GR 173231; (December, 2007) (Digest)
G.R. No. 173231; December 28, 2007
RUBEN L. ANDRADA, ET AL., Petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, SUBIC LEGEND RESORTS AND CASINO, INC., ET AL., Respondents.
FACTS
Petitioners were employees in the Project Development Division of Subic Legend Resorts and Casino, Inc. (Legend). On January 6, 1998, Legend notified the Department of Labor and Employment of its intent to retrench thirty-four employees, including petitioners, citing the shelving of a condotel project, completion of other projects, and the abolition of a department. The next day, Legend sent individual notices offering three options: temporary lay-off with possible reassignment, permanent retrenchment with separation pay, or immediate retrenchment with an additional month’s pay. The employees chose options but reserved their right to question the validity of the retrenchment. Notably, on the same day, an affiliate company advertised for positions similar to those vacated by petitioners. After receiving benefits and signing quitclaims with reservation, petitioners filed a complaint for illegal dismissal.
ISSUE
Whether the termination of petitioners on the ground of retrenchment was valid and legal.
RULING
The Supreme Court ruled that the retrenchment was illegal. For a valid retrenchment, the employer must prove: (1) substantial losses; (2) that the retrenchment is reasonably necessary and likely to prevent business losses; (3) written notice to employees and the DOLE at least one month prior; and (4) fair and reasonable criteria in selecting employees. Legend failed to discharge this burden. It did not present sufficient, concrete, and credible evidence, such as audited financial statements, to prove actual or imminent substantial losses justifying the mass termination. The advertised job openings by an affiliate for identical positions on the very day of the termination notices starkly contradicted the claim of redundancy and economic necessity, indicating a scheme to replace the employees rather than a bona fide retrenchment. The quitclaims signed by petitioners, given the circumstances and their express reservation of the right to sue, did not bar their action. Consequently, the termination constituted illegal dismissal. The Court reinstated the Labor Arbiter’s decision with modification, deleting the award for 14th-month pay.