Digest Labrel

7/21/2019 Digest Labrel

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G.R. No. 186965 December 23, 2009

TEMIC AUTOMOTIVE PHILIPPINES, INC., Petitioner,vs.TEMIC AUTOMOTIVE PHILIPPINES, INC. EMPLOYEES UNION-FFW, Respondent.

FACTS: Respondent Temic Automotive Philippines, Inc. Employees Union-FFW ( union ) is theexclusive bargaining agent of the petitioner's rank-and-file employees.

The petitioner, engaged in the manufacture of electronic brake systems and comfort bodyelectronics for automotive vehicles, contracts out some of the work in the warehouse department tothree independent service providers or forwarders, These forwarders also have their own employeeswho hold the positions of clerk, material handler, system encoder and general clerk. The regularemployees of the petitioner and those of the forwarders share the same work area and use the sameequipment, tools and computers all belonging to the petitioner.

This outsourcing arrangement gave rise to a union grievance on the issue of the scope andcoverage of the collective bargaining unit, contending contracting out services is the same as the

workplace activities undertaken by regular company rank-and-file employees covered by thebargaining unit who work under company control. The union demanded that the forwarders'employees be absorbed into the petitioner's regular employee force and be given positions within thebargaining unit. The petitioner, on the other hand, on the premise that the contracting arrangementwith the forwarders is a valid exercise of its management prerogative, posited that the union'sposition is a violation of its management prerogative to determine who to hire and what to contractout, and that the regular rank-and- file employees and their forwarders employees serving as itsclerks, material handlers, system encoders and general clerks do not have the same functions asregular company employees.

The issue was submitted to voluntary arbitration and later, to the jurisdiction of the Court of Appeals,to which both decided that the regular employees should be considered regular employees of thecompany.

ISSUE: Whether the contracting out arrangement is valid.

HELD: Yes, the arrangement is valid.

In Meralco v. Quisumbing , the SC joined the universal recognition of outsourcing as a legitimateactivity and held that a company can determine in its best judgment whether it should contract out apart of its work for as long as the employer is motivated by good faith ; the contracting is not forpurposes of circumventing the law; and does not involve or be the result of malicious or arbitraryaction. In this case, the petitioner's declared objective for the arrangement is to achieve greatereconomy and efficiency in its operations a universally accepted business objective and standardthat the union has never questioned, thus negating the presence of bad faith. Also, no evidence waspresented to show abuses and anything detrimental to the status of the regular employees.

The contract of the forwarding arrangement in the case at bar complies with the requirements of theLabor Code and its IRR. The company controls its employees in the means, method and results oftheir work, in the same manner that the forwarder controls its own employees in the means, mannerand results of their work. Complications and confusion result because the company at the same timecontrols the forwarder in the results of the latters work, without controlling however the means andmanner of the forwarder employees work.


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More importantly, it should be noted that that the forwarding agreements were already in place whenthe current CBA was signed. In this sense, the union accepted the forwarding arrangement, albeitimplicitly, when it signed the CBA with the company. Thereby, the union agreed, again implicitly byits silence and acceptance, that jobs related to the contracted forwarding activities are not regularcompany activities and are not to be undertaken by regular employees falling within the scope of thebargaining unit but by the forwarders employees.

G.R. No. 183335 December 23, 2009

JUANITO TABIGUE, ALEX BIBAT, JECHRIS DASALLA, ANTONIO TANGON, ROLANDOPEDRIGAL, DANTE MAUL, ALFREDO IDUL, EDGAR RAMOS, RODERICK JAVIER, NOELPONAYO, ROMEL ORAPA, REY JONE, ALMA PATAY, JERIC BANDIGAN, DANILO JAYME,

ELENITA S. BELLEZA, JOSEPHINE COTANDA, RENE DEL MUNDO, PONCIANO ROBUCA, andMARLON MADICLUM, Petitioners,vs.INTERNATIONAL COPRA EXPORT CORPORATION (INTERCO), Respondent.

D E C I S I O N

CARPIO MORALES, J .:

Petitioner Juanito Tabigue and his 19 co-petitioners, all employees of respondent InternationalCopra Export Corp-oration (INTERCO), filed a Notice of Preventive Mediation with the Departmentof Labor and Employment National Conciliation and Mediation Board (NCMB), Regional Branch

No. XI, Davao City against respondent, for violation of Collective Bargaining Agreement (CBA) andfailure to sit on the grievance conference/meeting .1

As the parties failed to reach a settlement before the NCMB, petitioners requested to elevate thecase to voluntary arbitration. The NCMB thus set a date for the parties to agree on a Voluntary

Arbitrator.

Before the parties could finally meet, respondent presented before the NCMB a lette r 2 of Genaro Tan(Tan), president of the INTERCO Employees/Laborers Union (the union) of which petitioners aremembers, addressed to respondents pla nt manager Engr. Paterno C. Tangente (Tangente), statingthat petitioners "are not duly authorized by [the] board or the officers to represent the union, [hence] .. . all actions, representations or agreements made by these people with the management will not behonored or recognized by the union." Respondent thus moved to dismiss petitioners complaint forlack of jurisdiction .3

Petitioners soon sent union president Tan and respondents plant manager Tangente a Notice to Arbitrate, citing the "Revised Guidelines" in the Conduct of Voluntary Arbitration Procedure vis a visSection 3, Article XII of the CBA, furnishing the NCMB with a cop y4 thereof, which notice respondentopposed .5
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The parties having failed to arrive at a settlement ,6 NCMB Director Teodorico O. Yosores wrotepetitioner Alex Bibat and respondents plant manager Tangente of the lack of wil lingness of bothparties to submit to voluntary arbitration, which willingness is a pre-requisite to submit the casethereto; and that under the CBA forged by the parties, the union is an indispensable party to avoluntary arbitration but that since Tan informed respondent that the union had not authorizedpetitioners to represent it, it would be absurd to bring the case to voluntary arbitration.

The NCMB Director thus concluded that "the demand of [petitioners] to submit the issues . . . tovoluntary arbitration CAN NOT BE GRANTED." He thus advised petitioners to avail of thecompulsory arbitration process to enforce their rights .7

On petitioners Motion for Recon sideration ,8 the NCMB Director, by letter of April 11, 2007 topetitioners counsel, stated that the NCMB "has no rule -making power to decide on issues [as it] onlyfacilitates settlement among the parties to . . . labor disputes."

Petitioners thus assailed the NCMB Directors decision via Petition for Review before the Court of Appeal s 9 which dismissed it by Resolution 10 of October 24, 2007 in this wise:

x x x x

Considering that NCMB is not a quasi-judicial agency exercising quasi-judicial functions but merely aconciliatory body for the purpose of facilitating settlement of disputes between parties, its decisionsor that of its authorized officer cannot be appealed either through a petition for review under Rule 43or under Rule 65 of the Revised Rules of Court.

Further perusal of the petition reveals the following infirmities:

1. Payment of the docket fees and other legal fees is short by One Thousand Pesos (Php1,000.00);

2. Copy of the assailed "Decision" of the Regional Director of the National Conciliation andMediation Board has not been properly certified as the name and designation of thecertifying officer thereto are not indicated; and

3. Not all of the petitioners named in the petition signed the verification and non-forumshopping .11(emphasis and underscoring supplied)

Their Motion for Reconsideration 12 having been denied ,13 petitioners filed the present Petition forReview on Certiorari ,14 raising the following arguments:

THIS PARTICULAR CASE XXX FALLS SQUARELY WITHIN THE PURVIEW OF SECTION 6,RULE IV, IN RELATION TO PARAGRAPH 3, SUB-PARAGRAPH 3.2, SECTION 4, RULE IV, ALL

OF THE REVISED PROCEDURAL GUIDELINES IN THE CONDUCT OF VOLUNTARY ARBITRATION PROCEEDINGS .15

THE NCMB, WHEN EXERCISING ADJUDICATIVE POWERS, ACTS AS A QUASI-JUDICIAL AGENCY.16

FINAL JUDGMENTS, DECISIONS, RESOLUTIONS, ORDERS, OR AWARDS OF REGIONALTRIAL COURTS AND QUASI-JUDICIAL BOARDS, LIKE THE NCMB, COMMISSIONS, AGENCIES,
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INSTRUMENTALITIES, ARE APPEALABLE BY PETITION FOR REVIEW TO THE COURT OF APPEALS .17 (emphasis in the original)

LABOR CASES, AS A GENERAL RULE, ARE NEVER RESOLVED ON THE BASIS OFTECHNICALITYESPECIALLY SO WHEN SUBSTANTIAL RIGHTS OF EMPLOYEES ARE

AFFECTED .18 (emphasis and underscoring supplied)

The petition fails.

Section 7 of Rule 43 of the Rules of Court provides that

[t]he failure of the petitioner to comply with any of the foregoing requirements regarding the paymentof the docket and other lawful fees, the deposit for costs, proof of service of the petition, and thecontents of and the documents which should accompany the petition shall be sufficient ground forthe dismissal thereof. (underscoring and emphasis supplied)

Petitioners claim that they had completed the payment of the appellate docket fee and other legalfees when they filed their motion for reconsideration before the Court of Appeals .19 While the Court

has, in the interest of justice, given due course to appeals despite the belated payment of thosefees ,20 petitioners have not proffered any reason to call for a relaxation of the above-quoted rule. Onthis score alone, the dismissal by the appellate court of petitioners petition is in order.

But even if the above- quoted rule were relaxed, the appellate courts dismissal would just the samebe sustained. Under Section 9 (3) of the Judiciary Reorganization Act of 1980 ,21 the Court of Appealsexercises exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders orawards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards orcommissions.

Rule 43 of the Rules of Court under which petitioners filed their petition before the Court of Appeal s 22 applies to awards, judgments, final orders or resolutions of or authorized by any quasi-

judicial agency in the exercise of its quasi-judicial functions .23

A[n agency] is said to be exercising judicial function where [it] has the power to determine what thelaw is and what the legal rights of the parties are, and then undertakes to determine these questionsand adjudicate upon the rights of the parties. Quasi-judicial function is a term which applies to theaction, discretion, etc. of public administrative officers or bodies, who are required to investigatefacts or ascertain the existence of facts, hold hearings, and draw conclusions from them as a basisfor their official action and to exercise discretion of a judicial nature .24 (underscoring supplied)

Given NCMBs following functions, as enumerated in Section 2 2 of Executive Order No. 126 (theReorganization Act of the Ministry of Labor and Employment), viz:

(a) Formulate policies, programs, standards, procedures, manuals of operation andguidelines pertaining to effective mediation and conciliation of labor disputes;

(b) Perform preventive mediation and conciliation functions;

(c) Coordinate and maintain linkages with other sectors or institutions, and other governmentauthorities concerned with matters relative to the prevention and settlement of labordisputes;
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(d) Formulate policies, plans, programs, standards, procedures, manuals of operation andguidelines pertaining to the promotion of cooperative and non-adversarial schemes,grievance handling, voluntary arbitration and other voluntary modes of dispute settlement;

(e) Administer the voluntary arbitration program; maintain/update a list of voluntaryarbitrations; compile arbitration awards and decisions;

(f) Provide counseling and preventive mediation assistance particularly in the administrationof collective agreements;

(g) Monitor and exercise technical supervision over the Board programs being implementedin the regional offices; and

(h) Perform such other functions as may be provided by law or assigned by the Minister,

it can not be considered a quasi-judicial agency.

Respecting petitioners thesis that unsettled grievances should be referred to voluntary arbitration ascalled for in the CBA, the same does not lie. The pertinent portion of the CBA reads:

In case of any dispute arising from the interpretation or implementation of this Agreement or anymatter affecting the relations of Labor and Management, the UNION and the COMPANY agree toexhaust all possibilities of conciliation through the grievance machinery. The committee shall resolveall problems submitted to it within fifteen (15) days after the problems ha[ve] been discussed by themembers. If the dispute or grievance cannot be settled by the Committee, or if the committee failedto act on the matter within the period of fifteen (15) days herein stipulated, the UNION and theCOMPANY agree to submit the issue to Voluntary Arbitration. Selection of the arbitrator shall bemade within seven (7) days from the date of notification by the aggrieved party. The Arbitrator shallbe selected by lottery from four (4) qualified individuals nominated by in equal numbers by bothparties taken from the list of Arbitrators prepared by the National Conciliation and Mediation Board

(NCMB). If the Company and the Union representatives within ten (10) days fail to agree on the Arbitrator, the NCMB shall name the Arbitrator. The decision of the Arbitrator shall be final andbinding upon the parties. However, the Arbitrator shall not have the authority to change anyprovisions of the Agreement. The cost of arbitration shall be borne equally by theparties .25 (capitalization in the original, underscoring supplied) 1avvphi1

Petitioners have not, however, been duly authorize d to represent the union. Apropos is this Courtspronouncement in Atlas Farms, Inc. v. National Labor Relations Commission ,26 viz:

x x x Pursuant to Article 260 of the Labor Code, the parties to a CBA shall name or designate theirrespective representatives to the grievance machinery and if the grievance is unsettled in that level,it shall automatically be referred to the voluntary arbitrators designated in advance by parties to aCBA. Consequently only disputes involving the union and the company shall be referred to thegrievance machinery or voluntary arbitrators .27(emphasis and underscoring supplied)

Clutching at straws, petitioners invoke the first paragraph of Article 255 of the Labor Code whichstates:

Art. 255. The labor organization designated or selected by the majority of the employees in anappropriate collective bargaining unit shall be the exclusive representative of the employees in such
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unit for the purpose of collective bargaining. However, an individual employee or group of employeesshall have the right at any time to present grievances to their employer.

x x x x (emphasis and underscoring supplied)

To petitioners, the immediately quoted provision "is meant to be an exception to the exclusiveness ofthe representative role of the labor organization/union. "28

This Court is not persuaded. The right of any employee or group of employees to, at any time,present grievancesto the employer does not imply the right to submit the same to voluntaryarbitration.

WHEREFORE, the petition is DENIED.

SO ORDERED.

G.R. No. 160146 December 11, 2009

LESLIE OKOL, Petitioner,vs.SLIMMERS WORLD INTERNATIONAL, BEHAVIOR MODIFICATIONS, INC., and RONALDJOSEPH MOY, Respondents.

FACTS: Leslie Okol, Vice President of the Slimmers World International was suspended due to theseizure by the Bureau of Customs of seven Precor elliptical machines and seven Precor treadmillsbelonging to or consigned to Slimmers World. The shipment of the equipment was placed under thenames of Okol and two customs brokers for a value less than US$500. For being undervalued, theequipment were seized. After finding her explanation of the seizure dissatisfactory, Slimmers Worldterminated Okols employment.

Okol filed a complaint for illegal suspension, illegal dismissal, unpaid commissions, damages andattorneys fees, with prayer for reinsta tement and payment of backwages against the respondents.Petitioner asserts that even as vice-president, the work that she performed conforms to that of anemployee rather than a corporate officer.

Respondents, on the other hand, maintain that petitioner was a corporate officer at the time of herdismissal from Slimmers World as supported by the General Information Sheet and Directors

Affidavit attesting that petitioner was an officer. Also, the factors cited by petitioner that she was a

mere employee do not prove that she was not an officer of Slimmers World.

The labor arbiter ruled that since Okol was the vice-president of Slimmers World at the time of herdismissal, the case involves a corporate officer and involves an intra-corporate controversy whichfalls outside the jurisdiction of the Arbitration branch. The ruling was adopted by the CA.

Issue: Whether petitioner was an employee or a corporate officer of Slimmers World.
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Held: The petitioner is a corporate officer. In Tabang v. NLRC, SC held that an "office" is created bythe charter of the corporation and the officer is elected by the directors or stockholders. On the otherhand, an "employee" usually occupies no office and generally is employed not by action of thedirectors or stockholders but by the managing officer of the corporation who also determines thecompensation to be paid to such employee.

The General Information Shee t13

(GIS) and minutes of the meeting of the board of directors indicatedthat petitioner was a member of the board of directors, holding one subscribed share of the capitalstock, and an elected corporate officer.

Clearly, from the documents submitted by respondents, petitioner was a director and officer ofSlimmers World. The charges of illegal suspension, illegal dismissal, unpaid commissions,reinstatement and back wages imputed by petitioner against respondents fall squarely within theambit of intra-corporate disputes. A corporate officers dismissal is always a corporate act, or anintra-corporate controversy which arises between a stockholder and a corporation. The question ofremuneration involving a stockholder and officer, not a mere employee, is not a simple labor problembut a matter that comes within the area of corporate affairs and management and is a corporatecontroversy in contemplation of the Corporation Code.

It is a settled rule that jurisdiction over the subject matter is conferred by law. Dismissal of a directoror a corporate officer is an intra-corporate dispute subject to the jurisdiction of the regular courts.Thus, the appellate court correctly ruled that it is not the NLRC but the regular courts which have

jurisdiction over the present case.

G.R. No. 176249 November 27, 2009

FVC LABOR UNION-PHILIPPINE TRANSPORT AND GENERAL WORKERS ORGANIZATION(FVCLU-PTGWO), Petitioner,vs.SAMA-SAMANG NAGKAKAISANG MANGGAGAWA SA FVC-SOLIDARITY OF INDEPENDENTAND GENERAL LABOR ORGANIZATIONS (SANAMA-FVC-SIGLO), Respondent.

D E C I S I O N

BRION, J .:

We pass upon the petition for review on certiorari under Rule 45 of the Rules of Cour t1 filed by FVCLabor Union Philippine Transport and General Workers Organization (FVCLU-PTGWO) tochallenge the Court of Appeals (CA) decision of July 25, 200 6 2 and its resolution rendered onJanuary 15, 200 73 in C.A. G.R. SP No. 83292 .4

THE ANTECEDENTS

The facts are undisputed and are summarized below.

On December 22, 1997, the petitioner FVCLU-PTGWO the recognized bargaining agent of therank-and-file employees of the FVC Philippines, Incorporated (company) signed a five-year
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collective bargaining agreement (CBA) with the company. The five-year CBA period was fromFebruary 1, 1998 to January 30, 2003 .5 At the end of the 3rd year of the five-year term and pursuantto the CBA, FVCLU-PTGWO and the company entered into the renegotiation of the CBA andmodified, among other provisions, the CBAs duration. Article XXV, Section 2 of the renegotiatedCBA provides that "this re-negotiation agreement shall take effect beginning February 1, 2001 anduntil May 31, 2003" thus extending the original five-year period of the CBA by four (4) months.

On January 21, 2003, nine (9) days before the January 30, 2003 expiration of the originally-agreedfive-year CBA term (and four [4] months and nine [9] days away from the expiration of the amendedCBA period), the respondent Sama-Samang Nagkakaisang Manggagawa sa FVC-Solidarity ofIndependent and General Labor Organizations (SANAMA-SIGLO) filed before the Department ofLabor and Employment (DOLE) a petition for certification election for the same rank-and-file unitcovered by the FVCLU-PTGWO CBA. FVCLU-PTGWO moved to dismiss the petition on the groundthat the certification election petition was filed outside the freedom period or outside of the sixty (60)days before the expiration of the CBA on May 31, 2003.

Action on the Petition and Related Incidents

On June 17, 2003, Med-Arbiter Arturo V. Cosuco dismissed the petition on the ground that it wasfiled outside the 60-day period counted from the May 31, 2003 expiry date of the amendedCBA.6 SANAMA-SIGLO appealed the Med- Arbiters Order to the DOLE Secretary, contending thatthe filing of the petition on January 21, 2003 was within 60-days from the January 30, 2003expiration of the original CBA term.

DOLE Secretary Patricia A. Sto. Tomas sustained SANAMA- SIGLOs position, thereby setting asidethe decision of the Med-Arbiter .7 She ordered the conduct of a certification election in the company.FVCLU-PTGWO moved for the reconsideration of the Secretarys decision.

On November 6, 2003, DOLE Acting Secretary Manuel G. Imson granted the motion; he set asidethe August 6, 2003 DOLE decision and dismissed the petition as the Med- Arbiters Order of June 17,2003 did .8 The Acting Secretary held that the amended CBA (which extended the representationaspect of the original CBA by four [4] months) had been ratified by members of the bargaining unitsome of whom later organized themselves as SANAMA-SIGLO, the certification election applicant.Since these SANAMA-SIGLO members fully accepted and in fact received the benefits arising fromthe amendments, the Acting Secretary rationalized that they also accepted the extended term of theCBA and cannot now file a petition for certification election based on the original CBA expirationdate.

SANAMA-SIGLO moved for the reconsideration of the Acting Secretarys Order, but Secretary Sto.Tomas denied the motion in her Order of January 30, 2004 .9

SANAMA-SIGLO sought relief from the CA through a petition for certiorari under Rule 65 of theRules of Court based on the grave abuse of discretion the Labor Secretary committed when she

reversed her earlier decision calling for a certification election. SANAMA-SIGLO pointed out that theSecretarys new ruling is patently contrary to the express provision of the law and established

jurisprudence.

THE CA DECISION

The CA found SANAMA- SIGLOs petition meritorious on the basis of the applicable law 10 and therules ,11 as interpreted in the congressional debates. It set aside the challenged DOLE Secretary
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decisions and reinstated her earlier ruling calling for a certification election. The appellate courtdeclared:

It is clear from the foregoing that while the parties may renegotiate the other provisions (economicand non-economic) of the CBA, this should not affect the five-year representation aspect of theoriginal CBA. If the duration of the renegotiated agreement does not coincide with but rather

exceeds the original five-year term, the same will not adversely affect the right of another union tochallenge the majority status of the incumbent bargaining agent within sixty (60) days before thelapse of the original five (5) year term of the CBA. In the event a new union wins in the certificationelection, such union is required to honor and administer the renegotiated CBA throughout the excessperiod.

FVCLU-PTGWO moved to reconsider the CA decision but the CA denied the motion in its resolutionof January 15, 2007 .12 With this denial, FVCLU-PTGWO now comes before us to challenge the CArulings .13 It argues that in light of the peculiar attendant circumstances of the case, the CA erred instrictly applying Section 11 (11b), Rule XI, Book V of the Omnibus Rules Implementing the LaborCode, as amended by Department Order No. 9, s. 1997 .14

Apparently, the "peculiar circumstances" the FVCLU-PTGWO referred to relate to the economic andother provisions of the February 1, 1998 to January 30, 2003 CBA that it renegotiated with thecompany. The renegotiated CBA changed the CBAs remaining term from February 1, 2001 to May31, 2003. To FVCLU-PTGWO, this extension of the CBA term also changed the u nions exclusivebargaining representation status and effectively moved the reckoning point of the 60-day freedomperiod from January 30, 2003 to May 30, 2003. FVCLU-PTGWO thus moved to dismiss the petitionfor certification election filed on January 21, 2003 (9 days before the expiry date on January 30,2003 of the original CBA) by SANAMA-SIGLO on the ground that the petition was filed outside theauthorized 60-day freedom period.

It also submits in its petition that the SANAMA-SIGLO is estopped from questioning the extension ofthe CBA term under the amendments because its members are the very same ones who approvedthe amendments, including the expiration date of the CBA, and who benefited from theseamendments.

Lastly, FVCLU-PTGWO posits that the representation petition had been rendered moot by a newCBA it entered into with the company covering the period June 1, 2003 to May 31, 2008 .15 1avvphi1

Required to comment by the Cour t16 and to show cause for its failure to comply ,17 SANAMA-SIGLOmanifested on October 10, 2007 that: since the promulgation of the CA decision on July 25, 2006 orthree years after the petition for certification election was filed, the local leaders of SANAMA-SIGLOhad stopped reporting to the federation office or attending meetings of the council of local leaders;the SANAMA-SIGLO counsel, who is also the SIGLO national president, is no longer in the positionto pursue the present case because the local union and its leadership, who are principals of SIGLO,had given up and abandoned their desire to contest the representative status of FVCLU-PTGWO;

and a new CBA had already been signed by FVCLU-PTGWO and the company .18

Under thesecircumstances, SANAMA-SIGLO contends that pursuing the case has become futile, andaccordingly simply adopted the CA decision of July 25, 2006 as its position; its counsel likewiseasked to be relieved from filing a comment in the case. We granted the request for relief anddispensed with the filing of a comment .19

THE COURTS RULING
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While SANAMA-SIGLO has manifested its abandonment of its challenge to the exclusive bargainingrepresentation status of FVCLU-PTGWO, we deem it necessary in the exercise of our discretion toresolve the question of law raised since this exclusive representation status issue will inevitablyrecur in the future as workplace parties avail of opportunities to prolong workplace harmony byextending the term of CBAs already in place .20

The legal question before us centers on the effect of the amended or extended term of the CBA onthe exclusive representation status of the collective bargaining agent and the right of another unionto ask for certification as exclusive bargaining agent. The question arises because the law allows achallenge to the exclusive representation status of a collective bargaining agent through the filing ofa certification election petition only within 60 days from the expiration of the five-year CBA.

Article 253-A of the Labor Code covers this situation and it provides:

Terms of a collective bargaining agreement. Any Collective Bargaining Agreement that the partiesmay enter into, shall, insofar as the representation aspect is concerned, be for a term of five (5)years. No petition questioning the majority status of the incumbent bargaining agent shall beentertained and no certification election shall be conducted by the Department of Labor and

Employment outside of the sixty day period immediately before the date of expiry of such five-yearterm of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution.

Any agreement on such other provisions of the Collective Bargaining Agreement entered into withinsix (6) months from the date of expiry of the term of such other provisions as fixed in such CollectiveBargaining Agreement, shall retroact to the day immediately following such date. If any suchagreement is entered into beyond six months, the parties shall agree on the duration of retroactivitythereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the partiesmay exercise their rights under this Code.

This Labor Code provision is implemented through Book V, Rule VIII of the Rules Implementing theLabor Cod e 21which states:

Sec. 14. Denial of the petition; grounds. The Med-Arbiter may dismiss the petition on any of thefollowing grounds:

x x x x

(b) the petition was filed before or after the freedom period of a duly registered collective bargainingagreement;provided that the sixty-day period based on the original collective bargaining agreementshall not be affected by any amendment, extension or renewal of the collective bargainingagreement (underscoring supplied).

x x x x

The root of the controversy can be traced to a misunderstanding of the interaction between a unionsexclusive bargaining representation status in a CBA and the term or effective period of the CBA.

FVCLU-PTGWO has taken the view that its exclusive representation status should fully be in stepwith the term of the CBA and that this status can be challenged only within 60 days before theexpiration of this term. Thus, when the term of the CBA was extended, its exclusive bargaining
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status was similarly extended so that the freedom period for the filing of a petition for certificationelection should be counted back from the expiration of the amended CBA term.

We hold this FVCLU-PTGWO position to be correct, but only with respect to the original five-yearterm of the CBA which, by law, is also the effective period of the unions exclusive bargainingrepresentation status. While the parties may agre e to extend the CBAs original five -year term

together with all other CBA provisions, any such amendment or term in excess of five years will notcarry with it a change in the unions exclusive collective bargaining status. By express provision ofthe above-quoted Article 253-A, the exclusive bargaining status cannot go beyond five years and therepresentation status is a legal matter not for the workplace parties to agree upon. In other words,despite an agreement for a CBA with a life of more than five years, either as an original provision orby amendment, the bargaining unions exclusive bargaining status is effective only for five years andcan be challenged within sixty (60) days prior to the expiration of the CBAs first five years. As wesaid in San Miguel Corp. Employees Union PTGWO, et al. v. Confesor, San Miguel Corp., MagnoliaCorp. and San Miguel Foods, Inc. ,22where we cited the Memorandum of the Secretary of Labor andEmployment dated February 24, 1994:

In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with aterm of three (3) years or one which does not coincide with the said five-year term and saidagreement is ratified by majority of the members in the bargaining unit, the subject contract is validand legal and therefore, binds the contracting parties. The same will however not adversely affectthe right of another union to challenge the majority status of the incumbent bargaining agent withinsixty (60) days before the lapse of the original five (5) year term of the CBA.

In the present case, the CBA was originally signed for a period of five years, i.e., from February 1,1998 to January 30, 2003, with a provision for the renegotiation of the CBAs other provisions at theend of the 3rd year of the five-year CBA term. Thus, prior to January 30, 2001 the workplace partiessat down for renegotiation but instead of confining themselves to the economic and non-economicCBA provisions, also extended the life of the CBA for another four months, i.e., from the originalexpiry date on January 30, 2003 to May 30, 2003.

As discussed above, this negotiated extension of the CBA term has no legal effect on the FVCLU-PTGWOs exclusive bargaining representation status which remained effective only for five yearsending on the original expiry date of January 30, 2003. Thus, sixty days prior to this date, or startingDecember 2, 2002, SANAMA-SIGLO could properly file a petition for certification election. Itspetition, filed on January 21, 2003 or nine (9) days before the expiration of the CBA and of FVCLU-PTGWOs exclusive bargaining status, was seasonably filed.

We thus find no error in the appellate courts ruling reinstating the DOLE order for the conduct of acertification election. If this ruling cannot now be given effect, the only reason is SANAMA- SIGLOsown desistance; we cannot disregard its manifestation that the members of SANAMA themselvesare no longer interested in contesting the exclusive collective bargaining agent status of FVCLU-PTGWO. This recognition is fully in accord with the Labor Codes intent to foster industrial peace

and harmony in the workplace.

WHEREFORE, premises considered, we AFFIRM the correctness of the challenged Decision andResolution of the Court of Appeals and accordingly DISMISS the petition, but neverthelessDECLARE that no certification election, pursuant to the underlying petition for certification electionfiled with the Department of Labor and Employment, can be enforced as this petition has effectivelybeen abandoned.

SO ORDERED.
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ARTURO D. BRION Associate Justice

G.R. No. 178083 July 22, 2008

FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THE PHILIPPINES(FASAP), Petitioner,vs.PHILIPPINE AIRLINES, INC., PATRIA CHIONG and COURT OF APPEALS, Respondents.

D E C I S I O N

YNARES-SANTIAGO, J .:

This petition for review on certiorari assails the Decisio n1 of the Court of Appeals (CA) dated August23, 2006 in CA- G.R. SP No. 87956 which affirmed the National Labor Relations Commissions(NLRC) decision setting aside the Labor Arbiters findings of illegal retrenchment and ordering thereinstatement of the retrenched Philippine Airlines, Inc. (PAL) employee-members of petitioner Flight

Attendants and Stewards Association of the Philippines (FASAP), with payment of backwages,moral and exemplary damages, and attorneys fees. Also assailed is the May 29, 2007Resolution 2 denying the motion for reconsideration.

Petitioner FASAP is the duly certified collective bargaining representative of PAL flight attendantsand stewards, or collectively known as PAL cabin crew personnel. Respondent PAL is a domesticcorporation organized and existing under the laws of the Republic of the Philippines, operating as acommon carrier transporting passengers and cargo through aircraft.

On June 15, 1998, PAL retrenched 5,000 of its employees, including more than 1,400 of its cabincrew personnel, to take effect on July 15, 1998. PAL adopted the retrenchment scheme allegedly tocut costs and mitigate huge financial losses as a result of a downturn in the airline industry broughtabout by the Asian financial crisis. During said period, PAL claims to have incurred P90 billion inliabilities, while its assets stood at P85 billion .3

In implementing the retrenchment scheme, PAL adopted its so- called "Plan 14" whereby PALs fleetof aircraft would be reduced from 54 to 14, thus requiring the services of only 654 cabin crewpersonnel .4 PAL admits that the retrenchment is wholly premised upon such reduction in fleet ,5 andto "the strike staged by PAL pilots since this action also translated into a reduction of flights. "6 PALclaims that the scheme resulted in "savings x x x amounting to approximately P24 million per month

savings that would greatly alleviate PALs financial crisis. "7

Prior to the full implementation of the assailed retrenchment program, FASAP and PAL conducted aseries of consultations and meetings and explored all possibilities of cushioning the impact of theimpending reduction in cabin crew personnel. However, the parties failed to agree on how thescheme would be implemented. Thus PAL unilaterally resolved to utilize the criteria set forth inSection 112 of the PAL-FASAP Collective Bargaining Agreemen t8 (CBA) in retrenching cabin crewpersonnel: that is, that retrenchment shall be based on the individual employees efficiency ratingand seniority.
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PAL determined the cabin crew personnel efficiency ratings through an evaluation of the individualcabin crew members overall performance for the year 1997 alone .9 Their respective performanceduring previous years, i.e., the whole duration of service with PAL of each cabin crew personnel,was not considered. The factors taken into account on whether the cabin crew member would beretrenched, demoted or retained were: 1) the existence of excess sick leaves; 2) the crew membersbeing physically overweight; 3) seniority; and 4) previous suspensions or warnings imposed .10

While consultations between FASAP and PAL were ongoing, the latter began implementing itsretrenchment program by initially terminating the services of 140 probationary cabin attendants onlyto rehire them in April 1998. Moreover, their employment was made permanent and regular .11

On July 15, 1998, however, PAL carried out the retrenchment of its more than 1,400 cabin crewpersonnel.

Meanwhile, in June 1998, PAL was placed under corporate rehabilitation and a rehabilitation planwas approved per Securities and Exchange Commission (SEC) Order dated June 23, 1998 in SECCase No. 06-98-6004 .12

On September 4, 1998, PAL, through its Chairman and Chief Executive Officer (CEO) Lucio Tan,made an offer to transfer shares of stock to its employees and three seats in its Board of Directors,on the condition that all the existing Collective Bargaining Agreements (CBAs) with its employeeswould be suspended for 10 years, but it was rejected by the employees. On September 17, 1998,PAL informed its employees that it was shutting down its operations effective September 23,1998 ,13 despite the previous approval on June 23, 1998 of its rehabilitation plan.

On September 23, 1998, PAL ceased its operations and sent notices of termination to its employees.Two days later, PAL employees, through the Philippine Airlines Employees Association (PALEA)board, sought the intervention of then President Joseph E. Estrada. PALEA offered a 10-yearmoratorium on strikes and similar actions and a waiver of some of the economic benefits in theexisting CBA. Lucio Tan, however, rejected this counter-offer .14

On September 27, 1998, the PALEA board again wrote the President proposing the following termsand conditions, subject to ratification by the general membership:

1. Each PAL employee shall be granted 60,000 shares of stock with a par value of P5.00,from Mr. Lucio Tans shareholdings, with three (3) seats in the PAL Board and an additionalseat from government shares as indicated by His Excellency;

2. Likewise, PALEA shall, as far as practicable, be granted adequate representation incommittees or bodies which deal with matters affecting terms and conditions of employment;

3. To enhance and strengthen labor-management relations, the existing Labor-ManagementCoordinating Council shall be reorganized and revitalized, with adequate representation fromboth PAL management and PALEA;

4. To assure investors and creditors of industrial peace, PALEA agrees, subject to theratification by the general membership, (to) the suspension of the PAL-PALEA CBA for aperiod of ten (10) years, provided the following safeguards are in place:

a. PAL shall continue recognizing PALEA as the duly certified bargaining agent of theregular rank-and-file ground employees of the Company;
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b. The union shop/maintenance of membership provision under the PAL -PALEACBA shall be respected.

c. No salary deduction, with full medical benefits.

5. PAL shall grant the benefits under the 26 July 1998 Memorandum of Agreement forged byand between PAL and PALEA, to those employees who may opt to retire or be separatedfrom the company.

6. PALEA members who have been retrenched but have not received separation benefitsshall be granted priority in the hiring/rehiring of employees.

7. In the absence of applicable Company rule or regulation, the provisions of the Labor Codeshall apply .15

In a referendum conducted on October 2, 1998, PAL employees ratified the above proposal. OnOctober 7, 1998, PAL resumed domestic operations and, soon after, international flights as well .16

Meanwhile, in November 1998, or five months after the June 15, 1998 mass dismissal of its cabincrew personnel, PAL began recalling to service those it had previously retrenched. Thus, inNovember 1998 17 and up to March 1999 ,18 several of those retrenched were called back to service.To date, PAL claims to have recalled 820 of the retrenched cabin crew personnel .19 FASAP,however, claims that only 80 were recalled as of January 2001 .20

In December 1998, PAL submitted a "stand-alone" rehabilitation plan to the SEC by which itundertook a recovery on its own while keeping its options open for the entry of a strategic partner inthe future. Accordingly, it submitted an amended rehabilitation plan to the SEC with a proposedrevised business and financial restructuring plan, which required the infusion of US$200 million innew equity into the airline.

On May 17, 1999, the SEC approved the proposed "Amended and Restated Rehabilitation Plan" ofPAL and appointed a permanent rehabilitation receiver for the latter .21

On June 7, 1999, the SEC issued an Order confirming its approval of the "Amended and RestatedRehabilitation Plan" of PAL. In said order, the cash infusion of US$200 million made by Lucio Tan onJune 4, 1999 was acknowledged .22

On October 4, 2007, PAL officially exited receivership; thus, our ruling in Philippine Air Lines v.Kurangkin g23 no longer applies.

On June 22, 1998, FASAP filed a Complain t24 against PAL and Patria T. Chiong 25 (Chiong) for unfairlabor practice, illegal retrenchment with claims for reinstatement and payment of salaries,

allowances and backwages of affected FASAP members, actual, moral and exemplary damageswith a prayer to enjoin the retrenchment program then being implemented. Instead of a positionpaper, respondents filed a Motion to Dismiss and/or Consolidation with NCMB Case No. NS 12-514-97 pending with the Office of the Secretary of the Department of Labor and Employment and/orSuspension and Referral of Claims to the interim rehabilitation proceedings (motion to dismiss) .26

On July 6, 1998, FASAP filed its Comment to respondents motion to dismiss. On July 23, 1998, theLabor Arbiter issued an Orde r 27 denying respondents motion to dismiss; granting a writ ofpreliminary injunction against PALs implementation of its retrenchment program with respect to
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FASAP members; setting aside the respective notices of retrenchment addressed to the cabin crew;directing respondents to restore the said retrenched cabin crew to their positions and PALs payrolluntil final determination of the case; and directing respondents to file their position paper.

Respondents appealed to the NLRC which reversed the decision of the Labor Arbiter. The NLRCdirected the lifting of the writ of injunction and to vacate the directive setting aside the notices of

retrenchment and reinstating the dismissed cabin crew to their respective positions and in the PALpayroll .28

FASAP filed its Position Pape r 29 on September 28, 1999. On November 8, 1999, respondents filedtheir Position Pape r 30 with counterclaims against FASAP, to which FASAP filed itsReply .31 Thereafter, the parties were directed to file their respective Memoranda .32

Meanwhile, instead of being dismissed in accordance with the Kurangking case, the FASAP case(NLRC-NCR Case No. 06-05100-98) was consolidated with the following cases:

1. Ramon and Marian Joy Camahort v. PAL, et al. (NLRC-NCR Case No. 00-07-05854-98);

2. Erlinda Arevalo and Chonas Santos v. PAL, et al. (NLRC-NCR Case No. 00-07-09793-98); and

3. Victor Lanza v. PAL, et al. (NLRC-NCR Case No.00-04-04254-99).

On July 21, 2000, Labor Arbiter Jovencio Ll. Mayor rendered a Decision ,33 the dispositive portion ofwhich reads, as follows:

WHEREFORE, premises considered, this Office renders judgment declaring that Philippine Airlines,Inc., illegally retrenched One Thousand Four Hundred (1,400) cabin attendants including flightpursers for effecting the retrenchment program in a despotic and whimsical manner. Philippine

Airlines, Inc. is likewise hereby ordered to:

1. Reinstate the cabin attendants retrenched and/or demoted to their previous positions;

2. Pay the concerned cabin attendants their full backwages from the time they were illegallydismissed/retrenched up to their actual reinstatements;

3. Pay moral and exemplary damages in the amount of Five Hundred Thousand Pesos(P500,000.00); and

4. Ten (10%) per cent of the total monetary award as and by way of attorneys fees.

SO ORDERED .34

Respondents appealed to the NLRC. Meanwhile, FASAP moved for the implementation of thereinstatement aspect of the Labor Arbiters decision. Despite respondents opposition, the Labor

Arbiter issued a writ of execution with respect to the reinstatement directive in his decision.Respondents moved to quash the writ, but the Labor Arbiter denied the same. Again, respondentstook issue with the NLRC.

Meanwhile, on May 31, 2004, the NLRC issued its Decisio n35 in the appeal with respect to the Labor Arbiters July 21, 2000 decision. The dispositive portion thereof reads:
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WHEREFORE, premises considered, the Decision dated July 21, 2000 is hereby SET ASIDE and anew one entered DISMISSING the consolidated cases for lack of merit.

With respect to complainant Ms. Begonia Blanco, her demotion is hereby declared illegal andrespondent PAL is ordered to pay her salary differential covering the period from the time she wasdowngraded in July 1998 up to the time she resigned in October 1999.

Respondent PAL is likewise ordered to pay the separation benefits to those complainants who havenot received their separation pay and to pay the balance to those who have received partialseparation pay.

The Order of the Labor Arbiter dated April 6, 2000 is also SET ASIDE and the Writ of Executiondated November 13, 2000 is hereby quashed.

Annexes "A" and "B" are considered part of this Decision.

SO ORDERED .36

FASAP moved for reconsideration but it was denied; hence it filed an appeal to the Court of Appealswhich was denied in the herein assailed Decision.

FASAPs motion for reconsideration was lik ewise denied; hence, the instant petition raising thefollowing issues:

WHETHER OR NOT THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAYCONTRARY TO LAW AND/OR APPLICABLE JURISPRUDENCE WHEN IT DENIED FASAPSPETITION FOR CERTIORARI UNDER RULE 65 AND EFFECTIVELY VALIDATED THERETRENCHMENT EXERCISED BY RESPONDENT PAL WHICH WAS INITIALLY DECLARED ASILLEGAL BY THE LABOR ARBITER A QUO SINCE:

FIRST, the record shows that PAL failed or neglected to adopt less drastic cost-cutting measuresbefore resorting to retrenchment. No less than the Supreme Court held that resort to less drasticcost-cutting measures is an indispensable requirement for a valid retrenchment x x x.

SECOND, PAL arbitrarily and capriciously singled out the year 1997 as a reference in its allegedassessment of employee efficiency. With this, it totally disregarded the employees performanceduring the years prior to 1997. This resulted in the unreasonable and unfair retrenchment ordemotion of several flight pursers and attendants who showed impeccable service records duringthe years prior to 1997.

THIRD, seniority was totally disregarded in the selection of employees to be retrenched, which is aclear and willful violation of the CBA.

FOURTH, PAL maliciously represented in the proceedings below that it could only operate on a fleetof fourteen (14) planes in order to justify the retrenchment scheme. Yet, the evidence on recordrevealed that PAL operated a fleet of twenty two (22) planes. In fact, after having illegally retrenchedthe unfortunate flight attendants and pursers, PAL rehired those who were capriciously dismissedand even hired from the outside just to fulfill their manning requirements.

FIFTH, PAL did not use any fair and reasonable criteria in effecting retrenchment. If there really wasany, the same was applied arbitrarily, if not discriminatorily.
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FINALLY, and perhaps the worst transgression of FASAPs rights, PAL used retrenchment to veil itsunion-busting motives and struck at the heart of FASAP when it retrenched seven (7) of its twelve(12) officers and demoted three (3) others .37 (Emphasis supplied)

These issues boil down to the question of whether PALs retrenchment scheme was just ified.

It is a settled rule that in the exercise of the Supreme Courts power of review, the Court is not a trierof facts and does not normally undertake the re-examination of the evidence presented by thecontending parties during trial. However, there are several exceptions to this rul e 38 such as when thefactual findings of the Labor Arbiter differ from those of the NLRC, as in the instant case, whichopens the door to a review by this Court .39

Under the Labor Code, retrenchment or reduction of employees is authorized as follows:

ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminatethe employment of any employee due to the installation of labor-saving devices, redundancy,retrenchment to prevent losses or the closing or cessation of operation of the establishment orundertaking unless the closing is for the purpose of circumventing the provisions of this Title, by

serving a written notice on the workers and the Ministry of Labor and Employment at least one (1)month before the intended date thereof. In case of termination due to the installation of labor-savingdevices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalentto at least his one (1) month pay or to at least one (1) month pay for every year of service, whicheveris higher. In case of retrenchment to prevent losses and in cases of closures or cessation ofoperations of establishment or undertaking not due to serious business losses or financial reverses,the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay forevery year of service, whichever is higher. A fraction of at least six (6) months shall be consideredone (1) whole year.

The law recognizes the right of every business entity to reduce its work force if the same is madenecessary by compelling economic factors which would endanger its existence or stability .40 Whereappropriate and where conditions are in accord with law and jurisprudence, the Court has authorizedvalid reductions in the work force to forestall business losses, the hemorrhaging of capital, or even torecognize an obvious reduction in the volume of business which has rendered certain employeesredundant .41

Nevertheless, while it is true that the exercise of this right is a prerogative of management, theremust be faithful compliance with substantive and procedural requirements of the law and

jurisprudence, for retrenchment strikes at the very heart of the workers employment, the lifebloodupon which he and his family owe their survival. Retrenchment is only a measure of last resort, whenother less drastic means have been tried and found to be inadequate .42

The burden clearly falls upon the employer to prove economic or business losses with sufficientsupporting evidence. Its failure to prove these reverses or losses necessarily means that theemployees dismissal was not justified .

43

Any claim of actual or potential business losses must satisfycertain established standards, all of which must concur, before any reduction of personnel becomeslegal .44 These are:

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, ifalready incurred, are not merely de minimis, but substantial, serious, actual and real, or ifonly expected, are reasonably imminent as perceived objectively and in good faith by theemployer;
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(2) That the employer served written notice both to the employees and to the Department ofLabor and Employment at least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one (1)month pay or at least one-half () month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for theadvancement of its interest and not to defeat or circumvent the empl oyees right to securityof tenure; and,

(5) That the employer used fair and reasonable criteria in ascertaining who would bedismissed and who would be retained among the employees, such as status, efficiency,seniority, physical fitness, age, and financial hardship for certain workers .45

In view of the facts and the issues raised, the resolution of the instant petition hinges on adetermination of the existence of the first, fourth and the fifth elements set forth above, as well ascompliance therewith by PAL, taking to mind that the burden of proof in retrenchment cases lies withthe employer in showing valid cause for dismissal ;46 that legitimate business reasons exist to justify

retrenchment .47

FIRST ELEMENT: That retrenchment is reasonably necessary and likely to prevent business losseswhich, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or ifonly expected, are reasonably imminent as perceived objectively and in good faith by the employer.

The employers prerogative to layoff employees is subject to certain limitations. In Lopez SugarCorporation v. Federation of Free Workers ,48 we held that:

Firstly, the losses expected should be substantial and not merely de minimis in extent. If the losspurportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial andinconsequential in character, the bona fide nature of the retrenchment would appear to be seriously

in question. Secondly, the substantial loss apprehended must be reasonably imminent, as suchimminence can be perceived objectively and in good faith by the employer. There should, in otherwords, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse withserious consequences for the livelihood of the employees retired or otherwise laid-off. Because ofthe consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely toeffectively prevent the expected losses. The employer should have taken other measures prior orparallel to retrenchment to forestall losses, i.e., cut other costs than labor costs. An employer who,for instance, lays off substantial numbers of workers while continuing to dispense fat executivebonuses and perquisites or so-called "golden parachutes," can scarcely claim to be retrenching ingood faith to avoid losses. To impart operational meaning to the constitutional policy of providing "fullprotection" to labor, the employers prerogative to bring down labor costs by retrenching must beexercised essentially as a measure of last resort, after less drastic means - e.g., reduction of bothmanagement and rank-and-file bonuses and salaries, going on reduced time, improving

manufacturing efficiencies, trimming of marketing and advertising costs, etc. - have been tried andfound wanting.

Lastly, but certainly not the least important, alleged losses if already realized, and the expectedimminent losses sought to be forestalled, must be proved by sufficient and convincing evidence.

The law speaks of serious business losses or financial reverses. Sliding incomes or decreasinggross revenues are not necessarily losses, much less serious business losses within the meaning ofthe law. The fact that an employer may have sustained a net loss, such loss, per se, absent any
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other evidence on its impact on the business, nor on expected losses that would have been incurredhad operations been continued, may not amount to serious business losses mentioned in the law.The employer must show that its losses increased through a period of time and that the condition ofthe company will not likely improve in the near future ,49 or that it expected no abatement of its lossesin the coming years .50 Put simply, not every loss incurred or expected to be incurred by a companywill justify retrenchment .51

The employer must also exhaust all other means to avoid further losses without retrenching itsemployees .52Retrenchment is a means of last resort; it is justified only when all other less drasticmeans have been tried and found insufficient .53 Even assuming that the employer has actuallyincurred losses by reason of the Asian economic crisis, the retrenchment is not completely justified ifthere is no showing that the retrenchment was the last recourse resorted to .54 Where the only lessdrastic measure that the employer undertook was the rotation work scheme, or the three-day-work-per-employee-per-week schedule, and it did not endeavor at other measures, such as costreduction, lesser investment on raw materials, adjustment of the work routine to avoid scheduledpower failure, reduction of the bonuses and salaries of both management and rank-and-file,improvement of manufacturing efficiency, and trimming of marketing and advertising costs, the claimthat retrenchment was done in good faith to avoid losses is belied .55

Alleged losses if already realized, and the expected imminent losses sought to be forestalled, mustbe proved by sufficient and convincing evidence. The reason for requiring this is readily apparent:any less exacting standard of proof would render too easy the abuse of this ground for termination ofservices of employees; scheming employers might be merely feigning business losses or reverses inorder

Digest Labrel

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