BENJAMIN G. INDINO, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) AND DASMARIÑAS INDUSTRIAL & STEELWORKS CORPORATION AND/OR PHILIPPINE NATIONAL CONSTRUCT…

The main issue in this petition for certiorari assailing
the two resolutions dated August 20,
1987^[1]
and October 5, 1987^[2]
of the respondent National Labor Relations Commission (NLRC) in NLRC Case No.
10-3268-85, is the validity of the petitioner’s separation from the employ of
private respondent Dasmariñas Industrial and
Steelworks Corporation (DISC).

The petitioner, Benjamin G. Indino,
joined the Philippine National Construction Corporation (PNCC) as a project
personnel officer on December 12,
1974.  On January 6, 1981, he was transferred to
private respondent DISC, a sister corporation of PNCC, which assigned him to
its Philphos Project in Isabel, Leyte.

On July 27, 1983,
while the petitioner was on a paid vacation leave, he received a
“letter-memorandum” from Roman B. Lopez, DISC personnel manager,
informing him that his services were no longer needed at the Philphos Project in Leyte.  The “letter-memorandum” reads:

Date July 27,1983

The significant business reverses being experienced by the company
makes (sic) it imperative to take drastic measures to reduce both its work
force and operating costs.  We regret to
inform you, therefore, that your employment with DISC shall be terminated at
the close of business hours on August 27, 1983, or after thirty (30) days from
your receipt hereof.

Relatively, you can elect to
submit a formal resignation in which case you shall also be entitled to separation pay and other benefits
applicable under existing policies.  You
may also take advantage of your
earned leave during the period July
27, 1983 to August 27,
1983.

The Personnel Administration
Department (PAD), will be glad to answer your questions pertaining to your
formal separation.  Please accomplish the
necessary clearance on or before July
30, 1983.

SGD. ROMAN B. LOPEZ

Personnel Manager^[3]

Immediately after receipt of the “letter-memorandum,”
the petitioner filed with the NLRC a complaint
for illegal dismissal against private respondent DISC; it was docketed as
NLRC-NCR CASE NO. 7-3590-83.^[4]
The case, however, was prematurely terminated upon a joint motion to dismiss,
dated September 30, 1983, filed by the parties, and which reads:

Comes (sic) now both parties in the above-entitled case and unto this Honorable Commission
respectfully state:

1. That both parties mutually agreed to settle their differences
and petitioner/complainant agreed to return
to work tomorrow October 1, 1983.  On the other hand, respondent accepted his
willingness to return to work at
any project or office where he may be assigned;

2. That complainant likewise agreed to be paid only fifty percent
(50%) of his back wages/salaries and other allowances by the respondent
starting July 27, 1983 up to September 30, 1983, and by this Joint Motion to
Dismiss both parties are foregoing and condoning whatever claims each party may
have against each other under NLRC-NCR CASE No. 7-3590-83;

3.  That both parties hereby
mutually and jointly move for the dismissal of the above-entitled case.

Makati,
Metro Manila

September 30, 1983.

SGD.
BENJAMIN G. INDINO                       SGD. ORLANDO
B. TIONGSON

Complainant                                                         President

Dasmariñas
Indus­trial& Steelworks

Corp.

Assisted by:

SGD. JOSE A. CABATUANDO JR.

“Counsel for the respondent”^[5]

On the basis of that agreement, the petitioner was reinstated on October 1, 1983 at respondent D1SC’s
central office, occupying the position of Project Administrative Officer III.^[6]
Barely two months after his reinstatement, however, or on December 14, 1983, the petitioner received
another “letter-memorandum” from respondent DISC, again terminating
his services.  The
“letter-memorandum” states:

December 14, 1983

As we have completed most of our major projects and about to complete
the Philippine Phosphate Fertilizer Project plus the fact that there has been a
low project in sales/marketing due to critical economic situation, the company
is forced to take drastic measures to reduce both its work force and operating
costs.  We regret to inform you, therefore, that your employment with
DISC shall be terminated at the close of business hours on January 15, 1984, or
thirty (30) days from your receipt hereof.

Relatively, you can elect to submit a formal resignation in which
case you shall also be entitled to separation pay and other benefits applicable
under existing policies.  You may also
take advantage of your earned leaves during the period December 15, 1983 to January 15, 1984.

The Personnel Administration Department (PAD) will be glad to
answer your questions pertaining to your formal separation.  Please accomplish the necessary clearance on
or before January 15, 1984.

(SGD.) ROMAN B. LOPEZ

 Personnel Manager^[7]

Accordingly, pursuant to this “formal separation,” the
petitioner received from DISC the amount of P20,458.52 as separation benefits.^[8]

The petitioner, however, refused to accept his termination; on October 7, 1985, he filed a complaint
for illegal dismissal, unpaid wages, moral and exemplary damages, and
attorney’s fees against respondent DISC.^[9]
Later, he amended his complaint and impleaded the
Philippine National Construction Corporation (PNCC) as additional respondent.^[10]
On February 10, 1987, Labor
Arbiter Ricardo C. Nora, to whom the case was assigned, dismissed the petitioner’s
complaint’ for lack of merit.

Dissatisfied with the labor arbiter’s decision, the petitioner
appealed to the respondent NLRC.  The
latter, however, finding no error in the appealed judgment, issued a resolution
on August 10, 1987 affirming the same and denying the petitioner’s appeal.  A motion for reconsideration seasonably filed
by the petitioner was denied on October 5, 1987.  Hence, this petition.

The petitioner insists that his removal was unjustified and
illegal and was carried out to circumvent the compromise agreement he had
earlier entered into with respondent DISC which provided, among others, his
reinstatement in any of the offices or projects of respondent DISC.  The
aforementioned compromise agreement, he avers, is already the law between them
and precludes his separation or dismissal. 
Moreover, the petitioner points out, the reason for his separation in
the “letter-memorandum” of December 14, 1983 is but a rehash of that
in the first “letter-memorandum” of July 27, 1983.  The petitioner concludes that the later move
by DISC at ostensible retrenchment had been made in bad faith and manifested
its thinly-veiled desire to dismiss him. 
The petitioner likewise makes capital of the failure of the respondent
DISC to show that it was incurring, or
at least about to incur, losses, which would warrant its retrenchment policy. 
As such, his removal from employment was unjustified and amounted
to an illegal dismissal.  Finally, the petitioner
substantiates the inclusion of the Philippine National Construction Corporation
(PNCC) as a party respondent in the case with the fact that PNCC was originally his employer but which later
transferred him to respondent DISC, the PNCC sister company.  This, according to the petitioner, shows the
link between the two respondents and for purposes of this case, deprives them
of their separate personality.

We find the petition
impressed with merit.

The failure of the respondent DISC to show proof of its actual or
imminent losses that would justify drastic cuts in personnel or costs, is fatal
to its cause.  Article 283 (then Article
284) of the Labor Code provides that an “employer may also terminate the
employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this title.”^[11]
Clearly, under the said provision of law, the right of an employer to terminate
the services of any employee is predicated on the existence of any of the
following causes:  (1) installation of
labor-saving devices; (2) redundancy; (3) retrenchment to prevent losses; and
(4) the closing or cessation of operation of the establishment or undertaking,
unless the closing is for the purpose of circumventing the provisions of law.^[12]
Thus, while business reverses can be a
just cause for terminating employees,^[13]
they must be sufficiently
proven by the employer.^[14]
This is precisely mandated under
par. (b) of Article 277 (formerly 278) of the Labor Code which states, among others, that
“(T)he burden of proving that the termination was for a valid or
authorized cause shall rest on the employer.”

Admittedly, the assassination of Senator Benigno
“Ninoy” Aquino on
August 21, 1983 produced extremely adverse political, social, and economic
conditions that resulted in widespread business failures.  Not all enterprises,
however, experienced severe economic setbacks; a number, in fact,
flourished during that financially bleak period.

It is almost an inflexible rule that employers who contemplate
terminating the services of their workers cannot be so arbitrary and ruthless
as to find flimsy excuses for their
decisions.  This must be so considering
that the dismissal of an employee from work involves not only the loss of his
position but more important, his means of livelihood.^[15]
Applying this caveat to the case at bar, it was therefore incumbent for respondent
DISC, before putting into effect any
retrenchment process on its work force, to show by convincing evidence that it was being wrecked by serious financial problems.  Simply stating its state of insolvency or its
impending doom will not be sufficient.  To do so would render the security of
tenure of workers and employees illusory. 
In a grander scale, to hold as valid and legal the
respondent DISC’s act would be disastrous to
labor.  Any employer desirous of ridding
itself of its employees could then easily do so without need to adduce proof in
support of its action.  We can not
countenance this.  Security of tenure is
a right guaranteed to employees and workers by the Constitution and should not
be denied on the basis of mere speculation.^[16]

Another point that makes the respondent DISC’s
cause suspect is that, as correctly pointed
out by the petitioner, the reason it gave in its “letter-memorandum”
dated December 14, 1983 terminating his services was simply a rehash of its (DISC’s) “letter-memorandum” dated July 27, 1983,
which ultimately produced the compromise agreement between the parties.  It will be noted that on July 27, 1983, the
event (Ninoy Aquino’s
assassination) that led to the near-collapse of the national economy, had not
yet taken place.  Respondent DISC’s use of basically the same reason thus shows its all-too-apparent effort to remove the
petitioner from its payroll.  Taken in the light of the then just recently concluded
compromise agreement between the
parties, the act of DISC in subsequently dismissing the petitioner just two
months-and-a-half after his reinstatement appears as having been made in bad
faith.  Surely, if the basis for the
second “letter-memorandum” is the same as that of the first, there is
no reason why the petitioner could not be retained as in the first
instance.  The ground of DISC’s retrenchment policy being basically no different
from the first, it is therefore covered by the compromise agreement
reached by the parties earlier.

Finally, considering that
the petitioner started his employment originally with the Philippine National
Construction Company (PNCC) but was only transferred later to its sister
company, the respondent DISC, the inclusion of the former as party respondent
in this action is justified and proper.  The
so-called separate and distinct personality
of PNCC could validly ignored inasmuch as it would unjustly prejudice the
petitioner vis-a-vis whatever benefits he may receive
by reason of his illegal dismissal.  This
has been demonstrated by the amount of the separation pay given to the
petitioner by respondent DISC which appears to correspond only to the period in
which the former was in the employ of the latter.  The period when the petitioner was still in
the employ of PNCC was apparently ignored. 
This omission should not be allowed inasmuch as there is no
showing that PNCC gave the petitioner separation benefits before he was
transferred to DISC.  It should always be
borne in mind that the fiction of law that a corporation, as a juridical entity, has a distinct and
separate personality, was envisaged for convenience and to serve justice; therefore, it should not be used as a
subterfuge to commit injustice and circumvent labor laws.^[17]

WHEREFORE, the petition is GRANTED, the assailed
resolutions of the National
Labor Relations Commission dated August 20, 1987 and October 5, 1987 are
ANNULLED and SET ASIDE.  The respondent Dasmariñas Industrial & Steelworks Corporation is
hereby ORDERED to REINSTATE the petitioner to his former position without loss
of seniority rights and privileges, and to PAY the petitioner three (3) years back wages without any
qualifications.  Costs against the
respondent Dasmariñas Industrial & Steelworks
Corporation.

SO ORDERED.

Melencio-Herrera, (Chairman), Paras, Padilla, and Regalado, JJ., concur.

^[1]
Commissioner Oscar N. Abella, ponente,
Commissioners Daniel M. Lucas, Jr., and Domingo H. Zapanta,
concurring; Rollo, 21-29.

^[2]
Rollo, 30.

^[3]
Id., 8-9; 50.

^[4]
Id., 9.

^[5]
Id.

^[6]
Id., 74.

^[7]
Id., 10, 74-75.

^[8]
Id., 10, 75.

^[9]
Id., 53.

^[10]
Id.

^[11]
See also Cebu Stevedoring Co., Inc. vs. The
Honorable Regional Director/Minister of Labor, et al.; No. 54285, December 8, 1988.

^[12]
International Hardware, Inc. vs. National Labor Relations Commission, et
al., No. 80770, August 10, 1989.

^[13]
Columbia Development Corporation vs. Minister of Labor and Employment, No. 57769, December 29, 1986, 146 SCRA 421; Garcia vs.
National Labor Relations Commission, No. 67825, September 4, 1987, 153 SCRA
639.

^[14]
Garcia vs. National Labor Relations Commission,
supra; Camara Shoes vs. Kapisanan ng mga
Manggagawa sa Camara Shoes, et al., Nos. 63208-09, May 5, 1989.

^[15]
Remerco Garments Manufacturing vs. Minister of
Labor and Employment, Nos. 56176-77, February
28, 1985, 135 SCRA 167.

^[16]
Tolentino vs. National Labor Relations
Commission, No. 75380, July 31, 1987,
152 SCRA 717.

^[17]
La Campana Coffee Factory, Inc. vs. Kaisahan ng mga
Manggagawa sa La Campana (KKM), 93 Phil. 160 (1953).