CHENIVER DECO PRINT TECHNICS CORP v. NLRC | 325 SCRA 758 | February 17, 2000
FACTS
- Cheniver is a corporation operating its printing business in Makati. The
respondents are members of the labor union and former employees of Cheniver. - June 5, 1992 – Cheniver informed its employees that it will transfer its
operations to Batangas. Reasons for the transfer are expiration of lease contract on the premises of the Makati palnt, and local authorities’ action to force out Cheniver’s operations from Makati because of alleged hazards to residents nearby.
- Cheniver gave its employees until the end of June to inform management if they wanted with Cheniver in its transfer, otherwise it would hire replacements. Aug1 was the scheduled start of operations in the new plant in Batangas. - Aug 4, 1992 – Cheniver wrote its employees to report to the new location within 7days, otherwise they will be deemed to have lost interest in the job and would be replaced. However, no one reported for work in batangas, even after extension of period of time to report to work.
- Respondents filed a complaint for unfair labor practice and illegal dismissal, and demanded separation pay (among others).
- LA ruled that the transfer of operations was valid and absolved cheniver of charges for unfair labor practice and illegal dismissal. It however ordered payment of separation pay. NLRC affirmed.
– cheniver contends that the transfer of its business is neither closure nor retrenchment, thus separation pay should not be awarded. Also, employees were not terminated but they resigned because they find the new site to far from their residences
ISSUE: WON employees are entitled to separation pay considering that the transfer of the plant was valid
HELD: YES
Ratio Art. 283 of the Labor Code provides (in part):
ART. 283. Closure of establishment and reduction of personnel. - The employer may 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
xxx
- 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. xxx
Reasoning
- there appears no complete dissolution of Cheniver’s business undertaking but the relocation of its plant to Batangas, in our view, amounts to cessation of petitioner's business operations in Makati. It must be stressed that the phrase “closure or cessation of operation of an establishment or undertaking not due to serious business losses or reverses” under Art. 283 includes both complete cessation of all business operations and the cessation of only part of a company's business
- There is no doubt that petitioner has legitimate reason to relocate its plant because of the expiration of the lease contract on the premises it occupied. That is its prerogative. But even though the transfer was due to a reason beyond its control, Cheniver has to accord its employees some relief in the form of severance pay.
- Since the closure of the plant is not on account of serious business losses, Cheniver shall give respondents separation pay equivalent to at least 1 month or ½ month pay for every year of service
- that the employees resigned is not convincing. The transfer of Cheniver to another place hardly accessible to its workers resulted in the latter's untimely separation from the service not to their own liking, hence, not construable as resignation
Disposition: petition denied. NLRC resolutions AFFIRMED.
PT&T v. NLRC | 456 SCRA 264 | G.R. No. 147002. April 15, 2005
F: Agnes Bayao and Mildred Castillo were hired by the Philippine Telegraph & Telephone Corporation (PT&T) in November 1991 and August 1995,
respectively, both as account executives stationed in Baguio City.
Both Bayao and Castillo received a Memorandum dated May 21, 1998 coming from Ma. Elenita V. Del Rosario, Vice-President of the Commercial Operations Group (COG) of PT&T, inviting them to consider a two to three-month
assignment to the provinces of Rizal and Laguna in view of PT&T’s expansion in the aforesaid area. Bayao and Castillo refused the offer, on the ground that the transfer would entail additional expense on their part and there were no clear guidelines and procedures for its implementation.
Meanwhile, the expansion project of PT&T failed to materialize due to lack of capital. PT&T realized that it needed to undertake measures against losses to prevent the company from going bankrupt, particularly by reducing its
workforce from 2,500 to 900 employees. Pursuant thereto, it implemented a Voluntary Staff Reduction Program (VSRP) which was availed of by 478 employees. Failing to attain its target, PT&T implemented an extended VSRP, but still not enough employees availed of the program.
PT&T decided to implement a temporary retrenchment of some employees dubbed as Temporary Staff Reduction Program (TSRP) lasting for not more than five and a half (5½) months, to commence from September 1, 1998 to February 15, 1999. Pursuant to the program, affected employees would receive financial assistance equivalent to 15 days salary and a loan equivalent to two months salary chargeable to the account of the employee concerned.
Bayao and Castillo received a Letter from Del Rosario, dated August 21, 1998, informing them that the cumulative net losses of PT&T for the last four years had reached P293.4 million and that they were among the employees affected by the TSRP.
When Bayao and Castillo reported for work on September 2, 1998, they were informed that the position of account executive no longer existed; in its stead, the positions of Service Account Representatives (SAR) and Service Account Specialists (SAS) were created per COG Bulletin Order No. 98-014 effective August 21, 1998, and had already been filled up.
That same day, Bayao and Castillo promptly filed a complaint for illegal dismissal with the NLRC, Regional Arbitration Branch, Cordillera Administrative Region, against PT&T and Delia Oficial in her capacity as manager for Baguio City.
Labor Arbiter Monroe C. Tabingan rendered a Decision in favor of Bayao and Castillo. PT&T and Oficial interposed their appeal to the NLRC. On October 12, 1999, the NLRC issued its Resolution dismissing the appeal and affirmed the decision of the Labor Arbiter, deleting, however, the award of legal interest, exemplary damages, indemnity and attorney’s fees for lack of merit.
On July 31, 2000, the CA issued its Decision dismissing the petition and affirmed the findings of the NLRC. The CA declared that there was no valid ground for retrenchment, considering that when Bayao and Castillo returned, their positions were already filled up; at the same time, PT&T did not inform its employees and the Department of Labor and Employment (DOLE) of the scheduled retrenchment at least one month before its implementation. A motion for reconsideration was filed, but the same was denied by the CA. Hence this petition.
I: WON the retrenchment program implemented by petitioner PT&T is valid. H: Retrenchment has been defined as the termination of employment initiated by the employer through no fault of the employees and without prejudice to the latter, resorted 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.
[12] It is a management prerogative resorted to by an employer to avoid or minimize business losses which is consistently recognized by the Court.
The Court has previously ruled that financial statements audited by independent external auditors constitute the normal method of proof of the profit and loss performance of a company. In this case, to prove that the company incurred losses, the petitioners presented its audited financial statements for the corporate fiscal years 1996 to 1998 and emphasized that, in the October 20, 1998 Audit Report prepared by SGV & Co., the auditing firm declared that petitioner PT&T incurred a substantial loss of about P558 million for the fiscal year ending June 30, 1998, resulting to a total deficit of about P574 million as of the same date; and that petitioner PT&T even negotiated with its creditors for the suspension of payments of its outstanding balances until the completion of an acceptable restructuring plan. The foregoing clearly indicates that the petitioner PT&T sufficiently complied with its burden to prove that it incurred substantial losses as to warrant the exercise of the extreme measure of retrenchment to prevent the company from totally going under.
While an employer may have a valid ground for implementing a retrenchment program, it is not excused from complying with the required written notice served both to the employee concerned and the DOLE at least one month prior to the intended date of retrenchment. The purpose of this requirement is not only to give employees some time to prepare for the eventual loss of their jobs and their corresponding income, look for other employment and ease the impact of the loss of their jobs but also to give the DOLE the opportunity to ascertain the verity of the alleged cause of termination.
In the case at bar, the memorandum of Del Rosario, the vice-president of the COG, to respondents Bayao and Castillo informing the latter that they were included in the TSRP to be implemented effective September 1, 1998 was dated August 21, 1998. The said memorandum was received by Castillo on August 24, 1998 and Bayao on August 26, 1998. The respondents had barely two weeks’ notice of the intended retrenchment program. Clearly then, the one-month notice rule was not complied with. At the same time, the petitioners never showed that any notice of the retrenchment was sent to the DOLE.
The petitioners’ adherence to the above pronouncement of the Court is
misplaced. The particular issue involved in the said decision was the duration of the period of temporary lay-off, and not the compliance with the one month notice requirement.
The requirement of notice to both the employees concerned and the
Department of Labor and Employment (DOLE) is mandatory and must be written and given at least one month before the intended date of retrenchment. In this case, it is undisputed that the petitioners were given notice of the temporary lay-off. There is, however, no evidence that any written notice to permanently retrench them was given at least one month prior to the date of the intended retrenchment. The NLRC found that GTI conveyed to the petitioners the impossibility of recalling them due to the continued unavailability of work. But what the law requires is a written notice to the employees concerned and that requirement is mandatory. The notice must also be given at least one month in advance of the intended date of retrenchment to enable the employees to look for other means of employment and therefore to ease the impact of the loss of their jobs and the corresponding income. That they were already on temporary lay-off at the time notice should have been given to them is not an excuse to forego the one-month written notice because by this time, their lay-off is to become permanent and they were definitely losing their employment. There is also nothing in the records to prove that a written notice was ever given to the DOLE as required by law. Interestingly enough, the evidence on record indicates that respondents Bayao and Castillo were not merely
temporarily laid-off. The October 26, 1998 Letter of Del Rosario addressed to the respondents clearly stated that the latter were to be considered separated from the company effective August 31, 1998 and that they were each being extended a separation package.
It must be stressed, however, that compliance with the one-month notice rule is mandatory regardless of whether the retrenchment is temporary or permanent. This is so because Article 283 itself does not speak of temporary or permanent retrenchment; hence, there is no need to qualify the term. Ubi lex non
distinguit nec nos distinguere debemus (when the law does not distinguish, we must not distinguish).
However, the employer’s failure to comply with the one month notice requirement prior to retrenchment does not render the termination illegal; it merely renders the same defective, entitling the dismissed employee to payment of indemnity in the form of nominal damages. Based on prevailing jurisprudence, the amount of indemnity is pegged atP30,000.00.
Finally, since petitioner PT&T was able to establish that it incurred serious business losses, justifying the retrenchment, the final requisite is the payment of separation pay. Pursuant to Section 283 of the Labor Code, as amended, the
retrenchment having been effected due to serious business losses, respondents Bayao and Castillo are each entitled to one month pay or to at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one whole year. Petition partially granted. WILTSHIRE FILE CO INC v. NLRC | 193 SCRA 665 | February 7, 1991 FACTS
- Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire File Co., Inc. ("Wiltshire") from 16 March 1981 up to 18 June 1985. On 13 June 1985, upon private respondent's return from a business and pleasure trip abroad, he was informed by the President of petitioner Wiltshire that his services were being terminated. Private respondent maintains that he tried to get an explanation from management of his dismissal but to no avail. On 18 June 1985, when private respondent again tried to speak with the President of Wiltshire, the company's security guard handed him a letter which formally informed him that his services were being terminated upon the ground of redundancy.
- Private respondent filed, on 21 October 1985, a complaint before the Labor Arbiter for illegal dismissal alleging that his position could not possibly be redundant because nobody (save himself) in the company was then performing the same duties. Private respondent further contended that retrenching him could not prevent further losses because it was in fact through his remarkable performance as Sales Manager that the Company had an unprecedented increase in domestic market share the preceding year. For that
accomplishment, he continued, he was promoted to Marketing Manager and was authorized by the President to hire four (4) Sales Executives five (5) months prior to his termination.
- In its answer, petitioner company alleged that the termination of respondent's services was a cost-cutting measure: that in December 1984, the company had experienced an unusually low volume of orders: and that it was in fact forced to rotate its employees in order to save the company. Despite the rotation of employees, petitioner alleged; it continued to experience financial losses and private respondent's position, Sales Manager of the company, became redundant.
- On 2 December 1986, during the proceedings before the Labor Arbiter, petitioner, in a letter 1 addressed to the Regional Director of the then Ministry of Labor and Employment, notified that official that effective 2 January 1987, petitioner would close its doors permanently due to substantial business losses. - In a decision dated 11 March 1987, the Labor Arbiter declared the termination of private respondent's services illegal and ordered petitioner to pay private respondent backwages, unpaid salaries in the amount of, accumulated sick and vacation leaves in the amount of, hospitalization benefit package in the amount, unpaid commission in the amount of, moral damages in the amount of and attorney's fees in the amount of. On appeal by petitioner Wiltshire, the National Labor Relations Commission ("NLRC") affirmed in toto on 9 February 1988 the decision of the Labor Arbiter.
- In this Petition for Certiorari, it is submitted that private respondent's dismissal was justified and not illegal. Petitioner maintains that it had been incurring business losses beginning 1984 and that it was compelled to reduce the size of its personnel force. Petitioner also contends that redundancy as a cause for termination does not necessarily mean duplication of work but a "situation where the services of an employee are in excess of what is demanded by the needs of an undertaking
ISSUE: WON private respondent’s dismissal was justified on the ground of retrenchment
HELD: YES
- The Court resolved to grant due course to the Petition for Certiorari. The Resolutions of the National Labor Relations Commission dated 9 February 1988 and 7 March 1988 are hereby SET ASIDE and NULLIFIED. The Temporary Restraining Order issued by this Court on 21 March 1988 is hereby made PERMANENT.
Ratio. Having reviewed the record of this case, the Court has satisfied itself that indeed petitioner had serious financial difficulties before, during and after the termination of the services of private respondent. For one thing, the audited financial statements of the petitioner for its fiscal year ending on 31 July 1985 prepared by a firm of independent auditors, showed a net loss in the amount of P4,431,321.00 and a total deficit or capital impairment at the end of year of P6,776,493.00. 2 In the preceding fiscal year (1983-1984), while the company showed a net after tax income of P843,506.00, it actually suffered a deficit or capital impairment of P2,345,172.00. Most importantly, petitioner Wiltshire finally closed its doors and terminated all operations in the Philippines on January 1987, barely two (2) years after the termination of private respondent's employment. We consider that finally shutting down business operations constitutes strong confirmatory evidence of petitioner's previous financial distress. The Court finds it very difficult to suppose that petitioner Wiltshire would take the final and irrevocable step of closing down its operations in the Philippines simply for the sole purpose of easing out a particular officer or employee, such as the private respondent.
- Turning to the legality of the termination of private respondent's employment, we find merit in petitioner's basic argument. The Court was unable to sustain public respondent NLRC's holding that private respondent's dismissal was not justified by redundancy and hence illegal. In the first place, while the letter informing private respondent of the termination of his services used the word "redundant", that letter also referred to the company having "incur[red] financial losses which [in] fact has compelled [it] to resort to retrenchment to prevent further losses". 3 Thus, what the letter was in effect saying was that because of financial losses, retrenchment was necessary, which retrenchment in turn resulted in the redundancy of private respondent's position.
- In the second place, the Court does not believe that redundancy in an
employer's personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private
respondent held prior to the termination of his services, does not show that his position had not become redundant. Indeed, in any well-organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person. Redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, 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 overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise. 4 The employer has no legal obligation to keep in its payroll more employees than are necessarily for the operation of its business.
- In the third place, in the case at bar, petitioner Wiltshire, in view of the contraction of its volume of sales and in order to cut down its operating
expenses, effected some changes in its organization by abolishing some
positions and thereby effecting a reduction of its personnel. Thus, the position of Sales Manager was abolished and the duties previously discharged by the Sales Manager simply added to the duties of the General Manager, to whom the Sales Manager used to report.
- It is of no legal moment that the financial troubles of the company were not of private respondent's making. Private respondent cannot insist on the retention of his position upon the ground that he had not contributed to the financial problems of Wiltshire. The characterization of private respondent's services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of Petitioner Company. The wisdom or soundness of such characterization or decision was not subject to
discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. It should also be noted that the position held by private respondent, Sales Manager, was clearly managerial in character.
De Ocampo v. NLRC, 213 SCRA 652
F: Petitioners Cecile de Ocampo, et. al. are employees of private respondent Baliwag Mahogany Corporation. They are either officers or members of the Baliwag Mahogany Corporation Union-CFW, the existing collective bargaining agent of the rank and file employees in the company. Private respondent Baliwag Mahogany Corporation is an enterprise engaged in the production of wooden doors and furniture and has a total workforce of about 900 employees. In 1988, private respondent Baliwag Mahogany Corporation (company) and Baliwag Mahogany Corporation Union-CFW (union) entered into a collective bargaining agreement containing, among other things, provisions on conversion into cash of unused vacation and sick leaves; grievance machinery procedure; and the right of the company to schedule work on Sundays and holidays.
In November, 1989, the union made several requests from the company, one of which was the cash conversion of unused vacation and sick leave for 1987-1988 and 1988-1989. Acting on the matter, the company ruled to allow payment of unused vacation and sick leaves for the period of 1987-1988 but disallowed cash conversion of the 1988-1989 unused leaves.
The company issued suspension orders affecting twenty (20) employees for failure to render overtime work on December 30, 1989. The suspension was for a period of three (3) days effective January 3, 1996 to January 5, 1990. On the same day, the union filed a notice of strike on the grounds of unfair labor practice particularly the violation of the CBA provisions on non-payment of unused leaves and illegal dismissal of seven (7) employees in November, 1989. On January 13, 1990, the company issued a notice of termination to three (3) employees or union members, namely, Cecile de Ocampo, Rene Villanueva and Marcelo dela Cruz, of the machinery department, allegedly to effect cost
reduction and redundancy. The members of the union conducted a picket at the main gate of the company on January 18, 1990. On the same day, the company filed a petition to declare the strike illegal with prayer for injunction against the union, Cecile de Ocampo, Wilfredo San Pedro and Rene Aguilar. An election of officers was conducted by the union on January 19, 1990. Consequently, Cecile de Ocampo was elected as president.
During the conciliation meeting held at National Conciliation and Mediation Board (NCMB) on January 22, 1990 relative to the notice of strike filed by the union on January 3, 1990, the issue pertaining to the legality of the termination of three (3) union members was raised by the union. However, both parties agreed to discuss it separately. Subsequently, in a letter dated January 28, 1990, the union requested for the presence of a NCMB representative during a strike vote held by the union. The strike vote resulted to 388 votes out of 415 total votes in favor of the strike. Consequently, the union staged a strike on February 6, 1990.
On February 7, 1990, the company filed a petition to assume jurisdiction with the Department of Labor and Employment. On February 16, 1990, the company filed an amended petition, praying among other things, that the strike staged by the union on February 6, 1990 be declared illegal, there being no genuine strikeable issue and the violation of the no-strike clause of the existing CBA between the parties.
The Secretary of Labor in an order dated February 15, 1990, certified the entire labor dispute to the respondent Commission for compulsory arbitration and directed all striking workers including the dismissed employees to return to work and the management to accept them back.
The company filed an urgent motion for assignment of a sheriff to enforce the order of the Secretary.
In an order dated February 22, 1990, the Secretary of Labor directed Sheriff Alfredo Antonio, Jr., to implement the order.
On February 23, 1990, the sheriff, with the assistance of the PC/INP of San Rafael, removed the barricades and opened the main gate of the company. Criminal complaints for illegal assembly, grave threats, and grave coercion were filed against Cecile de Ocampo, Timoteo Mijares, Modesto Mamesia and
Domingo Silarde by the local police authorities on February 24, 1990.
On February 25, 1990, the company caused the publication of his return to work order in two (2) newspapers, namely NGAYON and ABANTE. In its letter dated February 27, 1990, the union, through its President Cecile de Ocampo,
requested the Regional Director of DOLE, Region III to intervene in the existing dispute with management. Meanwhile, the company extended the February 26, 1990 deadline for the workers to return to work until March 15, 1990.
The respondent Commission rendered a decision on October 23, 1990, declaring the strikes staged on January 18, 1990 and February 6, 1990 illegal. Such decision prompted the company to file a motion for reconsideration substantially on the ground that public respondent seriously erred in not
dismissing the employees particularly the union officers, who participated in the illegal strike. Petitioners filed an opposition to the company's motion for
reconsideration and subsequently a supplemental comment/opposition to motion for reconsideration.
I: Whether or not there is legal basis for declaring the loss of employment status by petitioners on account of the strike in respondent Company.
H: Court finds the petition devoid of merit. The Solicitor General claims that it is undisputed that the union resorted to illegal acts during the strike arguing that
private respondent's personnel manager specifically identified the union officers and members who committed the prohibited acts and actively participated therein. Moreover, the Solicitor General maintains that the illegality of the strike likewise stems from the failure of the petitioners to honor the certification order and heed the return-to-work order issued by the Secretary of Labor.
Unrebutted evidence shows that the individual petitioners defied the return-to-work order of the Secretary of Labor issued on February 15, 1990. As a matter of fact, it was only on February 23, 1990 when the barricades were removed and the main gate of the company was opened. Hence, the termination of the services of the individual petitioners is justified on this ground alone.
Anent the contention that the respondent Commission gravely abused its discretion when it allowed the presentation of additional evidence to prove the loss suffered by the company despite the fact that they were mere
afterthoughts and just concocted by the company, time and again, We emphasize that "technical rules of evidence are not binding in labor cases. Labor officials should use every and reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process" (Philippine Telegraph and
Telephone Corporation v. National Labor Relations Commission, G.R. No. 80600, March 21, 1990, 183 SCRA 451, 457).
We believe that redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirement of the enterprise. Succinctly put, 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. The employer had no legal obligation to keep in its payroll more employees, than are necessary for the operation of its business. (Wiltshire File Co., Inc. v. National Labor Relations Commission, G.R. No. 82249, February 7, 1991; 193 SCRA 665,672).
The reduction of the number of workers in a company made necessary by the introduction of the services of Gemac Machineries in the maintenance and repair of its industrial machinery is justified. There can be no question as to the right of the company to contract the services of Gemac Machineries to replace the services rendered by the terminated mechanics with a view to effecting more economic and efficient methods of production.
In the same case, We ruled that "(t)he characterization of (petitioners') services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of (private respondent) company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown". In contracting the services of Gemac Machineries, as part of the company's cost-saving program, the services rendered by the mechanics became redundant and superfluous, and therefore properly terminable. The company merely exercised its business judgment or management prerogative. Petition dismissed.
Maya Farms Employees Organization v. NLRC, 239 SCRA 508 F: Private respondents Maya Farms, Inc. and Maya Realty and Livestock
Corporation belong to the Liberty Mills group of companies whose undertakings include the operation of a meat processing plant which produces ham, bacon, cold cuts, sausages and other meat and poultry products.
Petitioners, on the other hand, are the exclusive bargaining agents of the employees of Maya Farms, Inc. and the Maya Realty and Livestock Corporation. On April 12, 1991, private respondents announced the adoption of an early retirement program as a cost-cutting measure considering that their business operations suffered major setbacks over the years. The program was voluntary and could be availed of only by employees with at least eight (8) years of service. Dialogues were thereafter conducted to give the parties an opportunity to discuss the details of the program. Accordingly, the program was amended to reduce the minimum requirement of eight (8) years of service to only five (5) years.
However, the response to the program was nil. There were only a few takers. To avert further losses, private respondents were constrained to look into the companies' organizational set-up in order to streamline operations. Consequently, the early retirement program was converted into a special redundancy program intended to reduce the work force to an optimum number so as to make operations more viable.
In December 1991, a total of sixty-nine (69) employees from the two companies availed of the special redundancy program. On January 17, 1992, the two companies sent letters to sixty-six (66) employees informing them that their respective positions had been declared redundant. The notices likewise stated that their services would be terminated effective thirty (30) days from receipt thereof. Separation benefits, including the conversion of all earned leave credits and other benefits due under existing CBAs were thereafter paid to those affected.
On January 24, 1992, a notice of strike was filed by the petitioners which
accused private respondents, among others, of unfair labor practice, violation of CBA and discrimination. Conciliation proceedings were held by the National Conciliation and Mediation Board (NCMB) but the parties failed to arrive at a settlement.
On February 6, 1992, the two companies filed a petition with the Secretary of Labor and Employment asking the latter to assume jurisdiction over the case and/or certify the same for compulsory arbitration. Thus, on February 12, 1992, the then Acting Labor Secretary (now Secretary) Nieves Confesor certified the case to herein public respondent for compulsory arbitration.
On March 4, 1992, the parties were called to a hearing to identify the issues involved in the case. Thereafter, they were ordered to submit their respective position papers.
In their position paper, petitioners averred that in the dismissal of sixty-six (66) union officers and members on the ground of redundancy, private respondents circumvented the provisions in their CBA. Petitioners also alleged that the companies' claim that they were in economic crisis was fabricated because in 1990, a net income of over 83 million pesos was realized by Liberty Flour Mills Group of Companies. Invoking the workers' constitutional right to security of tenure, petitioners prayed for the reinstatement of the sixty-six (66) employees and the payment of attorney's fees as they were constrained to hire the
services of counsel in order to protect the workers' rights.
On their part, private respondents contend that their decision to implement a special redundancy program was an exercise of management prerogative which could not be interfered with unless it is shown to be tainted with bad faith and ill motive. Private respondents explained that they had no choice but to reduce their work force, otherwise, they would suffer more losses. Furthermore, they denied that the program violated CBA provisions. NLRC favored the company. I: WON there was grave abuse of discretion amounting to lack or in excess of jurisdiction with the factual findings of public respondent
H: The termination of the sixty-six employees was done in accordance with Article 283 of the Labor Code. The basis for this was the companies' study to streamline operations so as to make them more viable. Positions which overlapped each other, or which are in excess of the requirements of the service, were declared redundant. We fully agree with the findings and conclusions of the public respondent on the issue of termination.
A close examination of the positions retained by management show that said positions such as egg sorter, debonner were but the minimal positions required to sustain the limited functions/operations of the meat processing department. In the absence of any evidence to prove bad faith on the part of management in arriving at such decision, which records on hand failed to show in instant case, the rationality of the act of management in this regard must be sustained. The rule is well-settled that labor laws discourage interference with an
employer's judgment in the conduct of his business. Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. As long as the company's exercise of the same is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees under the laws or valid agreements, such exercise will be upheld.
Finally, contrary to petitioners' contention, there is nothing on record to show that the 30-day notice of termination to the workers was disregarded and that the same substituted with separation pay by private respondents. As found by public respondent, written notices of separation were sent to the employees on January 17, 1992. The notices expressly stated that the termination of
employment was to take effect one month from receipt thereof. Therefore, the allegation that separation pay was given in lieu of the 30-day notice required by law is baseless. Petition dismissed.
GOLDEN THREAD KNITTING INDUSTIRES v. NLRC | 304 SCRA 720 | March 11, 1999
FACTS
- several employees of Golden Thread Knitting Industries (GTK) were dismissed for different reasons. 2 employees were allegedly for slashing the company’s products (towels), 2 for redundancy, 1 for threatening the personnel manager and violating the company rules, and 1 for abandonment of work.
- The laborers filed complaints for illegal dismissal. They allege that the company dismissed them in retaliation for establishing and being members of the Labor Union.
GTK, on the other hand, contend that there were valid causes for the terminations. The dismissals were allegedly a result of the slashing of their products, rotation of work, which in turn was caused by the low demand for their products, and abandonment of work. WRT to the cases involving the slashing of their products and threats to the personnel manager, the dismissals were in effect a form of punishment.
- The labor arbiter ruled partially in favor of GTK. He said that there was no showing that the dismissals were in retaliation for establishing a union. He, however, awarded separation pay to some employees.
- NLRC, however, appreciated the evidence differently. It held that there was illegal dismissal and ordered reinstatement.
ISSUE: WON there was illegal dismissal HELD: YES
Ratio Dismissal is the ultimate penalty that can be meted to an employee. It must therefore be based on a clear and not on an ambiguous or ambivalent ground.
Reasoning
- WRT to the case involving slashing of towels, the employees were not given procedural due process. There was no notice and hearing, only outright denial of their entry to the work premises by the security guards. The charges of serious misconduct were not sufficiently proved.
- WRT to the employees dismissed for redundancy, there was also denial of procedural due process. Hearing and notice were not observed. Thus, although the characterization of an employee’s services is a management function, it must first be proved with evidence, which was not done in this case. the company cannot merely declare that it was overmanned.
- WRT to the employee dismissed for disrespect, the SC believed the story version of the company (which essentially said that the personnel manager was threatened upon mere service of a suspension order to the employee), but ruled that the dismissal could not be upheld.
“the dismissal will not be upheld where it appears that the employee’s act of disrespect was provoked by the employer. xxx the employee hurled
incentives at the personnel manager because she was provoked by the baseless suspension imposed on her. The penalty of dismissal must be commensurate with the act, conduct, or omission to the employee.” - The dismissal was too harsh a penalty; a suspension of 1 week would have sufficed.
“GTK exercised their authority to dismiss without due regard to the provisions of the Labor Code. The right to terminate should be utilized with extreme caution because its immediate effect is to put an end to an employee's present means of livelihood while its distant effect, upon a subsequent finding
of illegal dismissal, is just as pernicious to the employer who will most likely be required to reinstate the subject employee and grant him full back wages and other benefits.
Disposition Decision AFFIRMED
LOPEZ SUGAR CORP v. FED OF FREE WORKERS PHILIPPINE LABOR UNION ASSOCIATION (PLUA NACUSIP) | 189 SCRA 179 | August 30, 1990 FACTS
- Lopez Sugar Corporation (LPC), allegedly, to prevent losses due to major economic problems, and exercising its privilege under the 1975-1977 CBA entered into with PLUA-NACUSIP, caused the retrenchment and retirement of a number of its employees.
- LPC filed with the MOLE a combined report on retirement and application for clearance to retrench affecting eighty six (86) of its employees. Of these 86 employees, 59 were retired and 27 were to be retrenched in order to prevent losses.
- Federation of Free Workers (FFW), as the certified bargaining agent of the rank-and-file employees of LPC, also filed with the MOLE a complaint for unfair labor practices and recovery of union dues.
- In said complainant, FFW claimed that the terminations undertaken by LPC were violative of the security of tenure of its members and were intended to "bust" the union and hence constituted an unfair labor practice.
- FFW claimed that after the termination of the services of its members, LPC advised 110 casuals to report to its personnel office.
- FFW further argued that to justify retrenchment, serious business reverses must be "actual, real and amply supported by sufficient and convincing evidence." FFW prayed for reinstatement of its members who had been retired or retrenched.
- LPC denied having hired casuals to replace those it had retired or retrenched. It explained that the announcement calling for 110 workers to report to its personnel office was only for the purpose of organizing a pool of extra workers which could be tapped whenever there were temporary vacancies by reason of leaves of absence of regular workers.
- LA: denied LPC’ s application for clearance to retrench its employees on the ground that for retrenchment to be valid, the employer's losses must be serious, actual and real and must be amply supported by sufficient and convincing evidence. The application to retire was also denied on the ground that LPC's prerogative to so retire its employees was granted by the 1975-77 CBA had long ago expired. LPC was, therefore, ordered to reinstate 27 retired or retrenched employees represented by PLUAand FFW and to pay them full backwages from the time of termination until actual reinstatement.
- On appeal, the NLRC, finding no justifiable reason for disturbing the decision of the Labor Arbiter, affirmed that decision
ISSUE: WON NLRC acted with GAD in denying LPC’s combined report on retirement and application for clearance to retrench
HELD
NO - A283 of the LC provides:
Article 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 workers and the Ministry of Labor and Employer 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 se 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 one (1) whole year. - In ordinary connotation, the phrase "to prevent losses" means that
retrenchment or termination of the services of some employees is authorized to be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. It is not, in other words, the intention of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have in fact materialized ; if such an intent were expressly written into the law, that law may well be vulnerable to constitutional attack as taking property from one man to give to another - When, or under what circumstances does the employer becomes legally privileged to retrench and reduce the number of his employees?
- The general standards in terms of which the acts of petitioner employer must be appraised:
1) 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 the retrenchment would appear to be seriously in question.
2) 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. 3) Because of the consequential nature of retrenchment, it must 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 than labor costs. 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.
4) 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.
-Garcia v. National Labor Relations Commissions:
. . . But it is essentially required that the alleged losses in business operations must be prove[n] (NAFLU vs. Ople, [1986]). Otherwise, said ground for
be merely feigning business losses or reverses in their business ventures in order to ease out employees .
- WON an employer would imminently suffer serious or substantial losses for economic reasons is essentially a question of fact for the Labor Arbiter and the NLRC to determine.
- In the instant case, the LA found no sufficient and convincing evidence to sustain petitioner's essential contention that it was acting in order to prevent substantial and serious losses.
- The principal difficulty with LPC' s case as above presented was that no proof of actual declining gross and net revenues was submitted. No audited financial statements showing the financial condition of petitioner corporation during the above mentioned crop years were submitted.
- LPC conspicuous failed to specify the cost-reduction measures actually undertaken in good faith before resorting to retrenchment. Upon the other hand, it appears from the record that petitioner, after reducing its work force, advised 110 casual workers to register with the company personnel officer as extra workers.
- LPC argued that it did not actually hire casual workers but that it merely organized a pool of "extra workers" from which workers could be drawn whenever vacancies occurred by reason of regular workers going on leave of absence but the LA and the NLRC did not accord much credit to LPC's
explanation.
*AS REGARDS the RETIREMENTS effected by LPC
- On this point, SC finds for LPC saying that ”although the CBA expired on 31 December 1977, it continued to have legal effects as between the parties until a new CBA had been negotiated and entered into.” This proposition finds legal support in Article 253 of the Labor Code, which provides:
Article 253 — Duty to bargain collectively when there exists a collective bargaining agreement. — When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. (Emphasis supplied)
- Accordingly, in the instant case, despite the lapse of the formal effectivity of the CBA by virtue of its own provisions, the law considered the same as
continuing in force and effect until a new CBA shall have been validly executed. - Hence, LPC acted within legal bounds when it decided to retire several
employees in accordance with the CBA. That the employees themselves similarly acted in accordance with the CBA is plain from the record.
- Even after the expiration of the CBA, LPC's employees continued to receive the benefits and enjoy the privileges granted therein. If the workers chose to avail of the CBA despite its expiration, equity — if not the law—dictates that the employer should likewise be able to invoke the CBA.
- The fact that several workers signed quitclaims will not by itself bar them from joining in the complaint. Quitclaims executed by laborers are commonly frowned upon as contrary to public policy and ineffective to bar claims for the full
measure of the worker's legal rights.
- AFP Mutual Benefit Association, Inc. v. AFP-MBAI-EU:
In labor jurisprudence, it is well establish that quitclaims and/or complete releases executed by the employees do not estop them from pursuing their claims arising from the unfair labor practice of the employer. The basic reason
for this is that such quitclaimants and/or complete releases are against public policy and, therefore, null and void. The acceptance of termination pay does not divest a laborer of the right to prosecute his employer for unfair labor practice acts.
- Cariño vs. ACCFA, (1966) ~ Justice Sanchez, said:
Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and employee, obviously, do not stand on the same footing The employer drove the employee to the wall. The latter must have to get hold of money. Because, out of job, he had to face the harsh necessities of life. He thus found himself in no position to resist money proffered. His, then, is a case of adherence, not of choice. One thing sure, however, is that
petitioners did not relent their claim. They pressed it. They are deemed not to have waived any of their rights. Renuntiatio non praesumitur
Disposition Petition for Certiorari is partially GRANTED and NLRC’ s decision affirming that portion of the Decision of the Labor Arbiter ordering the reinstatement judgment of employees who had been retired by LPC under the applicable provisions of the CBA is AFFIRMED.
(*all illegally retrenched were ordered to be reinstated and given backwages; those who executed quitclaims-said amount shall be deducted from their backwages and where reinstatement is no longer possible, backwages + separation pay na lang. BUT those who were retired by LPC were found to be valid as per the CBA.
Flight Attendants and Stewards Association of the Philippines v. PAL, 559 SCRA 252
F: On June 15, 1998, PAL retrenched 5,000 of its employees, including more than 1,400 of its cabin crew personnel, to take effect on July 15, 1998. PAL adopted the retrenchment scheme allegedly to cut costs and mitigate huge financial losses as a result of a downturn in the airline industry brought about by the Asian financial crisis. During said period, PAL claims to have incurred P90 billion in liabilities, while its assets stood at P85 billion.
In implementing the retrenchment scheme, PAL adopted its so-called "Plan 14" whereby PAL's fleet of aircraft would be reduced from 54 to 14, thus requiring the services of only 654 cabin crew personnel. Prior to the full implementation of the assailed retrenchment program, FASAP and PAL conducted a series of consultations and meetings and explored all possibilities of cushioning the impact of the impending reduction in cabin crew personnel. However, the parties failed to agree on how the scheme would be implemented. Thus PAL unilaterally resolved to utilize the criteria set forth in Section 112 of the PAL-FASAP Collective Bargaining Agreement (CBA) in retrenching cabin crew personnel: that is, that retrenchment shall be based on the individual employee's efficiency rating and seniority.
PAL determined the cabin crew personnel efficiency ratings through an evaluation of the individual cabin crew member's overall performance for the year 1997 alone. The factors taken into account on whether the cabin crew member would be retrenched, demoted or retained were: 1) the existence of excess sick leaves; 2) the crew member's being physically overweight; 3) seniority; and 4) previous suspensions or warnings imposed.
While consultations between FASAP and PAL were ongoing, the latter began implementing its retrenchment program by initially terminating the services of
140 probationary cabin attendants only to rehire them in April 1998. Moreover, their employment was made permanent and regular. On July 15, 1998, however, PAL carried out the retrenchment of its more than 1,400 cabin crew personnel. Meanwhile, in June 1998, PAL was placed under corporate rehabilitation and a rehabilitation plan was approved per Securities and Exchange Commission (SEC) Order dated June 23, 1998 in SEC Case No. 06-98-6004.
On September 4, 1998, PAL, through its Chairman and Chief Executive Officer (CEO) Lucio Tan, made an offer to transfer shares of stock to its employees and three seats in its Board of Directors, on the condition that all the existing Collective Bargaining Agreements (CBAs) with its employees would be suspended for 10 years, but it was rejected by the employees. On September 17, 1998, PAL informed its employees that it was shutting down its operations effective September 23, 1998 despite the previous approval on June 23, 1998 of its rehabilitation plan.
On September 23, 1998, PAL ceased its operations and sent notices of termination to its employees. Two days later, PAL employees, through the Philippine Airlines Employees Association (PALEA) board, sought the intervention of then President Joseph E. Estrada. PALEA offered a 10-year moratorium on strikes and similar actions and a waiver of some of the economic benefits in the existing CBA. Lucio Tan, however, rejected this counter-offer.
In a referendum conducted on October 2, 1998, PAL employees ratified the proposal. On October 7, 1998, PAL resumed domestic operations and, soon after, international flights as well. Meanwhile, in November 1998, or five months after the June 15, 1998 mass dismissal of its cabin crew personnel, PAL began recalling to service those it had previously retrenched. Several of those retrenched were called back to service.
In December 1998, PAL submitted a "stand-alone" rehabilitation plan to the SEC by which it undertook a recovery on its own while keeping its options open for the entry of a strategic partner in the future. Accordingly, it submitted an amended rehabilitation plan to the SEC with a proposed revised business and financial restructuring plan, which required the infusion of US$200 million in new equity into the airline.
On May 17, 1999, the SEC approved the proposed "Amended and Restated Rehabilitation Plan" of PAL and appointed a permanent rehabilitation receiver for the latter. On June 7, 1999, the SEC issued an Order confirming its approval of the "Amended and Restated Rehabilitation Plan" of PAL. In said order, the cash infusion of US$200 million made by Lucio Tan on June 4, 1999 was acknowledged. Respondent PAL is ordered to pay the separation benefits to those complainants who have not received their separation pay and to pay the balance to those who have received partial separation pay.
I: WON CA decided the case a quo in a way contrary to law and/or jurisprudence and WON PAL’s retrenchment scheme was justified.
H: It is a settled rule that in the exercise of the Supreme Court's power of review, the Court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties during trial. However, there are several exceptions to this rule such as when the factual
findings of the Labor Arbiter differ from those of the NLRC, as in the instant case, which opens the door to a review by this Court.
The law recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors which would endanger its existence or stability. Where appropriate and where conditions are in accord with law and jurisprudence, the Court has authorized valid reductions in the work force to forestall business losses, the hemorrhaging of capital, or even to recognize an obvious reduction in the volume of business which has rendered certain employees redundant.
The burden clearly falls upon the employer to prove economic or business losses with sufficient supporting evidence. Its failure to prove these reverses or losses necessarily means that the employee's dismissal was not justified. Any claim of actual or potential business losses must satisfy certain established standards, all of which must concur, before any reduction of personnel becomes legal
FIRST ELEMENT: That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, 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.
The law speaks of serious business losses or financial reverses. Sliding incomes or decreasing gross revenues are not necessarily losses, much less serious business losses within the meaning of the law. The fact that an employer may have sustained a net loss, such loss, per se, absent any other evidence on its impact on the business, nor on expected losses that would have been incurred had operations been continued, may not amount to serious business losses mentioned in the law. The employer must show that its losses increased through a period of time and that the condition of the company will not likely improve in the near future or that it expected no abatement of its losses in the coming years. The employer must also exhaust all other means to avoid further losses without retrenching its employees. Retrenchment is a means of last resort; it is justified only when all other less drastic means have been tried and found insufficient.
In the instant case, PAL failed to substantiate its claim of actual and imminent substantial losses which would justify the retrenchment of more than 1,400 of its cabin crew personnel. Although the Philippine economy was gravely affected by the Asian financial crisis, however, it cannot be assumed that it has likewise brought PAL to the brink of bankruptcy. Likewise, the fact that PAL underwent corporate rehabilitation does not automatically justify the retrenchment of its cabin crew personnel.
Records show that PAL was not even aware of its actual financial position when it implemented its retrenchment program. It embarked on the mass dismissal without first undertaking a well-considered study on the proposed retrenchment scheme. This view is underscored by the fact that previously, PAL terminated the services of 140 probationary cabin attendants, but rehired them almost immediately and even converted their employment into permanent and regular, even as a massive retrenchment was already looming in the horizon.
Also, the claim that PAL saved P24 million monthly due to the implementation of the retrenchment program does not prove anything; it has not been shown to what extent or degree such savings benefited PAL, vis-a-vis its total
expenditures or its overall financial position. Likewise, its claim that its liabilities reached P90 billion, while its assets amounted to P85 billion only - or a debt to asset ratio of more than 1:1 - may not readily be believed, considering that it did not submit its audited financial statements. All these allegations are self-serving evidence.
FOURTH ELEMENT: That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees' right to security of tenure. Concededly,
retrenchment to prevent losses is an authorized cause for terminating employment and the decision whether to resort to such move or not is a management prerogative. However, the right of an employer to dismiss an employee differs from and should not be confused with the manner in which such right is exercised. It must not be oppressive and abusive since it affects one's person and property.
On the requirement that the prerogative to retrench must be exercised in good faith, we have ruled that the hiring of new employees and subsequent rehiring of "retrenched" employees constitute bad faith; that the failure of the employer to resort to other less drastic measures than retrenchment seriously belies its claim that retrenchment was done in good faith to avoid losses; and that the demonstrated arbitrariness in the selection of which of its employees to retrench is further proof of the illegality of the employer's retrenchment program, not to mention its bad faith.
When PAL implemented Plan 22, instead of Plan 14, which was what it had originally made known to its employees, it could not be said that it acted in a manner compatible with good faith. It offered no satisfactory explanation why it abandoned Plan 14; instead, it justified its actions of subsequently recalling to duty retrenched employees by making it appear that it was a show of good faith; that it was due to its good corporate nature that the decision to consider recalling employees was made.
FIFTH ELEMENT: That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers. In selecting employees to be dismissed, fair and reasonable criteria must be used, such as but not limited to: (a) less preferred status (e.g., temporary employee), (b) efficiency and (c) seniority. The appellate court held that there was no need for PAL to consult with FASAP regarding standards or criteria that the airline would utilize in the
implementation of the retrenchment program; and that the criteria actually used which was unilaterally formulated by PAL using its Performance Evaluation Form in its Grooming and Appearance Handbook was reasonable and fair. Indeed, PAL was not obligated to consult FASAP regarding the standards it would use in evaluating the performance of the each cabin crew. However, we do not agree with the findings of the appellate court that the criteria utilized by PAL in the actual retrenchment were reasonable and fair.
SC has repeatedly enjoined employers to adopt and observe fair and reasonable
standards to effect retrenchment. This is of paramount importance because an employer's retrenchment program could be easily justified considering the subjective nature of this requirement. The adoption and implementation
of unfair and unreasonable criteria could not easily be detected especially in the retrenchment of large numbers of employees, and in this aspect, abuse is a very distinct and real possibility. This is where labor tribunals should exercise more diligence; this aspect is where they should concentrate when placed in a position of having to judge an employer's retrenchment program.
Moreover, in assessing the overall performance of each cabin crew personnel, PAL only considered the year 1997. This makes the evaluation of each cabin attendant's efficiency rating capricious and prejudicial to PAL employees covered by it. In sum, PAL's retrenchment program is illegal because it was based on wrongful premise (Plan 14, which in reality turned out to be Plan 22, resulting in retrenchment of more cabin attendants than was necessary) and in a set of criteria or rating variables that is unfair and unreasonable when
implemented. It failed to take into account each cabin attendant's respective service record, thereby disregarding seniority and loyalty in the evaluation of overall employee performance.
Quitclaims executed as a result of PAL's illegal retrenchment program are likewise annulled and set aside because they were not voluntarily entered into by the retrenched employees; their consent was obtained by fraud or mistake, as volition was clouded by a retrenchment program that was, at its inception, made without basis. The law looks with disfavor upon quitclaims and releases by employees pressured into signing by unscrupulous employers minded to evade legal responsibilities. As a rule, deeds of release or quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not amount to estoppel. The amounts already received by the retrenched employees as consideration for signing the quitclaims should, however, be deducted from their respective monetary awards. As to PAL's recall and rehire process (of retrenched cabin crew employees), the same is likewise defective. Considering the illegality of the retrenchment, it follows that the subsequent recall and rehire process is likewise invalid and without effect.
A corporate officer is not personally liable for the money claims of discharged corporate employees unless he acted with evident malice and bad faith in terminating their employment. We do not see how respondent Patria Chiong may be held personally liable together with PAL, it appearing that she was merely acting in accordance with what her duties required under the
circumstances. Being an Assistant Vice President for Cabin Services of PAL, she takes direct orders from superiors, or those who are charged with the
formulation of the policies to be implemented. Petition granted. Manatad v. PT&T, 548 SCRA 64
F: In September 1988, petitioner was employed by respondent Philippine Telegraph and Telephone Corporation (PT&T) as junior clerk with a monthly salary of P3, 839.74. She was later promoted as Account Executive, the position she held until she was temporarily laid off from employment on 1 September 1998.
Petitioner temporary separation from employment was pursuant to the Temporary Staff Reduction Program adopted by respondent due to serious business reverses. On 16 November 1998, petitioner received a letter from respondent inviting her to avail herself of its Staff Reduction Program Package equivalent to one-month salary for every year of service, one and one-half month salary, pro-rated 13th month pay, conversion to cash of unused vacation and sick leave credits, and Health Maintenance Organization and group life insurance coverage until full payment of the separation package. Petitioner, however, did not opt to avail herself of the said package. On 26 February 1999, petitioner received a Notice of Retrenchment from respondent permanently dismissing her from employment effective 16 February 1999.
Petitioner filed illegal dismissal before the Labor Arbiter. Petitioner submitted evidence that the respondents have no grounds for retrenchment and that the company is not suffering from serious losses. However, the respondent also submitted financial reports to sustain its ground of a valid retrenchment. The Labor Arbiter held in favor of the petitioner which was affirmed by the NLRC. It further noted that the Department of Labor and Employment (DOLE) was not notified by the respondent of its retrenchment program as required by law. On appeal to CA, the decision of the NLRC was reversed. It held that the company is suffering serious financial losses as reflected on its financial statements submitted and prepared by independent auditors of the company. Hence, this petition.
I: Whether there is a valid retrenchment by the respondent company
H: Pertinent provision is Article 283 of the Labor Code. 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. The financial statements reflect that respondent suffered substantial loss in the amount of P558 Million by 30 June 1998. The Report of SGV & Co. substantiates the alleged precarious financial condition of the respondent. The financial statements audited by independent external auditors constitute the normal method of proving the profit and loss performance of a company.
The respondent complied with the requisite notices to the employee and the DOLE to effect a valid retrenchment. Petitioner failed to refute that she received the written notice of retrenchment from respondent on 16 November 1998. Although respondent failed to furnish DOLE with a formal letter notifying it of the retrenchment, it still substantially complied with the requirement. Since the National Conciliation and Mediation Board, the reconciliatory arm of DOLE, supervised the negotiation for separation package, we agree with the Court of Appeals that it would be superfluous to still require respondent to serve notice of the retrenchment to DOLE.
In fact, even granting arguendo that respondent was not experiencing losses, it is still authorized by Article 283[26] of the Labor Code to cease its business operations. Explicit in the said provision is that closure or cessation of business
operations is allowed even if the business is not undergoing economic losses. The owner, for any bona fide reason, can lawfully close shop anyone. Just as no law forces anyone to go into business, no law can compel anybody to continue in it. It would indeed be stretching the intent and spirit of the law if we were to unjustly interfere with the management prerogative to close or cease its
business operations, just because said business operations are not suffering any loss or simply to provide the workers continued employment.
North Davao Mining v. NLRC (1996) 254 SCRA 721
Facts: Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason of the company’s closure on May 31, 1992, and who were the complainants in the cases before the respondent labor arbiter. On May 31, 1992, petitioner North Davao completely ceased operations due to serious business reverses. From 1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos per year, for each of the five years prior to its closure. All told five months prior to its closure, its total liabilities had exceeded its assets by 20.392 billion pesos. When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days’ pay for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation, from the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent to thirty days’ pay for every year of service.
Moreover, the employees had to collect their salaries at a bank in Tagum, Davao del Norte, and some 58 kilometers from their workplace and about 2 ½hours’ travel time by public transportation; this arrangement lasted from 1981 up to 1990.
Subsequently, a complaint was filed with respondent labor arbiter by
respondent Wilfredo Guillema and 271 other separated employees for additional separation pay; back wages; transportation allowance; hazard pay; etc.,
amounting to P58, 022,878.31.
Issue: WON the time spent in collecting wages in a place other than the place of employment is compensable notwithstanding that the same is done during official time.
Held: Hours spent by complainants in collecting salaries shall be considered compensable hours worked.
It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC maintained its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the workers about two and a half (2 1/2) hours of travel from the place of work and such travel time is not official. Records also show that on February 12,1992, when an inspection was conducted by the Department of Labor and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that petitioners had violated labor standards law, one of which is the place of payment of wages.
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that:
