LABOR Standards 6

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3. separation pay equivalent to 1month pay or at least month payfor every year of service, whicheveris higher;

4. must be done in good faith;5. fair and reasonable criteria in

ascertaining who would bedismissed.

Retrenchment is an authorized causefor termination of employment whichthe law accords an employer who is notmaking good in its operations in orderto cut back on expenses for salariesand wages by laying off someemployees.

The purpose of retrenchment is to savea financially ailing businessestablishment from eventuallycollapsing.

Conditions under which anemployer may retrench:1. substantial loss which are not

merely de minimis in extent;2. imminence of such substantial

losses;3. retrenchment would effectively

prevent the expected and additionallosses;

4. the alleged losses and expected

losses must be proven by sufficientand convincing evidence.

4. Closing or cessation of operation of theestablishment or undertaking; To abolish means to do away with, to

annul, abrogate or destroy completely.It denotes an intention to do away withthe office wholly and permanently. Avalid abolition of offices is neither

removal nor separation of the

incumbents. No dismissal or separationarises because the position itself ceasesto exists (Tan vs. DPWH, GR No.143289, November 11, 2004).

Requisites for validity:1. must be in good faith;2. purpose should not be to circumvent

the provisions of the Labor Code;

3. no other option available to theemployer except to close or ceaseoperations;

4. notice requirement;5. separation pay.

Obligations of Transferee in case ofSale in Good Faith- There is no lawwhich requires the purchaser to absorbthe employees of the selling company.As there is no such law, the most thatthe purchasing company may do, forpurposes of public policy and social

justice,, is to give preference to thequalified separated employees of theselling company who in its judgmentare necessary in the continuedoperation of the business establishment(MDII Supervisors Association vs.Presidential Assistant on Legal Affairs,79 SCRA 40).

Sale in Bad Faith- Although the

purchaser of the assets or enterprise isnot legally bound to absorb in itsemploy the employees of the seller ofsuch assets or enterprise, the partiesare liable to the employees if thetransaction between the parties isclothed with bad faith.

In case of Merger- A succession ofemployment rights and obligations hasoccurred.

The principle that employment contractis in personam and binding onlybetween the parties applies only whenthe transferee is an entirely newcorporation with a distinct personalityfrom the integrating firms and NOTwhere the transferee was found to bemerely an alter ego of the different

merging firms.

5. Disease Requisites for validity:

1. employee is suffering from adisease;

2. his continued employment is either:(1) prohibited by law; (2) prejudicialto his health; or (3) prejudicial tothe health of his co-employees;

3. certification by a competent publichealth authority that the disease isincurable within 6 months;

4. notice of termination;5. separation pay of at least 1 month

salary or to month salary forevery year of service, whichever isgreater, a fraction of at least 6months shall be considered 1 wholeyear.

CASES:

NDC-GUTHRIE PLANTATIONS vs. NLRCand EDWIN M. CRUZ et.al G.R. No.110740 August 9, 2001 DE LEON

Facts:

Petitioner companies are bothgovernment-controlled corporations, 60%

of their stocks being owned by the


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National Development Corporation. Theywere incorporated in the early 1980's todevelop, operate and maintain integratedpalm projects in Agusan del Sur. Pursuantto their purpose clause, NGPI and NGEIhired hundreds of farm workers toestablish and maintain their respectiveplantations as well as several supervisors

to oversee and superintend their workers.Kumar Das was the designated generalmanager of petitioner companies at thetime of the supposed illegal dismissal.NGPI discovered that it was sustainingtremendous losses which threatened tofurther upset its precarious financialcondition. In a desperate attempt toreverse its fortune and prevent its coffersfrom further depletion, NGPI terminatedthe services of 72 field workers. Still, thecompany was confronted with an auditreport prepared by COA reflecting losses.Faced with mounting losses, NGPI furtherterminated the employment of 49 fieldworkers, followed by another 158 farmhands. With this as backdrop, severalemployees of petitioner companies bondedtogether and formed the NDC-GUTHRIEUnion. Petitioner companies notified theDOLE of their financial condition and their

decision to retrench employees numbering120. Subsequently, petitioner companiessent notices to 17 of their office andsupervisory employees advising them thatin view of the companies' financialproblems, they would be retrenched fromtheir employment. Believing that theirdismissal was resorted to because of theirunion activities and hence, in violation oftheir rights to self-organization and to

collective bargaining, the said 17

employees who were laid off filed with theLabor Arbiter a Complaint for illegaldismissal and unfair labor practice againstpetitioner companies and petitioner KumarDas. NLRC ruled in favor of privaterespondents.

Issue: WON private respondents were

illegally dismissed.

Ruling:

As the retrenchment programs undertakenby petitioner companies were purelybusiness decisions properly within thereasonable exercise of managementprerogative, the NLRC cannot delve intotheir wisdom and soundness. Indeed,management cannot be deniedrecourses to retrenchment if it cansuccessfully prove the existence ofthe following factors: (a) substantiallosses which are not merely d em i n i m i s in extent; (b) imminence ofsuch substantial losses; (c)retrenchment would effectivelyprevent the expected additionallosses; and, (d) alleged losses andexpected losses must be proven by

sufficient and convincing evidence. Inthe case at bench, these guidelines werefaithfully observed by petitionercompanies.

However, notwithstanding the propriety ofthe retrenchment programs, petitionercompanies are not excused fromcomplying with the required written noticeto the affected employees and DOLE at

least one month before the intended date

of termination. In this case, it isundisputed that petitioner companiesinformed both the retrenched employeesand DOLE of the impending retrenchment.The requirement of law mandating thegiving of notices was intended notonly to enable the employees to lookfor other employment and therefore

ease the impact of the loss of theirjobs and the corresponding income,but, more importantly, to give theDOLE the opportunity to ascertain theverity of the alleged authorized causeof termination. Accordingly, inasmuch asprivate respondents' separation fromservice was both substantively andprocedurally just, petitioner companiesshould only be held liable for separationpay and the proportionate 13th monthpay.

Petition is granted.

EDGAR AGUSTILO vs. CA and SANMIGUEL CORP G.R. No. 142875September 7, 2001 MENDOZA

Facts:

Petitioner Edgar Agustilo was hired byrespondent San Miguel Corporation (SMC)as a temporary employee at its MandaueBrewery in Mandaue, Cebu. On October 1,1979, he was made permanent anddesignated as a safety clerk. He wastransferred to the Engineering Departmentof the SMC Mandaue Brewery as anadministrative secretary. SMC MandaueBrewery adopted a policy that managers

would no longer be assigned secretaries


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and that only director level positions maybe given secretaries. As a result,petitioner's position as administrativesecretary was abolished and he wastransferred to the company's PlantDirector's Office-Quality ImprovementTeam. Petitioner was informed that 584employees, including him, would be

retrenched due to the modernizationprogram of the company. Petitioner wastold that his services would be terminatedand that he would be paid his benefits 30days after he was cleared of allaccountabilities. SMC notified the DOLE ofits modernization program. Petitioner thenfiled a complaint against respondents forunfair labor practice, illegal dismissal, andpayment of separation pay. The LaborArbiter dismissed the complaint.

Issue: WON petitioner was illegallydismissed.

Ruling:

Art. 283 of the Labor Code provides: Theemployer may also terminate theemployment of any employee due tothe installation of labor saving

devices, redundancy, retrenchment toprevent losses or the closing orcessation of operation of theestablishment or undertaking unlessthe closing is for the purpose ofcircumventing the provisions of thisTitle xxx.

In the case at bench, petitioner was notconstructively dismissed but his services

was terminated on the ground of the

installation of labor saving devices bySMC. As stated in the notice of terminationsent to petitioner the PDO-QIT GROUP hasbeen abolished after a thorough study.Consequently, petitioners position thereinhas also been abolished. As stated by theCourt of Appeals: Private respondentdemonstrated before the Labor Arbiter by

clear and convincing evidence that theMandaue plant where petitioners used towork had instituted a modernization

program. The operations of which are "allautomated using microprocessor andelectronic process controllers andinstrumentation systems throughintelligent interfacing with SiemensIndustrial computers." All of these high-technology innovations, at the cost of 2.6billion pesos, truly render the functions ofthe Plant Director's Office Quality ControlUnit, where private respondent wastransferred after his post as AdministrativeSecretary to the plant manager was validlyabolished, upon management prerogativethat the same "did not add value to theorganization."

Petition is denied.

NATIONAL FEDERATION OF LABORvs.NLRC and PATALON COCONUT ESTATEG.R. No. 127718 March 2, 2000 DELEON

Facts:

Petitioners are bona fide members of theNational Federation of Labor (NFL), alegitimate labor organization duly

registered with DOLE. They were

employed by private respondents CharlieReith and Susie Galle Reith, generalmanager and owner, respectively, of the354-hectare Patalon Coconut Estate.Patalon Coconut Estate was engaged ingrowing agricultural products and inraising livestock. In 1988, Congressenacted the Comprehensive Agrarian

Reform Law which mandated thecompulsory acquisition of all coveredagricultural lands for distribution toqualified farmer beneficiaries under the so-called CARP. Pursuant to R.A. No. 6657,the Patalon Coconut Estate was awardedto the Patalon Estate Agrarian ReformAssociation (PEARA), a cooperativeaccredited by DAR, of which petitioners aremembers and co-owners. As a result ofthis acquisition, private respondents shutdown the operation of the Patalon CoconutEstate and the employment of thepetitioners was severed. Petitioners didnot receive any separation pay. Thecooperative took over the estate.Petitioners filed complaints praying fortheir reinstatement with full backwages onthe ground that they were illegallydismissed. The petitioners wererepresented by their labor organization,

the NFL. NLRC ruled that petitioners werenot illegally dismissed. Hence, thispetition.

Issue: WON petitioners were illegallydismissed.

Ruling:

Under Article 283 of the Labor Code the

employer may also terminate the


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employment of any employee due xxxclosing or cessation of operation of theestablishment or undertaking xxx. In casesof xxx closures or cessation of operationsof establishment or undertaking not due toserious business losses or financialreverses, the separation pay shall beequivalent to one (1) month pay or at

least one-half (1/2) month pay for everyyear of service, whichever is higher. Afraction of at least six (6) months shall beconsidered as one (1) whole year.

It is clear that Article 283 of the LaborCode applies in cases of closures ofestablishment and reduction ofpersonnel. The peculiar circumstances inthe case at bar, however, involves neitherthe closure of an establishment nor areduction of personnel as contemplatedunder the aforesaid article. When thePatalon Coconut Estate was closedbecause a large portion of the estate wasacquired by DAR pursuant to CARP, theownership of that large portion of theestate was precisely transferred to PEARAand ultimately to the petitioners asmembers thereof and as agrarian lotbeneficiaries. Hence, Article 283 of the

Labor Code is not applicable to the case atbench.

Even assuming, arguendo, that thesituation in this case were a closure of thebusiness establishment called PatalonCoconut Estate of private respondents, stillthe petitioners/employees are not entitledto separation pay. The closurecontemplated under Article 283 of the

Labor Code is a unilateral and

voluntary act on the part of theemployer to close the businessestablishment as may be gleaned fromthe wording of the said legal provisionthat "The employer may also terminatethe employment of any employee due to

xxx. The use of the word "may," in astatute, denotes that it is directory in

nature and generally permissive only. Inother words, Article 283 of the Labor Codedoes not contemplate a situation wherethe closure of the business establishmentis forced upon the employer and ultimatelyfor the benefit of the employees.

In this case, the Patalon Coconut Estatewas closed down because a large portionof the said estate was acquired by the DARpursuant to the CARP. Hence, the closureof the Patalon Coconut Estate was noteffected voluntarily by private respondentswho even filed a petition to have saidestate exempted from the coverage of RA6657.

Petition is denied.

c. Procedure of Termination(Procedural Due Process of

Dismissal)

i. Notice and Hearinga. For Just Causes:

1. Written Notice- a written noticeserved on the employee specifyingthe ground or grounds fortermination, and giving to saidemployee reasonable opportunitywithin which to explain his side;

2. Hearing- A hearing or conferenceduring which the employeeconcerned, with the assistance ofcounsel if the employee so desires,is given opportunity to respond tothe charge, present his evidence orrebut the evidence presentedagainst him; and

3. Written Notice of Termination- Awritten notice of termination servedon the employee indicating thatupon due consideration of all thecircumstances, grounds have beenestablished to justify histermination. In case of termination,the foregoing notices shall be servedon the employees last knownaddress.

b. For Authorized Causes: The requirements of due process shall

be deemed complied with upon serviceofa written notice to the employeeand the appropriate Regional Officeof the DOLE at least 30 days beforeeffectivity of the termination,specifying the ground or grounds fortermination.

NOTES: When termination of employment is

brought by the failure of an employeeto meet the standards of the employerin case of probationary employment, itshall be sufficient that a written noticeis served the employee within areasonable time from the effective dateof termination.

When termination is brought about bythe completion of the contract or phasethereof, no prior notice is required.

ii. Burden of Proof


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The employer has the burden ofproving the lawfulness of hisemployees dismissal. The validity ofthe charge must be clearly establishedin a manner consistent with dueprocess.

iii. Preventive Suspension When there is an imminent threat to

the lives and properties of theemployer; his family andrepresentatives as well as theoffenders co-workers by the continuedservice of the employee, then he maybe placed under preventive suspensionpending his investigation.

Preventive suspension should not lastfor more than 30 days. The employeeshould be made to resume his workafter 30 days.

It can be extended provided theemployees wages are paid after the 30day period.

CASES:

VH MANUFACTURING vs. NLRC andHERMINIO C. GAMIDO G.R. No.130957 January 19, 2000 DE LEON

Facts:

Private respondent was employed inpetitioner's, business of manufacturingliquefied petroleum gas (LPG) cylinders.He served as a quality control inspectorwith the principal duty of inspecting LPGcylinders for any possible defects andearning P155.00 a day. His service withthe company was abruptly interrupted on

February 14, 1995, when he was served a

notice of termination of his employment.His dismissal stemmed from an incidentwherein petitioner's company President,Alejandro Dy Juanco, allegedly caughtprivate respondent sleeping on the job. Onthat same day, private respondent wasasked through a written notice to explainwhy no disciplinary action should be taken

against him for his violation of CompanyRule 15-b which provides for a penalty ofseparation for sleeping during workinghours. Without delay, private respondentreplied in a letter which reads: Sir,ipagpaumanhin po ninyo kung nakapikitako sa aking puwesto dahil hinihintay ko

po ang niliha hi Abreu para i qualitypasensiya na po kung hindi ko ponamalayan ang pagdaan ninyo dahilmaingay po ang painting booth.

Notwithstanding his foregoing reply, hewas terminated. Feeling aggrieved, privaterespondent initially instituted a criminalsuit for Estafa, for alleged withholding ofhis salary, against the company President.Said complaint was dismissed for improperforum. He then filed a complaint for illegal.Labor Arbiter declared that privaterespondent's dismissal is anchored on avalid and just cause and the latter's

contention of denial of due process asdevoid of merit. NLRC reversed the LaborArbiter and ordered herein petitioner toreinstate private respondent with fullbackwages less one-month pay.

Issue: WON private respondent wasillegally dismissed.

Ruling:

While an employer enjoys a widelatitude of discretion in thepromulgation of policies, rules andregulations on work-related activitiesof the employees, those directives,however, must always be fair andreasonable, and the correspondingpenalties, when prescribed, must be

commensurate to the offense involvedand to the degree of the infraction. Inthe case at bench, petitioner's claim thatprivate respondent slept on the job onFebruary 10, 1995 was not substantiatedby any convincing evidence other than thebare allegation of petitioner. The report ofRonaldo M. Alvarez, Acting Quality ControlDepartment Head of petitionercorporation, on the circumstances whichultimately served as basis for the

termination of private respondent'semployment, did not confirm the allegedviolation by private respondent of thepertinent Company Rule 15-b. The reportmerely stated private respondent's denialand response to petitioner's allegationwhich he reiterated in his written reply.Moreover, the dismissal meted out onprivate respondent for allegedly sleepingon the job, under the attendant

circumstances, appears to be too harsh apenalty, considering that he was beingheld liable for first time, after 9 long yearsof unblemished service, for an allegedoffense which caused no prejudice to theemployer, aside from absence ofsubstantiation of the alleged offense. Theauthorities cited by petitioner are alsoirrelevant for the reason that there is noevidence on the depravity of conduct,willfulness of the disobedience, or


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conclusiveness of guilt on the part ofprivate respondent. Neither was it shownthat private respondent's allegednegligence or neglect of duty, if any, wasgross and habitual. Thus, reinstatement is

just and proper.

Petition is dismissed.

MARICALUM MINING CORP vs.ANTONIO DECORION G.R. No. 158637April 12, 2006 TINGA

Facts:

Antonio Decorion was a regular employeeof Maricalum Mining who started out as aMill Mechanic assigned to the ConcentratorMaintenance Department and was laterpromoted to Foreman I. The ConcentratorMaintenance Supervisor called a meetingwhich Decorion failed to attend as he wasthen supervising the workers under him.Because of his alleged insubordination forfailure to attend the meeting, he wasplaced under preventive suspension on thesame day. He was also not allowed toreport for work the following day. A monthafter, Decorion was served a Notice of

Infraction and Proposed Dismissal toenable him to present his side. Hesubmitted to the Personnel Department hiswritten reply to the notice. A grievancemeeting was held upon Decorions request,during which he manifested that he failedto attend the meeting on April 11, 1996because he was then still assigning workto his men. He maintained that he has notcommitted any offense and that his service

record would show his efficiency. Decorion

filed NLRC a complaint for illegal dismissal.Maricalum Mining insists that Decorion wasnot dismissed but merely preventivelysuspended. Petitioner contends thatconstructive dismissal occurs only after thelapse of more than 6 months from thetime an employee is placed on a "floatingstatus" as a result of temporary preventive

suspension from employment. Thus, itgoes on to argue, since Decorion wassuspended for less than 6 months, hissuspension was legal.

Issue: WON private responded was merelysuspended from work.

Ruling:

Under the IRR of Labor Code, Theemployer may place the worker concernedunder preventive suspension if hiscontinued employment poses a seriousand imminent threat to the life or propertyof the employer or his co-workers. N op r e v e n t i v e s u s p e n s i o n s h a l l l as t

l o n g e r t h a n t h i r t y ( 3 0 ) d a y s x x x . TheRules are explicit that preventivesuspension is justified where theemployees continued employment

poses a serious and imminent threatto the life or property of the employeror of the employees co-workers.Without this kind of threat, preventivesuspension is not proper.

In this case, Decorion was suspended onlybecause he failed to attend a meetingcalled by his supervisor. There is noevidence to indicate that his failure to

attend the meeting prejudiced his

employer or that his presence in thecompanys premises posed a seriousthreat to his employer and co-workers.The preventive suspension was clearlyunjustified. What is more, Decorionssuspension persisted beyond the 30-dayperiod allowed by the IRR. A preventivesuspension which lasts beyond the

maximum period allowed by theImplementing Rules amounts toconstructive dismissal. Similarly, fromthe time Decorion was placed underpreventive suspension up to the time agrievance meeting was conducted, 55 dayshad already passed. Another 48 days wentby before he filed a complaint for illegaldismissal. Thus, at the time Decorion fileda complaint for illegal dismissal, he hadalready been suspended for a total of 103

days. Maricalum Minings contention thatthere was as yet no illegal dismissal at thetime of the filing of the complaint isevidently unmeritorious. Decorionspreventive suspension had already ripenedinto constructive dismissal at that time.While actual dismissal and constructivedismissal do take place in differentfashion, the legal consequences theygenerate are identical. Decorions

employment may not have been actuallyterminated in the sense that he was notserved walking papers but there is nodoubt that he was constructively dismissedas he was forced to quit because continuedemployment was rendered impossible,unreasonable or unlikely by MaricalumMinings act of preventing him fromreporting for work.

Petition is denied.


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d. Termination by Employee

i. Resignation Resignation- is defined as the

voluntary act of an employee who findshimself in a situation where he believesthat personal reasons cannot besacrificed in favor of the exigency of

the service and, that he has no otherchoice but to disassociate himself fromhis employment.

Resignation is withdrawable even if theemployee has called it irrevocable. Butafter it is accepted or approved by theemployer, its withdrawal need theemployers consent.

a. Requisites for Termination withoutJust Cause:

1. written notice of the termination

(resignation letter);2. service of the resignation letter to

the employer at least 1 month inadvance.

NOTE: An employer upon whom no suchnotice was served may hold the employeeliable for damages.b. Termination with Just Cause: No written notice (resignation letter) is

necessary in the following cases:

1. serious insult by the employer or hisrepresentative on the honor andperson of the employee;

2. inhuman and unbearable treatmentaccorded the employee by theemployer or his representative;

3. commission of a crime or offense bythe employer or his representativeagainst the person of the employeeor any of the immediate members ofthe family; and

4. other causes analogous to any ofthe foregoing.

e. Constructive Dismissal This refers to an involuntary

resignation resorted to when continuedemployment becomes impossible,unreasonable or unlikely; when there is

a demotion in rank or a diminution inpay; or when a clear discrimination,insensibility or disdain by an employerbecomes unbearable to an employee.

An employee is likewise deemedconstructively dismissed where hisstatus is changed from regular tocasual.

An unwarranted transfer or demotion ofan employee, or other unjustifiedaction prejudicial to the employee may

give rise to a complaint for constructivedismissal.

f. When Employment notDeemed Terminated (Art.286)

The bona fide suspension of theoperation of a business or undertakingfor a period exceeding 6 months, or the

fulfillment by the employee of amilitary or civic duty shall notterminate employment. In all suchcases, the employer shall reinstate theemployee to his former position withoutloss of seniority rights if he indicateshis desire to resume his work not laterthan 1 month from the resumption ofoperations of his employer or from hisrelief from the military or civic duty.

Article 283 speaks of a permanentretrenchment as opposed to atemporary lay-off. There is no specificprovision of law which treats of atemporary retrenchment or lay-off. Toremedy this situation or fill the hiatus,Article 286 may be applied but onlyby analogy to set a specific period that

employees may remain temporarilylaid-off or in floating status. 6 months is the period set by law that

the operation of a business of theemployees concerned. The temporarylay-off wherein the employees likewisecease to work should also not last longthan 6 months. After 6 months, theemployees should either be recalled towork or permanently retrenchedfollowing the requirements of the law.

g. Consequence ofTermination

i. Separation Pay

General Rule- If there is valid causeto terminate an employee, noseparation pay need by paid.

Exceptions:1. Article 283, Labor Code

Installation of labor saving deviceand redundancy- 1 month pay or moth pay for every year ofservice, whichever is higher

Retrenchment to prevent lossesand closure or cessation ofoperation or establishment orundertaking not due to seriousbusiness losses or financialreverses- 1 month pay or


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month pay for every year ofservice, whichever is higher.

If due to severe financial losses,no separation pay.

2. Article 284, Labor Code Disease- 1 month salary or

month salary for every year ofservice, whichever is higher. A

fraction of at least 6 months shallbe considered 1 whole year.3. Discerning Compassion Doctrine

Separation pay shall be allowed asa measure of social justice forinstances where the employee isvalidly dismissed for causes otherthat serious misconduct or thosereflecting on his moral character(i.e. Employee was found to havedemanded and received money in

consideration for promise tofacilitate approval of telephone lineapplication).

4. Antipathy and AntagonismReinstatement is no longerpossible Strained relations in order that is

may justify award of separationpay in lieu of reinstatement withbackwages, should be of such,

that they are so compelling and soserious in character, that thecontinued employment hasbecome inconsistent with peaceand tranquility which is an idealatmosphere in every workplace.

5. Even if an employee resigns, heshall be given a separation payif there is a company policy tothat effect.

NOTE: Financial assistance may beallowed as a measure of social justice andexceptional circumstances, and as anequitable concession.

ii. Computation of SeparationPay Includes not just the basic salary but

also the regular allowances theemployee has been receiving. However,commissions are not included in suchbase figure.

Effect- Receipt- An employee whoreceived his separation pay is notbarred from contesting the legality oftheir dismissal. The acceptance ofthose would not amount to estoppel.

iii. Backwages

Backwages- the relief given to anemployee to compensate him for lostearnings during the period of hisdismissal.

An employee who is unjustly dismissedfrom work shall be entitled to fullbackwages, inclusive of allowances,and to his other benefits or theirmonetary equivalents computed from

the time his compensation waswithheld up to the time of his actualreinstatement.

Backwages in general are granted ongrounds of equity which a worker haslost due to his illegal dismissal. As ageneral rule, an employee is entitled tobackwages only where his dismissal isdue to the unlawful act of the employerto the latters bad faith.

While generally, an order ofreinstatement carries with it an awardof backwages, the court may not onlymitigate, but absolve the employerfrom liability for backwages where goodfaith is evident.

Separation Pay vs. Backwages-Separation pay is the amount that an

employee receives at the time of hisseverance from the service and isdesigned to provide the employee withthe wherewithal during the period thathe is looking for another employment.Backwages, on the other hand,represent compensation that should beearned but not controlled because ofthe unjust dismissal.

The basis of computing the two aredifferent, the separation pay is being

computed usually on the basis of thelength of the employees service andthe backwages are computed from theactual period when he was unlawfullyprevented from working.

Inclusions to Backwages:1. transportation and emergency

allowance;2. vacation or service incentive leave

and sick leave;

3. 13th

month pay.NOTE: Facilities such as uniforms, shoes,helmets and ponchos should not beincluded in the computation of backwagesbecause said item are given free to beused only during official tour of duty andnot for private or personal use. Circumstances that prevent award

of backwages:1. death of the employee;2. physical and mental incapacity


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3. business reverses;4. closure of business;5. reinstatement of dismissed

employee confinement in jail.

iv. Reinstatement

Reinstatement- is a restoration to a

state which on e has been removed orseparated. It is the turn to the positionfrom which he was removed andassuming again the functions of theoffice already held. Reinstatementpresupposes that the previous positionfrom which one had been removed stillexists, or that there is an unfilledposition more or less of a similar natureas the one previously.

Forms of Reinstatement:

1. Actual or PhysicalReinstatement- the employee shallbe admitted back to work.

2. Payroll Reinstatement- theemployee is merely reinstated in thepayroll.

Q. May a court order the reinstatement ofa dismissed employee even if the prayer ofthe complaint did not include such relief?A. Yes, so long as there is a finding that

the employee was illegally dismissed, thecourt can order the reinstatement of anemployee even if the complaint does notinclude a prayer for reinstatement, unless,of course, the employee has waived hisright to reinstatement. By law, anemployee who is unjustly dismissed isentitled to reinstatement, among others.The mere fact that the complaint did notpray for reinstatement will not prejudicethe employee, because technicalities of

law and procedures are frowned upon inlabor proceedings (General Baptist BibleCollege vs. NLRC, 219 S 549).Q. What happens if there is an order ofreinstatement but the position is no longeravailable?A. The employee should be given asubstantially equivalent position. If no

substantially equivalent position isavailable, reinstatement should not eordered because that would in effectcompel the employer to do the impossible.In such a situation, the employee shouldmerely be given separation pay consistingof one month salary for every year ofservice. Circumstances when company may

not reinstate despite order ofreinstatement:

1. Transfer of Business Ownership-There is no law requiring apurchasing corporation to absorbthe employees of the sellingcorporation. A fortiori,reinstatement of unjustly dismissedemployees CANNOT be enforcedagainst the new owner UNLESSthere is an express agreement onthe assumption of liabilities by the

purchasing corporation;2. Reinstatement is rendered

impossible due to abolition of theposition;

3. When the business has closeddown;

4. Physical incapacity of theemployee; and

5. Doctrine of Strained Relations-When the employee can no longertrust the employee and vice-versa,

reinstatement could not effectivelyserve as a remedy. This doctrineonly applies to positions whichrequire trust and confidence.

Under the circumstanceswhere the employment relationshiphas become so strained to precludea harmonious working relationship

and that all hopes at reconciliationare nil after reinstatement, it wouldbe more beneficial to accord theemployee backwages and separationpay.

v. Damages

Moral damages are recoverable indismissal cases only where thedismissal was attended by bad faith or

fraud or constituted an act oppressiveto labor, or was done in a mannercontrary to morals, good customs, orpublic policy.

Exemplary damages in dismissal casesmay be awarded only if the dismissalwas effected in wanton, oppressive ormalevolent manner.

vi. Quitclaims

Generally, quitclaims are commonlyfrowned upon for being contrary topublic policy, there are, however,legitimate waivers that represent avoluntary and reasonable settlement ofa workers claim which should berespected by the courts as the lawbetween the parties.

Where the person making the waiverhas done so voluntarily, with a full


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understanding thereof, and theconsideration for the quitclaim iscredible and reasonable, thetransaction must be recognized asbeing a valid and binding undertaking.

Not all quitclaims are per se invalid oragainst policy, except: (1) where thereis clear proof that the waiver was

wangled from an unsuspecting orgullible person, or (2) where the termsof settlement are unconscionable ontheir face; in these cases, the law willstep in to annul the questionabletransaction.

Requisites for Recovery of Wages,Simple Money Claims and OtherBenefits:

1. The aggregate money claim of eachemployee or house helper does not

exceed P5K.2. The claim is presented by an employee

or person employed in domestic orhousehold service or househelper.

3. The claim arises from ER-EER4. The claimant does not seek

reinstatement.

NOTE:

In the absence of any of the requisites, itis the Labor Arbiter who shall haveexclusive jurisdiction over claims arisingfrom employer-employee relations,except claims for employeescompensation, SSS, Philihealth andMaternity benefits. The proceedingsbefore the Regional Office shall besummary and non-litigous in nature.

The RD or any of his duly authorizedhearing officer is empowered through

summary proceeding and after duenotice, to hear and decide casesinvolving recovery of wages and othermonetary claims and benefits, includinglegal interests.

Article 292. I n s t i t u t i o n o f M o n e y C la i m s - Money claims specified in Article

291 shall be filed before the appropriateentity independently of the criminal actionthat may be instituted in the propercourts. Pendingthe final determination of the merits ofmoney claims filed with the appropriateentity, no civil action arising from thesame cause of action shall be filed withany court. This provision shall not apply toemployee compensation cases which shallbe processed and determined strictly in

accordance with the pertinent provisions ofthe Labor Code.

Worker Preference in case ofBankruptcy (Art. 110):

Principle- Workers shall enjoy firspreference as regards their unpaidwages and other monetary claims, ayprovision of law to the contrarynotwithstanding.

Just establishes a preference and not alien;

Applicable only to ordinary preferredcredit, hence, must yield to specialpreferred credits e.g. secure creditors.

This Article did not sweep away theoverriding preference accorded underthe scheme of the Civil Code to taxclaims of the government.

Conditions sine qua non to theoperation of the preference accorded toworkers under Art. 110:1. formal declaration of insolvency or

bankruptcy2. general judicial liquidation

proceedings of the employersbusiness

3. filing of claims by workers The worker preference is not applicable

in case the employer is underrehabilitation.

Art. 110 covers not only unpaid wagesbut also all other monetary claims.

Attorneys Fees (Art. 111):a. In cases of unlawful withholding of

wages, the culpable party may beassessed attorneys fees equivalentto 10% of the amount of wages

recovered.b. It shall be unlawful for any person

to demand or accept, in any judicialor administrative proceedings forthe recovery of the wages,attorneys fees which exceed 10%of the amount of wages recovered.

Attorneys fees presupposes attorney-client relationship.

Any agreement on such other

provisions of the CBA made within 6months after the date of expiry of theCBA is subject to automatic retroactionto the day immediately following suchdate of expiry.

CASES:

MOBILE PROTECTIVE & DETECTIVEAGENCY vs. ALBERTO OMPAD G.R. No.159195 May 9, 2005 PUNO


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Facts:

Respondent alleged that he was employedby the Agency as security guard in January1990 and was, since then, detailed to itsvarious clients. He claimed having worked12 hours a day, even during rest days andholidays, without receiving overtime pay,

rest day pay, holiday pay, serviceincentive leave pay and 13th month pay.Sometime in June 1997, respondentinquired from the project manager of theAgency's client, Manila Southwoods, if thelatter had already paid their backwages tothe Agency. When petitioners found outabout his query, respondent was allegedlyrelieved from his post and never givenanother assignment. Petitioners allegedlypromised that they would pay respondent

his money claims provided he signs aresignation letter. He was also told to copyin his handwriting the same resignationletter. As he needed the money, hecomplied. Thereafter, petitioners wouldgive him only the meager amount ofP5,000.00, which he rejected. Respondentfiled a complaint for illegal dismissal andprayed for reinstatement with backwagesor backwages with separation pay and

money claims. Petitioners deniedrespondent's allegations and claimed thatrespondent was not dismissed butresigned as evidenced by anotherresignation letter signed by respondent.

Issue: WON respondent has resigned.

Ruling:

As a rule quitclaims, waivers orreleases are looked upon withdisfavor and are commonly frownedupon as contrary to public policy andineffective to bar claims for themeasure of a worker's legal rights. Inthis case, the Supreme Court sustainedthe findings of CA and NLRC that the two

resignation letters are not resignationletters but a bare reading of their contentwould reveal that they are in the nature ofa quitclaim, waiver or release. They werewritten in a language obviously not ofrespondent's and "lopsidedly worded" tofree the Agency from liabilities. As held byCA: "When the first resignation letter wasa pro forma one, entirely drafted by the

petitioner Agency for the privaterespondent to merely affix his signature,

and the second one entirely copied by theprivate respondent with his own hand fromthe first resignation letter, voluntariness isnot attendant."Moreover, it is a rule thatresignation is difficult to reconcilewith the filing of a complaint forillegal dismissal. Hence, the finding thatrespondent's resignation was involuntaryis further strengthened by the fact thatrespondent filed the instant case the day

after the alleged tender of resignation.

Petition is dismissed.

LITONJUA GROUP OF COMPANIES vs.TERESITA VIGAN G.R. No.143723 June 28, 2001 GONZAGA

Facts:

Respondent Teresita Vigan alleged thatshe was hired by the Litonjua Group ofCompanies as telex operator. Later, shewas assigned as accounting and payrollclerk under the supervision of DaniloLitonjua. She had been performing welluntil 1995, when Danilo Litonjua who wasalready naturally a very ill-tempered, ill-

mouthed and violent employer, becamemore so due to business problems. In fact,a complaint letter was sent by the LitonjuaEmployees to the father and his juniorregarding the boorishness of their kinDanilo Litonjua but apparently themanagement just glossed over this. DaniloLitonjua became particularly angry withVigan and threw a stapler at her when sherefused to give him money upon theinstructions of Eddie Litonjua. From then

on, Danilo Litonjua had been rabid towardsher and even threatened to hit her forsome petty matters. Danilo Litonjua wouldorder the security guards to forcibly ejecther or prevent her entry in the officepremises whenever he was angry. Theincidents prompted Vigan to write DaniloLitonjua letters asking why she wastreated so and what was her fault. Shesuspected that Danilo Litonjua wanted her

out for he would not let her inside theoffice such that even while abroad hewould order the guards by phone to barher. She pleaded for forgiveness or atleast for explanation but it fell on deafears. Later, Danilo Litonjua changed tackand charged that Vigan had beenhysterical, emotional and created scenesat the office. He even required her tosecure psychiatric assistance, but despiteproof that she was not suffering from


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psychosis or organic brain syndrome ascertified to by a Psychiatrist of DaniloLitonjuas choice, still she was denied bythe guards entry to her work uponinstructions again of Danilo Litonjua. Leftwith no alternative, Vigan filed this casefor illegal dismissal. Labor Arbiter renderedhis decision finding Vigan diseased and

unfit for work under Article 284 of theLabor Code and awarded thecorresponding separation pay. CA ruledthat respondent was illegally dismissed.

Issue: WON respondent is entitled todamages and attorneys fees.

Ruling:

The Supreme Court sustained the findingsof CA that respondent Vigan did notabandon her job but was illegallydismissed. In Vigans letter addressed topetitioner Danilo Litonjua, respondentVigan had complained of petitionerDanilos inhumane treatment in barringher from entering her workplace.Notwithstanding the fact the she wasrefused entrance to her workplace,respondent Vigan, to show her earnest

desire to report for work, would sneak herway into the premises and punched hertime card but she could not resume workas the guards in the company gate wouldprevent her per petitioner Danilo Litonjuasinstructions. Respondents actuationsmilitate against petitioners claim that shedid not heed the notices to return to workand abandoned her job. She had beengoing to her workplace to report for work

but was prevented from resuming her

work upon the instructions of petitionerDanilo Litonjua. It would be the height ofinjustice to allow an employee to claim asa ground for abandonment a situationwhich he himself had brought about.

Since respondent Vigan was illegallydismissed from her employment, she is

entitled to: (1) either reinstatement, ifviable, or separation pay if reinstatementis no longer viable, and (2) backwages.The award of moral and exemplarydamages to the respondent is also proper.As a rule, moral damages arerecoverable only where the dismissalof the employee was attended by badfaith or fraud or constituted an actoppressive to labor, or was done in amanner contrary to morals, good

customs or public policy. In this case,bad faith attended respondents dismissalfrom her employment. Bad faith involves astate of mind dominated by ill will ormotive. It implies a conscious andintentional design to do a wrongful act fora dishonest purpose or some moralobliquity. Petitioner Danilo Litonjuashowed ill will in treating respondent Viganin a very unfair and cruel manner which

made her suffer anxieties by reason ofsuch job difficulties. Respondent Vigan isalso entitled to exemplary damages as herdismissal was effected in an oppressiveand malevolent manner. The award ofattorneys fees is likewise sustained. It issettled that in actions for recovery ofwages or where an employee wasforced to litigate and incur expensesto protect his rights and interest, he is

entitled to an award of attorneysfees.

Petition is denied.

OSS SECURITY & ALLIED SERVICES vs.NLRC and EDEN LEGASPI G.R. No.112752 Feb. 9, 2000 DE LEON

Facts:

Private respondent worked as a ladysecurity guard of OSS Security Agencyfrom June 16, 1986. Petitioner of acquiredthe assets and properties of OSS SecurityAgency and absorbed some of itspersonnel, including private respondent.As a lady security guard she was assignedto render security services to the differentclients of petitioner. In a memorandumaddressed to petitioner's companyPresident, the Building Administrator of VMCondominium II complied of the laxity ofthe guards in enforcing security measures.In compliance therewith, petitioner issuedDuty Detail Order relieving privaterespondent and another lady securityguard of their assignment at VMCondominium II for reassignment to other

units or detachments where vacancyexists. Private respondent was detailed tothe Minami International Corporation fromto replace lady security guard Susan Tanwho filed her vacation leave for August1991. However, it appears that privaterespondent did not report for duty at hernew assignment. Private respondent filedher complaint for under payment andconstructive dismissal. Labor Arbiter

declared that private respondent's transfer


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was not sanctioned by law, hence illegaland tantamount to unjust dismissal. TheLabor Arbiter ordered for respondentsreinstatement and payment ofbackwagedHence, this petition.

Issue: WON respondent is entitled toreinstatement and payment of backwages.

Ruling:

In the employment of personnel, theemployer can prescribe the hiring, workassignments, working methods, time,place and manner of work, tools to beused, processes to be followed,supervision of workers, workingregulations, transfer of employees, worksupervision, lay-off of workers and thediscipline, dismissal and recall of work,subject only to limitations imposed bylaws. These are called managementprerogatives in which the free will ofmanagement to conduct its own affairs toachieve its purpose, takes from. Thus, thetransfer of an employee ordinarily lieswithin the ambit of management

prerogatives. However, a transferamounts to constructive dismissal

when the transfer is unreasonable,inconvenient, or prejudicial to theemployee, and it involves a demotionin rank or diminution of salaries,benefits and other privileges.

In the case at bench, nowhere in therecord does it show that that the transferof private respondent was anything butdone in good faith, without grave abuse of

discretion, and in the best interest of the

business enterprise. First. No maliceshould be imputed from the fact thatprivate respondent was relieved of herassignment and, a day later, assigned anew post. When a security guard is placed"off detail" or on "floating" status, insecurity agency parlance, it means"waiting to be posted. Private respondent

has not even been "off detail" for a weekwhen she filed her complaint. Second.Evidence is wanting to support the LaborArbiter's conclusion that petitionerdiscriminated against private respondentwhen it ordered her relief and transfer ofassignment. Petitioner proved that suchtransfer was effected in good faith tocomply with the reasonable request of itsclient, Madrigal Condominium for a moredisciplined service of the security guards

on detail. The renewal of the contract ofpetitioner with MCCI hinged on the actiontaken by the former on the latter'srequest. Third. It appears that privaterespondent declined the post assigned toher inasmuch as she considered it "abooby trap of crippling and dislocatingprivate respondent from her employment".Private respondent lived in Sta. Mesa,Manila, and her new assigned post is in

Taytay, Rizal, as against her previous postat VM Condominium II in Makati. Her newassigned post would entail changes in herroutine, something that she was notagreeable with. But the mere fact that itwould be inconvenient for her, as she hasbeen assigned to VM Condominium II for anumber of years, does not by itself makeher transfer illegal. Thus, there was nobasis to order reinstatement and backwages inasmuch as private

respondent was not constructivelydismissed. Neither is privaterespondent entitled to the award ofmoney claims for underpayment,absent evidence to substantiate thesame.


CANDIDO ALFARO vs. CA and STARPAPER CORP G.R. No. 140812 August28, 2001 PANGANIBAN

Facts:

Petitioner Candido Alfaro was employed asa helper/operator of private respondentStar Paper Corp. since November 8, 1990.Alfaro took a sick leave. When he reportedback to work, he was surprised to find outthat another worker was recruited to takehis place, and instead, he was transferredto the wrapping section where he wasrequired to work with overtime up to 9:30PM, from his regular working hours of from7:00 a.m., to 4:00 p.m., despite the factthat he had just recovered from illness. Hewas given a new assignment where thework was even more difficult and when he

complained of what he felt was rudetreatment or sort of punishment since hewas being exposed to hard labornotwithstanding his predicament of justcoming from sickness, petitioner was toldto look for another job because he wasdismissed, when petitioner was seeking his13th month pay and 15 days SIL, he wasignored when he refused to signdocuments which indicated that he was

renouncing claims against private


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respondent. Petitioner sought privaterespondent to pay him, but he was told tocome next year. When petitioner cameback, private respondent dangled to him acheck worth P3,000.00 which would bereleased to him, only if he signed thedocuments, being forced upon him to signon the day he was dismissed. Desperate

for the money to support his subsistence,and against his will, petitioner wasconstrained to sign the said documentswhich contained no amount of moneyreleased to him. The actual sum of moneyreceived by petitioner from privaterespondent amounted to P3,000.00 in theform of check, while his claims for 15 dayssick leave pay was secured by him fromSSS. The Labor Arbiter found thatpetitioner was not illegally dismissed bur

resigned from employment. Hence, thispetition.

Issue: WON petitioner is entitled toseparation pay.

Ruling:

Generally, an employee who voluntarilyresigns from employment is not

entitled to separation pay. Voluntaryresignation is defined as the act of anemployee, who finds himself in asituation in which he believes thatpersonal reasons cannot be sacrificedin favor of the exigency of the service;thus, he has no other choice but todisassociate himself from hisemployment. In this case, The factualfindings of the labor arbiter and the NLRC,as affirmed by the CA, reveal that

petitioner resigned from his work due tohis illness, with the understanding thatprivate respondent would give himseparation pay. He was already sufferingfrom a lingering illness at the time hetendered his resignation. His continuedemployment would have been detrimentalnot only to his health, but also to his

performance as an employee of privaterespondent. Hence, the termination of theemployment relations of petitioner withprivate respondent was ultimately, if notoutrightly inevitable. Petitioner negotiatedfor a resignation with separation pay asthe manner in which his employmentrelations with private respondent wouldend, because resignation with separationpay was the best option for him under thecircumstances. Rightly so, this was the

mode adopted and agreed upon by theparties, as evidenced by the Release andQuitclaim petitioner executed inconnection with his resignation.Clearlythen, the claim of petitioner that he wasillegally dismissed cannot be sustained. Itshould be noted that dismissal andvoluntary resignation are adverselyopposed modes of terminatingemployment relations, in that the

presence of one precludes that of theother.

Not all waivers and quitclaims areinvalid as against public policy. If theagreement was voluntarily enteredinto and represented a reasonablesettlement, it is binding on the partiesand may not later be disowned, simplybecause of a change of mind.Unfortunately, it private respondent did

not keep its promise to grant theseparation pay, prompting petitioner toinstitute the present action for illegaldismissal. Thus, the Supreme Court gavedue course to this petition.

Petition is denied.

GLOBE TELECOM v s . JOAN FLORENDO-FLORES G.R. No. 150092 September27, 2002 BELLOSILLO

Facts:

Petitioner GLOBE TELECOM is a domesticcorporation while respondent JoanFlorendo-Flores was the Senior AccountManager for Northern Luzon. JoanFlorendo-Flores filed an amendedcomplaint for constructive dismissalagainst GLOBE and alleged that Cacholo M.Santos never accomplished and submittedher performance evaluation report therebydepriving her of salary increases, bonusesand other incentives which otheremployees of the same rank had beenreceiving. GLOBE claimed that afterreceiving her salary in the second week ofMay 1998 Florendo-Flores went AWOL

without signifying through letter or anyother means that she was resigning fromher position; that notwithstanding herabsence and the filing of her case,respondents employment was notterminated as shown by the fact thatsalary was still provided her until July1998 to be released upon herpresentation of the attendance-recordsheet indicating that she already returned

and reported for work; that she continued


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to have the use a of company car andcompany "handyphone" unit; that she wasreplaced only when her absence becameindefinite and intolerable as the marketingoperations in Northern Luzon began tosuffer. Labor Arbiter ruled that respondentwas illegally dismissed. NLRC ruled thatpetitioners did not dismiss respondent but

that the latter actually abandoned heremployment because of a disagreementwith her immediate superior which shefailed to bring to the attention of GLOBEand its officers. However, NLRC orderedGLOBE to pay backwages to respondent.

Issue: WON respondent is entitled tobackwages.

Ruling:

Constructive dismissal exists wherethere is cessation of work becausecontinued employment is renderedimpossible, unreasonable or unlikely,as an offer involving a demotion inrank and a diminution in pay. Inconstructive dismissal, the employerhas the burden of proving that thetransfer and demotion of an employee

are for just and valid grounds such asgenuine business necessity. Theemployer must be able to show thatthe transfer is not unreasonable,inconvenient, or prejudicial to theemployee. If the employer cannotovercome this burden of proof, theemployee's demotion shall betantamount to unlawful constructivedismissal.

All these are discernible in respondent'ssituation. She was singularly edged out ofemployment by the unbearable orundesirable treatment she received fromher immediate superior Cacholo M. Santoswho discriminated against her withoutreason - not preparing and submitting herperformance evaluation report that would

have been the basis for her increasedsalary; not forwarding her projectproposals to management that would havebeen the source of commendation;diminishing her supervisor stature byassigning her to house-to-house sales ordirect sales; and withholding from her theenjoyment of bonuses, allowances andother similar benefits that were necessaryfor her efficient sales performance.Although respondent continued to have

the rank of a supervisor, her functionswere reduced to a mere house-to-housesales agent or direct sales agent. This wastantamount to a demotion. She might nothave suffered any diminution in her basicsalary but petitioners did not dispute herallegation that she was deprived of allbenefits due to another of her rank andposition, benefits which she apparentlyused to receive. For this act of illegal

dismissal, she deserves no less than fullback wages starting from the time she hadbeen illegally dismissed until her actualreinstatement to her former positionwithout loss of seniority rights and otherbenefits - earned, accrued anddemandable. She shall continue to enjoyher benefits, privileges and incentivesincluding the use of the company car and"handyphone." It should be noted thatthe award of back wages in the

instant case is justified upon thefinding of illegal dismissal, and notunder the principle of "a c t o f g r a c e "for past services rendered.

Decision appealed from is modified.

PATERNO S. MENDOZA v s . SAN

MIGUEL FOODS G.R. No. 158684. May16, 2005 CALLEJO

Facts:

Paterno S. Mendoza, Jr., was hired by SanMiguel Corporation (SMC) as a marketingcoordinator in its Trading Department. Hewas transferred to San Miguel Foods, Inc.(SMFI), a subsidiary of SMC, and wasassigned to Instafood Corporation of thePhilippines (Instafood) as a PurchasingOfficer. He, however, remained anemployee of SMFI. In the course of itsoperations, Instafood suffered seriousbusiness losses for successive years andwas closed. SMFI also suffered seriousbusiness losses; it had to implement aredundancy program and give benefits toaffected employees. One of those whoseemployment was terminated on account of

redundancy was Mendoza. He acceptedbenefits equivalent to two months salaryfor every year of service. SMFI, sentMendoza a letter of termination informinghim that the severance of his employmentwas to take effect at the close of businesshours of November 30, 1996, and that hisseparation benefits would be released 30days thereafter. Pursuant to companypolicy, Mendoza was allowed to go on a

one-month terminal leave before the date


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of his severance from employment. In thiscase, petitioner challenges that deed ofrelease and quitclaim that he signed andinsists that he was merely forced toexecute and sign it, and that he receivedonly half of what he was entitled toreceive; worse, he spent as much asP300,000.00 for processing the release of

the subject shipment. The petitionerinvokes the rule that quitclaims aredisfavored and do not bar recovery of thefull measure of a workers rights andbenefits.

Issue: WON the quitclaim in question isvalid.

Ruling:

Generally, quitclaims are commonlyfrowned upon for being contrary topublic policy, there are, however,legitimate waivers that represent avoluntary and reasonable settlementof a workers claim which should berespected by the courts as the lawbetween the parties. Where theperson making the waiver has done sovoluntarily, with a full understanding

thereof, and the consideration for thequitclaim is credible and reasonable,the transaction must be recognized asbeing a valid and binding undertaking.Not all quitclaims are p e r s e invalid oragainst policy, except (1) where thereis clear proof that the waiver waswangled from an unsuspecting orgullible person, or (2) where theterms of settlement areunconscionable on their face; in these

cases, the law will step in to annul thequestionable transaction.

In the case at bench, the petitioner is notan unsuspecting or a gullible person. Asadverted to by the respondents, thepetitioner is a graduate of the University ofthe Philippines no less, with a Bachelor of

Arts degree in Economics. Surely, heknew the nature and the legal effect of thesaid deed. Neither is the amount involvedin the quitclaim unconscionable. UnderArticle 283 of the Labor Code, in case oftermination of employment by virtue ofredundancy, the worker affected therebyshall be entitled to a separation payequivalent to at least one (1) month payor to at least one (1) month pay for everyyear of service, whichever is higher. In

this case, the amount involved in thequitclaim is a rather hefty sum, a grossamount of P1,102,386.25, equivalent totwo months salary for every year ofservice. Even assuming that thepetitioner, indeed, spent half of what hereceived in facilitating the release of theshipment, the remainder thereof is stillcompliant with the provision of theaforesaid Article 283, as it would still be

equivalent to about one month of hissalary for every year of service.

Petition is denied.

SPS. AGABON vs. NLRC and RIVIERAHOME IMPROVEMENTS G.R. No.158693 November 17, 2004 YNARES-SANTIAGO

Facts:

Private respondent Riviera HomeImprovements, Inc. is engaged in thebusiness of selling and installingornamental and construction materials. Itemployed petitioners Virgilio Agabon andJenny Agabon as gypsum board andcornice installers on January 2, 1992 untilFebruary 23, 1999 when they were

dismissed for abandonment of work.Petitioners then filed a complaint for illegaldismissal and payment of money claimsand the Labor Arbiter rendered a decisiondeclaring the dismissals illegal and orderedprivate respondent to pay the monetaryclaims.NLRC reversed the Labor Arbiterbecause it found that the petitioners hadabandoned their work, and were notentitled to backwages and separation pay.The other money claims awarded by the

Labor Arbiter were also denied for lack ofevidence. Petitioners assert that they weredismissed because the private respondentrefused to give them assignments unlessthey agreed to work on a "pakyaw" basiswhen they reported for duty. They did notagree on this arrangement because itwould mean losing benefits as SSSmembers. Petitioners also claim thatprivate respondent did not comply with the

twin requirements of notice and hearing.Private respondent, on the other hand,maintained that petitioners were notdismissed but had abandoned their work.In fact, private respondent sent two lettersto the last known addresses of thepetitioners advising them to report forwork. Private respondent's manager eventalked to petitioner Virgilio Agabon bytelephone to tell him about the newassignment at Pacific Plaza Towers.


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However, petitioners did not report forwork because they had subcontracted toperform installation work for anothercompany. Petitioners also demanded foran increase in their wage to P280.00 perday. When this was not granted,petitioners stopped reporting for work andfiled the illegal dismissal case.

Issue: WON petitioners were illegallydismissed.

Ruling:

To dismiss an employee, the law requiresnot only the existence of a just and validcause but also enjoins the employer togive the employee the opportunity to beheard and to defend himself.Article 282 of

the Labor Code enumerates the justcauses for termination by the employer:

xxx (b) gross and habitual neglect by theemployee of his duties; xxx. Abandonmentis the deliberate and unjustified refusal ofan employee to resume his employment. Itis a form of neglect of duty, hence, a justcause for termination of employment bythe employer. For a valid finding ofabandonment, these two factors should be

present: (1) the failure to report for workor absence without valid or justifiablereason; and (2) a clear intention to severemployer-employee relationship, with thesecond as the more determinative factorwhich is manifested by overt acts fromwhich it may be deduced that theemployees has no more intention to work.The intent to discontinue the employmentmust be shown by clear proof that it wasdeliberate and unjustified.

In the case at bench, petitioners werefrequently absent having subcontracted foran installation work for another company.Subcontracting for another companyclearly showed the intention to sever theemployer-employee relationship withprivate respondent. This was not the firsttime they did this. In January 1996, they

did not report for work because they wereworking for another company. Privaterespondent at that time warned petitionersthat they would be dismissed if thishappened again. Petitioners disregardedthe warning and exhibited a clear intentionto sever their employer-employeerelationship. The record of an employee isa relevant consideration in determining thepenalty that should be meted out to him.In a decided case, it has been held that

an employee who deliberately absentedfrom work without leave or permissionfrom his employer, for the purpose oflooking for a job elsewhere, is consideredto have abandoned his job. We shouldapply that rule with more reason herewhere petitioners were absent becausethey were already working in anothercompany.

The law imposes many obligations on theemployer such as providing justcompensation to workers, observance ofthe procedural requirements of notice andhearing in the termination of employment.

Issue: WON private respondent is liable toindemnify petitioner.

Ruling:

Dismissals based on just causescontemplate acts or omissionsattributable to the employee whiledismissals based on authorized causesinvolve grounds under the Labor Codewhich allow the employer to terminateemployees. A termination for anauthorized cause requires payment of

separation pay. When the terminationof employment is declared illegal,reinstatement and full backwages aremandated under Article 279. Ifreinstatement is no longer possiblewhere the dismissal was unjust,separation pay may be granted.

Procedurally, (1) if the dismissal isbased on a just cause under Article282, the employer must give the

employee two written notices and ahearing or opportunity to be heard ifrequested by the employee beforeterminating the employment: a noticespecifying the grounds for whichdismissal is sought a hearing or anopportunity to be heard and afterhearing or opportunity to be heard, anotice of the decision to dismiss; and(2) if the dismissal is based on

authorized causes under Articles 283and 284, the employer must give theemployee and DOLE written notices 30days prior to the effectivity of hisseparation.

From the foregoing rules four possiblesituations may be derived: (1) thedismissal is for a just cause under Article282 of the Labor Code, for an authorizedcause under Article 283, or for health


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reasons under Article 284, and dueprocess was observed; (2) the dismissal iswithout just or authorized cause but due

process was observed; (3) the dismissal iswithout just or authorized cause and therewas no due process; and (4) the dismissalis for just or authorized cause but due

process was not observed.

In the first situation, the dismissal isundoubtedly valid and the employer willnot suffer any liability. In the second andthird situations where the dismissals areillegal, Article 279 mandates that theemployee is entitled to reinstatementwithout loss of seniority rights andother privileges and full backwages,inclusive of allowances, and otherbenefits or their monetary equivalent

computed from the time thecompensation was not paid up to thetime of actual reinstatement. In thefourth situation, the dismissal should beupheld. While the procedural infirmitycannot be cured, it should notinvalidate the dismissal. However, theemployer should be held liable fornon-compliance with the proceduralrequirements of due process.

The present case squarely falls under thefourth situation. The dismissal should beupheld because it was established that thepetitioners abandoned their jobs to workfor another company. Private respondent,however, did not follow the noticerequirements and instead argued thatsending notices to the last knownaddresses would have been uselessbecause they did not reside there

anymore. Unfortunately for the privaterespondent, this is not a valid excusebecause the law mandates the twin noticerequirements to the employee's last knownaddress. Thus, it should be held liable fornon-compliance with the proceduralrequirements of due process.

In cases involving dismissals forcause but without observance of thetwin requirements of notice andhearing, t the dismissal was for justcause and should be upheld butimposing sanctions on the employer.Where the dismissal is for a justcause, as in the instant case, the lack ofstatutory due process should notnullify the dismissal, or render itillegal, or ineffectual. However, the

employer should indemnify theemployee for the violation of hisstatutory rights. The sanction shouldbe in the nature of indemnification orpenalty and should depend on thefacts of each case, taking into specialconsideration the gravity of the dueprocess violation of the employer.

Petition is denied.

JAKA FOOD PROCESSING CORP v s.DARWIN PACOT G.R. No. 151378.March 28, 2005 GARCIA

Facts:

Respondents Darwin Pacot et.al wereearlier hired by petitioner JAKA FoodsProcessing Corporation (JAKA) until the

latter terminated their employment

because the corporation was in direfinancial straits. It is not disputed,however, that the termination was effectedwithout JAKA complying with therequirement under Article 283 of the LaborCode regarding the service of a writtennotice upon the employees and the DOLEat least one (1) month before the intendeddate of termination. In time, respondentsfiled complaints for illegal dismissal,underpayment of wages and nonpaymentof service incentive leave and 13th monthpay against JAKA. Labor Arbiter rendered adecision declaring the termination illegaland ordering JAKA to reinstaterespondents with full backwages, andseparation pay if reinstatement is notpossible. NLRC modified the Labor Arbiterand set aside the awards of backwages,

service incentive leave pay but orderedJAKA to indemnify petitioners for its failureto observe due process in effecting theretrenchment.

Issue: WON petitioner is liable toindemnify private respondents.

Ruling:

In a decided case, it has been held thatwhere the dismissal is for a just cause, thelack of statutory due process should notnullify the dismissal, or render it illegal, orineffectual. However, the employer shouldindemnify the employee for the violation ofhis statutory rights. The violation of

petitioners right to statutory due processby the private respondent warrants the

payment of indemnity in the form ofnominal damages. The amount of such


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damages is addressed to the sounddiscretion of the court, taking into accountthe relevant circumstances.

A dismissal for just cause under Article282 implies that the employeeconcerned has committed, or is guiltyof, some violation against the

employer, i.e. the employee hascommitted some serious misconduct, isguilty of some fraud against theemployer. Thus, it can be said that theemployee himself initiated the dismissalprocess. On another breath, a dismissalfor an authorized cause under Article283 does not necessarily implydelinquency or culpability on the partof the employee. Instead, thedismissal process is initiated by the

employers exercise of hismanagement prerogative, i.e. when theemployer opts to install labor savingdevices, when he decides to ceasebusiness operations or when, as in thiscase, he undertakes to implement aretrenchment program. The clear-cutdistinction between a dismissal for

just cause under Article 282 and adismissal for authorized cause under

Article 283 is further reinforced by thefact that in the first, payment ofseparation pay, as a rule, is notrequired, while in the second, the lawrequires payment of separation pay.For these reasons, there ought to be adifference in treatment when the groundfor dismissal is one of the just causesunder Article 282, and when based on oneof the authorized causes under Article 283.

Accordingly, it is wise to hold that: (1)if the dismissal is based on a justcause under Article 282 but theemployer failed to comply with thenotice requirement, the sanction to beimposed upon him should bet e m p e r e d because the dismissalprocess was, in effect, initiated by anact imputable to the employee; and(2) if the dismissal is based on anauthorized cause under Article 283but the employer failed to comply withthe notice requirement, the sanctionshould be s t i f f e r because thedismissal process was initiated by theemployers exercise of hismanagement prerogative.

In the case at bench, , JAKA was suffering

from serious business losses at the time itterminated respondents employment. Itis, therefore, established that there wasground for respondents dismissal, i.e.,retrenchment, which is one of theauthorized causes enumerated underArticle 283 of the Labor Code. Likewise, itis established that JAKA failed to complywith the notice requirement under thesame Article. Considering the factual

circumstances in the instant case and theabove ratiocination, the Supreme Courtdeem it proper to fix the indemnity atP50,000.00.

SC held that CA erred when it orderedJAKA to pay respondents separation payequivalent to 1)month salary for everyyear of service. This is because the rule isthat in all cases of business closure orcessation of operation or undertaking of

the employer, the affected employee isentitled to separation pay. This isconsistent with the state policy of treatinglabor as a primary social economic force,affording full protection to its rights as wellas its welfare. The exception is whenthe closure of business or cessation ofoperations is due to serious businesslosses or financial reverses; dulyproved, in which case, the right ofaffected employees to separation payis lost for obvious reasons.


EASTERN SHIPPING LINES, INC vs.DIOSCORO D. SEDAN G.R. No. 159354April 7, 2006 QUISUMBING

Facts:

Petitioners hired on a per-voyage basisprivate respondent Dioscoro Sedan as 3rdmarine engineer and oiler in one of thevessels owned by petitioners. His lastvoyage was on July 27, 1997 on board thevessel M/V Eastern Universe. His monthlypay was P22,000. Additionally, after eachvoyage his earned leave credits are

monetized and paid in cash. He said hewas disembarking because he was goingto take the board examinations for marineengineers. Two months later, Sedan sent aletter to petitioners applying for optionalretirement, citing as reason the death ofhis only daughter, hence the retirementbenefits he would receive would ease hisfinancial burden. However, petitionersdeferred action on his application foroptional retirement since his services on


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board ship were still needed. Nonetheless,according to petitioners, the companyexpressed intention to extend him a loanin order to defray the costs incurred forthe burial and funeral expenses of hisdaughter. Sedan sent petitioners anotherletter insisting on the release of half of hisoptional retirement benefits. Later, he saidthat he no longer wanted to continueworking on board a vessel for reasons ofhealth. Sedan sent another letter topetitioners threatening to file a complaintif his application was not granted. In reply,according to petitioners, the companymanagement sent a telegram informingSedan that his services were needed onboard a vessel and that he should reportimmediately for work as there was noavailable replacement. Sedan claims he

did not receive the telegram, nor was thisfact proved by the company before theLabor Arbiter or the NLRC. Sedanproceeded to file a complaint with theLabor Arbiter against petitionersdemanding payment of his retirementbenefits, leave pay, 13th month pay andattorneys fees. The Labor Arbiter ruled infavor of Sedan. CA sustained NLRC andthe Labor Arbiter and ruled that private

respondent is entitled to financialassistance.

Issue: WON private respondent is entitledto financial assistance.

Ruling:

The Supreme Court is not unmindful of therule that Financial assistance is allowedonly in instances where the employee is

validly dismissed for causes other thanserious misconduct or those reflecting onhis moral character. Neither it is unmindfulof this of the Supreme Courts ruling inone case where it has been held that whenthere is no dismissal to speak of, an awardof financial assistance is not in order.

The Supreme Court did allow, in severalinstances, the grant of financial assistance.Financial assistance may be allowedas a measure of social justice andexceptional circumstances, and as anequitable concession. In the case atbench, private respondent joined thecompany when he was a young man of 25years and stayed on until he was 48 yearsold; that he had given to the company thebest years of his youth, working on board

ship for almost 24 years; that in thoseyears there was not a single report of himtransgressing any of the company rulesand regulations; that he applied foroptional retirement under the companysnon-contributory plan when his daughterdied and for his own health reasons; andthat it would appear that he had servedthe company well, since even the companysaid that the reason it refused his

application for optional retirement wasthat it still needed his services; that hedenies receiving the telegram asking himto report back to work; but thatconsidering his age and health, hepreferred to stay home rather than riskfurther working in a ship at sea. Thesespecial circumstances warrants the grantof financial assistance.

Petition is denied.

HA YUAN RESTAURANT vs. NLRC andJUVY SORIA G.R. No. 147719 January27, 2006 AUSTRIA-MARTINEZ

Facts:

Respondent Juvy Soria worked as acashier in petitioners establishment

located inside the SM Food Court Makati.Respondent assaulted her co-worker Ma.Teresa Sumalague resulting in a scufflebetween the two. Despite the interventionof their supervisor Fiderlie Recide, theywere not pacified, prompting Recide to callfor security assistance. The two were thenbrought to the SM Food CourtAdministration Office where they continuedto cast tirades at each othernotwithstanding the request of the SM

Food Court Manager to stop. Because theyrefused to be mollified, they were broughtto the Customer Relations Office forfurther investigation. As a result of theincident, the SM Food Court Managerbanned the two from working within theSM Food Courts premises. Respondentthen filed with the Labor Arbiter acomplaint for illegal dismissal which wasdismissed by the Labor Arbiter for lack of

merit. NLRC modified the Labor Arbiterand awarded separation pay to privaterespondent.

Issue: WON private respondent is entitledto separation pay.

Ruling:

In a decided case, it has been held thatseparation pay shall be allowed as a


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measure of social justice only in thoseinstances where the employee isvalidly dismissed for causes otherthan serious misconduct or thosereflecting on his moral character.Where the reason for the valid dismissalis, for example, habitual intoxication or anoffense involving moral turpitude, liketheft or illicit sexual relations with a fellowworker, the employer may not be requiredto give the dismissed employee separation

pay, or financial assistance, or whateverother name it is called, on the ground ofsocial justice. Separation pay therefore,depends on the cause of dismissal,and may be accordingly awardedprovided that the dismissal does notfall under either of two circumstances:(1) there was serious misconduct, or

(2) the dismissal reflected on theemployees moral character.

In the case at bench, respondents causeof dismissal in this case amounts as aserious misconduct and as such,separation pay should not have beenawarded to her. Thus, the petition shouldbe granted. While it is true, that the LaborArbiter did not tag private respondent

cause of dismissal as serious misconduct,nevertheless, it is its nature, not its labelthat characterizes the cause as seriousmisconduct. There is no question asregards the incident that causedrespondents dismissal. While respondentsco-worker Sumalague was eating at theback of the store, respondent rushedtoward Sumalague and hit the latter onthe face causing injuries. A scuffle ensuedand despite their supervisor Recides

pleas, the two continued to fight,prompting Recide to call the mall security.When the two were brought to theadministration office, they continuedbickering and did not heed the request ofthe manager to stop, and thus they werebrought to the Customer Relations Office.Because of the incident, the two werebanned from working within the premises.The fact that Sumalague sustained injuriesis a matter that cannot be taken lightly.Moreover, the incident disturbed the peacein the work place, not to mention thatrespondent and Sumalague committed abreach of its discipline. Clearly, respondentcommitted serious misconduct within themeaning of Art. 282 of the Labor Codeproviding for the dismissal of employees.Her cause of dismissal amounting to a

serious misconduct, respondent is notentitled to an award of separation pay.


h. Retirement (Art. 287)

Retirement Age- The age ofretirement is that specified in the CBAor in the employment contract. In the

absence of a retirement plan oragreement providing for retirementbenefits of employees in anestablishment, an employee uponreaching the age of 60 years old ormore; but not beyond 65 years of agewhich is hereby declared as thecompulsory retirement age, who hasserved at least 5 years in saidestablishment.

The rule is different with respect tounderground mining employees whoseoptional retirement age is 50-60provided they have at least served for aperiod of 5 years.

Benefits: A retiree is entitled to a retirement

pay equivalent to at least monthsalary for every year of service, afraction of at least 6 months beingcontracted as one whole year.

Unless the parties provide forbroader inclusions, the term onehalf month salary shall means: 15 days plus 1/12 of the 13th

month pay and the cash equivalent of NOT more

than 5 days of SIL (22.5 days peryear of service).

Under Section 26, RA 4670 (MagnaCarta for Public School Teachers),public school teachers having fulfilledthe age and service requirements ofthe applicable retirement laws shall begiven ONE RANGE SALARY RAISE uponretirement, which shall be the basis ofthe computation of the lump sum of theretirement pay and the monthly benefitthereafter.

NOTE: Exempted from the payment ofretirement pay are retail, service andagricultural establishments or operationsemploying not more than 10 employees orworkers.

AGE RETIREMENT

60-65 Optional but the employee musthave served at least 5 years

65 Compulsory (no need for 5years of service)


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CAINTA CATHOLIC SCHOOL vs.CAINTA CATHOLIC SCHOOLEMPLOYEES UNION (CCSEU) G.R. No.151021 May 4, 2006 TINGA

Issue: WON a stipulation in a CBA that

allows management to retire an employeein its employ for a predetermined lengthyperiod but who has not yet reached theminimum compulsory retirement ageprovided in the Labor Code is valid.

Ruling:

Retirement is a different specie oftermination of employment fromdismissal for just or authorized causes

under Articles 282 and 283 of theLabor Code. While in all three cases,the employee to be terminated may beunwilling to part from service, thereare eminently higher standards to bemet by the employer validly exercisingthe prerogative to dismiss for just orauthorized causes. In those twoinstances, it is indispensable that theemployer establish the existence of

just or authorized causes for dismissalas spelled out in the Labor Code.Retirement, on the other hand, is theresult of a bilateral act of the parties,a voluntary agreement between theemployer and the employee wherebythe latter after reaching a certain ageagrees and/or consents to sever hisemployment with the former.

Article 287 of the Labor Code, asamended, governs retirement ofemployees, stating:Any employee may beretired upon reaching the retirement ageestablished in the collective bargainingagreement or other applicable employmentcontract. In case of retirement, theemployee shall be entitled to receive suchretirement benefits as he may have earnedunder existing laws and any collectivebargaining agreement and otheragreements: Provided, however, That anemployees retirement benefits under anycollective bargaining agreement and otheragreements shall not be less than those

provided herein. In the absence of aretirement plan or agreement providing forretirement benefits of employees in theestablishment, an employee upon reaching

the age of sixty (60) years or more, butnot beyond sixty-five (65) years which ishereby declared the compulsoryretirement age, who has served at leastfive (5) years in the said establishment,may retire and shall be entitled toretirement pay equivalent to at least one-half (1/2) month salary for every year ofservice, a fraction of at least six (6)months being considered as one whole

year.We are impelled to reverse the Courtof Appeals and affirm the validity of thetermination of employment of Llagas andJavier, arising as it did from amanagement prerogative granted by themutually-negotiated CBA between theSchool and the Union.

In the case at bench, the CBA providedthat the School has the option to retire anemployee upon reaching the age limit of

sixty (60) or after having rendered at leasttwenty (20) years of service to the School,the last three (3) years of which must becontinuous. The CBA established 60 as thecompulsory retirement age. However, it isnot alleged that either Javier or Llagas hadreached the compulsory retirement age of60 years, but instead that they hadrendered at least 20 years of service in theSchool, the last 3 years continuous.Clearly, the CBA provision allows theemployee to be retired by the School evenbefore reaching the age of 60, providedthat he/she had rendered 20 years ofservice.

Would such a stipulation be valid?

Yes, such stipulation is valid. In a decided

case, it has been held that Labor Codepermitted employers and employeesto fix the applicable retirement age atbelow 60 years of age. Moreover,there was no illegal dismissa

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