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44 Keng Hua Paper Products vs. Ainza, G.R. No. 224097, February 22, 2023

Keng Hua Paper Products terminated several employees in 2009 claiming financial losses from typhoon damage required retrenchment. The employees claimed illegal dismissal. The Court ruled the termination was illegal because Keng Hua failed to: (1) provide one month written notice to employees and DOLE; and (2) pay termination pay as required by law. Keng Hua also did not prove actual financial losses through audited statements or show other cost-cutting measures were considered before retrenchment. The termination therefore violated legal requirements for a valid retrenchment.

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237 views1 page

44 Keng Hua Paper Products vs. Ainza, G.R. No. 224097, February 22, 2023

Keng Hua Paper Products terminated several employees in 2009 claiming financial losses from typhoon damage required retrenchment. The employees claimed illegal dismissal. The Court ruled the termination was illegal because Keng Hua failed to: (1) provide one month written notice to employees and DOLE; and (2) pay termination pay as required by law. Keng Hua also did not prove actual financial losses through audited statements or show other cost-cutting measures were considered before retrenchment. The termination therefore violated legal requirements for a valid retrenchment.

Uploaded by

Salvador III V. Santos
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© © All Rights Reserved
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‭Keng Hua Paper Products vs. Ainza, G.R. No.

224097, February 22, 2023‬


‭FACTS:‬
‭Ainza‬‭was‬‭hired‬‭in‬‭July‬‭1981‬‭as‬‭a‬‭machine‬‭tender.‬‭Dela‬‭Cruz‬‭was‬‭hired‬‭in‬‭April‬‭1982‬‭but‬
‭resigned‬ ‭on‬ ‭26‬‭March‬‭2001‬‭to‬‭avail‬‭of‬‭his‬‭gratuity‬‭pay.‬‭He‬‭was‬‭rehired‬‭in‬‭May‬‭2001.‬‭Gelicami‬
‭was‬ ‭hired‬ ‭in‬ ‭February‬ ‭2002.‬ ‭All‬ ‭respondents‬ ‭alleged‬ ‭that‬ ‭they‬ ‭were‬ ‭stopped‬ ‭at‬ ‭the‬ ‭gate‬ ‭and‬
‭bluntly‬‭told‬‭them‬‭that‬‭they‬‭had‬‭no‬‭more‬‭jobs‬‭to‬‭do.‬ ‭Petitioners,‬‭on‬‭the‬‭other‬‭hand,‬‭claimed‬‭that‬
‭there‬ ‭was‬ ‭no‬ ‭illegal‬ ‭dismissal‬ ‭because‬ ‭Keng‬ ‭Hua‬ ‭ceased‬ ‭operating‬ ‭and‬ ‭there‬ ‭was‬ ‭no‬ ‭work‬‭for‬
‭respondents.‬ ‭As‬ ‭Keng‬ ‭Hua‬ ‭establishment‬ ‭was‬ ‭greatly‬ ‭affected‬ ‭by‬ ‭the‬ ‭flash‬ ‭floods‬ ‭caused‬ ‭by‬
‭typhoon‬ ‭Ondoy‬ ‭in‬ ‭late‬ ‭September‬ ‭2009.‬‭The‬‭floods‬‭seriously‬‭damaged‬‭Keng‬‭Hua's‬‭equipment.‬
‭Prior‬ ‭to‬ ‭typhoon‬ ‭Ondoy,‬‭Keng‬‭Hua‬‭was‬‭already‬‭suffering‬‭a‬‭decline‬‭in‬‭their‬‭income‬‭since‬‭2007.‬
‭Despite‬ ‭the‬ ‭petitioners'‬ ‭claim‬ ‭of‬ ‭cessation‬ ‭of‬ ‭operations.‬ ‭two‬ ‭years‬ ‭after‬ ‭the‬ ‭occurrence‬ ‭of‬
‭typhoon‬ ‭Ondoy,‬ ‭Keng‬ ‭Hua‬ ‭renewed‬ ‭its‬‭collective‬‭bargaining‬‭agreement‬‭(CBA)‬‭with‬‭the‬‭union.‬
‭The‬ ‭LA‬ ‭ruled‬ ‭there‬ ‭was‬ ‭no‬ ‭illegal‬ ‭dismissal.‬ ‭The‬ ‭NLRC‬ ‭affirmed‬ ‭the‬ ‭decision.‬ ‭The‬ ‭CA,‬
‭however,‬ ‭granted‬ ‭the‬ ‭petition.‬ ‭finding‬‭that‬‭they‬‭were‬‭retrenched‬‭and‬‭petitioners‬‭did‬‭not‬‭comply‬
‭with the legal requirements for a valid retrenchment.‬

I‭ SSUE:‬ ‭WON‬ ‭the‬ ‭respondents‬ ‭were‬ ‭illegally‬ ‭dismissed‬ ‭due‬ ‭to‬ ‭retrenchment‬‭to‬‭prevent‬‭losses.‬
‭(NO)‬

‭ ULING:‬‭There‬‭are‬‭two‬‭procedural‬‭requirements‬‭for‬‭a‬‭valid‬‭termination‬‭of‬‭employment‬‭under‬
R
‭Art‬ ‭298:‬ ‭(1)‬ ‭service‬ ‭of‬ ‭a‬ ‭written‬ ‭notice‬ ‭to‬ ‭the‬ ‭employees‬ ‭and‬ ‭to‬‭the‬‭DOLE‬‭at‬‭least‬‭one‬‭month‬
‭before‬‭the‬‭intended‬‭date‬‭thereof;‬‭and‬‭(2)‬‭payment‬‭to‬‭the‬‭employees‬‭of‬‭termination‬‭pay‬‭amounting‬
‭to‬ ‭one‬ ‭month‬‭pay‬‭or‬‭at‬‭least‬‭one-half‬‭month‬‭pay‬‭for‬‭every‬‭year‬‭of‬‭service,‬‭whichever‬‭is‬‭higher.‬
‭The‬ ‭Labor‬ ‭Code‬ ‭does‬ ‭not‬ ‭provide‬ ‭for‬ ‭exemptions‬ ‭from‬ ‭these‬ ‭two‬ ‭procedural‬ ‭requirements.‬‭In‬
‭this‬ ‭case,‬ ‭petitioners‬‭failed‬‭to‬‭show‬‭proof‬‭of‬‭compliance‬‭with‬‭the‬‭procedural‬‭requirements‬
‭for‬ ‭a‬ ‭valid‬ ‭termination‬ ‭of‬ ‭employment.‬ ‭First,‬ ‭Keng‬ ‭Hua‬ ‭failed‬ ‭to‬ ‭show‬ ‭any‬ ‭proof‬ ‭of‬ ‭such‬
‭written‬ ‭notice‬ ‭to‬ ‭any‬ ‭of‬ ‭the‬ ‭respondents‬ ‭or‬ ‭to‬ ‭the‬ ‭DOLE.‬ ‭That‬ ‭respondents‬ ‭were‬ ‭already‬ ‭on‬
‭temporary‬ ‭lay-off‬ ‭at‬ ‭the‬ ‭time‬‭notice‬‭should‬‭have‬‭been‬‭given‬‭to‬‭them‬‭is‬‭not‬‭an‬‭excuse‬‭to‬‭forego‬
‭the‬‭one-month‬‭written‬‭notice‬‭because‬‭by‬‭this‬‭time,‬‭their‬‭lay-off‬‭is‬‭to‬‭become‬‭permanent‬‭and‬‭they‬
‭were‬‭definitely‬‭losing‬‭their‬‭employment.‬‭Second,‬‭Keng‬‭Hua‬‭failed‬‭to‬‭show‬‭proof‬‭of‬‭payment‬‭of‬
‭termination‬‭pay‬‭to‬‭respondents.‬‭Further,‬‭Keng‬‭Hua‬‭failed‬‭to‬‭show‬‭before‬‭the‬‭LA‬‭and‬‭the‬‭NLRC‬
‭financial‬‭statements‬‭to‬‭prove‬‭its‬‭actual‬‭business‬‭losses.‬‭The‬‭CA‬‭even‬‭made‬‭a‬‭factual‬‭finding‬‭that‬
‭"there‬ ‭are‬ ‭no‬ ‭independent‬ ‭audited‬ ‭financial‬ ‭statements‬ ‭proving‬ ‭the‬ ‭alleged‬ ‭financial‬ ‭losses‬ ‭of‬
‭[Keng‬ ‭Hua]."‬ ‭There‬ ‭was‬ ‭also‬ ‭no‬ ‭showing‬ ‭that‬ ‭petitioners‬ ‭adopted‬ ‭other‬ ‭cost-saving‬ ‭measures‬
‭before‬ ‭resorting‬ ‭to‬ ‭retrenchment.‬ ‭There‬ ‭was‬ ‭no‬ ‭indication‬ ‭that‬ ‭petitioners‬ ‭used‬ ‭fair‬ ‭and‬
‭reasonable criteria, if at all, in determining who would be retrenched.‬

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