Friday, February 03, 2006


JOSE L. GARCIA et al. vs.
G.R. No. 110518 August 1, 1994


NASECO is a government-owned or controlled corporation engaged in providing manpower services such as security guards, radio operators, janitors and clerks, principally for the Philippine National Bank. The petitioners were its employees who were either members of the NASECO Employees Union (NASECO - EU) or of the Alliance of Concerned Workers of NASECO (ACW - NASECO). On November 19, 1988, they were among those who staged a strike and picketed the premises of the PNB.

PNB filed a complaint for damages with preliminary injunction against the labor unions with the Regional Trial Court of Manila for which the court granted the application for a preliminary injunction and issued the writ ordering the lifting of the picket.

NASECO also filed a petition with the NLRC to declare the strike illegal. The NLRC rendered its decision sustaining NASECO. The union officers who knowingly and actively participated in the strike, as well as the members of the respondent union who committed illegal acts in the course of the strike, were deemed to have legally lost their employment status. The rest of the striking members, including the herein fifty-one petitioners, were ordered to report for work immediately.

The complaint of the labor union against the PNB for unfair labor practice and illegal lockout was dismissed on the ground that there was no employer-employee relationship between the PNB and the labor unions.

The petitioners reported for work at the NASECO office but they could not be given assignments because the PNB had meanwhile contracted with another company to fill the positions formerly held by the petitioners. NASECO inquired from the PNB whether or not the petitioners could still be accepted to their former positions but the PNB in its reply manifested that it was no longer accepting the petitioners back to their former positions as these were no longer vacant.

NASECO then sought new assignments for the petitioners with its other clients, but the petitioners insisted on their reassignment to the PNB. In the meantime, starting April 1, 1989, NASECO paid the salaries and other benefits of the petitioners although they were not actually working.

Thereafter, the petitioners received notice of separation from NASECO, the reason given was the financial losses NASECO was incurring at that time due mainly to the salaries being paid to the employees who could not be posted despite efforts to place them. Conformably to Art. 283 of the Labor Code, the Department of Labor and Employment was likewise given a 30-day notice of the intended retrenchment.

The petitioners refused to acknowledge receipt of the notice and instead, on October 26, 1989, filed with NLRC a complaint against NASECO for unfair labor practice, illegal dismissal, non-payment of wages and damages. The Labor Arbiter rendered a decision finding that the petitioners had been "fairly discharged by the respondent (NASECO) in a valid act of simple retrenchment." The petitioners appealed to the NLRC but the NLRC issued a resolution affirming the decision of the labor arbiter. A motion for reconsideration filed by the petitioners was likewise denied. The petitioners then appealed the case via petition for certiorari to the Supreme Court.


The main issue before the Court in this petition for certiorari is whether the retrenchment of the fifty-one petitioners by private respondent National Service Corporation as upheld by the Labor Arbiter and later by the National Labor Relations Commission is valid.


The Supreme Court ruled in favor of the respondents and affirmed with modification the decision of the NLRC. The SC held that the requisites for a valid retrenchment are: 1) the losses expected should be substantial and not merely de minimis in extent; 2) the substantial losses apprehended must be reasonably imminent; 3) the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and 4) the alleged losses, if already incurred, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The losses incurred by NASECO for the year 1989 amounted to P1,457,700.42 and were adequately proved by it. These losses were directly caused by the salaries and other benefits paid to the petitioners during the period from April 1 to December 31, 1989. The amount of these payments is not insubstantial in light of the economic difficulties of the country during that year when several coups d' etat adversely affected the nation's economic growth.
The constitutional policy of providing full protection to labor is not intended to oppress or destroy management. The employer cannot be compelled to retain employees it no longer needs, to be paid for work unreasonably refused and not actually performed. NASECO bent over backward and exerted every effort to help the petitioners look for other work, postponed the effective date of their separation, and offered them a generous termination pay package. The unflagging commitment of this Court to the cause of labor will not prevent us from sustaining the employer when it is in the right, as in this case.

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