CAPITOL MEDICAL CENTER VS.

MERIS (470 SCRA 125, SEPTEMBER 16, 2005)

FACTS:

1 Capitol Medical Center hired Dr. Meris in 1974 as Chief

of its Industrial Service Unit (ISU).

2 In 1992, however, or after about 18 years of service,

Dr. Meris was notified that the ISU will be abolished and that his services will be terminated. He,
however, doubted the closure.

3 The ISU was not, in fact, abolished. It continued to

operate with Dr. Clemente as head.

4 Dr. Meris believed it was a mere ploy for his ouster due
to his refusal to retire. He sought reinstatement but was unheeded.

5 Dr. Meris then filed a complaint for illegal dismissal but

the Labor Arbiter dismissed the same and was only granted his hospital retirement plan.

6 On appeal, the NLRC set aside the retirement plan on

the ground that Dr. Meris did not, in fact, retire. It ordered payment of separation pay instead.

7 The CA, however, ruled that Dr. Meris was illegally

dismissed. Hence, present action by Capitol.

ISSUE: Was there illegal dismissal?

RULING: Yes.

1 Although employers have management prerogatives,

including the right to close the operation of an establishment or undertaking, they must comply with
the legal requirements and not offend the protected rights of labor.

2 Requisites:
(a) done in good faith to advance the company’s interest; and

(b) not for the purpose of defeating or circumventing the rights of employees under the law.

3 Capitol failed to prove its good faith in closing the ISU.

4 The “Analysis of Income and Expenses” which showed

there were losses was doubtful since it was prepared by the internal auditor who happened to be a
relative of Dr. Clemente.

The accounting records, in fact, showed increasing revenues from 1989 to 1991.