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 initiated a Temporary Staff Reduction Program (TSRP). Bayao and Castillo were notified they were part of this temporary retrenchment effective September 1, 1998. When they reported for work, they found their positions had been collapsed and replaced by new designations, 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 their positions were merely renamed and given to others. PT&T elevated the case to the Supreme Court via a petition for review.
ISSUE
Whether or not the dismissal of respondents Bayao and Castillo was a valid exercise of the employer’s prerogative to retrench employees.
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 dire economic necessity for retrenchment. This satisfied the first requisite of a valid retrenchment.
However, the Court ruled PT&T failed in its duty to observe due process. The notice of termination did not comply with the twin-notice requirement under the Labor Code. The company merely informed the employees of their inclusion in the TSRP without providing a detailed notice stating the specific grounds for termination and affording them a genuine opportunity to be heard. This procedural lapse did not invalidate the dismissal due to the proven economic cause, but it rendered the termination defective. Consequently, the employees were entitled to nominal damages, which the Court set at ₱30,000.00 each.
Finally, as the retrenchment was based on serious business losses, the respondents were legally entitled to separation pay equivalent to one-half month’s pay for every year of service. The Supreme Court modified the CA decision, ordering PT&T to pay the separation pay and nominal damages.