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Saturday, April 22, 2006
Retrenchment
By Dominador A. Almirante
Labor case digest
Petitioner EMCO Plywood Corp. undertook retrenchment of employees due to losses. It presented its audited financial statements for the years 1991 and 1992. It alleged that it suffered a decrease in net income due to low market demand, lack of raw materials, frequent breakdown of old equipment and high cost of operations. Was the retrenchment justified?
Ruling: No.
In the present case, petitioners have presented only EMCO’s audited financial statements for the years 1991 and 1992. These show that their net income of P1,052,817 for 1991 decreased to P880,407.85 in 1992.
Somerville Stainless Steel Corporation versus NLRC, 350 Philippines 859, 872, March 11, 1998—citing San Miguel Jeepney Service versus NLRC, 332 Philippines 804, 851, Nov. 28, 1996—held that the presentation of the company’s financial statements for a particular year was inadequate to overcome the stringent requirement of the law.
According to the Court, “the failure of petitioner to show its income or loss for the immediately preceding years or to prove that it expected no abatement of such losses in the coming years bespeaks the weakness of its cause.” “The financial statement for 1992, by itself, xxx does not show whether its losses increased or decreased.” Although (the employer) posted a loss for 1992. It is also possible that such loss was considerably less than those previously incurred, thereby indicating the company’s improving condition. (EMCO Plywood Corp. and Jimmy Lim versus Perferio Abelgas, et. al., G.R. No. 148532, April 14, 2004).
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