THIRD DIVISION
G.R. No. 214744, March 14, 2018
LA CONSOLACION COLLEGE OF MANILA, SR. IMELDA A. MORA, OSA, ALBERT D. MANALILI, AND ALICIA MANABAT, Petitioners, v. VIRGINIA PASCUA, M.D., Respondent.
D E C I S I O N
LEONEN, J.:
When termination of employment is occasioned by retrenchment to prevent losses, an employer must declare a reasonable cause or criterion for retrenching an employee. Retrenchment that disregards an employee's record and length of service is an illegal termination of employment.
This resolves a Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure, praying that the assailed June 2, 2014 Decision2 and October 8, 2014 Resolution3 of the Court of Appeals in CA-G.R. SP No. 130793 be reversed and set aside.
The assailed Court of Appeals June 2, 2014 Decision reversed the ruling of the National Labor Relations Commission which, in turn, reversed Labor Arbiter Luvina P. Roque's (Labor Arbiter Roque) January 8, 2013 Decision,4 holding that Virginia Pascua's (Pascua) employment was illegally terminated. The assailed Court of Appeals October 8, 2014 Resolution denied the Motion for Reconsideration file by herein petitioners La Consolacion College of Manila (La Consolacion), Sr. Imelda A. Mora (Sr. Mora), Albert Manalili (Manalili), and Alicia Manabat (Manabat).
On January 10, 2000, Pascua's services as school physician were engaged by La Consolacion.5 She started working part-time before serving full-time from 2008.6
On September 29, 2011, Pascua was handed an Inter-Office Memo from Manalili, La Consolacion's Human Resources Division Director, inviting her to a meeting concerning her "working condition."7 The meeting was set the following day, September 30, 2011, at the office of La Consolacion's President, Sr. Mora.8
In that meeting, Pascua was handed a termination of employment letter, explaining the reasons for and the terms of her dismissal, including payment of separation pay as follows:
Due to the current financial situation of La Consolacion College Manila caused by the decrease in enrollment in our institution, the Board of Trustees in its last meeting of September 24, 2011 has advised the [La Consolacion College] to downsize the health services staff at the end of this 1st Semester of School Year 2011-2012.Not satisfied, Pascua wrote to Sr. Mora, pointing out that the part-time school physician, Dr. Venus Dimagmaliw (Dr. Dimagmaliw),10 should have been considered for dismissal first. She also noted that rather than dismissing her outright, La Consolacion could have asked her to revert to part-time status instead. Pascua sought clarification specifically on the following points:
Accordingly, we were forced to eliminate your position as school physician who is rendering thirty-five (35) hours in a week.
It is really with regret that management has to take this decision, as a last resort, to prevent serious business losses.
Your last day of service with La Consolacion College Manila shall be one month after your receipt of this letter.
The payments that you shall be receiving are the computation of your one (1) month pay of the thirty (30) days notice, one-half QA) month of basic salary for every year of service as a regular employee (as of August 19, 2008), 13th month pay and tax refund.9
1. What were your criteria for retrenchment selection?In the meantime, Pascua underwent La Consolacion's clearance procedures and completed them on November 3, 2011. However, Pascua made a handwritten note on her Exit Clearance, stating that she was reserving the right "to question the validity/legality of [her] termination . . . before any agency/court with appropriate jurisdiction over the case."12 Following this, Pascua proceeded to file a complaint for illegal dismissal against La Consolacion, Sr. Mora, Manalili, and Manabat.13
2. Why was I selected to be terminated (with the status of regular, ful[l-]time School Physician) over my counterpart who is merely a part-time School Physician without even giving me the option to rever[t] back to my part-time status?
3. How come I was the only one terminated among the health services staff?
4. Were there other cost-cutting measures done by the school to abate its alleged losses other than implementation of that drastic measure of termination of one (1) employee as in my case?11
One obvious measure to prevent serious business losses was to downsize the health services division, by eliminating your position as a full-time physician. As you may know, the monthly payroll of the health services division, which consists of five (5) personnel, came to P90,462.34 in basic salary and P5,550.00 in rice subsidy and transportation allowance. Your item in this payroll was P24,687.10 in basic salary and P850.00 in rice subsidy and transportation allowance, or about 26% of total payroll.On January 8, 2013, Labor Arbiter Roque16 rendered a Decision holding that Pascua's employment was illegally terminated and noting that "[La Consolacion, Sr. Mora, Manalili, and Manabat] failed to justify the criteria used in terminating the employment of [Pascua]."17 The dispositive portion of this Decision read:
Since the purpose of the downsizing was to reduce payroll costs, the employees with the highest rates of pay would be the first to be retrenched, if their services could be dispensed with. For this reason, you were the employee terminated. This same objective criteri[on] was used in downsizing the nursing faculty which resulted in the retrenchment of the six highest paid faculty members out of a faculty of eleven.15
WHEREFORE, premise[s] considered, judgment is hereby rendered finding the dismissal of complainant Virginia R. Pascua as illegal. Respondent La Concolacion College, through its responsible officers, is directed to immediately reinstate said complainant to her former position as School Physician within ten (10) days from receipt of this Decision, and submit compliance top (sic) this Office.On appeal, the National Labor Relations Commission reversed Labor Arbiter Roque's Decision. It explained the validity of the basis for dismissing Pascua, as follows:
Moreover, respondent college is directed to pay complainant the following sums: (a) backwages from the time of illegal dismissal until actual reinstatement, which as of this date is computed at P387,225.56 pesos; (b) proportionate 13th month pay in the amount of P20,739.25 pesos; and attorney's fees in the amount of P40,796.48.
SO ORDERED.18
The primary criterion used in selecting complainant-appellee for termination was valid considering that they faced a substantial drop in income, and sought to directly address the problem by reducing the larger of the college expenses, such as salaries and allowances of its more expensive staff members including but not limited to complainant-appel[l]ee.19In its assailed June 2, 2014 Decision,20 the Court of Appeals reinstated Labor Arbiter Roque's January 8, 2013 Decision.
Retrenchment is normally resorted to by management during periods of business reverses and economic difficulties occasioned by such events as recession, industrial depression, or seasonal fluctuations. It is an act of the employer of reducing the work force because of losses in the operation of the enterprise, lack of work, or considerable reduction on the volume of business. Retrenchment is, in many ways, a measure of last resort when other less drastic means have been tried and found to be inadequate.26 (Citations omitted)While a legitimate business option, retrenchment may only be exercised in compliance with substantive and procedural requisites.
In this case, petitioners acted in response to an actual drop in enrollment as shown by their documentary attachments. The drop in enrollment and corresponding drop in income to cover basic operating expenses was not a mere figment of the imagination of the administration. Attached as Annex "C" of the Appeal at the NLRC which is Annex "I" of the Petition was a summary of the audited financial statements from 2006 to 2011 that show very clearly the deterioration of income due to decline in enrollment in a long period of time. Also attached were copies of the audited financial statements of the school from 2008-2012 Annexes "D", "E" and "F" . . . The 2010 audited financial report of SGV (2010 vs. 2009) clearly showed the decline in total tuition fee revenue from Php 210,355,192 million to Php 155,823,959 million or by a drop of Php 54,531,233 million or twenty-six [percent] (26%). Moreover the decline in comprehensive income from Php 19,133,158 to [Php] 738,671 or Php 18,394,487 or ninety-six percent (96%) was very alarming indeed.35As acknowledged by Labor Arbiter Roque,36 this financial backdrop demonstrates the starkly difficult financial situation besetting La Consolacion. This also shows that La Consolacion proceeded with a modicum of good faith and not with a stratagem specifically intended to undermine certain employees' security of tenure.
Records do not show any criterion adopted or used by petitioner in dismissing respondent. Respondent was terminated without considering her seniority. Retrenchment scheme without taking seniority into account rendered the retrenchment invalid. While respondent was the third most senior employee among the 7 employees in petitioner's personnel department, she was retrenched while her other co-employees junior than her were either retained in the Personnel Department or were transferred to other positions in the company. There was no showing that respondent was offered to be transferred to other positions.41 (Citations omitted)In Philippine Tuberculosis Society, Inc. v. National Labor Union,42 this Court quoted with approval the following discussion by the National Labor Relations Commission:
We noted with concern that the criteria used by the Society failed to consider the seniority factor in choosing those to be retrenched, a failure which, to our mind, should invalidate the retrenchment, as the omission immediately makes the selection process unfair and unreasonable. Things being equal, retaining a newly hired employee and dismissing one who had occupied the position for years, even if the scheme should result in savings for the employer, since he would be paying the newcomer a relatively smaller wage, is simply unconscionable and violative of the senior employee's tenurial rights. In Villena vs. NLRC, 193 SCRA 686. February 7, 1991, the Supreme Court considered the seniority factor an important ingredient for the validity of a retrenchment program. According to the Court, the following legal procedure should be observed for a retrenchment to be valid: (a) one-month prior notice to the employee as prescribed by Article 282 of the Labor Code; and b) use of a fair and reasonable criteria in carrying out the retrenchment program, such as 1) less preferred status (as in the case of temporary employees) 2) efficiency rating, 3) seniority, and 4) proof of claimed financial losses.43There is no dispute here about respondent's seniority and preferred status. Petitioners acknowledge that she had been employed by La Consolacion since January 2000, initially as a part-time physician then serving full-time beginning 2008. It is also not disputed that while respondent was a full-time physician, La Consolacion had another physician, Dr. Dimagmaliw, who served part-time. Precisely, respondent's preeminence is a necessary implication of the very criteria used by La Consolacion in retrenching her, i.e., that she was the highest paid employee in health services division.
An illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages. In certain cases, however, the Court has ordered the reinstatement of the employee without backwages considering the fact that (1) the dismissal of the employee would be too harsh a penalty; and (2) the employer was in good faith in terminating the employee. For instance, in the case of Cruz v. Minister of Labor and Employment[,] the Court ruled as follows:La Consolacion's prohibitive financial condition and demonstrated, though imperfect, attempt at devising a reasonable mechanism for retrenching employees impel this Court to temper its liability for backwages. Accordingly, this Court upholds Labor Arbiter Roque's order for respondent to be reinstated, but modifies the amount of backwages. Respondent is deemed to be employed on a part-time basis from the effective date of her wrongful termination and is entitled to backwages corresponding to such status and period.The Court is convinced that petitioner's guilt was substantially established. Nevertheless, we agree with respondent Minister's order of reinstating petitioner without backwages instead of dismissal which may be too drastic. Denial of backwages would sufficiently penalize her for her infractions. The bank officials acted in good faith. They should be exempt from the burden of paying backwages. The good faith of the employer, when clear under the circumstances, may preclude or diminish recovery of backwages. Only employees discriminately dismissed are entitled to backpay ...Likewise, in the case of Itogon-Suyoc Mines, Inc. v. National Labor Relations Commission, the Court pronounced that "[t]he ends of social and compassionate justice would therefore be served if private respondent is reinstated but without backwages in view of petitioner's good faith."47 (Citations omitted)
| Very truly yours, |
(SGD) | |
WILFREDO V. LAPITAN | |
Division Clerk of Court |
Endnotes:
1Rollo, pp. 14-32.
2 Id. at 34-46. The Decision was penned by Associate Justice Agnes Reyes-Carpio and concurred in by Associate Justices Noel G. Tijam and Priscilla J. Baltazar-Padilla of the Seventh Division, Court of Appeals, Manila.
3 Id. at 57-58. The Resolution was penned by Associate Justice Agnes Reyes-Carpio and concurred in by Associate Justices Noel G. Tijam and Priscilla J. Baltazar-Padilla of the Former Seventh Division, Court of Appeals, Manila.
4 No copy annexed to the Petition. See rollo, p. 46.
5Rollo, p. 35.
6 Id. at 37.
7 Id. at 35.
8 Id.
9 Id. at 35-36.
10 Id. at 45.
11 Id. at 37.
12 Id. at 38.
13 Mrs. Alicia Manabat was the Finance Officer/Vice-President for Finance and Administrative Services of La Consolacion College Manila. See rollo, pp. 15 and 55.
14Rollo, p. 38.
15 Id. at 38-39.
16 Id. at 46.
17 Id. at 39.
18 Id. at 76.
19 Id. at 40.
20 Id. at 34-46.
21 Id. at 57-58.
22 Id. at 47-A-52.
23 Id. at 14.
24 LABOR CODE, art. 298 provides:
Article 298. [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 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 one (1) whole year.
25Edge Apparel, Inc. v. National Labor Relations Commission, 349 Phil. 972, 982 (1998). [Per J. Vitug, First Division].
26 Id. at 982-983.
27Asian Alcohol Corp. v. National Labor Relations Commission, 364 Phil. 912, 926 (1999). [Per J. Puno, Second Division]. (Citation omitted)
28 Id. at 927. (Citation omitted)
29 Id.
30 Id. at 926-927.
31 Id. at 927. (Citation omitted)
32 Id. (Citation omitted)
33Rollo, p. 16.
34 Id. at 17.
35 Id. at 21-22.
36 Id. at 39.
37 236 Phil. 236 (1987) [Per J. Guttierez, Jr., Third Division].
38See also Villena v. National Labor Relations Commission, 271 Phil. 718 (1991) [Per J. Grino-Aquino, First Division].
39 615 Phil. 33 (2009) [Per J. Peralta, Third Division].
40 Id. at 52, citing Philippine Tuberculosis Society Inc. v. NLRC, 356 Phil. 63, 72 (1998) [Per J. Mendoza, Second Division].
41 Id. at 52.
42 356 Phil. 63 (1998) [Per J. Mendoza, Second Division].
43 Id. at 72. See also Oriental Petroleum and Minerals Corp. v. Fuentes, 509 Phil. 684 (2005) [Per J. Tinga, Second Division].
44 Pantranco North Express v. National Labor Relations Commission, 211 Phil. 657 (1983) [Per J. Gutierrez, Jr., First Division].
45 Solicitor General's Comment, quoted with approval in Durabuilt Recapping Plant & Co. v. National Labor Relations Commission, 236 Phil. 351 (1987) [Per J. Gutierrez, Jr., Third Division]. See Findlay Millar Timber Co. v. Philippine Land-Air-Sea Labor Union, 116 Phil. 534 (1962) [Per J. Bautista Angelo, En Banc]; and Pantranco North Express v. National Labor Relations Commission, 211 Phil. 657 (1983) [Per J. Gutierrez, Jr., First Division].
46 704 Phil. 120 (2013) [Per J. Perlas-Bernabe, Second Division].
47 Id. at 144-145.