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MOBILIA
PRODUCTS, INC., Petitioner, - versus - ALAN G. DEMECILLO, CRISTOPHER S. DALIGDIG, MANUELITO V. SUSON,
MARCIANO SUAREZ and ANTONIO MONTECILLO, JR., Respondents. |
G.R. No. 170669
Present: Quisumbing, J.,
Chairperson, Carpio Morales,
Tinga,
VELASCO, JR., and
BRION, JJ.
Promulgated: February
4, 2009 |
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QUISUMBING, J.:
This petition for review on certiorari assails the Decision[1] dated P203,160
and 10% attorney’s fees.
The
factual antecedents of the case are as follows:
Respondents
Alan G. Demecillo, Christopher S. Daligdig, Manuelito V. Suson, Marciano G.
Suarez and Antonio Montecillo, Jr. were employees of petitioner Mobilia
Products, Inc., a company engaged in the manufacture of furniture for export
mainly to
In July 1998, petitioner initiated a retrenchment program
allegedly to cope with reduced orders from
On various dates from
On
WHEREFORE, IN VIEW OF THE
FOREGOING, judgment is hereby rendered declaring complainants Cristopher
Daligdig, Alan Demecillo, Marciano Suarez and Manuelito Suson, as having been invalidly
retrenched. Consequently, respondent MOBILIA PRODUCT[S], INC. is hereby
ordered to pay the said complainants with backwages from the time they were
invalidly retrenched up to the date of this decision, to wit:
1.
Cristopher
Daligdig…….. P5,079.00 x 10
mos. = P50,790.00
2.
Alan
Demecillo…………. 5,079.00 x 10 mos. = 50,790.00
3. Marciano Suarez………... 5,079.00 x 10 mos. = 50,790.00
4.
Manuelito
Suson……….. 5,079.00 x 10 mos. = 50,790.00
TOTAL ------------ P203,160.00
ADD: 10% Attorney’s fees……..………………………………20,316.00
GRAND
TOTAL-----------------------------------------------------P223,476.00
Complainants’ other claims are dismissed for failure
to substantiate [said claims].
Likewise, the case of other complainants who resigned
or have not resigned, are DISMISSED for failure to substantiate their claims
and for lack of merit.
SO ORDERED.[7]
On
appeal, the NLRC reversed the Labor Arbiter.
It noted that only .037% of the 309 employees questioned the validity of
the retrenchment. It held that notice
was not necessary since the employees consented to the retrenchment thereby
acknowledging its validity. Nonetheless,
the NLRC granted respondents’ claims for overtime differentials and attorney’s
fees. The NLRC ruled:
WHEREFORE, the assailed decision is REVERSED declaring that the retrenchment was VALID but that all eleven (11) complainants are entitled to
overtime pay differentials from September, 1995 to July, 1998. For this purpose, the Arbitration Branch is
directed to make the necessary computation, as discussed.
Respondent is also assessed the attorney’s fees of ten
percent (10%) of the total awards because complainants were forced to litigate
to vindicate their rights.
SO ORDERED.[8]
Respondents brought the case on certiorari to the Court of
Appeals. On
IN
LIGHT OF ALL THE FOREGOING, this petition is GRANTED. The decision of the NLRC dated P20,000.00 each and 5% of the monetary
award in the form of attorney’s fees.
All
other claims are dismissed.
Costs
against the petitioners.
SO
ORDERED.[9]
The
Court of Appeals observed that petitioner did not present evidence to prove the
substantial losses it allegedly suffered to justify retrenchment. The only relevant evidence submitted by
petitioner were the letters signifying acceptance of retrenchment and waivers
and quitclaims signed by respondents.
But while the letters of acceptance were dated P20,000
as nominal damages, plus 5% attorney’s fees.[11]
Petitioner
now comes to us contending that:
I.
THE PETITION BROUGHT BY THE RESPONDENTS TO THE
HONORABLE COURT OF APPEALS WAS A SPECIAL CIVIL ACTION FOR CERTIORARI UNDER RULE
65. HOWEVER, ON THE SUBSTANCE OF THE
PETITION, IT SHOULD NOT HAVE BEEN GIVEN DUE COURSE BY THE HONORABLE COURT OF
APPEALS AS THERE WAS NO ACT COMMITTED BY THE HONORABLE FOURTH DIVISION OF THE
NATIONAL LABOR RELATIONS COMMISSION WHICH WAS WITHOUT OR IN EXCESS OF ITS
JURISDICTION OR WITH GRAVE ABUSE OF DISCRETION WHEN IT HELD THAT THE
RETRENCHMENT PROGRAM OF THE PETITIONER WAS LEGAL, AS THE SAID RULING WAS BASED
ON CASES THAT WERE DECIDED BY THIS HONORABLE SUPREME COURT.
II.
THE PETITION FOR CERTIORARI OF THE RESPONDENTS BEFORE
THE COURT OF APPEALS SHOULD HAVE NOT … BEEN GIVEN DUE COURSE FOR BEING
DEFECTIVE IN FORM.
III.
THE [COURT OF APPEALS ERRED IN INCLUDING] RESPONDENT
ANTONIO MONTECILLO, JR. IN THE AWARD FOR BACKWAGES IN [ITS] DECISION… THE
DECISION OF THE REGIONAL ARBITRATION BRANCH VII OF THE NATIONAL LABOR RELATIONS
COMMISSION GAVE AN AWARD FOR BACKWAGES TO RESPONDENTS CHRISTOPHER DALIGDIG,
ALAN DEMECILLO, MARCIANO SUAREZ AND MANUELITO SUSON ONLY.[12]
Briefly,
the key issues are: (1) whether the
retrenchment was valid; (2) whether the appellate court erred in giving due
course to the petition for certiorari filed by respondents; and (3) whether the
award of backwages to Montecillo was proper.
Petitioner
argues that it need not substantiate losses because by jurisprudence, the
validity of retrenchment is presumed when an employee consents or voluntarily
applies for it. As regards the notice
requirement, it is petitioner’s view that payment of 30 days salary in lieu of
notice constituted substantial compliance with the law. Even more, respondents were given one month
pay for every year of service instead of just one-half month pay for every year
of service. Petitioner also faults the
appellate court for giving due course to the petition for certiorari filed by
respondents. It stressed that the
petition neither named the petitioners therein nor impleaded the NLRC as a
nominal party. Petitioner finally
disputes the award of backwages to Montecillo as he did not amend his complaint
to include a claim for illegal dismissal.
Respondents
for their part, deny that they volunteered for inclusion in the retrenchment
program, much less knew about the financial status of the company. They aver that petitioner’s failure to submit
an independent and externally audited financial statement strongly indicates
the absence of an authorized cause for dismissal. Respondents likewise agree with the appellate
court that petitioner could not substitute the 30-day notice by paying 30 days
salary. Thus, they believe that the
award of nominal damages and attorney’s fees was only fitting considering the
swift manner by which they were laid off.
While further admitting that Montecillo did not allege illegal dismissal
in his complaint, respondents reason that he nevertheless claimed the same in
the position paper.[13] Hence, the award of backwages in his favor was
proper.
The
resolution of this case rests on the determination of the validity of
respondents’ retrenchment by petitioner.
Retrenchment is the termination of employment initiated by the employer
through no fault of the employees and without prejudice to the latter, resorted
to by management during periods of business recession, industrial depression,
or seasonal fluctuations or during lulls occasioned by lack of orders, shortage
of materials, conversion of the plant for a new production program or the
introduction of new methods or more efficient machinery, or of automation.[14] It is a
management prerogative resorted to by employers to avoid or minimize business
losses.[15]
For
retrenchment to be valid, the following requisites under Article 283[16] of the Labor Code
must concur: (1) necessity of
retrenchment to prevent losses and proof of such losses; (2) written notice to
the employees and to the Department of Labor and Employment (DOLE) at least one
month prior to the intended date of retrenchment; and (3) payment of separation
pay equivalent to one month pay or at least ½ month pay for every year of
service, whichever is higher.[17]
To
justify the employees’ termination of service, the losses must be serious,
actual and real, and they must be supported by sufficient and convincing
evidence.[18]
Petitioner
cites International Hardware, Inc. v. NLRC[19] as its
authority in disputing its obligation to prove losses. In that case, we held that:
…if an employee consented to his retrenchment or
voluntarily applied for retrenchment with the employer due to the installation
of labor-saving devices, redundancy, closure or cessation of operation or to
prevent financial losses to the business of the employer, the required previous
notice to the DOLE is not necessary as the employee thereby acknowledged the
existence of a valid cause for termination of his employment.[20]
However, apart from
petitioner’s bare assertion of reduced orders from
Settled is the rule that the employer bears the burden of proving an
allegation of the existence or imminence of substantial losses, which by its
nature is an affirmative defense. It is
the duty of the employer to prove with clear and satisfactory evidence that
legitimate business reasons exist to justify retrenchment. Failure to do so inevitably results in a
finding that the dismissal is unjustified.[25] Accordingly, where the retrenchment is
illegal and of no effect, as in this case, the quitclaims were therefore not
voluntarily entered into by the workers.
Their consent had been vitiated by mistake or fraud.[26]
For a valid termination due to retrenchment, the law also requires that
written notices of the intended retrenchment be served by the employer on the
worker and on the DOLE at least one month before the actual date of the
retrenchment. The purpose of this
requirement is to give employees time to prepare for the eventual loss of their
jobs, as well as to give DOLE the opportunity to ascertain the veracity of the
alleged cause of termination.[27] In this case, petitioner insists that the
payment of 30 days salary to respondents in place of notice was sufficient
compliance with the 30-day notice rule.
We cannot agree. Nothing in the
law gives petitioner the option to substitute the required prior written notice
with payment of 30 days salary. Indeed,
a job is more than the salary it carries.
Payment of 30 days salary cannot compensate for the psychological effect
or the stigma of immediately finding one’s self laid off from work. It cannot be a fully effective substitute for
the 30 days’ written notice requirement by law, especially when, as in this
case, no notice was given to the DOLE.[28] Even as the letters of voluntary acceptance
were dated P30,000. We also sustain the
award of attorney’s fees as it is sanctioned by law.[30]
As
regards the second issue, suffice it to say that technical rules of procedure should be used to promote, not
frustrate, justice.[31] Although respondents’ full names were not
stated in the title of their petition before the Court of Appeals as
petitioners, the same appeared in the verification where they specifically
identified themselves as the petitioners in the case. Such omission, including the omission to
implead the NLRC as nominal party, is not such a defect as to render the
petition before the appellate court fatally defective considering the merits of
respondents’ case. Petitioner cannot
harp on procedural technicalities in its bid to defeat substantial justice.
Finally, as
regards the third issue, respondents invoke the case of Development Bank of
the Philippines v. NLRC[32] to justify
the award of backwages to Montecillo.
Unfortunately, their reliance on the said case is misplaced. In Development
Bank of the Philippines v. NLRC, the Court affirmed the grant by the NLRC
of benefits prayed for by the respondents therein in their position paper even
if the same were not included as part of the original claim. Significantly, no
new party intervened to seek additional relief from the Commission.
Quite the
opposite, in this case, respondent Montecillo was a party, only in the suit for
non-payment of benefits. He did not
amend his complaint to reflect a charge of illegal dismissal against
petitioner. It was not surprising,
therefore, that Montecillo was not among those who were awarded backwages by
the Regional Arbitration Branch of the NLRC in its
By express
provision of Section 3, par. (2)[33] Rule V of The New
Rules of Procedure of the NLRC on the proceedings before the labor arbiter,
verified position papers shall cover only those claims and causes of action
raised in the complaint save those that may have been amicably settled. They shall be accompanied by all supporting
documents including the affidavits of their respective witnesses which shall
take the place of the latter’s direct testimony. Thereafter, the parties shall not be allowed
to allege facts, or present evidence to prove facts, not referred to and any
cause or causes of action not included in the complaint or position papers, affidavits
and other documents.
Since
respondent Montecillo failed to allege illegal dismissal in his complaint, he
cannot subsequently incorporate such claim in his position paper. It follows that the Court of Appeals never
acquired jurisdiction to rule on the validity of his termination. Thus, we find the appellate court’s award of
backwages in Montecillo’s favor without legal basis.
WHEREFORE the instant petition is DENIED. The Decision dated P30,000,
and (2) the award of backwages to Antonio Montecillo, Jr. is deleted. Other awards are hereby sustained. For the prompt execution hereof, this case is
hereby remanded to the Labor Arbiter for the purpose of computing the exact
amount of award to each respondent pursuant to this decision.
SO ORDERED.
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LEONARDO A. QUISUMBING Associate Justice |
WE CONCUR:
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CONCHITA CARPIO MORALES Associate Justice |
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DANTE O. TINGA Associate Justice |
PRESBITERO J. VELASCO,
JR. Associate Justice |
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ARTURO D. BRION Associate Justice |
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A T T E S T A T I O N
I attest that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division.
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LEONARDO A. QUISUMBING Associate Justice Chairperson |
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson’s Attestation, I certify that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
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REYNATO S. PUNO Chief Justice |
[1] Rollo, pp. 334-343. Penned by Associate Justice Pampio A. Abarintos, with Associate Justices Mercedes Gozo-Dadole and Ramon M. Bato, Jr. concurring.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14] Polymart Paper Industries, Inc. v. NLRC,
G.R. No. 118973,
[15] Oriental Petroleum and Minerals Corporation v. Fuentes, G.R. No. 151818, October 14, 2005, 473 SCRA 106, 115.
[16] ART. 283. Closure of establishment and reduction of personnel.–The
employer may also terminate the employment of any employee due to the
installation of labor saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the 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 to 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.
[17] Guerrero v. National Labor Relations
Commission, G.R. No. 119842,
[18]
[19] G.R. No. 80770,
[20]
[21] Balasbas v. National Labor Relations
Commission, G.R. No. 85286,
[22] F.F. Marine Corporation v. National Labor Relations Commission, Second Division, G.R. No. 152039, April 8, 2005, 455 SCRA 154, 168.
[23] Oriental Petroleum and Minerals
Corporation v. Fuentes, supra note 15, at 116.
[24] Supra note 19.
[25] Polymart Paper Industries, Inc. v. NLRC,
supra note 14, at 170.
[26] EMCO Plywood Corporation v. Abelgas,
G.R. No. 148532,
[27]
[28] Serrano v. National Labor Relations
Commission, G.R. No. 117040,
[29] G.R. No. 158693,
[30] Civil Code of the
ART. 2208. In the absence of stipulation, attorney’s
fees and expenses of litigation, other than judicial costs, cannot be
recovered, except:
x
x x x
(7) In actions for the recovery
of wages of … laborers and skilled workers;
x x x x
[31] Cusi-Hernandez v. Sps. Diaz, 390 Phil. 1245, 1252 (2000).
[32] G.R. Nos. 100376-77,
[33] II
SEC. 3. Submission of Position Papers/Memorandum.–…
These
verified position papers shall cover only those claims and causes of action
raised in the complaint excluding those that may have been amicably settled,
and shall be accompanied by all supporting documents including the affidavits
of their respective witnesses which shall take the place of the latter’s direct
testimony. The parties shall thereafter
not be allowed to allege facts, or present evidence to prove facts, not
referred to and any cause or causes of action not included in the complaint or
position papers, affidavits and other documents. Unless otherwise requested in writing by both
parties, the Labor Arbiter shall direct both parties to submit simultaneously
their position papers/memorandum with the supporting documents and affidavits
within fifteen (15) calendar days from the date of the last conference, with
proof of having furnished each other with copies thereof. Promulgated on