GR 147002; (April, 2005) (Digest)
G.R. No. 147002. April 15, 2005
PHILIPPINE TELEGRAPH & TELEPHONE CORPORATION and DELIA OFICIAL, Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, AGNES BAYAO and MILDRED CASTILLO, Respondents.
FACTS
Agnes Bayao and Mildred Castillo were account executives for Philippine Telegraph & Telephone Corporation (PT&T). Due to severe and sustained financial losses, PT&T implemented workforce reduction programs. After voluntary programs failed to meet targets, PT&T instituted a Temporary Staff Reduction Program (TSRP). Bayao and Castillo were notified they were part of this TSRP. When they reported for work, they were informed their positions had been collapsed and replaced by new ones, which were already filled. They subsequently filed a complaint for illegal dismissal.
The Labor Arbiter ruled the dismissals were illegal, a decision affirmed by the National Labor Relations Commission (NLRC) and the Court of Appeals (CA). The lower tribunals found that PT&T failed to prove the factual basis for retrenchment and that the dismissal was done in bad faith, as the company had simultaneously created new positions similar to those held by the dismissed employees.
ISSUE
Whether or not the dismissal of respondents Bayao and Castillo on the ground of retrenchment was valid.
RULING
The Supreme Court partially granted the petition. It held that retrenchment was justified but the dismissal procedure was defective. The Court found PT&T presented sufficient evidence, including audited financial statements showing massive losses over four years, to prove the existence of serious business losses necessitating retrenchment. This satisfied the first requisite for a valid retrenchment under Article 283 of the Labor Code.
However, the Court ruled PT&T failed in its duty to serve a written notice to both the employees and the Department of Labor and Employment at least one month prior to the intended date of termination. This procedural lapse did not render the termination illegal but merely defective. Consequently, while the dismissal for an authorized cause (retrenchment) was substantiated, the failure to observe due process entitled the employees to nominal damages, which the Court pegged at ₱30,000.00 each.
Finally, as the retrenchment was justified, the employees were entitled to separation pay equivalent to one-half month pay for every year of service. The decision of the Court of Appeals was modified, ordering PT&T to pay the respondents their separation pay and nominal damages.