GR 163657; (April, 2012) (Digest)
G.R. No. 163657; April 18, 2012
International Management Services/Marilyn C. Pascual, Petitioner, vs. Roel P. Logarta, Respondent.
FACTS
Petitioner International Management Services deployed respondent Roel Logarta to work for Petrocon Arabia Limited in Saudi Arabia under a two-year contract. In 1998, due to a 40% reduction in work allocation from its client Saudi Aramco, Petrocon implemented a retrenchment program. Respondent was notified and his employment was terminated effective July 1, 1998. He received his final paycheck and returned to the Philippines.
Respondent filed a complaint for illegal dismissal against the local recruitment agency, seeking payment of salaries for the unexpired portion of his contract. The Labor Arbiter ruled in his favor, a decision affirmed by the NLRC and the Court of Appeals. The appellate court found that while the retrenchment was justified, Petrocon failed to comply with procedural requirements, specifically the mandated notice to the Department of Labor and Employment and the payment of separation pay.
ISSUE
Whether the respondent was illegally dismissed, thereby entitling him to monetary awards under the law.
RULING
The Supreme Court affirmed the finding of illegal dismissal but modified the awarded remedies. The Court held that retrenchment, as an authorized cause for termination under Article 283 of the Labor Code, requires strict compliance with substantive and procedural requisites. Substantively, the employer must prove actual or imminent business losses. Procedurally, it must give both the employee and the DOLE a written notice at least one month prior to termination and pay separation pay equivalent to one month’s salary or at least one-half month’s pay for every year of service.
Here, Petrocon established a valid ground for retrenchment due to a drastic reduction in work allocation. However, it failed in its procedural duties. There was no evidence that a notice was furnished to the DOLE. Furthermore, the payroll details confirmed that respondent was not paid any separation pay. This procedural defect rendered the dismissal illegal. Consequently, the recruitment agency, as the local agent solidarily liable with the foreign employer, is responsible. The award of salaries for the unexpired contract under the Migrant Workers Act was set aside following jurisprudence. Instead, the Court ordered petitioner to pay respondent one month’s salary as separation pay and Fifty Thousand Pesos (₱50,000.00) as nominal damages for the procedural violation.