G.R. No. 106621 June 8, 1993
PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION (PSBA MANILA), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (First Division) and PSBA-EMPLOYEES UNION-FEDERATION OF FREE WORKERS(FFW) and its officers/members, Ricardo R. Abreu, et al., respondents.

FACTS

Private respondents are faculty members and administrative staff of petitioner PSBA Manila and members of the PSBA Employees Union-FFW. On March 20, 1990, petitioner informed its personnel of the expiration of the lease contract for its two buildings at P. Paredes St. and its decision not to renew due to a rental increase from P16,000 to P182,000 per month. Petitioner announced a retrenchment program and subsequently terminated private respondents effective April 1, 1990. Private respondents filed a complaint for illegal dismissal, alleging the retrenchment was unwarranted and aimed at union busting. Petitioner claimed it suffered business reverses due to a 50% decrease in enrollment, resulting in financial losses of P919,022.40 (1987), P998,452.29 (1988), and P430,007.32 (1989), and that the rental increase aggravated its situation. The Labor Arbiter declared the retrenchment invalid, finding the losses insubstantial and the selection process unfair, and ordered payment of backwages and separation pay but found reinstatement not feasible due to the campus closure. The NLRC affirmed with modification, ordering reinstatement with payment of backwages and deleting separation pay. Petitioner appealed, arguing retrenchment was justified as a cost-saving measure and that the NLRC cannot substitute its business judgment.

ISSUE

Whether the National Labor Relations Commission gravely abused its discretion in finding that the individual private respondents were unlawfully retrenched from employment and that petitioner was guilty of union busting.

RULING

The Supreme Court denied the petition and affirmed the NLRC decision. The Court held that retrenchment was not justified. The program was implemented in the third consecutive year of losses when the losses had already decreased by 43% from the previous year, indicating the business was picking up. The Court noted that petitioner’s financial operations included income from its association with G.S. FAME Indonesia, which was reflected in its Income Statement, and this income mitigated the losses. Business losses as a ground for retrenchment must be proved and cannot be feigned. The Court also found the claim of being unprepared for the lease expiration hard to believe, as the closure of a school has far-reaching implications. Regarding union busting, the Court upheld the findings of the Labor Arbiter and NLRC, stating that such factual findings are generally accorded respect and finality. Petitioner was ordered to reinstate private respondents to their former or equivalent positions with payment of backwages equivalent to three (3) years from the time of their dismissal.