G.R. No. 214744 - La Consolacion College of Manila vs. Pascua

Virginia Pascua was engaged by La Consolacion College of Manila on January 10, 2000, initially serving as a part-time school physician.
She began working full-time from 2008, establishing a long period of service and a preferred status within the institution.

On September 29, 2011, Pascua received an Inter-Office Memorandum from Manalili, Director of Human Resources, inviting her to a meeting regarding her "working condition."
The following day, September 30, 2011, at the office of the college’s President (Sr. Mora), she was handed a termination letter.
The termination letter cited a reduction in expenses due to a decline in enrollment and consequent financial difficulties, explaining that her position as full-time and highest paid in the health services division was deemed dispensable.
The letter provided details on the separation pay and other computed benefits, including one (1) month pay for notice, half a month pay for every year of service (computed from her regular employment status as of August 19, 2008), 13th month pay, and a tax refund.

Pascua questioned the fairness of the retrenchment process by raising several specific points:

The absence of clear criteria for the selection of employees for retrenchment.
Why she was selected for dismissal over a part-time counterpart (Dr. Venus Dimagmaliw), despite her full-time status and longer tenure.
The fact that she was the only one among the health services staff who was terminated.
Whether alternative cost-cutting measures had been considered by the administration.

During her clearance procedures, completed on November 3, 2011, she made a handwritten note reserving her right to question the legality and validity of her termination before any proper agency or court.
Following these events, Pascua initiated legal action by filing a complaint for illegal dismissal against La Consolacion College and its responsible officers (Petitioners: La Consolacion, Sr. Mora, Manalili, and Manabat).

Labor Arbiter Luvina P. Roque rendered a decision on January 8, 2013, finding Pascua’s dismissal to be illegal and ordering her reinstatement along with the payment of backwages, proportionate 13th month pay, and attorney’s fees.
This initial decision was reversed by the National Labor Relations Commission (NLRC), which upheld that the retrenchment was justified by the need to curtail substantial financial losses.
The Court of Appeals, in its June 2, 2014 Decision, reinstated Labor Arbiter Roque’s ruling, emphasizing the illegality of the dismissal due to the employer’s failure to justify the retrenchment criteria.
After the denial of a Motion for Reconsideration, the petitioners filed a Petition for Review on Certiorari challenging the June 2, 2014 Decision.

La Consolacion justified the retrenchment on the basis of a sharp decline in student enrollment, particularly following the collapse of the nursing bubble.
The institution presented audited financial statements evidencing a dramatic drop in comprehensive income (a 96% decline) and a notable decrease in tuition fee revenue, thereby substantiating its claim of severe financial distress.
However, the retrenchment criterion was deemed flawed because it was based solely on the employee’s status as the highest paid member in the health services division, without considering her seniority and long-standing service.
The decision underscored that even if financial exigencies necessitate cost-reduction measures, the criteria employed must be fair and reasonable, reflecting both the financial situation and the employee’s entitlements under labor law.

Whether the retrenchment of Virginia Pascua was valid in light of the procedural and substantive requirements mandated by the Labor Code.
Whether the criterion used—targeting the highest paid employee without considering seniority and other equitable factors—rendered the retrenchment arbitrary and illegal.
Whether La Consolacion’s demonstration of financial hardship and consequent retrenchment measures sufficiently justified the dismissal despite failing to use a fair and balanced selection process.