GR 117040; (January, 2000) (Digest)
G.R. No. 117040 January 27, 2000
RUBEN SERRANO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ISETANN DEPARTMENT STORE, respondents.
FACTS
Petitioner Ruben Serrano was a regular employee and head of the Security Checkers Section of Isetann Department Store. In 1991, as a cost-cutting measure, Isetann decided to phase out its entire in-house security section and engage the services of an independent security agency. Consequently, Serrano was terminated from his employment. He filed a complaint for illegal dismissal.
The Labor Arbiter ruled in Serrano’s favor, finding the dismissal illegal. The Arbiter held that Isetann failed to prove retrenchment to prevent losses, did not accord due process, and failed to use reasonable criteria in termination. The decision noted that Isetann hired a safety and security supervisor shortly after Serrano’s dismissal. The National Labor Relations Commission (NLRC) reversed the Labor Arbiter, upholding the termination as a legitimate business decision and awarding separation pay instead of reinstatement and backwages.
ISSUE
Whether the abolition of the company’s security section and the hiring of an independent security agency constitute a valid authorized cause for dismissal under Article 283 of the Labor Code.
RULING
The Supreme Court ruled in favor of the petitioner, Serrano. The Court held that the termination was illegal. The phase-out of the security section and contracting out of security services did not fall under any of the authorized causes for dismissal enumerated in Article 283, namely: installation of labor-saving devices, redundancy, retrenchment to prevent losses, or closure/cessation of business. The employer’s mere invocation of “cost-cutting” or a “legitimate business decision” is insufficient; it must strictly prove that the dismissal was for a specific authorized cause. The Court found that Isetann failed to substantiate that the action was due to redundancy, as the functions were merely transferred to an agency, not abolished. Nor was it retrenchment, as the company did not prove actual or imminent substantial losses. The subsequent hiring of a security supervisor indicated bad faith. Consequently, Serrano was entitled to reinstatement without loss of seniority rights and full backwages. The NLRC’s award of separation pay in lieu of reinstatement was erroneous, as separation pay is only proper when reinstatement is no longer viable, which was not the case here.