Previously, we discussed that if management terminates the employment who used illegal substances, but skipped the twin notice rule, is liable to pay nominal damages in the amount of ₱30,000.00.

But what if management implements a valid retrenchment program, but does not comply with the prior notice rule?

ABC Corp. was in dire financial straits, so it sought to implement a retrenchment program. It complied with four of the five requisites under law. The one requirement it did not meet was to inform the workers and DOLE of the retrenchment. What is the consequence?

The penalty is to pay ₱50,000.00. This is the ruling in JAKA v. Pacot G.R. NO. 151378, March 28, 2005.

The Supreme Court noted that a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee.  Instead, the dismissal process is initiated by the employer’s exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program.

Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employer’s exercise of his management prerogative.