G.R. Nos. 205685-86 June 22, 2015
EMMANUEL H. BERALDE, et al. and PRESCO A. FUENTES and BRIAN TAUB, Petitioners, vs. LAPANDAY AGRICULTURAL AND DEVELOPMENT CORPORATION (GUIHING PLANTATION OPERATIONS), RICA REGINA L. DA VILA, EDWIN T. FABREGAR, JR., GERARDO IGNACIO B. ONGKIKO, CELSO S. SANCHEZ, and JESSEPEHINE O. ALEGRE, Respondents.

FACTS

Lapanday Agricultural and Development Corporation (Lapanday) is engaged in banana plantation and export. Petitioners were its employees. Between 1992-1994, Lapanday retrenched and paid separation pay to some employees, then allegedly re-hired some with a promise that the land would be turned over to them under the Comprehensive Agrarian Reform Program (CARP). In 1999, Lapanday again retrenched all employees and offered separation pay. The land was not turned over as the Department of Agrarian Reform (DAR) issued an order exempting it from CARP coverage. On March 29, 1999, Lapanday and employees, including petitioners, signed a new employment contract. The employees filed a petition to revoke the DAR’s exemption order.
On January 4, 2008, Lapanday issued a Notice of Termination to all employees, including petitioners, instituting a retrenchment program under the Collective Bargaining Agreement (CBA) to prevent losses due to increased production costs and lower productivity, effective February 4, 2008. Some employees signed the notice; petitioners claimed separation pay was not given and those who refused to sign were barred from work premises. Lapanday claimed it offered separation pay despite financial difficulties. Petitioners filed complaints for illegal dismissal: Emmanuel Beralde, et al. on February 5, 2008, and Presco Fuentes and Brian Taub on October 6, 2008.
Lapanday asserted financial reverses since 2006 due to low productivity, banana diseases, aerial spraying ban, CARP reduction, non-renewal of leases, increased costs, and foreign exchange fluctuation. It implemented saving measures, consulted the union, and filed a notice with the Department of Labor and Employment (DOLE) before retrenchment.
In NLRC RAB XI-02-00135-08 (Beralde, et al.), the Labor Arbiter dismissed the illegal dismissal complaint, declared retrenchment valid, and ordered Lapanday to pay separation pay. The NLRC reversed this, declaring the complainants (except Fuentes and Taub) illegally dismissed, ordering reinstatement with backwages and attorney’s fees. Lapanday’s motion for reconsideration was denied.
In NLRC RAB XI-10-00881-08 (Fuentes and Taub), the Labor Arbiter declared their dismissal illegal, ordering reinstatement and backwages. Lapanday appealed to the NLRC, which dismissed the appeal for non-perfection due to failure to post a bond. The Court of Appeals granted Fuentes and Taub’s petition, reinstating the case. The NLRC then dismissed the complaint for lack of merit, affirming the Labor Arbiter’s finding of illegal dismissal and including Fuentes and Taub in its earlier ruling.
Lapanday filed petitions for certiorari with the Court of Appeals. The appellate court consolidated the cases and granted the petitions, setting aside the NLRC resolutions. It reinstated the Labor Arbiter’s decision in CA-G.R. SP No. 03588 (Beralde, et al.) and dismissed the complaints in CA-G.R. SP No. 04646 (Fuentes and Taub), remanding the case for computation of separation pay. Petitioners’ motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals erred in ruling that petitioners were legally dismissed due to a valid retrenchment program by Lapanday.

RULING

The Supreme Court denied the petition, affirming the Court of Appeals’ decision. The retrenchment program implemented by Lapanday was valid and justified. The Court emphasized that in reviewing labor cases via a Rule 45 petition, it examines whether the Court of Appeals correctly determined the presence or absence of grave abuse of discretion in the NLRC’s decision, not the correctness of the labor tribunal’s assessment of evidence. The appellate court found no grave abuse of discretion in the Labor Arbiter’s ruling, which was based on substantial evidence of Lapanday’s financial losses.
For retrenchment to be valid, the employer must prove: (1) the retrenchment is necessary to prevent losses; (2) written notice to employees and the DOLE at least one month before effectivity; (3) payment of separation pay; (4) good faith in implementing retrenchment; and (5) fair and reasonable criteria in selecting employees to be dismissed. Lapanday sufficiently established these elements. It presented audited financial statements showing net losses in 2006 and 2007. It issued written notices, filed the required DOLE notice, and offered separation pay. The selection criteria (efficiency, experience, tenure, and physical fitness) were fair. The retrenchment was done in good faith, not as a ploy to ease out petitioners. The promise of land turnover under CARP was contingent on DAR approval, which was denied, and did not affect the legitimacy of the subsequent retrenchment due to financial losses. Therefore, petitioners’ dismissal was legal.