8/12/2019 Asian Alcohol v NLRC.docx

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8/12/2019 Asian Alcohol v NLRC.docx

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Under the said provision, retrenchment and redundancy are just cause for the employerto terminate the services to preserve the viability of the business. In exercising its right,however management must faithfully comply with the substantive and proceduralrequirements laid down by law and jurisprudence.

The requirements for a valid retrenchment which must be proved by clear and convincing

evidence are (1 ) the retrenchment is reasonably necessary and likely to prevent businessloses which, if already incurred are not merely diminish but substantial, serious, actualand real or if only expected are reasonably imminent as perceived objectively in goodfaith by the emploter (2) that the employer served written notice both the emplyees andto the DOLE at least one month prior to the intended date of retrenchment. (3) that theemployer pays the retrenched employees separation pay equivalent to one month pay orat least month pay for every year of service, whichever is higher. (4) that the employerexercise its prerogative to retrench empoyees in good faith for the (5) that the employersused fair and reasonable criteria in ascertaining who would be retained among theemployess.

An important requirement would also to state the condition of the business losses. This isnormally shown by audited financial documents like yearly balance sheets and profit andloss statements as well as annual income tax return.

In the case at bar, private respondents never contested the veracity of the auditedfinancial documents proferred by Asian Alcohol before the LA. Documents show that thepetitioner has an accumulated losses amounting to 306, 764, 349

In rejecting the petitioners claim the NLRC stated that the alle ged deficits of thecorporation did not prove anything for the petitioner since they were incurred before thetake over of Prior Holdings. Under Art 283 of the Labor Code, retrenchment to preventlosesse means that retrenchment must be undertaken by the employer before loses areactually sustained. The employer need not keep his employees until after loses shallmaterialize.

The law gives the new management every right to undertake measures to save thecompany from bankruptcy. In this case, when Prior Land bought the corporation and tookover the management of it there were no signs that the loses would end, hence Prior landundertook re-organizational plan which retrenched number of employees becauseultimately they will absorb all the loses that the prior corporation incurred.

In the issue of redundancy, when the service capability of work force is in excess of whatis reasonably needed to meet the demands on the enterprise. Under this condition theemployer has no legal obligation to keep in its payroll more employees than necessaryfor the operation of its business. For the implementation of redundancy program to bevalid it must (1) written notice served on both the employees and the DOLE (2) paymentof separation pay at least one month pay for every year of service, whichever is higher,(3) good faith in abolishing the redundant positions and (4) fair and reasonable criteria inascertaining what positions are to be declared redundant and accordingly abolished.

In this case, when the company made introduction of the services of an independentcontractor it was justified when the latter is undertaken in order to effectuate moreeconomic and sufficient methods of production. Respondent failed to prove that companyacted in malicious or arbitrary manner to operate the Laura wells.