G.R. No. 202454 - California Manufacturing Co., Inc. vs. Advanced Technology System, Inc.

Petitioner: Bataan Shipyard and Engineering Co., Inc. (BASECO), a duly organized corporate entity with its principal office in Port Area, Manila.
Respondents:

National Labor Relations Commission (NLRC) and its representatives, including Hon. Francisco Jose, Jr. and Hon. Vladimir P. L. Sampang, and Jose G. Cruz.
National Federation of Labor Unions (NAFLU), a labor organization registered with the Department of Labor and Employment.

Affected employees who were retrenched and later joined as individual complainants.

Prior to 1984, BASECO filed an application with the NLRC for the retrenchment of 285 employees, citing heavy losses incurred since the end of 1979.
During the retrenchment process, some employees who were on sick leave were already considered retrenched. All of these employees were identified as officers and members of NAFLU.
NAFLU opposed the application on behalf of the affected employees, and the individual complainants (the retrenched employees) joined the case.

In a Decision dated January 30, 1984, the Executive Labor Arbiter declared the retrenchment legal and valid, ordering BASECO to pay separation benefits to the affected employees.
The same Decision found that BASECO had discriminated against NAFLU members in the selection of employees for retrenchment, qualifying as an act of unfair labor practice.
As a penalty for this unfair labor practice, the Executive Labor Arbiter ordered the payment of six months’ backwages to each of the individual complainants.

BASECO appealed the ruling to the Third Division of the NLRC, challenging both the determination of unfair labor practice and the award of backwages, despite affirming the validity of the retrenchment.
On December 27, 1985, the Third Division of the NLRC affirmed the earlier Decision, emphasizing that BASECO could have explained the basis for the selection but did not provide sufficient justification for retrenching only NAFLU members.
On June 10, 1987, BASECO elevated the case to the Supreme Court by filing a Petition for certiorari, seeking annulment or modification of the NLRC Resolution and the ruling on unfair labor practice.

Argued that the retrenchment, being legal and valid, should not be simultaneously considered an act of unfair labor practice.
Contended that the finding of an unfair labor practice amounted to a grave abuse of discretion amounting to loss of jurisdiction on the part of the NLRC.

While acknowledging the legality of the retrenchment, stressed that the manner of its implementation must be free from discrimination and abuse of discretion.
Emphasized that the selection process was clearly discriminatory, as evidenced by the fact that only NAFLU members were retrenched, and that there were no objective guidelines (such as ability to perform work, physical fitness, age, disablement, job security, or financial hardship) employed in the decision-making process.

The NLRC and the Executive Labor Arbiter found substantial evidence that membership in NAFLU was the determining factor for retrenchment.
The absence of any systematic or transparent criteria in choosing which employees to retrench further supported the inference of discriminatory intent.
Relevant legal provisions, particularly Article 249 of the Labor Code, which prohibits interference with employees’ right to self-organization, were invoked to support the finding of unfair labor practice.

Whether a valid retrenchment can also constitute an act of unfair labor practice if its implementation is carried out in a discriminatory manner.
Whether the findings of the NLRC—specifically, that BASECO discriminated against NAFLU members in the retrenchment process—are supported by substantial evidence.
Whether BASECO’s failure to establish objective criteria or guidelines for selecting employees for retrenchment negates the legitimacy of the discrimination finding.
Whether the NLRC committed grave abuse of discretion amounting to loss of jurisdiction in finding BASECO guilty of an unfair labor practice despite the legal validity of the retrenchment.