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VOL.

155, OCTOBER 29, 1987 retrenchment program.


301
Same; Same; Same; No basis for respondents-workers
Gregorio Araneta University Foundation vs. NLRC
being considered retired or separated from the service, as
Nos. 75925-26. October 29, 1987. *

their resignation or retirement is subject to the proviso that


GREGORIO ARANETA UNIVERSITY FOUNDATION their positions have been abolished by the reorganizational
and OBED JOSE MENESES, petitioners, vs. set-up under the retrenchment program.The guidelines
NATIONAL LABOR RELATIONS COMMISSION, of the retrenchment program as approved by the Minister
PEDRO L. REYES, ROSARIO D. REYES, BILLY T. of Labor specifically states that under the reorganizational
VICARIO, CORAZON D. VICARIO, LUIS ALMAZAN set up, all the employees of the university would be
and JULIAN R. MAIMBAN, JR., respondents. considered separated or retired with corresponding
Labor; Illegal Dismissal; Retrenchment; Failure of grants of termination pay or retirement benefits,
employees to file their courtesy resignations cannot whichever is higher, and all would be rehired except
those whose present positions will be affected by the
automatically result in their dismissal or inclusion in the
retrenchment; Reason.The failure of the private proposed reorganizational changes. All the employees
respondents to file their courtesy resignations cannot were, therefore, considered resigned under the
reorganizational set up without any need for the courtesy
automatically result in dismissal or inclusion in the
resignations demanded by the petitioner university in its
retrenchment. We agree with the NLRC that such courtesy
letters of resignations memorandum-circular. The resignations or retirement
______________ of the employees are, of course, subject to the proviso that
* THIRD DIVISION. their positions have been abolished by the
reorganizational set up envisioned in the retrenchment
302 program. In the case of the private respondents, their
positions were not abolished. Hence, there is no basis for
302 SUPREME COURT REPORTS ANNOTATED their being considered retired or separated from the
Gregorio Araneta University Foundation vs. NLRC university.
were merely administrative requirements that could be Same; Same; Same; Temporary employees, not a case of;
dispensed with in the implementation of the Fact that the petitioners voluntarily signed the
appointments extended to them does not make them the proposition that the private respondents are estopped
temporary employees; Persons like the employees in case from questioning their dismissal because they accepted
at bar who are deans and department heads and who have their 30-day termination pay, suffice it to state that the
served the University for 28 years, could not be considered private respondents cannot waive their rights protected by
temporary employees or casuals.The contention of the no less than the Constitution. Section 18, Article 11 of the
university that the private respondents positions are 1987 Constitution provides that The state affirms labor as
temporary in nature as indicated in their appointments is a primary social economic force. It shall protect the rights
not well taken. The fact that the petitioners voluntarily
of workers and promote their welfare. This Constitutional
signed the appointments extended to them does not make protection to labor has been carried through all our three
them temporary employees. x x x Undoubtedly, the (3) constitutions since 1935.
private respondents positions as deans and department Same; Same; Same; Reorganization cannot be used as a
heads of the petitioner university are necessary in its usual convenient device to get rid of existing personnel and
business. Moreover, all the private respondents have been replace them with new ones.The appeal to the Court
serving the university from eighteen (18) to twenty-eight about saving a noble institution from collapse has no basis.
(28) years. All of them rose from the ranks starting as
Retrenchments are allowed for all unnecessary positions
instructors until they became deans and department based on the petitioners own reorganization program.
heads of the university. A person who has served the However, the reorganization cannot be used as a
University for 28 years and who occupies a high convenient device to get rid of existing personnel in order
administrative position in addition to teaching duties could to replace them with new ones. For this purpose, the
not possibly be a temporary employee or a casual. regular rules and procedures on dismissal of employees
303 will have to be followed.
VOL. 155, OCTOBER 29, 1987 303
PETITION to review the decision of the National
Gregorio Araneta University Foundation vs. NLRC Labor Relations Commission.
Same; Same; Same; Proposition that the respondents are
The facts are stated in the opinion of the Court.
estopped from questioning their dismissal because they
accepted their 30-day termination pay, is not correct
GUTIERREZ, JR., J.:
because they cannot waive their constitutional rights.On The petitioners seek to annul the decision of the
National Labor Relations Commission (NLRC) financial difficulties.
ordering the Gregorio Araneta University In a letter reply to Mijares, dated March 29, 1984,
Foundation to reinstate the private respondents Minister Ople found no serious objection to the
to their former positions, with full backwages program but advised him that it should be
under the new terms and conditions of implemented without prejudice to whatever
employment in the university as reorganized, and benefits that might have accrued to the employees
to pay them separation pay or retirement pay and concerned at the effective date of reorganization.
other accrued benefits under the existing laws or The University started the implementation of its
the universitys policy whichever is higher. The retrenchment program with the issuance of a
petitioners also question the resolution of the memorandum-circular dated October 14, 1983
NLRC denying the petitioners motion for from the Executive Committee of the Board of
reconsideration of the decision for having been Trustees wherein the following guidelines were
filed out of time. stated for the information of all faculty members
The antecedent facts are summarized as follows: and employees of the University:
304 1 1.All ad hoc, ad interim and temporary
30 SUPREME COURT REPORTS ANNOTATED appointments will be considered terminated
4 as of the date indicated in their respective
Gregorio Araneta University Foundation vs. NLRC appointments, or as of October 31, 1983,
On March 15, 1983, the president of Gregorio whichever is earlier;
Araneta University Foundation, (hereinafter called 2 2.GAUF faculty members and associates are
University) Mr. Cesar A. Mijares wrote the then invited to submit courtesy letters of
Minister of Labor Blas Ople soliciting his opinion on resignation to the Executive Vice-President
a proposed retrenchment and reorganization on or before October 31, 1983. Those who
program made necessary by the Universitys
submit may be re-appointed while those who Gregorio Araneta University Foundation vs. NLRC
would fail to submit may be retrenched; who has served the university for 23 years; 2)
3 3.In order not to prejudice the operations of Rosario Reyes, wife of Victor Reyes, head of the
the Foundation, temporary appintments shall department of food technology and concurrently
be made by the Acting President. This should manager for food processing who has served the
not be considered as preferential or priority university as full-time faculty member for 22 years;
right of the temporary appointees. The 3) Billy T. Vicario, head of the department of soil
normal procedure of appointment by the science, and assistant dean of the institute of
Board of Trustees shall be observed; agriculture who has served the university for 19
4 4.As required by law, the appropriate notice to years; 4) Corazon Vicario, wife of Billy Vicario, dean
the Ministry of Labor and Employment will be of the institute of arts and sciences who has served
filed immediately by the GAUF the university for 25 years; 5) Luis Almazan, head of
Administration; the department of biology who has served the
5 5.The re-appointment of faculty members and university for 28 years and 6) Remigio Perez, full-
personnel shall be subject to such terms and time associate professor and department head of
conditions as may be proposed by the Spanish who has served the university for 18 years.
Administration to the Board of Trustees and The private respondents did not submit their
approved by the latter, (p. 45, Rollo) courtesy resignations.
The private respondents are: 1) Victor Reyes, Mr. Obed Meneses acting president of the
institute dean and concurrently department head university served on the six above-named faculty
and a farm administrator members notices of termination, all dated
305 November 10, 1983, and effective November 11,
VOL. 155, OCTOBER 29, 1987 1983. 305
The private respondents responded to Meneses given to them prior to their dismissal because as
action by filing cases for illegal dismissal, non- early as May 1983, the then president Mijares had
payment of separation pay, and other benefits and publicly announced the proposals for a new
unfair labor practice with damages against the working structure as a result of which several
university and Meneses before the National Labor meetings
Relations Commission. The cases were 306
consolidated and assigned to Labor Arbiter Porfirio 30 SUPREME COURT REPORTS ANNOTATED
Villanueva. 6
In their position paper, the complainants alleged Gregorio Araneta University Foundation vs. NLRC
that they were dismissed without prior notice in were held with the faculty members and other
violation of BP 130; that the implementation of the personnel with their respective unions; that the 30-
retrenchment program was without any day notice envisioned in BP. 130 was substantially
established criteria for selecting the faculty complied with because in their letters of
members to be dismissed, as, in fact, they were termination it is stated that It is understood that
replaced by faculty members with qualifications your name shall still be included in the payroll for
inferior to the complainants; and that their one month after said date and that actually the
discharge from employment was a retaliatory complainants received the terminal 30-day pay
move against them by Obed Meneses for their whose operative effect is to put them in estoppel
having been instrumental in charging him with to question their dismissal; that the complainants
having committed various anomalies in the dismissal was due to the non-submission of their
university administration. resignation letters as directed and their failure to
The university denied the respondents allegations conform to the new terms and conditions of the
and stated in its answer that sufficient notice was reorganized set-up and not as a retaliation move
against the complainants; and that the
complainants appointments as institute deans and other accrued benefits under the existing laws or GAUFs
department heads were merely ad hoc or policy, whichever is higher.
temporary and had expired on October 15,1983 as The Decision appealed from is modified accordingly. (pp.
200-201, Rollo).
indicated in their appointment papers which they
The petitioners motion for reconsideration was
signed resulting in their termination even without
denied for
the retrenchment program. 307
On the basis of the parties position papers and VOL. 155, OCTOBER 29, 1987
documentary evidence, Labor Arbiter Porfirio Gregorio Araneta University Foundation vs. NLRC
Villanueva rendered a decision upholding the
having been filed out of time. Hence, this petition.
dismissal of the complainants. The university was
In a resolution dated July 29, 1987, we gave due
ordered to pay the complainants termination
course to the petition.
benefit in accordance with law including those
The petitioners contend:
already earned at the time of their termination. First: In ruling that all the employees should first
The complainants appealed the decision to the
be retrenched and paid separation/retirement
National Labor Relations Commission. In a decision
benefits which would amount to millions of
dated April 10, 1986, the NLRC en banc modified pesos, and thereafter, all of them be rehired
the Labor Arbiters decision.
under new terms of employment, the NLRC
The dispositive portion of the decision reads:
negated the essence and imperatives of
WHEREFORE, the respondents are hereby ordered to
reinstate all the complainants except Samuel G. Ramos in
retrenchment and gave Minister Oples advisory
their former positions, with full back wages under the new opinion the binding force of an administrative
terms and conditions of employment in the respondent order or decision in an adversarial proceeding.
University as reorganized, and to pay them (again, with the Instead of helping save a noble institution, it
exception of Ramos) separation pay or retirement pay and would bring about its (GAUF) collapse with
consequent lay off of all its remaining personnel closure. The main issue is whether or not the
and the displacement of students. private respondents were dismissed within the
Second: In refusing to submit their courtesy context and spirit of the retrenchment program
resignations and to accept the reduced terms adopted by the university.
and conditions of employment as required by The letter of the petitioner university through its
GAUFs memorandum-circular (Annex B then President Cesar A. Mijares to the Minister
hereof) and in accepting their 30-day terminal of Labor Bias Ople informing the latter of its
pay, the complainants forfeited/waived their financial predicament reads as follows:
right to be re-appointed or re-instated. There This University can no longer afford to continue operation
was no illegal dismissal. under the present salary rates of its personnel. The
reduction of per-
Third: In peremptorily denying petitioners motion
308
for reconsideration for having been filed
30 SUPREME COURT REPORTS ANNOTATED
beyond the 10 calendar days based on alleged
8
prescribed rules not specified and possibly
Gregorio Araneta University Foundation vs. NLRC
non-existing, and in thereby refusing to pass
sonnel is not an adequate solution to this problem,
upon the merits of the pleading, the NLRC acted because to do so would not enable the University to
capriciously and in disregard of due process. accommodate its present enrolment, x x x.
(pp. 33, 36 and 39, Rollo) xxx xxx xxx
There is no dispute that the petitioner university xxx xxx xxx
was in financial distress. Both parties agree on Reducing the salaries of personnel even to an amount
the necessity and indispensability of a which is not below the statutory minimum is not legally
allowable. Therefore, the only effective solution is for the
retrenchment program which could remedy the
University to have all its personnel resign and pay them
imminent danger of the universitys total their separation pays, or retirement pays, whichever is
higher, so that it could effect a top-to-bottom and reorganization plan, the following measures are
reorganization and restructure its salary rates and other envisaged:
benefits not mandated by law but were only granted 1 1.a top-to-bottom, University-wide reorganization,
unilaterally by the University to its employees long before functional and structural scope, as well as
the present hard times of inflation. restructuring of salary rates and other personnel
After we have paid our employees their benefits not mandated by existing labor standard
separation/retirement pays, we will immediately rehire laws;
them in accordance with new and restructured salary rates 2 2.separation or retirement of ALL personnel with
which are not, of course below the statutory minimum and corresponding grants of termination pay or
without the benefits not mandated by law and/or paying retirement benefits,
our faculty members on the hourly basis, subject to the 309
Universitys actual needs under its reorganized set-up. VOL. 155, OCTOBER 29, 1987
In this connection, we would like to seek in advance the Gregorio Araneta University Foundation vs. NLRC
opinion of the Ministry of Labor and Employment if this
1 whichever is higher;
University could effect the retrenchment and restructuring
2 3.re-hiring of ALL personnel so separated or retired
of salary rates above explained in accordance with P.D. No.
under terms and conditions of employment to be
442, otherwise known as the Labor Code of the Philippines,
established for the reorganized University
as amended by B.P. Blg. 130.
Foundation, with the possible exception of those
We would appreciate it very much if your good office
whose present positions will be affected by the
could give our inquiry your most preferential
proposed reorganizational changes.
consideration. (Annex N, herein Private Respondents
As explained in your letter, the plan to restructure and
Position Paper). (pp. 253-255, Rollo; emphasis supplied)
reorganize the University is premised on one over-riding
In reply, the then Minister of Labor Bias Ople sent consideration; to continue the operation of the University
a letter to the university the pertinent portion of Foundation as an educational institution WITHOUT
which reads: imposing additional burden on the student body by way of
We understand that under the proposed retrenchment tuition fee increases.
We note that, on the one hand, most of your students Taking into consideration these two documents, it
came from low-income families which can hardly absorb can be seen that the NLRC was correct in stating
any increase under existing schedule of tuition fees. On the that:
other hand, your operating costs, particularly personnel
x x x x x x x x x
overhead, had so greatly outpaced revenues from tuition
x x x [T]he basic and salient features of the reorganization
and other student fees that the University has been in the
plan are couched in clear terms which leave no room for
red since 1980 with an average deficit of about
interpretation. Specifically, the plan calls for the
P866,000.00.
separation or retirement of all per-
On the basis of the foregoing considerations, we find no
310
serious objections that may be interposed to the proposed 310 SUPREME COURT REPORTS ANNOTATED
reorganization and retrenchment program of the Gregorio Araneta University Foundation vs. NLRC
University Foundation. Implementation of this program
sonnel with corresponding grant of termination pay or
shall of course be instituted without prejudice to whatever
retirement benefits, whichever is higher. This phrase
benefits that might have accrued to the employees
connotes authority to effect dismissal of personnel in the
concerned at the effective date of reorganization. (Annex
implementation of a top-to-bottom, University-wide
A, Petition). (At pp. 255-256, Rolo; Emphasis supplied).
reorganization, subject, however, to the condition of
These two documents outline the approved rehiring of ALL personnel so separated or retired. (pp.
scheme for the retrenchment program of the 197-198, Rollo)
university. The letter of Minister Ople shows that The rehiring of ALL personnel so separated or
he merely confirmed the guidelines set up by the retired was, however, subject to the exception of
petitioner university to implement its those whose present positions will be affected by
retrenchment program. It is to be noted that the the proposed reorganizational changes. The NLRC
petitioner university did not question the took this into consideration when it ruled that the
interpretation made by Minister Ople regarding its private respondents were illegally dismissed by the
proposals for the retrenchment program. petitioners. Thus, the NLRC said:
x x x x x x x x x that under the reorganizational set up, all the
x x x [T]he complainantsdischarge from the service was employees of the university would be considered
evidently the result of the implementation of the separated or retired with corresponding grants of
reorganizational program. Considering, however, that all
termination pay or retirement benefits, whichever
of them were not rehired to their former positions as
Institute Deans and Department Heads, positions, is
incidentally, that were not affected by the reorganizational 311
changes, the respondents act in this respect contradicted VOL. 155, OCTOBER 29, 1987
their own program which the Labor Minister himself had Gregorio Araneta University Foundation vs. NLRC
in effect approved of. x x x. higher. and all would be rehired except those
x x x x x x x x x whose present positions will be affected by the
It is clear, therefore, that the respondents failure to
proposed reorganizational changes. All the
rehire the complainants in their former positions, which,
to repeat, were not abolished as a result of the
employees were, therefore, considered resigned
reorganization, pursuant to their own reorganization plan, under the reorganizational set up without any need
amounted to dismissal which was illegal because it was for the courtesy resignations demanded by the
effected for no valid reason, x x x. (pp. 198-199, Rollo) petitioner university in its memorandum-circular.
The failure of the private respondents to file their The resignations or retirement of the employees
courtesy resignations cannot automatically result are, of course, subject to the proviso that their
in dismissal or inclusion in the retrenchment. We positions have been abolished by the
agree with the NLRC that such courtesy letters of reorganizational set up envisioned in the
resignations were merely administrative retrenchment program. In the case of the private
requirements that could be dispensed with in the respondents, their positions were not abolished.
implementation of the retrenchment program. Hence, there is no basis for their being considered
The guidelines of the retrenchment program as retired or separated from the university.
approved by the Minister of Labor specifically state The contention of the university that the private
respondents positions are temporary in nature as deans and department heads of the petitioner
indicated in their appointments is not well taken. university are necessary in its usual business.
The fact that the petitioners voluntarily signed the Moreover, all the private respondents have been
appointments extended to them does not make serving the university from eighteen (18) to
them temporary employees. Article 281 of the twenty-eight (28) years. All of them rose from the
Labor Code provides: ranks
Regular and Casual Employment.The provisions of 312
written agreement to the contrary notwithstanding and 31 SUPREME COURT REPORTS ANNOTATED
regardless of the oral agreements of the parties, an 2
employment shall be deemed to be regular where the Gregorio Araneta University Foundation vs. NLRC
employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or
starting as instructors until they became deans and
trade of the employer, except where the employment has department heads of the university. A person who
been fixed for a specific project or undertaking the has served the University for 28 years and who
completion or termination of which has been determined occupies a high administrative position in addition
at the time of the engagement of the employee or where to teaching duties could not possibly be a
the work or services to be performed is seasonal in nature temporary employee or a casual.
and the employment is for the duration of the season.
Hence, there is no merit in the universitys
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph: Provided, That any
argument that the private respondents
employee who has rendered at least one year of service, employment with it expired on October 15,1983 as
whether such service is continuous or broken shall be indicated in their appointments.
considered a regular employee with respect to the activity On the proposition that the private respondents
in which he is employed and his employment shall are estopped from questioning their dismissal
continue while such actually exists. because they accepted their 30-day termination
Undoubtedly, the private respondents positions as pay, suffice it to state that the private respondents
cannot waive their rights protected by no less than deduction. No costs.
**

the Constitution. Section 18, Article 11 of the 1987 SO ORDERED.


Constitution provides that The state affirms labor Fernan (Chairman), Feliciano, Bidin and
as a primary social economic force. It shall protect Cortes, JJ, con-
the rights of workers and promote their welfare. ______________
** (Flexo Manufacturing Corporation v. National Labor
This constitutional protection to labor has been
Relations Commission, 135 SCRA 145; Hope Christian High
carried through all our three (3) constitutions since School v. National Labor Relations Commission, 135 SCRA 251;
1935. and Union of Supervisors (R.B.)-NATU v. Secretary of Labor, 109
The appeal to the Court about saving a noble SCRA 139).
institution from collapse has no basis. 313
Retrenchments are allowed for all unnecessary VOL. 155, OCTOBER 30, 1987
positions based on the petitioners own Republic vs. Reyes
reorganization program. However, the cur.
reorganization cannot be used as a convenient Petition dismissed; decision affirmed
device to get rid of existing personnel in order to Notes.Compelling petitioner to continue
replace them with new ones. For this purpose, the employing private respondents despite serious
regular rules and procedures on dismissal of business losses of petitioner would be oppressive.
employees will have to be followed. (Columbia Development Corporation vs. Minister of
WHEREFORE, the instant petition is hereby Labor and Employment, 146 SCRA 421.)
DISMISSED. The questioned decision of the Termination of employment of any employee
National Labor Relations Commission is AFFIRMED, due to retrenchment to prevent losses shall entitle
but payment of backwages shall be limited to the employee affected to separation pay.
THREE (3) YEARS without qualification and (Columbia Development Corporation vs. Ministry of
Labor and Employment, 146 SCRA 421.)
o0o
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