GR 110518; (August, 1994) (Digest)
G.R. No. 110518 August 1, 1994
JOSE L. GARCIA, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL SERVICE CORPORATION, respondents.
FACTS
Petitioners were employees of private respondent National Service Corporation (NASECO), a government-owned corporation providing manpower services primarily to the Philippine National Bank (PNB). They participated in a strike and picket in November 1988. The NLRC subsequently declared the strike illegal but ordered the reinstatement of the rank-and-file members, including petitioners. When petitioners reported for work on March 1, 1989, NASECO could not assign them to PNB because the bank had contracted another agency and refused to accept them back pursuant to a service agreement. NASECO paid petitioners’ salaries from April 1, 1989, while seeking alternative postings, but petitioners insisted on PNB assignments.
On October 13, 1989, NASECO served notices of retrenchment, effective after thirty days, citing continuous financial losses from paying unposted employees. It complied with the Labor Code’s notice requirement and offered separation pay exceeding statutory minimum. Petitioners filed a complaint for illegal dismissal and unfair labor practice.
ISSUE
Whether the National Labor Relations Commission committed grave abuse of discretion in upholding the validity of petitioners’ retrenchment.
RULING
The Supreme Court upheld the NLRC’s ruling, finding the retrenchment valid. The legal logic centered on the substantive and procedural compliance with Article 283 of the Labor Code and the jurisprudential standards for retrenchment. Financially, NASECO demonstrated substantial and imminent losses, as it was incurring continuous operational losses by paying salaries to employees who performed no work despite earnest efforts to redeploy them. This satisfied the requirement that retrenchment be reasonably necessary to prevent further financial deterioration.
Procedurally, NASECO observed good faith by providing a 30-day notice to both employees and the Department of Labor and Employment, offering a separation package more generous than the legal minimum, and repeatedly extending the effectivity date of termination. The Court emphasized that the constitutional protection of labor does not compel an employer to retain employees it no longer needs or to subsidize indefinitely idle workers. Management’s prerogative to retrench for legitimate economic reasons was properly exercised. However, the Court modified the award by granting petitioners’ wage increases under Republic Acts 6640 and 6727 in computing separation pay and allowing attorney’s fees, while disallowing moral and exemplary damages due to absence of bad faith.