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Saturday, July 16, 2005
Separation pay with no back wages
By Dominador A. Almirante
Labor case digest
Private respondent Jose F. Mascarinas was separated from the service of petitioner Jesus Adlawan Trading and General Services (JAT) due to the closure of the business.
Mascarinas prevailed in his case before the labor arbiter, the National Labor Relations Commission and the Court of Appeals, all of which arrived at a common finding on the failure of JAT to timely adduce sufficient evidence to prove it suffered business losses. Hence, they held that Mascarinas was illegally dismissed from the service and ordered JAT to pay him separation pay and back wages. Did they err?
Ruling: Yes, partially.
In this case, we are persuaded that the closure of JAT’s business is not unjustified. Further, we hold that the private respondent was validly terminated because the closure of business operations is justified.
Nevertheless, in this case, we must stress that the closure of business operation is allowed under the Labor Code, provided separation pay be paid to the terminated employee. It is settled that in case of closure or cessation of operation of a business establishment not due to serious business losses or financial reverses, the employees are always given separation benefits.
The amount of separation pay must be computed from the time the private respondent commenced employment with the petitioners until the time the latter ceased operations.
Considering that the private respondent was not illegally dismissed, however, no back wages need to be awarded. Back wages in general are granted on grounds of equity for earnings which a worker or employee has lost due to illegal dismissal. It is well settled that back wages may be granted only when there is a finding of illegal dismissal. (JAT General Services et al. vs. NLRC et al., G.R. 148340, Jan. 26, 2004, citations omitted).
(July 16, 2005 issue)
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