AIKO ELENI PALER Alabang Country Club vs. NLRC GR No.

157611 (Retrenchment) Facts: Petitioner Alabang Country Club Inc. (ACCI), is a stock, non-profit corporation that operates and maintains a country club and various sports and recreational facilities for the exclusive use of its members. Sometime in 1993, Francisco Ferrer, then President of ACCI, requested its Internal Auditor, to conduct a study on the profitability of ACCIs Food and Beverage Department (F & B Department). Consequently, report showed that from 1989 to 1993, F & B Department had been incurring substantial losses. Realizing that it was no longer profitable for ACCI to maintain its own F & B Department, the management decided to cease from operating the department and to open the same to a contractor, such as a concessionaire, which would be willing to operate its own food and beverage business within the club. Thus, ACCI sent all F & B Department employees individual letters informing them that their services were being terminated and that they would be paid separation pay. The Union in turn, with the authority of individual employees, filed a complaint for illegal dismissal. Issue: WON the employees were illegally dismissed. Decision: The employees were not illegally dismissed. The Court held that retrenchment on the ground of serious business losses is allowed subject to the conditions that (1) the losses expected should be substantial and not merely de minimis in extent; (2) the substantial losses apprehended must be reasonably imminent as such imminence can be perceived objectively in good faith by the employer; (3) retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and (4) the alleged losses, if already realized and the expected imminent losses sought to be forestalled, must be proven by sufficient and convincing evidence. This Court, however, views the case as one involving closure of a business undertaking, not retrenchment. While retrenchment and closure of a business establishment or undertaking are often used interchangeably and are interrelated, they are actually two separate and independent authorized causes for termination of employment. Retrenchment is the reduction of personnel for the purpose of cutting down on costs of operations in terms of salaries and wages resorted to by an employer because of losses in operation of a business occasioned by lack of work and considerable reduction in the volume of business. Closure of a business or undertaking due to business losses is the reversal of fortune of the employer whereby there is a complete cessation of business operations to prevent further financial drain upon an employer who cannot pay anymore his employees since business has already stopped. One of the prerogatives of management is the decision to close the entire establishment or to close or abolish a department or section thereof for economic reasons, such as to minimize expenses and reduce capitalization. As in the case of retrenchment, however, for the closure of a business or a department due to serious business losses to be regarded as an authorized cause for terminating employees, it must be proven that the losses incurred are substantial and actual or reasonably imminent; that the same increased through a period of time; and that the condition of the company is not likely to improve in the near future. This Court finds that individual respondents were dismissed on the ground of closure or cessation of an undertaking not due to serious business losses or financial reverses, which is allowed under Article 283 of the Labor Code:
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 the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title

The closure of operation of an establishment or undertaking not due to serious business losses or financial reverses includes both the complete cessation of operations and the cessation of only part of a companys activities. For any bona fide reason, an employer can lawfully close shop anytime. Just as no law forces anyone to go into business, no law can compel anybody to continue the same. It would be stretching the intent and spirit of the law if a court interferes with managements prerogative to close or cease its business operations just because the business is not suffering from any loss or because of the desire to provide the workers continued employment. In fine, managements exercise of its prerogative to close a section, branch, department, plant or shop will be upheld as long as it is done in good faith to advance the employers interest and not for the purpose of defeating or circumventing the rights of employees under the law or a valid agreement.

AIKO ELENI PALER EASTERN OVERSEAS EMPLOYMENT CENTER VS. CECILIA GR NO. 143023 (Poor performance or gross inefficiency) Facts: Private respondent Bea Cecilia was hired as Senior Head Staff Nurse by Elbualy Group/Sultan Qaboos University Hospital (SQUH), the principal employer through its placement agency in the Philippines, petitioner Eastern Overseas Employment Center, Inc. (Eastern). Private respondent Beas placement with SQUH was subject to a three -(3) month probationary period during said contractual employment. When her probationary status ended, she still continued being in the employ of SQUH. She, like all other employees of the hospital, was also periodically subjected to performance evaluation. After an alleged poor evaluation of Beas performance as a nurse, she was transferred to the Neo-Natal Unit and her performance was supposedly under observation. Unsatisfied still of her performance, the Director of Nursing Services notified Bea that her contract would be terminated. She then filed a case of illegal dismissal against instant petitioner before the POEA Adjudication Office. The POEA Administrator held that private respondent Bea herein was illegally dismissed. The NLRC affirmed the Administrators decision and the CA denied Eaterns motion for reconsideration. Issue: WON Bea Cecilia was illegally dismissed. DECISION: Bea Cecilia was illegally dismissed. The Court agreed with the findings of the POEA Adjudication Office that Beas termination was illegal for failure of petitioner to prove the existence of a just or authorized cause for terminating her. Petitioner maintains that Bea was terminated from her employment because of her poor performance and lack of enthusiasm in doing her duties and responsibilities as a nurse. But the Court took cognizance of the fact that in any given workplace, not all of the employees perform in accordance with what is expected of them. As such, it is not uncommon that an employees work performance is found to be unsatisfactory. As a general concept, poor performance is equivalent to inefficiency and incompetence in the performance of official duties. Under Article 282 of the Labor Code, an unsatisfactory rating can be a just cause for dismissal only if it amounts to gross and habitual neglect of duties. The fact that an employees performance is found to be poor or unsatisfactory does not necessarily mean that the employee is grossly and habitually negligent of his duties. Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. In the present case, petitioner failed to present substantial evidence to prove that Beas alleged poo r performance in her duties as Senior Head Staff Nurse amounted to gross and habitual neglect. In the first place, petitioner failed to present any other evidence to prove that Beas work performance was indeed poor. Although petitioner contends that three separate evaluations of Beas work performance were conducted; that after the first evaluation, Bea was notified about the poor quality of her work; that following the second evaluation, she was given an intensive management assistance through a specialized training program; and, that only after the third evaluation was made that Bea was advised that her employment would be terminated, the Court found no error in the findings of the POEA and the NLRC that these claims of petitioner remain to be allegations since no substantial evidence was presented to prove them.

AIKO ELENI PALER AGABON VS. NLRC GR NO. 158693 (Effects of Dismissal; with just/authorized cause, no due process) Facts: Virgilio and Jenny Agabon worked for respondent Riviera HomeImprovements, Inc. as gypsum and cornice installers from January 1992 until Feb 1999. Their employment was terminated when they were dismissed for allegedly abandoning their work. Petitioners Agabon then filed a case of illegal dismissal. The LA ruled in favor of the spouses and ordered Riviera to pay them their money claims. The NLRC reversed the LA, finding that the Agabons were indeed guilty of abandonment. The CA modified the LA by ruling that there was abandonment but ordering Riviera to pay the Agabons money claims. The Agabons claim, among others that Riviera violated the requirements of notice and hearing when the latter did not send written letters of termination to their addresses. Riviera admitted to not sending the Agabons letters of termination to their last known addresses because the same would be futile, as the Agabons do not reside there anymore. However, it also claims that the Agabons abandoned their work. More than once, they subcontracted installation works for other companies. They already were warned of termination if the same act was repeated, still, they disregarded the warning. ISSUES 1. Whether the Agabons were illegally dismissed. 2. Whether Riviera violated the requirements of notice and hearing 3. Is the violation of the procedural requirements of notice and hearing for termination of employees a violation of the Constitutional due process? 4. What are the consequences of violating the procedural requirements of termination? RULING: Valid dismissal but violation of statutory due process = payment of nominal damages (P30,000) & balance of th 13 month pay, etc. 1. No. There was just cause for their dismissal, i.e., abandonment. Here, the Agabons were frequently absent from work for having performed installation work for another company, despite prior warning given by Riviera. This clearly establishes an intention to sever the employer-employee relationship between them, and which constitutes abandonment. 2. Yes. While the employer has the right to expect good performance, diligence, good conduct and loyalty from its employees, it also has the duty to provide just compensation to his employees and to observe the procedural requirements of notice and hearing in the termination of his employees. Procedure of termination (Omnibus Rules Implementing the Labor Code): a. A written notice to the employee specifying the grounds for termination and giving the employee reasonable opportunity to be heard b. A hearing where the employee is given the opportunity to respond to the charges against him and present evidence or rebut the evidence presented against him (if he so requests) c. A written notice of termination indicating that grounds have been established to justify his termination upon due consideration of all circumstances In this case, Riviera failed to notify the Agabons of their termination to their last known addresses. Hence, they violated the procedural requirement laid down by the law in the termination of employees. 3. No. Constitutional due process is that provided under the Constitution, which involves the protection of the individual against governmental oppression and the assurance of his rights In civil, criminal and administrative proceedings; statutory due process is that found in the Labor Code and its Implementing Rules and protects the individual from being unjustly terminated without just or authorized cause after notice and hearing. The two are similar in that they both have two aspects: substantive due process and procedural due process. However, they differ in that under the Labor Code, the first one refers to the valid and authorized causes of employment termination, while the second one refers to the manner of dismissal. A denial of statutory due process is not the same as a denial of Constitutional due process for reasons enunciated in Serrano v. NLRC. 4. The dismissal is valid, but Riviera should pay nominal damages to the Agabons in vindication of the latter for violating their right to notice and hearing. The penalty is in the nature of a penalty or indemnification, the amount dependent on the facts of each case, including the nature of gravity of offense of the employer. In this case, the Serrano doctrine was re-examined.

First, in the Serrano case, the dismissal was upheld, but it was held to be ineffectual (without legal effect). Hence, Serrano was still entitled to the payment of his backwages from the time of dismissal until the promulgation of the court of the existence of an authorized cause. Further, he was entitled to his separation pay as mandated under Art. 283. The ruling is unfair to employers and has the danger of the following consequences: a. The encouragement of filing frivolous suits even by notorious employees who were justly dismissed but were deprived of statutory due process; they are rewarded by invoking due process b. It would create absurd situations where there is just or authorized cause but a procedural infirmity invalidates the termination, ie an employee who became a criminal and threatened his co-workers lives, who fled and could not be faound c. It could discourage investments that would generate employment in the economy Second, the payment of backwages is unjustified as only illegal termination gives the employee the right to be paid full backwages. When the dismissal is valid or upheld, the employee has no right to backwages. ADDITIONAL NOTES: 1. Dismissals based on just causes: acts or omissions attributable to the employee; no right to claim backwages or to pay separation pay (separation pay is subject to exception, ie if termination is not based on serious misconduct or a conduct reflecting the moral depravity of a person, separation pay may be granted by reason of social justice) Dismissals based on authorized causes: involve grounds provided under the Labor Code; employee (and DOLE) is entitled the payment of separation pay (redundancy and installation of labor-saving devices: 1 month pay or 1 month/yr of service, whichever is higher; retrenchment and closure or cessation of business: 1 month pay or month per year of service, whichever is higher) Illegal termination: employee is entitled to the payment of full backwages as well as reinstatement without loss of seniority rights and other privileges, inclusive of allowances and other monetary claims from the time compensation was withheld until reinstatement; if reinstatement is not possible, separation pay shall be given.