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OTHER CAUSES. BUSINESS RELATED CAUSES Recognition of Right- Business Related Causes/ Protection Ÿ Agabon vs. NLRC (Monette) Facts: Agabon was dismissed for abandonment of work (subcontracting for another company). The court held that the cause for the dismissal was valid but the company failed to follow notice requirements. The company reasoned that it would be useless because the Agabons did not reside there anymore. Held: This is not a valid excuse because the twin notice requirements are mandatory. The dismissal is upheld but the company should be held liable for nominal damages, for the violation of his right to statutory due process. Ÿ The law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests. where terminated due to massive retrenchment of the company to forestall serious business losses and/or closure of operations. Issue: When, or under what circumstances, the employer becomes legally privileged to retrench and reduce the number of employees? Held: The ff. are general standards in terms of which the acts of petitioner employer must be appraised: Firstly, the losses expected should be substantial and not merely de minimis in extent. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. Thirdly, must be reasonably necessary and likely to effectively prevent the expected losses. Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. Ÿ To impart operational meaning to the constitutional policy of providing “full protection” to labor, the employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means – e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc.
Ÿ Uichico vs. NLRC (Monette) Facts: The case is an illegal dismissal case filed by workers of Crispa, Inc. who were terminated on the ground of retrenchment due to alleged serious business losses suffered by the company. Held: The Statement of Profit and Losses submitted by Crispa, Inc. to prove its alleged losses, without the accompanying signature of a certified public accountant or audited by an independent auditor, are not credible. This is not the kind of sufficient and convincing evidence necessary to discharge the burden of proof required to establish the alleged losses suffered by Crispa. The corporate directors and officers of Crispa are solidarily liable with the corporation for the termination of employment done with malice or in bad faith. In this case, it is undisputed that they have a direct hand in the illegal dismissal of respondent employees. Ÿ The law recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors which would endanger its existence or stability. In spite of overwhelming support granted by the social justice provisions of our Constitution in favor of labor, the fundamental law itself guarantees, even during the process of tilting the scales of social justice towards workers and employees, "the right of enterprises to reasonable returns of investment and to expansion and growth.
Business Services of the Future Today vs. CA (Monette) Facts: The employee was terminated on the ground of severe business losses. The employers believe, however, that since the employee was also a stockholder, there was no need to notify DOLE of the closure since as stockholder, he was presumed to have taken part in the decision to close the business. Held: Notice of closure to the DOLE is mandatory. It allows the DOLE to ascertain whether the closure and/or dismissals were done in good faith and not a pretext for evading obligations to the employees. This requirement protects the workers’ right to security of tenure. Failure to comply with this requirement taints the dismissal. An exceptions is when the employee consented to his retrenchment, the required prior notice to the DOLE is not necessary as the employee thereby acknowledges the existence of a valid cause for termination of his employment. However, there is no evidence to show that the employee consented to his dismissal and for these reasons the petitioners should have submitted a written notice of BSFTI’s closure to the DOLE. The NLRC and the Court of Appeals were unanimous in finding that the closure was bona fide. As in the case of Agabon, nominal damages were awarded to vindicate employee’s right to due process. Ÿ A. Installation of Labor Saving Devices- 283
Ÿ Filipinas vs. Gatbalayan (Monette) Facts: Another illegal dismissal case by the workers who
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 1
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. B. Redundancy- 283 (above) Business Judgment Ÿ Wiltshire File vs. NLRC (Monette) Facts: Ong was dismissed because of serious business losses. In the termination letter, the ground alleged was redundancy of the position. Ong countered that there could be no redundancy because nobody except himself, in the company was then performing the same duties. Held: Dismissal was valid. The losses were proven by the company and most importantly, company finally closed its doors and terminated all its operations. SC considered that finally shutting down business operations constitutes strong confirmatory evidence of financial distress. Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. That no other person was holding the same position that employee held, does not show that his position had not become redundant. Ÿ The characterization of private respondent's services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of petitioner company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. The determination of the continuing necessity of a particular officer or position in a business corporation is management's prerogative, and the courts will not interfere with the exercise of such so long as no abuse of discretion or merely arbitrary or malicious action on the part of management is shown. Ÿ Asufrin vs. San Miguel Corp (Monette) Facts: An illegal dismissal case which stemmed from SMC’s new marketing system known as the "pre-selling scheme". As a consequence, all positions of route sales and warehouse personnel were declared redundant. Held: Dismissal was invalid. In selecting employees to be dismissed, a fair and reasonable criteria must be used, such as but not limited to (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority. In the case at bar, no criterion whatsoever was adopted by the employee. Furthermore, SMC has not shown how the cessation of the employees’ services would contribute to the ways and means of improving efficiency and cutting distribution overhead and other related costs. Ÿ In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof that such is the actual situation to justify the dismissal of the affected employees for redundancy.
Ÿ Soriano Jr. vs. NLRC (Monette) Facts: PLDT utilized high technology equipment in its operation such as computers and digital switches which necessarily resulted in the reduction of the demand for the services of a Switchman. Held: Dismissal was valid. PLDT submitted the relevant documents attesting redundancy of employing switchmen and it has also paid separation pay to the dismissed workers. Ÿ PLDT, as employer, has the recognized right and prerogative to select the persons to be hired and to designate the work as well as the employee or employees to perform it. This includes the right of the PLDT to determine the employees to be retained or discharged and who among the applicants are qualified and competent for a vacant position. The rationale for this principle is that respondent PLDT is in the best position to ascertain what is proper for the advancement of its interest. Thus, this Court cannot interfere in the wisdom and soundness of the PLDT’s decision as to who among the Switchmen should be retained or discharged or who should be transferred to vacant positions, as long as such was made in good faith and not for the purpose of curbing the rights of an employee. Financial loss Ÿ Ecareal vs. NLRC (Monette) Facts: Escareal’s position as Pollution Control and Safety
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 2
Manager was declared redundant. Held: Illegal dismissal. Philippine Refining Company (PRC)had no valid and acceptable basis to declare the position redundant as the same may not be considered superfluous. Ÿ If the aim was to generate savings in terms of the salaries that PRC would not be paying the petitioner any more as a result of the streamlining of operations for improved efficiency, such a move could hardly be justified in the face of PRC’s hiring frsh graduates for various positions. Besides, there would seem no compelling reason to save money by removing such an important position. As shown by their recent financial statements, PRCs net profits has steadily increased. While concededly, Art. 283 of the Labor Code does not require that the employer should be suffering financial losses before he can terminate the services of an employee on the ground of redundancy, it does not mean either that a company which is doing well can effect such a dismissal whimsically or capriciously. The fact that a company is suffering from business losses merely provides stronger justification for the termination. Law Required Position Position of Pollution Control and Safety Manager is required by law. Thus, it cannot be gainsaid that the services of the petitioner are in excess of what is reasonably required by the enterprise. Escareal vs. NLRC When Redundancy Ÿ Lopez Sugar Corp vs. Franco (Eds) Facts: Lopez Sugar Corp. issued a Memorandum for the adoption of a special retirement program for selected supervisory and middle level managers, allegedly due to over-staffing and duplication of functions. Private respondents, all supervisory employees of the Corp who organized a labor union which was currently undergoing CBA negotiations with the corp, were included in its coverage and terminated from employment. Issue: Was the termination of respondents by virtue of the special retirement program valid? Held: No. The corp illegally dismissed the private respondents by including them in its special retirement program, thus debilitating the union, rendering it pliant by decapacitating its leadership. The so-called “downsizing of the departments based on the SGV Study Report was a farce—capricious and arbitrary. No standard, criteria or guidelines for the selection of the dismissed employoees was made known to them, and all that they were told was that they had been selected for termination. Ÿ Redundancy exists when the service capability of the work force is in excess of what is reasonably needed to meet the demands on the enterprise. A redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line or phasing out of a service activity priorly undertaken by the business. Tierra International Construction Corp. vs. NLRC (Eds) Facts: Isidro Olivar, a shift supervisor for shipping company FEBROE, was dismissed from service and repatriated to the Philippines 6 months before his contract expired. Ground for dismissal: promotion of economy, efficiency and profitability in operations, and reduction of personnel whose positions are redundant or surplusage and/or reassignment of personnel to other available useful positions. Issue: Was the termination of Olivar for a just and valid cause? Held: Yes. Olivar’s position was deleted due to a decrease in scope of work assigned to FEBROE’s Base Operating Support Contract. Unfortunately, there were no other available positions for which he could qualify. Other positions were also abolished, including both U.S. and Third Country Nations positions, showing that he was not singled out and his termination was not arbitrary or malicious. Ÿ Ÿ Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position(s) may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. The law does not make any distinction between a technical and a nontechnical position for purposes of determining the validity of termination due to redundancy. Neither does the law nor the stipulations of the employment contract here involved require that junior employees should first be terminated. In redundancy, what is looked into is the position itself, the nature of the services performed by the employees and the necessity of such position.
Ÿ Edge Apparel vs. NLRC (Eds) Facts: Edge Apparel, Inc. dismissed some of its employees pursuant to a retrenchment program. Upon advice of the DOLE Regional Director, they received the separation pay benefits offered, but they still filed a complaint for illegal dismissal, alleging that the retrenchment program was a mere subterfuge used to give a semblance of regularity and validity to the dismissal.
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 3
In this case. is shut down does not necessarily remove that measure from the ambit of the term “retrenchment” within the meaning of Sec. in contrast to redundancy.. 2) the losses are actual or reasonably imminent. Evidence should have been presented to support this contention. Heidi Soria. feasibility studies/proposal. 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. Retrenchment. the retrenchment must be reasonably necessary and like to effectively prevent such losses. b) efficiency and c) seniority. Such appraisal was not done in the instant case. NLRC (Eds) Facts: Moises Panlilio. The amount depends on the ground for the termination of employment. Ÿ In selecting the employees to be dismissed.g. The company alleged redundancy in their position as defense for dismissing them. the firm amy choose to close all. was dismissed 6 months after being hired on the ground that his position had become redundant. such as but not limited to. In this case. temporary employee). The fact alone that a mere portion of the business of an employer. It must produce adequate proof that such is the actual situation in order to justify the dismissal of the affected employees for redundancy. Kristel Macatangay. Before any reduction of personnel becomes legal. Prudencio Tanjuan. it is not shown that Rivera and Macaspac’s positions were indeed unnecessary. 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.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. program. Ÿ Golden Thread Knitting Industries vs. The corp has sufficiently and convincingly established business reverses of the kind or the amount that would justify the retrenchment. provided that violation of law or arbitrary or malicious action is not shown. For it to be valid. a fair and reasonable criteria must be used. Issue: Were the dismissals on the ground of redundancy valid? Held: No. contrary to the ruling of the NLRC. one of which was the illegal dismissal of some union members. Dianne Miano. such as but not limited to: a) less preferred status (e. such as overhiring of workers. Issue: Was Tanjuan’s dismissal illegal? Held: No. is an exercise of business judgment on the part of the employer. or a part of. Monina Lagman. if already incurred. It is not enough for a company to merely declare that it has become overmanned. who was preventively suspended for alleged negligence in performance of duties and misrepresentation of bank rules and regulations. decreased volume of business or dropping of a line or service activity. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac Criteria. and therefore properly terminable. Phil. Jon Santos. In exercising its right to retrench emplooyees. The documents submitted do not present the necessary factors which would confirm that a position is indeed redundant. viability of the newly created positions. 283(c) of the Labor Code. any claim of acutal or potential business losses must satisfy established standards as follows: 1) losses incurred are substantial and not de minimis. Monette Mesa. Edlyn Santiago. a) preferred status. b) efficiency. NLRC (Eds) Facts: Several charges were filed against Golden Thread Knitting Industries. is an economic ground to reduce the number of employees. job description. or the expected imminent losses sought to be forestalled are proven by sufficient and convincing evidence. a Property Appraisal Specialist and a Department Officer-in-Charge. a Recreational Manager of Sheraton Hotel in oman. and c) seniority.Selection of Employee Ÿ Panlilio vs. not the whole of it. and is not subject to the discretionary review on the aprt of the Labor Arbiter nor the NLRC. The employer has the burden of proving that the losses are Irah Burog. Inc. the losses expected must be substantial and not merely de minimis in extent. Alpe Macalalad. Ysan Castillo. and the imminent losses sought to be forestalled are substantiated. issued a Board Resolution for the bank’s reorganization via retrenchment of employees and realignment of functions and positions for the purpose of preventing further serious losses. There was no substantial evidence to justify Panlilio’s dismissal on such ground. was one of those termininated. Ÿ It is important for a company to have fair and reasonable criteria in implementing its redundancy Ÿ Tanjuan vs. Postal Savings Bank (Eds) Facts: Philippine Postal Savings Bank. its business to avoid further losses or mitigate expenses. the expected losses must be reasonably imminent such as can be perceived objectively and in good faith by the employer. and in this case. and 4) the alleged losses. Anna Tetangco 4 . Charms Haw. much less was the company’s claim supported by any evidence. It is a measure of last resort when other less drastic means have been tried and found to be inadequate. and the approval by the management of the restructuring. 3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses. however. such as new staffing pattern. Jake Ng. they were terminated due to retrenchment not redundancy. The characterization of an employee’s services as no longer necessary or sustainable. Issue: Was Panlilio’s dismissal on the ground of redundancy valid? Held: No.
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. Issue: Were the private respondents illegally dismissed? Held: No. union and non-union members were treated alike. serious. NLRC (Eds) Facts: Due to mounting business losses. real and substantial losses.Effect Asian Alcohol Corp vs. Jake Ng. “retrenchment to prevent losses” is also allowed. and financial hardship for certain workers. 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. Retrenchment must be undertaken by the employer before losses are actually sustained. Charms Haw. whichever is higher. Answer and hearing. seniority. Asian Alcohol’s management implemented an organizational plan and other cost-saving measures. private respondents. age. xxx xxx xxx Sec. Some of the dismissed union members filed a suit for illegal dismissal. The employer shall Irah Burog. In cases of abandonment of work. Lopez Sugar Corp vs. as long as the requirements under the law are complied with. Golden Thread Knitting Industries v. It is imperative for the employer to have fair and reasonable criteria in implementing its redundancy program. which. Ÿ In selecting the employees to be dismissed. There was also no proof that the program was designed to bust the union. whereby 21 union members and 51 non-union members were terminated on the ground that their positions had become redundant. Reductions in work force to forestall business losses or stop the hemorrhaging of capital is allowed. Alpe Macalalad. 2) that the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment. such as but not limited to a) preferred status. Asian Alcohol v. Here. 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. guidelines. Heidi Soria. The law allows an employer to downsize his business to meet clear and continuing economic threats. ?? 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.g. 5. actual and real. contrary to the respondents’ claim. Edlyn Santiago. actual and real. Kristel Macatangay. and c) seniority. 4) that the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees’ right to security of tenure. such as but not limited to: a) less preferred status (e. if already incurred. are not merely de minimis. b) efficiency. Notice of dismissal. but substantial. never contested the veracity of the audited financial documents offered by Asian Alcohol. 283 of the Labor Code. 2. Monette Mesa. the audited financial statements submitted by the corp adequately supported their claim of actual.Labor II serious. temporary employee). Franco an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. Dianne Miano. a fair and reasonable criteria must be used. ?? The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. NLRC Ÿ Employment of Independent Contractor. claiming that Asian Alcohol used the retrenchment program as a subterfuge for union busting. the notice shall be served at the worker's last known address. Besides. and 5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees. efficiency. such as status. 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. management must faithfully comply with the substantial and procedural requirements laid down by law and jurisprudence. physical fitness. and c) seniority. In this case. Monina Lagman. Under Art. Such requirements for retrenchment are: 1) that the retrenchment is reasonably necessary and likely to prevent business losses. and that they were singled out for separation by reason of their active participation in the union. Anna Tetangco 5 . capricious and vindictive. showing that the latter has accumulated losses and that there was no sign of its abating in the near future. However. Ysan Castillo. no criterion whatsoever was adopted by the company in dismissing Rivera and Macaspac. or standard for selection of dismissed employees renders the dismissals whimsical. or if only expected are reasonably imminent are perceived objectively and in good faith by the employer. Jon Santos. In this case. Ÿ An employer’s good faith in implementing a redundancy program is not necessarily destroyed by the availment of the services of an independent contractor to replace the services of the terminated employees. NLRC The absence of criteria. In this case.
industrial depression. Section 5 may be seen to envisage charges against an employee constituting one or more of the just causes for dismissal listed in Article 282 of the Labor Code. Thus. Jon Santos. The appropriate forum for such controversion would. however. Jake Ng. 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. Monette Mesa. Lead Electrician for the corp. 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. be the Department of Labor and Employment and not an investigation or hearing to be held by the employer itself. on the business and financial circumstances compelling retrenchment and resulting in redundancy. The corp also failed to comply wikth the rule that retrenchment shall be a remedy of last resort. as in the instant case. 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. Ricardo Magno. Monina Lagman. The corp failed to adduce financial statements duly audited by independent external auditor. allege any malfeasance or non-feasance on the part of the employee. Alleged losses if already realized. Dianne Miano. 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. shortage of materials. there appears to us no need for an investigation and hearing to be conducted by the employer who does not. b) written notice to the employees and to the DOLE at least 1 month prior to the intended ndate of retrenchment. Anna Tetangco 6 . The losses expected should be substantial and not merely de minimis in extent. must also be proved by sufficient and convincing evidence. conversion of the plant for a new production program or the introduction of new methods or more efficient machinery. after less drastic means. Retrenchment to prevent losses Irah Burog. to begin with. Alpe Macalalad. NLRC) The three basic requisites for a valid retrenchment are: a) the retrenchment is necessary to prevent losses and such losses are proven. and c) payment of separation pay equivalent to 1 month pay or at least ½ month pay for every year of service. was one of those terminated. (Wiltshire vs. Section 5 gives the employee the right to answer and to defend himself against "the allegations stated against him in the notice of dismissal". would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination. NLRC(Charms) C. Ÿ Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter. to require petitioner Wiltshire to hold a hearing. 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. Issue: Was the termination by virtue of the retrenchment program valid? Held: No. imminence can be perceived objectively and in good faith by the employer. Edlyn Santiago. as such. The ground for retrenchment availed of was not sufficiently and convincingly established. Again. there are no allegations which the employee should refute and defend himself from. NLRC) Defined FF Marine Corp vs. Where. or of automation. (Wiltshire vs. It is essentially required that the alleged losses in business operations be proven. Charms Haw. the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee. It is precisely for this reason that an employer seeking to terminate services of an employee or employees because of "closure of establishment and reduction of personnel". The employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort. In such case. Heidi Soria. (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". Distinction Redundancy and Retrenchment Ÿ AG & P United Bank and File Assn vs. and expected imminent losses sought to be forestalled. Ysan Castillo. 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. Such substantial loss apprehended must be reasonably imminent. Kristel Macatangay. Retrenchment must also be reasonably necessary and likely to effectively prevent the expected losses. at which private respondent would have had the right to be present. resorted to by management during periods of business recession. or seasonal fluctuations or during lulls occasioned by lack of orders. Thus. whichever is higher.Labor II afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires.
is one of the economic grounds for dismissing employees and is resorted to primarily to avoid or minimize business losses." while denominated as such. NLRC (Charms) Facts: In the proceedings before the NLRC. 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. Consequently. The closure of business operation by petitioners. and sold its equity in the Philippine Ÿ Irah Burog.100. this Court finds that the study report submitted by the internal auditor of petitioner. 283 of the Labor Code as just causes for the closing of establishments or reduction of personnel. "Redundancy" exists when the services of an employee are in excess of what is required by an enterprise. Consequently. contrary to the findings of the Labor Arbiter.135. Ÿ As did the appellate court. Alpe Macalalad. 1 First. Mascarinas as helper tasked to coordinate with the cleaning and delivery of the heavy equipment sold to customers. ACCI then sent its F & B Department employees individual letters informing them that their services were being terminated effective January 1. In October 1997. the president of respondent company announced the adoption by the company of several cost-cutting measures to forestall impending financial losses. There were no indications that an impending strike or any labor-related union activities precipitated the sudden closure of business. resulted in the layoff of around 177 employees. including private respondent. The affected employees were given separation pay equivalent to one month pay for every year of service. is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. not to report for work starting on the first week of March 1998. requested its Internal Auditor. Coverage Philippine Tuberculosis Society vs. JAT hired private respondent Jose F. Jake Ng.000.T General Services vs. it must be proven that the losses incurred are substantial and actual or reasonably imminent. NLRC Facts: Sometime in April 1997. the union declared a strike. Jon Santos. Monette Mesa. JAT indefinitely closed shop effective May 1998. as implemented on March 1. that the same increased through a period of time. Held: NO ILLEGAL DISMISSAL. Kristel Macatangay.00 in 1990 and was certain to become worse were it not for quick measures taken by petitioner. Charms Haw. Dianne Miano. is more precisely termed "retrenchment" because it is primarily intended to prevent serious business losses. Held: No illegal dismissal. Distinction Closure and Retrenchment Ÿ Ÿ J. cancelled its service agreement with a janitorial company. Ÿ Alabang Country Club vs.727. the sales of heavy equipment declined because of the Asian currency crisis. 1998 of its decision to permanently close its business and had submitted a termination report to the DOLE. Further. Among these was a socalled "redundancy program. petitioners had notified private respondent and all other workers through written letters dated November 25. Ysan Castillo. which is allowed under Article 283 of the Labor Code. it was shown that. Monina Lagman. Held: No Illegal Dismissal. to conduct a study on the profitability of ACCI’s Food and Beverage Department (F & B Department). 1988. 1995. and that the condition of the company is not likely to improve in the near future. her report showed that from1989 to 1993." on the other hand. NLRC (Charms) Facts: Francisco Ferrer. Irene Campos-Ugalde. for which they signed documents of waiver. however. 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. 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. It advised its employees. There was substantial proof that the company was incurring substantial losses. Both are mentioned in Art. Heidi Soria." which. The shortfall increased to P9. 4 "Retrenchment. in our view. the Society leased a property in Tayuman to a fastfood outlet. Petitioner’s failure to prove that the closure of its F & B Department was due to substantial losses notwithstanding. Private respondent's "redundancy program.A. Anna Tetangco 7 . the company losses were duly established by the financial statements presented by both parties. and that they would be paid separation pay equivalent to one hundred twenty five (125%) percent of their monthly salary for every year of service. in 1989. 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.00. As already stated. JAT temporarily suspended its operations. then President of ACCI. As in the case of retrenchment. the Society began to experience serious financial difficulties when it incurred a deficit of P2 million. Edlyn Santiago. F & B Department had been incurring substantial losses in the aggregate amount of P8. In the case at bar. Prior to the rendition of the decision of the Secretary of Labor and Employment. for the closure of a business or a department due to serious business losses to be regarded as an authorized cause for terminating employees.Labor II Facts: As a result of a deadlock in the negotiations for a collective bargaining agreement. some of whom were officers and members of the petitioner union. the only evidence submitted to prove its alleged losses.
it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of six (6) months. and implemented the retrenchment of one hundred sixteen (116) employees. Dianne Miano. should invalidate the retrenchment. 1989. Jon Santos. Kristel Macatangay. Things being equal. as the omission immediately makes the selection process unfair and unreasonable. in the development of the countryside through its loan portfolios and other services to the rural folk. After all. to wit: (1) The losses expected and sought to be avoided must be substantial and not merely de minimis. negotiated with the Government Service Insurance System for the restructuring of its obligations. whether for profit or not. we find substantial evidence that petitioners intended the termination to be permanent. 2 The retrenchment is the subject of the present suit. even if the scheme should result in savings for the employer. retrenchment as a measure adopted to stave off threats to its existence is available to it. Alpe Macalalad. Ÿ It need not be overemphasized that the State recognizes the pivotal role of small rural banks. Indeed. 1999. NLRC (Charms) Facts: On June 30. Held: ILLEGALLY DISMISSED. namely. it withdrew from the Pag-Ibig Fund Program. financial statements. Monina Lagman. 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. a failure which. Jake Ng. Second. Held: ILLEGALLY DISMISSED. therefore. 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. it disapproved the overtime pay of supervisory and managerial employees. Petitioner presented to the NLRC the balance sheets. must be proven by sufficient and convincing evidence. Charms Haw. Anna Tetangco 8 . as such imminence can be perceived objectively and in good faith by the employer. 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. Moreover. Heidi Soria. Ÿ Balbalec vs. Monette Mesa.Labor II Long Distance Telephone Company (PLDT). We cannot." However. (2) The apprehended substantial losses must be reasonably imminent. obtained the waiver of personnel of their entitlement to wage differentials. (3) The retrenchment should reasonably necessary and likely to prevent effectively the expected losses. Finally. retaining a newly hired employee and dismissing one who had occupied the position for years. is simply unconscionable and violative of the senior employee's tenurial rights. 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. the hotel operations of the business were suspended on March 31. its implementation of the scheme rendered the retrenchment invalid. retrenchment strikes at the very core of an individual's employment and the burden clearly falls upon the Irah Burog. Edlyn Santiago. 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. even assuming arguendo that the cessation of employment on April 1997 was merely temporary. Only nine (9) of the sixteen (16) employees continued working in the Mayon Restaurant at its new site. and the reports of its external auditors for the years 1989 and 1990. (4) The losses. to our mind. Nor do we think the NLRC erred in holding that though the Society was justified in ordering a retrenchment. pursuant to Article 286 of the Labor Code. Paulino Balbalec. such as the respondent bank. 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. 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. since he would be paying the newcomer a relatively smaller wage. On the contrary. the Rural Bank of Bangued dismissed three of its employees. say that the finding of the NLRC is unsupported by substantial evidence. Legazpi City. Ÿ Although petitioner is a non-stock and non-profit organization. The operation of the restaurant was continued in its new location at Elizondo Street." employer to prove economic or business losses with appropriate supporting evidence. Procedure Ÿ Mayop Hotel & Restaurant vs. both the past and forthcoming. Adora (Charms) Facts: Due to the expiration and non-renewal of the lease contract for the rented space occupied by the said hotel and restaurant at Rizal Street. Ysan Castillo. while waiting for the construction of a new Mayon Hotel & Restaurant at Peñaranda Street. While the closure of the hotel operations in April of 1997 may have been temporary. for the law's phraseology explicitly uses the phrase "retrenchment to prevent losses. NLRC ruled: We noted with concern that the criteria used by the Society failed to consider the seniority factor in choosing those to be retrenched. 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. Legazpi City. and applied for exemption from minimum wage increases.
After six months. 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. 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. To determine whether the petitioners were validly retrenched or were illegally dismissed. it is recognized under Article 283 of the Labor Code. Lastly.e. Anna Tetangco 9 . Resorted to by employers to avoid or minimize business losses. Dianne Miano. then petitioners should have complied with the requirements of written notice. low market demand and expiration of permit to operate its sawmill department. it must. thirdly. The intended retrenchment was grounded on purported financial difficulties occasioned by alleged lack of raw materials. in other words. as such imminence can be perceived objectively and in good faith by the employer. Lopez Sugar vs. The “loss” referred to in this provision cannot be of just any kind or amount. These employees cannot forever be temporarily laid-off. and the expected imminent losses sought to be forestalled. the losses expected should be substantial and not merely de minimis in extent. Franco Temporary Retrenchment Ÿ Sebugero vs. 2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of serve. Edlyn Santiago. 1993 and of March 2. and 4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. Ÿ EMCO Plywood Corp vs. otherwise. 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. NLRC (Charms) Facts: The petitioners were among the thirty-eight (38) regular employees of private respondent GTI Sportswear Corporation (hereinafter GTI). 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. EMCO. Kristel Macatangay. must Ÿ Requirements. The Court has laid down the following standards that a company must meet to justify retrenchment and to guard against abuse: “Firstly. but certainly not the least important. who were given "temporary lay-off" notices by the latter on 22 January 1991 due to alleged lack of work and heavy losses caused by the cancellation of orders from abroad and by the garments embargo of 1990. be a certain degree of urgency for the retrenchment. the substantial loss apprehended must be reasonably imminent. 1993. Abelgas (Charms) Facts: On January 20. Retrenchment is one of the authorized causes for the dismissal of employees.. 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. A memorandum was thereafter issued by EMCO. Monina Lagman.Standards Irah Burog. supervisors and department heads. frequent machinery breakdown. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. Secondly. be reasonably necessary and likely to effectively prevent the expected losses.Labor II Ÿ To say the least. section heads. represented by Lim. alleged losses if already realized. Monette Mesa. Jake Ng. whichever is higher. 3) good faith in abolishing the redundant positions. but more importantly. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. addressed to all its foremen. the employees should either be recalled to work or permanently retrenched following the requirements of the law. Ysan Castillo. Heidi Soria. Charms Haw. to give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized cause of termination. Alpe Macalalad. Held: ILLEGAL DISMISSAL DUE TO FAILURE TO GIVE NOTICE. and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. Because of the consequential nature of retrenchment. i. it still has to accord its employees some relief in the form of severance pay. a corporation engaged in the manufacture and export of ready-to-wear garments. which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laidoff. 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 employer should have taken other measures prior or parallel to retrenchment to forestall losses. informed the Department of Labor and Employment (‘DOLE’) of its intention to retrench some of its workers. There should. To remedy this situation or fill the hiatus. And even assuming that the closure was due to a reason beyond the control of the employer. if it were true that the lay-off was temporary but then serious business losses prevented the reinstatement of respondents. cut other costs other than labor costs. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character. Jon Santos. the bonafide nature of the retrenchment would appear to be seriously in question.
Ÿ Philippine Carpet vs. or the expected imminent losses sought to be forestalled. however. if already incurred. if already incurred. and the expected imminent losses sought to be forestalled. Amarilla (Jake) Facts: Blucor notified Amarilla. (2) the losses are actual or reasonably imminent. Ysan Castillo. are not merely de minimis. efficiency.. Edlyn Santiago. whichever is higher. 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. age. such as status (i.e. or that a fair and reasonable criteria had been used in selecting the employees to be retrenched. The CA also found that the company had failed to show that retrenchment was reasonably necessary to avert substantial losses. more than 100 new workers were hired. Jon Santos. 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. and 12 managers and supervisors were promoted. Ÿ Not every loss incurred or expected to be incurred by an employer can justify retrenchment. (3) that the employer pays the retrenched employees separation pay equivalent to one month pay or at least one-half month pay for every year of service. Monette Mesa. Dianne Miano. regular or managerial employees). Heidi Soria. Held: Respondents failed to adduce clear and convincing evidence to prove the confluence of the essential requisites for a valid retrenchment of its employees. 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. Any claim of actual or potential business losses must satisfy the following established standards: (1) the losses incurred are substantial. Kristel Macatangay. in order to give employees some time to prepare for the eventual loss of their jobs. or if only expected. "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. whether they are temporary. Monina Lagman. Sto. must be proved by sufficient and convincing evidence. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the Nature of Loss Lopez Sugar vs. Federation of Free Workers(Heidi) Irah Burog. SMC has thus proven substantial business reverses justifying retrenchment of its employees. and financial hardship for certain workers. 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. Aldiano and Parcon to the effect that Blucor is terminating their employment due to retrenchment. not de minimis. as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination. which led to the closure of its San Fernando Shrimp Processing Plant in Pampanga and the Bacolod Shrimp Processing Plant. seniority. as Blucor had failed to prove with clear and satisfactory evidence that legitimate business reasons existed to justify retrenchment. For termination due to retrenchment to be valid. and (d) the alleged losses. including some of those who had been retrenched.Labor II be proved by sufficient and convincing evidence. Held: Decision of CA affirmed. serious. We believe that respondents acted in bad faith in terminating the employment of the members of petitioner Union. casual. Charms Haw. Anna Tetangco 10 . Ÿ The requirements are: (1) that the retrenchment is reasonably necessary and likely to prevent business losses which. the Middle East war and the 9/11 incident in the United States of America. The failure of the employer to prove by convincing evidence any of the foregoing requirements will result in an illegal dismissal. actual and real. and (4) sufficient and convincing evidence prove the alleged losses. After the retrenchment program was implemented. but substantial. (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. Tomas (Jake) Facts: A Memorandum was issued informing all employees that a comprehensive cost reduction program would be implemented by the Corporation. Petitioners failed to show any reasonable necessity for the retrenchment. physical fitness. are reasonably imminent as perceived objectively and in good faith by the employer. Ÿ San Miguel Corp vs. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. and (5) that the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees.” Ÿ Blucor Minerals Corp. Jake Ng. (3) the retrenchment can be fairly regarded as necessary and likely to be effective in preventing the expected losses. Alpe Macalalad. The CA ruled that the dismissal was unjustified. if already incurred. vs. 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. expected losses.
Dianne Miano. what they Ÿ Cama vs. the possibility of incurring losses is constantly present. and not because of serious business losses. As a consequence. Alpe Macalalad. Held: NLRC decision affirmed. To require an employer to be generous when it is no longer in a position to do so. Jake Ng. however. 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. and unfair to the employer. JFSI shut down more outlets. petitioner Galace. San Antonio. if such an intent were expressly written into the law. respondents had no option but to lay off employees and eventually close shop. faced with dropping sales. Anna Tetangco 11 . 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. In its ordinary connotation. Monina Lagman. JFSI sent notices of Irah Burog. "opted not to renew the existing contract nor bid on the new contract". petitioner did not renew his contract because of "sliding incomes". Employer advised 110 casuals to report to its personnel office. to provide transportation services to personnel and dependents inside said facility. In the nature of things. and exercising its privilege under the CBA entered into between petitioner and PLUANACUSIP. Monette Mesa. One month before the target closure date of its remaining outlets. caused the retrenchment and retirement of a number of its employees. Held: Apparently. To stem these serious losses. Held: Respondents assert that the company was taking losses of such magnitude which left its survival or future existence in the dark. 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. NLRC (Jake) Facts: Petitioner SMJS had a contract with the U. Phil. of the factors which impact upon the profitability or viability of such operations may be substantially outside the control of the employer. In 1997. Heidi Soria. Joni’s Food Services (Jake) Facts: In the 1990s. 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. owner and general manager of SMJS. Edlyn Santiago. not all business losses suffered by the employer would justify retrenchment under this article. as found by the Court of Appeals. would be unduly oppressive. JFSI had 8 outlets for its coffee shop and restaurant business. the company found no recourse but to shut down its outlets. Thus. In other words. Sto. the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have. They that after the termination of the services of its members. he having suffered a net loss the prior year. Bleak business conditions continued to plague the company and by the end of the first quarter of 1999. Tomas Ÿ Bogo Medellin Sugar Cane Planters vs. in our view. leaving it with just three operating outlets at the end of 1998. The Court has held that the "loss' referred to in Article 283 cannot be just any kind or amount of loss. Indeed. When the said contract expired. otherwise.S. that law may well be vulnerable to constitutional attack as taking property from one man to give to another. the remaining branches were also closed. Ÿ Not every asserted possibility of loss is sufficient legal warrant for reduction of personnel. Naval Base Facility located in San Miguel. a company could easily feign excuses to suit its whims and prejudices or to rid itself of unwanted employees. in greater or lesser degree.Labor II Fact: Employer. NLRC (Jake) Facts: While Respondent Commission agreed with petitioners that management had the prerogative to terminate employment on account of business reversals. it held. materialized. the services of the complainants were terminated. it shut down three of these shops to avert serious business losses. that petitioners failed to present adequate proof of such losses. the employer must prove serious business losses. Jon Santos. in other words. thus petitioner cannot justify the nonpayment of separation pay. in fact. the employer becomes legally privileged to retrench and reduce the number of his employees. Ysan Castillo. in the carrying on of business operations. Thus. Ÿ As petitioners themselves admitted. indeed many. Kristel Macatangay. due to financial difficulties. closure to the Department of Labor and Employment (DOLE) and to the complainants who were then employed in the remaining branches or outlets. or under what circumstances. Article 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to serious losses. allegedly to prevent losses due to major economic problems. Carpet vs. unjust. It is not. Zambales. Ÿ Ÿ To justify retrenchment. since some." Sliding Income Ÿ San Miguel Jeepney Service vs. Charms Haw. the difficult question is determination of when. Petitioners herein are not entitled to separation pay under Article 283 of the Labor Code.
that the serious and actual business reverses suffered by the petitioner justified its resort to retrenchment of 700 of its employees. In accordance with the CBA. Hence. the payment of backwages should be computed up to February of 1998. Held: The petitioner’s losses in 1997 and 1998 are not insignificant. to which losses were allegedly traceable due to incorrect handling of sales. The labor arbiter and the NLRC both found that petitioners validly exercised their management prerogatives. such ground for termination would be susceptible to abuse by scheming employers. vs. It is beyond cavil then. Ÿ Danzas International vs. sliding incomes are not necessarily losses. the employer closing his business is obligated to pay his employees their separation pay. Jon Santos. Ÿ Ÿ Mitsubishi Motors vs. Essentially. they may be assailed as self-serving. 1996. Anna Tetangco 12 . 1996. The termination of the 531 affected employees was made effective a month from receipt of the termination letter. 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. in other words. Charms Haw. Still. of course. 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. Otherwise. it is an essential requirement that alleged losses in business operations must be proven convincingly. he would have been included among those who had been retrenched had he not been dismissed. Ysan Castillo. Held: The termination of private respondents was unjustified either as retrenchment to prevent losses because petitioners’ evidence to prove business losses was insufficient. Financial statements must be prepared and signed by independent auditors. Since the losses incurred must be substantial and actual or reasonably imminent. Ÿ Business reverses or losses are recognized by law as an authorized cause for termination of employment. The petitioner posits that even if respondent Paras had become a regular employee by November 26. Daguman (Jake) Facts: Petitioners aver that they were compelled to close the company’s brokerage department. Dianne Miano. Federation of Free Workers A comparative statement of revenue and expenses for two years. 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. Edlyn Santiago. Monette Mesa. pursuant to the "last in first out policy" embedded in the CBA. Bogo Medelin vs. NLRC might be merely feigning business losses or reverses in their business ventures to ease out employees. Considering that respondent Paras had just been regularized on November 24. The employer must prove that the cessation of or withdrawal from business operations was bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees. the petitioner concludes. if the business losses that justify the closure of the establishment are duly proved. 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. or closure of the establishment because the brokerage department did not actually cease operations. Lopez Sugar vs. decreasing gross revenues. Jake Ng. is not conclusive proof of serious business losses.Labor II suffered were "sliding incomes". Caparoso (Kristel) Facts: Caparoso and Quindipan were employed as Irah Burog. 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. although the more overriding consideration is. What the law speaks of is serious business losses or financial reverses. he would have been included in the first phase of its retrenchment program. Clearly. Heidi Soria. the right of affected employees to separation pay is lost for obvious reasons. 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. who Ÿ Composite Enterprises Inc. Chrysler (Jake) Facts: The petitioner asserts that assuming respondent Paras was illegally dismissed. Proof of Loss Ÿ The proof of actual declining gross and net revenues must be submitted. much less serious business losses within the meaning of the law. his reinstatement had become moot and academic because of its retrenchment program which was effected beginning February 1998. Otherwise. The purpose of retrenchment is to save a financially ailing business establishment from eventually collapsing. by itself. Alpe Macalalad. 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. Kristel Macatangay. Financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. Monina Lagman. employees who were recently hired were the ones retrenched. in order to prevent further losses which threatened the company’s viability. Otherwise. good faith.
failing which these can be assailed as self-serving documents. for the memorandum states that respondent’s contract of Irah Burog. the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with. attributing these to the Asian currency crisis. his employment contract was not renewed. San Pedro (Kristel) Facts: Raycor hired Mario San Pedro as tinsmith operator for the duration of its contract with Uniwide. 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. In the same case of Sevillana vs. that the dismissal was not illegal. in general. Monette Mesa. Ÿ Worse. it failed to prove that such document was ever served upon respondent and the DOLE. Inc. Burden of Proof Ÿ Sy vs. In the case at bar. He filed for a month leave but SBT refused and it was during this that SBT terminated him. employment is to expire on November 3. and the expected imminent losses sought to be forestalled. Alpe Macalalad. the employer must prove compliance with the following requirements: (a) a written notice must be served on the employees. CA (Kristel) Facts: Sahot was hired as truck helper by the family owned SBT Trucking Corp. There is no evidence that it complied with the one-month notice requirement. He filed a week long leave and found that he had osteoarthritis. must be proved by sufficient and convincing evidence. the notice is less than one month. Ÿ As this Court stated in Triple Eight integrated Services. 1997. we ruled: Since the burden of proving the validity of the dismissal of the employee rests on the employer. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. the latter should likewise bear the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. or if dismissed. in particular. After the expiration of his contract he was rehired (this extended for 5 contracts). This Court will not sanction a dismissal premised on mere conjectures and Ÿ Raycor Aircontrol Systems vs. NLRC. if already incurred. Normally. (b) the substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer. Ÿ For retrenchment to be considered valid. Caparoso and Quindipan filed a case for illegal dismissal. In the absence of the required certification by a competent public health authority. (International) Corp. In other words. the employer clearly did not comply with the medical certificate requirement before Sahot’s dismissal was effected. They were terminated from their work allegedly as a result of the expiration of contract which was on a month to month basis. He found that his employers were not remitting his SSS contributions. this Court has ruled against the validity of the employee?s dismissal. Jon Santos. or it resorted to the dismissal of respondent and other employees to stave off cessation or suspension of its business. Petitioner claims that respondent was laid off due to adverse business conditions it suffered at that time. heart enlargement. Ysan Castillo. it is not enough for a company to merely declare that it has implemented a retrenchment program. The financial statements must be prepared and signed by independent auditors. Jake Ng.T. It must produce adequate proof that such is the actual situation to justify the retrenchment of employees. I. Dianne Miano. 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. 1997 Memorandum of termination of employment. While petitioner claims that it issued to respondent an October 30.. Anna Tetangco 13 . and (d) the alleged losses. When he was 59 years old. and to the rehabilitation of Uniwide. Moreover.Labor II deliverymen with Composite Enterprises. profit and loss statements and annual income tax returns. or only three days later from the date of the Memorandum. the condition of business losses is shown by audited financial documents like yearly balance sheets. he started to incur absences due to several ailments the most severe of all being the pain in his left thigh. and the Department of Labor and Employment (DOLE) at least one month before the intended cessation of business. Ÿ To justify termination of employment under Article 283 of the Labor Code. It is therefore incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not dismissed. Charms Haw. Kristel Macatangay. It is readily apparent that petitioner did not comply with any of the foregoing requirements. there is no evidence at all that petitioner dismissed respondent because it actually ceased or suspended business operations. Monina Lagman. the following substantial requirements must be met: (a) the losses expected should be substantial and not merely de minimis in extent. He filed an illegal dismissal case. After the 5th. Heidi Soria. otherwise. UTI. and (b) the cessation of business must be bona fide in character. 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. otherwise. Edlyn Santiago. the dismissal would be unjustified.
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. it was dissolved on January 27. 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. Monette Mesa. Dianne Miano. if such an intent were expressly written into the law. 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. shortened its Ÿ Irah Burog. Ÿ Article 283 entails. (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. Thus. Such requirement is mandatory. It is not. that law may well be vulnerable to constitutional attack as taking property from one man to Lopez Sugar Corp vs. the evidence must be substantial and not arbitrary and must be founded on clearly established facts sufficient to warrant his separation from work. On 30 July 1992 it gave private respondents an opportunity to explain why they should not be dismissed for the loss of company funds. including petitioner. But the burden imposed on petitioner National Bookstore does not stop here. (b) if the employer decides to terminate the services of the employee. or on November 30. because this time their lay-off is to become permanent. actual losses need not set in prior to retrenchment.Labor II suspicions. Anna Tetangco 14 . As mandated by Article 283. Edlyn Santiago."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. respondents failed to comply with the one-month notice requirement. Heidi Soria. which private respondents immediately complied with by submitting their joint answer on 31 July 1992. 1998. IPI Phils. 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. to enable the employees to look for other means of employment and therefore ease the impact of the loss of their jobs and incomes. 1998. Clearly. the employer must notify him in writing of the decision to dismiss him.15 This is the situation in the case at bar. The notice must be given at least 1 month in advance of the intended retrenchment. having no viable projects. Due to economic slowdown. Ysan Castillo. among others. and. In fact. Petitioner National Bookstore. When effected Ÿ In its ordinary connotation. it shifted its business from production to marketing and trading of Thai Petrochemical products. vs. 1998. 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. Evidently. Sebugero vs. but what the law requires is a written notice to the employees concerned. if he so desires. 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. GTI conveyed to the petitioners the impossibility of recalling them. CA (Kristel) Facts: Maria Ymasa and Edna Gabriel were the head custodian and cashier of National Bookstore. Following the provision of Article 283. Ymasa and Gabriel filed a case for illegal dismissal. Federation of Free Workers corporate term from 50 years to 2 years and 7 months. in other words. 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. Kristel Macatangay. Jon Santos. 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. Moreover. With respect to respondent TP Vinyl. Ÿ National Bookstore Inc. more than substantially observed this requirement. 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. the retrenchment is defective. respondents sent petitioner and the DOLE separate notices of retrenchment effective December 30. 1998. 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. respondent TP Cement. When the required notices to the employees and to the DOLE are not given. Alpe Macalalad. Cement Corp. A written notice given to the DOLE is required by law. as correctly pointed out by the Labor Arbiter in his decision. stating clearly the reasons therefor. Ÿ Anent the first requisite. Charms Haw. these notices should have been served one month before. Jake Ng. NLRC For an employer to validly terminate the service of Ÿ Cajucom VII vs. Monina Lagman. They were terminated for gross neglect of duty and loss of confidenc. Records show that on December 3.
to avoid or minimize business losses.Labor II his employees under Art. 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. Thelma Navarette-Clemente (Dr. To save itself. Dr. involving the same parties. Liability Ÿ Capitol Medical Center vs. The purpose of notice to the DOLE is to allow the department to assess whether the retrenchment is being done in good faith. vs. Meris was the industrial service unit chief of Capitol Medical Center. while it is true that the company hired or re-employed some of the dismissed workers. Monina Lagman. 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. In sum. Ÿ Ÿ Moreover. which prompted private respondents to retrench. petitioner was charged with unfair labor practice and illegal dismissal by private respondents. Ababon (Kristel) Facts: Industrial Plywood Group Corp. Under the first kind. the employer must sufficiently and convincingly prove its allegation of substantial losses. They alleged. and as long as he pays his employees their termination pay in the amount corresponding to their length of service.. there are three basic requisites for a valid retrenchment: 1) The retrenchment is necessary to prevent losses and such losses are proven. Jon Santos. Meris (Kristel) Facts: Dr. 283. Anna Tetangco 15 . i. Edlyn Santiago. of Manila vs. Dianne Miano. whichever is higher. The employees. filed a complaint against ITC and IPGC for illegal dismissal. no law can compel anybody to continue the same. 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. was untenable because the Court in said decision thoroughly passed upon the legality of respondent company's redundancy program. managerial and staff positions were separated from employment. (IPGC) leased a plywood plant to Industrial Timber Corp. 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. reportedly incurred huge operating losses. Re-Hiring Effect Atlantic Gulf and Pacific Co. a notice Irah Burog. Jake Ng. whichever is higher. 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. (ITC) ITC employed 387 workers. . and instead ruled that the AG&P duly established its claim of company losses which was the basis of the questioned retrenchment program. This is to allow the employees to look for other employment. The rehiring or re-employment does not negate the imminence of losses. NLRC (Monette) Facts: Petitioner corporation engaged in general construction work. Held: Private respondent's contention that what the Court in an earlier case. 2) Written notice to the employees and to DOLE at least one month prior to the intended date of retrenchment. unfair labor practice and damages. IPGC took over the plywood plant coincidentally on the same day the ITC ceased operation of the plant. Ababon.". More than a year after. The Court also rejected the complaining employees' claim that the program was a mere scheme to bust the local union. upheld was only the legality of the redundancy program and not the legality of its implementation.e. EMCO vs. Kristel Macatangay. 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. 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. under Article 283 of the Labor Code. Charms Haw. The requirement of notice must be given to both DOLE and the employees concerned 1 month before the intended date of retrenchment. Meris received from Capitol’s president and chairman of the board. Ysan Castillo. et al. members of the AG&P United Rank and File Association. Dr. Alpe Macalalad. the employer can lawfully close shop anytime as long as cessation of or withdrawal from business operations was bona fide in character and not impelled by a motive to defeat or circumvent the tenurial rights of employees. received all the benefits due them under the Labor Code. Heidi Soria. Monette Mesa. Abelgas Ÿ Industrial Timber Corp. (b) the cessation of business must be bona fide in character. 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. Just as no law forces anyone to go into business. Clemente). They also signed releases indicating their conformity with petitioner's redundancy program. among others. petitioner implemented a redundancy program wherein 177 employees occupying rank and file. and 3) Payment of separation pay equivalent to 1 month OR at least ½ month pay for every year of service. while under the second kind.
(a) service of a written notice to the employees and to the DOLE at least one month before the intended date thereof. whichever comes first. The announcement in advance was intended to give the workers ample time to look for alternative employment. 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. Dr. and to backwages. as in the instant case.Y. with a fraction of at least six (6) months being considered as one(1) year. 283 is that closure or cessation of business operations is allowed even if the business is not undergoing economic losses. Instead private respondents were required to give separation pay which they already did. proprietors of GBS and MAME explained the closure of MAME and GBS was because Lydia V. Sison. Ÿ D. such exercise will be upheld. Ruling: Explicit from Art. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona Ÿ Irah Burog. Jake Ng. Kristel Macatangay. 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. can lawfully close shop at anytime. whichever is higher. and full backwages from the time of his dismissal from April 30. Macadams Metal Engineering vs. however. 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. Ÿ 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. no law can compel anybody to continue the same. The determination to cease operations is a prerogative of management which the State does not usually interfere with. 1992 until the expiration of his term as Chief of ISU or his mandatory retirement. she announced her plan to close shop e. 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. or one month pay. Ysan Castillo. Dianne Miano. The employer need only comply with the following requirements for a valid cessation of business operations. 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. 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. CA (Heidi) Facts: M. Just as no law forces anyone to go into business. The records reveal that private respondents complied with the aforecited requirements. Alpe Macalalad. 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. Edlyn Santiago. Monina Lagman. there was no illegal dismissal to speak of. This fact negated the obligation to pay backwages. Sison decided to retire from business when she became sickly. San was previously engaged in the business of manufacturing biscuits and other related products. and such act would be tantamount to a taking of property without due process of law.” Ÿ The termination of the services of Dr. 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. since private respondents cessation and closure of business was lawful.Y. and that M. Macadams Meat Engineering(Heidi) Facts: Spouses Geronimo and Lydia V. Clearly then. fide in character. Heidi Soria. And the burden of proving such falls upon the employer. Her health did not improve despite proper medical attention. no law can compel anybody to continue in it. 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. San shall provide Monde a list of all its present employees who shall be given preference in employment by the latter. she declined to accept new projects and proceeded with the winding up of her business. the only limitation being that the closure must not be for the purpose of circumventing the provisions on terminations of employment embodied in the Labor Code. The owner. In the general meeting of the workers. Jon Santos.283 Right Ÿ Espina vs. Meris is thus entitled to payment of separation pay at the rate of one (1) month salary for every year of his employment.Labor II advising him of the management’s decision to close or abolish the ISU and the consequent termination of his services as Chief. as no business or undertaking must be required to continue operating simply because it has to maintain its workers in employment. Meris not having been premised on a just or authorized cause.Y. Closing of Business. Charms Haw. Monette Mesa. Anna Tetangco 16 . Finally. (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. for any bona fide reason. Accordingly. M. Reinstatement. Monde.
89 in 1998. Dianne Miano. Heidi Soria. such exercise will be upheld. Ruling: This requisites of a valid retrenchment are: (a) the losses expected should be substantial and not merely de minimis in extent. Meris Work is a necessity that has economic significance deserving legal protection.000. Jake Ng. Considering the losses suffered by private respondent.389. 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. Monette Mesa. 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. to wit: P65. (b) the substantial losses apprehended must be reasonably imminent. and (d) the alleged losses. it is logical for it to implement a retrenchment program to prevent further losses. and reasonable Ÿ Irah Burog. employers are also accorded rights and privileges to assure their selfdetermination and independence." Where.204. In North Davao Mining Corporation v. and of the various demand notices of payments from creditor banks.Labor II Ÿ Cattista vs. 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 . nor did they establish that the closure was motivated by Galaxie’s anti-union stance. 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. Although they may be broad and unlimited in scope. the petitioners had not presented evidence to the contrary. Kristel Macatangay. 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. indeed. Ÿ Employers are also accorded rights and privileges to assure their self-determination and independence and reasonable return of capital. Respecting petitioners’ claim for separation pay is Article 283 of the Labor Code. Charms Haw. The ultimate test of the validity of closure or cessation of establishment or undertaking is that it must be bona fide in character. 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. 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 burden of proving such falls upon the employer. In a letter. VMC's personnel reduction program was meant to reduce excessive labor costs in the company. And it posted the notice of closure on the corporate bulletin board. Having determined that private respondent suffered losses and had to resort to retrenchment of its employees in Hacienda Binanlutan to prevent further losses. Jon Santos. Clearly then. Besides. if already incurred. whichever was higher. must be proved by sufficient and convincing evidence. Petitioners received their termination pay or retirement pay under the pension plan. Galaxie decided to close down its business operations. Ysan Castillo. . 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. Ÿ Galaxie Steel Workers Union vs.480.97 in 1999. as long as he pays his employees their termination pay in the amount corresponding to their length of service. On the other hand. management subsequently held a conference with all 13 field workers to explain to them the reason for this move. as well as the computation of their termination pay. P48.000. In view of such decision. this Court holds that private respondent was within its rights in closing Hacienda Binanlutan and in terminating the service of petitioners. NLRC. (c) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses. NLRC (Heidi) Facts: Victoria’s Milling Corp. and the expected imminent losses sought to be forestalled. Monina Lagman. 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.753. Capitol Medical Center vs. It would. The social justice and protection to labor provisions in the Constitution dictate so. the Labor Code does not impose any obligation upon the employer to pay separation benefits. Edlyn Santiago.65 in 1997. 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. . Anna Tetangco 17 . One of the rights accorded an employer is the right to close an establishment or undertaking. This mass of privileges comprises the so-called management prerogatives.785. Galaxie thus filed a written notice with the DOLE informing the latter of its intended closure and the consequent termination of its employees. In any case.429. 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. the closure then is due to serious business losses. and P13. 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. Alpe Macalalad.00. On account of serious business losses which occurred in 1997 up to mid-1999 totaling around P127.
Monette Mesa. 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. 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. Ordinarily. hence. accompanied with an act of relinquishment. Consequently. Jake Ng. NLRC that several employees namely. This mass of privileges comprises the so-called management prerogatives. the union advised Cheniver that its members are not willing to go along with the transfer to the new site. Cheniver gave its employees up to the end of June 1992 to inform management of their willingness to go with Cheniver. Monina Lagman. Suffice it to state that there is no termination of employment during the period of suspension. JAT General Services vs.Labor II return of capital. the subsequent transfer of petitioner to another place hardly accessible to its workers resulted in the latter's untimely separation from the service not to their own liking. Cheniver wrote its employees to report to the new location within 7 days. Alpe Macalalad. it would hire replacements. That is its prerogative. decided not to work at the new site but just opted to be paid financial assistance offered by petitioner. Earlier. The complete closure of business operation by petitioners. It must be stressed that the phrase "closure or cessation of operation of an establishment or undertaking not due to serious business losses or reverses" under Article 283 of the Labor Code includes both the complete cessation of all business operations and the cessation of only part of a company's business. Edlyn Santiago. However. they would be considered to have lost interest in their work and would be replaced. Industrial Timber Corp vs. Cheniver informed its workers about the transfer of the company from its site in Makati to Batangas. In view of the impending transfer. 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. 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. not one reported for work at petitioner's new site. amounts to cessation of petitioner's business operations in Makati. Although they may be broad and unlimited in scope. Jon Santos. the labor federation informed petitioner that the employees decided to continue working for petitioner. Anna Tetangco 18 . 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. 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. Dianne Miano. Later on. Ÿ The phrase "closure or cessation of operations of establishment or undertaking" includes a partial or total closure or cessation. 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. Resignation is inconsistent with the filing of the said complaint. One of the rights accorded an employer is the right to close an establishment or undertaking. Resignation must be voluntary and made with the intention of relinquishing the office. it would have been illogical for private respondents herein to resign and then file a complaint for illegal dismissal. Cheniver gave its workers additional time within which to report to the new work place. Kristel Macatangay. in our view is not tainted with bad faith or other circumstance that arouses undue suspicion of malicious intent. 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. As public respondent observed. NLRC (Heidi) Facts: Cheniver operates a printing business. Heidi Soria. otherwise. Cheniver must pay his employees their termination pay in the amount corresponding to their length of service. Since the closure of petitioner's business is not on account of serious business losses. Five days later. 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. Nonetheless. whichever is higher. there appears no complete dissolution of Cheniver's business undertaking but the relocation of petitioner's plant to Batangas. 286. otherwise. Cheniver has to accord its employees some relief in the form of severance pay. not construable as resignation. Ÿ Broadly speaking. Cheniver's contention that private respondents resigned from their jobs. Now. But even though the transfer was due to a reason beyond its control. Indeed. The right to close the operation of an establishment or undertaking is one of the authorized causes in terminating employment of workers. in our view. Ysan Castillo. does not appear convincing. Charms Haw. 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. thus the procedural requirement for terminating an employee does not come into play yet. the State has the right to determine whether an employer's privilege is exercised in a manner that complies with the legal requirements and does not offend the protected rights of labor. It appears Irah Burog.
NLRC Ÿ Temporary Cessation of Operation. Jon Santos. the determination to cease operations is a management prerogative that the State does not usually interfere in. organized Me-Shurn Workers Union-FSM. 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.T vs. what is more important. by undertaking such suspension of operation. with union. Similar notices were individually delivered to union members. Heidi Soria. The last patient was consequently discharged. the law requires the employer to prove that it suffered substantial actual losses. vs. The cessation of a company’s operations shortly after the organization of a labor union. it must also protect the right of an employer to exercise what is clearly a management prerogative. It is not enough to merely raise this issue nor to discuss it only in passing. Espina vs. considering that it involves laying off employees for a period of six months. that its cessation of operation was really necessitated by its financial condition. 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. Despite the NCMB's call for a conciliation conference. Charms Haw. gives credence to the employees’ claim that the closure was meant to discourage union membership and to interfere in union activities. Ÿ Ÿ Concededly. The parties formally commenced negotiations for the renewal of their CBA but the parties failed to reach an agreement. Alpe Macalalad. Monina Lagman. corporation. Indeed.286 Basis San Pedro Hospital of Digos vs. Ÿ The burden of proving that such a temporary suspension is bona fide falls upon the employer. as well as the resumption of business barely a month after. Me-Shurn Workers Union (Heidi) Facts: The regular rank and file employees of MeShurn Corp. The operations of the hospital having come to a grinding halt. A "Notice of Temporary Suspension of Operation" was issued by the hospital and submitted to the local office of the NCMB. or its losses abated. the evidence belies any claim that the lay-off of respondents was merely temporary. In this instance. and that said condition would probably be alleviated or improved. no business can be required to continue operating at a loss. The same principle applies in temporary suspension of operations. nurses and nurse aides who were members of the union abandoned their respective department and joined the picket line a week later. the State is bound to intervene. These acts constitute unfair labor practices. Kristel Macatangay. and in the exercise of such management prerogative. non-profit medical and educational training Ÿ While the closure of the hotel operations may have been temporary. Anna Tetangco 19 . considering that the dismissal of an employee from work involves not only the loss of his position but. Inc. That would be a taking of property without due process of law. corporation started placing on forced leave all the rank and file employees who were members of the union’s bargaining unit. 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. The union saturated petitioner's premises with streamers and picketed the hospital. Edlyn Santiago. On the contrary.Labor II absence of serious business losses or financial reverses. Dianne Miano. is a charitable. 10 days later. simply to maintain the workers in employment. Even as the law is solicitous of the welfare of the employees. there is substantial evidence that petitioners intended the Irah Burog. But where it is manifest that the closure is motivated not by a desire to avoid further losses. his means of livelihood. nonstock. Petitioner also alleged that the resident/consultant physicians abandoned the hospital because there were no more patients. 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. Secretary of Labor (Heidi) Facts: Pedro Hospital of Digos. Held: To justify the closure of a business and the termination of the services of the concerned employees. Monette Mesa. J. The union had a pending application for registration BLR. Ysan Castillo. Doctors began leaving the hospital and the number of patients dwindled. Jake Ng. as in this case. as long as he pays his employees their termination pay in the amount corresponding to their length of service. Thereafter the corporation declared that it will be temporarily lay off employees and cease operations. Itr had a 3-year CBA covering from 1987 until 1990. Undue interference with an employer’s judgment in the conduct of his business is uncalled for. CA Requisite Mc-Shurn Corp. but to discourage the workers from organizing themselves into a union for more effective negotiations with management. the employer may merge or consolidate its business with another. 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. petitioner had to establish the fact of its precarious financial health.A. the hospital management considered the union actions as tantamount to a strike.
Digos E. Dianne Miano. Ysan Castillo. it led to the termination of the services of the SMC employees at the Mandaue Brewery. Assuming arguendo.38 caliber revolver service firearm and duty detail order had already expired. Sy vs. He was later on suspended following his argument with Alcantara. with more reason will an invalid and illegal suspension of operations. signed by the employees concerned as reasonable settlements. 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. Kristel Macatangay. not affect the employment relationship. Installation of Labor Savings Device Ÿ Abapo vs. His filing of a complaint for constructive dismissal. His prolonged suspension. Mayon Hotel vs. Inc. CA (Dianne) Facts: SMC conducted a modernization program wherein it brought into the Mandaue plant high-speed machines to be used in the manufacture of its beer. Mc-Shurn Workers Union Ÿ Pido vs. Charms Haw. CA G. Anent the delay of seven days in the filing with the Court of Appeals of the petition. Ÿ Verily. Heidi Soria. Jon Santos. DISEASE. through Mr. a floating status requires the dire exigency of the employer's bona fide suspension of operation of a business or undertaking. NLRC (Dianne) Facts: Federito B. Due to the grim economic consequences to the employee. Apropos this responsibility. He had an altercation with Richard Alcantara of the Ayala Security Force arising from Alcantara’s statement that Pido’s security license for his . owing to respondent’s neglect to conclude the investigation. that said cessation of employment was merely temporary. 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. Pido was constructively dismissed. When a security guard is placed on a "floating status. which eventually led to his illegal constructive dismissal. the replaced security guard may be placed on temporary "off-detail" if there are no available posts under respondent’s existing contracts. Anna Tetangco 20 . Inc. Ÿ In a similar case involving the same issue – the validity of the termination of SMC employees at the Mandaue Brewery – the Supreme Court. Drilon (Dianne) Facts: Hotel Mabuhay. indeed. Monina Lagman. Eventually. it became dismissal by operation of law when petitioners failed to reinstate respondents after the lapse of 6 months. For as explicitly provided therein. valid and legal suspension of operation does not terminate but merely suspends the employee-employer relationship. Special case of business transfers Nature of Labor Contract Ÿ Sundowner Devt Corp vs. The quitclaims and releases. 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. As a consequence. the petitioners admitted that there was indeed such delay." he does not receive any salary or financial benefit provided by law. Edlyn Santiago. The Court of Appeals did not commit any grave abuse of discretion in dismissing the petition for non-compliance with Rule 46. the dismissal is deemed unjustified. clearly indicates that he did not abandon his work.284 Ÿ The requirement for a medical certificate cannot be dispensed with. Held: The installation of labor-saving devices by SMC at the Mandaue plant was a proper ground for terminating employment. had ripened to constructive dismissal. Justice Vicente V. Monette Mesa. 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. Alpe Macalalad. in instances when contracts for security services stipulate that the client may request the agency for the replacement of the guards assigned to it even for want of cause. the corporation should have presented clear and convincing evidence of imminent economic or business reversals as a form of affirmative defense in the proceedings. Mc-Shurn Corp. San Pedro Hospital vs. leased the premises belonging to Santiago Syjuco. Held: The Supreme Court finds that. 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. pursuant to Art. are binding upon the parties. vs.Labor II termination to be permanent. Section 3. Effect on Employer-Employee Relationship Ÿ If a legitimate. 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. several functions of its employees were declared redundant. Otherwise. However. failure to comply with any of the requirements shall be sufficient ground for the dismissal of the petition. 286. a case for ejectment was filed by Syjuco against Mabuhay in the Metropolitan Trial Court of Manila. In security services. Inc. Mabuhay F. Floating Status Irah Burog. Mendoza. as in this case. Also. due to non-payment of rentals. Jake Ng. Pido was an employee of Cherubim Security and General Services.
Edlyn Santiago. Thereafter. thus binding only between the parties. Monette Mesa. and its responsibility if at all. like Constitutional due process. (Dianne) Facts: Edgar Villena and Jerry Colcol were employees of Solid Development Corporation. Held: The absorption of the employees of Mabuhay may not be imposed on Sundowner. Even if no hearing was conducted. Villena was charged with disrespect to a superior officer and/or impolite/discourteous manner. Ÿ H. However. loss of confidence and gross habitual neglect of duty. In addition.e. Sec. As a general rule. Sundowner wrote a letter-complaint to Syjuco. Agabon vs. i. barricaded the entrance to the leased premises and denied Sundowner's officers. NLRC Essence of Due Process Solid Development Corp. is only to consider them for reemployment in the operation of the business in the same premises. They claimed that they were dismissed without just cause and without due process. 2(d) 1. Requirements Irah Burog. Ÿ The rule is that unless expressly assumed. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. as it is expressly provided in the agreement that petitioner has no commitment or duty to absorb them. Procedural due process. labor contracts such as employment contracts and collective bargaining agreements are not enforceable against a transferee of an enterprise. Anna Tetangco 21 . employees and guests free access to and egress from said premises. Sundowner has no liability whatsoever to the employees of Mabuhay. the manner of dismissal. Thus. neither of them complied. i. Book VI. Colcol was eventually dismissed for insubordination and poor work performance. 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. has two aspects: substantive. In General Ÿ Due process under the Labor Code.e. and procedural. It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to offer same to other lessees. Heidi Soria. Colcol was also served an infraction report where he was charged with insubordination and poor work performance. followed by a complaint for damages with preliminary injunction and/or temporary restraining order filed with the Regional Trial Court of Manila. Rule 1.Labor II offered to sell its assets and personal properties in the premises to Sundowner to which it agreed. civil or administrative proceedings. Solid Development Corp.. Dianne Miano. Constitutional due process protects the individual from the government and assures him of his rights in criminal. Workers Assn. and the same can only be restricted by law through the exercise of police power. Kristel Macatangay. the valid and authorized causes of employment termination under the Labor Code. Ysan Castillo. 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. 2(d). Yet. Meanwhile. the report also mentioned that Villena frequently violated company rules. He was also required to submit a written explanation within 12 hours from receipt of the report. 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. A deed of assignment of said assets and personal properties was executed by Mabuhay in favor of Sundowner.Nature and Requirements 277 (b). they should have requested for an extension of time. Held: The Supreme Court found that the dismissal of Villena and Colcol from the service was in accordance with the law. Alpe Macalalad. Subsequently. They were also required to submit their written explanation within 12 hours from receipt of the reports. Villena and Colcol filed separate complaints for illegal dismissal with prayer for reinstatement and monetary claims. 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. vs. the requirement of due process had been met since they were accorded a chance to explain their side of the controversy. Jon Santos.. it was Syjuco who found Sundowner and persuaded it to lease said premises. A labor contract merely creates an action in personam and does not create any real right which should be respected by third parties. Jake Ng. In separate infraction reports. labor contracts being in personam. There can be no implied acceptance of the employees of Mabuhay by petitioner and acceptance of statutory wrong. Mabuhay had nothing to do with the negotiation and consummation of the lease contract between Sundowner and Syjuco. He was also required to submit a written explanation within 12 hours from receipt of the report. Restaurant and Allied Services (NUWHRAIN) picketed the leased premises. Hence. Rule 1. petitioners were given due process before they were dismissed. Charms Haw. Sec. Monina Lagman. Had they found the 12-hour period too short. National Union of Workers in Hotel. they were both apprised of the particular acts or omissions constituting the charges against them. incurred absences without official leave and slept while on duty. Book VI. notices of termination were also sent to them informing them of the basis of their dismissal. he was dismissed for serious misconduct. In fine. Further. the parties are liable to the employees if the transaction between the parties is colored or clothed with bad faith.
" There is no reason to set aside these factual findings of the Court of Appeals as they are supported by evidence on record. and not notified that the case was submitted for resolution. In separate memoranda dated February 4. A formal or trial-type hearing is not at all times and in all instances essential. Edlyn Santiago. 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. informing them of the basis of their termination. not given an opportunity to present his evidence. 1999.” Held: There exists a valid reason to dismiss both employees. or as applied to administrative proceedings. What is frowned upon is the absolute lack of notice and hearing. Heidi Soria. Carag was not issued summons. an opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or ruling complained of. which were then returned due to insufficiency of funds. Charms Haw. not ordered to submit a position paper. as reflected in the summary of tardiness and absences report. Alpe Macalalad. He was re-assigned from one position to another which was due to his tardiness and absences. is complied with as long as there was an opportunity to be heard. They were represented by counsel during the investigation. They participated in the investigation conducted at petitioner’s board room on February 13. he received a suspension order without pay. and not necessarily that an actual hearing was conducted. They gave their own "answer/explanation" to the charges.m. and eventually. NLRC (Dianne) Facts: National Federation of Labor Unions (NAFLU) and Mariveles Apparel Corporation Labor Union (MACLU). Ÿ Valiao vs. 1999 at 11:30 a. Coop vs. and to have reported late almost every day for the period November to December 1991. and (2) the second informs the employee of the employer's decision to dismiss him. Jake Ng. In this case. Time and again. As such. 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. In fine. Monina Lagman. not accorded a hearing. a notice of termination was sent to him informing him of his termination from the service for serious misconduct and gross and habitual neglect of duty. it is stressed that due process is simply an opportunity to Ÿ Carag vs. Jon Santos. 1991. For an employee’s dismissal to be valid. Ysan Castillo. Thus. Central Pangasinan Elec. we hold that Arbiter Ortiguerra's Decision is void as against Carag for utter absence of due process. Ÿ Ÿ There is no doubt that Central observed procedural due process in dismissing Macaraeg and De Vera. well-settled is the dictum that the twin requirements of notice and hearing constitute the essential elements of due process in the dismissal of employees. and breach of trust and confidence reposed on them by management. 1999 and signed by the General Manager. It was error for the NLRC and the Court of Appeals to uphold Arbiter Ortiguerra's decision as against Carag. Ÿ The essence of due process is simply an opportunity to be heard. they were both apprised of the particular acts or omissions constituting the charges against them. Macaraeg was then the cashier who also took part in the illicit transactions. filed a complaint against MAC for illegal dismissal brought about by its illegal closure of business. 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. De Vera admitted that she encashed several checks issued by her sister from the money collected from Central’s customers. the results of which eventually led to their termination for “serious misconduct. Article 282(c) of the Labor Code allows an employer to dismiss employees for willful breach of trust or loss of confidence. notices were sent to them on March 19. Monette Mesa. Dianne Miano. 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. they were given due process before they were dismissed. not accorded a conciliatory conference. The requirement of a hearing. Proof beyond reasonable doubt of their misconduct is not required. 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. Irah Burog. Kristel Macatangay. Anna Tetangco 22 . 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. A hearing was also set. CA (Dianne) Facts: Rene Valiao was an employee of West Negros College. on behalf of all of MAC's rank and file employees. (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process. which showed him to have been absent or late for work from a minimum of seven (7) to a maximum of seventy-five (75) minutes for the period March to October 31. Finally.Labor II be heard. on the other hand. Macaraeg (Dianne) Facts: Geronima Macaraeg and Maribeth de Vera were employees of Central Pangasinan Electric Cooperative. Ÿ On the matter of due process. Held: Valiao’s dismissal from employment is valid and justified.
Ÿ The essence of due process is that a party be afforded a reasonable opportunity to be heard and to submit any evidence he may have in support of his defense. Where, as in this case, sufficient opportunity to be heard either through oral arguments or position paper and other pleadings is not accorded a party to a case, there is undoubtedly a denial of due process. Ÿ King of Kings Transport Inc. vs. Mamac (Monina) Facts: Mamac was employed as a bus conductor. He was terminated form work because of irregularities (fraud) he caused like declaring sold tickets as returned tickets causing the bus company to lose income. Mamac received a letter then terminating him from his work. The lower courts affirmed the dismissal but ordered the bus company to pay full backwages for violation of the twin notice requirement and 13th month pay. Held: Notice requirements were not followed by the bus company. The respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal appraisal of the charges against an employee does not comply with the first notice requirement. In addition, no hearing was also conducted. Therefore as held in the case of Agabon vs. NLRC, noncompliace with the due process requirements entitles the employee to receive nominal damages. To clarify, the following should be considered in terminating the services of employees: (1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. Ÿ (2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.
Right to Counsel Ÿ Salaw vs. NLRC (Monina) Facts: Espero Santos Salawa was employed as a credit investigator-appraiser. His duties included inspecting, investigating, appraising, and identifying the company’s foreclosed assets giving valuation to its real properties mortgaged to the respondents. The Criminal Investigation Service of the Philippine Constabulary extracted from the petitioner without the assistance of counsel a Sworn Statement which made it appear that petitioner in cahoots with a co-employee, sold 20 sewing machines and electric generators which had been foreclosed by the respondent bank and divided the proceeds thereof in equal shares. When petitioner signified his readiness to appear before the PDIC, private respondent sent him a letter stating that he is requested to come without counsel or representative. The petitioner was terminated for alleged serious misconduct or willful disobedience and fraud or willful breach of the trust reposed on him. Held: Salaw was denied the assistance of counsel hence violated due process of law. It is true that administrative and quasi-judicial bodies are not bound by the technical rules of procedure in the adjudication of cases. However, the right to counsel, a very basic requirement of substantive due process, has to be observed. Indeed, the right to counsel and to due process of law are two of the fundamental rights guaranteed by the constitution to any person under investigation, be the proceeding administrative, civil or criminal. Significantly, the dismissal of the petitioner from his employment was characterized by undue haste and the admission by petitioner which was extracted without counsel cannot be used as evidence against petitioner. Notice Ÿ It is clear that there was an utter absence of opportunity to be heard at the arbitration level, as the procedure adopted by the Labor Arbiter virtually prevented private respondents from explaining matters fully and presenting their side of the controversy. They had no chance whatsoever to at least acquaint the Labor Arbiter with whatever defenses they might have to the charge that they illegally dismissed Carag. In fact, private respondents presented their position paper and documentary evidence only for the first time on appeal to the NLRC. Carag vs. NLRC
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 23
(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment. Collegio de San Juan de Letran Calamba vs. Villas (Monina) Facts: Belen Villas was employed as high school teacher. She applied for a study leave. It was granted but there were conditions imposed by the school where she was working that she needs to submit certification that she really studied. However, the first semester where she was on leave, her masteral studies did not push through and instead took up a course on the Old Testament. During the second semester, she already started his masteral studies. The President of the school where she was working alleged that her failure to enroll during the first semester was a violation of the conditions of the study leave. Hence, she was dismissed. Held: We affirm the findings of the Court of Appeals that there was no violation of the conditions of the study leave grant. Thus, respondent could not be charged with serious misconduct warranting her dismissal as a teacher in petitioner School. Petitioner has failed to convince us that the three alleged violations of the study leave grant constituted serious misconduct which justified the termination of respondent’s employment. Ÿ Ÿ Petitioner also failed to comply with the procedural requirements for a valid dismissal. As earlier noted, the law requires the employer to give the worker to be dismissed two written notices before terminating his employment. Considering that these notices are mandatory, the absence of one renders any management decision to terminate null and void. Petitioner failed to give respondent the first notice which should have informed the latter of the former’s intention to dismiss her. The next letter from the petitioner, dated June 3, 1996, already informed respondent that she was considered resigned effective schoolyear 1996-1997. These letters did not comply with the requirements of the law that the first written notice must apprise the employee that his termination is being considered due to a certain act or omission. These letters merely required petitioner to submit proof of her studies and respondent could not have reasonably inferred from them that her dismissal was being considered by the petitioner. The fact that there was a hearing conducted by the grievance committee pursuant to the collective bargaining agreement did not work in petitioner’s favor because this was done after petitioner had informed respondent that she was already considered resigned from her teaching job. Besides, the rights of an employee to be informed of his proposed dismissal are personal to him and, therefore, the notice to the union was not notice to the employee. Ÿ Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. Agabon vs. NLRC
Ÿ Sta. Catalina College vs. NLRC (Monina) Facts: Hilaria was hired as an elementary teacher at the petitioner school in 1955 until 1970. In 1970, she applied for and was granted a 1 year leave of absence without pay on account of the illness of her mother. In the meantime, she was employed as a teacher at another school. In 1982, she applied anew at petitioner school. During the commencement exercise of petitioner school she was awarded a plaque of appreciation for 30 years of service. When she reached the compulsory retirement age of 65, petitioner school pegged her retirement benefits only from her service on 1982-1997. Hilaria then filed a complaint for non-payment of retirement benefits. Held: Hilaria abandoned her work. Hilaria cannot be credited for her services in 1955-1970 in the determination of her retirement benefits. For, after her one year leave of absence expired in 1971 without her requesting for extension thereof as in fact she had not been heard from until she resurfaced in 1982 when she reapplied with petitioner school, she abandoned her teaching position as in fact she was employed elsewhere in the interim and effectively relinquished the retirement benefits accumulated during the said period. Abandonment of work being a just cause for terminating the services of Hilaria, petitioner school was under no obligation to serve a written notice to her. Two Notice Rule Ÿ Caingat vs. NLRC (Monina) Facts: Petitioner became the General Manager of Sta. Lucia Realty Development sister companies both organized to service the malls and subdivisions owned by Sta. Lucia. He was allowed to use 10% of the total payroll of Sta.Lucia’s sister company to defray operating expenses. However, the Finance Manager discovered that petitioner deposited company funds in the latter’s personal account and used the funds to pay his credit
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 24
card purchases, trip abroads, etc. Without conducting an investigation, the sister company filed a complaint in court while petitioner filed with the Labor Arbiter a complaint for illegal dismissal. Held: Nonetheless, while dismissal may truly be justified by loss of confidence, we agree with the Labor Arbiter and NLRC that management failed to observe fully the procedural requirement of due process for the termination of petitioner’s employment. Ÿ In this case, the respondents only sent the first notice, gleaned from the June 20, 1996 memorandum. There was no second notice. Neither the public notice in the Philippine Daily Inquirer, a newspaper of general circulation, nor the demand letter could constitute substantial compliance. What the public notice did was to inform the public that petitioner was already separated as of June 20, 1996, the same day he was suspended. never gave respondent Galay an opportunity to explain herself, hence denying her due process. In sum, we find that Galay was illegally dismissed, because petitioners failed to show adequately that a valid cause for terminating respondent exists, and because petitioners failed to comply with the twin requirement of notice and hearing. Ÿ Genuino Ice Co. vs. Magpantay (Monina) Facts: Alfonso Magpantay (respondent) was employed as a machine operator with Genuino Ice Company, Inc. (petitioner) from March 1988 to December 1995. Respondent filed against petitioner a complaint for illegal dismissal. In his Position Paper, respondent alleged that he was dismissed from service effective immediately by virtue of a memorandum, after which he was not allowed anymore to enter the company premises. Respondent bewailed that his termination from employment was done without due process. Petitioner countered that he was not illegally dismissed, since the dismissal was based on a valid ground, i.e., he led an illegal strike at petitioners sister company, Genuino Agro Industrial Development Corporation, which lasted from November 18 to 22, 1995, resulting in big operation losses on the latter?s part. Held: Due to his refusal to report to the Cavite plant, petitioner reiterated its order transferring respondent in its Memorandum, where respondent was also warned that his failure to report to the Cavite plant will be considered as an absence without leave (AWOL) and insubordination. Respondent was required to comply with the order within 24 hours from receipt, otherwise, disciplinary action will be imposed on respondent. Respondent replied with a request that he remain in the Otis plant since a transfer to the Cavite plant will entail additional expenditure and travel time on his part. Petitioner again wrote respondent inviting him to appear before the Plant Level Investigation on December 11, 1995 for the latter to be able to clarify his reasons for refusing the transfer. Finally, petitioner issued its Memorandum informing respondent of its decision to terminate his services. Ÿ Prior to the Memorandum, petitioner sent respondent several memoranda apprising him of the possible implications of his refusal to comply with the order of transfer. Thus, in its Memorandum dated November 24, 1995, petitioner notified respondent that his continued non-compliance with the order of transfer might bring about disciplinary action. Respondent replied to this memorandum, stating the reasons for his refusal. Petitioner sent another Memorandum asking respondent to appear for further clarification of his reasons for refusing the transfer. Despite the meeting, and since respondent, apparently, stubbornly refused to heed petitioner’s order, it was then that the Memorandum dated
Ÿ Heavylift Manila vs. CA (Monina) Facts: Heavylift thru a letter signed by its Finance Manager informed respondent of her low performance rating and the negative feedback from her team members regarding her work attitude. The letter also notified her that she was being relieved of her other functions except the development of the new access program. Subsequently, respondent was terminated for alleged loss of confidence. Held: An employee who cannot get along with his coemployees is detrimental to the company for he can upset and strain the working environment. Without the necessary teamwork and synergy, the organization cannot function well. Thus, management has the prerogative to take the necessary action to correct the situation and protect its organization. When personal differences between employees and management affect the work environment, the peace of the company is affected. Thus, an employee's attitude problem is a valid ground for his termination. It is a situation analogous to loss of trust and confidence that must be duly proved by the employer. Similarly, compliance with the twin requirement of notice and hearing must also be proven by the employer. However, we are not convinced that in the present case, petitioners have shown sufficiently clear and convincing evidence to justify Galay's termination. Ÿ In our view, neither does the February 23, 1999 letter constitute the required notice. The letter did not inform her of the specific acts complained of and their corresponding penalty. The law requires the employer to give the worker to be dismissed two written notices before terminating his employment, namely, (1) a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which informs the employee of the employer's decision to dismiss him. Additionally, the letter
Irah Burog, Ysan Castillo, Charms Haw, Monina Lagman, Alpe Macalalad, Kristel Macatangay, Monette Mesa, Dianne Miano, Jake Ng, Edlyn Santiago, Jon Santos, Heidi Soria, Anna Tetangco 25
Irah Burog. an employee must be given the twin requirements of due process-proper notice and hearing. Jon Santos. 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. They should have again sent a notice of dismissal to private respondent stating the particular acts or omission constituting the grounds for dismissal. a notice of the decision to dismiss. pursuant to Section 6 above. Dianne Miano. Position Paper Ÿ Shoppes Manila Inc. and private respondent should again be allowed to answer and be heard. Alpe Macalalad. Andanar a supplier in Surigao complained that mas Magos was supplying PEPSI products in the region despite the agreement. 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. respondent’s right to due process was not violated. Kristel Macatangay. which made a dishonest mark in his timecard by marking present on a day he is absent. Private respondent availed of this chance by submitting a written explanation. Hearing Ÿ Magos vs. should also be sent to private respondent. an opportunity to explain one's side. Even though petitioner in this case never admitted the accusations of dishonesty against him. Jake Ng. but it chose not to participate therein without any known justifiable cause. He was later dismissed by petitioner due to dishonesty. pursuant to Section 2. Due process is not violated where a person is given the opportunity to be heard. The essence of due process is that a party be afforded a reasonable opportunity to be heard and to submit any evidence he may have in support of his defense. for an authorized cause under Article 283. National Semi-Conductor Distribution vs. Monette Mesa.Labor II December 13. if after the said thirty-day period private respondent still did not give his explanation about the incident. or for health reasons under Article 284. By requiring him to submit a written explanation within 48 hours from receipt of the notice. and adding therein. (3) the dismissal is without just or authorized cause and there was no due process. “J” Marketing Corp(Jon) Facts: Lavador is a daily paid employee of J Marketing. (2) the dismissal is without just or authorized cause but due process was observed. Charms Haw. Ÿ Ÿ The essence of due process is simply an opportunity to be heard. he impliedly acknowledged his insubordination as shown in his petition. NLRC (Jon) Facts: Buan and Torno are employees of Shoppes Manila. and thereafter. Ÿ Procedurally. 1995 was issued to respondent informing him of the management’s decision to terminate his services. Ÿ La Carlota Planters Assn Inc. Clearly. perhaps. Ÿ What is most important is that before termination. another notice about the decision of dismissal. but chooses not to give his side of the Ÿ Lavador vs. pursuant to Section 5 above. Caurdenetan Piece Workers Union vs. the company gave him the opportunity to be heard in his defense. this does not give petitioners an outright license to terminate private respondent. 11 In the instant case. Ÿ The law requires the employer to afford his employee ample opportunity to be heard. above. the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought. 1993 letter. Magos was later terminated. NLRC(Jon) Facts: Compacion was hired as driver for La Carlota. but an accident happened later in his career which caused his dismissal. and (4) the dismissal is for just or authorized cause but due process was not observed. Ÿ Ÿ Private respondent had been duly informed of the pendency of the illegal dismissal case. When they formed a union they were barred and were replaced with non-union members. she was later promoted. Edlyn Santiago. vs. vs. and due process was observed. or as applied to administrative proceedings. NLRC (Jon) Facts: Philip Santos is an employee of petitioner. an inquiry why he did not give the explanation required in the January 4. Monina Lagman. a hearing or an opportunity to be heard and after hearing or opportunity to be heard. Thus. Laguesma (Jon) Facts: CPWU is union with 92 members all of which are “cargadors” and paid on piece rate basis. (1) if the dismissal is based on a just cause under Article 282. NLRC (Jon) Facts: Magos is a manager of PEPSI assigned in Surigao. Heidi Soria. Ysan Castillo. Anna Tetangco 26 . but when she was ate her new position she was charged with misappropriation was subsequently dismissed. Magos countered it was necessary as sales were down. petitioner furnished private respondent notice as to the particular acts which constituted the ground for his dismissal.
Cross Examination Ÿ CF Sharp Crew Management Inc. Suico et al. he was on watch standing duty and was doing nautical publications as required by standard maritime practice. 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. This option is part of their right to due process. Ÿ In order to effect a valid dismissal. the procedural deficiency in the dismissal of Suico. Effect of Failure. Suico et al. et al. PLDT complied with the two-notice requirement of due process. Reinier Pacific International Shipping Inc (Ysan) Facts: Sadagnot alleged that while on board MV Baotrans. Alpe Macalalad. Ÿ Trial-type hearings are not required in labor cases and these may be decided on verified position papers. On 2 March 1996. There is nothing in the records showing that respondents complied with the two-notice requirement. Sadagnot alleged that when the order was issued. He refused the order on the ground that it was not related to his duties as Third Officer. a PLDT managerial employee. Monette Mesa. These two notices would have sufficed had it not been for the existence of Systems Practice No. did not affect the validity or effectivity of the dismissal as the Ÿ CF Sharp Crew Management vs. required them to explain their side and expressly warned them of the possibility of their dismissal should their explanation be found wanting. FAILURE OF DUE PROCESS Sadagnot vs. that. Ÿ Jurisprudence is replete with rulings that administrative bodies are not bound by the technical niceties of law and procedure and the rules obtaining in the courts of law. It is not necessary for the affiants to appear and testify and be cross-examined by the counsel for the adverse party. Jon Santos. Anna Tetangco 27 .and (b) the employee be afforded an opportunity to be heard and to defend himself. sustained injuries when strikers blocked her way to the premises of PLDT. Due to the complaint of the seaman’s family he was given preventive suspension and was later dismissed. Held: Respondents failed to observe the necessary procedural safeguards. 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. Zialcita (Jon) Facts: Zialcita was assigned as clerk of CF sharp. 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. if he so desires. the Master made several negative reports against him. and (b) the subsequent notice which informs the employee of the employer's decision to dismiss him. 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. Rizal on the otherhand filed a case for illegal recruitment against LCL and CF Sharp. Monina Lagman. Heidi Soria. et al. Espanola (Jon) Facts: C. Suico. The first notices sent to Suico. a deck work. In termination cases. Sharp’s argument might have in the context of ordinary civil actions. Under Systems Practice No. 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. whatever merit C. the vessel's Master ordered him to perform Ÿ Irah Burog. disappears when adduced in connection with labor cases.F.Substantive. 94-016. Held: Apparently. respondents repatriated him to the Philippines. et al. stating clearly the reason therefore. Ÿ It should be emphasized. were implicated in said incident. Edlyn Santiago. In the course of his employment he misappropriated an amount sent by a seaman for his family. He alleged that because of his refusal to obey the order. Notices from PLDT management were sent asking for an explanation of the said incident. with supporting documents and their affidavits. Ysan Castillo. The notices stipulated that failure to give an explanation would constitute waiver to be heard on the matter. (b) if the employer decides to terminate the services of the employee. the employer must notify him in writing of the decision to dismiss him. consistent with our ruling in Agabon. Jake Ng. hatch stripping. however.Labor II They were charged of stealing items of “KAMISETA” and subsequently suspended and dismissed. set out in detail the nature and circumstances of the violations imputed to them.Procedural Ÿ Suico vs. where the rules of evidence apply with greater rigidity. failed to explain and were terminated. the law requires that (a) there be just and valid cause as provided under Article 282 of the Labor Code. of the decision to terminate their employment and cited the evidence upon which the decision was based.F sharp became the manning agency of LCL in the Philippines replacing Rizal Shipping. vs. Charms Haw. Dianne Miano. The last notices informed Suico. Hence. PLDT is bound to comply with the Systems Practice. 94-016. Kristel Macatangay. exercised their option under Systems Practice No. et al. if he so desires. NLRC (Ysan) Facts: Fernando.
Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages. Florido reluctantly complied with the order. as well as the receipts for the Fundador Brandy giveaways. de Guzman and Cerezo in the present case deliberately disregarded or disobeyed a company policy. 2. Ysan Castillo. He was then instructed to take a leave of absence for a month. and in the meantime. included among the vehicles that had to be re-allocated in accordance with the priority schedule of Ÿ Irah Burog. upon the other hand. Agabon vs. Roxas received another letter from the personnel department informing him of his preventive suspension for certain offenses. Nagkakaisang Empleyado ng Wellcome (Ysan) Facts: GLAXO-WELLCOME adopted a new Car Allocation Policy. Such sanctions. the failure to give the required notice does not invalidate the same. the burden of proof rests upon the employer to show that the dismissal is for a valid and just cause. notice to the employee should merely embody the particular acts or omissions constituting the grounds for which the dismissal is sought. and. they were nonetheless given adequate opportunity to answer the charge. Florida (Ysan) Facts: While Florido was in the middle of a Team Leaders/Branch Managers' meeting. Anna Tetangco 28 . Inc. An employee may be dismissed only if the grounds mentioned in the pre-dismissal notice were the ones cited for the termination of employment. Monina Lagman. Ÿ The present rule is set forth in the Agabon v. Ÿ Alladin Transit Corp. The employee should be appraised of the particular acts and omissions for which the dismissal is sought... Glaxo took into consideration the explanations they had offered. which in fact they did. there was no necessity for an actual hearing. was illegal. Consistent with San Miguel Corporation v. Glaxxo-Wellcome Phils. Ÿ In termination cases.Labor II substantive bases thereof were never put in issue. Ÿ Verily. CA (Ysan) Facts: Roxas alleged that his sister had a quarrel with their personnel manager. In arriving at the decision to dismiss them. he received a letter from their personnel manager asking him to shed light about the SSS contribution that he allegedly did not remit. Under the circumstances. Monette Mesa. he was barred from entering the company’s premises. inclusive of allowances. it was not proven by private respondent that it gave petitioner notice informing him of the cause of his impending dismissal. a prioritization schedule in the assignment of company vehicles is to be fixed based on the sales performance of the employees. vs. He wrote a letter to the President of the company but he did not receive any reply. NLRC the new car plan were those of union officers Cerezo and de Guzman. vs. Jon Santos. therefore. Their written explanations admitted their refusal to obey petitioner’s directive to return the vehicles. and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. Heidi Soria. He alleged that he tried to answer the allegation and wrote a letter to the President of the company. nor did it show that petitioner was given notice of his dismissal. namely. Dianne Miano. Platon. Edlyn Santiago. Held: The Court agrees that the penalty of dismissal imposed upon respondent is disproportionate to the alleged infraction committed by the latter. Where the dismissals are illegal. NLRC. Under the provisions of the said car plan. Other Procedural Matters Burden and Degree of Proof Burden Ÿ LBC Domestic Franchise Co. he shall turn over all his accountabilities to an officer of the company. As a result thereof. that where the dismissal is based on a just cause. the better rule is to hold that the dismissal was for just cause but to impose sanctions on the employer. Charms Haw. It did not narrate that it heard petitioner’s side. Held: Without a doubt. Ÿ In cases involving dismissals for cause but without observance of the twin requirements of notice and hearing. It is sufficient to show by substantial evidence that the employee is guilty of misconduct which makes the latter unworthy of the trust and confidence demanded by his position. Pursuant to the same. but merely holds the employer liable for damages for violating said notice of requirement. but petitioner did not allow him. Held: In the case at bar. several company cars had to be re-assessed and reassigned in favor of other employees more qualified under the priority list. While he was on leave. Their justification of their refusal to obey the lawful orders of their employer did not militate against their obvious disobedience. Roxas merely said he tried to report to the office. Kristel Macatangay. Both refused to surrender their vehicles and were thus sent notices of termination. he was served with a memorandum from LBC's Board Chairman. however. et al. Ubaldo. Jake Ng. vs. He was being directed to go on vacation leave and consume all his remaining leave credits. Failure to do so would necessarily mean that the dismissal was not justified. 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. Alpe Macalalad. but did not receive a reply. must be stiffer than that imposed in Wenphil. Incidentally.
vs. Azcor. PMSC has every right to dismiss Salvador. Ÿ Azcor Manufacturing vs. The complaint was thus filed well within the prescriptive period. Edlyn Santiago. Frustrated at the snail's pace of his case. Heidi Soria. Alpe Macalalad. pre-drafted with blank spaces for dates of effectivity. Morales filed with Makati RTC a complaint for sum of money against Pablo Antonio. In the case at bar. still limping heavily. for breach of trust and loss of confidence as a measure of self-preservation against acts patently inimical to its interests. Phil. Ÿ Salvador vs. tried to convince the respondent to accept an amount of P50. respondent has proved by substantial evidence the charge of pilferage against petitioner. Dianne Miano. Capulso's supposed resignation letters to Azcor and Filipinas Paso were identically worded. the respondent's filing of complaint for illegal dismissal on 1 September 1999 was well within the four-year prescriptive period. et al. NLRC (Irah) Facts: Four months after his dismissal. 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. Jon Santos. which was granted by the RTC in Aug. Moreover. went to Victory's office to report for work. Monina Lagman. the bus he was driving was bumped by a Dagupan-bound bus. this time with QC RTC. During that same occasion. As a consequence thereof. Prescription Period Ÿ Victory Liner Inc. a language Capulso was not conversant. Race suffered a fractured left leg and was rushed to the hospital. if to be considered at all. Proof beyond reasonable doubt of their misconduct is not required. should be taken against him. One month after his release from the said hospital. (Ysan) Facts: PMSC’s evidence disclose that Sawa. Anna Tetangco 29 . scooping fine ore from the stockpile and loading it on his private cargo truck. He was. 2002. Ÿ The four-year prescriptive period shall commence to run only upon the accrual of a cause of action of the worker. His confinement therein lasted a month. Victory shouldered the doctor's professional fee and the operation. 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. was on his way back to his office in the plant. instead of betrayed. Jake Ng. Mining Service Corp. It is settled that in illegal dismissal cases. et al. 1146 of the Civil Code. a managerial employee. 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. Race was confined again for further treatment of his fractured left leg at another hospital. it must be unconditional and with the intent to operate as such. Race. Thus. Charms Haw. PMSC’s Assistant Resident Manager for Administration. While the case filed in the Makati RTC was later dismissed without prejudice. 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. He and his driver.00 as a Ÿ Atonio M. Morales (Irah) Facts: On Dec. Morales filed anew a complaint for the collection of sum of money. 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. Consequently. 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. Central Pangasinan vs. Moreover. however. the petitioner. and were written in English. Monette Mesa. Here. but was not allowed to resume work afterwards. 282 (c) allows an employer to dismiss employees for willful breach of trust or loss of confidence. 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. as his act of pilferage reflects a regrettable lack of loyalty which he should have strengthened. Indeed. informed by the petitioner that he was considered resigned from his job. Morales filed a motion to dismiss his complaint without prejudice. Thereafter. Thus. Capulso had to go on sick leave due to bronchial asthma which he contracted as a ceramics worker. said that Capulso resigned. the fact that Salvador has been employed with the respondent for a long time. Candido Capulso filed a complaint for constructive illegal dismissal and illegal detention of P50 per day against Azcor. 2001. the cause of action accrues from the time the employment of the worker was unjustly terminated. in fact.Labor II Degree Ÿ Art. Ysan Castillo. Macaraeg consolation for his dismissal but the latter rejected it.000. Kristel Macatangay. 1995. the dismissal sought was not for the purpose of voluntarily abandoning Morales's Irah Burog. Gresones. Race (Ysan) Facts: While traversing Tarlac. Held: Antonio's invocation of prescription is misplaced. On Sept. Held: To constitute resignation. Held: In the case at bar. it was only at this time that the respondent's cause of action accrued. saw Salvador operating the company’s payloader. Antonio filed a motion to dismiss on the ground of prescription considering that actions based on oral contracts prescribe in six years. It is sufficient that there is substantial basis for the loss of trust. in cases of this nature.
thinking that the secretary had only spoken in jest. the acts complained of. and to the payment of his full backwages. Jake Ng. Private respondents incurred liability under the Labor Code from the moment Ranara was illegally dismissed. Ÿ The fact that his employer later made an offer to reemploy him did not cure the vice of his earlier arbitrary dismissal. and (c) must show that the employee has become unfit to continue working for the employer. did not in any way pertain to Abella's duties as chemist/quality controller. Monette Mesa. Kristel Macatangay. Oro. While generally an order of reinstatement carries with it an award of backwages. At any rate. (a) it must be serious. Ÿ Under Article 279 of the Labor Code. Notably. offered to re-employ Ranara. the court may not only mitigate. the employer believed that Abella’s dismissal was based on a valid ground. Her remarks were neither insulting nor offensive. Her acts did not constitute serious misconduct as to justify her dismissal. who had been working as a driver with Oro Union Construction Supply. Subsequently. When he protested his replacement. a chemist/quality controller at Marival Trading. it must be stressed that not every case of illegal dismissal will automatically entail its grant. filed a complaint for illegal dismissal against Marival. SANCTIONS AND REMEDIES 14. Ranara was simply told that he should not report back for work the following day. NLRC (Irah) Facts: Vianney Abella. Understandably. contending that it was Ranara who actually abandoned work when he stopped reporting. Ÿ Prescription of an action refers to the time within which an action must be brought after the right of action has accrued. Without cause and without any investigation. Charms Haw. a result of Chang's repentance. His case remained pending before the CA for six long years. In this case. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges. the offer of reinstatement could not correct the earlier illegal dismissal of the petitioner. denied the charges. Abella was dismissed allegedly due to disrespectful insubordination and unprofessional conduct. Alpe Macalalad. Chang. NLRC (Irah) Facts: Carlos Ranara. Anna Tetangco 30 . Heidi Soria. et al. and to his other benefits or their monetary equivalent. Abella did not make false and malicious statements against her superior.07 GENERAL RULE Nature and Remedies. and the liability did not abate as Irah Burog. Jon Santos. the employer. (b) must relate to the performance of the employee's duties. Held: Petitioner was illegally dismissed without even the politeness of a proper notice. Moreover. This militates against the propriety of granting Abella backwages. or intent to abandon a lawful claim or cause of action. he felt frustrated at the snail's pace at which his case was moving. 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. in a belated gesture of good will. computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Offer to reinstate Ÿ Ranara vs. Dianne Miano. 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. no action whatsoever was taken. As regards backwages. inaction. even moral and exemplary damages. When he did so just the same. Monina Lagman. Edlyn Santiago. The prescriptive statutes serve to protect those who are diligent and vigilant. 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.Labor II claim. Rather. vs. Held: For misconduct or improper behavior to be a just cause or dismissal. but also absolve the employer from liability of backwages where good faith is evident. lack of interest. he found that somebody else had been employed in his place. there must be a categorical showing that due to plaintiff's negligence. under the circumstances they were done. it was only after the complaint had been filed that it occurred to Chang.Twin Remedies Ÿ Marival Trading Inc. not those who sleep on their rights. The wrong had been committed and the harm done. These remedies give life to the worker’s constitutional right to security of tenure. Morales's intention was to expedite the enforcement of his rights. filed a complaint for illegal dismissal and sought reinstatement with full back wages. We doubt if his offer would have been made if Ranara had not complained against him. inclusive of allowances. In this case. formal or otherwise. Chang's sincerity is suspect. to invite Ranara back to work in his store. G. thus allowing the statute of limitations to bar any subsequent suit. But it does not simply mean a mere lapse of time. alleging that she was dismissed without just cause and due process. On the contrary. sincere or not. Ysan Castillo. he was even scolded for being "hard-headed" and not accepting his dismissal. as to sanction Abella’s unprofessional and disrespectful conduct. The rationale behind the prescription of actions is to prevent fraudulent and stale claims from springing up at great distances of time.
Belga's failure to formally inform Tropical of her pregnancy cannot be considered as grave conduct directly connected to her work. Great Southern. they were transferred back home since their services were no longer needed. Julio offered him 5k should he agree to sign the resignation letter. Moldez alleged that he was at first suspended from work without pay for 7 days. Charms Haw. Alpe Macalalad. vs. and other privileges and to his full backwages. a driver of NEECO. Monette Mesa. were illegally dismissed. Kristel Macatangay. Before the expiration of their contracts. et al. which can hardly be considered a forbidden act or a dereliction of duty. without being informed of its reason. Ÿ Where the dismissal is without just or authorized cause and there was no due process. Dianne Miano. Lourdes Belga. NEECO alleged that Cairlan also worked for the Provincial Government of Nueva Ecija. NLRC (Irah) Facts: For failure of NEECO's BOD to act on his termination. Rather. Cabatulan passed by the premises of J. alleged that they were deployed as croupiers (card dealers) for Ferry Casinos under a six-month contract. Cabatulan was given a pre-drafted voluntary resignation letter which he refused to sign. Held: Belga was illegally dismissed. and (2) insubordination for refusing to comply with directives to report for work and to explain her absence. et al. Employees who were illegally dismissed prior Ÿ Lakpue Drug Inc. Cabatulan was informed that respondent Julio’s brother. Trucking but was refused admission by Alaan who was armed with an armalite rifle. They employed Cabatulan as operations manager and purchasing officer.C. Ÿ Ÿ Cabatulan vs. inclusive of allowances. Buat (Anna) Facts: The respondent spouses Julio and Cecilia Cosmiano were engaged in the trucking business. Belga (Irah) Facts: Ma. Held: Moldez was illegally dismissed. Before proceeding to the meeting place. Tropical claimed that it terminated the services of Belga due to: (1) concealment of her pregnancy which is tantamount to dishonesty. 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. It is only when reinstatement is no longer feasible that payment of separation pay is awarded to an illegally dismissed employee. inclusive of allowances. Held: Yes. Julio’s security aide. Clearly. which explains his repeated failure to report to work. 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. Pheschem claimed that Moldez was dismissed due to grave and habitual neglect of duties (i. NEECO's general manager claimed that Cairlan was dismissed due to abandonment of work. an assistant cashier of Tropical Biological Phils. Acuña. He was assured to be rehired. 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 dismissal against NEECO. Cabatulan agreed and immediately went home. Held: Cairlan was illegally dismissed. Jake Ng. Heidi Soria.e. 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 The legal consequences of an illegal dismissal are reinstatement of the employee without loss of seniority rights and other privileges. Acuna (Irah) Facts: Respondents Acuña. The spouses and their children went on a world tour and entrusted the business operations to Cabatulan. An altercation ensued between Cabatulan and Alaan. delivered a child. Anna Tetangco 31 . Ÿ Nueva Ecija Electric Corp. et al. an operator of Pheschem's payloader and bulldozer at its quarrying site in Leyte. Cabatulan was advised not to report for work in the meantime and await the arrival of the respondent spouses. Issue: W/N Cabatulan is entitled to backwages and separation pay. and payment of his full backwages. Belga's absence for 16 days was justified considering that she had just Irah Burog. et al. Ysan Castillo. Cabatulan was summoned to the Cosmiano residence and was told that his services were no longer needed in the business.Labor II Ÿ Pheschem Industrial Corp vs. vs. et al. they were forced to resign or were summarily dismissed without just cause. filed with the POEA a complaint for illegal dismissal against Great Southern Maritime. His suspension was subsequently extended. and other benefits or their monetary equivalent. Jon Santos. et al. NLRC (Irah) Facts: Pablito Moldez. et al. voluntarily resigned from employment. With regard to the charge of disobeying a memorandum. Cabatulan refused to sign the same.. Ÿ An employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights. which is a subsidiary of Lakpue. denied the charges and averred that Acuña. because of a disagreement in the purchase of some spare parts. the law intended reinstatement to be the general rule. inclusive of allowances. Monina Lagman. wanted to see him. They did not voluntarily quit their jobs. Held: Respondents Acuña. Eduardo Cairlan. but eight months had already passed with no word from Pheschem. filed a complaint for illegal suspension and dismissal against Pheschem. failure to inspect a bulldozer prior to its use) which resulted in damage to Pheschem's property and delay in its production. Edlyn Santiago. Great Southern Maritime Services Corp vs. filed a complaint for illegal dismissal against Lakpue.
Kristel Macatangay. if viable. In this case. Ysan Castillo. The respondents failed to comply with the order of reinstatement. would be an award of separation pay equivalent to at least one month pay for every year of service in addition to his full backwages. or separation pay if reinstatement is no longer viable and backwages. moral and exemplary damages as well as night shift differential. Ÿ Under the existing law. Monette Mesa. 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. Jake Ng. were formerly employed by Triad Security as security guards. 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. NLRC (Anna) Facts: In May 1982. as contained in the decision of the labor arbiter. 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. They posit the argument that with respondents' receipt of their separation pay. Respondents filed a complaint for underpayment/nonpayment of salaries." 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. Ortega (Anna) Facts: Respondents Ortega. separation pay is granted where reinstatement is no longer feasible because of strained relations between the employee and the employer. Alpe Macalalad. had already been fully satisfied. 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. Thus. RATIONALE FOR THE REMEDIES Ÿ Globe-Mackay Cable v. Issue: W/N petitioner is still liable for backwages Held: Yes. Upon learning of the complaint. according to petitioners.Labor II to the effectivity of Rep. 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. 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. even pending appeal. namely: backwages and reinstatement. and attorney's fees. These are separate and distinct from each other. 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. Petitioners insist that their monetary obligation. Jon Santos. 6715 on March 21. overtime pay. the payment of separation pay. underpayment or nonpayment of allowance. shall be immediately executory. Heidi Soria. In effect. service incentive leave pay. in proper cases. 1989 were granted backwages up to three (3) years without deduction or qualification. petitioners maintain that there is no more basis to hold them liable for the accrued backwages stated in the 30 September 2002 computation. therefore. Edlyn Santiago. "the decision of the Labor Arbiter reinstating a dismissed or separated employee. respondents' services were terminated without the benefit of notice and hearing. Under Article 223 of the Labor Code. therefore. Charms Haw. illegal deductions. while those illegally dismissed after. an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights. illegal dismissal. ordered the payment of both. holiday pay. insofar as the reinstatement aspect is concerned. Anna Tetangco 32 . an illegally dismissed employee is entitled to either reinstatement. and claims for 13th month pay. It also appeared that she had full knowledge of the loss and whereabouts of the Fedders airconditioner but failed Irah Burog. Backwages and separation pay are. However. private respondent Salazar was employed by Globe-Mackay as general systems analyst. respondents had already found new employments and to award them further backwages would be tantamount to unjust enrichment. Ÿ Triad Security vs. separation pay. et al. In fact. they had opted not to seek reinstatement to their former jobs and elected instead to sever their employment with petitioner Triad Security. A more equitable settlement. Act No. An illegally dismissed employee is entitled to two reliefs. premium pay for holiday and rest day. Evidence showed that she signed as a witness to the articles of partnership between Yambao and Saldivar. hence. Though there are specific circumstances where reinstatement is not a practicable remedy. Monina Lagman. Also employed by petitioner as manager for technical operations' support was Delfin Saldivar with whom private respondent was allegedly very close. allowances and other benefits. It bears emphasizing that the law mandates the prompt reinstatement of the dismissed or separated employee. It appeared in the course of investigation that Imelda Salazar violated company regulations by involving herself in transactions conflicting with the company's interests. complainants' backwages accrued. Dianne Miano. distinct reliefs granted to one who was illegally dismissed from employment. The award of one does not preclude that of the other as this court had. 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.
It is the return to the position from which he was removed and assuming again the functions of the office already held. or that Reinstatement is the restoration to a state or condition from which one had been removed or separated. Edlyn Santiago." Held: By itself. lathemen. she had every right. Ysan Castillo. Heidi Soria. Section 4. Mercury Drug Corp (Anna)." Here. Both remedies. Secretary of Labor (Anna) Facts: SC rendered a decision ordering for Luna’s reinstatement and backwages. corporate name. (Pheschem Industrial vs. a restructuring and reorganization of the management team of the Republic Planters Bank was effected. tinsmith and carpenters. her eventual separation from employment was not for cause. looking to the past." there is an unfilled position more or less of a similar nature as the one previously occupied by the employee. etc. Such disciplinary measure is resorted to for the protection of the company's property pending investigation of any alleged malfeasance or misfeasance committed by the employee.08 REINSTATEMENT Employee Right Ÿ Quijano v. position. vacation and sick leave benefits. controlling stockholders." Ÿ Defined Ÿ Union of Supervisors v. Anna Tetangco 33 . Salazar was placed under preventive suspension for 1 month. Jon Santos. 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. in the case at bar. reinstatement was erroneously ordered for the petitioner's shop was already closed. at the time of his reinstatement. The Labor Arbiter held that he was illegally dismissed and ordered for his reinstatement. . board membership. Issue: W/N the new management is bound to reinstate the employees. cause for the dismissal of private respondent. to give her back the income lost during the period of unemployment. His services were terminated allegedly for disrespecting his superiors several times. Irah Burog. Monette Mesa. Charms Haw. 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. etc. Alpe Macalalad.Labor II to inform her employer. Although the position formerly held by the herein complainant is now held by another. to offset the impending financial collapse. from which one had been removed" and in the latter. drill press operators. Book VI of the implementing Rules and Regulations of the Labor Code states. Respondent Republic Bank sought reconsideration due to the fact that it was the old management who committed the unfair labor practice. NLRC held that Mercury Drug should pay him separation pay in lieu of reinstatement because of strained relations. There being no evidence to show an authorized. reinstatement is a restoration to a state from which one has been removed or separated. Dianne Miano. preventive suspension does not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. Mercury Drug appealed with the NLRC which held that there was illegal dismissal. unless such position no longer exists. to wit: "An employee who is separated from work without just cause should be reinstated to his former position. to restore the dismissed employee to her status before she lost her job. condition. 13th month pay and damages. However. Monina Lagman. Moldez) 14. Instead of submitting an explanation. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. for the dictionary meaning of the word "reinstate" is "to restore to a state. Reinstatement pre-supposes that the previous position from which one had been removed still exists. to full backwages. not only to be entitled to reinstatement. but as well. Ÿ The intendment of the law in prescribing the twin remedies of reinstatement and payment of backwages is. Jake Ng. Rule 1. As a necessary consequence of change of corporate personality (i. would perforce make her "whole.e. In providing foremost for the reinstatement of an illegally dismissed employee." And. The Court held that "there being no more positions in the machine shop to which the dismissed employee. the position previously held by the complainant Luna was not abolished. private respondent filed a complaint against petitioner for illegal suspension. In the case.) of the old Republic Bank into the present Republic Planters Bank. after petitioner notified her in writing that she was considered dismissed "in view of (her) inability to refute and disprove these findings. in the former. but also gives substance and meaning to the protection accorded by the Constitution to labor. the Labor Code not only recognizes the security of tenure granted by law to regular employees. much less a legal. However. Held: In its generally accepted sense. the bank suffered from the danger of financial collapse. The law mandates the reinstatement of an illegally dismissed employee to his former position. could be returned. which she subsequently amended to include illegal dismissal. mostly welders. the machineries were dismantled and transferred to a bodega and some of the machineries were sold. there was no closure of shop notwithstanding that the respondent Republic Bank was almost at the brink of financial ruin. but is now held by the incumbent manager who replaced Luna. Kristel Macatangay. Also. . reinstatement is not possible . Facts:Petitioner Quijano was a warehouseman of respondent Mercury Drug.
Monina Lagman. merely reinstated in the payroll.Labor II Issue: W/N petitioner should be reinstated. the date he actually reported back to work. Over the years. petitioner refused to pay respondent's salary. However. respondents are to admit back to work complainant under the same terms and conditions prevailing prior to his dismissal or at its option. Alpe Macalalad. on March 26. 2003 Decision reversing the Decision of the Labor Arbiter. 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. especially to a lowly or menial laborer. However. Kristel Macatangay. to act with justice. not to render his act (dismissal or resignation. Anna Tetangco 34 . Some are simply part of a procedure to be followed before a right granted to a party can be exercised. According to respondent. Ÿ Supreme Steel Corp. the NLRC rendered its July 10. 282 (a) of the Labor Code. At any rate. Monette Mesa. Held: YES. it would be more prudent to order payment of separation pay instead of reinstatement. There is. v. Such is the notice requirement in Arts. embodied in the Civil Code. petitioner was deprived of the opportunity to respond thereto. . in addition. Consequently. the time of dismissal until the court ruling that he was dismissed for a valid cause. as where reinstatement would only exacerbate the tension and strained relations between the parties. his family to consider. Consequently. Issue: W/N respondent should be reinstated. petitioner opted to reinstate respondent in the payroll effective August 23. Not all notice requirements are requirements of due process. and observe honesty and good faith toward one's fellowmen. Dianne Miano. And it is oppression to compel the employer to continue in employment one who is guilty or to force the employer to remain in operation when it is not economically in his interest to do so. he was instructed to deliver bags of cement to Felix Hardware but delivered the same to one Eduardo Interior. Some unscrupulous employers. injuring him and a co-employee who was pacifying petitioner. Heidi Soria. however. we give primacy to the employee's right to reinstatement rather than the employer's claim that due to "strained relationship. 2003 (while petitioners' appeal in the NLRC was pending). 2001. As the reinstatement aspect is immediately executory even pending appeal by the employer. the omission does not render petitioner's dismissal invalid but merely ineffectual. In the case at bar. He charged petitioner for illegal dismissal. give everyone his due." But it is equally true that "the law. authorizes neither oppression nor self-destruction of the employer. 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. but failed to furnish him written notice apprising him of the charges against him. whatever missteps may be committed by labor ought not to be visited with a consequence so severe. respondent filed a Manifestation and Motion praying that petitioner be immediately ordered to pay his salary from June 2002 up to the present. Reinstatement is the remedy that most effectively restores the right of an employee to his employment before he was unjustly deprived of his job. or where the relationship between the employer and employee has been unduly strained by reason of their irreconcilable differences. Jon Santos. . petitioner refused to drive for his employer's son. expedient or practical. The same can be remedied by payment of employee's full backwages from Irah Burog. While the case was on appeal. however. Petitioner's actuations clearly constituted willful disobedience and serious misconduct justifying his dismissal under Art. Respondent furnished petitioner a written notice of his dismissal. The CA reversed the NLRC decision. as the case may be) void. 282-283. Jake Ng. Issue: W/N there was illegal dismissal. in protecting the rights of the laborer. Bardaje(Anna) Facts: Bardaje was petitioner’s warehouseman. Charms Haw. [W]here a penalty less punitive would suffice. Edlyn Santiago. And when respondent engaged the services of another driver. starting June 2002. It is not only because of the law's concern for the workingman. Others are simply an application of the Justinian precept." his illegally dismissed employee should just be given separation pay. the case law developed that where reinstatement is not feasible. Without ruling on the motion. respondent fell short of the two-notice requirement in dismissing an employee. The Constitution bids the State to "afford full protection to labor. . petitioner fought with the latter. the law recognizes the fact that continued employment gives to a worker. The Labor Arbiter held petitioner guilty of illegal dismissal and ordered for respondent’s reinstatement. Held: Time and again. Ysan Castillo. At one time. 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. and ordering the dismissal of the complaint. The misery and pain attendant on the loss of jobs then could be avoided if there be Ÿ Rosario v. Held: YES. Ÿ Well-entrenched is the rule that an illegally dismissed employee is entitled to reinstatement as a matter of right. In giving an illegally dismissed employee the right to reinstatement. 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. Unemployment brings untold hardships and sorrows on those dependent on the wage-earner. an assurance of continuity in his source of income which a grant of separation pay could not provide. particularly where the illegally dismissed employee held a managerial or key position in the company.
Ysan Castillo. the law would readily be circumvented. Because of need. The rationale of the law has been explained in Aris (Phil. The intent is to balance the scale of justice. it is but a recognition of the inherent economic inequality between labor and management. the law itself has laid down a Irah Burog. Anna Tetangco 35 . After hearing petitioner's explanation. CAP Philippines(Anna) Facts: Petitioner was an employee of CAP. the Commission's failure. vs. or refusal. NLRC. 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: In termination cases. is immediately enforceable. Where a decision may be made to rest [on] informed judgment rather than rigid rules. to put the two parties on relatively equal positions. In this case. when petitioner SSPC opted for respondent's payroll reinstatement. Issue: W/N petitioner is entitled for reinstatement. It was a mere procedural lapse which should not affect his substantive right to reinstatement. Petitioners question the decision of reinstatement because this was not raised in the pleadings. Under Article 223 of the Labor Code. Branch No. However.. The law in protecting the rights of the employees authorizes neither oppression nor selfdestruction of the employer. otherwise. and Section 2 of the NLRC Interim Rules on Appeals under RA No.) Inc. as amended by Section 12 of Republic Act No. Josefina went to CAP to ask for help. to timely act on the matter is a serious oversight for which it should be admonished. Ÿ Panuncillo v. provide that an order of reinstatement by the Labor Arbiter is immediately executory even pending appeal. 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. 6715. Edlyn Santiago. Jon Santos. CAP decided to terminate petitioner. 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. Kristel Macatangay. THereafter. she did not transfer the plan in Josefina's name. XI. Amending the Labor Code. Thus. Charms Haw. Pheschem Industrial Corp.Labor II acceptance of the view that under all circumstances of this case. Monette Mesa. Alpe Macalalad. the burden of proving the just cause of dismissing an employee rests on the employer. Moldez Ÿ Rules on Reinstatement Rationale Ÿ Roquero v. "In authorizing execution pending appeal of the reinstatement aspect of a decision of the Labor Arbiter reinstating a dismissed or separated employee. 6715. The reinstatement aspect of the Labor Arbiter's decision. petitioners should not be deprived of their means of livelihood. and his failure to do so would result in a finding that the dismissal is not justified. Nor is this to condone what had been done by them For all this while. He was dismissed from employment. While it is incumbent upon the party to take an active role in his case and not adopt a wait-and-see attitude. 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. Heidi Soria. albeit under appeal. Davao City. the NLRC as an adjudicating body has the corresponding obligation to act promptly on all incidents brought before it. 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. He was found to be guilty of serious misconduct and has no right to be reinstated as ground equipment mechanic of PAL. She availed of an educational plan from her employer. Monina Lagman. she sold the plan to Josefina. SC held that the dismissal was for a valid cause. they had not been paid. is a procedural lapse which cannot put to naught a right which he is entitled under a substantive law. Held: The order to reinstate is incompatible with a finding that the dismissal is for a valid cause. even if he was instigated to take drugs. where the Rules of Court are applicable only in order to effectuate the objectives of the Labor Code and not to defeat them. She pledged it to another person who later sold the plan to another. Technicalities have no room in labor cases. since private respondent considered them separated from the service. in violation of the PAL Code of Discipline. It should be made clear that when the law tilts the scale of justice in favor of labor. Dianne Miano. PAL (Alpe) Facts: Roquero was caught red handed possessing shabu. Effect of failure to ask relief Ÿ General Baptist v. 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. v. an award or order of reinstatement is self-executory. causing untold hardships to the dismissed employee. NLRC (Alpe) Facts: Basa was terminated as President of the college because of non-compliance with his conditions of employment. Ÿ Article 223 (3rd paragraph) of the Labor Code. Jake Ng. it should have paid his salary during the period of appeal before the NLRC. all the equities of the case must be accorded their due weight.
damages and causes of action arising out of the instant case. In Roquero v... Dianne Miano. Then. The law itself can not exact compliance with what is impossible. Zamora (Alpe) Facts: Zamora was employed with Airphils as a Flight Deck Crew. Jake Ng. SEC. Abella (Alpe) Facts: Abella was terminated due to a company-wide reorganization pursuant to its Manpower Reduction Program. v. On the other hand... They were terminated for an allegedly illegal strike. the exclusive taxi concessionaire in NAIA. the order of reinstatement embodied therein was already the subject of an alias writ of execution even pending appeal.. an award of separation pay equivalent to 1 month pay for every year of service. 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. v. Edlyn Santiago.. pending appeal. 33 Accordingly. given the lapse of considerable time from the occurrence of the Irah Burog. Ysan Castillo. in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. he was not promoted to the position of captain. Monina Lagman. Ÿ Airphils Corp. a continuing threat or danger to the survival or even the life of the dismissed or separated employee and his family. Ÿ The premise of the award of unpaid salary to respondent is that prior to the reversal by the NLRC of the decision of the Labor Arbiter. The SC held that Airphils is liable. vivifies and enhances the provisions of the 1987 Constitution on labor and the working man . of a decision reinstating a dismissed or separated employee since that saving act is designed to stop. seventeen (17) years have elapsed since respondents were illegally dismissed. In Association of Independent Unions in the Philippines v. in this case. Ÿ If reinstatement is no longer possible. although temporarily since the appeal may be decided in favor of the appellant. He then filed a Complaint with the Labor Arbiter and argued that the act of APC of withholding his promotion rendered his continued employment with it oppressive and unjust and that Airphils must be held liable for constructive dismissal. In short. the award of separation pay of 1 month salary for each year of service. NLRC. in lieu of reinstatement. Charms Haw. These duties and responsibilities of the State are imposed not so much to express sympathy for the workingman as to forcefully and meaningfully underscore labor as a primary social and economic force. After completing his training. Ad imposible tenetur. if the employee has been reinstated during the appeal period and such reinstatement order is reversed with finality.” Ÿ Reinstatement presupposes that the previous position from which one had been removed still exists. The above-quoted rule enunciates reinstatement as the standard relief.Labor II compassionate policy which. waiving “[a]ll other claims. Monette Mesa.. by and pursuant to the same power (police power). even if the order of reinstatement of the Labor Arbiter is reversed on appeal. the reinstatement of the illegally dismissed employee to his former position would neither be fair nor just. — (a) An employee who is separated from work without just cause shall be reinstated to his former position. strike. Although petitioner did not comply with this writ of execution. Heidi Soria. The SC ruled that the dismissal was illegal. Alpe Macalalad. Hence. Inc. Anna Tetangco 36 . 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 SC ruled that his complaint for illegal dismissal cannot hold because of a compromise he executed. its intransigence made it liable nonetheless to the salaries of respondent pending appeal. with respect to decisions reinstating employees. If the position is no longer available for any other valid and justifiable reason. however. Infante (Alpe) Facts: Respondents were drivers of G & S. 4. The employer's remedy is to reinstate the employee to a substantially equivalent position without loss of seniority rights as provided for above. Jon Santos. which the Constitution also expressly affirms with equal intensity. or that there is an unfilled position more or less of a similar nature as this previously occupied by the employee. There is logic in this reasoning of the NLRC. the law itself has determined a sufficiently overwhelming reason for its execution pending appeal . unless such position no longer exists at the time of his reinstatement. Ÿ G & S Transport Corp. more so if he actually rendered services during the period. 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. is in order." Ÿ PNOC-EDC v. the employee is not required to reimburse whatever salary he received for he is entitled to such. where more than 8 years have passed since the petitioners therein staged an illegal strike and were found to have been unlawfully terminated. However.. in lieu of reinstatement. Kristel Macatangay. Philippine Airlines. Reinstatement to former position. once more. the State may authorize an immediate implementation. Labor is an indispensable partner for the nation's progress and stability . was deemed more practical and appropriate to all the parties concerned..
agreement or policy an employee may be retired upon reaching the age of sixty (60) years." Ÿ Espejo v. . Dianne Miano. . but still binds the Agency to provide them. NLRC (Alpe) Facts: Espejo worked as general manager for CISP. Construing this provision. 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. of Labor) situation where a peaceful relationship is not feasible. 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. . the petitioner must follow the laws which protect workers and uphold their security of tenure. Charms Haw. the Board considered him terminated and paid his unused vacation leave and transportation expenses. of separation pay at the rate of one month's salary for every year of service. who in turn is not seeking reinstatement. which requires a deliberate and unjust refusal of an employee to resume his work. Luna can still be reinstated because. Ÿ In such situation. . However considering that petitioner has already reached the statutory retirement age of sixty (60). there is an unfilled position more or less of a similar nature as the one previously occupied. the petitioner's contention that Mrs. was terminated after borrowing money from the mother of one of her wards. a case worker. NLRC (Alpe) Facts: Umlas was dismissed from Commercial Motors after being uncooperative and attempting to disrupt auditors investigating the loss of certain spare parts. as an item of relief. we held that an employee may retire. However. The relief and transfer order per se did not sever thte employment between the Agency and the complainants. upon their reaching the retirement age. it would be an act of oppression to compel them to return to the status quo ante. Ysan Castillo. There is also no abandonment. upon reaching sixty (60). Heidi Soria. Thus. He resigned but later withdrew his resignation. Ÿ There is likewise no basis for the NLRC ruling that Mrs. (the employee) can be spared the agony of having to work anew with . (latter) does not have to endure the continued service of . The parties to a case should not be forced into a Ÿ Sentinel Security Agency v. Querimit in effect waived her right and cannot insist on a literally strict interpretation of procedural due process because she refused to submit herself to an investigation. Sec. Alpe Macalalad. Sentinel Security Agency issued a Relief and Transfer Order replacing the complainants and reassigning them to other clients.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. (Union of Supervisors vs. 13. however. although his previous position is now held by another. STRAINED RELATIONS Ÿ Pearl Buck Foundation v. Edlyn Santiago. Jon Santos. . Ÿ It would seem. A more equitable disposition is that which this Court has more than once made in other cases of the same nature: the award. Monina Lagman. NLRC therefore did not err in denying the reinstatement of petitioner. Ÿ Commercial Motors Corp. 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. Monette Mesa. Querimit should be reinstated with backwages. we agree with NLRC that petitioner is entitled only to backwages. But when they reported for work. . "so that . He was asking to be reinstated but this was denied. There is moreover. The SC affirmed the non-reinstatement. As the petitioner appears to have lost its trust in private respondent. in lieu of reinstatement. However. The dismissal was declared to be illegal but reinstatement was not awarded. Anna Tetangco 37 .” Issue: Was there an illegal dismissal? Held: Yes. that the circumstances of this case render inappropriate Umlas' reinstatement to his former position. Kristel Macatangay. of the Omnibus Rules Implementing the Labor Code provides that in the absence of a retirement plan. coupled w/ a clear absence of any intention of Irah Burog. retirement pay or whatever else is provided under the CBA or employment contract. We are aware that in any country where due process is strictly observed and where social justice is a compelling constitutional principle. (the employer) under an atmosphere of antipathy and antagonism. or may be retired by his employer. . (the former) in whom it has lost confidence. they were not given new assignments. . Jake Ng. and instead were told that they would be replaced “because [they] are already old. Book VI. and the . Sec. we cannot compel it to retain employees who commit violations of trust relationships. All illegally dismissed employee who cannot be reinstated is granted separation pay and backwages. v. NLRC (Alpe) Facts: Querimit.
The Executive Labor Arbiter (ELA) ordered reinstatement of the employees. she was not paid her vacation pay.D. NLRC denied their motion for execution on the ground that they gave up first motion for execution by entering into the compromise agreement. Thus. Otherwise. neither was she compensated for the extra teaching job. the employees moved for execution. Pending appeal. NCF stopped paying accrued salaries after three installments. Kristel Macatangay. There is no basis for the ruling of the NLRC. refuse to accept other assignments. The subject of the compromise agreement was the reinstatement ordered by the ELA. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. Howeer. that they are so obnoxious to the person or business of the employer. though her contract does not require her to do so. The latter do not pray for reinstatement. The subject of the NLRC decision. antagonism is likely to have already caused a severe strain in the relationship between them. Issue: Was there strained relations as to make reinstatement with backwages impossible? Held: No. Heidi Soria. otherwise an employee who shall assert his right could be easily separated from the service. The school director claimed that the summer was the best time to update the students’ clinical records. in order that it may justify the award of separation pay in lieu of reinstatement with backwages. Garcia for serious charges under P. in fact. Ÿ Bascon v. Bose (Eds) Facts: Petitioners filed a complaint with the NLRC for illegal dismissal. And it was NCF who caused a strain in the relation of the parties. should be such. CA (Eds) Facts: The NAMA-MCCH labor union asked the Metro Cebu Community Hospital (MCCH) to renew their CBA. No strained relations should arise from a valid and legal act of asserting one’s right. They reported to the Agency for reassignment several times but were not given any. backed by the Faculty Association. Garcia all the more confirmed the discriminatory and oppressive treatment which he gave Sibal. Ÿ The Cosmianos charged Cabatulan with qualified theft and even (tried to) coerce him into dropping the labor case against them. moved for the ouster of the school director Fr. and that she was not entitled to extra compensation for teaching. backwages and damages against Naga College Foundation. That complainants did not pray for reinstatement is not sufficient proof of abandonment. after which the school served Sibal with a letter of termination effective immediately. then entered into an agreement with NCF for reinstatement. b merely paying his separation pay on the pretext that his relationship with his employer had already become strained. Anna Tetangco 38 . Buat) Ÿ Sibal v.Labor II returning to his or her work. but the NLF opposed the same. Sibal filed a complaint for non-payment of compensation and vacation pay. Edlyn Santiago. the complainants. was ordered to work during the summer. The agency cannot reassign them to the Client. they refused to be reinstated. reinstatement is no longer feasible. Monina Lagman. No supervening event rendering execution unjust can be considered. Notre Dame of Greater Manila (Edsa) Facts: Delia Sibal. That is human nature. Ÿ Ÿ The principle of “strained relations” cannot be applied indiscriminately. The alleged “strained relations” or “irritant factors” which the Labor Arbiter capitalized on in ordering separation pay instead had been totally elimintaed when. He threatened to take drastic measures against her if she kept refusing to report for work the next summer. the complainants are entitled to reinstatement and backwages. tranquility which is an ideal atmosphere in every workplace. Issue: Did the petitioners give up their claims for reinstatement? Held: No. The eventual replacement of Fr. 176. MCCH decided to defer Irah Burog. Ÿ As a necessary consequence for the illegal dismissal. Dianne Miano. a school nurse at the Notre Dame of Greater Manila. Jake Ng. Ÿ No strained relations should arise from a valid and legal act of asserting one’s right. Monette Mesa. which has recruited new security guards. which was part of her regular working program as a school nurse. reinstatement. and that the continuation of such employment has become inconsistent with peace and Naga College Foundation Education Workers v. Jon Santos. and that they abandoned the benefits of the compromise agreement by resorting to the NLRC. an employee who shall assert his/her right could be easily separated from the service by merely paying his/her separation pay on the pretext that his/her relationship with his/her employer had already become strained… Strained relations. which they sought to enforce in the motion for execution was also their reinstatement. teachers and personnel of the school. Charms Haw. on the other hand. hoping to obtain assistance. Therefore. and was also assigned to teach health during SY 1981-1982. For filing an LOA and not reporting to work that summer. (Cabatulan v. 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. Alpe Macalalad. separation pay is awarded in lieu of reinstatement. who in turn filed a complaint against the former for conducting an illegal strike. However. Ysan Castillo. Petitioners did not occupy managerial or confidential positions which might be affected by any bad feeling resulting from the execution of the decision. for otherwise. about a month after Sibal’s termination. Such refusal is indicative of strained relations.
Ÿ Acesite Corp. then a 12-day vacation leave. took a 4-day sick leave.Labor II the CBA negotiations until there was a determination as to which union had the right to negotiate a new CBA. otherwise. v.” and the phrase cannot be given an overarching interpretation. she was terminated for the shouting incident and refusal to tranfer to the Plaza Cervantes Branch. Here. the Chief of Security of the Manila Pavillion Hotel (now the Holiday Inn Manila). Alpe Macalalad. have no prerogative in the operation of the business. 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. Gonzales was Chief of Security. an ordinary striking worker must have participated in the commission of illegal acts during the strike. and were subsequently terminated from employment. Edlyn Santiago. Laureano Gonzales. Petitioners denied receiving said orders. MCCH issued a notice of investigation. who would not have helped him cover up his absences Ÿ BPI Employees Union v. Otherwise. which was denied. the latter filed a notice of strike. There must be proof of such illegal acts. In order to be justly terminated. Neither can be construed as illegal acts. or whose differences with their employer are of such nature or degree as to preclude reinstatement. Petitioners are entitled to reinstatement with full backwages. Jon Santos. was ordered to transfer to the Plaza Cervantes Branch to defuse the tense situation at the Escolta Branch. That is human nature. reinstatement is no longer possible. Besides. CA (Eds) Ÿ Irah Burog. Charms Haw. when reinstatement would no longer be beneficial to either pary in view of strained relations between them. cannot be applied indiscriminately. But he is not entitled to reinstatement. Ÿ In illegal dismissal cases. Issue: Was there illegal dismissal? Held: Yes. which was not approved. Monina Lagman. Zenaida Uy. which she could not do so since she had been barred from entering the bank premises. Leo Gonzales. Petitioners herein are nurse and nursing aide. He was eventually issued a Notice of Termination for continuously disregarding several advices to report back to work. but he failed to do so. Before the expiration of the 12 day vacation leave. Despite DOLE certifications that NAMA-MCCH was not a registered labor org. saying she would await the result of the grievance proceeding filed by her union. She asked to be considered on leave since then. Jr. an unjustly dismissed employee can never be reinstated. The doctrine of “strained relations” should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. respectively. Every labor dispute almost always result in “strained relations. She also alleged sexual harrassment on the part of her Senior Manager. former teller of BPI. NLRC (Eds) Facts: Due to a severe stomach disorder. Upon being notified of the mass actions. and thus. he filed for a 10-day emergency leave. Here.” This may be invoked against employees whose positions demand trust and confidence. He must therefore be paid separation pay of 1 month for every year of service instead. Issue: Is Uy entitled to reinstatement with backwages? Held: Yes. Anna Tetangco 39 . He was told to report back for work. Ÿ Mere payment of severance pay. otherwise. Union members and officers staged mass actions inside the MCCH premises. no strained relations should arise from a valid and legal act of asserting one’s right. Jake Ng. The medical certificate also proves that he was indisposed during the period in controversy. It was also sufficiently proven that Gonzales reported for work after the final notice but was refused entry. Issue: Was Gonzales illegally dismissed? Held: Yes. especially in the light that the same was issued by his rival in the political arena. Instead. Mere allegation of strained relations to bar reinstatement is frowned upon. and requested to be transferred to the Taft Ave. however. Sagum v. and that she could not transfer as there was no proper turnover of her accountabilities. then an emergency leave. Heidi Soria. then an order to desist from participating in the mass actions. otherwise. It has been almost a decade since the incident that led to Uy’s dismissal. There now appears no basis for strained relations between the present management and Uy.. whose position is one of trust and confidence. thereby using up all leaves he was entitled to for the year. The other involved parties have long been assigned in another area or are no longer connected with BPI. reinstatement to an illegally dismissed employee’s former position may be excused on the ground of “strained relations. Ysan Castillo. The principle of strained relations. Dianne Miano. Branch to save on gas expenses. petitioenrs’ actual participation in the illegal strike was limited to wearing armbands and putting up placards which do not contain offensive words or symbols. he being in charge of the over-all security of the hotel. reinstatement can never be possible simply because some hostility is invariably engendered between the parties as a result of litigation. Dr. 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. Kristel Macatangay. Monette Mesa. There is no proof that a telegram had indeed been sent to and received by Gonzales ordering him to report back to work. Uy refused. A complaint for illegal dismissal was filed. 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. is allowed. BPI (Eds) Facts: For shouting at her Senior Manager. Thus.
" and the phrase cannot be given an overarching interpretation. Three days later. and that such was being undertaken by JDI’s sales rep. No. the doctrine of "strained relations" should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Kristel Macatangay. Reyes’ brother. filed a complaint for illegal dismissal against IIEE and its officers.O. Ÿ Employees illegally dismissed before March 21. a fraction of at least 6 months being considered as one whole year. 1989. Here.O. otherwise. de Jesus worked on P.O. 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. if reinstatement is no longer viable. argued and proven before the Labor Arbiter. reinstatement is not warranted.O. Held: There was illegal dismissal. are entitled to backwages up to 3 years without deduction or qualification. Edlyn Santiago. de Jesus based her assigned work on a paper note posted by petitioners. 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. Dianne Miano. if feasible. Number. 3853 allegedly required no trimming. As reviser/trimmer. 1992.NLRC (Charms) Facts: Private respondent Lourdes A. NLRC (Eds) Facts: Upon reports by a private investigator that the “Union 76” lubricating oil which was being exclusively distributed by Jardine Davies. Jon Santos. we have always held Irah Burog. Moreover. A more equitabble disposition would be an award of separation pay equivalent to 1 month’s pay for every year of service. One company. She was preventively suspended for 30 days. 3853 as it has the same style and design as P. Monina Lagman. especially where said employee holds a faithful and an untarnished twelveyear service record. The SC found the imposition of the extreme penalty of dismissal against de Jesus as certainly harsh and grossly disproportionate to the negligence committed. There was no factual basis for JDI’s distrust of Ÿ Pioneer Texturizing vs. 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. Sagum’s dismissal was subsequently declared illegal. While an employer has the inherent right to discipline its employees. The owner of said articles was Donato. as evidenced by the subsequent judicial order releasing the articles seized during the search. 3853 by trimming the cloths' ribs. Ysan Castillo. No. Jake Ng. Sagum is correct that mere persistency in argument does not amount to proof. was being illegally manufactured. Anna Tetangco 40 . de Jesus is petitioners' reviser/trimmer since 1980. nonetheless. an unjustly dismissed employee can never be reinstated. they are entitled to either reinstatement. Issue: Was there illegal dismissal? Held: Yes. Reyes sued for illegal dismissal since the seized materials were actually legally claimed by Reyes’ younger brother. The finding by the CA of strained relations does not have any basis on the records. Nowhere was this raised in private respondents’ pleadings before the Labor Arbiter and the NLRC. Inc.O. No. In addition to backwages. In her handwritten explanation. terminated her from employment and sent her a notice of termination dated September 18. DBR. On August 15. was allegedly consistently being awarded majority of the printing contracts of IIEE. 1992. the principle of strained relations cannot be applied indiscriminately. Issue: Is Sagum entitled to reinstatement with backwages? Held: Yes. IMPLEMENTATION = OPTIONS AND RATIONALE Options and Rationale Ÿ Jardine Davies v. Ÿ The existence of strained relations is a factual finding and should be initially raised. or separation pay. the Officer-in-Charge for the Executive Director of the Institute of Integrated Electrical Engineers of the Phils. Alpe Macalalad. To protect labor's security of tenure. 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. Charms Haw. not to mention the considerable length of time Reyes has been out of JDI’s employ. Heidi Soria. 3824 which has an attached price list for trimming the ribs and admitted that she may have been negligent in presuming that the same work was to be done with P. 3853. Petitioners' personnel department. No. packed and distributed. de Jesus maintained that she merely committed a mistake in trimming P.. The three year period wherein backwages are awarded must be included in the computation of separation pay. Every labor dispute almost always results in "strained relations. who was the legal tenant of the apartment. blended. Reyes. There are no hard facts upon which to base the application of the doctrine of strained relationship. but not for dishonesty or tampering. 279 of the Labor Code.O. JDI secured a search warrant which led to the seizure of alleged fake items in Reyes’ apartment. Virgilio Reyes. Reyes was consequently dismissed for committing serious misconduct inimical to the interest of JDI. Monette Mesa. Antagonism and imputations of criminal act caused a severe strain in the relationship between JDI and Reyes.Labor II Facts: Marilyn Sagum. No. The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its P.
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 employer has to inform the employee of his choice. However. 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. Charms Haw. even illegally. NLRC (Charms) Facts: Petitioner was hired by private respondents as a technician. The last contract signed by petitioner fixed the term of his employment from 1 May 1993 to 30 November 1993. An award for reinstatement is self-executory. 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. Held: The NLRC correctly labeled petitioner as a project employee. Heidi Soria.00. petitioner received a Memorandum from private respondents demanding an explanation for administrative infractions. The Court found that private respondents not only failed to give a valid and justifiable reason to terminate Kiamco. the NLRC failed to act on Tanpiengco's motion for the issuance of a writ to execute the Labor Arbiter's reinstatement order.e. and the penalty it must impose should be commensurate to the offense involved and to the degree of its infraction. Ysan Castillo. Kristel Macatangay. 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 fact that an employee is not a regular employee does not mean that his employer can dismiss him anytime. Falling to exercise the options in the alternative. The legislative intent is quite obvious. meaning that it does not require a writ of execution much less a motion for its issuance. Edlyn Santiago. Tanpiengco has since then become a regular employee. Finding petitioner's explanation unsatisfactory. 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. i. 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." from one of the balikbayan boxes inside the container yard. this did not give private respondents the unbridled authority to terminate petitioner upon the Irah Burog. Ÿ As a consequence of this. Thus. In either instance. Alpe Macalalad. According to petitioner.. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons. for some inexplicable reasons. he admitted to the investigating officer that he took the "Gesim Corp. tucked it at his waist and proceeded to the washroom. The Supreme Court in the 1997 Pioneer case has laid down the doctrine that henceforth an order or award for reinstatement is self-executory. The provision of Art. private respondents. The Commission's inaction is a serious oversight for which it should be admonished. Tanpiengco was dismissed for pilferage which petitioner considered as breach of trust. Monina Lagman. Container Services vs. The notification is based on practical considerations for without notice. but Tanpiengco insisted on his innocence claiming that he was coerced at knifepoint into admitting the theft. the employee has no way of knowing if he has to report for work or not. petitioner filed before the NLRC a complaint for illegal suspension and dismissal with prayer for reinstatement and backwages. On October 20. Ÿ Intl. which he allegedly committed. Tanpiengco was accused of taking a T-shirt marked "Gesim Corp. the immediate execution of a reinstatement order. Jon Santos." T-shirt valued at P100. i. 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. Dianne Miano.Labor II that this right must always be exercised humanely. Moreover. Held: There was illegal dismissal and therefore should be reinstated. Ÿ After receipt of the decision or resolution ordering the employee's reinstatement. placed petitioner under preventive suspension from 1 November 1993 to 30 November 1993 pending further investigation. even if the employment contract signed by petitioner fixed the term of his employment. Jake Ng. When it was time for him to clean himself he took his T-shirt which was hanging from a post. 1993. He was accosted by a security guard allegedly for behaving suspiciously. NLRC (Charms) Facts: Petitioner employed private respondent Tanpiengco as a CFS Priority pursuant to a collective bargaining agreement with private respondent's labor union. as maintained by petitioner. after a brief suspension.e. reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. Monette Mesa. Petitioner reported back to work but was prevented from entering the company premises. 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. 223 is clear that an award for Ÿ Kiamco vs. Anna Tetangco 41 . On 30 April 1990.. In the instant case. but they also ignored the due process requirement of the law. on 28 October 1993. Negros Occidental. to make an award of reinstatement immediately enforceable. even pending appeal. dishonesty and theft of property. On 7 March 1990 Tanpiengco was assigned at Bodega I.
because in the past he had been consistently rated for his outstanding performance and his salary correspondingly increased. Jake Ng. is based simply on expectancy or his assumption that. Dianne Miano. Jon Santos. can be attributed to the annual salary increases which he received equivalent to 15 percent (15%) of his monthly salary.365. when he was appointed as Vice President of petitioner Bank’s Legal Department and later as its General Counsel in December 1981. Heidi Soria. in the absence of any valid reason to terminate him. we did not permit petitioner Bank to rely on Sec. Charms Haw. accused respondent Sadac of abusive conduct. and ultimately. were unsubstantiated. private respondents should have retained his services until the actual completion of the project. on 10 August 1989. or by rightful expectation. Held: Are annual general increases in basic salary deemed component in the computation of full backwages? The weight of authority leans in petitioner Bank’s favor and against respondent Sadac’s claim for the inclusion of general increases in the computation of his backwages. 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. they held respondent Sadac’s dismissal illegal. when he was dismissed illegally. Edlyn Santiago. under the rules of client and lawyer relationship. petitioner Bank be ordered forever released from liability under said judgment. it maintained. the Supreme Court modified the decision of the NLRC and ordered the reinstatement of petitioner and payment of his backwages. Kristel Macatangay. his monthly compensation amounted to P29. The difference. Respondent Sadac theorized that he started with a monthly compensation of P12. In a previous SC decision.00 or more than twice his original compensation. Finally. as in the case of a wage increase under a wage order.442. petitioner Bank terminated the services of respondent Sadac. the Court had the opportunity to elucidate on the reason for the grant of backwages. Monette Mesa. Moreover. Rule XIV. 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. Such decision became final and executory.Labor II expiration thereof. Per its computation.59. and subsequently General Counsel thereof. hence. thus. Irah Burog. Pursuant thereto. After learning of the filing of the complaint. 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. 26. Ÿ Equitable Banking vs. Petitioner’s claim. respondent Sadac requested for a full hearing and formal investigation but the same remained unheeded.030. as in the case of one’s salary or wage. As held by the Court of Appeals. In reaction thereto. Private respondents. Alpe Macalalad. respondent Sadac filed a complaint for illegal dismissal with damages against petitioner Bank and individual members of the Board of Directors thereof. Consequently. in a letter-petition to the Chairman of the Board of Directors. petitioned for a change in leadership of the department. Anna Tetangco 42 . qualify for the said increase later. either by virtue of a lawful decree or order.456. Monina Lagman. Petitioner Bank disputed respondent Sadac’s computation. representing his backwages and other benefits. On the ground of lack of confidence in respondent Sadac. Likewise. and. inter alia. petitioner Bank filed a Manifestation and Motion praying that the award in favor of respondent Sadac be computed and that after payment is made. Book V of the Implementing Rules of the Labor Code. Backwages are granted on grounds of equity to workers for earnings lost due to their illegal dismissal from work. it could terminate at any time the services of respondent Sadac. claiming that the association between the parties was one of a client-lawyer relationship.98 only. therefore. 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. On 26 June 1989.00 in August 1981. Rule 138 of the Rules of Court. They are a reparation for the illegal dismissal of an employee based on earnings which the employee would have obtained. 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. Ysan Castillo.500.981. 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. Per respondent Sadac’s computation. the amount of monetary award due respondent Sadac is P2. respondent Sadac was removed from his office and ordered disentitled to any compensation and other benefits. they did not find that respondent Sadac’s dismissal was grounded on any of the causes stated in Article 282 of the Labor Code. Therefore. nine lawyers of petitioner Bank’s Legal Department. the total amount of the monetary award is P6. Petitioner was specifically assigned to work in a particular project. respondent Sadac filed with the Labor Arbiter a Motion for Execution thereof. he posited. including the general increases which he should have earned during the period of his illegal termination. 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. to the exclusion of the latter’s general salary increases and other claimed benefits which. Sadac(Charms) Facts: Respondent Sadac was appointed Vice President of the Legal Department of petitioner Bank. however. however. however. On 9 November 1989. 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. failed to show proof as to when the project was completed. As of November 1989. In several cases.
NLRC (Charms) Facts: Private respondent electric cooperative hired petitioners as meter readers from October 8 to 21. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. Payment thereof is a form of relief that restores the income lost by reason of such unlawful dismissal. petitioners separately filed complaints for illegal dismissal. But where. The Supreme Court held that petitioners should be reinstated to their former position as meter readers. but is awarded in furtherance and effectuation of the public objectives of the Labor Code. which pertain to compensation due the employee for services actually rendered before termination. With the continuation of their employment beyond the original term. Monette Mesa. The Labor Arbiter declared private respondent's dismissal as illegal and ordered her reinstated and paid full backwages and damages. the challenged award of backwages is decidedly improper and contrary to law and jurisprudence. Edlyn Santiago. Payment of unpaid salaries is only ordered if there are still salaries collectible from his employer by reason of services already rendered. but awarded private respondent partial backwages. Nor is it a redress of a private right but. 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. NLRC (Charms) Facts: Petitioner Adoracion Roxas is the president of St. The Labor Arbiter dismissed the complaints. Nature . Accordingly. they were. She instituted a complaint for unfair labor practice. illegal dismissal. private respondent terminated petitioners' employment. Charms Haw. etc. When private respondent reported for work. Theresa’s School vs. Held: Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis. On the other hand. Jurisprudence is filled to the brim with cases wherein backwages were awarded to an employee illegally dismissed. what was actually meant was unpaid salaries. she went on a leave of absence with the approval by petitioner. Heidi Soria. Ysan Castillo. On January 3. there is no vested right to salary increases. therefore.Purpose Ÿ Tomas Claudio Memorial College vs. rather. she found out that her table. Thus. 1990. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. chair and other belongings were moved to a corner of their office and she has been replaced by the daughter of petitioner Adoracion Roxas. refer to his supposed earnings had he not been illegally dismissed. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. the Court held that petitioners are entitled to full backwages. (General Baptist Bible College vs. Dianne Miano. When private respondent became ill. the employment of petitioners is no longer on a fixed term basis. According to the Court. as in this case of a pitiful employee rendered hapless by her lawyer's inaction or ignorance. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. not on a probationary status. Esther Reyes on a contract basis. reinstatement would always bring with it payment of backwages but not necessarily payment of unpaid salaries. the dismissal has been adjudged valid and lawful. She hired private respondent. but as regular employees. On appeal. Unpaid salaries refer to those earned prior to dismissal whereas backwages refer to those earnings lost after illegal dismissal. 1991. 1991.Labor II In short. Backwages are generally granted on grounds of equity. Backwages. Thus. 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. Monina Lagman. Ÿ St. petitioners have become full-fledged regular employees. entitled to be reinstated to their former position as regular employees. NLRC (Charms) Irah Burog. 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. It is not private compensation or damages. It held that after October 31. NLRC) Ÿ Viernes vs. Despite the expiration of their employment contract. underpayment of wages and claim for indemnity against private respondent. the fact that the petitioners were allowed to continue working after the expiration of their employment contract was evidence of the necessity and desirability of their service to private respondent's business. The NLRC reversed the decision of the Labor Arbiter. 1990. 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. Jake Ng. Moreover. against herein petitioners before the Labor Arbiter. Kristel Macatangay. petitioners were allowed by the private respondent to work until January 2. Jon Santos. Held: The term "backwages" has been defined as that for earnings lost by a worker due to his illegal dismissal. not merely probationary. Alpe Macalalad. Ÿ When the term "backwages" was used in the NLRC decision. Petitioners contended that they were not apprentices but regular employees whose services were illegally and unjustly terminated in a manner that was whimsical and capricious. Moreover. Anna Tetangco 43 . Theresa's School of Novaliches Foundation. private respondent invoked Article 283 of the Labor Code. on the other hand.
and non-payment of wages or commission and separation pay. the private respondent was detained in Criminal Case No. 1996. 1996. While it may be true that on June 11. in the interim. for violation of the Dangerous Drugs Act (Republic Act No. but rejected the charge of unfair labor practice and dismissed. 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. Culture and Sports (DECS) and with the Commission on Higher Education (CHED) with the rank of Assistant Registrar. private respondent Pedro Natividad started working with petitioner Tomas Claudio Memorial College (TCMC) in Morong. NLRC. The petitioner asserts that it is absurd for the petitioner to pay backwages to the private respondent while the latter was in jail. illegal dismissal. since it would include that period of time when the latter was in jail. Alpe Macalalad. Nor is it a redress of a private right. It is evident that the award of back wages resulting from the illegal dismissal of an employee is a substantive right. The private respondent would thereby be enriching himself at the expense of the petitioner. sent a Memorandum to the private respondent informing him that his employment was already terminated. On June 10. the State Prosecutor found no probable cause for the detention of the private respondent and resolved to dismiss the case. non-payment of overtime pay. Kristel Macatangay. through its president. for lack of merit. Labor Arbiter Dennis D. 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. The petitioner insists that backwages should not and cannot be awarded to the private respondent. the petitioner. The award of backwages is not conditioned on the employee's ability or inability to. 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. he is presumed innocent until his guilt is proved beyond reasonable doubt. 1996 up to July 5. legal holiday pay. he is deemed to have opted for Irah Burog. premium pay for holiday and rest day. 5137. underpayment of salary. Held: Grant of backwages proper. and from November 21. However. 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. Jake Ng. Jon Santos. Ysan Castillo. The award of backwages is not conditioned on the employee’s ability or inability to. Heidi Soria. and to other benefits or their monetary equivalent computed from the time compensation was withheld up to the time of actual reinstatement. The petitioner relied on the declaration of this Court in the case of Cathedral School of Technology v. been entitled to reinstatement as a consequence of his illegal dismissal from employment. NLRC (Charms) Facts: In a complaint filed before the NLRC. 5251. the private respondent was arrested by the Morong police authorities. Charms Haw. 6425). Conformably then with Article 279 of the Labor Code. 1996. Anna Tetangco 44 . 1996 to February 17. The private respondent has not yet been convicted by final judgment in Criminal Case No. petitioner charged private respondent Emmanuel Lo with unfair labor practice. allowances and damages. Monette Mesa. by expressly asking for separation pay. without any warrant therefor. Rizal. A criminal complaint was later filed against him. It is a form of relief that restores the income lost by reason of unlawful dismissal. Thus. In the interim. where it held that when the employee's dismissal is for a just cause. Effect Failure to Claim Ÿ Rolando Dela Cruz vs. Aladdin F. Trinidad. in the interim. 1997 for violations of the Dangerous Drugs Act. Ÿ The payment of backwages is generally granted on the ground of equity. there can be no backwages even if she was denied due process. but is awarded in furtherance and effectuation of the public objective of the Labor Code. he was promoted as "Liaison Officer" of the school with the Department of Education.Labor II Facts: Sometime in 1983. Petitioner seasonably appealed to the NLRC which in turn remanded the case to the Labor Arbiter. The Labor Arbiter Lagoc found that petitioner was an employee of private respondent and was illegally dismissed from the service. back wages. Indeed. likewise. hence entitled to separation pay. respondent was detained from June 10. 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. 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. Petitioner would have. inclusive of allowances. earn any income. In time. This is because the private. petitioner's other monetary claims. It is not a private compensation or damages. otherwise she would be unjustly enriching herself at the expense of the employer. Both the labor arbiter and the NLRC concluded that petitioner was illegally dismissed. after appropriate proceedings. 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. earn any income. Dianne Miano. Monina Lagman. On 7 August 1992. Juanon rendered a decision dismissing the complaint for lack of merit due to the absence of an employer-employee relationship between petitioner and private respondent. Edlyn Santiago. 1996 until the judgment of the CA shall have become final and executory.
however." Second. Dagui was dismissed. as in this case. This pertains to that period from the date petitioner was dismissed from employment on 2 December 1990 until he could have been reinstated which. even if they are not assigned as errors on appeal. it is conducive to lack of initiative on the part of a laborer." on the alleged ground that his work was unsatisfactory. Period. Effect Failure to Order Ÿ Aurora Land etc. the same must be computed from the time petitioner was first employed by private respondent until the finality of this decision. Corollary then to the foregoing is the matter of computing both the back wages and the separation pay due petitioner. The award of separation pay is in lieu of reinstatement and not of backwages. substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. an illegally dismissed employee is entitled to (1) either reinstatement. account should be taken of whether in the exercise of due diligence respondents might have obtained income from suitable remunerative employment. amounts to a "plain error" which we may rectify in this petition. Neither was there any hearing conducted in order to give Dagui the opportunity to be heard and defend himself. Edlyn Santiago. the deduction should be made up to the time judgment becomes final. 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. carpenter. A contrary view would breed idleness. and (3) clerical errors. and the filing of this case.Labor II separation pay in lieu of reinstatement. Heidi Soria. without giving him any written notice informing the cause for his termination. Besides. with respect to the activity in which they are employed. and (2) backwages. In this case. is bewildered why only an award for separation pay in lieu of reinstatement was made by both the Labor Arbiter and the NLRC. and (2) those who have rendered at least one year of service. Kristel Macatangay. for the reason that employees should not be permitted to enrich themselves at the expense of their employer. And these. in mitigation of the damages that the dismissed respondents are entitled to. Ysan Castillo. Anna Tetangco 45 . We are prompted to give out this last reminder because it is really unjust that a discharged employee should. namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. Likewise. Dagui should likewise be considered a regular employee by the mere fact that he rendered service for the Tanjangcos for more than one year. 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. 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. To be reckoned for the former is the period of putative service. Monina Lagman. there is the "law's abhorrence for double compensation. Should the laborer decide that it is preferable not to return to work. As regards separation pay. It is true that private respondent did not appeal the award of the Labor Arbiter awarding separation pay sans backwages. Suddenly. It must be remembered that backwages and reinstatement are two reliefs that should be given to an illegally dismissed employee. They are separate and distinct from each other. vs. if it finds that their consideration is necessary in arriving at a just decision of the case. There are two kinds of regular employees. Charms Haw. In other words. taking into account the appeals separately interposed by petitioner and private respondent from the decision of the labor arbiter. Thus. Both bear the Irah Burog. Held: Yes to both. plumber. the employer said "Wala ka nang trabaho mula ngayon. whether continuous or broken.Computation Ÿ First. that is. Jake Ng. Issue: (1) Whether Dagui is a regular employee (2) Whether or not he was illegally dismissed. Monette Mesa. The jobs assigned to private respondent as maintenance man. The Supreme Court is clothed with ample authority to review matters. separation pay is awarded to the employee. Rules of procedure are mere tools designed to facilitate the attainment of justice. beginning 1953 until 1982. Jon Santos. These twin requirements of notice and hearing were undeniably absent in the case at bar. if they involve (1) errors affecting the lower court's jurisdiction over the subject matter. although Dagui did not bring any appeal regarding the matter. Ÿ The Court. in the interest of substantial justice. electrician and mason were directly related to the business of petitioners as lessors of residential and apartment buildings. 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. law and jurisprudence authorize a tribunal to consider errors. the failure of the Labor Arbiter and the NLRC to award backwages to the private respondent. remain inactive in the expectation that a windfall would come to him. although unassigned. In the event that reinstatement is no longer possible. Alpe Macalalad. with folded arms. Dianne Miano. No backwages were awarded. if viable. or separation pay if reinstatement is no longer viable. (2) plain errors not specified. who is legally entitled thereto having been illegally dismissed.
Ÿ TEEHANKEE. the minimum should have been fixed at 3 years pay-Monette TEEHANKEE. Monina Lagman. and obviates the twin evils of idleness on the part of the 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. Itogon-Suyoc vs. concurring opinion: (Mercury Drug rule) I particularly endorse the new formula reached by the Court in ordering that respondent be paid a fixed amount of back wages (equivalent to 1 year. The period of delay in instituting this ULP charge with claim for reinstatement and back wages. However. Edlyn Santiago. As observed by the Court in another case. 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. Dianne Miano. Justice Teehankee concurs in the ruling that there shouldn’t be a deduction of earnings elsewhere from the backwages awarded. the employer in the case at bar should be directed to pay private respondent Dayao back wages equivalent to one year. Kristel Macatangay. the Court applies the precedent recently set in Mercury Drug. J. 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.. Jake Ng. eleven months. As to the amount of backwages. 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. Alpe Macalalad. Monette Mesa. Ysan Castillo." that is to say. the period was based on the remainder of the 4 year prescriptive period). should be deducted from the liability of the employer to him for back wages. Anna Tetangco 46 . 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. Heidi Soria. vs.As has been noted. generally led to long delays in the execution of the decision for back wages and reinstatement. although within the prescriptive period. 11 months and 15 days in the case at bar) "without further qualifications. he dissents as to the period of computation. however. dissenting opinion:(Mercury Drug rule) I dissent. Co. 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. such general award for back wages tended to breed idleness on the part of a discharged employee who would "with folded arms. He suggested that instead of Irah Burog. 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. and fifteen days without further disqualifications. Charms Haw. as noted in the main opinion. reasonable and mutually beneficial solution. As aforestated. which may delay the execution of the decision. Jon Santos. Such general awards. J.. CIR 1974) arbitrary procedures (in the Mercury case. (Mercury Drug vs.Labor II stamp of undesirability. is four years. On the other hand. from the specific result in the Ÿ *** Basically. 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. the shortest prescriptive period for the filing of all other actions for which the statute of limitations does not fix a period. 1961. 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. 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. Rationale. remain inactive in the expectation that a windfall would come to him" and attrition and protracted delay in satisfying such award on the part of unscrupulous employers who have seized upon the further proceedings to determine the actual earnings of the wrongfully dismissed or laid-off employees to hold unduly extended hearings for each and every employee awarded backwages and thereby render practically nugatory such award and compel the employees to agree to unconscionable settlements of their backwages award in order to satisfy their dire need. without having to determine and deduct earnings from the general award of back wages from date of unlawful dismissal until actual reinstatement heretofore customarily made in such unfair labor practice and reinstatement cases.
Held: The Supreme Court made a distinction between employees who signed a fixed term of contract and those who did not.Labor II judgment at bar of awarding respondent back wages only in an amount equivalent to 1 year. Jon Santos. Thus. 1964 and its en banc resolution of February 25. 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. Thus. 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. the Industrial Peace Act. their services were lawfully terminated by reason of the expiration of the periods of their respective contracts. when it is considered that he pursued — with vigor his complaint after its filing on April 25. they cannot be removed from their positions unless for cause. Normally.. 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. etc. History of the different methods in the computation of backwages. Insofar as the private respondents who knowingly and voluntarily agreed upon fixed periods of employment are concerned. 11 months and 15 days . they were notified of petitioners' decision not to renew their contracts anymore. Consequently. they are likewise protected by the security of tenure provision of the Constitution. NLRC (Monette) Facts: Private respondents were all employed as high school and college teachers on probationary basis by Pines City Educational Center. such was necessary to effectuate the policies of the Industrial Peace Act. the law abhors double compensation. as stressed in East Asiatic Co. 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. Alpe Macalalad. Monette Mesa. a case for illegal dismissal was filed. 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. oppression or dilatory appeals) on the employer's part. there was no illegal dismissal. a) The first labor relations law governing the award of backwages was Republic Act No. Monina Lagman. Anna Tetangco 47 . Employers should be put on notice as a deterrent that if they pursue manifestly dilatory and unmeritorious appeals and thus delay satisfaction of the judgment justly due their employee(s). Jake Ng. if any. 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. signed contracts of employment with petitioner for a fixed duration. All the private respondents. Dianne Miano.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. petitioners had the burden of proving that the termination of their services was legal. should be immediately effected upon finality of the judgment without waiting for the computation and determination of the back wages). when an employer had declared a Ÿ Irah Burog. Here. Hence. Only in one case was backpay a matter of right. As probationary employees.g. 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. and decision in this Court). 875. In accordance with these provisions. in the opinion of the Court of Industrial Relations (CIR). Edlyn Santiago.. 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. 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. Kristel Macatangay. backpay (the same as backwages) could be awarded where. supra. Heidi Soria. The petitioner’s contention that their evaluation of the teachers’ performance was poor was not presented by any written proofs or evidence. Charms Haw. In addition. Ÿ Pines City Educational Center vs. in ascertaining the total amount of backwages payable to them. 1963 and obtained favorable judgment in the industrial court within a year as per said court's decision of January 17. Ysan Castillo. 1964 denying petitioner's motion for reconsideration. 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. We restate the underlying reason that employees should not be permitted to enrich themselves at the expense of their employer. Due to the expiration of private respondents' contracts and their poor performance as teachers. should be deducted therefrom. and that was. 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. Ÿ However. except Roland Picart and Lucia Chan.
A survey of cases from 1974 until 1989. et al. it also had the implied power of mitigating (reducing) the backpay where backpay was allowed. Former Justice Claudio Teehankee approved of this formula expressing that such method of computation is a "realistic. However." However. be diminished or reduced by the earnings derived by him elsewhere Irah Burog. Its posture on the award of backwages.. 6715 took effect. In an even later case (1987). b) Mercury Drug rule. Act No.D. as a general rule. Feati University (1974) and others. 442) had taken effect. among them. No. the CIR increased or diminished the award of backpay. the rule generally applied by the Court after the promulgation of the Mercury Drug case. No. 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.Labor II lockout without having first bargained collectively with his employees in accordance with the provisions of the Act. c) 3 year backwages (Dissenting opinion of Justice Teehankee in Mercury Drug). without qualification or deduction.In order not to unduly delay the disposition of illegal dismissal cases. et al.D. the employee's employment in other establishments during the period of illegal dismissal.. 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. 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. 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. 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. Ysan Castillo. to rule that a fixed amount of backwages without further qualifications should be awarded to an illegally dismissed employee (hereinafter the Mercury Drug rule). was expressed as follows: “ART. e) On 21 March 1989. 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. (italics supplied). R. among them. in compliance with the jurisprudential policy of fixing the amount of backwages to a just and reasonable level. Charms Haw. as amended. backwages to be awarded to an illegally dismissed employee. Heidi Soria. the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. (See Itogon-Suyoc case). d) Then came Presidential Decree No. Monette Mesa. however. Security of Tenure. After the Labor Code (P. this Court found occasion in the case of Mercury Drug Co. Justice Teehankee dissented from the majority view that the employee in said case should be awarded backwages only for a period of 1 year. Kristel Macatangay. 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. Monina Lagman. qualified the provision under P. Republic Act No. Article 279 thereof states in part: “ART. No. In labor cases decided during the effectivity of R.D. Alpe Macalalad. 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. 442 (the Labor Code of the Philippines). — . As the CIR was given wide discretion to grant or disallow payment of backpay (backwages) to an employee. 442. 442 was still the Mercury Drug rule. Jon Santos. in effect. in the exercise of its jurisdiction. Dianne Miano. above-quoted. 279. and during the effectivity of P. this Court acknowledged and upheld the CIR's authority to deduct any amount from the employee's backwages including the discretion to reduce such award of backwages by whatever earnings were obtained by the employee elsewhere during the period of his illegal dismissal. to reconsider earlier rulings on the computation of backwages by now holding that comfortably with the evident legislative intent as expressed in Rep.A No. the Court enforced the Mercury Drug rule and. when the amendatory law to P. The Court deems it appropriate. 279. Inc. No.D. inclusive of allowances. depending on several circumstances. This ruling was grounded upon considerations of expediency in the execution of the decision. . the award of backwages equivalent to three (3) years. 442. 6715. Security of Tenure. should not. Thus. 875. No. during the effectivity of P. 442 by limiting the award of backwages to three (3) years.D. supports this conclusion. . — In case of regular employment. was nonetheless followed in said case. v.The proposal on the threeyear backwages was subsequently adopted in later cases. Edlyn Santiago.A. 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. Anna Tetangco 48 . In sum. 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. CIR. 6715 took effect. it became mandatory to award backwages to illegally dismissed regular employees. This notwithstanding." Under the abovequoted provision. namely. amending the Labor Code." (italics supplied) In accordance with the above provision. 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. the good faith of the employer. Feati University Faculty Club (PAFLU) v. Jake Ng.
that it has been established through substantial evidence that such abnormal behavior manifests a continuing mental disorder and incapacity to work. therefore. Bustamante vs. First. Held: Dropping from the rolls due to mental incapacity is subject to the requirements of due process. Jake Ng. during said periods. wherein the Court affirmed the disallowance of backwages or "financial assistance" in dismissals under the aforementioned circumstance. a closer adherence to the legislative policy behind Rep. requiring her to undergo psychiatric evaluation. Dianne Miano. and finally. 6715 effectively mitigated previous jurisprudence which had limited the extent to which illegally dismissed employees could claim for backwages. Thus. petitioner was diagnosed to be suffering from Major Depression. Metro Cebu Water (Monette) Facts: Metro Cebu Water District (MCWD) dismissed Romagos for mental incapacity. 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. Clearly. that a written notice is issued by the subject's immediate supervisor. Charms Haw. In other words. has made the employer bear a heavier burden than that pronounced in the Mercury Drug Rule.Labor II during the period of his illegal dismissal. This is only fair and just because an employee who is reinstated after having been illegally dismissed is considered as not having left her office and should be given the corresponding compensation at the time of her reinstatement. 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. Kristel Macatangay. the following elements and process must obtain: first. 6715 points to "full backwages" as meaning exactly that. but Ÿ Irah Burog. These certifications hardly prove that petitioner's behavior manifests a continuing mental disorder and incapacity to work. Atienza. Edlyn Santiago. 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. plain and free from ambiguity and. as amended by Republic Act No. The procedure adopted by respondent in dropping petitioner from the rolls substantially complied with the two-notice requirement. NLRC. The clear legislative intent of the amendment in Rep. second. Act No. must still earn a living to support himself and family. Zip Venetian Blind and the later decision in 1989 of Soriano v.e. must be applied without attempted or strained interpretation. 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. Issue: Whether there was proper procedure and substantial basis for MCWD to declare Romagos mentally unfit to work and drop her from the rolls. the 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. Respondent issued to petitioner a letter. while litigating the legality (illegality) of his dismissal. Gentallan. Rep. Heidi Soria. as amended by Republic Act No. which took effect just five (5) days after Soriano was promulgated. as confirmed by the head of office. However. inclusive of allowances. third.1996 Ÿ Romagos vs. the provision calling for "full backwages" to illegally dismissed employees is clear. before an officer or employee may be dropped from the rolls for mental incapacity. that another notice is issued by the appointing authority or head of office. 6715. it did sufficiently proved that petitioner's mental condition has rendered her incapacitated to work as to justify her being dropped from the rolls . describing the former's continuing mental disorder and incapacity to work and citing the reports of his coworkers or immediate supervisor. Such a doctrine is admittedly supported by the early case of National Labor Union v. without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Act No. that it has been observed that the subject officer or employee has been behaving abnormally for an extended period. where reinstatement is adjudged. Ÿ However. Anna Tetangco 49 . However. 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. Monette Mesa. whether the Labor Arbiter correctly awarded full backwages to Timbal. respondent sufficiently established that petitioner suffers from a mental disorder. Alpe Macalalad. i. However. Act No. 6715. Monina Lagman.All that the 1989 and 1991 medical certifications established is that. the Court now recognizes that this doctrine is inconsistent with Article 279 of the Labor Code. Ysan Castillo.. 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 underlying reason for this ruling is that the employee. We now turn to the second issue raised. Jon Santos. It may appear that Article 279 of the Labor Code. 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. 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. informing the subject of his separation from the service due to mental incapacity." Thus.
# On November 27. respondent agency terminated her services for abandonment when she failed to report for work in her new assignment. Jake Ng. with full backwages from the time she was placed under preventive suspension on October 27. respondent E & R security agency hired petitioner Chona P.ð Standard Electric vs. 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. 1995 cannot be deemed as an abandonment of his work. 1989. The Labor Arbiter declared the dismissal of the complainant not in accordance with law. Held: The amount of P 105. Abandonment as a just ground for dismissal requires clear. To constitute as such. never left his office. They also asserted that in interfering with their right to self-organization by deceitfully transferring them to an employment agency. KPI thereby engaged in ULP. On August 9. Moreover. 1995. Dianne Miano. Ÿ Ÿ Respondent Javier is not entitled to any salary during the period of his detention. Anna Tetangco 50 . 1989 up to the time of her reinstatement. Held: Respondent Javier’s absence from August 9. 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. 1989. Ÿ Kay Products vs. He failed to notify the SEMC of the reason for his absences. respondent Javier’s acquittal for rape makes it more compelling to view the illegality of his dismissal. Charms Haw. Saldiar (2007) Ÿ Torres vs. Hence. Now. CA (Jake) Facts: The employees alleged that they were illegally dismissed. Genalyn Barotilla. when respondent Javier was freed on May 24. even after notice to return. the backwages to be awarded should not be diminished or reduced by earnings derived by the illegally dismissed employee elsewhere during the term of his illegal dismissal. 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. Del Monte vs. Held: As regular employees. and considering that they were illegally dismissed. Ysan Castillo. 6715 was enacted precisely for the employer to realize that the employee must be immediately restored to his former position. In the instant case. should be granted the compensation which rightfully belongs to him from the moment he was unduly deprived of it up to the time it was restored to him. and unjustified refusal of the employee to resume his employment. 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. 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. Jon Santos. he was arrested and detained for the charge of rape upon complaint of his neighbor. 1989. NLRC (Jake) Facts: On January 5. Torres as a security guard. the private respondents should be reinstated. he immediately proceeded to the petitioner but was not accepted back to work. The complainants further contended that they were coerced and intimidated into signing letters of resignation. Puente (Jake) Facts: Respondent avers that he started working with Ÿ Irah Burog. we said that the rule enunciated in Pines Cityð no longer controls. in contemplation of the law. the reckoning point for the grant of backwages started therefrom. two requisites must concur: first. 1996. and second. 1996 by virtue of the judgment of acquittal dated May 17. Heidi Soria. An illegally dismissed employee who. In the recent ruling of the Court. 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. with the second element being the more determinative factor. 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.Labor II perhaps Republic Act No. Standard Electric Employees Union (Jake) Facts: On July 31. deliberate. Edlyn Santiago. willful. and (b) for committing rape. Javier failed to report for work. His entitlement to full backwages commenced from the time the petitioner refused his reinstatement. Monina Lagman. Monette Mesa. 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. 1995. respondent was ordered to immediately reinstate Complainant to her former position as security guard without prejudice to reassignment in the exigency of the service.396. is not tantamount to abandonment.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. 1995. the employee must have failed to report for work or must have been absent without valid or justifiable reason. hence. Alpe Macalalad. Mere absence or failure to report for work. Kristel Macatangay. On November 10.
that his work was not dependent on the completion or termination of any project. their temporary appointment to other positions could not have affected their permanent status pursuant to the ruling in the First GAUF Case. 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. there can be no question. are binding on us since they are supported by substantial evidence. Ÿ Intercontinental Broadcasting vs. Since backwages are granted on grounds of equity for earnings lost by an employee due to his illegal dismissal. Benedicto was entitled to backwages only for the period he could have worked had he not been illegally dismissed. was terminated as Secretary to the Legal Office on 21 November 1983. respondent is entitled to an award of separation pay equivalent to one-half (1/2) month’s pay for every year of service (with a fraction of at least six months considered one whole year). Held: These factual findings of the NLRC. Furthermore. or from June 1. as marketing manager with a monthly compensation of P20. Clarita's position was neither abolished. therefore. he should be paid P160. Dianne Miano. he was already 64 years old. they shall be entitled to reinstatement with full back wages. was terminated as Dean of the Institute of Business and Agricultural Administration and Concurrent Head of the Department of Business. that on October 1. Heidi Soria. terminating him as the Acting Vice-President and concurrently Executive Officer of the University effective 11 November 1983.00. the general manager then of petitioner. While petitioner Fuentes. In a letter dated October 11.000 plus 1% commission from collections of all advertising contracts consummated. Finance. the employment of project employees cannot be terminated prior to expiration.Labor II Petitioner Filsystems. Kristel Macatangay. in case of retrenchment to prevent losses. Benedicto was terminated from his position. 1999.000. Charms Haw. 1994. which we fix at P20. Benedicto (Jake) Facts: In 1993. petitioners filed their Complaint against the University and its President. petitioners implemented Irah Burog. a corporation engaged in construction business. Jon Santos. an authorized cause. petitioner Filomeno Lantion received a letter. respondent Obed Jose Meneses. Cajucom (Jake) Facts: As a result of the economic slowdown then experienced in this country. Petitioner Clarita Lantion. Such compliance with the reportorial requirement confirms that respondent was a project employee.000. the compulsory retirement age under the law. Thus. The position of Vice-President continued to exist. Held: That retrenchment was proper. Their positions were not affected by the re-organizational changes envisioned in the retrenchment program. Petitioners were not rehired although they fall outside the exception provided. his employment with the petitioner company was continuous and without interruption for the past ten years. Reynaldo Benedicto was appointed by Ceferino Basilio. Ÿ Benedicto was entitled to backwages only up to the time he reached 65 years old. Since he was employed by petitioners for four years.000. Held: The dismissal of respondent from the service is by reason of retrenchment. on June 12. pursuant to our ruling in Agabon. His employment was coterminous with the completion of the projects for which he had been hired. with a monthly salary of P80. Ysan Castillo. including respondent. Otherwise. Held: The contracts of employment of Puente attest to the fact that he was hired for specific projects. Anna Tetangco 51 . cost-cutting measures resulting in the termination from the service of their employees. 1995 to December 30.00 as separation pay.. were not religiously followed. However. Inc. 1989. wife of Filomeno. The conditions laid down. petitioners should be liable for violation of his right to due process and should pay him indemnity in the form of nominal damages. before the NLRC. She was replaced by another faculty member. confirmed by the CA. 1998. he was dismissed from his employment allegedly because he was a project employee. Alpe Macalalad. Ÿ In respect of the argument that the inflation that has supervened justifies the imposition of interest. that since his work was not dependent on any project. Under Article 283. 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. petitioner regularly submitted to the labor department reports of the termination of services of project workers. NLRC (Jake) Facts: On 10 November 1983. Effect Inflation Ÿ Lantion vs. at that time the president of petitioner. however. Ÿ Without a valid cause. dated 9 November 1983. The labor arbiter concluded that Benedicto was illegally dismissed. 1994 signed by Tomas Gomez III. Reinstatement of petitioners with backwages is thus called for. and Management effective 1 June 1984. if the project or work is completed during the pendency of the ensuing suit for illegal dismissal. And as far as Filomeno and Clarita Lantion are concerned. this Court has held that the effects of extraordinary Ÿ TPI Cement Corp vs. Edlyn Santiago.00. Jake Ng. Filomeno's sister-in-law. Monette Mesa. Monina Lagman. On 25 March 1985. Ÿ We rule that the Court of Appeals erred in awarding him such backwages. 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. When Benedicto was illegally dismissed on October 11.
The fact that she has worked with the PLDT for more than a decade. NLRC (Jake) Facts: Marilyn Abucay. on the ground of social justice. . as a pharmaceutical territory manager. Jake Ng. Moreover. an employee who is dismissed for cause is not entitled to any financial assistance. were immediately returned to the student-leaders for proper reimbursement to the students concerned. 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.00 in consideration of her promise to facilitate approval of their applications for telephone installation. Jon Santos. Ÿ We rule that the NLRC correctly awarded to petitioner the amount of P45. Gustilo. the employer may not be required to give the dismissed employee separation pay. petitioner." As a general rule." Petitioner's infraction of a school policy warrants her dismissal. 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. petitioner relied principally on a letter written by Ÿ Gustilo vs.. Alpe Macalalad. Wyeth Philippines (Kristel) Facts: Alan D. being ethical rather than jural and belonging to the sphere of morals than of law. Ÿ Salavarria vs. It is grounded on the precepts of conscience and not on any sanction of positive law. like theft or illicit sexual relations with a fellow worker. In PLDT v. 10. After consideration of the evidence and arguments of the parties. Inc. 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. . was employed by Wyeth Philippines. was accused by two complainants of having demanded and received from them the total amount of P3.. If regarded as a justification for moderating the penalty of dismissal. the employer may not be required to give the dismissed Irah Burog. the company was sustained and the complaint was dismissed for lack of merit but private respondent was awarded separation pay.00 as "severance pay" which is synonymous with "separation pay. . Further. . Kristel Macatangay. for example. having been effected without just cause. However. Redentor Salonga. she was found guilty as charged and accordingly separated from the service. habitual intoxication or an offense involving moral turpitude. after initial purchases were made. Held: If there is one person more knowledgeable of respondent's policy against illegal exactions from students. Monette Mesa. the fact that the same was approved or indorsed by petitioner. 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. reprimanded and suspended him for habitually neglecting to submit his periodic reports. one of her students. Petitioner's employment records show that respondent company. for equity finds no room for application where there is law. or financial assistance. on various dates.800. or whatever other name it is called. 14. it would be petitioner Salavarria. Charms Haw. but for the canvass of the price of the religious items as well. not only for the collection of the contributions. Letran College (Jake) Facts: Petitioner contended that her dismissal was arbitrarily carried out. equity has been defined as justice outside law. In support of this claim. . Hence. 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. maintaining that he was responsible. if it is to be considered at all. an offense involving moral turpitude . Heidi Soria. FINANCIAL ASSISTANCE Allowed Financial Assistance Ÿ PLDT vs. Where the reason for the valid dismissal is. it will actually become a prize for disloyalty. 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. equity considerations provide an exception. 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. perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables.000. The private respondent has been dismissed for dishonesty. who attested to the veracity of the former's assertion. made her "in effect the author of the project. Ysan Castillo. Where the reason for the valid dismissal is. Held: We hold that the grant of separation pay in the case at bar is unjustified. NLRC. petitioner pleaded that she never misappropriated the money collected and whatever was left of it. a traffic operator of the Philippine Long Distance Telephone Company. Edlyn Santiago. Anna Tetangco 52 . Investigated and heard. as found by the labor arbiter and affirmed by the NLRC and as she herself has impliedly admitted. She went to the Ministry of Labor and Employment claiming she had been illegally removed. 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. respondent company. Monina Lagman. Dianne Miano.
Inc. private respondent was found by the Labor Arbiter and the NLRC to have been validly dismissed for violations of company rules.Labor II employee separation pay. The fact that private Ÿ Eastern Shipping Lines vs. Anna Tetangco 53 .The union staged a strike. that it would appear that he had served the company well. and Irah Burog. since even the company said that the reason it refused his application for optional retirement was that it still needed his services. Equity has been defined as justice outside law. and that he was not authorized to accept payment. we can call upon the same "social and compassionate justice" cited in several cases allowing financial assistance. Moreover. Equity considerations. 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. Hence. and (3) defrauding others by using the name of the company. Although meriting termination of employment." 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. or whatever other name it is called.. this case is not the appropriate instance for generosity under the Labor Code nor under our prior decisions. Ÿ Pinero vs. Ysan Castillo. 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. if supported by substantial evidence. are accorded respect and even finality by this Court. with these special circumstances. provide an exception. Monina Lagman. Edlyn Santiago. that he applied for optional retirement under the company's non-contributory plan when his daughter died and for his own health reasons. but that considering his age and health. or financial assistance. 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. 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. that in those years there was not a single report of him transgressing any of the company rules and regulations. being ethical rather than jural and belonging to the sphere of morals than of law. NLRC (Kristel) Facts: Lito Cagampan was the Acting Power Use Coordinator of petitioner Central Pangasinan Electric Cooperative. Jon Santos. Ÿ Pangasinan Electric Coop vs. Kristel Macatangay. Ÿ An employee who is dismissed for cause is generally not entitled to any financial assistance. that he had given to the company the best years of his youth. Heidi Soria. on the ground of social justice. hence the retirement benefits he would receive would ease his financial burden. Monette Mesa. Charms Haw. Inc. Alpe Macalalad. is the employer of the faculty and staff members comprising the labor union DUCACOFSANAFTEU. He was dismissed from service. It appeared that Cagampan knowingly entered into an unauthorized contract for the installation of a transformer. Dianne Miano. he preferred to stay home rather than risk further working in a ship at sea. Ÿ Section 7. Such findings. working on board ship for almost 24 years. 15 Separation pay in such case is granted to stand as a "measure of social justice. the grant by the Court of separation benefits is hardly justifiable. In this instance. that he denies receiving the telegram asking him to report back to work. Sedan sent a letter to petitioners applying for optional retirement. an educational institution. Rule I. In our view. for equity finds no room for application where there is law. Jake Ng. and as an equitable concession. Cagampan was found guilty of violating CENPELCO's Code of Ethics and Discipline. It is grounded on the precepts of conscience and not on any sanction of positive law. Financial assistance may be allowed as a measure of social justice and exceptional circumstances. (2) dishonest or unauthorized activity whether for personal gain or not. 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. he has no previous derogatory records. conscience and reason tip in favor of granting financial assistance to support him in the twilight of his life after long years of service. These circumstances indubitably merit equitable concessions. and certain acts tantamount to serious misconduct. In this case. 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. via the principle of "compassionate justice" for the working class. The strike was declared illegal and the dismissal of the union members was ordered by the lower courts. citing as reason the death of his only daughter. namely: (1) unauthorized acceptance of payments for new connection. however. Weighed on the scales of justice. (CENPELCO).This was not granted despite several demands. NLRC (Kristel) Facts: Dumaguete Cathedral College. Although long years of service might generally be considered for the award of separation benefits or some form of financial assistance to mitigate the effects of termination.
NLRC (Kristel) Facts: Petitioner. The company found him guilty of stealing or unauthorized taking of company property. Not Allowed Ÿ Phil. (Articles 283 and 284. During the strike. Both declared that the items were deposited there by Manreza and his companions. 148 SCRA 526. Filipro. within full view and hearing of the other employees. and hearing. although the employee was lawfully dismissed. At best it may mitigate the penalty but it certainly will not condone the offense. Inc. . Anna Tetangco 54 .) . Labor Code. Heidi Soria. of which petitioner Benito D. NLRC. betrayal of the company. since his violation reflects a regrettable lack of loyalty and worse. the North Luzon Expressway (NLE) Security Services Investigation and Intelligence Unit discovered NLE flexbeams in the house of Alfonso Eusebio in Sipat. for having physically assaulted and verbally abused. Monette Mesa. (4) cessation of the employer's business. Jon Santos. Book VI of the Omnibus Rules Implementing the Labor Code. a violation of Section 7 (a) (10) of the CDCP Code of Employee Discipline. August 23. It contravenes Rule 1. does not call for such award of benefits. several of the striking employees threw stones at the trucks entering and leaving the company premises. 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. like theft or illicit sexual relations with a fellow worker. (3) retrenchment. Ÿ An award of separation pay to an employee who was dismissed for a valid cause (in this case. rammed a private vehicle and crashed into a beauty parlor resulting in the death of three (3) persons and extensive damage to private property. Jake Ng. Kristel Macatangay. NLRC and Marilyn Bucay." Since Manreza was found guilty of dishonesty for having stolen company property and was dismissed for cause. or financial assistance. (Emphasis supplied. 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. 145 SCRA 123). whose driver was rendered unconscious by a stone hitting him on the head. dismissed the private respondent Eduardo Malabanan. or whatever other name it is called. It placed the complainant under preventive suspension for thirty (30) days. and also in the house of Nene Enriquez.Labor II respondent served petitioner for more than twenty years with no negative record prior to his dismissal. a superior officer. One truck. such gesture will actually become a prize for disloyalty. Bulacan. G. If an employee's length of service is to be regarded as a justification for moderating the penalty of dismissal. vs. NLRC (Kristel) Facts: Domingo Manreza was hired by the CDCP in 1972. . as a janitor and later promoted to Leadsman. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it. and thereafter terminated his employment Ÿ It is true that in some earlier cases. for example. investigation. 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. Inc. distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of undesirables. like the workers who have tainted the cause of labor with the blemishes of their own character. in our view of this case. 80609. Dianne Miano. Monina Lagman. where We held that: ". Sec. No. who was then the personnel and administrative manager of the company. 148 SCRA 187. the employer may not be required to give the dismissed employee separation pay. 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. Lariosa. On May 24. of Davao. Charms Haw. Construction Corp vs. after due notice. . are when the cause of termination was not attributable to the employee's fault but due to: (1) the installation of labor-saving devices. an accounts payable clerk. Ÿ Eastern Paper Mills vs. NLRC (Kristel) Facts: Union of Filipro Employees. of the Philippines vs. for serious misconduct) is legally indefensible. 1983. 7. Edlyn Santiago.) Ÿ Chua vs. Ysan Castillo. 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. Nestle Philippines. he is not entitled to separation pay. Alpe Macalalad. "The policy of social justice is not intended to countenance wrong doing simply because it is committed by the underprivileged. . Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. on the ground of social justice. Where the reason for the valid dismissal is.R. Plaridel. Mercantile Corp. The only cases when separation pay shall be paid. Chua was a member. declared a strike against the private respondent company. vs. 1988. Mariano Lopingco. Soco vs. (2) redundancy. Petitioner received a notice Irah Burog. having the main duty of removing and/or changing damaged flexbeams on the expressway. 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. that doctrine was abandoned by this Court in the recent case of Philippine Long Distance Telephone Co. habitual intoxication or an offense involving moral turpitude.
like theft or illicit sexual relations with a fellow worker. SDPI decided to terminate the FMA with ARCI and cease operation of the rubber 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. Jake Ng.11 SEPARATION PAY When Alternative Ÿ Although Vital. Had the dailypaid rank-and-file employees deemed the same to be a diminution of their benefits. CA (Heidi) Facts: SDPI was given the right to manage. a letter to DOLE. in addition to his full backwages. Meanwhile. the CBA. and other benefits which were all lumped in one Metrobank check. have the effect of rewarding rather than punishing the erring employee for his offense . Ÿ Irah Burog. accordingly. unused sick leave and other benefits. petitioner's participation in the unlawful and violent strike. permanent or temporary lay-off workers affected would be entitled to termination pay as provided by the Labor Code. A contrary rule would. SDPI and NFL executed CBA in which they agreed that in case of permanent or temporary lay-off. which strike resulted in multiple deaths and extensive property damage. It bears stressing that a CBA refers to the negotiated contract between the legitimate labor organization and the employer concerning wages. or whatever other name it is called. they should have rejected the CBA. Edlyn Santiago. Simultaneously. 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. Etcuban vs. During the negotiations. Monina Lagman. as a contract governing the employer and the employees respecting the terms of employment. management and union meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement. The petitioners never assailed the CBA as prejudicial to them or for having been in violation of Article 100 of the Labor Code. each of the petitioners received his separation pay equivalent to one-half month pay for every year of service. whichever is higher. Where the reason for the valid dismissal is. develop. . A fraction of at least 6 months shall be considered 1 whole year. Anna Tetangco 55 . should prevail. Separation pay for the employees was computed pursuant to the provisions of the CBA between SDPI and NFL. whichever is higher.Labor II of dismissal from private respondent for having participated in the illegal strike. Dianne Miano. allowances. Sulpico Liner (Heidi) 14. The parties opted to be bound by the provisions of the Labor Code and not by company policy. In the case at bar. During the effectivity of the FMA between ARCI and SDPI. . NFL was the duly registered bargaining agent of the daily-and-monthly-paid rank-and-file employees of SDPI in a rubber plantation. Ysan Castillo. on the ground of social justice. as the petitioner correctly argues. who was illegally dismissed. vs. 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. cultivate. . 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. specifically for planting rubber trees. SDPI served formal notices of termination to all the employees of the plantation. workers affected would be entitled to termination pay as provided by the Labor Code. Heidi Soria. (Coca-cola Bottlers Phils. vacation leave. hours of work and all other terms and conditions of employment in the bargaining unit. processing of and marketing of its products and providing technical expertise. Unless annulled. Kristel Macatangay. Consequently. without the NFL initiating the revision thereof. in relation to the Labor Code of the Philippines. is entitled to reinstatement. for example. the NFL requested SDPI that the separation pay benefits for its members be segregated from regular workdays. the employer may not be required to give the dismissed employee separation pay. respecting the terminations was sent by SDPI. or financial assistance. However. constituted serious misconduct on his part. Vital) Ÿ National Federation of Labor vs. thus: Pursuant to the CBA. antagonism has caused a severe strain in their relationship. and other benefits. Jon Santos. the parties. 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. habitual intoxication or an offense involving moral turpitude. Charms Haw. administer. 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. Alpe Macalalad. the Comprehensive Agrarian Reform Law (CARL) took effect. The employees of the private respondent who were members of the NFL ratified the CBA which had been in force and effect for 3 years before the closure of the plantation. and improve the rubber plantations of ARCI as an agro-industrial development project.
in a surprise examination.000. discovered irregularities in the issuance of passage tickets. as in fact. 1998. In Hinatuan Mining Corporation and/or the Manager v. non-payment of overtime pay. employees or workers who may be separated without cause. It also informed him of his immediate preventive suspension until further notice. Later. as in this case.. Under the Code. (e) disease of an employee and his continued employment is prejudicial to himself or his co-employees. 1998. there is no reason why they should not also extend such liberality to respondent considering that she served petitioner for 21 years. 1986. PNB transferred all its loans to and equity in North Davao in favor of the national government which later turned them over to petitioner Asset Privatization Trust (APT). "separation from the company without cause. Dianne Miano. Monina Lagman. Barely a week after the petitioner's preventive suspension and pending his administrative investigation. Hanford then paid Joseph her last salary. After all. 1994 for loss of trust and confidence. an employee who voluntarily resigns may not be granted separation pay. this Court holds that there was sufficient basis for petitioner to lose trust and confidence in private respondent so as to justify his termination. If petitioners could be liberal to those employees who retired. Inasmuch as reason for which the petitioner was validly separated involves his integrity. NLRC and Margo Batister." 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. Moreover. 10. 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. 1998. voluntary resignation is not one of the grounds which justifies the When not allowed Ÿ North Davao Mining Corp vs. Well-settled is the rule that separation pay shall be allowed only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. As aptly held by the Labor Arbiter. 1978 until his dismissal on June 10. he filed a complaint against the respondent for illegal dismissal." such as voluntary resignation. Ectuban received a memorandum of even date relative to the irregularity in the "alleged involvement in anomaly of ticket issuance. however. it is very clear from the CBA that when an employee or worker voluntarily resigns due to. Charms Haw. On Aug. Joseph (Heidi) Facts: On July 17. Anent the petitioner's request for separation pay. separation pay may be awarded only in cases when the termination of employment is due to: (a) installation of labor saving devices. grant of separation pay. Hanford hired Shirley Joseph as a sewer. retirement is not also a ground for the grant of separation pay. At the time of his dismissal. Irah Burog. the Court is constrained to deny the same. when it is stipulated in the employment contract or CBA or such payment is authorized by the employer's practice or policy. Ectuban was the Chief Purser of the M/V Surigao Princess receiving a monthly salary of P5. respondent voluntarily tendered her resignation effective September 17. 2 which petitioner accepted the following day. Alpe Macalalad. records show that petitioners granted the employees mentioned earlier their separation pay upon their separation by reason of their retirement." Ÿ Hanford Phil.Labor II Facts: Ectuban was employed by the Sulpicio Lines on January 30. 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. Consequently. (c) retrenchment. all doubts should be construed in favor of labor. On June 30. among others. NLRC (Heidi) Facts: North Davao was incorporated in 1974 as a 100% privately-owned company. Ÿ In the instant case. then he is entitled to a separation pay. 13th month pay and the cash conversion of her unused vacation and sick leave. (b) redundancy. or (f) when an employee is illegally dismissed but reinstatement is no longer feasible. Edlyn Santiago. there is an exception. (d) closing or cessation of business operations.00. NLRC finds application here. Under the Labor Code. the NLRC and the Court of Appeals. 13th month pay and other monetary benefits with the regional arbitrator. 1978. Hanford denied Joseph's request on the ground that under the Labor Code. Ysan Castillo. Heidi Soria. Kristel Macatangay. Jon Santos. Monette Mesa. which is especially required for the position of purser. thus: "In the interpretation of an employer's program providing for separation benefits. 19. 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. Our ruling in Philippine National Construction vs. that is. the general rule is that an employee who voluntarily resigns is not entitled to separation pay. and those whose services are terminated due to suspension or cessation of operation. Jake Ng. vs. workers are the intended beneficiaries of such program and our Constitution mandates a clear bias in favor of the working class. Sometime in 1994. Ÿ It is well to note that there is no provision in the Labor Code which grants separation pay to employees who voluntarily resign. On Nov. we held that while it is true that under the Labor Code. Anna Tetangco 56 . the newly designated jefe de viaje of the ship. he is not worthy of compassion as to deserve at least separation pay for his length of service.
Ÿ Art. Moreover. "wage" is defined in letter (f) as the remuneration or earnings. . Therefore.e. one cannot squeeze blood out of a dry stone. When it ceased operations. its cash flow could still have sustained the payment of such separation benefits. authorizes neither oppression nor self-destruction of the employer. by denying the same separation benefits to private respondents and the others similarly situated. Art. in addition to the commutation to cash of their unused vacation and sick leaves. As already stated. whether fixed or ascertained on a time. some 58 kilometers from their workplace and about 2 1/2 hours' travel time by public transportation. Computation Ÿ Millares vs. . managerial and even a Vice Presidential positions in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Surigao del Sur. Specifically. 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." the question arises. i. 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 . capable of being expressed in terms of money..5-days' worth at that. unfair and most revolting to the conscience. 1992 due to serious business reverses.Labor II North Davao completely ceased operations in May 31.". Davao Del Norte. anchoring their claim solely on petitioner North Davao's long-standing policy of giving separation pay benefits equivalent to 30-days' pay.5 days' pay for every year of service. Indeed. As a going concern. it gave 30-days' separation pay to its employees when it was still a going concern even if it was already losing heavily. which is proscribed as an unfair labor practice by Art. upon its death as a going business concern. Jake Ng. however designated. the employees had to collect their salaries at a bank in Tagum. the grant of a lesser amount of separation pay to private respondent was done. whichever is higher. The law. out of sheer financial bankruptcy — a fact that is not controlled by management prerogatives. petitioners were given separation pay.. 283 of the Labor Code does not obligate an employer to pay separation benefits when the closure is due to losses. the basis for the claim of the additional separation benefit of 17. Nor water out of parched land. from the beginning of its operations in 1981 until its closure in 1992. 97 of the same Code on definition of terms. But when a business enterprise completely ceases operations. Ysan Castillo. 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. it had been giving separation pay equivalent to 30 days' pay for every year of service. Ÿ In case of retrenchment to prevent losses. Anna Tetangco 57 . its remaining employees were separated and given the equivalent of 12. a reward or recompense for services performed. 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 closure was due to business losses — as in the instant case. but rather. during the life of the petitioner corporation. 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. 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. not by reason of discrimination. 283 with Art. should have elicited admiration instead of condemnation. Such action was dictated not by a discriminatory management option but by its complete inability to continue its business life due to accumulated losses. the fact that less separation benefits were granted when the company finally met its business death cannot be characterized as discrimination. or commission basis. i. unequal treatment of employees. NLRC (Heidi) Facts: Petitioners numbering 116 occupied technical. Where. in protecting the rights of the laborer. or other method of calculating the Irah Burog. In the case before us. Monette Mesa. respondents tenaciously insist on the award of separation pay. they lodged a complaint for separation pay differentials. 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. piece. Under the facts and circumstances of the present case. Monina Lagman. which policy had been in force in the years prior to its closure. Art. Alpe Macalalad. However. for obvious reasons. "Pay" is not defined therein but "wage. i. In the case of North Davao. its vital lifeblood — its cashflow — literally dries up. Heidi Soria. Jon Santos. Edlyn Santiago. Accordingly.e. it appears that. inasmuch as the region where North Davao operated was plagued by insurgency and other peace and order problems.e.. Stated differently.5 days is alleged discrimination. Since the law speaks of "pay. Dianne Miano. computed on their basic monthly pay. petitioners discriminated against them. Respondents contend that. 248 (e) of said Code. Believing that the allowances they regularly received on a monthly basis during their employment should have been included in the computation thereof. however. However." Both words (as well as salary) generally refer to one and the same meaning. "What exactly does the term connote?" We correlate Art. Kristel Macatangay. this arrangement lasted from 1981 up to 1990. Charms Haw. task.
the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer. Ransom Labor Union-CCLU v. The subject allowances do not form part of petitioners wages. because a corp. In the case of the housing allowance. Edlyn Santiago. NLRC (Heidi) Facts: Complainants-petitioners are employees of Hinatuan Mining Corporation (HMC) holding supervisory positions who organized the Hinatuan Mining Supervisory Union (HIMSU). the fair and reasonable value thereof. Ÿ What the Court finds apropos is our disquisition in A. In this case Cathy Ng. dismissed complainants-petitioners who are active leaders of the union. admittedly. which held that since a corporation is an artificial person. the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation given only to employees who have personal cars. 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. On the other hand. Effect of Acceptance Ÿ Anino vs. however. Kristel Macatangay. (Bogo-Medellin vs. NLRC (Heidi) Facts: Publico was a sewer of NYK. HMC in opposition avers that the validity of the retrenchment was not in issue in the complaint filed by petitioners. HMC. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. she notified petitioner that she was still recovering from her sickness. Conformably with our ruling in A.C. NLRC. In a subsequent case. LIABILITY OF CORPORATE OFFICERS Liability Rule Ÿ Unless they have exceeded their authority. C. In the case at bar. being the "person acting in the interest of the employer. therefore. Publico went home early despite refusal of petitioner because she was not feeling well. 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. in the technical sense only. The next day. a measure fully explained to all its employees. null and void. Jake Ng. Irah Burog. Waivers and quitclaims are generally looked upon with disfavor. that it merely exercised its management prerogative when it resorted to retrenchment as a means of preventing losses. Monina Lagman. Alpe Macalalad. or other facilities customarily furnished by the employer to the employee. Dianne Miano. the employee concerned transfers to the company premises and his housing allowance is discontinued. On May 7. by legal fiction.Labor II same. there was no reason at all for petitioners to resort to the above cases. respondent corporation did not submit an iota of evidence to show losses in its business operations and the economic havoc it would sustain imminently. However. it must have an officer who can be presumed to be the employer. unfair labor practice and damages against HMC. 1997. has a separate and distinct personality. is included in "wage. AFP-MBAIEU which ruled that such quitclaims are against public policy and. of board. Ransom. Ysan Castillo. Ÿ In termination cases. this fictional veil may be pierced whenever the corp personality is used as a means of perpetrating fraud or other illegal acts. Jon Santos." In other words the corporation. corporate officers are as a GR. Anent the issue on the quitclaims. It cited the case of AFP Mutual Benefit Association. Anna Tetangco 58 . "fair and reasonable value as determined by the Secretary of Labor. or for services rendered or to be rendered and includes the fair and reasonable value. Charms Haw. 1997. as determined by the Secretary of Labor and Employment. is the manager of NYK." and. On May 9. we ordered the corporate officers of the employer corporation to pay jointly and solidarily the private respondents' monetary award. once a vacancy occurs in the company-provided housing accommodations. When an employer customarily furnishes his employee board. is the employer. More recently. 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. not personally liable for their official acts. vs. in the guise of retrenchment. as determined by the Secretary of Labor. 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. lodging or other facilities. Publico was refused entry for work and later informed of her dismissal. Inc. Monette Mesa." "Customary" is founded on long-established and constant practice connoting regularity. But in view of the previous discussion that the disputed allowances were not regularly received by petitioners herein. NLRC) Ÿ NYK Intl vs. Heidi Soria." we divide the discussion on the following — "customarily furnished. which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done." In order to ascertain whether the subject allowances form part of petitioner's "wages. lodging or other facilities. Complainants-petitioners then filed a complaint for illegal dismissal." "board. lodging.
(Tan vs. this Court reduces the amount of moral damages awarded to P500. 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. Given petitioner's business position or standing before and at the time of termination and petitioner's business and financial position. In determining the amount of moral damages recoverable. To warrant award of moral damages. as a general rule. Thus. Therefore. NLRC) dismissal with prayer for damages and attorney's fees. evading an existing obligation. good customs or public policy. Kristel Macatangay. 1990. this fictional veil may be pierced whenever the corporate personality is used as a means of perpetuating fraud or an illegal act. stockholders and members. Jake Ng. vs. A dismissal may be contrary to law. with the company for the monetary award. The labor arbiter didn’t make any such finding. Hence. not personally liable for their official acts. or was done in a manner contrary to morals. this petition for certiorari. Dianne Miano. Timbol) Unless they have exceeded their authority. social and financial position of the offended party and the business or financial position of the offender are taken into account. nor did he hold Tan liable. Petitioners alleged that the NLRC committed grave abuse of discretion in ordering their reinstatement to their former position on probationary basis.00. The amount of exemplary damages awarded is accordingly reduced too to P250. private respondent terminated petitioners' employment. or is done contrary to morals. Tan’s real and personal property should not be burdened by such award. Moral damages are recoverable only where the dismissal is attended by bad faith or fraud. the business. Monina Lagman. petitioners were allowed by the private respondent to work until January 2. in limiting the backwages to one year and in deleting the award of indemnity and attorney's fees. On January 3. Charms Haw. 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.’s fees because there is no showing that bad faith and malice attended her dismissal. Monette Mesa. in her capacity as manager and responsible officer of NYK. the alias writ of execution for said award should be directed only against the company and not against Tan. Despite the expiration of their employment contract. Cathy Ng. or constitutes an act oppressive to labor. it must be shown that the dismissal of the employee was attended to by bad faith. (Collegio de San Juan de Letran-Calamba vs. she was terminated. by legal fiction. Ÿ The Supreme Court held that the respondent was illegally dismissed. Thus. cannot be exonerated from her joint and several liability in the payment of monetary award to private respondent. hence. corporate officers are. the NLRC modified the Labor Arbiter's judgment and declared petitioners' dismissal illegal. has a personality separate and distinct from its officers. 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. 1991. or confusing a legitimate issue.Labor II she falls within the meaning of an "employer" as contemplated by the Labor Code. 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. On appeal. petitioners separately filed complaints for illegal dismissal. where terminations of employment are done with malice or in bad faith. Heidi Soria. (Acesite Corp. because a corporation. 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 21.00 which it finds reasonable. Anna Tetangco 59 . however. The Labor Arbiter dismissed the complaints. Ÿ 14. Ysan Castillo. 1991. Jon Santos.000. underpayment of wages and claim for indemnity against private respondent. Alpe Macalalad. good customs or public policy. Edlyn Santiago. who may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. or constituted an act opposite to labor. but by itself alone. Her resultant sufferings thus entitle her to an award of moral damages.000. Irah Burog. However. Pursuant to prevailing jurisprudence. corporate directors and officers are solidarily liable with the corporation. either jointly or severally. bad faith or malice was not proven. 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. Here. even though the latter was the General Manager. Indeed. On the other hand. 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.12 DAMAGES Moral/Exemplary Ÿ Villas is not entitled to moral and exemplary damages and atty. In cases of illegal dismissal. Villas) Ÿ Asia Pacific Chartering vs. private respondent invoked Article 283 of the Labor Code. petitioner was deprived of due process and denied "basic precepts of fairness" when she was terminated. it does not necessarily establish bad faith.
Labor II Held: The Supreme Court held that petitioners should be reinstated to their former position as meter readers. The enforcement of this labor standard rests with the labor secretary. which has been violated or invaded by the defendant. in which the employer-employee relation is merely incidental. Petitioner cannot anchor her claim for damages to Article 161 of the Labor Code. Petitioner's action was recovery of damages based on a quasi-delict or tort. ruled that the labor commission had no jurisdiction over the subject matter filed by petitioner. NLRC (Dianne) Facts: Petitioner was the widow of Capt. but as regular employees. the Court held that petitioners are entitled to full backwages. They have no jurisdiction over torts that have no reasonable causal connection to any of the claims provided for in the Labor Code. petitioners have become full-fledged regular employees. Petitioner is actually suing shipmates Garate and Asis for gross negligence. 1990. 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. his health rapidly deteriorated resulting in his death. Tolosa contracted a fever and in the succeeding 12 days. in effecting such dismissal. 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. however. through its manning agent. Monette Mesa. transferred to the DOLE. Dianne Miano. NLRC. Ÿ As a rule. or collective bargaining agreements. The Court also awarded attorney's fees to the petitioners pursuant to the provisions of Article 111 of the Labor Code. Moreover. 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. While labor arbiters and the NLRC have jurisdiction to award not only relief provided by labor laws. Accordingly. Under Article 2221 of the Civil Code. Ÿ An employer becomes liable to pay indemnity to an employee who has been dismissed if. or collective bargaining agreements. Tolosa. and other labor benefits that are generally cognized in labor disputes. the employment of petitioners is no longer on a fixed term basis. these relief must still be based on an action that has reasonable causal connection with matters. Jake Ng. Moreover. Irah Burog. not adjudication of a labor dispute to which jurisdiction of labor tribunals is limited. this appeal. overtime compensation or separation pay. petitioner's claim for damages is not related to any other claim under Article 217. other labor statutes. Anna Tetangco 60 . With the continuation of their employment beyond the original term. not merely probationary. Hence. the fact alone that petitioners have rendered service for a period of less than six months does not make their employment status as probationary. Asia Bulk. and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Virgilio Tolosa who was hired by Qwana-Kaiun. Jon Santos. Capt. and in which the cause of action proceeds from a different source of obligation such as a tort. Heidi Soria. This provision is only a safety and health standard under Book IV of the same Code. Only if there is such a connection with the other claims can the claim for damages be considered as arising from employeremployee relations. It held that after October 31. It is not the NLRC but the regular courts that have jurisdiction over actions for damages. Considering that petitioners were already regular employees at the time of their illegal dismissal from employment. It must be noted that a worker's loss of earning capacity and blacklisting are not to be equated with wages. entitled to be reinstated to their former position as regular employees. jurisdiction over the action lies with the regular courts — not with the NLRC or the labor arbiters. While in command of the vessel. the employer fails to comply with the requirements of due process. Edlyn Santiago. The NLRC. "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. nominal damages are adjudicated in order that a right of the plaintiff. Charms Haw. When petitioner filed a complaint with the POEA. the Labor Arbiter ruled in her favor. they were. 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. Alpe Macalalad. Kristel Macatangay. affirmed by the Court of Appeals. to be the master of the Vessel named M/V Lady Dona. which does not grant or specify a claim or relief. 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. petitioners are entitled to indemnity for failure of private respondent to comply with the requisite notice in violation of petitioners' right to due process. therefore. According to the Court. Ysan Castillo. but also damages under the Civil Code. Monina Lagman. and the said shipmates have no employer-employee relations with Capt. In other words. Thus. or collective bargaining agreements. claims for an employer's violation thereof are beyond the jurisdiction of the labor arbiter. petitioner cannot enforce the labor standard provided for in Article 161 by suing for damages Ÿ Tolosa vs. other labor statutes. The indemnity is in the form of nominal damages intended not to penalize the employer but to vindicate or recognize the employee's right to procedural due process which was violated by the employer. Held: The Supreme Court affirmed the appealed decision. not on a probationary status. other labor statutes. may be vindicated or recognized." In the present case.
Maquiling. 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.00) was dismissed from service as Deputy Executive Director after serving PTS for twenty-three (23) years. Ÿ This Court has consistently accorded the working class a right to recover damages for dismissals tainted with bad faith. The award must be based on clear factual and legal bases and correspond to such pecuniary loss suffered by the employee as duly proven. On 8 June 1991. Edward L. the lack of statutory due process should not nullify the dismissal. and Fe M. oppressive or malevolent manner. (IIEE). The instant controversy fails to show that the dismissal of the employee was attended by bad faith. Engrs. Jr. 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. The award of such damages is based not on the Labor Code but on Article 2220 of the Civil Code. or was done in a manner contrary to morals. The suspension of petitioner without prior investigation is akin to Irah Burog. Charms Haw. It may be also argued that actual or compensatory damages may be recovered in employment termination cases.000. (Kay Products vs.000. or ineffectual. Evidently. moral damages are recoverable when the dismissal of an employee is attended by bad faith or fraud or constitutes an act oppressive to labor. fraud. the Supreme Court ruled that Dr. Jon Santos. Inc. (Acesite Corp. in the alternative. then earning a monthly salary of thirteen thousand nine hundred pesos (P13. without her reinstatement forthcoming. Mendoza. oppressive or malevolent manner to warrant an award for exemplary damages. as well as moral damages in the amount of five hundred thousand pesos (P500. Dianne Miano. Exemplary damages on the other hand may be awarded only if the dismissal was effected in a wanton. Heidi Soria. PTS was remiss in its duty to observe procedural due process in effecting the dismissal of Dr. The measures undertaken were relevant to the company-wide audit and investigation conducted within the institute. oppressive or malevolent manner. Edlyn Santiago. vs. Jr. Indeed.00 as moral damages and P5. Dr. Exemplary damages may be awarded if the dismissal is effected in a wanton. Monina Lagman. Maquiling was indeed validly dismissed for just cause." which we sought to deter in the Serrano ruling. Maquiling was employed by respondent Philippine Tuberculosis Society. Ysan Castillo. The amount of such damages is addressed to the sound discretion of the court. Maquiling filed a complaint against PTS for reinstatement or. good customs or public policy.Labor II before the labor arbiter. no doubt. In the case at bar.. Herrera. The dismissal. Dr. Maquiling vs Philippine Tuberculosis Society (Dianne) Facts: On 16 April 1968.00 as exemplary damages are hereby awarded to each private respondent. However. Hence.000. good customs or public policy. 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. Antonio S. (PTS). Petitioner Marilyn T. Calado. the amount of P10. taking into special consideration the gravity of the due process violation of the employer. Alpe Macalalad. 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. Barrientos. as in the instant case. Neither will an award for moral damages nor exemplary damages prosper. there is less degree of discretion to award actual or compensatory damages. was effected in a wanton. Actual or compensatory damages are not available as a matter of right to an employee dismissed for just cause but denied statutory due process. we are not convinced that private respondents acted in a wanton or oppressive manner. oppressive or malevolent manner as the private respondents were deprived of due process. good customs or public policy. Jake Ng. taking into account the relevant circumstances. Kristel Macatangay. Anna Tetangco 61 . Such were not sufficiently proven. Monette Mesa. petitioner Dr. the employer should indemnify the employee for the violation of his statutory rights. Sagum is another hapless employee whose dismissal was ruled to be illegal but. Maquiling. or that the employer committed an act oppressive to labor to warrant an award for moral damages. Held: The Supreme Court rejected petitioner's claim for moral and exemplary damages.00) and exemplary damages in the amount of one hundred thousand pesos (P100.000. However. Exemplary damages may avail if the dismissal was effected in a wanton. or is done in a manner contrary to good morals. pay later.00). Thus. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case. Held: After careful perusal of the factual backdrop of the case.900. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now. Amador C. for payment of full backwages and separation pay in accordance with Article 279 of the Labor Code. CA) Gonzales is not entitled to moral and exemplary damages. Inc. or render it illegal. Dr. Ÿ Ÿ Where the dismissal is for just cause. is still on the outside looking in. Maquiling shall only be entitled to an award for nominal damages..
respondent Cabanit was informed that he erred in recording US$40 and was later suspended from July 1-31. That an employee’s retirement benefits under any collective bargaining and other agreements shall not be less than those provided therein. As used herein.000.Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. Jon Santos. Held: Considering the prevailing circumstances in the case at bar. he was required to appear before petitioner corporation's office and its Executive Committee pursuant to two letters. Ysan Castillo. 1997 but the suspension was rescinded and he was assigned as general auditor. Inc. 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. who has served at least five (5) years in the said establishment. Retirement ART. 1997. Alpe Macalalad. through an EXECOM meeting. The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. 7641 which took effect on Jan. Promoted. Retail. SEC. 1993. and auditor from 1990 to 1996. Edlyn Santiago. taking into account the relevant circumstances. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. regardless of their position. Dianne Miano. to be malicious as they were fact-based. Anna Tetangco 62 . The amount of such damages is addressed to the sound discretion of the court.Labor II preventive suspension which was necessary pending investigation of company records which she had access to. . Subsequently. It was believed that this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. Lastly. he became its regular employee. designation or status and irrespective of the method by which their wages are paid. 287. petitioner corporation. Despite the presence of security guards. Unless the parties provide for broader inclusions. except to those specifically exempted under Section 2 hereof. Retirement. At the very least. 2. mental anguish or serious anxiety as the result of the actuations of the other party. abusive language or any species of violence. General Statement on coverage. 1997. as when the latter committed an antisocial and oppressive abuse of its right to investigate and dismiss an employee. The Electrical Engineer. Violation of this provision is hereby declared unlawful and subject to the penal provisions under Article 288 of this Code. 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. 7. Omnibus Rules Rule II Retirement Benefits SECTION 1. petitioner did not even allege that there was use of force. In case of retirement. Monette Mesa. the Supreme Court deemed it proper to fix the nominal damages at P30. Act No. On June 11. After six months. He requested copies of pertinent documents to enable him to explain his side but petitioner corporation allegedly did not oblige. it provides a vindication or recognition of this fundamental right granted to the Ÿ Section 15. Ÿ The award of moral and exemplary damages is proper when an illegally dismissed employee had been harassed and arbitrarily terminated by the employer. Charms Haw. Jake Ng. 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. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision. an employee upon reaching the age of sixty (60) years or more. Rule II. This rule shall apply to all employees in the private sector. He was placed under preventive suspension on October 16. latter under the Labor Code and its Implementing Rules. 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. Heidi Soria. we do not find the articles published in private respondent institute's publication. Kristel Macatangay. 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. 1997. adopted a resolution terminating his employment effective October 16. It is not enough that one merely suffered sleepless nights.00. Book VI. In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. Exemptions. This rule shall not apply to the following employees: Irah Burog. a fraction of at least six (6) months being considered as one whole year. however. Monina Lagman. assigned to the accounting department. he became branch manager from 1981 to 1990. On November 18. the term “Act” shall refer to Rep. 1997 and required to explain in 15 days why he should not be dismissed due to irregularities committed.
and includes the fair and reasonable value. That an employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule. It shall lose its retail character qualified for exemption if it is engaged in both retail and wholesale of goods.: a) 15 days salary of the employee based on his latest salary rate. compulsory retirement. 4.1 Employees of the National Government and its political subdivisions. That if such benefits are less. task. the cultivations and tillage of the soil. an employee shall be retired upon reaching the age of sixty-five (65) years. Jake Ng.2 Compulsory retirement.3 One-half month salary of employees who are paid by results. and Provided. abaca.O. Monette Mesa. a fraction of at least 6 months being considered as one whole year. SEC. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). . 20. or other method of calculating the same. 2. .2 Components of One-half (½) Month Salary.4 Service requirement. the culture of fish and other aquatic products in farms or ponds. No. 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. 3. the term “one-half month salary” shall include all the ff. Charms Haw. Jon Santos. Heidi Soria. his services may be continued or extended on a case to case basis upon agreement of the employer and employee. Alpe Macalalad. including GOCC’s if they are covered by the Civil Service Law and its regulations. Where there is no such plan or agreement referred to in the immediately preceding subsection. growing and harvesting of any agricultural or horticultural commodities.1 Optional retirement. however. Edlyn Santiago. Anna Tetangco 63 . SEC. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who Irah Burog.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of employees in an establishment. cultivation. among others. further. 4. c) One-twelfth of the 13th month pay due the employee.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. b) The cash equivalent of not more than five (5) days of service incentive leave. as determined by the Secretary of Labor and Employment. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and hours. dairying. tobacco. the employer shall pay the deficiency. regular holidays and mandatory fulfillment of a military or civic duty. 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. c) “Agricultural establishment/operations” refers to an employer which is engaged in agriculture.1 In the absence of an applicable agreement or retirement plan. As used in this subsection: a) “Retail establishment” is one principally engaged in the sale of goods to end-users for personal or household use. 5. piece or commission basis.Labor II 2. series of 1994) 2. coconut. 4. subject to the provisions of Rule VII-A. As used herein. or other facilities customarily furnished by the employer to his employees. 3.3 Upon retirement of an employee. For covered workers who are paid by results and do not have a fixed monthly rate. Retirement benefits. 4.For the purpose of determining the minimum retirement pay due an employee under this Rule. Dianne Miano.2 Domestic helpers and persons in the personal service of another. production. This term refers to all farming activities in all its branches and it includes. 4. (Deleted by D. 5. Retirement under CBA/contract. Monina Lagman. pineapple. Optional. the employer’s total contribution thereto shall not be less than the total retirement benefits to which the employee would have been entitled had there been no such retirement fund. raising of livestock or poultry.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. 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. of food. Ysan Castillo. aquatic or other farm products. whether such payments are fixed or ascertained on a time. whether optional or compulsory. and any activities performed by a farmer or on a farm as an incident to or in conjunction with such farming operations. 5. lodging. SEC. 3. but does not include the manufacture and/or processing of sugar. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees.3 Employees of retail. Kristel Macatangay.2 In case of retirement under this section. The term does not include cost of living allowance. 3. 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. 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. service and agricultural establishment or operations regularly employing not more than ten (10) employees.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. In case the employer’s contribution is less than the retirement benefits provided under this Rule. 5. 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.
Retirement under CBA/contract. Jon Santos. 2. raises. 1986 are met. supplements or payments as provided in existing laws. The retirement pay provided in the Act may be exempted from tax if the requirements set by the BIR under Sec. The term “Act” refers to RA 7641 as amended by RA 8558. 4. 8558. retirement and separation pay constitute compensation subject to withholding. Relations to agreements and regulations. This rule took effect on January 7. 1993 when the Act went into force.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. Dianne Miano. SEC. Edlyn Santiago. a fraction of at least 6 months being considered as one whole year. the employer shall pay the deficiency. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. 3. Penal Provision.In the absence of a retirement plan or other applicable agreement providing for retirement benefits of underground mine employees in the establishment. In case the employer’s contribution is less than the retirement benefits provided under this Rule. 3. the terms “employee”. 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. working places whether abandoned or in use beneath the earth’s surface for the purpose of searching for and extracting mineral deposits. “employees”. Monina Lagman. 3. 2. Exemption from tax. Anna Tetangco 64 . 1. subject to the provisions of Section 4 hereof on the payment of retirement benefits. Where there is no such plan or agreement referred to in the immediately preceding subsection. if the following requirements are met: i) The benefit plan must be approved by the BIR. 2. 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.Labor II are paid by results. and Provided. 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.3 Service requirement. 12-86 dated Aug. Alpe Macalalad. Kristel Macatangay. the employer shall pay the difference b/w the amount due the employer under this Rule and that provided under the CBA or other applicable employment contract.3 Where both the employer and the employee contribute to a retirement fund in accordance with CBA or other applicable employment contract. winzes. Effectivity. Heidi Soria. to wit: Pensions. however. That the said employee’s retirement benefits under any CBA and other agreements shall not be less than those provided under this Rule.1 In the absence of an applicable employment contract.For the purpose of determining the minimum retirement pay due an employee under this Rule. SEC. Jake Ng. an underground mine employee refers to any person employed to extract mineral deposits underground or to work in excavations or workings such as shads. 7.2 Compulsory retirement. 288 of the Labor Code of the Philippines. drifts.2 Components of One-half (½) Month Salary. 1998) SEC. SEC. Retirement benefits. The ADS is the average salary for the last twelve (12) months reckoned from the date of their retirement. Rule II-A (Dep. As used herein. .Pensions. or “covered workers” shall mean underground mine employee/s. retirement and separation pay. the term “one-half month salary” shall include all the ff. Optional Retirement and Compulsory Retirement 2. Order No. except the following: a) Retirement benefits received by officials and employees of private firms under a reasonable private benefit plan maintained by the employer. further. Violations thereof shall be subject to the penal provisions provided under Art. tunnels. an underground mine employee who retires pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half (½) month salary for every year of service. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. individual/collective agreements or employment practices or policies. This Rule shall apply to all underground mine employees as contemplated under RA No. . 3. Charms Haw. As used herein.The minimum length of at least 5 years required for entitlement to retirement pay shall include authorized absences and vacations. All rules and regulations.. SEC. 9 dated May 4.2 In case of retirement under this section. Ysan Castillo. an underground mine employee shall be retired upon reaching the age of sixty-five (65) years. 9. 4. Monette Mesa.1 Optional retirement. crosscuts. divided by the number of actual working days in that particular period.: a) 15 days salary of the employee based on his latest salary rate. SEC. 2(b) item (1) of Revenue Regulations No. SEC. 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. That if such benefits are less. the term “salary” includes all remunerations paid by an employer to his employees for services rendered during normal working days and Irah Burog. 4. For these purpose. 8. 6. 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. 1 Coverage. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. SEC. holidays and mandatory fulfillment of a military or civic duty.
Ysan Castillo. "An underground mining employee upon reaching the age of fifty (50) years or more. piece or commission basis. To save costs. Edlyn Santiago. otherwise known as the Labor Code of the Philippines. b) The cash equivalent of five (5) days of service incentive leave. "Nothing in this Article shall deprive any employee of benefits to which he may be entitled under existing laws or company policies or practices. may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service. SEC. A workforce audit showed that Irah Burog. as amended. 1998 when the RA 8558 went into force. of food. the basis for determination of the salary for 15 days shall be their average daily salary (ADS). "Retail. Dianne Miano. "In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment. Heidi Soria. Jake Ng. 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. 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. Monette Mesa. as determined by the Secretary of Labor and Employment." SECTION 2. c) One-twelfth of the 13th month pay due the employee. lodging. Kristel Macatangay. Philex sustained financial losses in its operations.01 Retirement REPUBLIC ACT NO. Approved: February 26. Alpe Macalalad. 8558 AN ACT AMENDING ARTICLE 287 OF PRESIDENTIAL DECREE NO. The term does not include cost of living allowance. or other facilities customarily furnished by the employer to his employees. This rule took effect on March 2. 1998. 6. The retirement pay provided in the Act may be exempted consistent with the requirements set by the BIR. Anna Tetangco 65 . may retire and shall be entitled to all the retirement benefits provided for in this Article. 15. 1998 Published in Malaya and Manila Times on March 7. The ADS is the twelve (12) month of their retirement. bargaining agreement or other applicable employment contract. but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age. service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision.Retirement. whichever comes earlier. 9. It shall be unlawful for any person or entity to circumvent or render ineffective the provisions of the Act. supplements or payments as provided in existing laws. profit-sharing payments and other monetary benefits which are not considered as part of or integrated into the regular salary of the employees. 4. Nothing in this Rule shall justify an employer from withdrawing or reducing any benefits. 442. a fraction of at least six (6) months being considered as one whole year. "Violation of this provision is hereby declared unlawful and subject to the penal provisions provided under Article 288 of this Code. however. whether such payments are fixed or ascertained on a time. Franco Mallare. — Any employee may be retired upon reaching the retirement age established in the collective Definition Ÿ Ariola vs Philex Mining Corp. 442. 287. 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. an employee upon reaching the age of sixty (60) years or more. (Dianne) Facts: Petitioners Roberto Ariola. 5. 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. Penal Provision. Philex adopted several measures including reducing personnel through early voluntary retirement and retrenchment programs. SEC. Effectivity. "Unless the parties provide for broader inclusions.3 One-half month salary of employees who are paid by results. AS AMENDED. who has served at least five (5) years as underground mine worker. subject to the provisions of Rule VII-A. and includes the fair and reasonable value. 288 of the Labor Code of the Philippines. In 1992. That an employee's retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. but not beyond sixty (60) years which is hereby declared the compulsory retirement age for underground mine workers. 8. policy issuances or orders contrary or inconsistent with these rules are hereby repealed or modified accordingly. Relations to agreements and regulations. Exemption from tax. Monina Lagman. SEC. individual/collective agreements or employment practices or policies. SEC. For covered workers who are paid by results and do not have a fixed monthly rate. who has served at least five (5) years in the said establishment. Jon Santos. Violations thereof shall be subject to the penal provisions provided under Art. 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. is hereby amended to read as follows: "ART. or other method of calculating the same. task. All rules and regulations.Article 287 of Presidential Decree No. "In case of retirement.Labor II hours. Charms Haw. Book III of the Rules Implementing the Labor Code on the payment of wages of workers who are paid by results. of actual working period. Benjamin Biete and Hermogenes Mamayson ("petitioners") are former supervisors of respondent Philex Mining Corporation ("Philex").
the amounts petitioners received as net separation pay should be deducted from their backwages. . 1992. citing "company policy.Labor II Philex had 310 "excess positions. In the present case. respondent was guilty of illegal dismissal. a voluntary agreement between the employer and the employee whereby the latter. respondent Reuters implemented a Irah Burog. Philex shall pay backwages as computed above plus. Cordillera Administrative Region. at which time she would be 57 years old. Monette Mesa." Philex re-assigned some of the employees belonging to this group while others took early retirement. the vouchers in question. . (Reuters). Philex's financial condition before and at the time of petitioners' retrenchment justified petitioners' retrenchment. Philex could ill afford to experiment with other cost-cutting measures before resorting to retrenchment as the situation called for immediate and drastic action. Ÿ Retirement is the result of a bilateral act of the parties. By its express language. All of them signed Deeds of Release and Quitclaim in Philex's favor. Monina Lagman. after reviewing the assailed decision together with the rules and regulations of respondent's retirement plan. However. This ballooned to P283. of its plan to retrench 241 employees. Thus. informed petitioner that she was approaching her 35th year of service with the university and was due for automatic retirement on November 18. 287. we grant her separation pay in lieu of reinstatement. 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. On 29 April 1993. petitioner began working for respondent's university medical center as a nurse.000 in 1992. 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. the union representing the supervisory employees also signed a Memorandum of Agreement ("supervisors' MOA") with Philex similarly prescribing the criteria for retrenchment. At this point.173. On 14 May 1993. separation pay equal to one-half month pay for every year of service. Thus. Edlyn Santiago. petitioner. beyond Philex's projected loss of P187 million. through its Human Resources Development Office. the Labor Code permits employers and employees to fix the applicable retirement age at below 60 years. However. An independent auditor confirmed Philex's claim of financial losses. after reaching a certain age agrees to sever his or her employment with the former. On 1 June 1993. Philex informed the Department of Labor and Employment ("DOLE"). Held: Petitioners' retrenchment was illegal.743. If reinstatement is no longer possible because the positions petitioners held no longer exist. as its local correspondent. reinstatement is out of the question. with six other supervisors and 49 rank-and-file employees. A Types Ÿ Gerlach vs Reuters Limited (Dianne) Facts: On February 15. Ÿ Jaculbe vs Silliman University (Dianne) Facts: Sometime in 1958. 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. Petitioner is now 71 years old and therefore well over the statutory compulsory retirement age. 1983." 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. finding that Philex suffered an operational loss of P33. For this reason. Anna Tetangco 66 . also known as the provision on Social Justice and Human Rights. an employer is free to impose a retirement age less than 65 for as long as it has the employees' consent. Charms Haw. we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII. Retirement — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. As already stated. 30 April 1993. The following day. 1993 up to her compulsory retirement age. respondent Reuters Limited. Petitioners are thus entitled to reinstatement with full backwages. Jake Ng. Phils. having terminated petitioner solely on the basis of a provision of a retirement plan which was not freely assented to by her. received from Philex termination notices informing them of their retrenchment under their respective MOAs effective 30 June 1993. But respondent stood pat on its decision to retire her. Dianne Miano. Stated conversely. in lieu of reinstatement. a company engaged in news dissemination with offices worldwide. 1982. to be computed from the time of her illegal dismissal on November 18.000 in 1993. Ÿ By themselves. Kristel Macatangay. In a letter dated December 3. Article 287 of the Labor Code provides: ART. petitioners. leaving 241 positions for retrenchment. Article 283 of the Labor Code governs retrenchment to prevent losses. Heidi Soria. Jon Santos. ." Respondent required certain documents in connection with petitioner's impending retirement. Ysan Castillo. Alpe Macalalad. 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. hired Marilyn Odchimar Gerlach. which allegedly evidence receipt of “retirement gratuities.” do not suffice brief exchange of letters between petitioner and respondent followed. It is also for this reason that we modify the award of backwages in her favor. Baguio City. Philex paid them separation pay. 1993. On October 1. respondent.
It follows that the amount of retirement benefits of a retiring employee assigned abroad is based on his notional salary. not on her notional salary. which is in accord with the above provision. Article 287 of the Labor Code reads: "Article 287. in the instant case. Inc. invoking the retirement plan of the company which they said was contractual rather than statutory. The Plan is funded by the company. Held: We agree with the Court of Appeals that petitioner's retirement benefits must be based on her notional Philippine salary. Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code. a money claim against respondent. Edlyn Santiago. expressly as in an announced company policy or impliedly as in a failure to contest the employee's claim for retirement benefits. 1991. both actual and notional. 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. Eventually. In case of retirement. vs. Basis Ÿ Aquino vs. Retirement. Monina Lagman. The second paragraph deals with the retirement benefits to be received by a retiring employee which he may have earned under (a) an existing law. Retirement benefits are intended to help the employee enjoy the remaining years of his Irah Burog. petitioner received her retirement benefits under the Plan in the amount of P79. and they received separation pay double that required by the Labor Code. However. Issue: Having received the separation pay. . Jake Ng. 1984. Dianne Miano. . the company's contribution to the fund is 10% of the basic monthly salary of each participant. Thereafter. It is very clear that from the very start of her first assignment overseas. Kristel Macatangay. 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. 1983. Rule 1 of the Rules and Regulations Implementing Book VI of the Labor Code. 14. Rachel Addison. respondent apprised her that the company's contribution to the Plan is based on her notional Philippine salary. which include retrenchment. The second type is one set up by agreement between the employer and the employees in collective bargaining agreements or other agreements between them. Alpe Macalalad.04. under the Plan. On January 23. Retirement benefits. which amount was determined by the trustee bank (Bank of the Philippine Island) in accordance with the provisions of the Plan. It is this third type of retirement scheme which covers respondent's Plan. Heidi Soria. The computation was based on her notional salary. and is computed at least one month salary or at the rate of one-half month salary for every year of service. provides: "Sec. Reuters' Eastern Region Staff Manager. the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements. she opted not to contribute to the fund.228. where not mandated by law. — (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 . Petitioner was automatically covered by the Plan by reason of her age and length of service. Section 14(a). Ÿ There are three kinds of retirement schemes. Nonetheless. respondent based petitioner's retirement benefits on its Plan and established policy. specifically that her home base will always be the Philippines. In fact. but an employee-participant may volunteer to contribute a percentage of his basic monthly salary to the fund. Ysan Castillo. — Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract." 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. Anna Tetangco 67 . petitioner filed with the Office of the Labor Arbiter. apprised her of the details of her forthcoming assignment. like the Social Security Act. (b) a collective bargaining or (c) other agreements. Before leaving. may be granted by agreement of the employees and their employer or as a voluntary act on the part of the employer. 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. she questioned the amount she received as well as her entitlement to a disturbance grant. She worked in Reuters Philippines up to December 23. respondent assigned petitioner as a journalist to Reuters Singapore. petitioner's theory that the computation of her retirement benefits should be based on her basic annual salary while stationed abroad is untenable.Labor II local Retirement Benefit Plan (Plan) for its Philippinehired employees. whichever is higher. The third type is one that is voluntarily given by the employer. We have held that it is a statutory right designed to provide the employee with the wherewithal during the period that he is looking for another employment." Thus. In Llora Motors. Significantly. Consequently. Monette Mesa. However. Ÿ Retirement benefits. Charms Haw. they demanded retirement benefits. contending that her retirement benefits must be computed on the basis of her actual salary abroad. NCR. Drilon. The first type is compulsory and contributory in character. Jon Santos. NLRC (Monina) Facts: The petitioners’ services were terminated on the ground of retrenchment. On March 1. were the petitioners still entitled to the retirement benefits? Held: Yes.
Labor II life. corporation employed employees and of them was Divina Lopez. All terminations other than for cause will be governed by the applicable provision of the Labor Code of the Philippines. Creditable service referred to in the retirement plan is the retiree’s continuous years of service with the company. and (2) where the terms of settlement are unconscionable on their face. especially where there are strong equitable considerations as in this case. With the inclusion of the provision abovementioned in the retirement plan. We cannot presume that it forms an implicit part of either the CBA or the law. not being contrary to law. National Steel Corp (Monina) Facts: National Steel Corporation embarked on 2 massive projects. Gamogamo vs. In addition. it also behooves us to protect the sanctity of contracts that do Irah Burog. Monette Mesa.“ Although the CBA is silent as regards the grant or denial of retirement benefits to retrenched employees. B 2. In the case at bar. We discern nothing from the record that would suggest that petitioner was coerced. Edlyn Santiago. does not give petitioner the right to her claimed benefits. issued a memo announcing retrenchment and one of the affected employees was Lopez. no necessity of expressly providing that retirement pay and retrenchment pay are mutually exclusive. Consequently. after reaching a certain age. for the purpose of computing an employee’s retirement pay. then said employee is entitled to the benefits embodied in the agreement in addition to whatever benefits are mandated by statute. petitioner requested to be included in the retrenchment schedule. that an employee who resigns voluntarily after he has qualified for optional early retirement under Art. Heidi Soria. whether the retirement plan expressly prohibits the payment of retirement benefits to employees terminated for cause Held: No. Since the retirement pay solely comes from PNOC’s funds. There is. When the corporation suffered losses. 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. Ÿ Retirement (benefits) result from voluntary agreement between the employees and the employer whereby the former. there is no such provision. be upheld. the NSC explicitly disallows payment of retirement benefits in case of retrenchment. public order or public policy and must. Anna Tetangco 68 . Since retirement pay solely comes from company funds in this case. provided. good customs. — No retirement benefits are payable in instances of resignations or terminations for a cause. 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. Subsequently. the 5-year expansion program and the Integrated Steel Mill Project. except (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person. intimidated or deceived into signing the Release and Undertaking. The retirement plan is a binding agreement. Settled is the rule that not all quitclaims are per se invalid or against public policy. a private domestic corporation. however. IV. Kristel Macatangay. Jon Santos. ostensibly. Alpe Macalalad. petitioner is qualified to receive benefits granted by the GSIS by his employment in DOH. the retirement plan is succinct in denying such benefits. It was turned down. The provisions of the NSC's retirement plan which petitioner admitted applies to her. “E. Dianne Miano. and are a form of reward for his loyalty and service to the employer. Interpretation Ÿ Lopez vs. When a manpower reduction was implemented. therefore. 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. Here. 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. 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. Issue: whether. morals. it is but natural that PNOC shall disregard petitioner’s length of service in another company for the computation of his retirement benefits. PNOC acquired and took over the shipping business of LUSTEVECO. Jake Ng. agrees to sever his employment with the latter. Ysan Castillo. Charms Haw. thus. 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. PNOC Shipping and Transport Corp (Monina) Facts: Gamogamo was first employed with DOH (as dentist) for 14 years. Afterwhich he was hired by LUSTEVECO. it is but natural that it should disregard Gamogamo’s service in another company for the computation of his retirement benefits. Resignations and Terminations. Monina Lagman. 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. While it is our duty to prevent the exploitation of employees. We cannot uphold petitioner’s contention that his 14 years of service with the DOH should be considered because his last 2 employers were GOCC’s and fall under the Civil Service Law. 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. lessening the burden of worrying for his financial support.
Dianne Miano. 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. Given such facts. It is also noteworthy that at the time of the filing of the second complaint Nolasco was already 60 years old. did not materialize as petitioners questioned the propriety of their retrenchment before the NCMB. Accordingly and considering their Releases and Irah Burog. Jon Santos. Rationale Ÿ Producers Bank vs. the retirement age is 65 — is wrong. what each actually received is a separation pay. in light of clear lack of consensual and statutory basis of the grant of retirement benefits to the petitioners.Labor II not contravene our law. petitioner was placed by the Central Bank under a conservator for protecting its assets. resulting in an impasse between the petitioner bank and the private respondent union. Age Ÿ MAI Phils. which is the retirement age fixed by the Labor Code. vs. Heidi Soria. it adopted an organizational streamlining program that resulted in retrenchment or termination from service of 17 workers. Alpe Macalalad. Article X thereof. Edlyn Santiago. Salomon vs. NLRC (Monina) Facts: Mai Philippines dismissed its Custom Engineering Manager Rodolfo Nolasco. the acting conservator of the petitioner expressed her objection to such plan. its refusal. Here. 1982. Monette Mesa. petitioners instead of receiving their separation pay. NLRC (Monina) Facts: At the time the controversy started. decided to file a case against the petitioner for unfair labor practice and for flagrant violation of the CBA provisions. It is a fact that petitioners were involuntarily separated from service and thus. it is apparent that the amount is representative of all the claims of petitioners. Private respondent thus. and there is no reason to invalidate their Releases and Quitclaims. Article XI of the CBA regarding the retirement plan and Section 4.A. Ysan Castillo. however. petitioners were separated from the service for cause. This dismissal was held to be illegal and it was declared that Nolasco be reinstated. amounting to grave abuse of discretion. or neglect to consider the fact — again quite plain from the record and to which MAI had adverted more than once — that the matter of Nolasco's reinstatement had become moot and academic at the time that he filed his second action before the labor arbiters' office against MAI on August 16. under the law should be given separation pay. such interpretation cannot be made here. they are no longer entitled to retirement benefits. As a result of said complaint. pursuant to the CBA. Association of International Shipping Lines (Monina) Facts: When the Association of International Shipping Lines Inc. and Nolasco's claim — that under MAI's retirement plans. Yet a serious mistake. Issue: whether the grant of “retirement benefits” to petitioners as shown in their quitclaims precludes their availment of retirement benefits pursuant to the CBA Held: A perusal of the provision of petitioners' CBA on retirement readily shows that the same is optional on the employees who have served private respondent company for at least 15 years. it is obvious that the conservator had no authority whatsoever to disallow the implementation of Quitclaims. Anna Tetangco 69 . because by the terms of those very same retirement plans invoked by him. he had already reached the age of 60 years. No provision in the CBA authorizes the grant to petitioners of retirement benefits in addition to their retrenchment pay. Charms Haw. It appears that when the private respondents sought the implementation of Section I.S. pertaining to uniform allowance. suffered substantial losses. The same however. Kristel Macatangay. 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. The Court will not disturb this finding for upon review of the said quitclaims. Issue: whether the CBA can still be implemented Held: Prescinding from the rationalization that a conservator cannot rescind a valid and existing contract and that the CBA is the law between the contracting parties. to resolve the issue. Ÿ Retirement laws are to be liberally construed in favor of the persons intended to be benefited. specifically cited by him. Jake Ng. Monina Lagman. 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. for as of that day. Ÿ Ÿ While it is axiomatic that retirement laws are liberally construed in favor of the persons intended to be benefited. Nolasco reached the compulsory retirement age of 60 years set by the Labor Code. and Puerto Rico. Private respondent company in its notice of termination to petitioners stated that the latter would receive their separation pay. under the law should give separation pay. Issue: whether or not Nolasco is entitled to retirement benefits Held: No. Consequently. 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. the retirement age of 65 applied only to employees in the U. may be ascribed to the Commission. However. The deadlock continued for at least six months when the private respondent. and that is. only received their retirement benefits plus other benefits which represent the totality of their claims from private respondent company.
especially considering that the ideals of social justice and protection of labor are guaranteed not only by the Labor Code. as well as an effective inducement for remaining with the corporation. releasing him from the burden of worrying for his financial support. Thus. any commission which they receive is certainly not the basic salary which measures the standard or amount of work of complainant as Unit Manager. one of which is the protection of the labor union. Brion was provided a monthly amount of retirement benefit. However. However. the additional payments made to petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business. under the SDA's retirement plan. Union Mission (Monina) Facts: Brion became a member of respondent church 7th Day Adventist Church (SDA) sometime in 1949 until 1983 when he retired. Held: Petitioner's contention in untenable. but more importantly by the fundamental law of the land. direct or necessary relation to the amount of work he actually performed. Section 1 and Article X. Anna Tetangco 70 . be recognized. as it were. It bears repeating that apart from the nonimpairment clause. vests on him. It must be borne in mind that the retirement scheme was part of the employment package and the benefits to be derived therefrom constituted. for the purpose of prosecuting his claims. When the retired employees were requesting that their retirement benefits be granted. Jon Santos. is the principle that when the conflicting interests of labor and capital are weighed on the scales of social justice. if the employee is eligible.22 as the commissions he received are in the form of profit-sharing payments specifically excluded by the foregoing rules. Issue: Petitioner asserts since the employees have retired. Reyes did not agree with the computation of the company and hence filed a complaint. and these benefits shall terminate with the death of the beneficiary except in the presence of an eligible surviving spouse and/or children. Sometime. the status of an employee entitled to the protection of the Labor Code. NLRC (Monina) Facts: Rogelio Reyes was employed as salesman at Universal Robina’s Corporation Grocery Division. the "overriding commissions" paid to him by Universal Robina Corp. Edlyn Santiago. must be met at the time of retirement at which juncture the right to retirement benefits. Brion got into an argument with another pastor of SDA culminating in the establishment of a new religious group and enticing other SDA members to join. It may be argued that petitioner may have exerted efforts in pushing the salesmen to close more sale transactions. the commissions which petitioner received were not part of his salary structure but were profit-sharing payments and had no clear. 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. As correctly ruled by public respondent NLRC. the retirement of an employee does not. such that when it began paying Brion retirement benefits in said Eligibility Ÿ Reyes vs. The very essence of retirement is the termination of the employer-employee relationship. Ÿ Brion vs. South Phil. As was the practice of SDA. 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. 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. Accordingly. however. since these must be protected as though there had been no interruption of service. Here. they were not pleading for generosity but were merely demanding that their rights. He eventually retired. Brion was adjudged by the SDA in 1983 to be qualified for retirement. the basis in computing his retirement benefits is his latest salary rate of P10. Dianne Miano. Therefore. in itself. Jake Ng. Petitioner filed for optional retirement upon reaching the age of 60. the dominant influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the under-privileged worker. when an employee has retired but his benefits under the law or the CBA have not yet been given. its benefits are designed for those who have devoted their lives to the work of the SDA. and are a form of reward for his loyalty.919. but the actual sale transactions brought about by the individual efforts of the salesmen. they do not effect any sale of article at all. 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. and the Court cannot give its imprimatur for retirement. could not have been 'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales commissions. Heidi Soria. as a consequence of which no employee-employer relationship exists anymore between it and the employees.Labor II Article XI. Kristel Macatangay. what is also well-settled. private respondent no longer had the personality to file the complaint for them. This negated the very concept of retirement. Alpe Macalalad. Monina Lagman. to the point of being trite. it is not the criterion which would entitle him to a commission. Ysan Castillo. as embodied in the CBA. Unit Managers are not salesmen. 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. Section 4 of the CBA. Monette Mesa. In fine. he still retains. affect his employment status especially when it involves all rights and benefits due to him. Hence. Charms Haw. he was excommunicated. a continuing consideration for services rendered. As such.
Upon reaching 65 he stopped working. Edlyn Santiago. Charms Haw. if the employee is eligible. in case of retrenchment or cessation of operations. arising as it did from a management prerogative granted by the mutuallynegotiated CBA between the School and the Union. as amended. petitioners are not entitled to both separation pay and retirement benefits. it must have been convinced that Brion had devoted his life to the work of the SDA. before a right to retirement benefits or pension vests in an employee. 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. Heidi Soria. Monette Mesa. whichever is higher. the last three (3) years of which must be continuous. there are eminently higher standards to be met by the employer validly exercising the prerogative to dismiss for just or authorized causes. Twenty years is a more than ideal length of service an employee can render to one employer. 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. 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. and the other of which sanctions the severance by the retiree of his employment thereto at retirement. Under 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. 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. 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. one of which requires the retiree to devote his life to the service of the church even after retirement. 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. Dianne Miano. After the election of union officers the school retired some of its official who rendered atleast 20 years of service as stated in the CBA. The union filed a notice of strike and subsequently picketed in front of the school. 15. Ysan Castillo. This is a condition precedent to his acquisition of rights. Ÿ Ÿ We are impelled to reverse the Court of Appeals and affirm the validity of the termination of employment of Llagas and Javier. Cainta Catholic School Employees Union (Oreo) Facts: A CBA was entered into by the school and the union on March of 1986. In those two instances. Retirement. Jake Ng. Monina Lagman. 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. respondent opted to pay petitioners separation benefits computed under the Retirement Plan. While in all three cases. this Court will not hesitate to adopt the latter interpretation. Under the Retirement Plan before us. age. Jon Santos. vests in him. it is indispensable that the employer establish the existence of just or authorized causes for dismissal as spelled out in the Labor Code. Phil. In other words. and length of service. or retirement benefits prescribed by the Retirement Plan. Cruz however despite receiving separation pay asks for his retirement benefits. Where two constructions of a retirement plan are possible. He now files a case for the collection of his retirement Irah Burog. Pursuant to the existing CBA. affected employees. Ÿ Llora Motors vs. Ÿ Petitioners are entitled only to either the separation pay provided under Article 283 of the Labor Code. as amended. Anna Tetangco 71 . Alpe Macalalad. whichever is higher. As we held in Cipriano and Aquino. There is no essential difference between the CBA provision in this case and those we affirmed in Pantranco and Progressive. provides. The CBA in the case at bar contains no such infirmities which must be stricken down. the employees’ right to payment of retirement benefits and/or separation pay is governed by the Retirement Plan of the parties. Global Communications (Oreo) Facts: PGC is in the business of telex and telegram. he must have met the stated conditions of eligibility with respect to the nature of employment. is the result of a bilateral act of the parties. 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. Here. the same being higher than what Article 283 of the Labor Code.Labor II year. Kristel Macatangay.02 ACCRUAL OF BENEFITS Accrual Ÿ Cruz vs. on the other hand. are always given termination or separation pay equivalent to one month pay or at least ½ month pay for every year of service. the employee to be terminated may be unwilling to part from service. as amended. Article VI 12 of respondent’s Retirement Plan. Under Section 4. Ground Termination Cainta Catholic School v.
Drilon. Respondent is not asking for retirement benefits due him under the Social Security Law. is that Section 14 of Implementing Rule I. Monette Mesa. 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. NLRC) 15. therefore. GVM on the other hand denies having such liability. The third type is one that is voluntarily given by the employer. 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. granting him retirement benefits. Kristel Macatangay. and an additional or consensual retirement plan exists.03 PRIVATE PLAN Employer Obligation GVM Security & Protective Agency vs. Article 287 does not in itself purport to impose any obligation upon employers to set up a retirement scheme for their employees over and above that already established under existing laws. He now files for monetary claims including his retirement benefits. Inc. Inc. and are a form of reward for his loyalty to the employer. releasing him from the burden of worrying for his financial support. Gratuity. The first type is compulsory and contributory in character. Edlyn Santiago.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. Catalina College vs. NLRC (Oreo) Facts: Dulce an employee of GVM resigned after 28 years of service. like the Social Security Act. 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. benefit or bounty given to the worker. is not intended to pay a worker for actual services rendered of for actual performance. on the other hand are intended to help the employee enjoy the remaining years of his life. Retirement benefits. then payments under such retirement plan may be credited against the termination pay that is due. the purpose of which is to reward employees who have rendered satisfactory service to the company.Labor II benefits and ECOLA underpayments. 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. It is a money. Inc. Charms Haw.. supra). is for the legislature to remedy. Ÿ What needs to be stressed. Heidi Soria. contract or an established company policy. Jake Ng. He does not claim that there is a collective bargaining agreement or other applicable. (Sta. 91 SCRA 265 ). 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. 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. Ople. in other words. Irah Burog. Alpe Macalalad. Ysan Castillo. however. Llora in its answer contend that Alviar abandoned his work. like Article 287 of the Labor Code. subject. 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. After being paid his cash deposit he executed a quitclaim. 15. 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. to certain conditions. v. Jon Santos. 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. Ÿ Ÿ As stressed in Llora Motors. Dianne Miano. Thus. There are three kinds of retirement schemes. Monina Lagman. v. Anna Tetangco 72 . however.