EDI Staffbulders vs NLRC 537 SCRA 409

In 1993, EDI-Staffbuilders, Inc. (EDI), upon request of Omar Ahmed Ali Bin Bechr Est. (OAB), a company in
Saudi Arabia, sent to OAB resumes from which OAB can choose a computer specialist. Eleazar Gran was
selected. It was agreed that his monthly salary shall be $850.00. But five months into his service in Saudi
Arabia, Gran received a termination letter and right there and then was removed from his post. The
termination letter states that he was incompetent because he does not know the ACAD system which is
required in his line of work; that he failed to enrich his knowledge during his 5 month stay to prove his
competence; that he is disobedient because he failed to submit the required daily reports to OAB. Gran then
signed a quitclaim whereby he declared that he is releasing OAB from any liability in exchange of 2,948.00
Riyal.
When Gran returned, he filed a labor case for illegal dismissal against EDI and OAB. EDI in its defense
averred that the dismissal is valid because when Gran and OAB signed the employment contract, both parties
agreed that Saudi labor laws shall govern all matters relating to the termination of Grans employment; that
under Saudi labor laws, Grans termination due to incompetence and insubordination is valid; that Grans
insubordination and incompetence is outlined in the termination letter Gran received. The labor arbiter
dismissed the labor case but on appeal, the National Labor Relations Commission (NLRC) reversed the
decision of the arbiter. The Court of Appeals likewise affirmed the NLRC.

hospitalized of the accident. After initial investigation, the respondent issued separate memoranda to herein
petitioners who are sales supervisors to explain why no disciplinary action should be taken against them
for violation of Employee`s Code of Disciplinary Rules and Regulations vis--vis Article 282
of the Labor Code.Further investigation was conducted by respondent and it showed that petitioners
conspired to have an ``altered report`` prepared to make it appear that sales was not under the influence of
liquor at the time of the accident. Petitioners were dismissed from employment which lead them to
file separate complaints for illegal suspension and dismissal against respondent. The Labor Arbiter found
that Dela Cruz was illegally dismissed and ordered for his reinstatement while Lacuata was found to be at
fault. The NLRC affirmed Labor Arbiter`s decision. The Court of Appeals held that petitioners were validly
dismissed for wilful breach of confidence.
Issue: Whether or not the petitioners were illegally dismissed and entitled to backwages.
Ruling:
The Supreme Court denied the petition. By obtaining an altered police report and medical
certificate, petitioners deliberately attempt to cover up the fact that Sales was under the influence of liquor.
In so doing, they committed acts which are inimical to respondents interests and stability not only
of management but of the company itself through deceitful means and methods. Thus, they committed a
work-related willful breach of the trust and confidence reposed in them.
Pantoja vs. SCA Hygiene Products Corp., G.R. No. 163554, April 23, 2010

ISSUE: Whether or not the Saudi labor laws should be applied.

Facts:
HELD: No. The specific Saudi labor laws were not proven in court. EDI did not present proof as to the
existence and the specific provisions of such foreign law. Hence, processual presumption applies and
Philippine labor laws shall be used. Under our laws, an employee like Gran shall only be terminated upon just
cause. The allegations against him, at worst, shall only merit a suspension not a dismissal. His incompetence is
not proven because prior to being sent to Saudi Arabia, he underwent the required trade test to prove his
competence. The presumption therefore is that he is competent and that it is upon OAB and EDI to prove
otherwise. No proof of his incompetence was ever adduced in court. His alleged insubordination is likewise
not proven. It was not proven that the submission of daily track records is part of his job as a computer
specialist. There was also a lack of due process. Under our laws, Gran is entitled to the two notice rule
whereby prior to termination he should receive two notices. In the case at bar, he only received one and he was
immediately terminated on the same day he received the notice.
Lastly, the quitclaim may not also release OAB from liability. Philippine laws is again applied here sans proof
of Saudi laws. Under Philippine Laws, a quitclaim is generally frowned upon and are strictly examined. In this
case, based on the circumstances, Gran at that time has no option but to sign the quitclaim. The quitclaim is
also void because his separation pay was merely 2,948 Riyal which is lower than the $850.00 monthly salary
(3,190 Riyal).
Loss of Trust and Confidence:
Eric Dela Cruz and Raul M. Lacuata v. Coca-Cola Bottlers Phils. Inc., G.R. No. 180465, July 31, 2009
Facts:
On August 12, 2000, Raymund Sales, a salesman of Coca-Cola BottlersPhils., Inc. figured in a motor vehicle
accident while driving respondent`s motor vehicle which he was then not authorized to use. Sales was

SCA Hygiene Products Corp. ( SCA Hygiene for short), a corporation engaged in sale, making and distribution
of tissue products and industrial paper, hired Pantoja on March 1987 as back tender taking charge of
operations in one of SCA Hygienes mill ( Paper Mill No.4).On March 1999, Pantoja received a Notice of
Transfer offering him a position at Paper Mill No. 5 under the same terms and conditions of employment for
an anticipated shutdown of Paper Mill No.4 to streamline and phase out the companys industrial paper
manufacturing operations in Paper Mill No.4 due to financial difficulties brought about by the low volume of
sales and orders for industrial paper products. But Pantoja (and some others offered with transfers ) refused
to be transferred of which his services were terminated by reason of redundancy of position. Pantoja then
received separation pay (which was handsomely over and above what was provided by law) and executed a
release and quitclaim in the corps favor. However, on June 2000, Pantoja filed a complaint for illegal
dismissal against SCA Hygiene for lack of valid cause. Pantoja interposed that no permanent shutdown of
Paper Mill No. 4 due to its continuous operation since his termination, presenting in evidence Paper Mill
Personnel Schedule for Mill No.4 for June, July and August 2000; thus, corp. was in bad faith trying to
circumvent his tenurial security when no substantial reason exist. Labor Arbiter dismissed Pantojas complaint
stating his rejection of transfer and receipt of the separation pay belie Pantojas illegal dismissal. On appeal by
Pantoja, NLRC reversed the Arbiters decision stating the redundancy program is legally infirm on feigned
shutdown of operations. On reconsideration by SCA Hygiene asseverating that on 1999 when Mill No.4 was
shut down due to low production output, there was a necessity to occasionally run from time to time the
machines only for the purpose of maintaining and preserving the same and does not mean that Paper Mill No.
4 continued to be operational. Yet, NLRC remain unpersuaded. On appeal by SCA Hygiene, CA reinstated
Labor Arbiters decision.
Issue:
Whether or not Pantoja was illegally dismissed
Ruling:
Pantoja is not illegally dismissed. SCA Hygienes right of management prerogative was exercised in good
faith. In International Harvester Macleod, Inc. v. Intermediate Appellate Court, the determination of the need
to phase out a particular department and consequent reduction of personnel and reorganization as a labor and

cost saving device is a recognized management prerogative which the courts will not generally interfere with.
Circumstances pointing good faith on SCA Hygienes part - the abolishment of Paper Mill No. 4 was a
business judgment arrived at due to low demand for the production of industrial paper at the time. Despite an
apparent reason to implement a retrenchment program as a cost-cutting measure, SCA Hygiene, did not
outrightly dismiss the workers affected by the closure of Paper Mill No. 4 but gave them an option to be
transferred to posts of equal rank and pay. As can be seen, retrenchment was utilized by respondent only as an
available option in case the affected employee would not want to be transferred. SCA Hygiene did not
proceed directly to retrench. This, to our mind, is an indication of good faith on respondents part as it
exhausted other possible measures other than retrenchment. Besides, the employers prerogative to bring
down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic
means have been tried and found wanting. Giving the workers an option to be transferred without any
diminution in rank and pay specifically belie petitioners allegation that the alleged streamlining scheme was
implemented as a ploy to ease out employees, thus, the absence of bad faith. No evidence, however, was
presented to prove that there was continuous operation after the shutdown in the year 1999. On record, Paper
Mill No. 4 resumed its operation in 2000 due to a more favorable business climate. The resumption of its
industrial paper manufacturing operations does not, however, make respondents streamlining/reorganization
plan illegal because, again, the abolishment of Paper Mill No. 4 in 1999 was a business judgment arrived at to
prevent a possible financial drain at that time. As long as no arbitrary or malicious action on the part of an
employer is shown, the wisdom of a business judgment to implement a cost saving device is beyond this
courts determination. Work reassignment of an employee as a genuine business necessity is a valid
management prerogative. Even though the transfer would not involve any diminution of rank and pay, still
Pantoja refused the transfer and instead, accepted the separation pay voluntarily. The consideration for the
quitclaim is credible and reasonable, the waiver represents a valid and binding undertaking. No force and
duress attended in its execution. The corp. even gave Pantoja a separation pay more than what the law requires
from respondent.

Culili v. Eastern Telecommunications Phils., G.R. No. 165381, February 9, 2011

Facts:
Nelson Culili was employed by Eastern Telecommunications a Senior Technician. In 1998, due to business
losses, ETPI was compelled to implement a Right-Sizing Program which consisted of two phases: the first
phase involved the reduction of ETPIs workforce to only those employees that were necessary and which
ETPI could sustain; the second phase entailed a company-wide reorganization which would result in the
transfer, merger, absorption or abolition of certain departments of ETPI. Among the departments abolished
was the Service Quality Department. As a result, Culilis position was abolished due to redundancy. Upon
filing a complaint, the Labor Arbiter rendered a decision finding ETPI guilty of illegal dismissal and unfair
labor practice, which was affirmed by the NLRC. However, the Court of Appeals found that Culilis position
was validly abolished due to redundancy. It was highly unlikely that ETPI would effect a company-wide
reorganization simply for the purpose of getting rid of Culili. Also, ETPI cannot be held guilty of unfair labor
practice as mere contracting out of services being performed by union members does not per se amount to
unfair labor practice unless it interferes with the employees right to self-organization.
Issue:
Whether or not there was an illegal dismissal.
Ruling: There was a valid dismissal on the ground of redundancy.
There is redundancy when the service capability of the workforce is greater than what is reasonably required
to meet the demands of the business enterprise. A position becomes redundant when it is rendered superfluous
by any number of factors such as over-hiring of workers, decrease in volume of business, or dropping a
particular product line. Among the requisites of a valid redundancy program are: (1) the good faith of the
employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining what
positions are to be declared redundant such as but not limited to: preferred status, efficiency, and seniority.

The records show that ETPI had sufficiently established not only its need to reduce its workforce and
streamline its organization, but also the existence of redundancy in the position of a Senior Technician. It was
decided that, in the judgment of ETPI management, the specialized functions of a Senior Technician whose
sole function was essentially the repair and servicing of ETPIs telecommunications equipment was no longer
needed since the Business and Consumer [Accounts] Department had to remain economical and focused yet
versatile enough to meet all the multifarious needs of its small and medium sized clients. It is inconceivable
that ETPI would effect a company-wide reorganization of this scale for the mere purpose of singling out Culili
and terminating him. What ETPI did was to abolish the position itself for being too specialized and limited.
SC finds Culilis dismissal was for a lawful cause and not an act of unfair labor practice, ETPI, however, was
remiss in its duty to observe procedural due process in effecting the termination of Culili. In Mayon Hotel &
Restaurant v. Adana, SC observed that the requirement of law mandating the giving of notices was intended:
not only to enable the employees to look for another employment and therefore ease the impact of the loss of
their jobs and the corresponding income,
but more importantly, to give the Department of Labor and Employment (DOLE) the opportunity to ascertain
the verity of the alleged authorized cause of termination.
With regard to the impleaded corporate officers, they cannot be held liable for acts done in his official capacity
because a corporation, by legal fiction, has a personality separate and distinct from its officers, stockholders,
and members. To pierce this fictional veil, it must be shown that the corporate personality was used to
perpetuate fraud or an illegal act, or to evade an existing obligation, or to confuse a legitimate issue. In illegal
dismissal cases, corporate officers may be held solidarily liable with the corporation if the termination was
done with malice or bad faith.
Culili has failed to prove that his dismissal was orchestrated by the individual respondents herein for the mere
purpose of getting rid of him. Hence, the dismissal is declared valid but Eastern Telecommunications
Philippines, Inc. is ordered to pay petitioner Nelson A. Culili the amount of P50,000.00 as nominal damages
for non-compliance with statutory due process, in addition to the mandatory separation pay required under
Article 283 of the Labor Code.

San Miguel Jeepney v. NLRC

FACTS:
The 23 complainants were formerly working (as drivers, dispatchers and mechanic) with petitioner San
Miguel Jeepney Service (SMJS), with services ranging from two to eight years. Petitioner SMJS had a
contract with the U.S. Naval Base Facility located in San Miguel, San Antonio, Zambales, to provide
transportation services to personnel and dependents inside said facility. When the said contract expired on 02
May 1988, petitioner Galace, owner and general manager of SMJS, opted not to renew the existing contract
nor bid on the new contract, due to financial difficulties, he having suffered a net loss the prior year. As a
consequence, the services of the complainants were terminated. By that time, however, the 23 had already
filed a complaint for non-compliance with the minimum wage law from 1980 onwards, plus non-payment of
the 13th month pay, legal holiday pay, overtime pay, service incentive leave pay and separation pay. In their
position paper, complainants claimed that they were drivers (except for Edna Farin and Brainly Aglibot who
worked as dispatchers, and Abner Martinez who was a mechanic-dispatcher) and all of them were receiving
their pay based on commission basis, which was below the statutory minimum wage. They further alleged,
among others, that their work entitled them to overtime pay, legal holiday pay and severance pay, which were
not paid to them.
Petitioners on the other hand rejected any liability for the money claims. In refutation of the
complainants claims, they submitted a position paper stating:

1. Legal Holiday Pay -- Complainants are not entitled. (a) the casual dispatchers have no fix
(sic) day of work, they merely act as substituted (sic); and (b) the drivers-complainants, who are
purely on commission basis are not entitled to legal holiday pay (Rule IV, Holiday Pay, Sec. 1
(e), Implementing Rules of the Labor Code).
2. 13th month pay: Not applicable to complainants who are purely on commission basis (Sec.
3 (e), Rules and Regulations Implementing P.D. 851) Complainants casual-dispatchers are not
allowed 13th month pay because they are not (paid on) monthly basis.
3. Underpayment of Minimum Wage: Complainants-drivers are not wage earners. They are
not paid on the basis of their work-hours rendered but on the percentages of their collections
representing fares from their passengers. They control their own collections. There is no basis
of minimum wage in relation to their commissions taken by them.
The complainants-casual dispatchers are well over their minimum wage.
4. Overtime pay. -- Complainants cannot claim overtime pay. They control their own
time. The amount of their percentages depend on how industrious they are in looking for paying
passengers. Hence, complainants control their pay, not the respondents. So, why give overtime
pay to one who is really working on such a (sic) time?

He likewise held that the non-renewal of the contract with the US Naval Base is a closure or cessation of
operations NOT due to serious business losses under Art. 283 of the Labor Code, and that being the case, the
drivers became entitled to one-half (1/2) month pay for every year of service. All other claims, such as for
overtime pay and the like, were dismissed for lack of both legal basis and evidence to support the
same. However, the arbiter ordered payment of P1,000.00 to each of the complainants-drivers by way of
financial assistance, considering their length of service.
On appeal, the respondent Commission modified the arbiters ruling, holding that all the complainants are
regular employees in the contemplation of Article 281 (now Art. 280) of the Labor Code, which provides that
employment shall be deemed regular when the employee performs activities which are usually necessary and
desirable in the usual business or trade ; respondent Commission thus ruled that the complainants are
entitled to separation pay of one-half month for every year of service, by virtue of the non-renewal of the
transportation contract with the naval base. Dissatisfied, petitioners brought this petition for certiorari under
Rule 65 of the Rules of Court on April 19, 1990.
ISSUE:
W/N the respondent NLRC acted in grave abuse of its discretion in awarding separation pay in favor of
respondents, such award not being warranted by the facts and the law.
HELD:

5. Separation pay. -- All the complainants stopped working when(ever) they pleased. At least
respondent Mamerto Galace has given all the complainants notice on July 17, 1988 (should be
1987) that his contract will terminate on February 3, 1988 and after this date, complainants went
on strike. How could they be entitled to separation pay when they wilfully stopped working
without the fault of the respondents(?)
6. Service Incentive pay: -- This is not applicable to the complainants who are purely on
commission basis (Rule V, Sec. 1 (d), Implementing Rules and Regulations of the Labor Code).
th

The arbiter ruled that insofar as the claims for holiday pay, 13 month pay and service incentive pay
were concerned, under the Rules Implementing PD 851, the complainants were not entitled to such benefits,
being workers on a purely commission basis. With respect to the alleged underpayment of minimum wage,
the arbiter held that since the complainants-drivers control(led) their own collections and time, xxx there
could be no basis to determine minimum wage in relation to their commissions xxx. Moreover, a perusal of
the Complaint xxx shows a clear admission of payment of the latter on commission basis at the rate of 14.4%
of their collections. xxx (T)he failure of the complainants-drivers to state in their Complaint and pleadings the
amount of their alleged underpayment only reflects that complainants themselves were unsure if they were
underpaid or not. Hence this Arbiter finds no basis to grant the same.
It seems that the arbiter also went on to hold implicitly that the drivers were not regular employees of
SMJS. He stated:
(Insofar) as the cases of Edna Farin and Brainly Aglibot and Abner Martinez are concerned, we
rule that they are entitled to the difference of the underpayment of their wages as their jobs are
different from that of complainants-drivers, but regular employees of respondents, in accordance
with Article(s) 280 and 281 of the Labor Code as amended. These three (3) employees having
been found to have been dismissed without due process of law are entitled to separation pay
equivalent to one-half (1/2) month for every year of service.

Apparently, San Miguel did not renew its contract because of sliding incomes and not because of serious
business
losses,
thus,
it
cannot
justify
the
non-payment
of
separation
pay.
As San Miguel admitted, what they suffered were sliding incomes in other words, decreasing revenues. What
the law speaks of is serious business losses or financial reverses. Clearly, sliding incomes are not necessarily
losses, much less serious business losses within the meaning of the law.
In this case there was no question about the existence of employer-employee relationship between petitioners
and private respondents. Art. 280 therefore can be properly applied to the present case, to confirm the regularemployee status of the private respondents.
Prescinding from the foregoing, as such regular employees, private respondents are entitled to security of
tenure and their services may be terminated only for causes provided by law. Likewise, they are also to be
accorded the benefits provided under the Labor Code, including inter alia separation pay for loss of
employment resulting from retrenchment to prevent losses or closure/cessation.
NORTH DAVAO MINING CORPORATION V. NLRC
254 SCRA 721
J. PANGANIBAN
FACTS
Petitioner was incorporated in 1974 as a 100% privately owned company, but was co-owned by PNB later as a
result of a conversion into equity of a portion of loans obtained by petitioner from said bank. PNB later
transferred all its loans to and equity in North Davao in favor of the national government.
Respondent Wilfredo Guillema is one among several employees of petitioner who were separated by reason of
the companys closure, and who were the complainants. On May 31, 1992, petitioner completely ceased
operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net

losses averaging P 3 billion per year each of the five years prior to its closure. When it ceased operations, its
remaining employees were separated and given the equivalent of 12.5 days pay for every year of service,
computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick
leaves.
However, it appears that, during the life of the petitioner corporation, from the beginning of operations in 1981
until its closure in 1992, it had been paying separation pay equivalent to 30 days pay for every year of service.
The NLRC ruled affirming the Labor Arbiters decision that the separation pay equivalent to 30 days pay for
every year of service has ripened into an obligation and depriving respondents would be discriminatory.
ISSUE
Whether or not an employer whose business operations ceased due to serious business
losses or financial reverses is obliged to pay separation pay to its employees separated by
reason of such closure.
HELD
NO. the companys practice of giving one moths pay for every year of service could no longer be continued
precisely because the company could not afford it anymore. It was forced to close down on account of
accumulated losses of over P20 billion. The fact that less separation benefits were granted when the company
finally met its business death cannot be characterized as discrimination. Such action was dictated not by a
discriminatory management option but by its complete inability to continue its business life due to
accumulated losses. Indeed, one cannot squeeze blood out of a dry stone. To require it to continue being
generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most
revolting to the conscience.
SERRANO V. NLRC
323 SCRA 445
MENDOZA, J.
FACTS
Ruben Serrano was hired by Isetann Department Store as a security checker to apprehend shoplifters and
prevent pilferage of merchandise. He was initially hired a contractual but he eventually became a regular
employee on April 4, 1985. In 1988, he became the head of the Security Checkers Section of Isetann. In 1991,
as a cost-cutting measure, Isetann decided to phase out its entire security section and engage the services of an
independent security agency. On October 11, 1991, Serrano was given a letter which provides the following:
In view of the retrenchment program of the company, we hereby reiterate our verbal notice to you of your
termination as Security Section Head effective October 11, 1991. The loss of his employment prompted
Serrano to file a complaint for illegal dismissal, illegal layoff, unfair labor practice, underpayment of wages
and nonpayment of salary and overtime pay.
ISSUE
What are the sanctions for violations of the notice requirements in Articles 282 and 283 of
the Labor Code?
HELD
In the case at bar, petitioner was given a notice of termination on October 11, 1991. On the same day, his
services were terminated. He was thus denied his right to be given written notice before the termination of his
employment and the question is the appropriate sanction for the violation of petitioners right. In the case of
Wenphil Corp. v. NLRC, the court ruled that it will be highly prejudicial to the interest of the employer to
impose on him the services of an employee who has been shown to be guilty of the charges that warranted his
dismissal from employment. The employer must nevertheless held to account for the failure to extend to the
employee the right to investigation before causing his dismissal. Considering the circumstances of the case,
the employer was ordered to indemnify the employee the amount of P1,000.00. The measure of this award
depends on the facts of each case and the gravity of the emission committed by the employer. The number of
cases involving dismissals without the requisite notice to the employee, although effected for just or
authorized causes, suggests that the imposition of fire for violation of the notice requirement has not been
effective in deterring violations of the notice requirement. The remedy is to order the payment to the employee
of the full backwages from the time of his dismissal until the court finds that the dismissal was for a just cause.
But otherwise, his dismissal must be upheld and he should not be reinstated. This is because his dismissal is

ineffectual. For the same reason, if an employee is laid off for any of the causes in Articles 283-284 but
the employer did not give him and the DOLE a 30-day written notice of termination in advance, then the
termination of his employment should be considered ineffectual and he should be paid backwages. However,
the termination of his employment should not be considered void but should simply be paid sepration pay as
provided in Article 283 in addition to backwages.
ANABE VS ASIAKONSTRUCT
Petitioner Virgilio Anabe was dismissed from service by respondent Asian Construction (Asiakonstrukt) on the
ground of retrenchment. He thus filed a complaint for illegal dismissal and money claims.
Asiakonstrukt failed to submit its audited financial statements within the two years that the case was pending
before the labor arbiter. It submitted the documents only when the case was on appeal with the National Labor
Relations Commission (NLRC). Anabe contended that their submission was belated. Was this contention
meritorious?
Ruling: Yes.
Indubitably, the NLRC is not precluded from receiving evidence on appeal as technical rules of evidence are
not binding in labor cases. There is, however, a caveat to this policy. The delay in the submission of evidence
should be clearly explained and should adequately prove the employers allegation of the cause for
termination. In the present case, Asiakonstrukt preferred no explanation behind the belated submission. And
the financial statements it submitted covered the period 1998-2000. Further, note that the audited financial
statement covering the period 1998-2000 was prepared in April 2001, which begs the question of how the
management knew at such date of the companys huge losses to justify petitioners retrenchment in 1999.
Furthermore, from the certification issued by the Securities and Exchange Commission (SEC), it would appear
that Asiakonstrukt failed to submit its financial statements to the SEC, as required under the law, for 19982000 and 2003-2005, thereby lending credence to petitioners theory that the financial statements submitted on
appeal may have been fabricated. Indeed, Asiakonstrukt could have easily submitted its audited financial
statements during the pendency of the proceedings at the labor arbiters level, especially considering that it
was in late 2001 that the case was decided.
For failure then of Asiakonstrukt to clearly and satisfactorily substantiate its financial losses, the dismissal of
petitioner on account of retrenchment is unjustified. Petitioner is thus entitled to the twin reliefs of payment of
backwages and other benefits from the time of his dismissal up to the finally of this Courts Decision, and
reinstatement without loss of seniority rights or, in lieu thereof, payment of separation pay. (Virgilio G. Anabe
vs. Asian Construction (Asiakonstrukt), et. a. G.R. No. 183233, December 23, 2009).

FACTS
Cheniver is a corporation operating its printing business in Makati. The respondents are members of the labor
union and former employees of Cheniver.
June 5, 1992 Cheniver informed its employees that it will transfer its operations to Batangas. Reasons for the
transfer are expiration of lease contract on the premises of the Makati palnt, and local authorities action to
force out Chenivers operations from Makati because of alleged hazards to residents nearby.
Cheniver gave its employees until the end of June to inform management if they wanted with Cheniver in its
transfer, otherwise it would hire replacements. Aug1 was the scheduled start of operations in the new plant in
Batangas.

Aug 4, 1992 Cheniver wrote its employees to report to the new location within 7days, otherwise they will be
deemed to have lost interest in the job and would be replaced. However, no one reported for work in batangas,
even after extension of period of time to report to work.

- 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. xxx

Respondents filed a complaint for unfair labor practice and illegal dismissal, and demanded separation pay
(among others).

Reasoning

LA ruled that the transfer of operations was valid and absolved cheniver of charges for unfair labor practice
and illegal dismissal. It however ordered payment of separation pay. NLRC affirmed.
cheniver contends that the transfer of its business is neither closure nor retrenchment, thus separation pay
should not be awarded. Also, employees were not terminated but they resigned because they find the new site
to far from their residences

ISSUE: WON employees are entitled to separation pay considering that the transfer of the plant was valid

- there appears no complete dissolution of Chenivers business undertaking but the relocation of its plant to
Batangas, in our view, amounts to cessation of petitioner's business operations in Makati. It must be stressed
that the phrase closure or cessation of operation of an establishment or undertaking not due to serious
business losses or reverses under Art. 283 includes both complete cessation of all business operations and the
cessation of only part of a company's business
- There is no doubt that petitioner has legitimate reason to relocate its plant because of the expiration of the
lease contract on the premises it occupied. That is its prerogative. But even though the transfer was due to a
reason beyond its control, Cheniver has to accord its employees some relief in the form of severance pay.
- Since the closure of the plant is not on account of serious business losses, Cheniver shall give respondents
separation pay equivalent to at least 1 month or month pay for every year of service

HELD: YES
Ratio Art. 283 of the Labor Code provides (in part):
ART. 283. Closure of establishment and reduction of personnel. - The employer may 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
xxx

- that the employees resigned is not convincing. The transfer of Cheniver to another place hardly accessible to
its workers resulted in the latter's untimely separation from the service not to their own liking, hence, not
construable as resignation
Disposition: petition denied. NLRC resolutions AFFIRMED