Thursday, February 23, 2012

Linton Commercial Co. Inc. vs Hellera

Facts: Linton is a domestic corporation engaged in the business of importation of steel. On Dec. 17, 1997, through its VP, Desiree Ong, Linton Inc issued a memorandum addressed to its employees informing them of the company’s decision to suspend its operations from 18 December 1997 to 5 January 1998 due to the currency crisis that affected its business operations. Linton submitted an establishment termination report to the Department of Labor and Employment (DOLE) regarding the temporary closure of the establishment covering the said period. The company’s operation was to resume on 6 January 1998. 

On 7 January 1998, Linton issued another memorandum informing them that effective 12 January 1998, wherein each worker would be working on a rotation basis for three working days only instead for six days a week. 

On the same day, Linton submitted an establishment termination report concerning the rotation of its workers. Linton proceeded with the implementation of the new policy without waiting for its approval by DOLE. 

Aggrieved, 68 workers filed a Complaint for illegal reduction of workdays with the NLRC on 17 July 1998. They pointed out that Linton implemented the reduction of work hours without observing Article 283 of the Labor Code, which required submission of notice thereof to DOLE one month prior to the implementation of reduction of personnel. 

Linton, on the other hand, contended that the devaluation of the peso created a negative impact in international trade and affected their business because a majority of their raw materials were imported thus, they suffered a net loss of P3,569,706.57 primarily due to currency devaluation and the slump in the market. Consequently, Linton decided to reduce the working days of its employees to three (3) days on a rotation basis as a cost-cutting measure. 

On 28 January 2000, the Labor Arbiter rendered a Decision finding petitioners guilty of illegal reduction of work hours and directing them to pay each of the workers. 

Petitioners appealed to the NLRC. The NLRC reversed the decision of the Labor Arbiter. The NLRC held that an employer has the prerogative to control all aspects of employment. The NLRC took judicial notice of the Asian currency crisis in 1997 and 1998 thus finding Linton’s decision to implement a compressed workweek as a valid exercise of management prerogative. Moreover, the NLRC ruled that Article 283 of the Labor Code, which requires an employer to submit a written notice to DOLE one (1) month prior to the closure or reduction of personnel, is not applicable to the instant case because no closure was undertaken and no reduction of employees was implemented by Linton. 

The workers then filed before the Court of Appeals a petition for certiorari under Rule 65 assailing the decision of the NLRC and its resolution that denied their Motion for Reconsideration. 

Issue: Whether or not Linton is guilty of illegal reduction of work hours

Held: Yes. Linton had failed to establish enough factual basis to justify the necessity of a reduced workweek and present adequate, credible and persuasive evidence that it was indeed suffering, or would imminently suffer, from drastic business losses. Linton’s financial statements for 1997-1998 showed no indication of financial losses, and the alleged loss of P3,645,422.00 in 1997 was considered insubstantial considering its total asset of P1 BILLION. 

Jurisprudence provides for the validity of the reduction of working hours, taking into consideration the ff: arrangement was temporary, it was a more humane solution instead of retrenchment of personnel, notice and consultations with workers, consensus on how to solve problems and sufficient proof that company was suffering a substantial loss. 

*Management prerogative must be exercised in good faith and with due regard to the rights of labor.

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