G.R. No. 100092 December 29, 1995
CENTRAL AZUCARERA DE LA CARLOTA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, FOURTH DIVISION, CEBU CITY and REYNALDO DECREPITO, respondents.
FACTS
Petitioner Central Azucarera de la Carlota, facing financial difficulties due to production shortfalls and a reduction in cane-planted areas, implemented a cost reduction program. On June 18, 1987, it terminated the employment of private respondent Reynaldo Decrepito, an Accounting Clerk II, on the ground of retrenchment, effective June 23, 1987. Decrepito received retrenchment pay and subsequently executed a Release and Quitclaim. Over a year later, on September 16, 1988, Decrepito filed a complaint for illegal dismissal, seeking reinstatement with backwages.
The Labor Arbiter dismissed the complaint, ruling that Decrepito voluntarily accepted the retrenchment benefits and executed the quitclaim, thus estopping him from questioning his dismissal. On appeal, the National Labor Relations Commission reversed the Labor Arbiter’s decision. The NLRC found the retrenchment invalid for failure to comply with both substantive and procedural legal requirements and ordered Decrepito’s reinstatement with three years of backwages.
ISSUE
The main issues are: (1) whether the dismissal of Decrepito due to retrenchment was valid and justified; and (2) whether Decrepito was estopped from questioning his dismissal by virtue of the Release and Quitclaim he signed.
RULING
The Supreme Court denied the petition and affirmed the NLRC decision. On the first issue, the retrenchment was invalid. For retrenchment to be justified under Article 283 of the Labor Code, the employer must prove compliance with substantive and procedural requirements. The substantive standards require that the expected losses be substantial, reasonably imminent, and that retrenchment is reasonably necessary to prevent them, with the employer having explored other cost-saving measures first. The Court found petitioner’s evidence insufficient, as it merely presented a board resolution citing general financial difficulties without proving substantial and imminent losses or that it had first taken other measures to cut costs aside from labor. Procedurally, the required one-month written notice to the employee and the Department of Labor was not proven.
On the second issue, the quitclaim does not bar Decrepito’s claim. Quitclaims executed by employees are commonly frowned upon as contrary to public policy, especially when the employer and employee do not stand on equal footing. The employee, having been driven to the wall by loss of employment, is often in no position to resist money proffered. His acceptance is considered one of adherence, not of choice. Therefore, Decrepito is not estopped from seeking the full measure of his legal rights.
