565 Phil. 821
VELASCO JR., J.:
Legend gave said employees a period of one week or until January 14, 1998 to choose their option, with option number 2 (permanent retrenchment) as the default choice in case they failed to express their preferences. After the employees made their choices, they also expressed their reservation that their choice should not be deemed as waiver of their rights granted under the Labor Code or their right to question the validity of their retrenchment should their separation benefits not be settled by January 30, 1998.
- Temporary retrenchment/lay-off for a period not to exceed six months within which we shall explore your possible reassignment to other departments or affiliates, after six months and redeployment and/or matching are unsuccessful, permanent retrenchment takes place and separation pay is released.
- Permanent retrenchment and payment of separation pay and other benefits after the thirty (30) days notice has lapsed; or
- Immediate retrenchment and payment of separation pay, benefits and one month's salary in lieu of notice to allow you to look for other employment opportunities.[1]
WHEREFORE, premises considered, respondents are hereby adjudged guilty of Illegal dismissal, and they are ordered to immediately reinstate the complainants without loss of seniority rights and to pay to them the following:The Labor Arbiter stated that the documents submitted by Legend to justify the retrenchment of its personnel were insufficient because the documents failed to show that Legend was suffering from actual losses or that there was redundancy in the positions occupied by petitioners. The Labor Arbiter also attributed bad faith on the part of Legend when it advertised openings for positions similar to those occupied by the retrenched employees at the same time the retrenchment program was being implemented.
1. Ruben Andrada: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P14,300.00 and the same amount every month thereafter until reinstated
--------- P343,200.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
-----------P19,200.00 c) 13th month pay for 2 years (1998 to 1999) ---------- P28,600.00 d) 14th month pay for 2 years (1998 to 1999) ---------- P28,600.00 e) Damages --------- P100,000.00 T O T A L ------ P519,600.002. Darryl Bautista: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P11,200.00 and the same amount every month thereafter until reinstated
--------- P268,800.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) ---------- P22,400.00 d) 14th month pay for 2 years (1998 to 1999) ---------- P22,400.00 T O T A L ------P332,800.003. Jovencio Poblete a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P12,000.00 and the same amount every month thereafter until reinstated
--------- P288,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) ---------- P24,000.00 d) 14th month pay for 2 years (1998 to 1999) ---------- P24,000.00 e) Damages -------- P100,000.00 T O T A L ------ P455,200.004) Renato Pangilinan: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P17,000.00 and the same amount every month thereafter until reinstated
--------- P408,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
--------- P408,000.00 c) 13th month pay for 2 years (1998 to 1999) --------- P408,000.00 d) 14th month pay for 2 years (1998 to 1999) ---------- P34,000.00 T O T A L ------ P495,200.005) Dario Rapada: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P10,000.00 and the same amount every month thereafter until reinstated
--------- P240,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) ---------- P20,000.00 d) 14th month pay for 2 years (1998 to 1999) ---------- P20,000.00 T O T A L ------P299,200.006) Adrian Camacho: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P7,000.00 and the same amount every month thereafter until reinstated
--------- P168,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) ---------- P14,000.00 d) 14th month pay for 2 years (1998 to 1999) ---------- P14,000.00 T O T A L ------ P215,200.007) Marvin Samaniego: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P7,000.00 and the same amount every month thereafter until reinstated
--------- P168,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) ---------- P14,000.00 d) 14th month pay for 2 years (1998 to 1999) ---------- P14,000.00 T O T A L ------ P215,200.008) Filamer Alfonso: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P10,000.00 and the same amount every month thereafter until reinstated
--------- P240,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) ---------- P20,000.00 d) 14th month pay for 2 years (1998 to 1999) ---------- P20,000.00 T O T A L ------ P299,200.009) Milton Maravilla: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P13,000.00 and the same amount every month thereafter until reinstated
--------- P312,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) ---------- P26,000.00 d) 14th month pay for 2 years (1998 to 1999) ---------- P26,000.00 e) Damages -------- P100,000.00 T O T A L ------ P483,200.0010) Harvey Cayetano: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P8,000.00 and the same amount every month thereafter until reinstated
--------- P192,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) --------- P16,000.00 d) 14th month pay for 2 years (1998 to 1999) --------- P16,000.00 e) Damages -------- P100,000.00 T O T A L ------ P343,200.0011) Vicente Mantala, Jr.: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P5,500.00 and the same amount every month thereafter until reinstated --------- P132,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) --------- P11,000.00 d) 14th month pay for 2 years (1998 to 1999) --------- P11,000.00 e) Damages -------- P100,000.00 T O T A L ------ P273,200.0012) Carlos Mananquil: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P30,000.00 and the same amount every month thereafter until reinstated
--------- P720,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) ---------- P60,000.00 d) 14th month pay for 2 years (1998 to 1999) ---------- P60,000.00 e) Damages --------- P100,000.00 T O T A L ------ P959,200.0013) Bernaldo delos Santos: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P18,500.00 and the same amount every month thereafter until reinstated
--------- P444,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) ---------- P37,000.00 d) 14th month pay for 2 years (1998 to 1999) ---------- P37,000.00 e) Damages -------- P100,000.00 f) Service charge at P1,500.00 a month from May 15, 1996 to February 6, 2000 (44 months) and every month thereafter until reinstated
--------- P72,000.00 T O T A L ------ P709,200.0014) Joven Pabustan: a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of P10,000.00 and the same amount every month thereafter until reinstated
--------- P240,000.00 b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24 months) and the same amount every month thereafter until reinstated
---------- P19,200.00 c) 13th month pay for 2 years (1998 to 1999) --------- P20,000.00 d) 14th month pay for 2 years (1998 to 1999) --------- P20,000.00 e) Damages -------- P100,000.00 T O T A L ------ P399,200.00
The respondents are further ordered to pay to the complainants attorney's fees equivalent to ten (10%) percent of the total award due the complainants. The payment of back salary, 13th month pay and 14th month pay, meal allowance and service charge shall be computed up to the date of the finality of this decision.
SO ORDERED.[4]
WHEREFORE, premises considered, the assailed decision is hereby reversed and set aside. Respondents are adjudged not guilty of illegal dismissal. The order of reinstatement as well as all monetary awards are deleted from the decision.Complainants moved for the reconsideration of the NLRC's Decision, but their motion was denied by the NLRC. Consequently, 10[6] out of the 14[7] original complainants filed a Petition for Certiorari with the Court of Appeals (CA), docketed as CA-G.R. SP No. 81701. This petition was, however, denied by the CA for lack of merit in its April 28, 2006 Decision.[8]
SO ORDERED.[5]
This Court is not oblivious of the significant role played by the corporate sector in the country's economic and social progress. Implicit in turn in the success of the corporate form in doing business is the ethos of business autonomy which allows freedom of business determination with minimal governmental intrusion to ensure economic independence and development in terms defined by businessmen. Yet, this vast expanse of management choices cannot be an unbridled prerogative that can rise above the constitutional protection to labor. Employment is not merely a lifestyle choice to stave off boredom. Employment to the common man is his very life and blood, which must be protected against concocted causes to legitimize an otherwise irregular termination of employment. Imagined or undocumented business losses present the least propitious scenario to justify retrenchment.[10]Under the Labor Code, retrenchment and redundancy are authorized causes for separation from service. However, to protect labor, dismissals due to retrenchment or redundancy are subject to strict requirements under Article 283 of the Labor Code, to wit:
ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to separation pay equivalent to at least his one (1) month pay or at least one (1) month pay for every year of service, whichever is higher. 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. A fraction of at least six (6) months shall be considered as one (1) whole year.Retrenchment is an exercise of management's prerogative to terminate the employment of its employees en masse, to either minimize or prevent losses, or when the company is about to close or cease operations for causes not due to business losses.
Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the bona fide nature of retrenchment would appear to be seriously in question. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laid-off. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively prevent the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs other than labor costs. An employer who, for instance, lays off substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called "golden parachutes," can scarcely claim to be retrenching in good faith to avoid losses. To impart operational meaning to the constitutional policy of providing "full protection" to labor, the employer's prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means – e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc. – have been tried and found wanting.In Ariola v. Philex Mining Corporation,[12] the Court summarized the requirements for retrenchment, as follows:
Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this quantum of proof is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees.
Thus, the requirements for retrenchment are: (1) it is undertaken to prevent losses, which are not merely de minimis, but substantial, serious, actual, and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) the employer serves written notice both to the employees and the DOLE at least one month prior to the intended date of retrenchment; and (3) the employer pays the retrenched employees separation pay equivalent to one month pay or at least ½ month pay for every year of service, whichever is higher. The Court later added the requirements that the employer must use fair and reasonable criteria in ascertaining who would be dismissed and x x x retained among the employees and that the retrenchment must be undertaken in good faith. Except for the written notice to the affected employees and the DOLE, non-compliance with any of these requirements render[s] the retrenchment illegal.In the present case, Legend glaringly failed to show its financial condition prior to and at the time it enforced its retrenchment program. It failed to submit audited financial statements regarding its alleged financial losses. Though Legend complied with the notice requirements and the payment of separation benefits to the retrenched employees, its failure to establish the basis for the retrenchment of its employees constrains us to declare the retrenchment illegal.
Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.Thus, simply put, redundancy exists when the number of employees is in excess of what is reasonably necessary to operate the business. The declaration of redundant positions is a management prerogative. The determination that the employee's services are no longer necessary or sustainable and therefore properly terminable is an exercise of business judgment by the employer. The wisdom or soundness of this judgment is not subject to the discretionary review of the Labor Arbiter and NLRC.[14]
Retrenchment, on the other hand, is used interchangeably with the term "lay-off." It is the termination of employment initiated by the employer through no fault of the employee's and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation. Simply put, it is an act of the employer of dismissing employees because of losses in the operation of a business, lack of work, and considerable reduction on the volume of his business, a right consistently recognized and affirmed by this Court.