Linton Commercial v. Hillera Digest

Linton Commercial v. Hillera 

Facts:

1. Petitioner is engaged in the selling of by-products while private respondent Ong is the Vice President of the company. The petitioner implemented a compressed workweek schedule whereby work will only be on a 3-day rotation basis. The company's reason was the currency crisis and net loss it suffered. This was implemented without DOLE approval. 

2. Aggrieved, the employees herein co-respondents, all 68 of them filed a complaint for illegal reduction of workdays alleging the non-observance of Art. 280 requirement of 1-month notice. Pending the decision, 21 of the workers signed a waiver.

Labor Arbiter: Linton was guilty of illegal reduction

NLRC: Reversed the LA decision and held that the employer has the prerogative to control all aspects of employment in its business.

CA: Reversed the NLRC decision and held that there was constructive dismissal

Issue: W/N the management's decision was a valid exercise of management prerogative

RULING: No. The compressed workweek was unjustified and illegal. The management has the prerogative to come up with measures to ensure profitability or minimize loss. However, such prerogative is not absolute. It must be exercised in good faith and with due regard to the rights of labor. The petitioner committed illegal reduction of work hours. The records show that while the company suffered a loss, it retained a considerable amount of earnings and operating income.  Permitting the reduction of work hours or pay would be contrary to the state's policy to afford protection to labor and provide full employment.

Further, Linton failed to substantiate the alleged financial loss. For retrenchment to be justified, any claim of actual or potential business loss must satisfy the following standards:
1) the loss is substantial and not de minimis
2) the losses are actual or reasonably imminent
3) the retrenchment is reasonably necessary and effective in preventing the expected loss
4) the alleged losses, if already incurred or expected imminent loss sought to be forestalled must be proven by sufficient and convincing evidence.