304 Phil.

798

FIRST DIVISION
[ G.R. No. 110518. August 01, 1994 ]
JOSE L. GARCIA, EDUARDO ALAS, NOEL APAYA, RICARDO
ARMAMENTO, MARCOS AVEJERO REYNALDO BANTIGUE, ROMEO
BORRAS, MARGARITO CABICUELAS, ROLANDO CAMUA, JOSE
DENNIS CASTILLO, DICOROSO CARBO, FELIPE COSCULLA,
EDUARDO DE GUZMAN, SEVILLA DEMLO, DIONALDO
TEODOLFO, ADEMAR DUPINO, JOSE ESCOBAR, REYNALDO
FLORES, DELFIN GARCIA, FEDERICO GATDULA, FELOMINO
GUTIERREZ, HILARIO EUGENIO, EUGENIO ILANO, JR.,
WILFREDO JALLA, RAMON LASQUITE, CESARIANO LIM,
AUGUSTO LUMBANG, SALVADOR MACARAEG, ERNESTO
MARQUEZ, LAURO MIRAVALLES, FRED ONIA, REYNALDO ORTIZ,
LEONIZA PALALIMPA, ALFREDO ROMEO, LECERIO ROSARIO,
ARMANDO SABIDURIA, RONILO SACE, REGONDOLA SANTOS,
ERNESTO SALVATUS, ENRICO SANDOVAL, EUFEMIO SATURAY,
VIRGILIO TINAMISAN, MACARIO VALDEZ, JOSE VILLARICA,
SANTOS VIRAY, FLORENDO LOPEZ, JOSE SEGISMUNDO, DIZON
GERONIMO, RUPERTO CLAVIO, JR., SEFARIN DYTIOCO, FIDEL
TAGULAM, AND EDITHA R. JUAN, PETITIONERS, VS. NATIONAL
LABOR RELATIONS COMMISSION AND NATIONAL SERVICE
CORPORATION, RESPONDENTS.
DECISION

CRUZ, J.:

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

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.
On November 21, 1988, the PNB filed a complaint for damages with preliminary
injunction against the labor unions with the Regional Trial Court of Manila. It
was docketed as Civil Case No. 88-46938 in Branch 22. On December 5, 1988, the
court granted the application for a preliminary injunction and issued the writ
ordering the lifting of the picket.

NASECO also filed on November 21, 1988, a petition with the National Labor
Relations Commission to declare the strike illegal. This was docketed as NLRC
Case No. 00-11-04766-88. On February 17, 1989, the NLRC rendered its decision
sustaining NASECO.[1] 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.[2]

On March 1, 1989, 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 in light of the Service Agreement between
NASECO and the PNB giving the latter the right to reject or replace any and all of
NASECO's employees assigned to it, for inefficiency or other valid reasons.

In reply, the PNB 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.[3]

On October 13, 1989, the petitioners received notice of separation from NASECO,
effective thirty days thereafter. 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.[4]

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 management of NASECO even offered a better separation package

equivalent to three-fourths of the estimated new basic monthly salary for every
year of service, compared to the statutory requirement of only 1/2 month pay for
every year of service.[5]

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.[6]

On November 13, 1989, NASECO sent notice to the petitioners that their
termination from the service would take effect not on November 16, 1989, but on
November 30, 1989, for humanitarian considerations. The effective date was
again extended to December 15, 1989, and finally to December 31, 1989.

On June 22, 1990, Labor Arbiter Potenciano Canizares Jr. rendered a decision
finding that the petitioners had been "fairly discharged by the respondent
(NASECO) in a valid act of simple retrenchment. "[7]

On July 11, 1990, the petitioners appealed to the NLRC. On September 11, 1992,
they filed a manifestation that the private respondent had been hiring new
personnel, but no proof was offered to support the charge.

On December 21, 1992, the NLRC issued a resolution affirming the decision of the
labor arbiter.[8] A motion for reconsideration filed by the petitioners on January
15, 1993, was denied by the NLRC on February 10, 1993.[9]

It is now asserted in this petition that the NLRC gravely abused its discretion in
holding that the petitioners were validly dismissed on the ground of
retrenchment; that NASECO is not guilty of unfair labor practice; and that their
monetary claims for increases under Republic Acts 6640 and 6727, as well as for
moral and exemplary damages and attorney's fees, should be denied.

On the first two issues, the petitioners fault the NLRC for completely
disregarding the requisites of a valid retrenchment as laid down in Lopez Sugar
Corporation vs. Federation of Free Workers.[10]

The requisites 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 petitioners assert that NASECO failed to show with convincing evidence that
the incurred losses, if any, were substantial. The claimed losses were belied by
the fact that NASECO hired new personnel before and after the dismissal of the
petitioners. NASECO also failed to pursue other measures to forestall losses,
short of dismissing the petitioners. It did not follow the "first in, last out" rule
that in cases of retrenchment, employees with long years of service with the
company, like the petitioners, should not be the first to be retrenched. They
attribute their dismissal to their participation in the strike of November 19, 1988.
Thus, their dismissal was an act of unfair labor practice for being discriminatory
and violative of their rights to self-organization and to engage in concerted
activities.

We have to disagree.

The losses incurred by NASECO for the year 1989 amounted to P1,457,700.42 and
were adequately proved by it.[11] 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.

It is also not true that respondent NASECO did not look for other measures to cut
back on its losses. NASECO had in fact tried to place the petitioners with its other
clients but it was the petitioners themselves who refused reassignment.

The particular facts of this case preclude application of the "first in, last out" rule
in the retrenchment of employees. There was no discrimination against the
petitioners. NASECO could not compel the PNB to take the petitioners back to
their former positions in view of its contractual right to reject any employee of
NASECO for inefficiency and other valid reasons. The PNB had already filled the
vacated positions of the petitioners during the strike, to ensure the continued
operation of its business.

The monetary claim under RA 6640 and RA 6727 is another matter. RA 6640,
which took effect on December 14, 1987, and RA 6727, which took effect on July
1, 1989, provide for P10.00 and a P25.00 increases respectively in the minimum
wage of laborers. The NLRC denied this claim on the ground that the petitioners
had failed to include it in their basic complaint. This contention is not acceptable
because the claim was clearly included and prayed for in their position paper.

The Revised Rules of the NLRC provide under Sec. 3, Rule V, that parties should
not be allowed to allege facts not referred to or included in the complaint, or
position paper, affidavits and other documents. This would mean that although
not contained in the complaint, any claim can still be averred in the position
paper, as was done by the petitioners, or in an affidavit or other documents.

We also hold that the increases in the petitioners' minimum wage under RA 6640
and RA 6720 should be granted since they became effective before the
petitioners' retrenchment. Said increases should be considered in the
computation of their separation pay in accordance with Art. 283 of the Labor
Code.

Moral damages are recoverable only where the dismissal of the employee was
attended by bad faith or fraud or constituted an act oppressive to labor or was
done in a manner contrary to morals, good customs or public policy.[12]
Exemplary damages may be awarded only if the dismissal was effected in a
wanton, oppressive or malevolent manner.[13] None of these grounds has been
proven. However, the Court will grant the claim for attorney's fees in an amount
equivalent to 10% of the total amount awarded to the petitioner as authorized by
the Labor Code.[14]

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.

WHEREFORE, the decision of the Labor Arbiter dated June 22, 1990, and the
resolutions of the NLRC dated December 21, 1992, and February 10, 1993, are
AFFIRMED, with the modification that the monetary claim under RA 6640 and
RA 6720, and for attorney's fees, should be and is hereby granted. The award of
moral and exemplary damages is disallowed.

SO ORDERED.

Davide Jr., Quiason, and Kapunan, JJ., concur.

Bellosillo, J., on official leave.

[1] Rollo, pp. 364-365.

[2] Ibid.
[3]
Rollo, p. 341.
[4]
Ibid., p. 343.
[5]
Id.
[6] Rollo, p. 3.
[7] Rollo, pp. 336-348.
[8] Rollo, pp. 361-373.
[9] Annex G, Rollo, p. 378.
[10]
189 SCRA 179.
[11]
Rollo, pp. 342-343.
 Spartan Security & Detective Agency, Inc. v. NLRC, 213 SCRA 528 citing Art.
[12]

1701 in relation to Art. 21 of the Civil Code of the Phil., and Primero v. IAC, 156
SCRA 435.

Ibid., citing Art. 2232 of the Civil Code of the Phil., and NASECO v. NLRC, 168
[13]

SCRA 122.
[14] Art. III.

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