‭Keng Hua Paper Products vs. Ainza, G.R. No.

224097, February 22, 2023‬

‭FACTS:‬
‭Ainza‬‭was‬‭hired‬‭in‬‭July‬‭1981‬‭as‬‭a‬‭machine‬‭tender.‬‭Dela‬‭Cruz‬‭was‬‭hired‬‭in‬‭April‬‭1982‬‭but‬
‭resigned‬ ‭on‬ ‭26‬‭March‬‭2001‬‭to‬‭avail‬‭of‬‭his‬‭gratuity‬‭pay.‬‭He‬‭was‬‭rehired‬‭in‬‭May‬‭2001.‬‭Gelicami‬
‭was‬ ‭hired‬ ‭in‬ ‭February‬ ‭2002.‬ ‭All‬ ‭respondents‬ ‭alleged‬ ‭that‬ ‭they‬ ‭were‬ ‭stopped‬ ‭at‬ ‭the‬ ‭gate‬ ‭and‬
‭bluntly‬‭told‬‭them‬‭that‬‭they‬‭had‬‭no‬‭more‬‭jobs‬‭to‬‭do.‬ ‭Petitioners,‬‭on‬‭the‬‭other‬‭hand,‬‭claimed‬‭that‬
‭there‬ ‭was‬ ‭no‬ ‭illegal‬ ‭dismissal‬ ‭because‬ ‭Keng‬ ‭Hua‬ ‭ceased‬ ‭operating‬ ‭and‬ ‭there‬ ‭was‬ ‭no‬ ‭work‬‭for‬
‭respondents.‬ ‭As‬ ‭Keng‬ ‭Hua‬ ‭establishment‬ ‭was‬ ‭greatly‬ ‭affected‬ ‭by‬ ‭the‬ ‭flash‬ ‭floods‬ ‭caused‬ ‭by‬
‭typhoon‬ ‭Ondoy‬ ‭in‬ ‭late‬ ‭September‬ ‭2009.‬‭The‬‭floods‬‭seriously‬‭damaged‬‭Keng‬‭Hua's‬‭equipment.‬
‭Prior‬ ‭to‬ ‭typhoon‬ ‭Ondoy,‬‭Keng‬‭Hua‬‭was‬‭already‬‭suffering‬‭a‬‭decline‬‭in‬‭their‬‭income‬‭since‬‭2007.‬
‭Despite‬ ‭the‬ ‭petitioners'‬ ‭claim‬ ‭of‬ ‭cessation‬ ‭of‬ ‭operations.‬ ‭two‬ ‭years‬ ‭after‬ ‭the‬ ‭occurrence‬ ‭of‬
‭typhoon‬ ‭Ondoy,‬ ‭Keng‬ ‭Hua‬ ‭renewed‬ ‭its‬‭collective‬‭bargaining‬‭agreement‬‭(CBA)‬‭with‬‭the‬‭union.‬
‭The‬ ‭LA‬ ‭ruled‬ ‭there‬ ‭was‬ ‭no‬ ‭illegal‬ ‭dismissal.‬ ‭The‬ ‭NLRC‬ ‭affirmed‬ ‭the‬ ‭decision.‬ ‭The‬ ‭CA,‬
‭however,‬ ‭granted‬ ‭the‬ ‭petition.‬ ‭finding‬‭that‬‭they‬‭were‬‭retrenched‬‭and‬‭petitioners‬‭did‬‭not‬‭comply‬
‭with the legal requirements for a valid retrenchment.‬

I‭ SSUE:‬ ‭WON‬ ‭the‬ ‭respondents‬ ‭were‬ ‭illegally‬ ‭dismissed‬ ‭due‬ ‭to‬ ‭retrenchment‬‭to‬‭prevent‬‭losses.‬
‭(NO)‬

‭ ULING:‬‭There‬‭are‬‭two‬‭procedural‬‭requirements‬‭for‬‭a‬‭valid‬‭termination‬‭of‬‭employment‬‭under‬
R
‭Art‬ ‭298:‬ ‭(1)‬ ‭service‬ ‭of‬ ‭a‬ ‭written‬ ‭notice‬ ‭to‬ ‭the‬ ‭employees‬ ‭and‬ ‭to‬‭the‬‭DOLE‬‭at‬‭least‬‭one‬‭month‬
‭before‬‭the‬‭intended‬‭date‬‭thereof;‬‭and‬‭(2)‬‭payment‬‭to‬‭the‬‭employees‬‭of‬‭termination‬‭pay‬‭amounting‬
‭to‬ ‭one‬ ‭month‬‭pay‬‭or‬‭at‬‭least‬‭one-half‬‭month‬‭pay‬‭for‬‭every‬‭year‬‭of‬‭service,‬‭whichever‬‭is‬‭higher.‬
‭The‬ ‭Labor‬ ‭Code‬ ‭does‬ ‭not‬ ‭provide‬ ‭for‬ ‭exemptions‬ ‭from‬ ‭these‬ ‭two‬ ‭procedural‬ ‭requirements.‬‭In‬
‭this‬ ‭case,‬ ‭petitioners‬‭failed‬‭to‬‭show‬‭proof‬‭of‬‭compliance‬‭with‬‭the‬‭procedural‬‭requirements‬
‭for‬ ‭a‬ ‭valid‬ ‭termination‬ ‭of‬ ‭employment.‬ ‭First,‬ ‭Keng‬ ‭Hua‬ ‭failed‬ ‭to‬ ‭show‬ ‭any‬ ‭proof‬ ‭of‬ ‭such‬
‭written‬ ‭notice‬ ‭to‬ ‭any‬ ‭of‬ ‭the‬ ‭respondents‬ ‭or‬ ‭to‬ ‭the‬ ‭DOLE.‬ ‭That‬ ‭respondents‬ ‭were‬ ‭already‬ ‭on‬
‭temporary‬ ‭lay-off‬ ‭at‬ ‭the‬ ‭time‬‭notice‬‭should‬‭have‬‭been‬‭given‬‭to‬‭them‬‭is‬‭not‬‭an‬‭excuse‬‭to‬‭forego‬
‭the‬‭one-month‬‭written‬‭notice‬‭because‬‭by‬‭this‬‭time,‬‭their‬‭lay-off‬‭is‬‭to‬‭become‬‭permanent‬‭and‬‭they‬
‭were‬‭definitely‬‭losing‬‭their‬‭employment.‬‭Second,‬‭Keng‬‭Hua‬‭failed‬‭to‬‭show‬‭proof‬‭of‬‭payment‬‭of‬
‭termination‬‭pay‬‭to‬‭respondents.‬‭Further,‬‭Keng‬‭Hua‬‭failed‬‭to‬‭show‬‭before‬‭the‬‭LA‬‭and‬‭the‬‭NLRC‬
‭financial‬‭statements‬‭to‬‭prove‬‭its‬‭actual‬‭business‬‭losses.‬‭The‬‭CA‬‭even‬‭made‬‭a‬‭factual‬‭finding‬‭that‬
‭"there‬ ‭are‬ ‭no‬ ‭independent‬ ‭audited‬ ‭financial‬ ‭statements‬ ‭proving‬ ‭the‬ ‭alleged‬ ‭financial‬ ‭losses‬ ‭of‬
‭[Keng‬ ‭Hua]."‬ ‭There‬ ‭was‬ ‭also‬ ‭no‬ ‭showing‬ ‭that‬ ‭petitioners‬ ‭adopted‬ ‭other‬ ‭cost-saving‬ ‭measures‬
‭before‬ ‭resorting‬ ‭to‬ ‭retrenchment.‬ ‭There‬ ‭was‬ ‭no‬ ‭indication‬ ‭that‬ ‭petitioners‬ ‭used‬ ‭fair‬ ‭and‬
‭reasonable criteria, if at all, in determining who would be retrenched.‬