761 Phil. 476
PERALTA, J.:
WHEREFORE, foregoing considered, judgment is hereby rendered as follows:Undaunted, before the NLRC, petitioners insisted that they were illegally dismissed. On September 22, 2009, the NLRC reversed and set aside the appealed decision.[11] The dispositive portion reads, thus:1. Dismissing the complaint for illegal dismissal and unfair labor practice;SO ORDERED.[10]
2. Declaring that the retrenchment is valid; and
3. Ordering respondent LAPANDAY AGRICULTURAL AND DEVELOPMENT CORPORATION to pay complainants the sum of EIGHT MILLION TWO HUNDRED EIGHTY-SIX THOUSAND ONE HUNDRED SEVENTY-FOUR AND 53/100 PESOS (P8,286,174.53) representing their separation pays.
WHEREFORE, foregoing premises considered, the appealed decision is Reversed and Set Aside. In lieu thereof, a new judgment is rendered declaring the complainants, less Presco Fuentes and Brian Taub, to have been illegally dismissed from employment, and thus ordering respondent Lapanday Agricultural Development Corporation to reinstate the said complainants to their former positions without loss of seniority rights and other privileges and to pay them full backwages from the dates they were dismissed until they are actually reinstated plus attorney's fees equivalent to ten (10%) percent of the aggregate monetary award due them, subject to computation by the Regional Arbitration Branch of origin during execution proceedings.Lapanday filed a motion for reconsideration, but the NLRC denied the same in a Resolution[13] dated February 12, 2010.
SO ORDERED.[12]
WHEREFORE, foregoing premises considered, judgment is hereby rendered declaring the dismissal of complainants Presco A. Fuentes and Brian Taub as illegal:Lapanday appealed to the NLRC, however, the NLRC dismissed the same for non-perfection due to failure of petitioner to post a cash bond or surety bond within the reglementary period. Petitioner moved for reconsideration but was denied.
Accordingly, Lapanday Agricultural Development Corporation (Guihing Plantation Operation), represented by its authorized officers, is hereby (ordered) to pay complainants' backwages, to wit:1. Fresco A. Fuentes - P160,632.21Respondent is further ordered (to) reinstate complainants to their former positions, either physically or in the payroll, without loss of seniority rights and other privileges, and to submit a report of compliance thereon within ten (10) days from receipt of Decision. This order of reinstatement is immediately executory.
2. Brian M. Taub - P160,632.21
P321,264.42
All other claims are denied for insufficiency of evidence.
SO ORDERED.[17]
WHEREFORE, the instant consolidated Petitions are GRANTED.Petitioners' moved for reconsideration, but was denied in a Resolution[25] dated November 14, 2012.
In CA-G.R. [SP] No. 03588: the National Labor Relations Commission, 8th Division's (NLRC) Resolution promulgated on September 22, 2009 and February 12, 2010 are SET ASIDE. The Decision of Labor Arbiter Henry F. Te promulgated on August 15, 2008 is hereby REINSTATED.
In CA-G.R. [SP] No. 04646: the National Labor Relations Commission, 8th Division's (NLRC) Decision promulgated on July 29, 2011 and the Resolution promulgated on October 26, 2011 are SET ASIDE and a new judgment is entered DISMISSING the instant complaints for lack of merit. Let this case be remanded to the arbitration branch of origin for the computation of private respondents' separation pay to be based on each private respondent's number of years of service.
SO ORDERED.[24]
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 the 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 [Department] 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 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, 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.Therefore, for a valid retrenchment, the following requisites must be complied with: (a) the retrenchment is necessary to prevent losses and such losses are proven; (b) written notice to the employees and to the DOLE at least one month prior to the intended date of retrenchment; and (c) payment of separation pay equivalent to one-month pay or at least one-half month pay for every year of service, whichever is higher.
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 1/2 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 renders the retrenchment illegal.[30]In the instant case, Lapanday's financial condition before and at the time of petitioners' retrenchment, justified petitioners retrenchment. The audited financial report presented in evidence was found to conclusively show that Lapanday has indeed suffered serious financial losses for the last three years prior to its retrenchment. We quote the findings of the appellate court, to wit:
Petitioner-company's financial condition before and at the time of the retrenchment clearly paints a picture of a losing business. An independent auditor confirmed its claim of financial losses, finding that is suffered a net loss of Php26,297,297, in 2006 as compared to its net income of Php14,128,589, in 2005. This net loss ballooned to Php72,363,879. in 2007. To be sure, these financial statements cannot be whimsically assailed as self-serving, as these documents were prepared and signed by SGV & Co., a firm of reputable independent external auditors.[31]Lapanday instituted a retrenchment program as a result of the management's decision to limit its operation and streamline positions and personnel requirements and arrest its increasing financial losses by downsizing its workforce. Lapanday then was justified in implementing a retrenchment program since it was undergoing financial reverses, not only for a single fiscal year, but for several years prior to and even after the program. We likewise quote the Labor Arbiter's findings:
Per audit report of Sycip, Gorres Velayo & Co (SGV), an independent accounting firm and credible external auditor, dated April 17, 2007, for 2006 Financial Statement of Lapanday Agriculture and Development Corporation, it shows that respondent's revenue for sales of bananas in 2005 was PhP724,200,596.00. In 2006, it dropped to Php607,186,264.00. A difference or loss of Php117,013,332.00 was incurred by the respondent company. Also, per audit report dated March 28, 2008 of same accounting firm x x x for the year 2007, it shows that respondent's revenue for sales of bananas from Php607,186,264.00 further went down to PhP539,979,711.00 or a loss of P67,207,753.00.We cannot ignore the audited financial reports of independent and reputable external auditors such as Sycip Gorres Velayo & Co., as no evidence can best attest to a company's economic status other than its financial statement. We defined the evidentiary weight accorded to audited financial statements in Asian Alcohol Corporation v. National Labor Relations Commission,[33] thus:
Recovering from other aspects of respondent's business, summary of respondent net loss was at PhP26,297,297.00 for 2006 from PhP14,128,589.00 for 2005. The net loss ballooned to Php72,363,879.00 in 2007.[32]
The condition of business losses is normally shown by audited financial documents like yearly balance sheets and profit and loss statements as well as annual income tax returns. It is our ruling that financial statements must be prepared and signed by independent auditors. Unless duly audited, they can be assailed as self-serving documents. But it is not enough that only the financial statements for the year during which retrenchment was undertaken, are presented in evidence. For it may happen that while the company has indeed been losing, its losses may be on a downward trend, indicating that business is picking up and retrenchment, being a drastic move, should no longer be resorted to. Thus, the failure of the employer to show its income or loss for the immediately preceding year or to prove that it expected no abatement of such losses in the coming years, may bespeak the weakness of its cause. It is necessary that the employer also show that its losses increased through a period of time and that the condition of the company is not likely to improve in the near future.[34]Verily, the fact that the financial statements were audited by independent auditors settles any doubt on the financial condition of Lapanday. As reported by SGV & Co., the financial statements presented fairly, in all material aspects, the financial position of the respondent as of December 31, 2006 and 2005.[35] However, even assuming arguendo that Lapanday was not experiencing losses, it is still authorized by Article 283[36] of the Labor Code to terminate the employment of any employee due to retrenchment to prevent losses or the closing provided that the projected losses 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.
Records show that the one (1) written notice requirement was duly filed by the respondent with the Office of the Department of Labor and Employment on December 27, 2007 and the Notices of Termination were duly served to its workers on January 4, 2008 to take effect thirty (30) days from their receipt or on February 4, 2008. By reason of the hard "no retrenchment" stand of herein complainants, the latter refused to receive the notices of termination, thus, copies of the Letters of Retrenchment were sent through registered mail on January 8, 2008 to the last known addresses of the complainants. It appears also that respondent submitted to the Department of Labor and Employment its Reports on Employee Termination. On the matter of separation pay, it is established that respondent company is willing to comply with the same.We likewise cannot sustain petitioners' argument that their dismissal was illegal on the basis that Lapanday did not actually cease its operation, or that they have re-hired some of the dismissed employees and even hired new set of employees to replace the retrenched employees.
Business enterprises today are faced with the pressures of economic recession, stiff competition, and labor unrest. Thus, businessmen are always pressured to adopt certain changes and programs in order to enhance their profits and protect their investments. Such changes may take various forms. Management may even choose to close a branch, a department, a plant, or a shop.In the same manner, when Lapanday continued its business operation and eventually hired some of its retrenched employees and new employees, it was merely exercising its right to continue its business. The fact that Lapanday chose to continue its business does not automatically make the retrenchment illegal. We reiterate that in retrenchment, the goal is to prevent impending losses or further business reversals - it therefore does not require that there is an actual closure of the business. Thus, when the employer satisfactorily proved economic or business losses with sufficient supporting evidence and have complied with the requirements mandated under the law to justify retrenchment, as in this case, it cannot be said that the subsequent acts of the employer to re-hire the retrenched employees or to hire new employees constitute bad faith. It could have been different if from the beginning the retrenchment was illegal and the employer subsequently hired new employees or rehired some of the previously dismissed employees because that would have constituted bad faith. Consequently, when Lapanday continued its operation, it was merely exercising its prerogative to streamline its operations, and to re-hire or hire only those who are qualified to replace the services rendered by the retrenched employees in order to effect more economic and efficient methods of production and to forestall business losses. The rehiring or reemployment of retrenched employees does not necessarily negate the presence or imminence of losses which prompted Lapanday to retrench.[39]