Labor Law >a) Definition >vi) Balancing of Interests: Constitution Art XIII Sec 3, pars 3-4

Hotel Enterprises of the Phils v SAMASAH G.R. No. 165756 !ne 5" #$$% Nach!ra" .

&acts'
Respondent nion is t!e certified co""ective bar#ainin# a#ent of t!e ran$-and-fi"e e%p"o&ees of '&att Re#enc&
(ani"a, a !ote" owned b& petitioner 'ote" )nterprises of t!e *!i"ippines, Inc+ ,')*I)+
')*I-s !ote" business suffered a s"u%p due to t!e "oca" and internationa" econo%ic s"owdown a##ravated b& t!e
events of ./00, t!us, cost-cuttin# %easures were i%p"e%ented
(eanw!i"e, t!e nion fi"ed a notice of stri$e due to a bar#ainin# dead"oc$+ In t!e course of t!e proceedin#s, ')*I
sub%itted econo%ic proposa"s for t!e ran$-and-fi"e e%p"o&ees w!ic! inc"uded %annin# and staffin# standards for
142 re#u"ar ran$-and-fi"e e%p"o&ees+ 3!e nion accepted t!e econo%ic proposa"s and a new co""ective
bar#ainin# a#ree%ent ,C4A) was si#ned+
Afterwards, ')*I issued a %e%o offerin# a vo"untar& resi#nation/retire%ent pro#ra% to its re#u"ar e%p"o&ees+
3!e vacant positions, as we"" as t!e re#u"ar positions vacated, were "ater fi""ed up wit! contractua" personne" and
a#enc& e%p"o&ees+
Subse5uent"&, petitioner decided to i%p"e%ent a downsi6in# sc!e%e and identified so%e positions as redundant7
t!e effect was to be a reduction of t!e ran$-and fi"e e%p"o&ees fro% 142 to 089+
3!e nion opposed t!e downsi6in# p"an+ Despite its opposition, a "ist of t!e positions dec"ared redundant and to
be contracted out was #iven b& t!e %ana#e%ent to t!e nion and notices of ter%ination were sent to 42
e%p"o&ees+
nion fi"ed a notice of stri$e based on unfair "abor practice ,L*) a#ainst ')*I and a stri$e vote was conducted
wit! %a:orit& in t!e bar#ainin# unit votin# in favor of t!e stri$e+ ')*I fi"ed a %otion to dis%iss notice of stri$e+
Subse5uent"&, t!e nion fi"ed a petition to suspend t!e effects of ter%ination before t!e ;ffice of t!e Secretar& of
Labor+ Later, !owever, t!e !ote" %ana#e%ent be#an i%p"e%entin# its downsi6in# p"an+ Conci"iation proceedin#s
were !e"d between petitioner and respondent, but to no avai"+ )ventua""&, respondent nion went on stri$e and a
petition to dec"are t!e stri$e i""e#a" was fi"ed b& petitioner+
Labor Arbiter ,LA) dec"ared t!e stri$e "e#a", but on appea", <LRC reversed t!e LA-s decision ,dec"ared t!e stri$e
i""e#a", suspended a"" nion officers for a period of = %os wit!out pa&, and dis%issed t!e L* c!ar#e a#ainst
')*I)+ nion-s (R was denied and t!e case was brou#!t up to t!e CA w!o reinstated LA-s decision+ 3!e CA a"so
ordered t!e reinstate%ent of t!e 42 ter%inated e%p"o&ees+ ')*I-s (R was denied, !ence t!is petition for review
on certiorari+

Iss!es(Hel)'
0+ >/< petitioner-s downsi6in# sc!e%e was va"id ? @)S
1+ >/< t!e i%p"e%entation of t!e downsi6in# sc!e%e prec"ude petitioner fro% avai"in# t!e services of contractua"
and a#enc&-!ired e%p"o&ees - <;
3+ >/< stri$e was done in #ood fait! - @)S

*etition was part"& #ranted+ 3!e downsi6in# sc!e%e i%p"e%ented b& petitioner is dec"ared a va"id eAercise of
%ana#e%ent prero#ative, !owever, t!e pena"t& of siA ,=) %ont!s suspension wit!out pa& i%posed upon t!e nion
officers b& <LRC was reduced+

Ratio'

B3!e Constitution affords fu"" protection to "abor, but t!e po"ic& is not to be b"ind"& fo""owed at t!e eApense of capita"+
A"wa&s, t!e interests of bot! sides %ust be ba"anced in "i#!t of t!e evidence adduced and t!e pecu"iar circu%stances
surroundin# eac! case+C

0+ 3!e downsi6in# sc!e%e i%p"e%ented b& petitioner is a va"id eAercise of %ana#e%ent prero#ative+ 3!e pertinent
provision of t!e Labor Code is Art 123D+ Retrench*ent an) re)!n)anc+, are vali) *anage*ent prerogatives"
provi)e) the+ are )one in goo) faith an) the e*plo+er faithf!ll+ co*plies -ith the s!.stantive an)
proce)!ral re/!ire*ents "aid down b& "aw and :urisprudence+ It is t!e e%p"o&er w!o bears t!e onus of provin#
co%p"iance wit! t!ese re5uire%ents, retrenc!%ent and redundanc& bein# in t!e nature of affir%ative defenses+ In
t!e case at bar, petitioner :ustifies t!e downsi6in# sc!e%e on t!e #round of serious business "osses it suffered+ It
bears e%p!asis t!at t!e financia" state%ents sub%itted b& petitioner were audited b& a reputab"e auditin# fir%
and are c"ear and substantia" enou#! to prove t!at t!e co%pan& was in a precarious financia" condition+

1+ As stated in Asian Alcohol Corporation v. NLRC, an e%p"o&er-s #ood fait! in i%p"e%entin# a redundanc& pro#ra%
is not necessari"& destro&ed b& avai"%ent of t!e services of an independent contractor to rep"ace t!e services of
t!e ter%inated e%p"o&eesE t!e reduction of t!e nu%ber of wor$ers in a co%pan& %ade necessar& b& t!e
introduction of t!e services of an independent contractor is 0!stifie) -hen the latter is !n)erta1en in or)er to
effect!ate *ore econo*ic an) efficient *etho)s of pro)!ction.

3+ A va"id and "e#a" stri$e %ust be based on Bstri$eab"eC #rounds, because if it is based on a Bnon-stri$eab"eC #round,
it is #enera""& dee%ed an i""e#a" stri$e+ Coro""ari"&, a stri$e #rounded on L* is i""e#a" if no acts constitutin# L*
actua""& eAist. As an eAception, even if no suc! acts are co%%itted b& t!e e%p"o&er, if t!e e%p"o&ees be"ieve in
#ood fait! t!at L* actua""& eAists, t!en t!e stri$e !e"d pursuant to suc! be"ief %a& be "e#a"+ As a #enera" ru"e,
t!erefore, -here a !nion .elieves that an e*plo+er co**itte) 23P an) the s!rro!n)ing circ!*stances
-arrante) s!ch .elief in goo) faith" the res!lting stri1e *a+ .e consi)ere) legal altho!gh" s!.se/!entl+"
s!ch allegations of !nfair la.or practices -ere fo!n) to .e gro!n)less+

'ere, respondent nion went on stri$e in t!e !onest be"ief t!at petitioner was co%%ittin# L* after t!e "atter
decided to downsi6e its wor$force contrar& to t!e staffin#/%annin# standards adopted b& bot! parties under a
C4A+++ 3!e be"ief was bo"stered w!en t!e %ana#e%ent !ired 099 contractua" wor$ers to rep"ace t!e 42
ter%inated re#u"ar ran$-and-fi"e e%p"o&ees w!o were a"" nion %e%bers+ Indeed, t!ose circu%stances s!owed
pri%a facie t!at t!e !ote" co%%itted L*+ 3!us, even if technicall+ there -as no legal gro!n) to stage a
stri1e .ase) on 23P Fpetitioner-s downsi6in# sc!e%e bein# va"id, and t!e avai"%ent of contractua" and a#enc&-
!ired e%p"o&ees bein# "e#a"G, since the atten)ant circ!*stances s!pport the .elief in goo) faith that
petitioner4s retrench*ent sche*e -as str!ct!re) to -ea1en the .argaining po-er of the 2nion" the stri1e"
.+ e5ception" *a+ .e consi)ere) legal. F4ecause of t!is, Court viewed t!e <LRC-s decision to suspend a"" t!e
nion officers for = %os wit!out pa& to be too !ars! a punis!%entG


,Notes'

AR6. #78. 3!e e%p"o&er %a& a"so ter%inate t!e e%p"o&%ent of an& e%p"o&ee due to t!e insta""ation of "abor-savin# devices,
redundanc&, retrenc!%ent to prevent "osses or t!e c"osin# or cessation of operation of t!e estab"is!%ent or underta$in# un"ess t!e
c"osin# is for t!e purpose of circu%ventin# t!e provisions of t!is 3it"e, b& servin# a written notice on t!e wor$er and t!e FDepart%entG of
Labor and )%p"o&%ent at "east one ,0) %ont! before t!e intended date t!ereof+ In case of ter%ination due to t!e insta""ation of "abor
savin# devices or redundanc&, t!e wor$er affected t!ereb& s!a"" be entit"ed to a separation pa& e5uiva"ent to at "east !is one ,0) %ont!
pa& or to at "east one ,0) %ont! pa& for ever& &ear of service, w!ic!ever is !i#!er+ In case of retrenc!%ent to prevent "osses and in
cases of c"osures or cessation of operations of estab"is!%ent or underta$in# not due to serious business "osses or financia" reverses,
t!e separation pa& s!a"" be e5uiva"ent to one ,0) %ont! pa& or at "east one-!a"f ,0/1) %ont! pa& for ever& &ear of service, w!ic!ever is
!i#!er+ A fraction of at "east siA ,=) %ont!s s!a"" be considered as one ,0) w!o"e &ear

Retrench*ent - reduction of wor$ personne" usua""& due to poor financia" returns, ai%ed to cut down costs for operation particu"ar"& on
sa"aries and wa#es+

Hor a va"id retrenchment, t!e fo""owin# re5uisites %ust be co%p"ied wit!:
,0) t!e retrenc!%ent is necessar& to prevent "osses and suc! "osses are proven7
,1) written notice to t!e e%p"o&ees and to t!e D;L) at "east one %ont! prior to t!e intended date of retrenc!%ent7 and
,3) pa&%ent of separation pa& e5uiva"ent to one-%ont! pa& or at "east one-!a"f %ont! pa& for ever& &ear of service, w!ic!ever is
!i#!er+

Re)!n)anc+ - eAists w!ere t!e nu%ber of e%p"o&ees is in eAcess of w!at is reasonab"& de%anded b& t!e actua" re5uire%ents of t!e
enterprise+

In case of redundancy, t!e e%p"o&er %ust prove t!at:
,0) a written notice was served on bot! t!e e%p"o&ees and t!e D;L) at "east one %ont! prior to t!e intended date of retrenc!%ent7
,1) separation pa& e5uiva"ent to at "east one %ont! pa& or at "east one %ont! pa& for ever& &ear of service, w!ic!ever is !i#!er, !as
been paid7
,3) #ood fait! in abo"is!in# t!e redundant positions7 and
,4) adoption of fair and reasonab"e criteria in ascertainin# w!ic! positions are to be dec"ared redundant and accordin#"& abo"is!ed+

Proce)!ral re/!isites for a vali) stri1e'

,a) a notice of stri$e fi"ed wit! t!e D;L) 39 da&s before t!e intended date t!ereof or 08 da&s in case of L*7
,b) a stri$e vote approved b& a %a:orit& of t!e tota" union %e%bers!ip in t!e bar#ainin# unit concerned obtained b& secret ba""ot in a
%eetin# ca""ed for t!at purpose7 and
,c) a notice to t!e D;L) of t!e resu"ts of t!e votin# at "east seven ,I) da&s before t!e intended stri$e+ 3!e re5uire%ents are %andator&
and fai"ure of a union to co%p"& t!erewit! renders t!e stri$e i""e#a"+