FIRST DIVISION
[G.R. No. 217577. October 13, 2021.]
EVELYN C. HORTALEZA, ARCADIO M. BARTOLOME, JR., SALVACION BIAGTAN, PERFECTO S. BORTADO, VERONICA D. DEE, LUIS C. DE GUZMAN, LOURDES A. DE LEON, HONORATO C. DE VERA, DEXTER N. FABIA, CARLITA S. FERRER, ROSALINA JIMENEZ, SAMILO T. MACARAEG, IMELDA S. MAGALONG, FRANCISCA T. MANDAPAT, JOSIE M. NEGRADAS, PATROCINA S. OPERAÑA, MIKE D. PABLO, REYNALDO M. PARAJAS, LORETO M. QUERIMIT, ROLAN C. SARMIENTO, FERDINAND C. SERRAON, RENATO I. SISON, AND CESAR P. URIENZA, petitioners,vs. EDUCATIONAL AND MEDICAL DEVELOPMENT CORPORATION (OPERATING UNDER THE BUSINESS NAME LYCEUM NORTHWESTERN UNIVERSITY), respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedOctober 13, 2021which reads as follows:
"G.R. No. 217577 (Evelyn C. Hortaleza, Arcadio M. Bartolome, Jr., Salvacion Biagtan, Perfecto S. Bortado, Veronica D. Dee, Luis C. De Guzman, Lourdes A. De Leon, Honorato C. De Vera, Dexter N. Fabia, Carlita S. Ferrer, Rosalina Jimenez, Samilo T. Macaraeg, Imelda S. Magalong, Francisca T. Mandapat, Josie M. Negradas, Patrocina S. Operaña, Mike D. Pablo, Reynaldo M. Parajas, Loreto M. Querimit, Rolan C. Sarmiento, Ferdinand C. Serraon, Renato I. Sison, and Cesar P. Urienza v. Educational and Medical Development Corporation (Operating under the business name Lyceum Northwestern University)). — This resolves the Petition for Review on Certiorari1 dated May 8, 2015 under Rule 45 of the Rules of Court, assailing the Decision 2 dated March 11, 2014 and the Resolution 3 dated March 5, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 126665. The CA reversed the Decision 4 dated February 28, 2012 and the Resolution 5 dated August 24, 2012 of the National Labor Relations Commission (NLRC) in NLRC LAC Case No. 08-002070-11 which in turn affirmed the Decision 6 dated September 2, 2010 of the Labor Arbiter (LA) in the consolidated cases of NLRC Case Nos. SUB RAB-I-7-08-0139-08 (DC), SUB RAB-7-10-0165-08 (DC), SUB RAB-7-10-0178-08 (DC), and SUB RAB-7-12-0202-08 (DC), declaring the petitioners to have been illegally retrenched.
Considering the allegations, issues, and arguments adduced in the parties' submissions, this Court hereby grants the instant petition.
To effect a valid retrenchment, the employer must comply with both procedural and substantive requirements. As to the procedural requirements, the employer must serve a written notice on the employee and the Department of Labor and Employment (DOLE) one (1) month before the date of dismissal, and pay the required amount of separation pay. As to the substantive requirements, the employer must show that: (a) retrenchment was a necessary measure to prevent substantial and serious business losses; (b) it was done in good faith and not to defeat employees' rights; and (c) the employer was fair and reasonable in selecting the employees who will be retrenched. 7
Educational and Medical Development Corporation (EMDC), operating under the business name Lyceum Northwestern University, substantially complied with the notice requirement to the DOLE when, on July 8, 2008, its Planning and Consultancy Committee (Committee) held a meeting 8 with some of the petitioners herein 9 and Adonis Peralta (Peralta), the DOLE Dagupan District Officer. In said meeting, LNU and DOLE District Officer Peralta discussed with the employees the basis for the proposed retrenchment, the amounts to be received by retrenched or retired employees, effect on retrenched employees who have not reached the mandatory age of retirement, consequence for the employees' contribution fund, and a commitment to re-hire the retrenched employees should financial conditions improve.
With regard to the notice to the employees, LNU's Human Resources Department (HRD) sent out Personal Memoranda 10 on various dates to the employees facing retrenchment, which notices uniformly stated:
We regret to inform you that your services will no longer be required thirty (30) days upon receipt of this memo, for the reason that the university has suffered a great fall on the enrolment since A.Y. 2005-2006. This A.Y. 2008-2009 we have the greatest decrease in enrolment which is equivalent to 34% and the Administration has to do this action in order to avoid further losses.
Be assured that you will be paid with the corresponding benefits due to you as provided by law after clearance.
Nevertheless, EMDC's compliance with the substantive requirements of retrenchment is wanting. To begin with, EMDC failed to show that it sustained substantial and serious business losses. This Court has expounded on such requirement in Philippine Phosphate Fertilizer Corporation v. Mayol, 11viz.:
What the law speaks of is 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 bare 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 also 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. 12
Intec Cebu, Inc. v. Court of Appeals13 demonstrates the stringent threshold of retrenchment. This Court found therein that the company had illegally retrenched its employees even if net losses were experienced at some point. Here, LNU's financial statements 14 indicate only a shrinking net income between the years 2003 and 2008, the period within which it experienced declining student enrollment. 15 Yet, these figures demonstrate that EMDC still managed to post net income through those years and not once experienced any "business losses or financial reverses[.]" 16
|
Fiscal Year |
Net Income After Tax (P) |
Appropriated Retained Earnings (P) |
|
2003 |
42,686,371.00 |
177,397,523.58 |
|
2004 |
31,036,337.99 |
208,433,861.57 |
|
2005 |
25,572,206.72 |
234,006,068.29 |
|
2006 |
11,947,474.12 |
245,953,542.41 |
|
2007 |
9,921,928.02 |
255,875,470.43 |
|
2008 |
1,744,514.96 |
257,649,984.39 |
|
Academic Year |
Number of Enrollees (First Semester) |
Number of Enrollees (Second Semester) |
|
2003-2004 |
10,157 |
9,290 |
|
2004-2005 |
10,324 |
9,370 |
|
2005-2006 |
9,414 |
8,451 |
|
2006-2007 |
8,194 |
7,218 |
|
2007-2008 |
7,353 |
6,842 |
Moreover, EMDC failed to establish the fair and reasonable criteria it used to decide whom among its employees to retain and retrench. In its Consultative Report 17 dated June 30, 2008, its Committee attached a list of employees recommended for retrenchment or retirement, but provided no explanation for such selection. Even in the July 8, 2008 meeting between the Committee and the employees, and attended by DOLE District Officer Peralta, the discussion was limited to the following topics: the basis for the proposed retrenchment, the amounts to be received by retrenched or retired employees, effect on retrenched employees who have not reached the mandatory age of retirement, consequence for the employees' contribution fund, and a commitment to re-hire the retrenched employees should financial conditions improve.
In affording full protection to labor, the employer's prerogative to bring down labor costs through retrenchment must be exercised carefully and as a measure of last resort. Even though a company may have sustained losses, still, retrenchment is not justified absent any showing that it was adopted as a measure of last recourse. 18 EMDC failed to demonstrate its resort to other cost-cutting measures before retrenching herein petitioners. In fact, it was as early as the Committee's Consultative Report dated June 30, 2008 that retrenchment was outrightly and summarily recommended.
It is not amiss to point out that owing to her retirement claims, Evelyn Hortaleza (Hortaleza) furnished the Private Education Retirement Annuity Association (PERAA) a copy of her memorandum of appeal during the NLRC proceedings. PERAA filed a Reply 19 dated September 2, 2010, arguing that it is a mere trustee of the retirement fund, and that Hortaleza never encashed the check owing to her. The NLRC later declared PERAA solidarily liable with EMDC for Hortaleza's retirement pay, as it is one that manages the contributions of retirement funds for EMDC's employees. 20 Having been given the opportunity to contest the claims raised against it, as it actually filed a responsive pleading denying the claims of Hortaleza, PERAA's liability was properly ascertained by the NLRC.
Finally, the LA's September 2, 2010 Decision ordered not only the award of backwages from the time petitioners were illegally dismissed until the promulgation of the decision, but also the petitioners' immediate reinstatement, whether actual or payroll. Subsequent issuances 21 by the LA indicate LNU's non-compliance with the latter directive, hence, ordered the payment of accrued backwages pending appeal, and issued the corresponding writs of execution therefor. However, the records do not indicate whether LNU's funds were duly executed, or if it eventually decided to comply with the reinstatement directive. Thus, a remand of the case to the LA is appropriate to accurately compute the monetary awards, from the time petitioners were illegally dismissed until the finality of this Resolution, less any amounts which may have already been executed.
WHEREFORE, the Petition for Review on Certiorari dated May 8, 2015 is GRANTED. The Decision dated March 11, 2014 and Resolution dated March 5, 2015 of the Court of Appeals in CA-G.R. SP No. 126665 are hereby REVERSED and SET ASIDE. The Decision dated February 28, 2012 and Resolution dated August 24, 2012 of the National Labor Relations Commission in NLRC LAC Case No. 08-002070-11 are REINSTATED with MODIFICATION as follows:
1. The Court finds that petitioners Evelyn C. Hortaleza, Arcadia M. Bartolome, Jr., Salvacion Biagtan, Perfecto S. Bortado, Veronica D. Dee, Luis C. De Guzman, Lourdes A. De Leon, Honorato C. De Vera, Dexter N. Fabia, Carlita S. Ferrer, Rosalina Jimenez, Samilo T. Macaraeg, Imelda S. Magalong, Francisca T. Mandapat, Josie M. Negradas, Patrocina S. Operaña, Mike D. Pablo, Reynaldo M. Parajas, Loreto M. Querimit, Rolan C. Sarmiento, Ferdinand C. Serraon, Renato I. Sison, and Cesar P. Urienza were illegally retrenched;
2. Respondent Educational and Medical Development Corporation, operating under the business name Lyceum Northwestern University, is ordered to pay petitioners' monetary claims (consisting of retirement pay, backwages, and 13th month pay, where applicable) from the time of illegal dismissal until the finality of this Resolution, inclusive of accrued backwages if petitioners were not reinstated, less any amounts previously executed, if any;
3. Private Education and Retirement Annuity Association is hereby declared jointly and solidarily liable with Educational and Medical Development Corporation to pay Evelyn Hortaleza her retirement pay;
4. All amounts due shall earn legal interest at the rate of six percent (6%) per annum from the finality of this Resolution until fully paid;
5. The case is hereby REMANDED to the Labor Arbiter for a detailed re-computation of the monetary awards that must be paid to petitioners.
SO ORDERED."Lopez, M., J., on official leave.
By authority of the Court:
(SGD.) LIBRADA C. BUENADivision Clerk of Court
By:
MARIA TERESA B. SIBULODeputy Division Clerk of Court
Footnotes
1.Rollo, pp. 8-29.
2. Penned by Associate Justice Myra V. Garcia-Fernandez and concurred in by Associate Justices Fernanda Lampas-Peralta and Francisco P. Acosta; id. at 31-51.
3.Id. at 59-60.
4. Penned by Presiding Commissioner Joseph Gerard E. Mabilog and concurred in by Isabel G. Panganiban-Ortiguerra and Nieves E. Vivar-De Castro; id. at 182-196.
5.Id. at 197-203.
6. Penned by Labor Arbiter Irenarco R. Rimando; id. at 209-246.
7.Team Pacific Corporation v. Parente, G.R. No. 206789, July 15, 2020.
8.Rollo, pp. 38-39, 347.
9. In attendance were: Perla N. Tamayo, Loreto D. Querimit, Arsenio C. Zamudio, Macrina B. Cajala, Jennette C. Pajarillo, Lourdes A. De Leon, Evelyn C. Hortaleza, Salvacion B. Biagtan, Imelda S. Magalong, Rosalina Jimenez, Francisca Mandapat, Samuel T. Cerezo, Patrocinia Operaña, Renato Sison, Glenda Lomibao, Federico Navarro, Veronica D. Dee, and Zen Manuel; id. at 348.
10.Id. at 319-342.
11. G.R. Nos. 205528-29, 205797-98, December 9, 2020.
12.Id. citing Philippine Carpet Employees Association v. Hon. Sto. Tomas, 518 Phil. 299, 316 (2006).
13. 788 Phil. 31, 38-39 (2016).
14.Rollo, pp. 748-803.
15.Id. at 262-279.
16.Genuino Agro-Industrial Development Corporation v. Romano, G.R. No. 204782, September 18, 2019.
17.Rollo, pp. 316-318.
18.Philippine Phosphate Fertilizer Corporation v. Mayol, G.R. Nos. 205528-29, 205797-98, December 9, 2020.
19.Id. at 804-808.
20.Id. at 194.
21.Rollo, pp. 847-852, 1083-1087, 1259-1263.