FACTS: Another illegal dismissal case by the workers who were terminated due to massive retrenchment of the company to forestall serious business losses and/or closure of operations.
ISSUE: Under what circumstances does the employer become legally privileged to retrench and reduce the number of employees?
HELD: The following are general standards in terms of which the acts of employer must be appraised:
- The losses expected should be substantial and not merely de minimis in extent.
- The substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer.
- It must be reasonably necessary and likely to effectively prevent the expected losses.
- The alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proven by sufficient and convincing evidence.
To impart operational meaning to the constitutional policy of providing full protection to labor, the employer's prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means, e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc.
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