Shimizu v. Callanta (Case Digest. G.R. No. 165923)
CASE DIGEST: SHIMIZU PHILIPPINES CONTRACTORS, INC. Petitioner, v. VIRGILIO P. CALLANTA, Respondent. (G.R. No. 165923; September 29, 2010)
FACTS: Petitioner employed respondent on August 23, 1994 as Safety Officer assigned at petitioner’s Yutaka-Giken Project and eventually as Project Administrator of petitioner’s Structural Steel Division (SSD) in 1995.
In a Memorandum, respondent was informed that his services will be terminated effective July 9, 1997 due to the lack of any vacancy in other projects and the need to re-align the company’s personnel requirements brought about by the imperatives of maximum financial commitments.
Respondent then filed an illegal dismissal complaint against petitioner assailing his dismissal as without any valid cause.
Petitioner advanced that respondent’s services was terminated in accordance with a valid retrenchment program being implemented by the company. To prove its financial deficit, petitioner presented financial statements for the years 1995 to 1997 as well as the Securities and Exchange Commission’s approval of petitioner’s application for a new paid-in capital amounting to P330,000,000. When respondent’s Honda Project was completed, petitioner offered respondent his separation pay which the latter refused to accept and instead filed an illegal dismissal complaint.
Respondent claimed that petitioner failed to comply with the requirements called for by law before implementing a retrenchment program thereby rendering it legally infirmed. First, it did not comply with the provision of the Labor Code mandating the service of notice of retrenchment. He pointed out that the notice sent to him never mentioned retrenchment but only project completion as the cause of termination. Also, the notice sent to the Department of Labor and Employment (DOLE) did not conform to the 30-day prior notice requirement. Second, petitioner failed to use fair and reasonable criteria in determining which employees shall be retrenched or retained. As shown in the termination report submitted to DOLE, he was the only one dismissed out of 333 employees. Worse, junior and inexperienced employees were appointed/assigned in his stead to new projects thus also ignoring seniority in hiring and firing employees.
The Labor Arbiter rendered a Decision holding that respondent was validly retrenched. Upon appeal, the NLRC upheld the ruling that there was valid ground for respondent’s termination but modified the Labor Arbiter’s Decision by holding that petitioner violated respondent’s right to procedural due process. The NLRC found that petitioner failed to comply with the 30-day prior notice to the DOLE and that there is no proof that petitioner used fair and reasonable criteria in the selection of employees to be retrenched.
Undaunted, respondent filed a petition for certiorari with the CA. The CA reversed and set aside the NLRC’s ruling. The CA opined that petitioner failed to prove that there were employees other than respondent who were similarly dismissed due to retrenchment and that respondent’s alleged replacements held much higher ranks and were more deserving employees. Moreover, there were no proofs to sustain that petitioner used fair and reasonable criteria in determining which employees to retrench.
ISSUES: Did the CA exceed its jurisdiction when it reversed the factual findings of the Labor Arbiter and the NLRC?
Did the petitioner fail to observe fair and reasonable standards or criteria in effecting the dismissal of respondent?
HELD: At the outset, the power of the CA to review a decision of the NLRC “in a petition for certiorari under Rule 65 of the Rules of Court does not normally include an inquiry into the correctness of the NLRC’s evaluation of the evidence.” However, under certain circumstances, the CA is allowed to review the factual findings or the legal conclusions of the NLRC in order to determine whether these findings are supported by the evidence presented and the conclusions derived therefrom are accurately ascertained.As an authorized cause for separation from service under Article 283 of the Labor Code, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence:
[1] That the 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;
[2] That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment;
[3] That 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;
[4] 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; and
[5] 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, x x x efficiency, seniority, physical fitness, age, and financial hardship for certain workers.
In implementing its retrenchment scheme, petitioner was constrained to streamline its operations and to downsize its complements in a progressive manner in order not to jeopardize the completion of its projects. Thus, several departments like the Civil Works Division, Electro-mechanical Works Division and the Territorial Project Management Offices, among others, were abolished in the early part of 1996 and thereafter the Structural Steel Division, of which respondent was an Administrator. Respondent was among the last batch of employees who were retrenched and by the end of year 1997, all of the employees of the Structural Steel Division were severed from employment.
Respondent, in any of the pleadings filed by him, never refuted the foregoing facts. Respondent’s argument that he was singled out for termination as allegedly shown in petitioner’s monthly termination report for the month of July 1997 filed with the DOLE does not persuade this Court. Standing alone, this document is not proof of the total number of retrenched employees or that respondent was the only one retrenched. It merely serves as notice to DOLE of the names of employees terminated/ retrenched only for the month of July. In other words, it cannot be deemed as an evidence of the number of employees affected by the retrenchment program. Thus we cannot conclude that no other employees were previously retrenched.
***
However, although there was authorized cause to dismiss respondent from the service, we find that petitioner did not comply with the 30-day notice requirement. Petitioner admitted that the reports were submitted 21 days, in the case of the first notice, and 16 days, in the case of the second notice, before the intended date of respondent’s dismissal.
The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the veracity of the cause of termination. Non-compliance with this rule clearly violates the employee’s right to statutory due process.
In a Memorandum, respondent was informed that his services will be terminated effective July 9, 1997 due to the lack of any vacancy in other projects and the need to re-align the company’s personnel requirements brought about by the imperatives of maximum financial commitments.
Respondent then filed an illegal dismissal complaint against petitioner assailing his dismissal as without any valid cause.
Petitioner advanced that respondent’s services was terminated in accordance with a valid retrenchment program being implemented by the company. To prove its financial deficit, petitioner presented financial statements for the years 1995 to 1997 as well as the Securities and Exchange Commission’s approval of petitioner’s application for a new paid-in capital amounting to P330,000,000. When respondent’s Honda Project was completed, petitioner offered respondent his separation pay which the latter refused to accept and instead filed an illegal dismissal complaint.
Respondent claimed that petitioner failed to comply with the requirements called for by law before implementing a retrenchment program thereby rendering it legally infirmed. First, it did not comply with the provision of the Labor Code mandating the service of notice of retrenchment. He pointed out that the notice sent to him never mentioned retrenchment but only project completion as the cause of termination. Also, the notice sent to the Department of Labor and Employment (DOLE) did not conform to the 30-day prior notice requirement. Second, petitioner failed to use fair and reasonable criteria in determining which employees shall be retrenched or retained. As shown in the termination report submitted to DOLE, he was the only one dismissed out of 333 employees. Worse, junior and inexperienced employees were appointed/assigned in his stead to new projects thus also ignoring seniority in hiring and firing employees.
The Labor Arbiter rendered a Decision holding that respondent was validly retrenched. Upon appeal, the NLRC upheld the ruling that there was valid ground for respondent’s termination but modified the Labor Arbiter’s Decision by holding that petitioner violated respondent’s right to procedural due process. The NLRC found that petitioner failed to comply with the 30-day prior notice to the DOLE and that there is no proof that petitioner used fair and reasonable criteria in the selection of employees to be retrenched.
Undaunted, respondent filed a petition for certiorari with the CA. The CA reversed and set aside the NLRC’s ruling. The CA opined that petitioner failed to prove that there were employees other than respondent who were similarly dismissed due to retrenchment and that respondent’s alleged replacements held much higher ranks and were more deserving employees. Moreover, there were no proofs to sustain that petitioner used fair and reasonable criteria in determining which employees to retrench.
ISSUES: Did the CA exceed its jurisdiction when it reversed the factual findings of the Labor Arbiter and the NLRC?
Did the petitioner fail to observe fair and reasonable standards or criteria in effecting the dismissal of respondent?
HELD: At the outset, the power of the CA to review a decision of the NLRC “in a petition for certiorari under Rule 65 of the Rules of Court does not normally include an inquiry into the correctness of the NLRC’s evaluation of the evidence.” However, under certain circumstances, the CA is allowed to review the factual findings or the legal conclusions of the NLRC in order to determine whether these findings are supported by the evidence presented and the conclusions derived therefrom are accurately ascertained.As an authorized cause for separation from service under Article 283 of the Labor Code, retrenchment is a valid exercise of management prerogative subject to the strict requirements set by jurisprudence:
[1] That the 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;
[2] That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment;
[3] That 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;
[4] 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; and
[5] 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, x x x efficiency, seniority, physical fitness, age, and financial hardship for certain workers.
In implementing its retrenchment scheme, petitioner was constrained to streamline its operations and to downsize its complements in a progressive manner in order not to jeopardize the completion of its projects. Thus, several departments like the Civil Works Division, Electro-mechanical Works Division and the Territorial Project Management Offices, among others, were abolished in the early part of 1996 and thereafter the Structural Steel Division, of which respondent was an Administrator. Respondent was among the last batch of employees who were retrenched and by the end of year 1997, all of the employees of the Structural Steel Division were severed from employment.
Respondent, in any of the pleadings filed by him, never refuted the foregoing facts. Respondent’s argument that he was singled out for termination as allegedly shown in petitioner’s monthly termination report for the month of July 1997 filed with the DOLE does not persuade this Court. Standing alone, this document is not proof of the total number of retrenched employees or that respondent was the only one retrenched. It merely serves as notice to DOLE of the names of employees terminated/ retrenched only for the month of July. In other words, it cannot be deemed as an evidence of the number of employees affected by the retrenchment program. Thus we cannot conclude that no other employees were previously retrenched.
***
However, although there was authorized cause to dismiss respondent from the service, we find that petitioner did not comply with the 30-day notice requirement. Petitioner admitted that the reports were submitted 21 days, in the case of the first notice, and 16 days, in the case of the second notice, before the intended date of respondent’s dismissal.
The purpose of the one month prior notice rule is to give DOLE an opportunity to ascertain the veracity of the cause of termination. Non-compliance with this rule clearly violates the employee’s right to statutory due process.
