WHETHER RESIGNATION CAN BE VALIDLY GIVEN AS AN OPTION TO RETRENCHMENT

Blue Eagle Management, Inc., et al. Vs. Jocelyn L. Naval
G.R. No. 192488. April 19, 2016

Facts:

In the Memorandum of Agreement (MOA), Ateneo de Manila University (ADMU), owner of the Moro Lorenzo Sports Center (MLSC) located within the ADMU compound, gave petitioner Blue Eagle Management, Inc. (BEMI) the authority to manage and operate the following businesses at MLSC: (a) sports clinic; (b) fitness gym; (c) coffee shop; and ( d) lease of basketball courts, badminton courts, locker rooms/storage facilities, weight training room, track oval, martial arts deck, and office spaces. Under the MOA, ADMU and petitioner BEMI agreed, among other terms and conditions, that petitioner BEMI would operate the businesses on its own account and employ its own employees. Respondent Naval was hired by BEMI as maintenance staff.

During its first year of operation in 2005, petitioner BEMI suffered financial losses in the total amount of P5,067,409.44. In an attempt to reduce its financial losses, the Management of petitioner BEMI (Management) resolved to decrease the operational expenses of the company. Since the gross income of petitioner BEMI was not even enough to cover the costs of the salaries, wages, and other benefits of its employees, one of the measures the Management intended to implement was the downsizing of its workforce. Pursuant to such decision of the Management, petitioners Bonoan and Dela Rama evaluated and identified several employees who could be the subject of retrenchment proceedings, taking into consideration the employees’ positions and tenures at petitioner BEMI. After their evaluation, five employees were identified for retrenchment one of which was respondent. Respondent was included in the list because she was one of the employees with the shortest tenures.

Before actually commencing retrenchment proceedings (scheduled to be completed not later than March 31, 2006), petitioner Dela Rama separately met with each of the five aforementioned employees and presented to them the option of resigning instead. The employees who would choose to resign would no longer be required to report for work after their resignation but would still be paid their full salary for February 2006 and their pro-rated 13th month pay, plus financial assistance in the amount of one month salary for every year of service at petitioner BEMI. This option would also give the employees free time to seek other employment while still receiving salary from petitioner BEMI.

Just several hours after the meeting, respondent returned to petitioner Dela Rama’s office and informed petitioner Dela Rama that she would voluntarily resign. In petitioner Dela Rama’s presence, respondent then executed a resignation letter in her own handwriting. The other four employees identified for retrenchment similarly opted to voluntarily resign and executed their respective resignation letters. Since all the five employees identified for retrenchment decided to voluntarily resign instead and avail themselves of the financial package offered by petitioner BEMI, there was no more need for the company to initiate retrenchment proceedings. The five employees were instructed to return on February 28, 2006 to comply with the exit procedure of petitioner BEMI and receive the amounts due them by reason of their voluntary resignation. On February 28, 2006, the resigned employees, except for respondent, appeared at the premises of petitioner BEMI, completed their exit procedures, received the amounts due them, and executed release waivers and quitclaims in favor of petitioner BEMI.

Respondent appeared at petitioner Bonoan’s office on March 3, 2006. Because respondent was finding it difficult to find new employment, she asked if it was possible for her to return to work for petitioner BEMI. However, petitioner Bonoan replied that respondent’s resignation had long been approved and that petitioner BEMI would not be able to rehire respondent given the difficult financial position of the company. Petitioner Bonoan advised respondent to just receive the amount she was entitled to by reason of her voluntary resignation. Respondent filed a complaint for illegal dismissal against petitioners before the NLRC.

LA Ruling:

The Labor Arbiter rendered a Decision finding that respondent was illegally dismissed. According to the Labor Arbiter, petitioners were not able to prove that petitioner BEMI was suffering from serious business losses that would have justified retrenchment of its employees. The Financial Statement of petitioner BEMI for 2005 by itself was not sufficient and convincing proof of substantial losses for it did not show whether the losses of the company increased or decreased compared to previous years. Although petitioner BEMI posted a loss for 2005, it could also be possible that such loss was considerably less than those previously incurred, thereby indicating the improving condition of the company. As a result, the Labor Arbiter held that respondent did not resign voluntarily. There was no factual or legal basis for giving respondent the option to resign in lieu of the alleged retrenchment to be implemented by petitioners. Respondent was obviously misled into believing that there was ground for retrenchment. Respondent’s resignation letter also did not deserve much weight. The resignation letter of respondent had uniform content as those of her four other co-employees. The assurances of payment of salaries, separation pay, and 13th month pay at a given date were words obviously coming from an employer. It was more of a quitclaim rather than a resignation letter. And the mere fact that respondent protested her act of signing a resignation letter by immediately filing a complaint for illegal dismissal against petitioners negated the allegation that respondent voluntarily resigned.

Petitioners appealed to the NLRC.

NLRC Ruling:

The NLRC found merit in the appeal holding for the year 2005 the financial statements showed that the company had incurred a net loss of P3,293,816.14 for the said year. Such amount of loss is likewise indicated in the company’s Balance Sheet which was prepared by an independent auditor in September 2006. The Balance Sheet would show that the company’s gross profit was not even enough to cover the amount of salaries, wages and other benefits of the employees. As to Labor Arbiter’s pronouncement that the company’s financial statement for [the] year 2005 does not sufficiently prove that it already suffered actual serious losses since it failed to present financial statements for the previous years, such failure was brought by the fact that it went on its first year of commercial operations only in year 2005.

The NLRC found good faith on petitioner’s part when it decided to implement a retrenchment program and see no basis to hold that it was merely intended to defeat or circumvent the employees’ right to security of tenure. Such finding is further supported by the criterion of shortest tenure in service which was used by the [petitioners] in determining the employees to be included in the program. The company could   have implemented a valid retrenchment program had the five (5) employees not opted to resign. Thus, [respondent] was neither deceived nor coerced when she was offered to voluntarily resign instead of being included in the program.

Respondent filed a Partial Motion for Reconsideration of the foregoing Decision but said Motion was denied for lack of merit by the NLRC. This prompted respondent to file a Petition for Certiorari with the Court of Appeals.

CA Ruling:

The SC held that the [respondent] had no intention to resign from office had she not been made to choose to resign or be one of the candidates for the planned retrenchment program of the company. There could not be any reason for the [respondent] to resign. The CA found it quite unbelievable that [respondent] would voluntarily resign from work, knowing fully well that she was only a candidate for the planned retrenchment and in such an event, would eventually legally receive benefits thereunder. Also, the fact that the [respondent] was forced to prepare a handwritten resignation letter, with the words having been dictated to her by the HR Manager, casts doubt on the voluntariness of the resignation. It bears stressing that whether it be by redundancy or retrenchment or any of the other authorized causes, no employee may be dismissed without observance of the fundamentals of good faith. Further, even though the employer interposed the defense of resignation, it is still incumbent upon the [petitioners] to prove that the employee voluntarily resigned.

The CA denied the Motion for Reconsideration. Thus, the petition.

Issue/s:

Whether or not the resignation given as an option to a retrenchment is valid

SC Ruling:

The SC found merit in the petition. The SC held that for the resignation of an employee to be a viable defense in an action for illegal dismissal, an employer must prove  that the resignation was voluntary, and its evidence thereon must be clear, positive, and convincing. The employer cannot rely on the weakness of the employee’s evidence. In this case, petitioners, as employers, were able to present sufficient evidence to establish that respondent’s resignation was voluntary.

The SC found ground for the implementation of retrenchment. That petitioners were not able to present financial statements for years prior to 2005 should not be automatically taken against them. Petitioner BEMI was organized and registered as a corporation in 2004 and started business operations in 2005 only. While financial statements for previous years may be material in establishing the financial trend for an employer, these are not indispensable in all cases of retrenchment. In Revidad v. National Labor Relations Commission, the Court declared that “proof of actual financial losses incurred by the company is not a condition sine qua non for retrenchment,” and retrenchment may be undertaken by the employer to prevent even future losses.

Petitioner BEMI had to act swiftly and decisively to avert its loss since its MOA with ADMU for the conduct of its business at MLSC was for a period of only a little over three years. The retrenchment of employees appears to be a practical course of action for petitioner BEMI to prevent more losses. No fraud or deception was employed upon respondent to resign because petitioner BEMI was indeed about to implement in good faith a retrenchment of its employees in order to advance its interest and not merely to defeat or circumvent the respondent’s right to security of tenure.

Both the Labor Arbiter and the Court of Appeals invoked the oft-repeated ruling of the Court that resignation is inconsistent with the filing of the complaint for illegal dismissal. However, the employee’s filing of the complaint for illegal dismissal by itself is not sufficient to disprove that said employee voluntarily resigned. There must be other attendant circumstances and/or submitted evidence which would raise a cloud of doubt as to the voluntariness of the resignation.

In the present case, respondent’s actions were more consistent with an intentional relinquishment of her position pursuant to an agreement reached with petitioners. After she submitted her resignation letter on she no longer reported for work. There is no showing that respondent made any attempt to contest her resignation, or to report for work but was prevented from doing so by petitioners. Respondent appeared at the premises of petitioner BEMI when, as stated in her resignation letter, her salary and other benefits would have already been available for release. Respondent, unable to find new employment, merely took the chance of requesting to be rehired by petitioner BEMI and when she was refused, belatedly decried illegal dismissal.