Labor Huhu

Title I. TERMINATION OF ENTAUTHORIZED CAUSES OF TERMINATION

Art 283. CLOSURE OF ESTABLISHMENT & REDUCTION OF PERSONNEL – The employer may also terminate the employment of an employee due to:

1. Installation of labor-saving DEVICES;2. REDUNDANCY3. RETRENCHMENT to prevent losses, or4. The closing/CESSATION of operation of the

establishment or undertaking UNLESS the closing is for the purpose of CIRCUMVENTING the law,

By serving a WRITTEN NOTICE on the 1. worker &2. the MINISTRY of Labor & ENT at least 1

MONTH before the intended date thereof.

In case of termination due to installation of labor saving DEVICES or REDUNDANCY, the worker affected thereby shall be entitled to a SEPARATION PAY equivalent to

a) at least his 1 MONTH PAY or b) to at least 1 month pay for EVERY YR of service, (w/c

ever is HIGHER).

In case of RETRENCHMENT to prevent losses & in cases of closures or CESSATION of operations of establishment/undertaking NOT due to serious business losses or financial reverses, the SEPARATION PAY shall be equivalent to:a) 1 MONTH pay or b) at least ½ MONTH pay for EVERY YR of service, (w/c

ever is HIGHER.

A fraction of at least 6 months shall be considered as 1 WHOLE year.

Art 284. DISEASE AS GROUND FOR TERMINATIONAn ER may terminate the services of an EE who has been found

to be suffering from any disease & whose continued ENT is a) prohibited by law, orb) prejudicial to his health as well as to the health of his

co-EEs. Provided, that he is paid SEPARATION PAY equivalent to:

a) 1 MONTH salary orb) ½ month salary for EVERY YR of service (w/c ever

is GREATER)A fraction of at least 6 months being considered as 1 WHOLE year.

Enumeration is not complete. There are many more OTHER AUTHORIZED CAUSES of ENT termination:

1. Total & permanent disability of an EE;2. Disease not curable in 6 months;3. Valid app of a union security clause;4. Expiration of period in term of ENT;5. Completion of project in project ENT;6. Failure in probation;7. Sale amounting to closure of business;8. Relocation of business to a distant place;9. Defiance of return-to-work order,10. Commission of illegal acts in strike;11. Non-feasible reinstatement,12. Floating status or off-detail beyond 6 months,13. Resignation;14. Violation of contractual commitment (such as

being consultant to a competitor)15. Retirement

16. Death of EE.

SEPARATION PAY – used in 4 SENSES:1. As a statutory benefit;2. As ENT benefit voluntarily granted or required by contract;3. As alternative to reinstatement of an illegally dismissed EE;

and4. As financial assistance to a legally dismissed EE.

Arts 283 & 284 are the only causes w/c REQUIRE the payment of separation pay, also called STATUTORY SEPARATION or SEVERANCE PAY (except closure or CESSATION because of serious losses).

INTRODUCTION OF LABOR-SAVING DEVICES The ER has the R to use labor-saving devices w/ a view to

effecting more economy & efficiency, provided that the R to reduce the personnel is NOT ABUSED.

REDUNDANCY – exists where the services of an EE 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 like

o overhiring of workers, o decreased volume of business, oro dropping of a particular product line or

service activity previously manufactured/undertaken by the enterprise

- redundancy ≠ duplication of work. (that no other person was holding the same position that the EE held prior to the termination of his services, does NOT show that his position had not become redundant)

ER may terminate an EE due to redundancy, however, the ER must comply w/ the procedural requirement of a WRITTEN NOTICE to the Ministry of Labor, AND the EE concerned at least 1 month prior to dismissal.

It is immaterial that the financial troubles of the company were not the fault of the EE, the latter cannot insist on the retention of the position upon the ground that he had not contributed to the financial problems of the company.

Creation of positions w/ functions related or similar to those of the abolished positions does NOT necessarily invalidate the declaration of redundancy.

o Santos v Pepsi Cola: Petitioners, who were dismissed due to redundancy of their positions filed for illegal dismissal w/ backwages when they learned that Pepsi created new positions w/ substantially the same duties and responsibilities as the ones they used to have. RULING: The question of w/n the old and the new positions are similar properly belong to the LA or NLRC, w/c in this case both found substantial difference bet the two. (1) the org set-up has been changed, where the new positions do not have to report to the CD managers, (2) the new positions do not include the task of driving trucks and physically delivering stocks to wholesale dealers, but merely to ensure that the stocks are displayed in the best location in the dealers’ store. , the 2 positions being different, it follows that the redundancy program is instituted by Pepsi in GF.

Valid abolition of position and transfer to lower positiono Great Pacific Life Assurance Corp v NLRC:

Ms. Allado was transferred to Makati because of the abolition of her position as Regional Cashier in Baguio. RULING: A mgt prerogative to abolish a position w/ it deems no longer necessary and absent findings of malice on the part of mgt, is valid. Here, GREPALIFE sought to accommodate Allado by ordering her to transfer to a position recently vacated. Whether that position is lower than her former position, is immaterial because GREPALIFE could just have terminated her services when it abolished her position, and the proposed transfer was merely an accommodation.

Replacing a Regular EE w/ an Independent Contractoro Serrano v NLRC & Isetann: Pet was a security

checker to apprehend shoplifters & prevent pilferage of merchandise for Isetann Dept Store. He was initially hired on contractual basis, and eventually became a regular EE. Later, he became head of the Security Checkers Section, but later received a letter terminating his ENT due to retrenchment. He filed for illegal dismissal, ulp etc. LA made a finding of illegal dismissal for failure of Isetann to justify the retrenchment, and failure to accord due process to petitioner, w/c decision was reversed by the NLRC finding that it was a legit business decision whose wisdom the NLRC does not need to inquire into. ISSUE: Is the hiring of an independent security agency by the ER to replace its current security section a valid ground to dismiss the EEs in that section? RULING: The company has the ultimate determination of whether the services shld be performed by its personnel or contracted to outside agencies. In this case, the EE was terminated for an authorized cause: redundancy.

Invalid Declaration of Redundancy. The mgt determines what services are no longer necessary, but as always, the law, and GF must be observed.

o Asufrin v San Miguel: SMC adopted a “pre-selling” operations scheme that resulted in all route & warehouse positions being declared “redundant.” SMC offered an early retirement package (250% of regular pay) to the affected EEs. Asufrin did not avail himself of the package and requested that he be retained in any position. Nonetheless his ENT was terminated on ground of redundancy. RULING: SC ordered his reinstatement citing 4 reasons why it was not convinced of the alleged redundancy:

Of the 14 EEs who did not avail of the retirement package, only Asufrin was no redeployed to other offices or outlets. He appeared to have been singled out.

Asufrin was in the payroll of Sta Fe Brewery although actually posted at the Sum-ag Warehouse where his post was declared redundant; he could have been retained in Sta Fe.

Despite contrary allegation, warehousing activities continued in

Sum-ag as transit point where dealers got their stocks;

No criteria, e.g. ENT status, efficiency and seniority was adopted in determining the EEs to be laid off.

A position cannot be said to be redundant where it is required by express mandate of the law, as in Pollution Control & Safety Manager.

RETRENCHMENT ER bears the burden to prove his allegation of economic or

business reverses. Retrenchment is recognized as a PREVENTIVE &

CURATIVE measure. Actual losses or profuse bleeding of business does NOT have to happen before the ER may do it.

Causes of Retrenchment Lack of Work

Where the continuation of the men in the service is patently inimical to the interest of the ER, he may lay off such number of workers as the circs may warrant. But the court may impose the condition that the ER shall not admit any new laborer in case of available work in the future before the laid-off men who are able, willing and available to do the same shall have been recalled to work.

Business Recession Fire Conservatorship – contemplate not the liquidation of the

company involved, but a conservation of company assets & business during the period of stress

Basic Requisites of Valid Retrenchment1. The retrenchment is necessary to prevent/minimize losses

and such losses are proven;- w/n an ER would imminently suffer serious or

substantial losses for economic reasons is essentially a question of fact for the LA & NLRC to determine

2. Written notice is given to the EEs and the DOLE, and- The written notice is mandatory, and must be

given at least 1 month in advance of the intended date of retrenchment to enable EEs to look for other means of ENT, and to ease the impact of the loss of their jobs

- Even if at the time the notice shld have been given, the EEs were already on temporary lay-off, it is not an excuse to forego the 1-month written notice because, by this time, their lay-off is to become permanent.

3. Separation pay is paid.- Even if EEs go on strike and the retrenchment

was found justified, they shld still be entitled to separation pay, inasmuch as the retrenchment occurred much ahead of the strike.Asionics PH Inc v Minister of Labor

* 2 more requisites as added by Asian Alcohol Corp v NLRC4. The ER exercises its prerogative to retrench EEs in GF for

the advancement of its interest and not to defeat or circumvent the EE’s R to security of tenure; and

5. The ER uses fair and reasonable criteria in ascertaining who will be dismissed or retained among the EEs, such as status (temporary/casual/regular), efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

Seniority Rs– an EE has no inherent R to seniority. Such may be based on a contract, statute, or an administrative regulation relative thereto. It is acquired by en EE through long-time ENT, are contractual, and not constitutional. But in selecting the EEs to retrench, the ER cannot completely disregard seniority as a factor.

4 Standards of Retrenchment Preventive retrenchment is lawful, but certain retrenchment

may be invalidated.Lopez Sugar Corp v Federation of Free Workers: ER allegedly to

prevent losses due to major economic problems, and exercising its privilege under the CBA, retrenched & retired a number of its EEs. It filed a combined report on retirement and app for clearance to retrench 86 of its EEs. Meanwhile, Private respondent filed a complaint of ULP stating that the terminations were intended to bust the union.RULING:

1. “TO PREVENT LOSSES” justifies retrenchment – it means that retrenchment or termination of services of some EEs is authorized to be done by the ER sometime before the losses anticipated are actually sustained. On the other hand, not every asserted possibility of loss is sufficient legal warrant to for reduction of personnel.

2. STANDARDS w/c JUSTIFY RETRENCHMENTa. The losses expected shld be

SUBSTANTIAL; b. The substantial loss apprehended must be

REASONABLY IMMINENT, as such imminence can be perceived objectively and in GF by the ER. (There shld be a certain degree of URGENCY for the retrenchment, w/c is a drastic recourse w/ serious consequences for the livelihood of the EEs retired or otherwise laid-off);

c. The retrenchment must be REASONABLY NECESSARY and likely to effectively prevent the expected losses. The ER should have taken other measures PRIOR or parallel to retrenchment to forestall losses (cut other costs, discontinue fat exec bonuses, reduction of both mgt & rank-n-file bonuses & salaries, going on reduced time, improving manuf. efficiency, trimming marketing & advertising costs, etc). Retrenchment shld be a measure of LAST RESORT, after less drastic means.

d. Alleged losses (if already realized) and expected imminent LOSSES sought to be forestalled, must be PROVEN by SUFFICIENT & CONVINCING EVIDENCE.

3. DETERMINATION of LOSS lies w/ the LA & NLRC –w/n an ER would imminently suffer serious/substantial losses is essentially a question of fact for the LA & NLRC to determine.

4. EFFECT of QUITCLAIMS – EE’s signing of quitclaims will not by itself disbar them from filing a complaint. Quitclaims executed by laborers are commonly frowned upon as contrary to pub policy

5. EFFECT of UNJUSTIFIED RETRENCHMENT – all retrenched EEs shld be REINSTATED and paid BACKWAGES..

Evidence to Prove Losses: “Modicum of Admissibility”Uichico v NLRC and Santos: To prove losses, the ER submitted the

Statement of Profit & Losses but the same does not bear the

signature of a CPA or audited by an independent auditor. It has no evidentiary value.

Hiring of Replacements after Retrenchment It is a showing of BF and belies the necessity of retrenchment

to prevent or offset losses. Why would the ER take in addt’l workers if it had to retrench?

Contracting out After Retrenchment/RedundancyAsian Alcohol v NLRC: may be validly done to promote economy &

efficiency as held in the De Ocampo case

REDUNDANCY RETRENCHMENTAs to Cause:Redundancy results from the fact that the position of the EE has become superfluous, an excess over what is actually needed, even if the business has not suffered reverses.

Retrenchment is linked w/ losses; it is a cost-cutting measure immediately necessary by business reduction or reverses.

As to Effect:Higher separation pay Lower separation pay

Retrenchment is either PERMANENT(283) or TEMPORARY (286). – When the 6-month period mentioned in Art 286 is over and the EE (still willing to work) is not recalled, he is deemed separated or constructively dismissed.o Sebuguero v NLRC, GTI Sportswear Corp: Petitioners

were among the 38 regular EEs of GTI. They were given “temporary lay-off” notices due to alleged lack of work & heavy losses caused by the cancellation of orders from abroad and by the garments embargo of 1990. Believing that their “temporary lay-off” was a ploy to dismiss them, resorted to because of their union activities, & was a violation of their R to security of tenure, they filed complaints for illegal dismissal, ULP, etc. GTI asserted its prerogative to lay-off its EEs temporarily for a period not exceeding 6months to prevent losses due to lack of work or job orders fr abroad, and that the lay-off affected both union & non-union members. It justified its failure to recall the EEs after the lapse of 6months because of the subsequent cancellations of job orders made by its foreign principals, a fact w/c was communicated to petitioners who were all offered severance pay. 22 of the 38 accepted the severance pay.LA: there is constructive dismissal. The circumstances

warranted the temporary lay-off. However, ER shld have recalled the EE’s after the end of the 6-month period, or at least reasonable informed them that it is still not in a position to recall them due to continuous drop of demand, thereby extending the temporary lay-off w/ a definite period of recall, and if the same cannot be met, then the company shld implement retrenchment and pay its EEs separation pay.

NLRC: Having established lack of work, it necessarily follows that retrenchment did take place and NOT constructive dismissal. It is only after the 6-month pd that an EE can be presumed to have been terminated.

Petitioners filed an action for certiorari, contending the NLRC erred in sustaining the theory of redundancy in justifying their dismissal.

RULING: What the NLRC affirmed is NOT redundancy but RETRENCHMENT as a ground for termination of ENT. Redundancy is different form retrenchment, or laying-off. Retrenchment is the termination of ENT initiated by the ER through no fault of its EEs and w/o the

prejudice to the latter, resorted to by mgt during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation. Simply put, it is the act of the ER of dismissing EEs because of losses in the operation of a business, lack of work & considerable reduction on the volume of his business.

Art 283 speaks of a PERMANENT retrenchment as opposed to a temporary lay-off as is the case here. There is no specific provision of law w/c treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period/duration therefor. These EEs cannot forever be temporarily laid-off. To remedy the situation or fill the hiatus, Art 286 may be applied but only by analogy to set a specific period that EEs may remain temporarily laid-off or in floating status. 6 months is the period set by law that the operation of a business may be suspended, thereby suspending the ENT of the EEs concerned. The temporary lay-off wherein the EEs likewise cease to work should also not last longer than 6 months. After 6 months, the EEs shld either be recalled to work or permanently retrenched ff the requirements of the law, and that failing to comply w/ this would be tantamount to dismissing the EEs and the ER would thus be liable for such dismissal. , To determine whether the petitioners were validly retrenched or were illegally dismissed, we must determine whether there was compliance w/ the law regarding a valid retrenchment at anytime w/in the 6-month period that they were temporarily laid off.

Problem: Preventive Personnel Reduction blurs the line bet retrenchment & redundancy

Accdg to jurisprudence, retrenchment may be done by the ER BEFORE losses are actually sustained. It need not keep all its EEs until after his losses shall have materialized. But a problem emerges: preventive personnel reduction blurs the line bet retrenchment & redundancy.

Reduction of Work Days: Constructive RetrenchmentInternational Hardware v NLRC: Pedroso was employed by

petitioner when the number of his working days was reduced to just 2 days a week due to financial losses suffered by petitioner’s business. He claimed he was retrenched and shld be paid separation pay. LA & NLRC ruled that inasmuch as the working days of Pedroso had been substantially reduced for more than 6 months and since the financial crisis of IH has not ceased, he is entitled to separation pay if he was actually retrenched.RULING: ER could not have been expected to notify DOLE of Pedroso’s retrenchment for there was no intention to do so on the part of the ER. Nevertheless, considering that Pedroso has been rotated by the ER for over 6months due to serious losses, so that he had been effectively deprived of a gainful occupation thereby, and considering further that the business of the ER was ultimately closed & sold off, the SC affirmed the NLRC’s ruling that Pedroso was thereby constructively dismissed or retrenched for ENT. Thus he is entitled to 1 month pay or at least ½ month pay for every year of service, w/c ever is higher.

CLOSURE OF BUSINESSClosure because of Losses 283 allows an ER to terminate the services of his EEs in case of

closure of business as a result of grave financial losses. But he ER must comply w/ the clearance or report required under the LC and its implementing rules before terminating the ENT of

the EEs. (NOTE: DOLE Clearance to terminate is no longer required).

Losses must be shown While business reverses can be a just cause for terminating the

services of EEs, the losses must be sufficiently proven by the ER. Art 277(b) states in part that “the burden of proving that the termination was for a valid or authorized cause shall rest on the ER.” Failure of the ER to show proof of its actual & imminent losses that would justify drastic cuts in personnel or costs, is fatal to its cause.

Financial losses are a question of fact that must be proved before the LA or the NLRC.

R to close whether losing or not It does not mean that closure is allowed only in case the

business is losing. If the business is NOT losing but its owner, for reasons of his won, wants to get out of the business, he in GF can lawfully do so anytime. Just as no law forces anyone to go into business, no law compels anybody to stay in business. But the EE shld be paid the severance pay.

3 Requirements of Cessation of Business NOT due to business reverses:

1. Service of a WRITTEN NOTICE to the EEs and to the DOLE at least 1 month before the intended date thereof;

2. The cessation or withdrawal from business operations must be BONA FIDE in character; and

3. Payment to the EEs of SEPARATION PAY amounting to at least:

a. 1 MONTH pay, orb. ½ month pay for each yr of service,

WHICHEVER IS HIGHER.

CLOSURE OF BUSINESS RETRENCHMENT or downsizing

It is the reversal of fortune of the ER whereby there is a COMPLETE cessation of business operations and/or an actual locking-up of the doors of establishment, usually due to financial losses.

It is the reduction of personnel usually due to poor financial returns so as to cut down on costs of operations in terms of salaries and wages to prevent bankruptcy of the company. (also called “downsizing”)

It is an authorized cause for termination of ENT w/c aims to prevent further financial drain upon an ER who cannot pay anymore his EEs since business has already stopped.

It is an authorized cause for termination of ENT w/c the law accords an ER who is not making good in its operations in order to cut back on expenses for salaries & wages by laying off some EEs. Its purpose is to save a financially ailing business establishment from eventually collapsing.

Not limited to those resulting from business losses or reverses.

Partial ClosureDangan v NLRC: Art 283 w/c permits closure or cessation of

operation of an establishment or undertaking not due to serious business losses or financial reverses, w/c includes BOTH the

complete cessation of operations and the cessation of only PART of a company’s activities.

TOTAL CLOSURE PARTIAL CLOSURESeparation pay may NOT be paid

Separation pay must be paid

JUST CAUSE AUTHORIZED CAUSESeparation pay may NOT be paid

Separation pay must be paid.

GR: The grant of separation pay under Art 283 is a statutory obligation on the part of the ER and a demandable R on the part of the EE.

except only where the closure or cessation of operations was due to serious business losses or financial reverses and there is sufficient proof of this fact or condition.

In the absence of proof of such serious business losses or financial reverses, the ER closing his business is obligated to pay separation pay to his EEs.

Temporary Shutdown- NOT a good reason to dismiss EEs, where operations continued

after such repairs, and it is apparent that the closure was a mere ploy to get rid of EEs.

Q: Does previous generosity obligate the company?(if the company paid a generous separation pay to batch one, must it do the same to batch 2 of the separated EEs?

A: The law requires an ER to extend equal treatment to its EEs. It may not, in the guise of exercising mgt prerogatives, grant greater benefits to some and less to others. BUT!North Davao case Business Information

Systems caseWhen the mining company ceased operations due to losses, its remaining EEs were separated & given the equivalent of only 2.5 days’ pay for every yr of service. In prior yrs, in contrast, it had been giving separation pay equivalent to 1 month’s pay for every yr of service.

BISSI, after experiencing financial reverses, decided as a retrenchment measure to lay-off some EEs and gave their separation pay equivalent to ½ month pay for every yr of service. BISSI retained some EEs in an attempt to rehabilitate its business. However, barely two and a half months later, these remaining EEs were likewise discharged. Unlike the earlier dismissed EEs, the 2nd batch received separation pay equivalent to a full month’s salary for every yr of service, plus a mid-yr bonus.

The recently separated EEs cried discrimination.

The first batch of EEs complained of discrimination.

RULING: the co’s practice of giving 1-month pay for every yr of service could no longer be continued precisely because the co could not afford it anymore. It was forced to shut down on account of staggering losses. , the fact that less separation

RULING: There was no reason for BISSI to skimp on separation pay for the 1st batch of EEs. That it was able to pay 1-month separation benefit for EEs at the time of closure meant that it must have been also in a position to pay the same amount to those

pay were granted when the company finally met its business death cannot be characterized as discrimination.

who were separated prior to closure. There was discrimination.

Justification for closure, not credible: ULPCarmelcraft Corp v NLRC: After its registration as a labor union,

the Carmelcraft EE’s Union sought but did not get recognition from the corp. Consequently, it filed a petition for certification election. ER announced to its EEs that it would cease operations due to serious financial losses. Operations did cease as announced. The union filed a complaint w/ the DOLE for illegal lockout, ULP& damages, and other benefits. LA declared the shutdown illegal & violative of the EE’s R to self-organization.RULINGS:

1. Justification for Closure is NOT established. That it sustained losses was not proved because there is no report of its operations during the succeeding 7 ½ months before it decided to close its business. The court believes that the corp would rather shut down than deal w/ the union.

2. ULP - the act was ULP and violation of the EE’s R to self-org.

3. State intervention in business closure when justified – the determination to cease operations is a prerog of mgt that is usually not interfered w/ by the State, but where it is manifest that the closure is motivated not by a desire to avoid further losses but to discourage the workers from organizing themselves into a union for more effective negotiations w/ the mgt, the State is bound to intervene

Closure by operation of the CARPNat’l Federation of Labor v NLRC: The closure contemplated

under Art 283 is a unilateral & voluntary act on the part of the ER to close the business establishment. It does not contemplate a situation where the closure of the business is forced upon the ER and ultimately for the benefit of the EEs.

Expiration of Lease If the workers’ tenure of ENT is coterminous w/ the lease

of the hacienda, their ENT expires as soon as the lease expires and the lessee turns over the hacienda to the owner. What severs the ER-EE relshp is not the worker’s dismissal but the expiration of their working relshp w/ the lessee. The workers are not entitled to separation pay as the case entails expiration of tenure and NOT dismissal.

SALE IN GOOD FAITH No law prohibits bona fide sale of a going enterprise. When that happens, the PURCHASER (unless he agrees to do

so), has no legal obligation to continue employing the EEs of the seller.

The SELLER, as ER, is obliged to pay his EEs separation pay and other benefits founded on law, policy, or contract.

The TRANSFEREE may, but is not obliged to, give ENT preference to the former EEs; if hired, they may be required to pass probation.

If the sale is tinged w/ BAD FAITH, however, the law & rulings on ULP and the doctrine of successor ER may apply.

San Felipe Neri School of Mandaluyong v NLRC, Roman Catholic Archbishop of Manila: SFNM sold its properties and assets to the RCAM. Immediately thereafter, RCAM, as the transferee-purchaser, continued the operation of the school, but applied for a new permit to operate the same.

RCAM required the respondent teachers to apply as new EEs subj to the usual probation. Demoted to probationary status and their past services not recognized by the new ER, the teachers inquired abt their Rs from the former school owners, but to no avail. Instead, they were referred to the new owners of the school, supposedly as the proper party who shld answer for and adjust their demands.

The teachers filed against FNSM (and RCAM as alternative defendant) for separation pay.RULING: The Deed of Sale reveals no express stipulation whatsoever relative to the continued ENT by RCAM of the teacher-EEs of FNSM. On the contrary, records show that RCAM expressly manifested its unwillingness to absorb the petitioner’s school EEs or to recognize their prior service. The respondent teachers’ ENT has been effectively terminated and there was in effect a closure.

There is no law w/c requires the purchaser to absorb the EEs of the selling corp. The most that the purchasing co may do, for purposes of public policy & social justice, is to give preference to the qualified separated EEs of the selling co, who in their judgment are necessary in the continued operation of the business. This, RCAM did.

Hence, the SFNSM’s contention that private respondents are not entitled to separation pay on the ground that there was no termination of the latter’s ENT but a mere change of ownership in the assets & properties of the school is untenable.

Sale of Business: Is it “closure” or “cessation of business?”Manlimos v NLRC & Super Mahogany Plywood Corp: the issue of

whether there was a closing or a cessation of business operations w/c could have operated as a just cause for the termination of ENT was not material. The change in ownership was bona fide.. The petitioners did not doubt that, and they even freely & voluntarily accepted their separation pay and executed a Release/Waiver.

An innocent transferee of a business establishment has NO liability to the EEs of the transferor to continue employing them. Nor is the transferee liable for past ULPs of the previous owner, except when the liability therefor is assumed by him under the contract of sale, or when liability arises because of the new owner’s participation in defeating the Rs of the EEs.

Where such transfer of ownership is in GF, the transferee is under no legal duty to absorb the transferor’s EEs. The most he may do, for reasons of pub policy & social justice, is to give preference to the qualified separated EEs in the filling of vacancies.

Since the petitioners were effectively separated from work due to a bona fide change of ownership, and they were accordingly paid their separation pay, w/c they freely & voluntarily accepted, the private resp corp was under no oblig to employ them; although it may give them preference in the hiring.

Successor-in-Interest, Contractual Oblig to EmployMarina Port services v Iniego: If the transferee contractually

committed itself to retain the EEs of the transferor, such contractual agreement must be honored.

MERGER By the fact of merger, succession of ENT Rs & obligs

occurs bet the absorbing corp and the EEs of the absorbed corp.

Not only must the absorbing corp retain the EEs; it should likewise recognize the length of service in the previous ER. In merger (like sale in BF), the “successor employer” principle applies.

Filipinas Port Services Inc v NLRC: In compliance w/ govt policy, the diff stevedoring and arrastre corps operating in the Port of Davao were integrated into a single dockhandlers corp, known as the Davao Dockhandlers, Inc., w/c was subsequently renamed Filport.

Sec 118 of the PPA AO 13-77 mandated Filport to draw its personnel complements from the merging operators. Thus, Filport labor force was mostly taken from the integrating corps, among them private respondents.

Years later, 19 EEs filed a complaint w/ DOLE, alleging that although they were EEs of Filport, when they retired, they were paid retirement benefits computed only from the time of the merger and the time of service they rendered before the merger was not counted.RULING: SC enbanc, ruled in favor of the EE’s claim. The alleged memo of the PPA Asst Gen Mgr exonerating Filport from any liability arising from and as a result of the merger is contrary to public policy, & violative of the workers’ R to security of tenure.

The Fernando v Angat Labor Union ruling (where it was held that unless expressly assumed, labor contracts are not enforceable against a transferee of an enterprise, labor contracts being in personam) is NOT APPLICABLE in this case. The principle involved in the Fernando case applies only when the transferee is an ENTIRELY NEW corp w/a DISTINCT personality from the integrating firms and NOT where the transferee was found to be merely an alter ego of the diff merging firms, as in this case. Thus, Filport has the oblig not only to absorb the workers, of the dissolved cos, but also to include the length of service earned by the absorbed EEs w/ their former EEs as well.

CONSOLIDATION Sec 3 of Act No. 2772: Upon the perfecting of a

consolidation, the several corps parties thereto shall be deemed and taken as one corp, upon the terms & conditions set forth in said agreement; or upon the perfecting of the merger, the corp mered shall be deemed and taken as absorbed by the other corp and incorporated in it; and all its singular Rs, privileges and franchises of each said corps and all property, real & personal, and all debts due on whatever account, belonging to each such corps shall be taken and deemed as transferred to and vested in the new corp formed by the consolidation, or in the surviving corp in case of a merger, w/o further act or deed. Provided however, that the Rs of creditors and all liens upon the prop of either of said corps shall be unimpaired.

AILMENT or DISEASE If the EE suffers from a disease and his continued ENT is

prohibited by law or prejudicial to his health or to the health of his co-EEs, the ER shall not terminate his ENT unless there is a certification by a competent public health authority that the disease of such nature or at such stage that it cannot be cured w/in 6months even w/ proper med treatment.

The burden of proving the validity of the dismissal rests on the ER. In absence of the required certification, by a competent pub health authority, the Court has ruled against the validity of the EE’s dismissal.

Triple 8 Integrated Services v NLRC: The reqment for a med cert CANNOT be dispensed w; otherwise, it would sanction the unilateral and arbitrary determination by the ER of the gravity or the extent of the EE’s illness and thus defeat pub policy.

A med cert issued by the company’s own physician is NOT a certificate by “competent public health authority”

Even if there is NO illegal dismissal, there may be an award for separation pay. Under Art 184, An ER may terminate the services of an EE who was found to be suffering from a disease and whose continued ENT is prohibited by law, or is prejudicial to his health, as well as to the health of his co EEs; provided that he is paid his SEPARATION pay.

Even VOLUNTARY RESIGNATION due to ill health may be paid termination pay for reasons analogous to those contemplated under Art 284.

PROCEDURE TO TERMINATE EMPLOYMENT

Lack of a valid cause (Substantive due process) dismissal is invalid, EE entitled to reinstatement

Lack of proper procedure (Procedural due process) does NOT invalidate dismissal, EE still dismissed, but the ER becomes liable for indemnity for violating EE’s R to due process

The guarantee of due process applies to ALL workers, including managerial EEs

The rules laid down by the co for the investigation of an EE before his termination need not be observed to the letter. It is enough that there was DUE NOTICE & HEARING before a judgment is made.

Summary proceedings may be conducted. Non-verbal devices such as written explanation, affidavits, position papers or other pleadings are sufficient hearing.

EE’s R to due process prevails over the company rules that allow “immediate dismissal” of the erring EE

STANDARDS OF PROCEDURAL DUE PROCESSA. For termination of ENT based on JUST CAUSES:1. A WRITTEN NOTICE served on the EE

a. specifying the ground/s for termination and b. giving to said EE reasonable opportunity to

explain his side;2. A HEARING or conference during w/c the EE concerned,

w/ the assistance of COUNSEL if the EE so desires, is a. given opportunity to respond to the charge, b. present his evidence, orc. rebut the evidence presented against him, and

3. A WRITTEN NOTICE of termination served on the EE indicating that upon due consideration of all the circumstance, grounds have been established to justify his termination.

In case of termination, the foregoing notices shall be served on the EE’s last known address.

B. For termination of ENT based on AUTHORIZED CAUSES defined in 283

1. Service of a WRITTEN NOTICE to the EE, and2. Service of a WRITTEN NOTICE to the Regional Office of

DOLE At least 30 days before the effectivity of the termination,

specifying the GROUND/S therefor.

C. For termination brought about by the COMPLETION of CONTRACT or phase thereof.

NO Notice required

D. For termination brought about by FAILURE of EE to MEET the STANDARDS of the ER in case of PROBATIONARY ENT

A WRITTEN NOTICE is sufficient if served to the EE w/in reasonable time from the effective date of termination.

Preventive suspension and investigation DO NOT replace “2-Notice” requirement of due process; defect not cured by NLRC Hearings.

De Vera v NLRC & BPI: Notice of preventive suspension is not considered adequate notice, as it was merely to ascertain the extent of the loss of the bank & to pinpoint responsibility of the parties involved, and NOT to apprise the EE of the causes of his desired dismissal.

Likewise, subsequent interview is NOT the “ample opportunity to be heard” contemplated by law. In the latter, the EE sought to be dismissed an opportunity is afforded the EE after he is informed of the charges against him in order to give him an opportunity to refute the accusations against him.

Consultation w/ union insufficient notice That the EE simply “kept silent”NOT a waiver of his Rs.

Notice & opportunity to be heard must be accorded by an ER event though the EE does not affirmatively demand them.

An EE must be given notice & an ample opportunity prior to his dismissal to be adequately prepare for his defense. The law lays down the procedure, but it does not need to be observed to the letter, but at least, it must be done in the natural SEQUENCE of NOTICE, HEARING & JUDGMENT.

Ample opportunity– every kind of assistance that mgt must accord to the EE to enable him to prepare adequately for his defense.

Reasonable opportunity– should be construed to as a period of 5 CALENDAR DAYS from receipt of notice to give the EEs an opportunity to study the accusation against them, consult a union official/lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint.

Participation of CounselQ: Does the EE’s counsel have the R to participate in the

investigatory hearing?Gonzales v Ateneo de Davao Univ: Ateneo Grade School Headmaster sent a letter to Gonzales about the complaints of 2 parents for alleged use of corporal punishment on her students. Gonzales claimed that she was not informed of the identity of the parents, and that she was not confronted about it by Ateneo, and that it was only 2 yrs after the complaints were made that she discovered, through her students and their parents, that Ateneo had solicited complainants to lodge written complaints about her.

She wrote a letter to the headmaster that she be formally informed of the complaint and be duly investigated.

An investigative committee was organized, but Gonzales refused to take part in the investigation unless the rules of procedure laid down by the Committee (specifically the provision prohibiting her counsel to participate in the proceedings) be revised, contending that the same were violative of her R to due process.

Later, Ateneo served a Notice of Termination on Gonzales pursuant to the findings & recommendation of the Committee.RULING: Due process denied. Twin requirements missing. No ample opportunity, w/ assistance of counsel, she was not informed of the nature of her offense and she did not get to cross examine and confront the witnesses against her. Decision must be based on established facts and on a sound legal foundation.

Formal Hearing NOT RequiredGatus v Quality House: There is no violation of due process even if

no formal or actual hearing was conducted, provided a party is given a chance to explain his side.

Procedural Process NOT wiped away by Union Security ClauseCarino v NLRC: The company, upon being formally advised in

writing of the expulsion of Carino from the union, in turn simply issued a termination letter to him, effective the very next day, w/o giving him a chance to explain his side of the story. RULING: The company should have satisfied itself by its own inquiry of the validity of his expulsion from the union.

Ferrer v NLRC: The union executed a closed-shop agreement w/ the company, and expelled the petitioner from the union, and recommended his dismissal to the mgt. the company dismissed him outright by virtue of the CBA. RULING: While a closed-shop agreement is not illegal, eventhough providing for the dismissal of EEs who have not maintained their membership in the union. However, in the implementation of the provisions of the CBA, both parties thereto shld see to it that no R is violated or impaired. In this case the outright dismissal of Ferrer violated his R to due process of notice & hearing.

In terminating the ENT of an EE by enforcing the union security clause, the ER needs only to determine & prove that:

1. The union security clause is APPLICABLE;2. The union is requesting for enforcement of the

union security provisions in the CBA;3. There is sufficient evidence to support the union’s

decision to expel the EE from the union.

WHEN HEARING IS NOT REQUIRED If the EE has ADMITTED his guilt; all that is needed is to

INFORM the EE of the findings of the mgt. BUT, there must be a clear admission of guilt. If the EE merely narrated & explained what he did w/o admitting his guilt, then conducting a hearing is required.

If the termination is due to AUTHORIZED CAUSES

Due Process in AUTHORIZED Causes: 2 Notices required but NOT a hearing

In ENT Terminations due to AUTHORIZED causes, INVESTIGATION & HEARING is NOT REQUIRED. Only 1-month advance notices to BOTH the affected EE and the DOLE.

The EE may contest the reality or GF character of the termination ground by filing a complaint w/ the DOLE.

Notice must be INDIVIDUAL, not collective Shopper’s Gain Supermart v NLRC: The lease contract over the

premises w/c the ER supermart was using was not renewed, hence the business had to close. 30 days before closing, the ER posted a notice of closure on the EE’s bulletin board.RULING: Such posting of notice on the EE’s bulletin board is not sufficient compliance. The law requires the ER who seeks to terminate the ENT of his EE must notify HIM in writing at least 30 days in advance.

WHEN NOTICE IS NOT NEEDED1. Voluntary Arbitration as Notice Voluntary arbitration is SUBSTANTIAL COMPLIANCE

w/ the 1-month mandatory notice required under 283. The purpose is to enable proper authorities to ascertain whether the closure of the business is done in GF. , where there has been voluntary arbitration, there is NO NEED FOR 1

MONTH NOTICE, as it more than satisfied the intendment of the hearing required.

2. If the EE has CONSENTED to the retrenchment, or voluntarily applied for retrenchment w/ his ER due to the installation of labor saving devices, redundancy, closure or cessation of oper, or to prevent financial losses to the business of the ER.

BURDEN OF PROOF In termination causes, the burden of proof rests upon the ER

to show that the dismissal is for a just and valid cause. Where the termination cases involve OFW recruited &

deployed overseas, the burden is upon BOTH the FOREIGN-BASED ER & the ENT AGENCY or recruitment entity w/c recruited the worker (for the latter is not only the agent of the former, but is also solidarily liable w/ the foreign principal for any claims or liabilities arising from the dismissal of the workers.

Quantum of Evidence: SUBSTANTIAL EVIDENCE: it is sufficient that there is SOME BASIS for the EE’s misconduct, or that the ER has REASONABLE GROUND TO BELIEVE that the EE is responsible for the misconduct and his participation therein renders him unworthy of the trust & confidence demanded by his position.

Substantial Evidence–such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.

CondonationGR: The ER may by condonation/waiver of the EE’s conduct (such

as retention of the EE after the ER’s discovery of his act), preclude himself from subsequently asserting the R to discharge them for cause. He is deemed to have lost or waived his R to insist on the EE’s acts as ground for dismissal.

: But subsequent misconduct of the EE gives the ER a right to take the entire record into account, the condoning is deemed to have been conditioned upon future good conduct.

: In case of a continuing breach of contract of ENT, there can be no waiver or condonation that will prevent the ER from discharging the EE at any time.

: Even if the ER has paid the wages/salary of the EE to the time of his discharge does not amount to condonation.

PREVENTIVE SUSPENSION The ER may place the worker concerned under preventive

suspension if his continued ENT poses a serious & imminent threat to the life or property of the ER or of his co-workers.

o Invalid Preventive Suspension–Global Inc v Atienza - where the ER placed the EE on preventive suspension “for having violated company rules & regulations by incurring repeated absences & tardiness” and subsequently dismissed her. Her tardiness/absences does not in any way pose serious threat to the property of the ER.

o Valid Preventive Suspension–Globe-Mackay v NLRC & Salazar: Acting on reports that some of its expensive equipment were missing, GM conducted an investigation of Saldivar, the manager for tech operations support. He was also investigated over the report that he formed a partnership w/ a supplier of GM.RULING: The findings pointing to Saldivar’s acts in conflict w/ his position as a tech operations manager, necessitated the immediate & decisive action on any EE closely associated w/ Saldivar.

The suspension of Salazar was impelled by the discovery of the missing ac unit inside the apartment w/c she shared w/ Saldivar. Such preventive susp, while not signifying that the company has adjudged the EE guilty of the charges she was asked to explain, was a valid measure resorted to for the protection of the company’s property pending investigation of the alleged misfeasance/malfeasance committed by the EE.

Period of Preventive Suspension–GR: Being only an alternative protective measure, cannot last longer

than 30 DAYS. After that, the ER shall reinstate the worker in his former position or in a substantially equivalent position (general application). Hence, the EE must be reinstated to his former position, because suspension beyond this maximum period amounts to CONSTRUCTIVE DISMISSAL.

: The ER may extend the period of suspension, provided that during the period of suspension, he pays the wages & other benefits due to the worker. In such case the worker shall NOT be bound to reimburse the amt paid to him during the extension if the ER decides, after completion of the hearing, to dismiss the worker.

: BUT for PROJECT & NON-PROJECT EES in the CONSTRUCTION industry, the preventive suspension cannot be longer than 15 DAYS. Beyond that, the EE is entitled to wages & benefits.

Constructive Dismissal– does not always involve forthright dismissal or diminution in rank, compensation, benefit & privileges. There may be constructive dismissal if an act of clear discrimination, insensibility or disdain by an ER becomes so unbearable on the part of the EE that it could foreclose any choice by him except to forego his continued ENT.

APPROPRIATE PENALTY Even if the cause is valid, and due process was followed,

still the dismissal may be questioned (& eventually nullified) if the penalty itself is NOT appropriate. The RULE is that: The penalty must be COMMENSURATE to the OFFENSE.

Grave offenses deserve grave penalties, BUT diverse factors shld also be considered, like the EE’s long yrs of otherwise satisfactory service, or the amt of money involved.

Dismissal is a harsh penalty. If at all avoidable, w/o oppressing the ER, it should be avoided.

Value of Property as a factor in determining penaltyGelmart Industries v NLRC: Felix has been an auto-mechanic for

Gelmart for 16 years. He was caught by security guards taking out 16 oz. of used motor oil w/o a gate pass. Under the Rules of Gelmart, theft or pilferage merits outright termination from ENT. After investigation, he was found guilty and was dismissed.RULING: While the used motor oil still remains the property of Gelmart, and taking it out of the co premises w/o gate pass constitutes theft/pilferage of company property, however, a dismissal is too harsh. Considering Felix’s 15 yrs of service w/o any previous derogatory record, and considering that the value of the prop pilfered is very minimal, plus the fact that Gelmart failed to reasonably establish that nondismissal of Felix would work undue prejudice to the validity of their operation or is inimical to the company’s interest, suspension and not dismissal is the more appropriate penalty.

Q: May past offenses of an EE be “tacked on” to the latest offense to justify the penalty of dismissal?

A: Such previous offenses may be so used as valid justification for dismissal from work only IF the infractions are RELATED to the subsequent offense upon w/c basis the termination of ENT is decreed.

FILING OF ILLEGAL DISMISSAL COMPLAINTWHERE: Regional Branch of DOLE (Branch comprising the

workplace)WHEN: Complaint should be filed w/in 4 YEARS from dismissal

CLEARANCE NO LONGER REQUIREDThe clearance requirement provided by Art 278(b) (“no ER may shut

down is establishment or dismiss or terminate the ENT of EEs w/ at least 1 yr of service during the last 2 yrs, whether such service is continuous or broken, w/o prior written authority issued in accordance w/ the RR the Sec may promulgate) is ABOLISHED by BP 130.

CONSEQUENCES OF TERMINATION

SEPARATION PAY

OLD LAW: The ER may dismiss an EE with or without just cause. And only when there is NO just cause was the ER required to

a) serve the 1-month advance NOTICE on the EE, OR b) pay½ month salary for every yr of service, (whichever

is longer). It was only the FAILURE to serve such notice that would

render the ER for separation pay (not the fact that the ENT was severed w/o just cause).

AND, even if the dismissal was found to be w/o just cause, w/o due notice and abusive on the part of the ER, the latter could only be liable for separation pay & moral damages, BUT the dismissed EE could NOT demand REINSTATEMENT.

PRESENT LAW: Requires a VALID REASON to terminate an ENT (no valid reason = no termination). GR: Continuance on the job.

: Payment of separation pay in lieu of the job.

4 WAYS/ CONTEXTS of Separation Pay1. As ER’s STATUTORY OBLIG in cases of legal

termination due to AUTHORIZED CAUSES (283 or 284);- Because those causes are not faults of the EE but

exigencies of the business disease, it is only fair in the context of social justice

Varies accdg to the cause of terminationa) Because of introduction of labor-saving

DEVICE or of REDUNDANCY, the separation pay is the higher amount of:

i. 1-month pay orii. 1-month pay for every yr of

service (a fraction of at least 6 months considered as 1 yr)

b) Because of RETRENCHMENT or closure/CESSATION of oper NOT due to serious business losses or EE’s DISEASE, whichever is higher of:

i. 1-month pay, orii. ½ month pay for every yr of

service (a fraction of at least 6 months considered as 1 yr)

c) If the closure/CESSATION of business is due to serious business LOSSES or financial reversesNO separation pay need be paid.

The salary base used in computing the separation pay should INCLUDE not just the basic salary, but also the regular allowances that an EE has been receivingbut commissions may not be included or travels equivalent.

2. As FINANCIAL ASSISTANCE, as an act of social justice, even in cases of legal dismissal under 282;

- This serves as an exception, when an EE who commits any of the acts enumerated in Art 282 (just causes), making his termination legal (ordinarily the ER need not pay him separation pay). This is paid if the act committed by the EE does not amount to serious misconduct or does not reflect of the EE’s moral character.

- It is NOT statutory requirement, but rather one out of compassion.PLDT v NLRC & Abucay: Ms. Abucay, a traffic operator of PLDT, was accused by 2 complainants of having received money from them in exchange of her promise to facilitate approval of their applications for telephone installation. Investigated & heard, she was found guilty and was dismissed. The LA found her dismissal as valid but nevertheless required PLDT to give her 1-month’s pay for every year of her 10years of service as financial assistance. Affirmed by the NLRC, it further said that the EE is sufficiently punished for her dismissal. The grant of financial assistance is not intended as a reward for her offense, but merely to help her for the loss of ENT after working faithfully for PLDT for 10yrs.

Financial assistance based on compassionate justice was granted even to an EE who was not dismissed but who had to RETIRE w/o being covered by the company retirement plan.

Exceptions to Financial Assistance1) Serious misconduct 2) Offense reflecting on his moral character3) Fraud or willful breach of trust4) Willful disobedience5) Gross & habitual neglect of duties6) Commission of a crime/offense against the

person of the ER or any immediate member of his family or his authorized rep

Labor court may grant separation pay for analogous causes anchored on social justice

Separation pay is denied an admin mgr who was dismissed after almost 3 yrs

of service for arrogant, uncompromising and hostile behavior toward the ER (Tirazona v PET)

BUT when there is doubt that dishonesty was committed, financial assistance may still be awarded to an EE who has rendered long yrs of service based on the liberal construction of labor laws in favor of the worker.

The court, in the interest of substantial justice, may revoke an award of financial assistance by the LA/NLRC, even if the ER did not question such grant.

Amount of Financial Assistance is by judicial determination based on the circumstances of each case.

3. In LIEU of REINSTATEMENT in illegal dismissal cases where the EE is ordered reinstated but reinstatement is NOT feasible;

4. As and ENT benefit granted in a CBA or company policy.- Does not arise from legal or illegal dismissal but

from nonadversarial mode of leaving one’s ENT, such as RESIGNATION. The benefit’s demandability depends on the terms of the

a. CBAb. Voluntary company policyc. Established practice

BUT even if not granted by a company policy or practice, resignation pay may still be awarded for equitable reason.

BACKWAGES An illegally dismissed EE is entitled to either:

a. Reinstatement + Backwages; orb. Separation pay + Backwages (if reinstatement is no

longer possible).[computed from the time of dismissal up to retirement age of 60].

Backwages– presupposes illegal termination. It is restitution of earnings unduly withheld from the EE because of illegal termination.

While generally an order of reinstatement carries w/ it an award of backwages, the court may not only mitigate, but also absolve the ER from liability for backwages where GF is evident.

SEPARATION PAY BACKWAGESGranted where reinstatement is no longer advisable because of strained relations bet EE & ER

Represent compensation that should be earned but not collected because of the unjust dismissal.

Basis of Computation:Usually, the length of EE’s service (separation pay in lieu of reinstatement)

The actual period when he was unlawfully prevented from working

Designed to provide the EE w/ the wherewithal during the period that he is looking for another job.

Designed to redress the injury (loss of earnings that would have accrued to the dismissed EE during the period bet dismissal & reinstatement.

Oriented towards the immediate future, the transitional period the dismissed EE must undergo before locating a replacement job.

It is a form of relief that restores the income that was lost by reason of unlawful dismissal.

They are DISTINCT & SEPARATE, and one cannot be deducted from the other.

UNPAID SALARY BACKWAGES

Refer to those earned PRIOR to dismissal

Refer to those earnings lost AFTER and because of dismissal.

Ordered if there are still salaries collectible by the EE form the ER by reason of services already rendered

Usually ordered w/ reinstatement

GR: As a substantive and statutory R, backwages may be granted by the court to an illegally dismissed EE even if he fails to claim it.

: Except where the lower court’s erroneous omission of the grant of backwages w/ a finding of illegal dismissal has become final & executory on the failure of the complainant to appeal the said decision. BUT in…

St. Michael’s Institute v Santos: The fact that the NLRC did not award backwages to the EEs, or that they themselves did not appeal the NLRC decision does not bar the CA from awarding backwages. The award of backwages is a mere logical consequence of the finding that the EE’s were illegally dismissed.

Basis of Computation of Backwages An UNQUALIFIED award of backwages means that the EE is

paid at a WAGE RATE at the TIME of his dismissal. The base figure to be used in the computation of backwages

shld include not just the basic salary, but also the regular allowances that the EE had been receiving such as the ECOLA and the 13th MP mandated under the law.

Backwages shld be computed from the time of the illegal dismissal w/c is also the time the EE’s salary started to be withheld, up to the time of his actual reinstatement.

OLD RULE: The award of backwages to an EE could be reduced by subtracting the wages actually earned by him from ENT during the period of his separation, or the wages w/c he could have earned had he been diligent enough to find a job.

The ER would be allowed to adduce evidence on these matters and consequently cause suspension of execution of judgment. This not only reduced the awarded backwages but also delayed its payment.

MERCURY DRUG RULE: Mercury Drug v CIR: The SC, in the interest of justice & expediency, adopted the policy of granting backwages for a maximum period or 3 years w/o qualification & deduction.

RA 6715: (March 21, 1989): entitled an illegally dismissed EE to FULL backwages for illegal dismissals that occurred after March 21, 1989. Bustamante v NLRC & Evergreen. Backwages to be awarded

to an illegally dismissed EE shld NOT as a GR, be diminished or reduced by the earnings derived by him elsewhere during the period of his illegal dismissal.

Inflation 2 Requisites for the effects of extraordinary inflation to

apply:1. Agreement bet the parties; and2. Official declaration thereof by competent

authorities.

If there is a legal & valid dismissal (for a valid reason), but ER does not observe procedural due process ER must pay indemnity (penalty), the amount of w/c depends on the facts of

each case and the gravity of the omission committed by the ER.—The Wenphil Doctrine.

Damage w/c an ER shld pay if he violates an EE’s R to procedural due process prior to his dismissal for cause is in the nature of nominal damages (the purpose is not to penalize the ER but to vindicate or recognize the R of the Ee.

Termination Legal but due process is not followed:Wenphil Doctrine: Termination is still valid, but ER must pay

INDEMNITY.Serrano Ruling: Termination is still valid, but the Court raised the

sanction from indemnity to FULL BACKWAGES.Viernes Ruling: Not only INDEMNITY + FULL BACKWAGES

(The termination here is invalid)Agabon (present) : Termination is still valid, the EE remains

dismissed, but the ER must pay an indemnity HEAVIER than that imposed in Wenphil but LIGHTER than full backwages.

JAKA ruling:refined Agabon. Whereas Agabon’s award of nominal damages does not distinguish whether an EE’s dismissal is based either on “just” or on “authorized” causes, JAKA makes a distinction.

1. Dismissal based on JUST causes w/o due process the sanction to be imposed upon him shld be tempered. Because the dismissal process was, in effect, initiated by an act imputable to the EE;

2. Dismissal based on AUTHORIZED causes w/o due process the sanction must be stiffer, because the dismissal was initiated by the ER’s exercise of his mgt prerogative.

Industrial Timber Ruling: refines further JAKA: subdivided the authorized causes:

1. Due to losses penalty to the ER who disregarded due process is lighter

2. Not due to losses. penalty is stiffer.

Agabon v NLRC, Reviera Home Improvements: Complaining EEs were cornice installers of a company whose business was selling & installing of ornamental construction materials. The were dismissed because they refused to work on “pakyaw” basis. In their complaint they asserted having been dismissed w/o notice & hearing. The ER, on the other hand, maintained that they were not dismissed, but that they abandoned their work. They refused to work on a new assignment of cornice installation, and instead they sub-contracted installation work for another company. CA: There was abandonment because they were already working for another ER.SC: There are 4 possible situations of dismissal:

1. Dismissal for a just cause (282), or authorized cause (283), or for health reasons (284), AND due process was observed- Dismissal is valid and ER will not suffer any

liability2. Dismissal without just or authorized cause BUT

due process was observed- Dismissal is illegal; EE entitled to

reinstatement w/o loss of seniority Rs and other privileges and full backwages inclusive of allowances & other benefits or their monetary equivalent computed from the time

the compensation was not paid up tho the time of actual reinstatement.

3. Dismissal without just/authorized cause AND no due process.- Same as #2

4. Dismissal is for just/authorized cause BUT no due process.- Dismissal shld be upheld, but the ER is liable

for non-compliance w/ the procedural requirements of due process.

In the present case, the dismissal should be upheld because there was abandonment on the part of the EEs. The ER however, did not follow the notice requirements. Where the dismissal is for a just cause, the lack of due process should not nullify the dismissal, or render it illegal, or ineffectual. However, ER should indemnify the EE for the violation of his statutory Rs. The indemnity to be imposed shld be stiffer to discourage the abhorrent practice of “dismiss now, pay later.” The sanction should be in the nature of indemnification or penalty & shld depend on the facts of each case, taking into special consideration the gravity of the due process violation. It should be in the form of nominal damages. In this case, it is P30k.

Industrial Timber v Ababan: mentioned some other factors to consider in assessing the penalty to the ER:

1. The authorized cause invoked, whether it was retrenchment, or a closure/cessation of operation due to losses or otherwise;

2. The number of EEs to be awarded;3. The capacity of the ERs to satisfy the awards,

taking into account their prevailing financial status as borne by the records;

4. The ER’s grant of other termination benefits in favor of the EEs

5. Whether there was a bona fide attempt to comply w/ the notice requirements as opposed to giving no notice at all.

Labor Huhu

Documents

Transcript of Labor Huhu