FE S. SEBUGUERO, CARLOS ONG, NENE MANAOG, JUANITO CUSTODIO, CRISANTA LACSAM, SATURNINO GURAL, WILMA BALDERA, LEONILA VALDEZ, FATIMA POTESTAD, EVANGELINE AGNADO, RESTITUTO GLORIOSO, JANESE DE LOS REYES, RODOLFO SANCHEZ, WILMA ORBELLO, DAISY PASCUA, and ALEX MASAYA, vs. NATIONAL LABOR RELATIONS…
- G.R. Number: G.R. No. 115394
- Promulgated: 1995-09-27
- Ponente: Davide, Jr., J.
Doctrine
## Facts of the Case Petitioners were employees of GTI Sportswear Corporation (GTI), a company manufacturing and exporting garments. On January 22, 1991, GTI issued "temporary lay-off" notices to 38 regular employees, including the petitioners, citing lack of work and losses due to canceled orders and the 1990 garments embargo. Believing the lay-off was a ploy to dismiss them due to union activities and a violation of their security of tenure, the petitioners filed complaints for illegal dismissal, unfair labor practice, underpayment of wages, and non-payment of overtime and 13th-month pay. GTI argued that it was its prerogative to temporarily lay off employees for up to six months to prevent losses. It claimed inability to recall the employees after six months due to continued cancellations of job orders and offered severance pay. While 22 employees accepted the separation pay, petitioners did not. The Labor Arbiter found GTI liable for constructive dismissal, underpayment of wages, and 13th-month pay differentials, awarding back wages, separation pay in lieu of reinstatement, and attorney's fees. The Labor Arbiter recognized the initial justification for temporary lay-off but ruled that the failure to recall petitioners after six months constituted constructive dismissal. The NLRC modified the Labor Arbiter's decision, agreeing that the initial lay-off was valid but disagreeing with the award of back wages, proportionate 13th-month pay for 1991, and attorney's fees. The NLRC held that a continuing lack of work justified retrenchment, not constructive dismissal, and thus deleted the awards. Petitioners then filed a special civil action for certiorari, arguing that the NLRC gravely abused its discretion. ## Issues 1. Did the NLRC err in ruling that there was a valid ground for termination, specifically retrenchment, and in deleting the award of back wages? 2. Did the NLRC err in deleting the award of proportionate 13th-month pay for 1991? 3. Did the NLRC err in deleting the award of attorney's fees? ## Decision / Rationale **Issue 1:** The Court **partially granted** the petition. It affirmed the NLRC's finding that there was a valid ground for termination, specifically retrenchment due to economic losses and lack of work. Both the Labor Arbiter and the NLRC found that GTI was suffering and would continue to suffer serious losses. The Court clarified that while the temporary lay-off was justified, it could not indefinitely exceed six months, after which employees must either be recalled or permanently retrenched. However, the Court found that GTI failed to comply with the procedural requirements for a valid retrenchment under Article 283 of the Labor Code, specifically the mandatory written notices to both the employees and the Department of Labor and Employment (DOLE) one month prior to the intended date of retrenchment. This failure rendered the retrenchment merely defective, not illegal, because the substantive cause for retrenchment (losses) was proven. Following established jurisprudence, where termination is for a just and valid cause but without due process, the dismissal is upheld, but the employer must be sanctioned. The Court affirmed the deletion of back wages by the NLRC but ordered GTI to pay each petitioner **P2,000.00** as indemnification for failure to observe due process. **Issue 2:** The Court **reinstated** the award of proportionate 13th-month pay for 1991. The NLRC deleted this award without providing a sufficient explanation or legal basis, while the Labor Arbiter had adequately justified it. **Issue 3:** The Court **reinstated** the award of attorney's fees but **reduced** the amount. Petitioners are entitled to attorney's fees under Article 2208, paragraph 7 of the Civil Code, as they were compelled to litigate to protect their rights. The ten percent (10%) provided in Article 111 of the Labor Code is the maximum, allowing for a reasonable amount to be awarded. The Court deemed **P25,000.00** as a…
Keywords
G.R. No. 115394, Rule 65 of the Rules of Court, grave abuse of discretion, National Labor Relations Commission (NLRC), NLRC NCR CA Case No. 004673-93, back wages, 13th month pay, attorney's fees, temporary lay-off, illegal dismissal, unfair labor practice, underpayment of wages, security of tenure, constructive dismissal, separation pay, Art. 286 of the Labor Code, suspension of employer-employee relationship, retrenchment, strained relations principle, complainants