CASE DIGEST IN LABOR

16. MAYA FARMS EMPLOYEES ORGANIZATION vs. NATIONAL LABOR RELATIONS

COMMISSION
G.R. No. 106256
December 28, 1994

FACTS:
Herein private respondents Maya Farms, Inc. and Maya Realty and Livestock
Corporation belong to the Liberty Mills group of companies. Petitioners, on the other hand, are
the exclusive bargaining agents of the employees of Maya Farms, Inc. and the Maya Realty and
Livestock Corporation.

Private respondents announced the adoption of an early retirement program as a cost-

cutting measure considering that their business operations suffered major setbacks over the
years. The program was voluntary and could be availed of only by employees with at least eight
(8) years of service.

Dialogues were thereafter conducted to give the parties an opportunity to discuss the
details of the program. Accordingly, the program was amended to reduce the minimum
requirement of eight (8) years of service to only five (5) years. However, the response to the
program was nil. There were only a few takers.

To avert further losses, private respondents were constrained to look into the companies'
organizational set-up in order to streamline operations. Consequently, the early retirement
program was converted into a special redundancy program intended to reduce the work force to
an optimum number so as to make operations more viable. There were 69 employees from the
two companies availed of the special redundancy program.

The two companies sent letters to sixty-six (66) employees informing them that their
respective positions had been declared redundant. The notices likewise stated that their
services would be terminated effective thirty (30) days from receipt thereof. Separation benefits,
including the conversion of all earned leave credits and other benefits due under existing CBAs
were thereafter paid to those affected.

A notice of strike was filed by the petitioners which accused private respondents, among
others, of unfair labor practice, violation of CBA and discrimination. Conciliation proceedings
were held by the National Conciliation and Mediation Board (NCMB) but the parties failed to
arrive at a settlement. Petitioners averred that in the dismissal of sixty-six (66) union officers and
members on the ground of redundancy, private respondents circumvented the provisions in their
CBA, which provides: “LIFO RULE. In all cases of lay-off or retrenchment resulting in
termination of employment in the line of work, the Last-In-First-Out (LIFO) Rule must always be
strictly observed.”

Petitioners also alleged that the companies' claim that they were in economic crisis was
fabricated because in 1990, a net income of over 83 million pesos was realized by Liberty Flour
Mills Group of Companies.

Furthermore, with the termination of the sixty-six (66) employees pursuant to the special
redundancy program, the remaining work force, especially the drivers, became overworked and
overburdened so much so that they found themselves doing overtime work and reporting for
duty even during rest days.

Invoking the workers' constitutional right to security of tenure, petitioners prayed for the
reinstatement of the sixty-six (66) employees and the payment of attorney's fees as they were
constrained to hire the services of counsel in order to protect the workers' rights. Private
respondents contend that their decision to implement a special redundancy program was an
exercise of management prerogative which could not be interfered with unless it is shown to be
tainted with bad faith and ill motive. Public respondent rendered a decision confirming the
legality of the separation of the 66 employees of management thereby dismissing the charges of
violation of CBA and unfair labor practice on the part of management.

Not satisfied with the above-quoted decision, petitioners interposed the instant petition.

ISSUES
1. Whether the termination of the sixty-six (66) employees was in accordance with Article
283 of the Labor Code
2. Whether the termination of the sixty-six (66) employees was in accordance with the LIFO
rule in the CBA
3. Whether the payment or offer of payment can substitute for the 30-day required notice
prior to termination

HELD
(1) YES. The termination of the sixty-six employees was done in accordance with Article
283 of the Labor Code. The basis for this was the companies' study to streamline operations so
as to make them more viable. Positions which overlapped each other, or which are in excess of
the requirements of the service, were declared redundant.
Article 283 provides the closure of an establishment and reduction of personnel, the employer
may also terminate the employment of any employee due to the installation of labor-saving
devises, 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 in the
provisions of this title, by serving a written notice on the workers and the Department of Labor
and Employment at least one (1) month before the intended date thereof. In case of
retrenchment to prevent losses of operations of establishment or undertaking not due to serious
business losses or financial reverses, the one (1) month pay or at least one-half (½) pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
The Court fully agree with the findings and conclusions of the public respondent on the issue of
termination.
A close examination of the positions retained by management show that said positions such as
egg sorter, debonner were but the minimal positions required to sustain the limited
functions/operations of the meat processing department. In the absence of any evidence to
prove bad faith on the part of management in arriving at such decision, which records on hand
failed to show in instant case, the rationality of the act of management in this regard must be
sustained. While it may be true that the Liberty Flour Mills Group of Companies as a whole
posted a net income of P83.3 Million, it is admitted that with respect to operations of the meat
processing and livestock which were undertaken by herein companies sustained losses in the
sum of P2,257,649.88.
(2) YES. The NLRC correctly held that private respondents did not violate the LIFO rule
under Section 2, Article III of the CBA which provides:
It is not disputed that the LIFO rule applies to termination of employment in the line of work.
Verily, what is contemplated in the LIFO rule is that when there are two or more employees
occupying the same position in the company affected by the retrenchment program, the last one
employed will necessarily be the first to go.
In the case under consideration, specifically with respect to Maya Farms, several positions were
affected by the special involuntary redundancy program. These are packers, egg
sorters/stockers, drivers. In the case of packers, prior to the involuntary redundancy program,
twenty-one employees occupied the position of packers. Out of this number, only 5 were
retained. The same is true with respect to egg sorters. The egg sorters employed on or before
April 26, 1972 were retained. All those employed after said date were separated.
(3) Finally, contrary to petitioners' contention, there is nothing on record to show that the
30-day notice of termination to the workers was disregarded and that the same substituted with
separation pay by private respondents. As found by public respondent, written notices of
separation were sent to the employees on January 17, 1992. The notices expressly stated that
the termination of employment was to take effect one month from receipt thereof. Therefore, the
allegation that separation pay was given in lieu of the 30-day notice required by law is baseless.
 17. EMCO PLYWOOD CORPORATION vs. PERFERIO ABELGAS
G.R. No. 148532
April 14, 2004

FACTS:

EMCO is a domestic corporation engaged in the business of wood processing, operating

through its sawmill and plymill sections where respondents used to be assigned as regular
workers. EMCO, represented by Lim, informed the DOLE of its intention to retrench some of its
workers. The intended retrenchment was grounded on purported financial difficulties occasioned
by alleged lack of raw materials, frequent machinery breakdown, low market demand and
expiration of permit to operate its sawmill department. A memorandum was thereafter issued by
EMCO, addressed to all its foremen, section heads, supervisors and department heads.

The Labor Arbiter dismissed the claim of the respondent employees. The NLRC affirmed
the decision of the Labor Arbiter. The respondents then filed Petition for Certiorari under Rule
65 with the Court of Appeals. The CA held that the evidence was insufficient to justify a ruling in
favor of EMCO, which had not complied with the one-month prior notice requirement under the
Labor Code. The appellate court added that the corporation had not served on the employees
the required notice of termination.

The CA also held that before EMCO resorted to retrenchment, the latter had failed to
adduce evidence of its losses and to prove that it had undertaken measures to prevent the
occurrence of its alleged actual or impending losses. All in all, the appellate court concluded
that the retrenchment was illegal, because of EMCO's failure to comply with the legal
requirements. Hence, this Petition.
ISSUES:
1. Whether or not, the retrenchment was valid and proper;
2. Whether or not, the quitclaim is proper.
HELD:

(1) Retrenchment is one of the authorized causes for the dismissal of employees.
Resorted to by employers to avoid or minimize business losses, it is recognized under Article
283 of the Labor Code. Not every loss incurred or expected to be incurred by a company will
justify retrenchment. The losses must be substantial and the retrenchment must be reasonably
necessary to avert such losses. The employer bears the burden of proving the existence or the
imminence of substantial losses with clear and satisfactory evidence that there are legitimate
business reasons justifying a retrenchment. Should the employer fail to do so, the dismissal
shall be deemed unjustified.

Retrenchment is a management prerogative consistently recognized and affirmed by this

Court. It is, however, subject to faithful compliance with the substantive and the procedural
requirements laid down by law and jurisprudence. It must be exercised essentially as a
measure of last resort, after less drastic means have been tried and found wanting.

(2) Since the retrenchment was illegal and of no effect, the Quitclaims were therefore not
voluntarily entered into by respondents. Their consent was similarly vitiated by mistake or fraud.
The law looks with disfavor upon quitclaims and releases by employees pressured into signing
by unscrupulous employers minded to evade legal responsibilities. As a rule, deeds of release
or quitclaim cannot bar employees from demanding benefits to which they are legally entitled or
from contesting the legality of their dismissal. The acceptance of those benefits would not
amount to estoppel.
 22. Accessories Specialists vs Alabanza
G.R. No. 168985
July 23, 2008

FACTS

On September 27, 2002, respondent Alabanza filed a complaint against petitioners Arts 21 and
Hashimoto for and in behalf of her husband for non-payment of salaries, separation pay and
13th month pay. Respondent’s husband was the Vice-President, Manager and Director of
Arts21 and had been with the company from 1975 to 1997. He was compelled by the owner,
Hashimoto, to file his involuntary resignation on October 17, 1997 on the ground that Arts 21
allegedly suffered losses. Respondent’s husband demanded payment of his money claims upon
resignation but was told that rank and file employees will be paid first and thus waited for his
turn. Respondent’s husband made several demands but Arts 21 just kept on assuring him that
he will be paid his money claims. Respondent’s husband died on August 5, 2002 with his claims
still unpaid.

Petitioners aver that the action of the respondents for the recovery of unpaid wages, separation
pay, and the 13th month pay has already prescribed since the action was filed almost 5 years
from the time Jones severed his employment from ASI. Jones filed his resignation on 31
October 1997, while the complaint before the La was instituted on 29 September 2002.
Petitioners contend that the 3-year prescriptive period under Article 291 of the Labor Code had
already set in, thereby barring all of respondent's money claims arising from their employer-
employee relationship.

ISSUE

Whether or not ASI is responsible for the delay in the institution of the complaint

HELD

Based on the findings of fact of the LA, it was ASI which was responsible for the delay in the
institution of the complaint. When Jones filed his resignation, he immediately asked for the
payment of his money claims. However, the management of ASI promised him that he would be
paid immediately after the claims of the rank-and-file employees had been paid. Jones relied on
this representation. Unfortunately, the promise was never fulfilled even until the time of Jones'
death.

In light of these circumstances, we can apply the principle of PROMISSORY ESTOPPEL, which
is a recognized exception to the 3-year prescriptive period enunciated in Article 291 of the Labor
Code.

PROMISSORY ESTOPPEL may arise from the making of a promise, even though without
consideration, if it was intended that the promise should be relied upon, as in fact it was relied
upon, and if a refusal to enforce it would virtually sanction the perpetration of fraud or would
result in other injustice.

Promissory estoppel presupposes the existence of a promise on the part of one against whom
estoppel is claimed. The promise must be plain and unambiguous and sufficiently specific so
that the court can understand the obligation assumed and enforce the promise according to its
terms. In order to make out a claim of promissory estoppel, a party bears the burden of
establishing the following elements: a promise was reasonably expected to induce action or
forbearance; such promise did, in fact, induce such action or forbearance; and the party
suffered detriment as a result.
All the requisites of promissory estoppel are present in this case. Jones relied on the promise of
ASI that he would be paid as soon as the claims of all rank-and-file employees had been paid. If
not for this promise that he had held on to until the time of his death, we see no reason why he
would delay filing the complaint before the LA.
Thus, we find ample justification not to follow the prescriptive period imposed under
Article 291 of the Labor Code. Great injustice will be committed if we will brush aside the
employee's claims on a mere technicality, especially when it was petitioner's own action that
prevented respondent from interposing the claims within the required period.