Fuentes vs NLRC G.R. No.
110017 January 2, 1997 LAW INVOLVED
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,
DOCTRINE: This Court firmly holds that measures should be strictly implemented to ensure that retrenchment to prevent losses or the closing or cessation of operation of the establishment or
such constitutional mandate on protection to labor is not rendered meaningless by an erroneous undertaking unless the closing is for the purpose of circumventing the provisions of the title, by
interpretation of applicable laws. serving a written notice on the workers 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-
Facts:
saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay
Petitioners, numbering 75 in all, seek to set aside the decision of respondent NLRC reversing
equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of
that of the Labor Arbiter which granted their claims, for having been rendered with grave
service, whichever is higher. In case of retrenchment to prevent losses and in case of closure or
abuse of discretion amounting to lack or excess of jurisdiction.
cessation of operations of establishment or undertaking not due to serious business losses or
Petitioners were regular employees of private respondent Agusan Plantations, Inc., which
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half
was engaged in the operation of a palm tree plantation in Trento, Agusan del Sur, since
(1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months
September 1982. Claiming that it was suffering business losses which resulted in the
shall be considered one (1) whole year.
decision of the head office in Singapore to undertake retrenchment measures, private
respondent sent notices of termination to petitioners and the DOLE. ISSUE:
On 31 October 1990 petitioners filed with the DOLE office in Cagayan de Oro City a W/N petitoners' dismissal or retrenchment did not comply with the requirements of Art. 283 of the
complaint for illegal dismissal with prayer for reinstatement, backwages and damages Labor Code.
against private respondent Agusan Plantation, Inc., and/or Chang Chee Kong.
Respondent's Contention:
RULING: YES
That upon receipt of instructions from the head office in Singapore to implement retrenchment, We sustain petitioners. The ruling of the Labor Arbiter that there was no valid retrenchment is
private respondents conducted grievance conferences or meetings with petitioners' representative correct.
labor organization, the Association of Trade Unions through its national president Jorge Alegarbes,
its local president and its board of directors. Private respondents also contended that the 30-day Under Art. 283 retrenchment may be valid only when the following requisites are met: (a) it is to
notices of termination were duly sent to petitioners. prevent losses; (b) written notices were served on the workers and the Department of Labor and
Employment (DOLE) at least one (1) month before the effective date of retrenchment; and, (c)
Labor Arbiter: IN FAVOR OF PETITIONERS ordering private respondents to pay the former separation pay is paid to the affected workers.
separation pay equivalent to fifteen (15) days pay for every year of service plus salary differentials
and attorney's fees. The closure of a business establishment is a ground for the termination of the services of an
employee unless the closing is for the purpose of circumventing pertinent provisions of the Labor
NLRC: REVERSED Code. But while business reverses can be a just cause for terminating employees, they must be
sufficiently proved by the employer.
There is no question that an employer may reduce its work force to prevent losses. However, these
losses must be serious, actual and real. Otherwise, this ground for termination of employment
would be susceptible to abuse by scheming employers who might be merely feigning losses in their
business ventures in order to ease out employees.
Application
In the case before us, private respondents merely alleged in their answer and position paper their
financial state. Except for the allegations in their answer and position paper, private respondents
did not present any other documentary proof of their alleged losses which could have been easily
proven in the financial statements which unfortunately were not shown. Indeed, private
respondents failed to prove their claim of business losses. What they submitted to the Labor Arbiter
were mere self-serving documents and allegations. Private respondents never adduced evidence
which would show clearly the extent of losses they suffered as a result of lack of capital funding,
which failure is fatal to their cause.
As regards the requirement of notices of termination to the employees, it is undisputed that the
Notice of Retrenchment was submitted to the DOLE on 12 September 1990. However, culled from
the data, the termination of petitioners could not have validly taken effect either on 25 or 30
September 1990. The one-month notice of retrenchment filed with the DOLE and served on the
workers before the intended date thereof is mandatory. Private respondents failed to comply with
this requisite. The earliest possible date of termination should be 12 October 1990 or one (1) month
after notice was sent to DOLE unless the notice of termination was sent to the workers later than
the notice to DOLE on 12 September 1990, in which case, the date of termination should be at least
one (1) month from the date of notice to the workers. Petitioners were terminated less than a
month after notice was sent to DOLE and to each of the workers.
CONSTITUTIONAL MANDATE
We agree with the conclusion of the Labor Arbiter that the termination of the services of petitioners
was illegal as there was no valid retrenchment. Respondent NLRC committed grave abuse of
discretion in reversing the findings of the Labor Arbiter and ruling that there was substantial
compliance with the law. This Court firmly holds that measures should be strictly implemented to
ensure that such constitutional mandate on protection to labor is not rendered meaningless by an
erroneous interpretation of applicable laws.
