G.R. No. 176908 - Cabaobas vs. Pepsi-Cola Products Philippines, Inc.

Petitioners: Purisimo M. Cabaobas, Exuperio C. Molina, Gilberto V. Opinion, Vicente R. Lauron, Ramon M. De Paz, Jr., Zacarias E. Carbo, Julito G. Abarracoso, Domingo B. Gloria, and Francisco P. Cumpio.
Respondent: Pepsi-Cola Products Philippines, Inc. (PCPPI), a domestic corporation engaged in the manufacturing, bottling, and distribution of soft drink products with operations nationwide, including the Tanauan Plant in Leyte.
The case involves a petition for review on certiorari under Rule 45, assailing the Court of Appeals (CA) Decision dated July 31, 2006, and its Resolution dated February 21, 2007, which had affirmed the NLRC’s consolidated ruling on PCPPI’s retrenchment program.

In 1999, the Tanauan Plant allegedly incurred business losses of P29,167,390.00.
To avert further losses, PCPPI implemented a company-wide retrenchment program known as the Corporate-wide Rightsizing Program (CRP) from 1999 to 2000.
On July 31, 1999, 47 employees at the Tanauan Plant were retrenched as part of this program.
Subsequently, on January 15, 2000, petitioners received notification of the cessation of their employment effective February 15, 2000 pursuant to the CRP.

On September 24, 1999, 27 employees (led by Anecito Molon and others) filed complaints for illegal dismissal before the NLRC in cases docketed as NLRC RAB Cases Nos. VIII-9-0432-99 to 9-0458-99 (“Molon, et al. v. PCPPI”).
In a separate set of cases, petitioners (regular and permanent employees) filed complaints for illegal dismissal before the NLRC Regional Arbitration Branch in Tacloban City (docketed as NLRC RAB VIII-03-0246-00 to 03-0259-00, “Kempis, et al. v. PCPPI”).
The petitioners alleged that the retrenchment was not necessitated by serious financial losses but was strategically implemented to preclude their union, Leyte Pepsi-Cola Employees Union-Associated Labor Union (LEPCEU-ALU), from becoming the certified bargaining agent.

The initial Labor Arbiter rendered a decision on December 15, 2000, finding the dismissal of ten complainants illegal, ordering their reinstatement with backwages.
The NLRC consolidated related cases and, on September 11, 2002, rendered a decision that:

The CA, in its decision rendered on July 31, 2006, denied the petition for certiorari filed by petitioners, thereby affirming the NLRC’s consolidated ruling.
Petitioners subsequently raised issues on errors of law in the CA decision, contending that:

The CA erred by ignoring the earlier decision of its Twentieth Division in “Pepsi-Cola Products Philippines, Inc. v. Molon” on identical factual and legal issues;
The CA failed to reverse the NLRC decision despite PCPPI’s failure to comply with requisites of a valid retrenchment; and
The CA improperly affirmed decisions declaring as legal an illegal dismissal.

PCPPI submitted audited financial statements and an SGV & Co. report showing substantial losses incurred at the Tanauan Plant.
Compliance with the retrenchment requisites was evidenced by:

The demonstrated serious financial losses;
Written notices served to both employees and the Department of Labor and Employment one month in advance;
Payment of separation pay evidenced by quitclaims signed by affected employees; and
The application of fair and reasonable criteria in selecting employees for retrenchment.

Allegations that the retrenchment was a union-busting ploy were refuted by the demonstration that the CRP was implemented on a company-wide basis and affected employees irrespective of their union affiliation.

Whether PCPPI’s retrenchment program (CRP) constitutes a valid exercise of management prerogative.
Whether the evidentiary basis—particularly the financial statements and SGV & Co. reports—sufficiently establishes that the retrenchment was necessary to avert substantial business losses.

Validity of the Dismissals in Light of Procedural and Substantive Requirements

Reasonable necessity due to substantial and real business losses;
Adequate notice to both employees and the Department of Labor and Employment; and
The payment of appropriate separation benefits.

Whether the dismissal of petitioners and their co-employees was executed in good faith and in accordance with principles of fairness and due process.

Whether the Court should adhere to the earlier decision in “Pepsi-Cola Products Philippines, Inc. v. Molon” given the identical factual and legal grounds involved in both cases.
Whether the CA erred in not reversing the NLRC decision, particularly when faced with petitioners’ allegations challenging the financial basis and motive behind the retrenchment.