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GR No. 174184

2015-01-28

G.J.T. REBUILDERS MACHINE SHOP v. RICARDO AMBOS

LEONEN, J.

The only time employers are not compelled to pay separation pay is when they closed their establishments or undertaking due to serious business losses or financial reverses.[42]

GR No. 156644

2008-07-28

UNIVERSAL ROBINA SUGAR MILLING CORPORATION v. AGRIPINO CABALLEDA

NACHURA, J.

The reason is laid down in Lopez Sugar Corporation v. Federation of Free Workers:[34]

GR No. 178083

2008-07-23

FLIGHT ATTENDANTS v. PHILIPPINE AIRLINES

YNARES-SATIAGO, J.

The employer's prerogative to layoff employees is subject to certain limitations. In Lopez Sugar Corporation v. Federation of Free Workers,[48] we held that:Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the bona fide nature of the retrenchment would appear to be seriously in question. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laid-off. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively prevent the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than labor costs. An employer who, for instance, lays off substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called "golden parachutes," can scarcely claim to be retrenching in good faith to avoid losses. To impart operational meaning to the constitutional policy of providing "full protection" to labor, the employer's prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means - e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc. - have been tried and found wanting.

GR No. 166703

2008-04-14

AMA COMPUTER COLLEGE v. ELY GARCIA

CHICO-NAZARIO, J.

In a number of cases, the Court has identified the necessary conditions for the company losses to justify retrenchment: (1) the losses incurred are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (d) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence.[37] ACC miserably failed to prove any of the foregoing.

GR No. 173231

2007-12-28

RUBEN L. ANDRADA v. NLRC

VELASCO JR., J.

In Lopez Sugar Corporation v. Federation of Free Workers,[11] this Court had the opportunity to lay down the following standards that a company must meet to justify retrenchment to prevent abuse by employers:Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the bona fide nature of retrenchment would appear to be seriously in question. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laid-off. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively prevent the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs other than labor costs. An employer who, for instance, lays off substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called "golden parachutes," can scarcely claim to be retrenching in good faith to avoid losses. To impart operational meaning to the constitutional policy of providing "full protection" to labor, the employer's prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc. have been tried and found wanting.

GR NO. 150429

2006-08-29

ROBERTO G. FAMANILA v. CA

YNARES-SANTIAGO, J.

It is true that quitclaims and waivers are oftentimes frowned upon and are considered as ineffective in barring recovery for the full measure of the worker's right and that acceptance of the benefits therefrom does not amount to estoppel.[20] The reason is plain. Employer and employee, obviously do not stand on the same footing.[21] However, not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of the settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking,[22] as in this case.

GR NO. 167959

2006-04-19

FILIPINAS SYSTEMS 'FILSYSTEMS v. ERNESTO GATLABAYAN

CALLEJO, SR., J.

In Lopez Sugar Corporation v. Federation of Free Workers,[24] this Court ruled, thus:At the other end of the spectrum, it seems equally clear that not every asserted possibility of loss is sufficient legal warrant for reduction of personnel. In the nature of things, the possibility of incurring losses is constantly present, in greater or lesser degree, in carrying on of business operations, since some, indeed many, of the factors which impact upon the profitability or viability of such operations may be substantially outside the control of the employer. Thus, the difficult question is determination of when, or under what circumstances, the employer becomes legally privileged to retrench and reduce the number of his employees.

GR NO. 149138

2006-02-28

TPI PHILIPPINES CEMENT CORPORATION v. BENEDICTO A. CAJUCOM VII

SANDOVAL-GUTIERREZ, J.

But respondent insists that actual, not probable losses, justify retrenchment. Article 283 (quoted earlier) entails, among others, only a situation where there is "retrenchment to prevent losses."[8] The phrase "to prevent losses" means that retrenchment or termination from the service of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized.[9] This is the situation in the case at bar. Evidently, actual losses need not set in prior to retrenchment.

GR NO. 168719

2006-02-22

PHILIPPINE CARPET EMPLOYEES ASSOCIATION v. PATRICIA STO. TOMAS

CALLEJO, SR., J.

Retrenchment is defined as the termination of employment initiated by the employer through no fault of the employee and without prejudice to the latter, resorted by management during periods of business recession, industrial depression or seasonal fluctuations or during lulls over shortage of materials. It is a reduction in manpower, a measure utilized by an employer to minimize business losses incurred in the operation of its business.[45] Explaining the import of the phrase "to prevent losses," this Court held in Lopez Sugar Corporation v. Federation of Free Workers,[46] thus:In its ordinary connotation, the phrase "to prevent losses" means that retrenchment or termination of the services of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. It is not, in other words, the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have, in fact, materialized; if such an intent were expressly written into the law, that law may well be vulnerable to constitutional attack as taking property from one man to give to another. This is simple enough.[47]

GR NO. 147756

2005-08-09

ROBERTO O. ARIOLA v. PHILEX MINING CORPORATION

CARPIO, J.

Thus, the requirements for retrenchment are: (1) it is undertaken to prevent losses, which are not merely de minimis, but substantial, serious, actual, and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;[27] (2) the employer serves written notice both to the employees and the DOLE at least one month prior to the intended date of retrenchment; and (3) the employer pays the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service, whichever is higher. The Court later added the requirements that the employer must use fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees[28] and that the retrenchment must be undertaken in good faith.[29] Except for the written notice to the affected employees and the DOLE,[30] non-compliance with any of these requirements renders the retrenchment illegal.

GR NO. 149090

2005-02-11

BENEDICTO A. CAJUCOM VII v. TPI PHILIPPINES CEMENT CORPORATION

SANDOVAL-GUTIERREZ, J.

For his part, petitioner insists that actual, not probable losses, justify retrenchment. Article 283 (quoted earlier) entails, among others, only a situation where there is "retrenchment to prevent losses."[14] The phrase "to prevent losses" means that retrenchment or termination from the service of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized.[15] This is the situation in the case at bar. Evidently, actual losses need not set in prior to retrenchment.

	GR No. 174184 2015-01-28	G.J.T. REBUILDERS MACHINE SHOP v. RICARDO AMBOS LEONEN, J.
The only time employers are not compelled to pay separation pay is when they closed their establishments or undertaking due to serious business losses or financial reverses.[42]
	GR No. 156644 2008-07-28	UNIVERSAL ROBINA SUGAR MILLING CORPORATION v. AGRIPINO CABALLEDA NACHURA, J.
The reason is laid down in Lopez Sugar Corporation v. Federation of Free Workers:[34]
	GR No. 178083 2008-07-23	FLIGHT ATTENDANTS v. PHILIPPINE AIRLINES YNARES-SATIAGO, J.
The employer's prerogative to layoff employees is subject to certain limitations. In Lopez Sugar Corporation v. Federation of Free Workers,[48] we held that:Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the bona fide nature of the retrenchment would appear to be seriously in question. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laid-off. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively prevent the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than labor costs. An employer who, for instance, lays off substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called "golden parachutes," can scarcely claim to be retrenching in good faith to avoid losses. To impart operational meaning to the constitutional policy of providing "full protection" to labor, the employer's prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means - e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc. - have been tried and found wanting.
	GR No. 166703 2008-04-14	AMA COMPUTER COLLEGE v. ELY GARCIA CHICO-NAZARIO, J.
In a number of cases, the Court has identified the necessary conditions for the company losses to justify retrenchment: (1) the losses incurred are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected losses; and (d) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence.[37] ACC miserably failed to prove any of the foregoing.
	GR No. 173231 2007-12-28	RUBEN L. ANDRADA v. NLRC VELASCO JR., J.
In Lopez Sugar Corporation v. Federation of Free Workers,[11] this Court had the opportunity to lay down the following standards that a company must meet to justify retrenchment to prevent abuse by employers:Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the bona fide nature of retrenchment would appear to be seriously in question. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laid-off. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively prevent the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs other than labor costs. An employer who, for instance, lays off substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called "golden parachutes," can scarcely claim to be retrenching in good faith to avoid losses. To impart operational meaning to the constitutional policy of providing "full protection" to labor, the employer's prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc. have been tried and found wanting.
	GR NO. 150429 2006-08-29	ROBERTO G. FAMANILA v. CA YNARES-SANTIAGO, J.
It is true that quitclaims and waivers are oftentimes frowned upon and are considered as ineffective in barring recovery for the full measure of the worker's right and that acceptance of the benefits therefrom does not amount to estoppel.[20] The reason is plain. Employer and employee, obviously do not stand on the same footing.[21] However, not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of the settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking,[22] as in this case.
	GR NO. 167959 2006-04-19	FILIPINAS SYSTEMS 'FILSYSTEMS v. ERNESTO GATLABAYAN CALLEJO, SR., J.
In Lopez Sugar Corporation v. Federation of Free Workers,[24] this Court ruled, thus:At the other end of the spectrum, it seems equally clear that not every asserted possibility of loss is sufficient legal warrant for reduction of personnel. In the nature of things, the possibility of incurring losses is constantly present, in greater or lesser degree, in carrying on of business operations, since some, indeed many, of the factors which impact upon the profitability or viability of such operations may be substantially outside the control of the employer. Thus, the difficult question is determination of when, or under what circumstances, the employer becomes legally privileged to retrench and reduce the number of his employees.
	GR NO. 149138 2006-02-28	TPI PHILIPPINES CEMENT CORPORATION v. BENEDICTO A. CAJUCOM VII SANDOVAL-GUTIERREZ, J.
But respondent insists that actual, not probable losses, justify retrenchment. Article 283 (quoted earlier) entails, among others, only a situation where there is "retrenchment to prevent losses."[8] The phrase "to prevent losses" means that retrenchment or termination from the service of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized.[9] This is the situation in the case at bar. Evidently, actual losses need not set in prior to retrenchment.
	GR NO. 168719 2006-02-22	PHILIPPINE CARPET EMPLOYEES ASSOCIATION v. PATRICIA STO. TOMAS CALLEJO, SR., J.
Retrenchment is defined as the termination of employment initiated by the employer through no fault of the employee and without prejudice to the latter, resorted by management during periods of business recession, industrial depression or seasonal fluctuations or during lulls over shortage of materials. It is a reduction in manpower, a measure utilized by an employer to minimize business losses incurred in the operation of its business.[45] Explaining the import of the phrase "to prevent losses," this Court held in Lopez Sugar Corporation v. Federation of Free Workers,[46] thus:In its ordinary connotation, the phrase "to prevent losses" means that retrenchment or termination of the services of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. It is not, in other words, the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have, in fact, materialized; if such an intent were expressly written into the law, that law may well be vulnerable to constitutional attack as taking property from one man to give to another. This is simple enough.[47]
	GR NO. 147756 2005-08-09	ROBERTO O. ARIOLA v. PHILEX MINING CORPORATION CARPIO, J.
Thus, the requirements for retrenchment are: (1) it is undertaken to prevent losses, which are not merely de minimis, but substantial, serious, actual, and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;[27] (2) the employer serves written notice both to the employees and the DOLE at least one month prior to the intended date of retrenchment; and (3) the employer pays the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service, whichever is higher. The Court later added the requirements that the employer must use fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees[28] and that the retrenchment must be undertaken in good faith.[29] Except for the written notice to the affected employees and the DOLE,[30] non-compliance with any of these requirements renders the retrenchment illegal.
	GR NO. 149090 2005-02-11	BENEDICTO A. CAJUCOM VII v. TPI PHILIPPINES CEMENT CORPORATION SANDOVAL-GUTIERREZ, J.
For his part, petitioner insists that actual, not probable losses, justify retrenchment. Article 283 (quoted earlier) entails, among others, only a situation where there is "retrenchment to prevent losses."[14] The phrase "to prevent losses" means that retrenchment or termination from the service of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized.[15] This is the situation in the case at bar. Evidently, actual losses need not set in prior to retrenchment.

LOPEZ SUGAR CORPORATION v. FEDERATION OF FREE WORKERS