BENEDICTO A. CAJUCOM VII, petitioner, vs.

TPI PHILIPPINES CEMENT CORPORATION, TPI

PHILIPPINES VINYL CORPORATION, AND THUN TRITASAVIT, respondents.

FACTS:

TPI Philippines Cement Corporation (TP Cement) and TPI Philippines Vinyl Corporation (TP Vinyl), respondents
employed Atty. Benedicto A. Cajucom VII, petitioner, as Vice-President for Legal Affairs.

As a result of the economic slowdown, TP Cement, having no viable projects, dissolved its operations. With respect to TP
Vinyl, it shifted its business from production to marketing and trading of Thai Petrochemical products. Thus, respondents
implemented cost-cutting measures resulting in the retrenchment or termination from the service of their employees,
including petitioner.

On December 3, 1998, respondents sent petitioner a notice terminating his services effective December 30, 1998.
Simultaneously, respondents, on the same day, filed with the Department of Labor and Employment (DOLE) an
Establishment Termination Report of petitioners retrenchment from the service. On January 12, 1999, petitioner filed
with the Office of the Labor Arbiter a complaint for illegal dismissal against respondents.

On March 31, 1999, the Labor Arbiter ruled that respondents failed to adduce sufficient evidence to show that their alleged
losses are substantial and imminent and concluded that petitioner was illegally dismissed from employment

Upon appeal, the NLRC reversed the Labor Arbiters Decision. Both parties filed a motion for reconsideration but it was
denied by the NLRC.

Petitioner then filed a petition for certiorari with the CA alleging that the NLRC committed grave abuse of discretion in
finding that the termination of petitioners employment is justified.

The CA then rendered the assailed Decision affirming with modification the NLRCs Decision. The CA denied petitioners
motion for reconsideration. Hence, this appeal.

ISSUE:

Whether or not the respondents are illegally dismissed.

RULING:

Retrenchment, under Article 283 of the Labor Code, as amended, is recognized as an authorized cause for the dismissal of
an employee from the service.

To be valid, three requisites must concur, as provided in Article 283 of the Labor Code, as amended, namely: (1)
The retrenchment is necessary to prevent losses and the same is proven; (2) Written notice to the employees and
to the DOLE at least one month prior to the intended date thereof; and (3) Payment of separation
pay equivalent to one month pay or at least month pay for every year of service, whichever is higher.

The SC ruled that CA is correct in finding that respondents suffered from financial losses relying on the audited
reports[12] prepared by SGV & Co. Petitioner insists that actual, not probable losses, justify retrenchment. Article
283 (quoted earlier) entails, among others, only a situation where there is retrenchment to prevent
losses.[14] The phrase to prevent losses means that retrenchment or termination from the service of some employees is
authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or
realized.[15] Evidently, actual losses need not set in prior to retrenchment.

Also, following the provision of Article 283, the employer shall serve notice of retrenchment to prevent losses on the
worker and the DOLE at least one month before the intended date thereof. However, respondents failed to comply with
the one-month notice requirement.

Considering that petitioner was separated from the service due to an authorized cause but that respondents did not
comply with the one-month notice requirement, petitioner is entitled to an award of separation pay equivalent to
one-half (1/2) months pay for every year of service (with a fraction of at least six (6) months considered one (1)
whole year). Since he had been employed for four (4) years, or from June 1, 1995 to December 30, 1998, with a monthly
salary of P80,000.00, he should be paid P160,000.00 as separation pay.