Lawyerly

GR No. 163657

2012-04-18

INTERNATIONAL MANAGEMENT SERVICES v. ROEL P. LOGARTA

PERALTA, J.

Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on salaries and wages.[22] It is one of the economic grounds to dismiss employees and is resorted by an employer primarily to avoid or minimize business losses.[23]

GR No. 165756

2009-06-05

HOTEL ENTERPRISES OF PHILIPPINES v. SAMAHAN NG MGA MANGGAGAWA SA HYATT-NATIONAL UNION OF WORKERS IN HOTEL

NACHURA, J.

The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the [Department] of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on salaries and wages.[47] Redundancy, on the other hand, exists where the number of employees is in excess of what is reasonably demanded by the actual requirements of the enterprise.[48] Both are forms of downsizing and are often resorted to by the employer during periods of business recession, industrial depression, or seasonal fluctuations, and during lulls in production occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or introduction of new methods or more efficient machinery or automation.[49] Retrenchment and redundancy are valid management prerogatives, provided they are done in good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law and jurisprudence.[50]

GR No. 169780

2009-02-16

ALFREDO A. MENDROS v. MITSUBISHI MOTORS PHILS. CORPORATION

VELASCO JR., J.

Lastly, x x x alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees.[10] (Emphasis supplied.)

GR No. 170669

2009-02-04

MOBILIA PRODUCTS v. ALAN G. DEMECILLO

QUISUMBING, J.

However, apart from petitioner's bare assertion of reduced orders from Japan, the only evidence it presented were the letters of voluntary acceptance of retrenchment, and waivers and quitclaims signed by respondents. To our mind, these were insufficient to show that petitioner indeed suffered business losses so serious as to necessitate the reduction of personnel. [21] We have constantly ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. [22] Any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees. [23] Petitioner submitted none. Further, let it be clarified that our ruling in International Hardware, Inc. v. NLRC [24] did not dispense with the responsibility of the employer to substantiate losses. It merely exempts the latter from giving notice of retrenchment to its employees and DOLE.

GR No. 166760

2008-08-22

EASTRIDGE GOLF CLUB v. EASTRIDGE GOLF CLUB

AUSTRIA-MARTINEZ, J.

Failure to prove the first requirement will render the retrenchment illegal and make the employer liable for the reinstatement of its employees and payment of full backwages.[46] However, were the retrenchment undertaken by the employer is bona fide, the same will not be invalidated by the latter's failure to serve prior notice on the employees and the DOLE; the employer will only be liable in nominal damages,[47] the reasonable rate of which the Court En Banc has set at P50,000.00[48] for each employee.

GR No. 178083

2008-07-23

FLIGHT ATTENDANTS v. PHILIPPINE AIRLINES

YNARES-SATIAGO, J.

The burden clearly falls upon the employer to prove economic or business losses with sufficient supporting evidence. Its failure to prove these reverses or losses necessarily means that the employee's dismissal was not justified.[43] Any claim of actual or potential business losses must satisfy certain established standards, all of which must concur, before any reduction of personnel becomes legal.[44] These are:(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, 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;

GR No. 166703

2008-04-14

AMA COMPUTER COLLEGE v. ELY GARCIA

CHICO-NAZARIO, J.

There are three basic requisites for a valid retrenchment to exist, to wit: (a) the retrenchment is necessary to prevent losses and such losses are proven; (b) written notice to the employees and to the DOLE at least one (1) month prior to the intended date of retrenchment; and (c) payment of separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.[33]

GR No. 172363

2008-03-07

JUVY M. MANATAD v. PHILIPPINE TELEGRAPH

CHICO-NAZARIO, J.

Art. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the [Department] of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter, resorted to by management during periods of business recession; industrial depression; or seasonal fluctuations, during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or the introduction of new methods or more efficient machinery or automation. Retrenchment is a valid management prerogative. It is, however, subject to faithful compliance with the substantive and procedural requirements laid down by law and jurisprudence.[17] In the discharge of these requirements, it is the employer who bears the onus, being in the nature of affirmative defense.[18]

GR No. 173231

2007-12-28

RUBEN L. ANDRADA v. NLRC

VELASCO JR., J.

This Court is not oblivious of the significant role played by the corporate sector in the country's economic and social progress. Implicit in turn in the success of the corporate form in doing business is the ethos of business autonomy which allows freedom of business determination with minimal governmental intrusion to ensure economic independence and development in terms defined by businessmen. Yet, this vast expanse of management choices cannot be an unbridled prerogative that can rise above the constitutional protection to labor. Employment is not merely a lifestyle choice to stave off boredom. Employment to the common man is his very life and blood, which must be protected against concocted causes to legitimize an otherwise irregular termination of employment. Imagined or undocumented business losses present the least propitious scenario to justify retrenchment.[10] Under the Labor Code, retrenchment and redundancy are authorized causes for separation from service. However, to protect labor, dismissals due to retrenchment or redundancy are subject to strict requirements under Article 283 of the Labor Code, to wit:ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to separation pay equivalent to at least his one (1) month pay or at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year.

GR No. 176627

2007-08-24

GLORY PHILIPPINES v. BUENAVENTURA B. VERGARA

YNARES-SANTIAGO, J.

Under Article 279[24] of the Labor Code, an employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights, and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Where reinstatement is no longer feasible, separation pay shall be granted in lieu of reinstatement.[25]

	GR No. 163657 2012-04-18	INTERNATIONAL MANAGEMENT SERVICES v. ROEL P. LOGARTA PERALTA, J.
Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on salaries and wages.[22] It is one of the economic grounds to dismiss employees and is resorted by an employer primarily to avoid or minimize business losses.[23]
	GR No. 165756 2009-06-05	HOTEL ENTERPRISES OF PHILIPPINES v. SAMAHAN NG MGA MANGGAGAWA SA HYATT-NATIONAL UNION OF WORKERS IN HOTEL NACHURA, J.
The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the [Department] of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. Retrenchment is the reduction of work personnel usually due to poor financial returns, aimed to cut down costs for operation particularly on salaries and wages.[47] Redundancy, on the other hand, exists where the number of employees is in excess of what is reasonably demanded by the actual requirements of the enterprise.[48] Both are forms of downsizing and are often resorted to by the employer during periods of business recession, industrial depression, or seasonal fluctuations, and during lulls in production occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or introduction of new methods or more efficient machinery or automation.[49] Retrenchment and redundancy are valid management prerogatives, provided they are done in good faith and the employer faithfully complies with the substantive and procedural requirements laid down by law and jurisprudence.[50]
	GR No. 169780 2009-02-16	ALFREDO A. MENDROS v. MITSUBISHI MOTORS PHILS. CORPORATION VELASCO JR., J.
Lastly, x x x alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees.[10] (Emphasis supplied.)
	GR No. 170669 2009-02-04	MOBILIA PRODUCTS v. ALAN G. DEMECILLO QUISUMBING, J.
However, apart from petitioner's bare assertion of reduced orders from Japan, the only evidence it presented were the letters of voluntary acceptance of retrenchment, and waivers and quitclaims signed by respondents. To our mind, these were insufficient to show that petitioner indeed suffered business losses so serious as to necessitate the reduction of personnel. [21] We have constantly ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. [22] Any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees. [23] Petitioner submitted none. Further, let it be clarified that our ruling in International Hardware, Inc. v. NLRC [24] did not dispense with the responsibility of the employer to substantiate losses. It merely exempts the latter from giving notice of retrenchment to its employees and DOLE.
	GR No. 166760 2008-08-22	EASTRIDGE GOLF CLUB v. EASTRIDGE GOLF CLUB AUSTRIA-MARTINEZ, J.
Failure to prove the first requirement will render the retrenchment illegal and make the employer liable for the reinstatement of its employees and payment of full backwages.[46] However, were the retrenchment undertaken by the employer is bona fide, the same will not be invalidated by the latter's failure to serve prior notice on the employees and the DOLE; the employer will only be liable in nominal damages,[47] the reasonable rate of which the Court En Banc has set at P50,000.00[48] for each employee.
	GR No. 178083 2008-07-23	FLIGHT ATTENDANTS v. PHILIPPINE AIRLINES YNARES-SATIAGO, J.
The burden clearly falls upon the employer to prove economic or business losses with sufficient supporting evidence. Its failure to prove these reverses or losses necessarily means that the employee's dismissal was not justified.[43] Any claim of actual or potential business losses must satisfy certain established standards, all of which must concur, before any reduction of personnel becomes legal.[44] These are:(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, 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;
	GR No. 166703 2008-04-14	AMA COMPUTER COLLEGE v. ELY GARCIA CHICO-NAZARIO, J.
There are three basic requisites for a valid retrenchment to exist, to wit: (a) the retrenchment is necessary to prevent losses and such losses are proven; (b) written notice to the employees and to the DOLE at least one (1) month prior to the intended date of retrenchment; and (c) payment of separation pay equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher.[33]
	GR No. 172363 2008-03-07	JUVY M. MANATAD v. PHILIPPINE TELEGRAPH CHICO-NAZARIO, J.
Art. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the [Department] of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year. Retrenchment is the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter, resorted to by management during periods of business recession; industrial depression; or seasonal fluctuations, during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or the introduction of new methods or more efficient machinery or automation. Retrenchment is a valid management prerogative. It is, however, subject to faithful compliance with the substantive and procedural requirements laid down by law and jurisprudence.[17] In the discharge of these requirements, it is the employer who bears the onus, being in the nature of affirmative defense.[18]
	GR No. 173231 2007-12-28	RUBEN L. ANDRADA v. NLRC VELASCO JR., J.
This Court is not oblivious of the significant role played by the corporate sector in the country's economic and social progress. Implicit in turn in the success of the corporate form in doing business is the ethos of business autonomy which allows freedom of business determination with minimal governmental intrusion to ensure economic independence and development in terms defined by businessmen. Yet, this vast expanse of management choices cannot be an unbridled prerogative that can rise above the constitutional protection to labor. Employment is not merely a lifestyle choice to stave off boredom. Employment to the common man is his very life and blood, which must be protected against concocted causes to legitimize an otherwise irregular termination of employment. Imagined or undocumented business losses present the least propitious scenario to justify retrenchment.[10] Under the Labor Code, retrenchment and redundancy are authorized causes for separation from service. However, to protect labor, dismissals due to retrenchment or redundancy are subject to strict requirements under Article 283 of the Labor Code, to wit:ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to separation pay equivalent to at least his one (1) month pay or at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year.
	GR No. 176627 2007-08-24	GLORY PHILIPPINES v. BUENAVENTURA B. VERGARA YNARES-SANTIAGO, J.
Under Article 279[24] of the Labor Code, an employee who was illegally dismissed from work is entitled to reinstatement without loss of seniority rights, and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Where reinstatement is no longer feasible, separation pay shall be granted in lieu of reinstatement.[25]

F.F. MARINE CORPORATION v. SECOND DIVISION NLRC