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Emilio Caparoso and Joeve P. Quindipan (respondents) were employed by Composite Enterprises as its deliverymen until they were terminated on October 8, 1999. Thus, Caparoso et.al. filed a complaint for illegal dismissal against petitioner with the National Labor Relations Commission (NLRC). Composite denied that Caparoso et.al were illegally dismissed. The LA orders immediately reinstatement of Caparoso et.al and directed Composite to pay the former’s accrued salaries. In NLRC, Composite stated that it cannot reinstate the two because their positions were no longer available. Accordingly, petitioner moved that it be allowed to pay respondents separation pay in lieu of reinstatement. However, NLRC reversed the LA order that there is no illegal dismissal made but not on payment of back wages
In, CA Composite insists that the NLRC should have ordered the payment of separation pay since Caproso’s reinstatement to their former positions was physically impossible due to petitioner's implementation of a retrenchment program.
Whether or not Caproso et.al can be reinstated.
Yes, affirmed the NRLC’s decision that here was no strong basis for petitioner's contention that reinstatement was physically impossible due to petitioner's implementation of a retrenchment program. The SC discussed when a payment of separation pay can be a substitute for reinstatement. Thus, it held that it is allowed only under exceptional circumstances, viz: (1) when reasons exist which are not attributable to the fault or are beyond the control of the employer, such as when the employer -- who is in severe financial strait, has suffered serious business losses, and has ceased operations -- implements retrenchment, or abolishes the position due to the installation of labor-saving devices; (2) when the illegally dismissed employee has contracted a disease and his reinstatement will endanger the safety of his co-employees; or, (3) where a strained relationship exists between the employer and the dismissed employee.
In this case, Composite sought to justify the payment of separation pay instead of reinstatement on the basis of its implementation of a retrenchment program for "serious and persistent financial difficulties." However, petitioner only submitted as evidence the notice of its intention to implement a retrenchment program, which it sent to the Department of Labor and Employment on July 25, 2000. It did not submit its financial statements duly audited by an independent external auditor. Its failure to do so seriously casts doubt on its claim of losses and insistence on the payment of separation pay.