494 Phil. 114
GARCIA, J.:
The material facts may be briefly stated, as follows:
- Decision dated 16 November 2001,[1] reversing and setting aside an earlier decision of the National Labor Relations Commission (NLRC); and
- Resolution dated 8 January 2002,[2] denying petitioner’s motion for reconsideration.
WHEREFORE, judgment is hereby rendered declaring as illegal the termination of complainants and ordering respondents to reinstate them to their positions with full backwages which as of July 30, 1998 have already amounted to P339,768.00. Respondents are also ordered to pay complainants the amount of P2,775.00 representing the unpaid service incentive leave pay of Parohinog, Lescano and Cagabcab an the amount of P19,239.96 as payment for 1997 13th month pay as alluded in the above computation.Therefrom, JAKA went on appeal to the NLRC, which, in a decision dated August 30, 1999,[4] affirmed in toto that of the Labor Arbiter.
If complainants could not be reinstated, respondents are ordered to pay them separation pay equivalent to one month salary for very (sic) year of service.
SO ORDERED.
WHEREFORE, premises considered, the instant motion for reconsideration is hereby GRANTED and the challenged decision of this Commission [dated] 30 August 1999 and the decision of the Labor Arbiter xxx are hereby modified by reversing an setting aside the awards of backwages, service incentive leave pay. Each of the complainants-appellees shall be entitled to a separation pay equivalent to one month. In addition, respondents-appellants is (sic) ordered to pay each of the complainants-appellees the sum of P2,000.00 as indemnification for its failure to observe due process in effecting the retrenchment.Their motion for reconsideration having been denied by the NLRC in its resolution of April 28, 2000,[6] respondents went to the Court of Appeals via a petition for certiorari, thereat docketed as CA-G.R. SP No. 59847.
SO ORDERED.
WHEREFORE, the decision dated January 28, 2000 of the National Labor Relations Commission is REVERSED and SET ASIDE and another one entered ordering respondent JAKA Foods Processing Corporation to pay petitioners separation pay equivalent to one (1) month salary, the proportionate 13th month pay and, in addition, full backwages from the time their employment was terminated on August 29, 1997 up to the time the Decision herein becomes final.This time, JAKA moved for a reconsideration but its motion was denied by the appellate court in its resolution of January 8, 2002.
SO ORDERED.
“I. WHETHER OR NOT THE COURT OF APPEALS CORRECTLY AWARDED ‘FULL BACKWAGES’ TO RESPONDENTS.As we see it, there is only one question that requires resolution, i.e. what are the legal implications of a situation where an employee is dismissed for cause but such dismissal was effected without the employer’s compliance with the notice requirement under the Labor Code.
II. WHETHER OR NOT THE ASSAILED DECISION CORRECTLY AWARDED SEPARATION PAY TO RESPONDENTS”.
“Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta vs. National Labor Relations Commission. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of ‘dismiss now, pay later,’ which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer.The difference between Agabon and the instant case is that in the former, the dismissal was based on a just cause under Article 282 of the Labor Code while in the present case, respondents were dismissed due to retrenchment, which is one of the authorized causes under Article 283 of the same Code.xxx xxx xxx
The violation of petitioners’ right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules,” (Emphasis supplied).
“A careful study of the evidence presented by the respondent-appellant corporation shows that the audited Financial Statement of the corporation for the periods 1996, 1997 and 1998 were submitted by the respondent-appellant corporation, The Statement of Income and Deficit found in the Audited Financial Statement of the respondent-appellant corporation clearly shows the following in 1996, the deficit of the respondent-appellant corporation was P188,218,419.00 or 94.11% of the stockholder’s [sic] equity which amounts to P200,000,000.00. In 1997 when the retrenchment program of respondent-appellant corporation was undertaken, the deficit ballooned to P247,222,569.00 or 123.61% of the stockholders’ equity, thus a capital deficiency or impairment of equity ensued. In 1998, the deficit grew to P355,794,897.00 or 177% of the stockholders’ equity. From 1996 to 1997, the deficit grew by more that (sic) 31% while in 1998 the deficit grew by more than 47%.Noteworthy it is, moreover, to state that herein respondents did not assail the foregoing finding of the NLRC which, incidentally, was also affirmed by the Court of Appeals.
The Statement of Income and Deficit of the respondent-appellant corporation to prove its alleged losses was prepared by an independent auditor, SGV & Co. It convincingly showed that the respondent-appellant corporation was in dire financial straits, which the complainants-appellees failed to dispute. The losses incurred by the respondent-appellant corporation are clearly substantial and sufficiently proven with clear and satisfactory evidence. Losses incurred were adequately shown with respondent-appellant’s audited financial statement. Having established the loss incurred by the respondent-appellant corporation, it necessarily necessarily (sic) follows that the ground in support of retrenchment existed at the time the complainants-appellees were terminated. We cannot therefore sustain the findings of the Labor Arbiter that the alleged losses of the respondent-appellant was [sic] not well substantiated by substantial proofs. It is therefore logical for the corporation to implement a retrenchment program to prevent further losses.”[10]
“The rule, therefore, is that in all cases of business closure or cessation of operation or undertaking of the employer, the affected employee is entitled to separation pay. This is consistent with the state policy of treating labor as a primary social economic force, affording full protection to its rights as well as its welfare. The exception is when the closure of business or cessation of operations is due to serious business losses or financial reverses; duly proved, in which case, the right of affected employees to separation pay is lost for obvious reasons. xxx”. (Emphasis supplied)WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed decision and resolution of the Court of Appeals respectively dated November 16, 2001 and January 8, 2002 are hereby SET ASIDE and a new one entered upholding the legality of the dismissal but ordering petitioner to pay each of the respondents the amount of P50,000.00, representing nominal damages for non-compliance with statutory due process.