G.R. No. 201535 - NEC System Integrated Construction Philippines, Inc. vs. Crisologo

Respondent Ralph T. Crisologo was employed by NEC System Integrated Construction Phils., Inc. (NESIC) since May 3, 1993, and was promoted several times—from Manager in the Communication Facilities Engineering Department to various senior managerial positions including Vice-President roles.
In July 2001, respondent was appointed as Executive Senior Manager – Quality Control and Training with a gross monthly salary of P93,596.84. Although this new role was effectively a demotion from his previous position, he accepted it at the special request of then NESIC President Noriyuki Yamashita, agreeing to train a prospective General Manager (Nakahata) on the condition that his salary remain intact and that he retain certain functional responsibilities, with the expectation of a temporary assignment.

Respondent voiced his reservations in a July 3, 2001 memorandum addressed to Yamashita, emphasizing his reluctance regarding the demotion despite consenting on condition his compensation and responsibilities not be compromised.
Yamashita’s reply on July 18, 2001 acknowledged respondent’s capabilities and reiterated the special request regarding training Nakahata, showing mutual understanding despite the shift in his role.

Although respondent began functioning in his new capacity in 2001, his formal appointment materialized only on April 16, 2003.
On July 7, 2003, a new President, Hideaki Amakawa, was appointed by NESIC Japan, and on November 13, 2003, an outsider, Chester Genobaten, was hired as Assistant General Manager for the Engineering and Operations Group while respondent continued to hold his position nominally.
In August 2003, Amakawa issued an “Executive Order” initiating extensive cost-cutting measures—including the termination of all project/contractual employees effective September 2003, reduction in vehicle rentals, office supply restrictions, and decreased communication expenses—to address severe financial losses.
Despite these measures, financial statements revealed a net loss of P25,814,677.00 for the year ending December 31, 2003, prompting further drastic measures.

In March 2004, NESIC announced a retrenchment program through a memorandum, which was concurrently submitted to the Department of Labor and Employment (DOLE) with the required Establishment Termination Report that listed respondent among 17 employees to be terminated.
The termination letter, sent March 5, 2004 (received personally by respondent on March 8, 2004), stated that due to an organizational restructuring—as part of a broader cost-reduction initiative—the position of Executive Senior Manager – Quality Control and Training was considered superfluous and would be abolished.
Although respondent was retrenched effective April 5, 2004, petitioner later adjusted his effective termination to April 10, 2004 citing procedural technicalities regarding the receipt of termination notice.
On March 12, 2004, respondent received separation pay amounting to P1,002,065.24 and executed a “Waiver and Quitclaim” acknowledging complete settlement of his claims, thereby waiving further monetary actions.

After the retrenchment, petitioner hired additional personnel, including Suzette Mendoza, Fredes Marie Lucas, and Larry Balonsay, and later promoted Chester Genobaten as General Manager of the Engineering and Operations Group.
On April 12, 2004, respondent filed a complaint for illegal dismissal before the Labor Arbiter, alleging that the retrenchment was unjust, citing inconsistent indicators of financial distress and selective firing despite his long service and managerial standing.
The Labor Arbiter dismissed the complaint for lack of merit, finding that the retrenchment was justified by substantial financial losses and that respondent had voluntarily executed a valid waiver and quitclaim.
The NLRC affirmed the Labor Arbiter’s decision on November 11, 2008, holding that although retrenchment is a management prerogative subject to strict compliance with procedural requirements, respondent’s execution of the waiver barred further claims.
Dissatisfied, respondent appealed to the Court of Appeals (CA) via a Petition for Certiorari, contending that petitioner did not suffer substantial losses justifying the retrenchment, that fair and reasonable criteria were not applied in selecting employees for termination, and that the waiver/quitclaim was ineffective in estopping his claims.

The CA initially granted respondent’s petition, annulled the NLRC decision, and declared his dismissal illegal based on the finding that fair and reasonable criteria in the retrenchment were not applied, notwithstanding petitioner’s evidence of substantial losses and compliance with notice requirements.
Petitioner and Amakawa countered by emphasizing that all but one retrenchment requisite were satisfied, that the waiver/quitclaim was valid, and that management’s prerogative in hiring and dismissing employees had been correctly exercised.
The Supreme Court ultimately granted petitioner’s petition, annulling the CA’s decisions and reinstating the NLRC ruling, primarily on the basis that respondent had voluntarily executed an unequivocal waiver and quitclaim with full understanding and in exchange for valuable consideration, thereby precluding further claims.

Whether the CA erred in giving due course to respondent’s petition despite alleged defects in its verification/certification.
Whether respondent’s identification evidence was adequate under the applicable notarial and evidentiary rules.

Whether the CA properly rejected the conclusive findings of the Labor Arbiter and the NLRC regarding the validity of the retrenchment process.
Whether there was grave abuse of discretion amounting to lack or excess of jurisdiction by the NLRC.

Whether petitioner’s retrenchment program effectively proved substantial and imminent losses as required by law.
Whether the retrenchment process complied with mandatory procedural requisites such as proper notice and payment of separation benefits.
Whether fair and reasonable criteria were employed in selecting which employees, including respondent, were retrenched.

Whether respondent’s execution of the waiver and quitclaim, which acknowledged receipt of separation pay and full settlement of claims, was voluntary, informed, and thus legally binding.
Whether such a waiver precludes respondent’s subsequent claims for backwages, damages, or other benefits.

Whether respondent is entitled to full backwages and separation pay in addition to those already received.
Whether granting attorney’s fees against petitioner was proper under the directives of the Labor Code and Civil Code.