GR 121434; (June, 1997) (Digest)
G.R. No. 121434 June 2, 1997
ELENA F. UICHICO, SAMUEL FLORO, VICTORIA F. BASILIO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, LUZVIMINDA SANTOS, SHIRLEY PORRAS, CARMEN ELIZARDE, ET. AL., respondents.
FACTS
Private respondents were long-time employees of Crispa, Inc. Their services were terminated in September 1991 on the ground of retrenchment due to alleged serious business losses. They filed complaints for illegal dismissal against Crispa, Inc., its major stockholder Valeriano Floro, and the petitioners, who were high-ranking officers and directors of the company. The Labor Arbiter dismissed the complaints but ordered payment of separation pay equivalent to 17 days for every year of service. On appeal, the NLRC reversed the Labor Arbiter, finding the dismissal illegal and modifying the separation pay to one month for every year of service. The NLRC later clarified its resolution to include an award of six months backwages. The NLRC held that the alleged financial losses were not sufficiently proven, as the Statement of Profit and Losses submitted by the company was unsigned by a certified public accountant and unaudited, giving it no evidentiary value. The NLRC also held the petitioners solidarily liable with the corporation.
ISSUE
Whether the NLRC committed grave abuse of discretion in: (1) finding the dismissal of private respondents illegal due to insufficient proof of serious business losses justifying retrenchment; and (2) holding the petitioners, as corporate officers, solidarily liable for the illegal dismissal.
RULING
The Supreme Court dismissed the petition, finding no grave abuse of discretion by the NLRC. On the first issue, the Court upheld the NLRC’s finding of illegal dismissal. While retrenchment is a management prerogative recognized under Article 283 of the Labor Code to prevent losses, the employer bears the burden of proving such losses with sufficient and convincing evidence. The company’s sole evidence, an unsigned and unaudited Statement of Profit and Losses, lacked a modicum of admissibility and had no evidentiary value, failing to satisfy the required standards for a valid retrenchment. On the second issue, the Court affirmed the solidary liability of the petitioners. Corporate directors and officers may be held solidarily liable with the corporation for the termination of employees done with malice or in bad faith. The petitioners, as the high-ranking officers and directors who signed the Board Resolution for retrenchment based on an unsubstantiated ground, exhibited bad faith, making them jointly and severally liable for the money claims of the illegally dismissed employees.