GR 102472; (August, 1996) (Digest)
G.R. Nos. 102472-84 August 22, 1996
JUAN SABALLA, LAILANI J. MIRANDA, NELIA I. IBARRIENTOS, HELEN G. QUIAMBAO, WILBERTO D. AMPARADO AND FIDEL S. MANAOG, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION AND CAMARINES SUR III ELECTRIC COOPERATIVE, INC., respondents.
FACTS
Camarines Sur III Electric Cooperative, Inc. (CASURECO III) issued a memorandum citing financial difficulties and instituting austerity measures, including retrenchment. It filed a notice to retrench 30 employees, which was approved by the DOLE Regional Director. Subsequently, CASURECO III placed 52 employees, including the petitioners, on a three-month “forced leave without pay,” purportedly as a cost-saving measure, with a promise of rehiring upon financial recovery. The DOLE Regional Office later disapproved an extension of this forced leave and advised the reinstatement of the employees.
Instead of reinstating them after the forced leave period, CASURECO III issued another memorandum barring the affected employees from returning to work and later applied for their retrenchment. The petitioners, who were regular employees without derogatory records, filed complaints for illegal dismissal. The Labor Arbiter ruled in their favor, declaring the forced leave and subsequent termination illegal. The NLRC reversed this decision, prompting the petitioners to elevate the case to the Supreme Court.
ISSUE
Whether the dismissal of the petitioners, implemented through a scheme of “forced leave” followed by retrenchment, was valid.
RULING
The Supreme Court ruled that the dismissal was illegal. The Court emphasized that retrenchment to prevent losses is a recognized ground for termination under Article 283 of the Labor Code, but it is subject to strict requirements. The employer must prove, with clear and convincing evidence, the existence of substantial losses, the imminent threat of such losses, that the retrenchment was reasonably necessary and likely to be effective in preventing the losses, and that it was done in good faith and without discrimination.
The Court found that CASURECO III failed to substantiate its claim of financial reverses with sufficient evidence. More critically, the method used—a “forced leave”—was a subterfuge. The Labor Code does not authorize an employer to unilaterally place employees on forced leave. This scheme effectively constituted a constructive dismissal, as it was a veiled attempt to terminate the employees without adhering to the legal requisites for a valid retrenchment. The subsequent application for retrenchment approval could not cure this initial illegality. Consequently, the NLRC committed grave abuse of discretion in upholding the dismissal. The Supreme Court reinstated the Labor Arbiter’s decision, ordering the reinstatement of the petitioners and the payment of three years of backwages.