JS Contractor, Inc. v. Bernal

THIRD DIVISION

[G.R. No. 205622 & G.R. No. 205628. August 23, 2017.]

JS CONTRACTOR, INC., MURRAY & ROBERTS, and MARY JEAN P. BORRA, petitioners,vs. NOEL A. BERNAL, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution datedAugust 23, 2017,which reads as follows:

"G.R. No. 205622 & G.R. No. 205628 (JS CONTRACTOR, INC., MURRAY & ROBERTS, and MARY JEAN P. BORRA, Petitioners, v. NOEL A. BERNAL, Respondent.) — The petitioners hereby appeal the decision promulgated on November 21, 2012, 1 whereby the Court of Appeals (CA) partly granted the petition for certiorari, and upheld with modification the second resolution dated November 15, 2011 of the National Labor Relations Commission (NLRC) 2 declaring that the amount of RAND 89,149.39 should be deducted from the sum of RAND 750,000.00 awarded to the respondent.

Antecedents

Petitioner JS Contractor, Inc. (JS Contractor) — a corporation duly organized and existing under the laws of the Philippines (with petitioner Mary Jean P. Borra, as its President) — was engaged in the recruitment of Filipino workers for its foreign principals, one of which was Murray & Roberts Construction Ltd. (Murray & Roberts), a publicly listed company in South Africa. JS Contractor recruited respondent Noel A. Bernal (Bernal) to work as a Construction Site Agent for Murray & Roberts. Prior to his deployment, Bernal signed an employment contract (effective for one year from October 1, 2007 to September 30, 2008) that contained a provision to the effect that the contract could be terminated at any time during the duration thereof for any reason justified in law. 3 CAIHTE

On January 24, 2009, Bernal and other overseas Filipino workers (OFWs) attended a meeting with the President of Murray & Roberts centering on the retrenchment program to be implemented because the company had been suffering and would continue to suffer losses unless the program was put into place; that Bernal and the other OFWs, through termination contracts dated February 9, 2009, were apprised of their dismissal, effective February 15, 2009, and the proposed settlement amounts; that Bernal accepted the proposal and received Rand 112,500.00 as retrenchment pay; and that despite being deployed to other overseas employment, he still filed a complaint for illegal dismissal. 4

On his part, Bernal declared that he had been hired by SPI Global Resources, a South African Recruitment Agency, through its local agent, JS Contractor, to work as a construction site agent for Murray & Roberts; that he had signed a limited duration Contract of Employment and Conditions of Service lasting three years (i.e., from November 1, 2007 to October 1, 2010; and that he had been paid a monthly salary of Rand 37,500 and a compensation package of one-month notice plus two months ex gratia pay upon rendering the full period of his employment contract.

Bernal was deployed to South Africa on November 15, 2007. On December 5, 2008, he went home to the Philippines for his annual vacation and was supposed to report back to work on January 26, 2009. On January 25, 2009, however, he was informed that he would be terminated. On February 9, 2009, Ms. Yvette Louw of the Human Resources Development of Murray & Roberts informed him that his employment was being terminated due to company downsizing. By then, he had worked for only 15 months. On October 30, 2009, he filed the complaint for illegal dismissal, non-payment of salary for the balance of the term of his contract, moral and exemplary damages and attorney's fees. 5

On July 2, 2010, 6 Labor Arbiter Melquiades Sol D. Del Rosario ruled that retrenchment as the ground for dismissing Bernal was not tenable inasmuch as the employer had not observed the substantive and procedural requirements under Philippine labor laws in order for the retrenchment to be valid. The dispositive portion of the decision reads:

CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered finding retrenchment as ground to dismiss complainant as impounded. Consequently, respondents insolidum are ordered to pay, in peso equivalent, at the time of payment the sum of R225,000.00 Rand plus 10% thereof as attorney's fees

Other claims are denied for lack of merit.

SO ORDERED. 7

Both parties appealed to the NLRC, which rendered its decision denying the appeal of the petitioners, 8viz.:

WHEREFORE, premises considered, respondent's appeal is DENIED while the appeal of the complainant is PARTIALLY GRANTED. Accordingly, the Decision of Labor Arbiter Melquiades Sol D. Del Rosario dated July 9, 2010 is hereby AFFIRMED with modification awarding to the complainant his unpaid salaries for the unexpired portion of his contract equivalent to nineteen (19) months from February 10, 2009 to October 31, 2010 in the total sum of RAND 712,000.00 or its equivalent in Philippine Pesos at the rate of exchange prevailing at the time of payment.

SO ORDERED. 9 DETACa

The petitioners then filed a motion for reconsideration and a supplemental motion for reconsideration.

Acting on the motions for reconsideration, the NLRC issued its resolution dated June 15, 2011 10 (first resolution), holding:

WHEREFORE, premises considered, in the interest of proper dispensation of labor justice, we hereby MODIFY our Decision dated February 10, 2011 in that the monetary award of the complainant-appellee is reduced to RAND225,000.00 representing his three (3) months salary for every year of the unexpired term of his contract equivalent at the prevailing exchange rate at that time of payment pursuant to Section 10 of RA 8042. The award of attorney's fees stands.

SO ORDERED.11

Unsatisfied, the petitioners elevated the matter to the CA on certiorari.

Meanwhile, Bernal filed his motion for partial reconsideration against the first resolution. Consequently, the NLRC rendered its second resolution dated November 15, 2011, 12 stating:

WHEREFORE, premises considered, complainant's Motion for Partial Consideration is partially GRANTED. Accordingly, our resolution dated June 15, 2011 is MODIFIED in that the award of unpaid salaries to the complainant is hereby increased to RAND 750,000.00 or its equivalent in Philippine Pesos at the exchange rate prevailing at the time of payment, for the unexpired portion of his contract equivalent to twenty (20) months computed from February 10, 2009 to October 31, 2010. The award of attorney's fees equivalent to 10% of the monetary award to the complainant stays.

SO ORDERED. 13

The petitioners then filed another petition for certiorari in the CA to assail the second resolution of the NLRC.

The two petitions contend that the NLRC committed grave abuse of discretion in failing to consider the overwhelming documentary evidence of petitioners justifying the retrenchment of Bernal; and in disregarding the payment of separation pay to him and failing to deduct the amount of the separation pay from whatever might be due to him.

Upon motion of the petitioners, the two petitions were consolidated before the CA. 14

On November 21, 2012, the CA promulgated its assailed decision partly granting the petition, 15 decreeing:

WHEREFORE, premises considered, the instant Petition is hereby PARTLY GRANTED. The (Second) Resolution dated November 15, 2011 of the National Labor Relations Commission in NLRC LAC (OFW-L) No. 08-000609-10 (NLRC NCR (OFW-L) Case No. 10-15173-09) is AFFIRMED with MODIFICATION in that the amount of the RAND 89149.39 shall be deducted from the RAND750,000.00 awarded to Bernal. aDSIHc

SO ORDERED.16

The CA explained that despite the petitioners' submission of voluminous documents, there was no substantial evidence that would justify Bernal's retrenchment; 17 that losses must be proven by sufficient and convincing evidence, and the usual and accepted method of proving such losses was by the submission of financial statements duly audited by independent external auditors; 18 that the records showed that the petitioners had merely provided unaudited "Balance Sheet and Income Statement" that even tended to contradict the stance of the petitioners, and that would not validly justify the retrenchment of Bernal; that as to the issue of redundancy, the petitioners did not submit any proof that Murray & Roberts was overmanned; that no staffing pattern, feasibility study or proposal or personnel restructuring were submitted to at least justify the reduction of manpower; that the petitioners simply cited cancelled job orders and terminated projects without specifying the effects thereof on the personnel complement; and that there was no proof that fair and reasonable criteria were employed to determine which positions were redundant, and that one of such redundant positions was that of Bernal's.

As to separation pay, the CA ruled that the amount of RAND89,149.39 (representing the net amount given to Bernal after taxes and other expenses) should be deducted from the amount awarded to him, following the principle against unjust enrichment.

Issue

Did the CA gravely err in ruling that actual business losses must first exist before a company can validly retrench its employees? Did the CA also err in not appreciating the audited financial statements of Murray & Roberts in proving business losses in 2011 and 2012 that would justify Bernal's retrenchment in 2009 during global recession?

Ruling of the Court

We DENY the petition for review on certiorari.

The petitioners claim that the CA erred in ruling that actual business losses must exist before a company could validly retrench its employees because Article 283 of the Labor Code allows a company to resort to retrenchment to prevent losses. Although the CA remarked that "losses must be proven by sufficient and convincing evidence," we must also consider that the rulings cited by the CA explained the requisites necessary for justifying retrenchment to prevent losses. The CA cited Andrada v. National Labor Relations Commission, 19 which adverted to Lopez Sugar Corporation v. Federation of Free Workers, 20 to wit:

Firstly, 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 retrenchment would appear to be seriously in question. Secondly, 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. . . x x x. Thirdly, it must be reasonably necessary and likely to effectively prevent the expected losses . . . x x x. 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 dramatic 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. ETHIDa

Lastly. . . alleged losses 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.

The application of Andrada v. National Labor Relations Commission and Lopez Sugar Corporation v. Federation of Free Workers implied that the CA really considered the petitioners' argument that their retrenchment program was designed to prevent business losses.

To summarize, the requisites to be satisfied by the petitioners to justify retrenchment to prevent business losses were: (1) the losses expected should be substantial in extent, not merely de minimis; (2) the substantial losses apprehended must be reasonably imminent; (3) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and (4) the alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be proven by sufficient and convincing evidence. 21

In this case, however, the foregoing requisites were not substantially established by the petitioners. The CA found that there was nothing in the petitioners' records that convincingly showed the expected losses to be substantial. The NLRC and the Labor Arbiter had similar findings. We cannot differ from their findings and conclusions considering that such findings of the Labor Arbiter and NLRC, as affirmed by the CA, were entitled to great weight and respect. The Court is not a trier of facts; hence, such findings are conclusive upon this Court unless it is shown that the lower courts or tribunals acted arbitrarily or that their decisions were reached with grave abuse of discretion.

Moreover, there had been no misapprehension of facts as to call for this Court's power to review all over again the evidence presented. Although the petitioners ascribed partiality to the CA based on its having promulgated the assailed resolution of January 22, 2013 without first resolving their motion for extension to file reply filed on February 6, 2013 22 along with their audited financial statements, the filing of the reply was not mandatory. Under Section 6, Rule 65 of the Rules of Court, indeed, the reply was not procedurally mandatory, because the CA could require the filing of the reply only when it was deemed necessary and proper. Herein, the submission of the audited financial statements should have been done by the petitioners in the early stages, specifically before the Labor Arbiter and the NLRC.

It is quite notable, too, that the audited financial statement submitted by the petitioners along with their reply to the CA were only for 2011 and 2012. If the petitioners were justifying the retrenchment made in 2009 to prevent losses, why did they not submit their audited financial statements for 2007, 2008, 2009 and 2010 in order to establish that they were expecting substantial and reasonably imminent business losses?

The petitioners further admitted that the Ten Year Financial Review that was considered and reviewed by the CA had been lifted from the audited financial statements of Murray & Roberts. Still, such document did not support their justification of Bernal's retrenchment. The CA found that the comparative balance sheets of Murray & Roberts for 2008 and 2009 even reflected an increase of Rand 1,843 Million in assets. Likewise, the comparable income statement of Murray & Roberts for the same years showed that the earnings from continuing operations in 2008 amounted to Rand 1,975 Million, while its earnings from continuing operations in 2009 was Rand 2,256 Million, reflecting an increase of Rand281 Million. cSEDTC

Although the petitioners submit that inasmuch as "the operational requirement" of Murray & Roberts had decreased considerably, the respondent's termination was justified because such ground was stated in his employment contract. In that regard, the petitioners did not establish that there had really been a decrease in the operational requirements of Murray & Roberts that would have justified the termination of the respondent.

As to the separation pay, the CA correctly held that the amount of Rand 89,149.39 should be deducted from Rand 750,000.00 awarded to Bernal to accord with the principle against unjust enrichment. Verily, Bernal admitted in his pleadings the receipt of such amount.

We further note Bernal's manifestation 23 that the parties had executed a compromise agreement in the NLRC respecting the balance of the judgment award amounting to P1,193,314.53, for which J.S. Contractor issued and delivered three checks totalling P1,193,314.53 to him, and the judgment award became thereby fully satisfied. Thus, this recourse has been rendered moot and academic, and should now be dismissed.

WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS the decision promulgated on November 21, 2012; and ORDERS the petitioners to pay the costs of suit.

SO ORDERED."

Very truly yours,

(SGD.) WILFREDO V. LAPITANDivision Clerk of Court

Footnotes

1.Rollo, Vol. 1, pp. 25-41; penned by Associate Justice Victoria Isabel A. Paredes, concurred in by Associate Justice Japar B. Dimaampao and Associate Justice Elihu A. Ybanez.

2.Id. at 139-164.

3.Id. at 26.

4.Id. at 26-27.

5.Id. at 27-28.

6.Id. at 128-139.

7.Rollo, Vol. II, p. 508.

8.Rollo, Vol. I, pp. 140-149.

9.Id. at 48-49.

10.Id. at 150-158.

11.Id. at 157-158.

12.Id. at 159-164.

13.Id. at 164.

14.Id. at 30.

15.Id. at 25-41.

16.Id. at 41.

17.Id. at 33.

18.Rollo, Vol. 1, p. 34.

19. G.R. No. 173231, December 28, 2007, 541 SCRA 538.

20. G.R. Nos. 75700-01, August 30, 1990, 189 SCRA 179, 186-187.

21.Sari-Sari Group of Companies, Inc. v. Piglas Kamao (Sari-Sari Chapter), G.R. No. 164624, August 11, 2008, 561 SCRA 569.

22.Rollo, Vol. I, p. 15.

23.Rollo Vol. III, pp. 1424-1425.