INTRODUCTION OF LABOR SAVING DEVICES
Reduction of the number of workers in a company’s factory made necessary by the introduction of machinery in the manufacture of its products is justified. There can be no question as to the right of the manufacturer to use new labor saving devices with a view to effecting more economy and efficiency in its method of production (Philippine Sheet Metal Workers’ Union vs. CIR).
RETRENCHMENT
Retrenchment is one of the economic grounds to dismiss employees. It is resorted to by an employer primarily to avoid or minimize business losses. The law recognizes this under Art 283 of the Labor Code. However, the employer bears the burden to prove his allegation of economic or business reverses. The employer’s failure to prove it necessarily means that the employee’s dismissal was not justified (Precision Electronics Corporation vs. NLRC).
RETRENCHMENT: WHOM TO LAY-OFF
There must be fair and reasonable criteria to be used in selecting employees to be dismissed, on account of retrenchment, such as (a) less preferred status (i.e., temporary employees); (b) efficiency rating, and (c) seniority (Asiaworld Publishing House, Inc. vs. Ople).
LACK OF WORK
Lack of work is a justifiable cause for termination of employment. Protection to labor does not mean oppression or self-destruction of capital. Where the continuation of the men in service is patently inimical to the interest of the employer, there is no alternative but for the court to authorize the employer to lay off such number of workers as the circumstances may warrant. But the court may impose the condition that the employer shall not admit any new laborer in case of available work in the future before the laid-off men who are able, willing and available to do the same shall have been recalled to work (Mayon Engineering Worker’s Union vs. Mayon Engineering and Machine Shop).
RETRENCHMENT AND CONSERVATORSHIP
The retrenchment of personnel as a consequence of conservatorship proceedings against an insurance company in financial difficulties is a cost-saving measure resorted to by the conservator to preserve the assets of the company for the protection of not only the policyholders and creditors but also the investors and the public in general. Conservatorship proceedings contemplate, not the liquidation of the company involved, but a conservation of company assets and business during the period of stress by the commissioner of Insurance, who thereafter yields control to the regular officers of the company (Garcia vs. NLRC).
FOUR STANDARDS OF RETRENCHMENT
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
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45and 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 n good faith by the employer. There should, in other words, be 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.
Thirdly, there must 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.
Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proven 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 (Lopez Sugar Corporation vs. Federation of Free Workers, et al.)
REDUNDANCY DISTINGUISHED FROM RETRENCHMENT
Redundancy exists where the services of an employee are in the excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, a superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term “lay-off.” It 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, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant machinery, or of automation. Simply put, it is an act of the employer of dismissing employees because of losses in the operation of a business, lack of work, and considerable reduction on the volume of his business a right consistently recognized and affirmed by this court (Sebuguero, et al. vs. NLRC).
CLOSURE OF BUSINESS
Under Article 284 of the Labor Code, three requirements may be seen to be established in respect of cessation of business operations of an employer company not due to business reverses, namely: a) service of written notice to the employees and to the MOLE at east one month before the intended date thereof; b) the cessation of or withdrawal from business operations must be bona fide in character; and c) payment to the employees of termination pay amounting to at east one- half month pay for each year of service, or one month pay, whichever is higher (Mobil Employees Association and Inter-Island Labor Organization).
TEMPORARY SHUTDOWN
Temporary shutdown of one of the furnaces of a glass plant is not a good reason to terminate employees where operations continued after such repairs, and it is apparent that the closure of the company’s warehouse was merely a ploy to get rid of the employees who were then agitating the company for benefits, reforms and collective bargaining as a union. There is no showing that petitioners had been remiss in their obligations and inefficient in their jobs to warrant their separation (“Brotherhood” Labor Unity Movement of the Philippines, et al. vs. Zamora).
MERGER
By the fact of merger, succession of employment rights and obligations occurs between the absorbing corporation and the employees of the absorbed corporation. Not only must the absorbing corporation retain the employees, it should likewise recognize the length of service in the previous employer. In merger, like in sale in bad faith, the “successor employer” principle applies (Filipinas Port Services, Inc. vs. NLRC).
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AILMENT OR DISEASE
A medical certificate issued by the company’s own physician, is not certificate by “competent public health authority” (Cebu Royal Plant [San Miguel Corporation] vs. Deputy Minister of Labor).
PREVENTIVE SUSPENSION AND INVESTIGATION
DO NOT REPLACE “TWO-NOTICE REQUIREMENT” OF DUE PROCESS
The notice of preventive suspension cannot be considered adequate notice since the objectives of the petitioner’s preventive suspension, as stated in the notice, were merely to ascertain the extent of the loss to the bank and to pinpoint responsibility of the arties involved, and not to apprise the petitioner of the causes of is desired dismissal. Likewise, the subsequent interview is not the “ample opportunity to be heard” contemplated by law. Ample opportunity to be heard is especially accorded to the employee sought to be dismissed after he is informed of the charges against him in order to give him an opportunity to refute the accusations leveled against him, and it certainly does not consist of an inquiry conducted merely for the purpose of filing a criminal case against another person (Norman de Vera vs. NLRC and Bank of the Philippine Islands).
The employer is mandated to furnish the employee sought to be dismissed two notices, the written charge, and, if, after hearing, dismissal is indeed warranted.
INSUFFICIENT NOTICE: CONSULTATION WITH UNION
The employer’s “prior consultation” with the union with which the employee is affiliated is legally insufficient. The rights of an employee whose services are sought to be terminated to be informed beforehand of his proposed dismissal (or suspension) as well as of the reasons therefore, and to be afforded an adequate opportunity to defend himself from the charges leveled against him, are rights personal to the employee. Those rights are not satisfied by the employer’s obtaining the consent of or consulting with the labor union. Such consultation or consent is not substitute for actual observance of those rights of the employee. The employee can waive those rights, if he chooses, but the union cannot waive them for him (Century Textile Mills, Inc. vs. NLRC, et. al.).
DUE PROCESS IN AUTHORIZED CAUSES
In employment termination due to authorized causes, the due process requirement is not completely done away with. Investigation and hearing need not be done by the employer, but the one-month advance notices to the affected employee and to the DOLE must be complied with, otherwise the termination is illegal (Wittshire File Co. vs. NLRC).
BASIS OF COMPUTATION OF BACKWAGES
The base figure to be used in the computation of backwages due to the employee should include not just the basic salary, but also the regular allowances that he had been receiving such as the emergency living allowances and the 13th- month pay mandated by the law (Paramount Vinyl
Product Corporation vs. NLRC).
BACKWAGES UP TO RETIREMENT AGE ONLY
If the ordered reinstatement is no longer feasible because he employee has reached retirement age, the court will not insist on reinstatement and even the backwages will not extend beyond the employee’s retirement date (Equitable Banking Corporation vs. NLRC and R.L. Salac).
INFLATION
Regarding the argument that the inflation that has supervened justifies the imposition of interest, the Court has held that the effects of extraordinary inflation are not to be applied without an agreement between the parties and without an official declaration thereof by competent authorities (Lantion, et al. vs. NLRC).
APPLICABILITY OF THE STRAINED RELATIONS PRINCIPLE
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45The rule is that “strained relations” may be invoked only against employees whose positions demand trust and confidence, or whose differences with their employer are of such nature or degree as to preclude reinstatement (Maranaw Hotels vs. CA).
REINSTATEMENT SHOULD HAVE BEEN ORDERED BY LABOR ARBITER
If the labor arbiter has not ordered reinstatement of the employee, the NLRC cannot award backwages for the period when the appeal was pending at the NLRC. An order for reinstatement must be specifically declared and cannot be presumed; like backwages, it is separate and distinct relief given to an illegally dismissed employee. There being no specific order of reinstatement and the order being for complainant’s separation, there can be no basis for the award of salaries/ backwages during the pendency of appeal (Filflex Industrial and MFG. Corp vs. NLRC).
DAMAGES
If the evidence adduced by the employee before the Labor Arbiter should establish that the employer did indeed terminate the employee’s services without just cause or without according him due process, the Labor Arbiter’s judgment shall be for the employer to reinstate the employee and him backwages, or exceptionally, for the employee simply to receive separation pay. These are reliefs explicitly prescribed by the labor code. But any award of moral damages by the Labor Arbiter obviously cannot be based on the labor code but would be grounded on the Civil Code. Such an award cannot be justified solely upon the premise (otherwise sufficient for redress under the Labor Code) that the employer fired his employee without just cause or due process (Suario vs. Bank of the Philippine Islands).
MORAL DAMAGES
Moral damages may be awarded to compensate one for diverse injuries such as mental anguish, besmirched reputation, wounded feelings and social humiliation. It is however, not enough that such injuries have arisen. It is essential that they have sprung from a wrongful act or omission of the defendant which was the proximate cause thereof (Suario vs. BPI).