement.

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

1. Kristel Macatangay. 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. The retirement pay provided in the Act may be exempted from tax if the requirements set by the BIR under Sec.1 In the absence of an applicable employment contract. further. 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. working places whether abandoned or in use beneath the earth’s surface for the purpose of searching for and extracting mineral deposits. Effectivity. 3. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. an underground mine employee shall be retired upon reaching the age of sixty-five (65) years. 6. 12-86 dated Aug. Jake Ng. Order No.: a) 15 days salary of the employee based on his latest salary rate. 1993 when the Act went into force. As used herein. individual/collective agreements or employment practices or policies. 2. As used herein. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and Irah Burog. 1 Coverage. This Rule shall apply to all underground mine employees as contemplated under RA No. Exemption from tax. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. SEC. the term “one-half month salary” shall include all the ff. SEC. Monette Mesa. winzes. 7. SEC.2 In case of retirement under this section. drifts. tunnels. Retirement under CBA/contract. however. Charms Haw. the employer shall pay the deficiency.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of underground mine employees in the establishment. 2. 288 of the Labor Code of the Philippines. 8. divided by the number of actual working days in that particular period. Rule II-A (Dep. an underground mine employee refers to any person employed to extract mineral deposits underground or to work in excavations or workings such as shads. Penal Provision. raises.For the purpose of determining the minimum retirement pay due an employee under this Rule. 4.Pensions. 3. “employees”. 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.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. except the following: a) Retirement benefits received by officials and employees of private firms under a reasonable private benefit plan maintained by the employer. Retirement benefits. 3. 2.2 Compulsory retirement.Labor II are paid by results. Dianne Miano. 8558. For these purpose. or “covered workers” shall mean underground mine employee/s. Ysan Castillo. SEC. This rule took effect on January 7. Optional Retirement and Compulsory Retirement 2. 4. holidays and mandatory fulfillment of a military or civic duty. Edlyn Santiago. Jon Santos. 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 difference b/w the amount due the employer under this Rule and that provided under the CBA or other applicable employment contract. Violations thereof shall be subject to the penal provisions provided under Art. The ADS is the average salary for the last twelve (12) months reckoned from the date of their retirement.2 Components of One-half (½) Month Salary. Relations to agreements and regulations. 9 dated May 4. if the following requirements are met: i) The benefit plan must be approved by the BIR. a fraction of at least 6 months being considered as one whole year. 9.3 Where both the employer and the employee contribute to a retirement fund in accordance with CBA or other applicable employment contract. Monina Lagman.The minimum length of at least 5 years required for entitlement to retirement pay shall include authorized absences and vacations. retirement and separation pay. That if such benefits are less. Heidi Soria. . crosscuts. Where there is no such plan or agreement referred to in the immediately preceding subsection. subject to the provisions of Section 4 hereof on the payment of retirement benefits. 1998) SEC. In case the employer’s contribution is less than the retirement benefits provided under this Rule. to wit: Pensions. supplements or payments as provided in existing laws. and Provided. 4. 1986 are met. . Anna Tetangco 64 . Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits.. SEC. 3. 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. That the said employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. The term “Act” refers to RA 7641 as amended by RA 8558. the terms “employee”. 2(b) item (1) of Revenue Regulations No. SEC. retirement and separation pay constitute compensation subject to withholding. All rules and regulations. 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.1 Optional retirement. Alpe Macalalad. SEC.3 Service requirement.

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

On 29 April 1993. the union representing the supervisory employees also signed a Memorandum of Agreement ("supervisors' MOA") with Philex similarly prescribing the criteria for retrenchment.743. Retirement — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. Philex could ill afford to experiment with other cost-cutting measures before resorting to retrenchment as the situation called for immediate and drastic action.000 in 1993. Thus. also known as the provision on Social Justice and Human Rights. respondent Reuters implemented a Irah Burog. Jon Santos. If reinstatement is no longer possible because the positions petitioners held no longer exist. Edlyn Santiago. 1993 up to her compulsory retirement age. Alpe Macalalad. Petitioner is now 71 years old and therefore well over the statutory compulsory retirement age. However. Ysan Castillo. . Kristel Macatangay. 1993. In a letter dated December 3. the vouchers in question. But respondent stood pat on its decision to retire her. petitioner. In the present case. Article 283 of the Labor Code governs retrenchment to prevent losses. respondent was guilty of illegal dismissal. Monina Lagman. 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. 30 April 1993. Ÿ By themselves. having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her. 1983. Cordillera Administrative Region. the amounts petitioners received as net separation pay should be deducted from their backwages. citing "company policy. Philex paid them separation pay. 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. beyond Philex's projected loss of P187 million. Anna Tetangco 66 . to be computed from the time of her illegal dismissal on November 18. petitioners. petitioner began working for respondent's university medical center as a nurse. On October 1. By its express language. This ballooned to P283. leaving 241 positions for retrenchment. Philex's financial condition before and at the time of petitioners' retrenchment justified petitioners' retrenchment. received from Philex termination notices informing them of their retrenchment under their respective MOAs effective 30 June 1993. an employer is free to impose a retirement age less than 65 for as long as it has the employees' consent. Heidi Soria. respondent. with six other supervisors and 49 rank-and-file employees. Ÿ Retirement is the result of a bilateral act of the parties. For this reason. informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18.173.” do not suffice brief exchange of letters between petitioner and respondent followed. a voluntary agreement between the employer and the employee whereby the latter. . As already stated. 1992. we grant her separation pay in lieu of reinstatement. Charms Haw. On 14 May 1993. we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII. finding that Philex suffered an operational loss of P33." 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. reinstatement is out of the question. An independent auditor confirmed Philex's claim of financial losses. At this point." Respondent required certain documents in connection with petitioner's impending retirement. Petitioners are thus entitled to reinstatement with full backwages. a company engaged in news dissemination with offices worldwide. Monette Mesa. after reviewing the assailed decision together with the rules and regulations of respondent's retirement plan." Philex re-assigned some of the employees belonging to this group while others took early retirement. . Jake Ng. Held: Petitioners' retrenchment was illegal. Baguio City. On 1 June 1993. Stated conversely. 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. Philex shall pay backwages as computed above plus. which allegedly evidence receipt of “retirement gratuities. respondent Reuters Limited. 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. The following day. after reaching a certain age agrees to sever his or her employment with the former. (Reuters). separation pay equal to one-half month pay for every year of service. Ÿ Jaculbe vs Silliman University (Dianne) Facts: Sometime in 1958. Phils. 1982. It is also for this reason that we modify the award of backwages in her favor. in lieu of reinstatement. at which time she would be 57 years old. hired Marilyn Odchimar Gerlach. However. Philex informed the Department of Labor and Employment ("DOLE"). Thus. 287. through its Human Resources Development Office.Labor II Philex had 310 "excess positions. as its local correspondent. of its plan to retrench 241 employees. A Types Ÿ Gerlach vs Reuters Limited (Dianne) Facts: On February 15. All of them signed Deeds of Release and Quitclaim in Philex's favor. Article 287 of the Labor Code provides: ART. the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years.000 in 1992. Dianne Miano.

— Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. provides: "Sec. petitioner filed with the Office of the Labor Arbiter. and is computed at least one month salary or at the rate of one-half month salary for every year of service. The Plan is funded by the company. In fact. In Llora Motors. she opted not to contribute to the fund. NLRC (Monina) Facts: The petitioners’ services were terminated on the ground of retrenchment. respondent assigned petitioner as a journalist to Reuters Singapore. NCR. specifically that her home base will always be the Philippines. Consequently. Before leaving. contending that her retirement benefits must be computed on the basis of her actual salary abroad. and they received separation pay double that required by the Labor Code. Retirement benefits are intended to help the employee enjoy the remaining years of his Irah Burog." 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." Thus. The first type is compulsory and contributory in character. Retirement. The third type is one that is voluntarily given by the employer. Alpe Macalalad. where not mandated by law. whichever is higher. Monina Lagman. Reuters' Eastern Region Staff Manager. 14.04. were the petitioners still entitled to the retirement benefits? Held: Yes. Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code. invoking the retirement plan of the company which they said was contractual rather than statutory. but an employee-participant may volunteer to contribute a percentage of his basic monthly salary to the fund. Petitioner was automatically covered by the Plan by reason of her age and length of service. respondent based petitioner's retirement benefits on its Plan and established policy. Respondent also informed petitioner of the amount of her notional Philippine salary whenever she was transferred to her next overseas assignment or when there were increases in her salary. 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. On March 1. Inc. Ÿ There are three kinds of retirement schemes. Issue: Having received the separation pay. the company's contribution to the fund is 10% of the basic monthly salary of each participant. Jake Ng. not on her notional salary. It is very clear that from the very start of her first assignment overseas. On January 23. The computation was based on her notional salary. (b) a collective bargaining or (c) other agreements. like the Social Security Act. 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. Dianne Miano. Drilon. Nonetheless. Charms Haw. Anna Tetangco 67 . The second paragraph deals with the retirement benefits to be received by a retiring employee which he may have earned under (a) an existing law. 1983. which include retrenchment. a money claim against respondent. In case of retirement. Rachel Addison. . — (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 . Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code. Section 14(a). she questioned the amount she received as well as her entitlement to a disturbance grant. Ÿ Retirement benefits. apprised her of the details of her forthcoming assignment. Jon Santos. which is in accord with the above provision. 1984. Significantly. Kristel Macatangay. Ysan Castillo. they demanded retirement benefits.Labor II local Retirement Benefit Plan (Plan) for its Philippinehired employees. both actual and notional. It is this third type of retirement scheme which covers respondent's Plan. Eventually.228. which amount was determined by the trustee bank (Bank of the Philippine Island) in accordance with the provisions of the Plan. Article 287 of the Labor Code reads: "Article 287. under the Plan. may be granted by agreement of the employees and their employer or as a voluntary act on the part of the employer. We have held that it is a statutory right designed to provide the employee with the wherewithal during the period that he is looking for another employment. Held: We agree with the Court of Appeals that petitioner's retirement benefits must be based on her notional Philippine salary. petitioner received her retirement benefits under the Plan in the amount of P79. However. Thereafter. petitioner's theory that the computation of her retirement benefits should be based on her basic annual salary while stationed abroad is untenable. in the instant case. Monette Mesa. it was held that Article 287 does not in itself purport to impose any obligation upon employers to set up a retirement scheme for their employees over and above that already established under existing laws. vs. 1991. . The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them. Retirement benefits. expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. Edlyn Santiago. Heidi Soria. It follows that the amount of retirement benefits of a retiring employee assigned abroad is based on his notional salary. However. Basis Ÿ Aquino vs. She worked in Reuters Philippines up to December 23. respondent apprised her that the company's contribution to the Plan is based on her notional Philippine salary.

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

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

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

provides. are always given termination or separation pay equivalent to one month pay or at least ½ month pay for every year of service. arising as it did from a management prerogative granted by the mutuallynegotiated CBA between the School and the Union. Where two constructions of a retirement plan are possible. this Court will not hesitate to adopt the latter interpretation. it is indispensable that the employer establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. 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. Jon Santos. Ysan Castillo. Dianne Miano. vests in him. 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. Ÿ Petitioners are entitled only to either the separation pay provided under Article 283 of the Labor Code. 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. As we held in Cipriano and Aquino. This is a condition precedent to his acquisition of rights. as amended. In other words. Article VI 12 of respondent’s Retirement Plan. is the result of a bilateral act of the parties. on the other hand. 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. Kristel Macatangay. or retirement benefits prescribed by the Retirement Plan. in case of retrenchment or cessation of operations. Under Article 283 of the Labor Code. Ÿ Llora Motors vs. Edlyn Santiago. petitioners are not entitled to both separation pay and retirement benefits. The union filed a notice of strike and subsequently picketed in front of the school. Under Section 4. Cruz however despite receiving separation pay asks for his retirement benefits. There is no essential difference between the CBA provision in this case and those we affirmed in Pantranco and Progressive. affected employees.02 ACCRUAL OF BENEFITS Accrual Ÿ Cruz vs. 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. Pursuant to the existing CBA. Monette Mesa. The CBA in the case at bar contains no such infirmities which must be stricken down. Here. if the employee is eligible. Charms Haw.Labor II year. Upon reaching 65 he stopped working. 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. Phil. one of which requires the retiree to devote his life to the service of the church even after retirement. as amended. He now files a case for the collection of his retirement Irah Burog. In those two instances. Monina Lagman. In the years 1993 and 1994 it suffered substantial business losses which forced it to adopt a streamlining program that caused the closing of some of its branches and laying off some of its workers among them is Cruz. as amended. it must have been convinced that Brion had devoted his life to the work of the SDA. Cainta Catholic School Employees Union (Oreo) Facts: A CBA was entered into by the school and the union on March of 1986. the same being higher than what Article 283 of the Labor Code. Brion's excommunication and "disfellowship" was misplaced considering that he had already a vested right to receive the retirement benefits and the same is not a ground for termination of the retirement. he must have met the stated conditions of eligibility with respect to the nature of employment. whichever is higher. Retirement. the employees’ right to payment of retirement benefits and/or separation pay is governed by the Retirement Plan of the parties. Under the Retirement Plan before us. and the other of which sanctions the severance by the retiree of his employment thereto at retirement. age. 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. 15. before a right to retirement benefits or pension vests in an employee. 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. Twenty years is a more than ideal length of service an employee can render to one employer. Anna Tetangco 71 . the employee to be terminated may be unwilling to part from service. While in all three cases. Ground Termination Cainta Catholic School v. Global Communications (Oreo) Facts: PGC is in the business of telex and telegram. Ÿ Ÿ We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment of Llagas and Javier. Jake Ng. the last three (3) years of which must be continuous. respondent opted to pay petitioners separation benefits computed under the Retirement Plan. and length of service. Alpe Macalalad. there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. Heidi Soria. whichever is higher.

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

Sign up to vote on this title
UsefulNot useful