G.R. No. 118973 August 12, 1998
POLYMART PAPER INDUSTRIES, INC. and CAYETANO TAGLE, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, RICARDO ADVINCULA, LAURENCE MEREN, GERARDO ALCARAZ, NORBERTO DIAVARRA, NELSON MALANA, DANILO PAPA, RICARDO BULAWAN and ALBERTO LOSALA, respondents.

FACTS

Petitioner Polymart Paper Industries, Inc. dismissed private respondents, who were officers of the National Mines and Allied Worker’s Union (NAMAWU) at its local, on July 4, 1992, on the ground of retrenchment due to alleged serious financial losses. The company posted a memorandum dated June 4, 1992, on the factory bulletin board, notifying all weekly and monthly employees of a proposed retrenchment. A second memorandum dated July 2, 1992, also posted on the bulletin board, included the names of the private respondents in the list of employees to be retrenched, effective July 4, 1992. Private respondents refused to accept copies. They filed a complaint for illegal dismissal and unfair labor practice. The Labor Arbiter found the dismissal valid on the ground of retrenchment but awarded separation pay. On appeal, the National Labor Relations Commission (NLRC) set aside the Labor Arbiter’s decision and ordered the reinstatement of the private respondents with full backwages.

ISSUE

Whether the dismissal of the private respondents on the ground of retrenchment was valid.

RULING

No, the dismissal was not valid. The Supreme Court ruled that the petitioner failed to prove the existence of substantial and imminent losses required to justify retrenchment under Article 283 of the Labor Code. The claim of losses due to power outages and unsold inventories was supported only by a self-serving affidavit and lacked sufficient and convincing evidence, such as audited financial statements. The petitioner also failed to demonstrate that it had undertaken cost reduction measures other than labor cost cutting prior to retrenchment, which is a measure of last resort. Furthermore, the procedural requirement of serving a written notice to the employees and the Department of Labor and Employment at least one month prior to the intended date of retrenchment was not complied with, as the memorandum naming the respondents was posted only on July 2, 1992, for effectivity on July 4, 1992. Consequently, the dismissal was unjustified. The NLRC decision ordering reinstatement with full backwages was upheld.