G.R. No. L-30736 July 11, 1975
LIRAG TEXTILE MILLS, INC. and FELIX K. LIRAG, petitioners, vs. COURT OF APPEALS and CRISTAN ALCANTARA, respondents.

FACTS

Petitioner Lirag Textile Mills, Inc. employed private respondent Cristan Alcantara under an agreement that his employment would last until he voluntarily resigned or until the company removed him for a valid cause. The company terminated Alcantara’s employment, contending it suffered “serious reverses, both in terms of pecuniary loss and in market opportunities.” Both the trial court and the Court of Appeals found this allegation to be false and made in bad faith. Consequently, the courts ruled that the termination was without a valid cause, constituting a breach of contract.
The trial court awarded Alcantara damages, including an amount of P500.00 per month until the total sums due were fully paid, which was affirmed by the appellate courts. In their motion for reconsideration, petitioners argued that this continuing monthly award was oppressive, unconscionable, and constituted a penalty on their right to litigate. They also contended that the termination provisions of Republic Act 1052, as amended, should apply to the case.

ISSUE

The primary issue is whether the award of P500.00 per month until full payment is valid or constitutes an oppressive penalty. A secondary issue is the applicability of Republic Act 1052.

RULING

The Supreme Court denied the motion for reconsideration. It held that Republic Act 1052, which governs termination of employment without a definite period, is inapplicable because the parties expressly agreed on a definite period: employment lasting until voluntary resignation or removal for a valid cause. By terminating Alcantara without the valid cause it falsely alleged, Lirag Textile Mills committed a breach of contract in bad faith, making it liable for damages under Article 1170 of the Civil Code.
Regarding the monetary award, the Court ruled that the P500.00 monthly payment was not a penalty but an award of actual damages representing salaries Alcantara failed to receive due to the wrongful termination. The Court found this reasonable compensation for the breach, considering Alcantara gave up a permanent job based on the employer’s inducement. The award is not oppressive nor a penalty on the right to litigate; it is a just approximation of the damage caused. The persistence of the petitioners in litigation, despite clear liability, merely shows their willingness to bear the consequences of their refusal to satisfy a valid obligation.