JAKA FOOD PROCESSING CORP VS.

PACOT
G.R. No. 151378. March 28, 2005
Garcia, J.:
FACTS:

Darwin Pacot, Robert Parohinog, David Bisnar, Marlon Domingo, Rhoel Lescano and Jonathan
Cagabcab were earlier hired by petitioner JAKA Foods Processing Corporation (JAKA, for short)
until the latter terminated their employment on August 29, 1997 because the corporation was in
dire financial straits.
It is not disputed, however, that the termination was effected without JAKA complying with the

requirement under Article 283 of the Labor Code regarding the service of a written notice upon
the employees and the Department of Labor and Employment at least one (1) month before the
intended date of termination.
Respondents separately filed with the regional Arbitration Branch of the National Labor

Relations Commission (NLRC) complaints for illegal dismissal, underpayment of wages and
nonpayment of service incentive leave and 13

th

month pay against JAKA and its HRD Manager,

Rosana Castelo.

After due proceedings, the Labor Arbiter rendered a decision

[3]

declaring the termination illegal

and ordering JAKA and its HRD Manager to reinstate respondents with full back wages, and
separation pay if reinstatement is not possible.
[4]

JAKA went on appeal to the NLRC, which, in a decision dated August 30, 1999,

toto that of the Labor Arbiter.

JAKA filed a motion for reconsideration. Acting thereon, the NLRC came out with another
decision modifying its earlier decision.

ISSUE:
W/N The employees are entitled for damages
HELD:

YES
Comparing this case to the ruling in Agabon vs. NLRC:
Agabon vs. NLRC

affirmed in

Present Case

Dismissal was based on a just cause

Respondents were dismissed due to

retrenchment,

which

is

one

of

the

authorized causes under Article 283 of the

same Code.
A dismissal for just cause under Article Dismissal for an authorized cause under
282 implies that the employee concerned Article 283 does not necessarily imply
has committed, or is guilty of, some delinquency or culpability on the part of
violation against the employer Does not the employee. Instead, the dismissal
require separation pay

process is initiated by the employers

exercise of his management prerogative
requires separation pay

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.

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.

Likewise, it is established that JAKA failed to comply with the notice requirement under

the same Article.

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.
EXCEPTION: 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.
Accordingly, the respondents were ordered to pay for the damages incurred by the
respondents.