Law on Closure & Reduction of Personnel


SMART's assertion that Astorga cannot complain of lack of notice because the organizational realignment was made known to all the employees as early as February 1998 fails to persuade. Astorga's actual knowledge of the reorganization cannot replace the formal and written notice required by the law. In the written notice, the employees are informed of the specific date of the termination, at least a month prior to the effectivity of such termination, to give them sufficient time to find other suitable employment or to make whatever arrangements are needed to cushion the impact of termination. In this case, notwithstanding Astorga's knowledge of the reorganization, she remained uncertain about the status of her employment until SMART gave her formal notice of termination.

But such notice was received by Astorga barely two (2) weeks before the effective date of termination, a period very much shorter than that required by law. (Smart Communications, Inc. vs. Regina M. Astorga, G.R. No. 148132, January 28, 2008)

With respect to Art. 283 of the Labor Code, the employer's failure to comply with the notice requirement does not constitute a denial of due process but a mere failure to observe a procedure for the termination of employment which makes the termination of employment merely ineffectual. It is similar to the failure to observe the provisions of Art. 1592, in relation to Art. 1191 of the Civil Code in rescinding a contract for the sale of immovable property. Under these provisions, while the power of a party to rescind a contract is implied in reciprocal obligations, nonetheless, in cases involving the sale of immovable property, the vendor cannot exercise this power even though the vendee defaults in the payment of the price, except by bringing an action in court or giving notice of rescission by means of a notarial demand. Consequently, a notice of rescission given in the letter of an attorney has no legal effect, and the vendee can make payment even after the due date since no valid notice of rescission has been given.
Indeed, under the Labor Code, only the absence of a just cause for the termination of employment can make the dismissal of an employee illegal.

In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination of employment was due to an authorized cause, then the employee concerned should not be ordered reinstated even though there is failure to comply with the 30-day notice requirement. Instead, he must be granted separation pay in accordance with Art. 283 (G.R. No. 117040)

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 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, which ever is higher. However, 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. (G.R. No. 80770)

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