INTERNATIONAL HARDWARE, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) AND BONIFACIO PEDROSO, RESPONDENTS.

The singular issue in
this case is whether or not an employee who had been retrenched or otherwise
separated from the service of an employer who, in turn, suffered financial
losses and revenues is entitled to separation pay.

Private respondent Bonifacio Pedroso was employed by
petitioner first, as a truck helper, and later as a delivery truck driver with
a monthly salary of P900.00 starting from 1966 until December 1984 when the
number of working days of private respondent was reduced to just two days a week
due to the financial losses suffered by the business of petitioner.  Thus, private respondent filed a complaint for illegal dismissal and the
payment of separation pay in the Department of Labor and Employment
(DOLE).

In a decision dated
September 12, 1985, the labor arbiter ruled that inasmuch as the working
arrangement of private respondent was rotated in such a way that the number of
his working days had been substantially reduced for more than six (6) months
since December, 1984 and considering that the financial crisis of petitioner
has not eased, private respondent is entitled to the payment of separation pay
as if he was actually retrenched, in the amount of P8,100.00.

Petitioner brought an
appeal to the respondent National Labor Relations Commission (NLRC).  In a decision dated July 3,
1987, the NLRC
affirmed the said decision of the labor arbiter.  The NLRC held that there was in effect a
“constructive dismissal” of private
respondent considering that his rotation of work was not with his consent and that the same was not
reported to the DOLE, and considering further that more than six (6) months
have already lapsed but the financial crisis of petitioner had not been
adverted to.

Petitioner now filed this
petition for review which should have been be a petition for certiorari
under Rule 65 of the Rules of Court, wherein it is alleged that the NLRC committed a grave abuse of
discretion in affirming the
payment at separation pay to private
respondent when he had not been
actually dismissed from the service.

Article 283 of the Labor
Code provides as follows:

“ART. 283.  Closure of establishment and reduction of personnel.  – The employer may also terminate the employment of any employee due
to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this title, by serving a
written notice on the workers and the Ministry of Labor and Employment at least
one (1) month before the intended date thereof. 
In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall
be entitled to a separation pay equivalent to at least his one (1) month pay or
to at least one (1) month pay for every year of service, whichever is
higher.  In case of retrenchment to
prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every
year of service, whichever is higher. 
A fraction of at least six (6) months shall be considered one (1) whole
year.”

Under the foregoing provision of law, an employer may terminate
the employment of any employee due to the following causes:  (1) installation of labor-saving devices; (2)
redundancy; (3) retrenchment to prevent
losses; and (4) the closing or cessation of operation of the
establishment or undertaking, unless the closing is for the purpose of
circumventing the provisions of law.  It
is required that to effect such termination of any employee, the employer must serve a written notice on the
workers and the DOLE at least one
(1) month before the intended date thereof. 
The purpose of such previous notice to DOLE must be to enable it to
ascertain the verity of the cause for termination of employment.

In case of termination due to the installation of labor-saving
devices or redundancy the worker affected thereby shall be entitled to separation pay equivalent
to at least one (1) month pay or to at least one month pay for every year of
service, whichever is higher.  However,
in case of retrenchment to prevent losses and in cases of closure or cessation
of operations of the establishment or undertaking not due to serious business
losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2)
month pay for every year of service, whichever is higher.

In this case, it
is admitted that private respondent
had not been terminated or
retrenched by petitioner but that due to financial crisis the number of working
days of private respondent was reduced to just two days a week.  Petitioner could not have been expected to
notify DOLE of the retrenchment of private respondent under the circumstances
for there was no intention to do so on the part of petitioner.

By the same token, if an employee consented to his retrenchment
or voluntarily applied for retrenchment with the employer due to the installation of labor-saving
devices, redundancy, closure or cessation of operation or to prevent financial
losses to the business of the employer, the required previous notice to the
DOLE is not necessary as the employee thereby acknowledged the existence of a
valid cause for termination of his employment.

Nevertheless, considering that private respondent had been rotated by petitioner for over
six (6) months due to the serious losses in the business so that private
respondent had been effectively deprived a gainful occupation thereby, and
considering further that the business of petitioner was ultimately closed and
sold off, the Court finds, and so holds that the NLRC correctly ruled that
private respondent was thereby constructively dismissed or retrenched from
employment.

Under Article 286 of the Labor Code, it is provided as follows:

“ART. 286.  When
employment not deemed terminated.  – The bonafide suspension of the operation of a business or undertaking
for a period not exceeding six months,
or the fulfillment by the employee of a military or civic duty shall
not terminate employment in all such cases, the employer shall reinstate the
employee to his former position without loss of seniority rights if he
indicates his desire to resume his work not later than one month from the
resumption of operations of his employer or from his relief from the military
or civic duty.”

From the foregoing it is clear that when
the bonafide suspension of the operation of a business or undertaking exceeds
six (6) months then the employment of the employee shall be deemed terminated.

Thus, private respondent is entitled to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is
higher.  The Court assumes that the award
of P8,100.00 separation pay in favor of the private
respondent was computed in accordance with the foregoing formula as provided by
law.  Otherwise, it should be recomputed
accordingly.

WHEREFORE, the petition is DISMISSED for lack of merit, without pronouncement as to
costs.  This decision is immediately
executory.

SO ORDERED.

Narvasa, (Chairman), Cruz, Griño-Aquino, and Medialdea, JJ., concur.