Case Summary (G.R. No. 206789)
Facts and Procedural History
Parente was employed by Team Pacific starting in 1999, eventually becoming a quality assurance calibration technician. While on maternity leave in April-May 2009, she was informed of her dismissal effective June 22, 2009, the day after her maternity leave ended. She received separation pay and executed quitclaims. Parente subsequently filed a complaint for illegal dismissal in July 2009. The Labor Arbiter initially ruled the dismissal valid based on the retrenchment carried out amid a global economic crisis, a ruling affirmed by the National Labor Relations Commission (NLRC). However, the Court of Appeals (CA) reversed these rulings, finding the dismissal illegal due to lack of proof of losses and procedural defects. Petitioners elevated the case to the Supreme Court via a Petition for Review on Certiorari under Rule 45.
Authority of the Court of Appeals to Admit New Evidence
The Supreme Court affirmed that the Court of Appeals has jurisdiction to receive new evidence in cases before it, including special civil actions for certiorari, as provided under Section 9 of Batas Pambansa Blg. 129 (Judiciary Reorganization Act of 1980) and supported by jurisprudence. Although the CA ruled petitioners waived presenting evidence by refusing to cooperate at initial proceedings, it had discretion to consider new documentary evidence on appeal, such as audited financial statements and retrenchment notices.
Standards for Valid Retrenchment under the Labor Code and Jurisprudence
Retrenchment, a lawful ground for termination, must comply with procedural and substantive requisites. Procedurally, the Labor Code (Article 298) requires the employer to serve written notice to both affected employees and the Department of Labor and Employment (DOLE) at least one month prior to the date of retrenchment and to pay separation benefits. Substantively, the employer must demonstrate: (1) the retrenchment is necessary to prevent substantial, serious, and imminent business losses; (2) the action was taken in good faith, not to undermine employees' security of tenure; and (3) fair and reasonable criteria were used in selecting employees for retrenchment, considering factors such as seniority, efficiency, and status.
Employer’s Burden to Prove Substantial and Serious Business Losses
The employer must present clear and convincing evidence, typically through independently audited financial statements, illustrating sustained substantial losses or economic distress that justify retrenchment as a last resort after other measures have failed. Moreover, evidence must indicate that losses are increasing or at least not improving to justify the necessity of retrenchment. Reliance solely on a termination letter referencing global economic crisis or unverified claims is insufficient.
Application to Petitioners’ Case: Insufficient Evidence and Procedural Defects
The Labor Arbiter and NLRC accepted the termination letter and petitioners’ testimonies without the benefit of substantial documentary evidence, as petitioners had refused to participate properly in the proceedings below. Although petitioners later submitted audited financial statements, retrenchment notices served on DOLE, a Petition for Corporate Rehabilitation granted by the Regional Trial Court, and other documents, these were not presented initially and thus do not cure procedural defects. The Supreme Court found these documents insufficient to fully establish the substantive and procedural validity of the retrenchment, particularly noting the absence of evidence showing that the retrenched employees, including Parente, were selected using fair and reasonable criteria such as seniority.
On the Issue of Estoppel by Acceptance of Separation Pay and Waiver
The Court held that acceptance of separation pay and execution of waiver or quitclaim documents do not bar an employee from contesting the legality of dismissal. This is because employees are usually economically disadvantaged and pressured into accepting such offers, especially in vulnerable situations like maternity leave. Moreover, Parente’s prompt filing of a complaint after accepting separation pay demonstrated that she did not waive her right to challenge her dismissal.
Corporate Officers’ Liability
Petitioners Fernandez and Garcia, as corporate officers, are not solidarily liable with Team Pacific for the alleged illegal dismissal absent proof of bad faith, malice, or gross negligence in directing corporate affairs related to the retrenchment. The Court emphasized the separate legal personality of the corporation, noting that liability for dismissal rests primarily with the corporation unless exceptional circumstances prove otherwise. Given no showing of bad faith or ill intent, they are not liable.
Final Ruling and Directives
The Supreme Court denied the petition, affirming the Court of Appeals’ decision with modification. It declared that Parente was illegally dismissed. Team Pacific was ordered to reinstate he
Case Syllabus (G.R. No. 206789)
Background and Procedural History
- The case involves a Petition for Review on Certiorari challenging the Decision and Resolution of the Court of Appeals which reversed earlier rulings by the National Labor Relations Commission (NLRC) and the Labor Arbiter.
- Respondent Layla M. Parente was employed by petitioner Team Pacific Corporation beginning in 1999 and later promoted to quality assurance calibration technician.
- In 2009, while on maternity leave, Parente was informed of her dismissal due to retrenchment citing the global economic crisis and substantial losses suffered by Team Pacific Corporation.
- Parente received her separation pay in June 2009 and subsequently filed a complaint for illegal dismissal in July 2009.
- Labor Arbiter dismissed the complaint, upholding the retrenchment as valid and citing compliance with procedural requirements and estoppel due to Parente's acceptance of separation pay.
- The NLRC affirmed the Labor Arbiter’s decision, ruling that Parente was estopped from questioning her dismissal based on her acceptance of benefits.
- The Court of Appeals reversed both rulings, finding Parente was illegally dismissed due to petitioners’ failure to present evidence of business losses and that she was not estopped by acceptance of separation pay.
- Petitioners sought review before the Supreme Court contesting the Court of Appeals’ findings.
Issues Presented
- Whether the Court of Appeals may consider new evidence submitted in a Petition for Certiorari.
- Whether petitioners complied with the substantive and procedural requisites for a valid retrenchment under Philippine labor law.
- Whether respondent Parente is estopped from challenging her dismissal by accepting separation pay and executing a quitclaim.
- Whether petitioners Fernandez and Garcia should be held solidarily liable alongside Team Pacific Corporation for the alleged illegal dismissal.
Authority of the Court of Appeals to Take New Evidence
- The Court of Appeals possesses the power under Batas Pambansa Blg. 129, as amended, including by Republic Act No. 7902, to admit and consider new evidence to resolve factual issues within its jurisdiction, including in special civil actions for certiorari.
- Precedent affirms that the Court of Appeals’ admission of additional evidence in such petitions is to ensure substantial justice and correct errors of jurisdiction or fact.
- However, on appeal to the Supreme Court under Rule 45, only questions of law may be raised; the Supreme Court is not a trier of facts and does not reweigh evidence unless findings are unsupported or based on gross misapprehension.
Legal Standards for Valid Retrenchment
- Retrenchment is an authorized cause for dismissal involving workforce reduction due to business reverses or economic difficulties.
- Procedural requirements include:
- Serving written notice on the affected employees and Department of Labor and Employment at least one month prior to dismissal.
- Payment of separation pay amounting to at least one month pay or half a month's pay for each year of service, whichever is higher.
- Substantive requisites include:
- Retracement is necessary and likely to prevent substantial, serious, actual, or reasonably imminent business losses as perceived objectively and in good faith.
- Retrencement is conducted in