G.R. No. 113958 July 31, 1997
BANANA GROWERS COLLECTIVE AT PUYOD FARMS and Individual Growers: CYNTHIA P. ZAFRA, MILAGROS P. CEGSIACO, MARCELA PUYOD, LUCIANO PUYOD II, MRYNA P. SOLSKI, CONCEPCION P. YULO, EVELYN PUYOD, MAURO PUYOD, SYLVIA P. RIETA and JACQUELENE P. MARCELINO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL FEDERATION OF LABOR (NFL), ESPERIDION GALLEGO, JULIE TAMON, DIONISIO GEMOTA, FLORENTINO HINDAP, ANTONIO ALINSOLORIS, CRESENCIO BASTIDA, SAMUEL ALBURO, VICENTE SUHAYON, EDUARDO MAPATOL, SOFRONIO AMISTOSO, RIO BERNAL, DOMINADOR ESCOTO, SOTERO BYCO, NESTOR AMPARIAS, WILLIAM EQUNA, ORENCIO BOLANIO, DOMINGO GAUCO, LUCIANO CARCELLER, SIXTO SUHAYON, CERENIO MAPICRE, JAIME ABANA, ALBRANDO GAMAY, RUPERTO GARADO, MANALO DAROY, DELIO DELAFUENTE, CARMELO PUSTA and RAMON HINDAP, respondents.

FACTS

Federico Puyod, Sr. operated a banana farm. After his death, his heirs partitioned the farm and individually managed their shares, allegedly dissolving the Banana Growers Collective. The farm had a contract with STANFILCO for marketing and technical assistance. In a January 30, 1990 letter, STANFILCO informed the heirs of a plan to convert approximately 50 hectares from giant cavendish to Ecuadorian dwarf bananas. The letter stated that regular farm operations would stop until conversion was completed, contractors would handle conversion labor, and the regular workforce needed to be reduced from chopping until harvest. On February 2, 1990, petitioners notified private respondent agricultural workers of their retrenchment, effective 30 days later, and filed an Employer’s Report with the DOLE. The private respondents had organized a labor union in September 1989 and filed a petition for certification election in October 1989. After receiving the retrenchment notice, they filed a complaint for illegal dismissal on March 12, 1990. The Labor Arbiter dismissed the complaint, finding the retrenchment valid due to economic reasons and managerial prerogative to fulfill contractual obligations with STANFILCO. The NLRC reversed the Labor Arbiter, finding the dismissal illegal. The NLRC found no evidence that STANFILCO’s standard procedure was to replace workers with contractors during conversion, noted that only the complainants were dismissed despite the hiring of additional workers for other farms, and concluded the dismissal was motivated by anti-union sentiment due to its timing close to the certification election. Petitioners filed a motion for reconsideration, which was denied.

ISSUE

Whether the National Labor Relations Commission gravely abused its discretion in ruling that the petitioners illegally dismissed the private respondent workers on the ground of retrenchment.

RULING

The Supreme Court dismissed the petition for certiorari and affirmed the NLRC Resolutions, subject to modification regarding reinstatement and backwages. The Court held that for a valid retrenchment, the employer must prove substantial and imminent losses with sufficient and convincing evidence. The petitioners failed to meet this burden. Their sole basis was a broad conclusion of potential total business cessation if STANFILCO’s condition was not met, which was not substantiated by proof of actual or imminent substantial losses. The retrenchment did not comply with the standards of being reasonably necessary to prevent such losses. Furthermore, the timing of the termination, closely following the workers’ union organization and petition for certification election, supported the NLRC’s finding that the retrenchment was a pretext for union busting. The Court modified the NLRC’s award, ordering the reinstatement of private respondents to their former or equivalent positions without loss of seniority rights and with full backwages from the time of termination until actual reinstatement.