G.R. No. 189851 - Intec Cebu, Inc. vs. Court of Appeals

Petitioner: Intec Cebu Inc. (Intec), engaged in the manufacture and assembly of mechanical systems and printed circuit boards for cassette players, CD and CD ROM players.
Respondents: A group of employees hired between 1997 and 1998 as production workers, including Rowena Reyes, Rowena R. Odiong, Hydee P. Ayuda, Teresita C. Berido, Cristina S. Labapiz, Gemma T. Jumao-as, Sigmaringa B. Barolo, Ligaya B. Anadon, Donaline dela Torre, Joy P. Lomod, Jacqueline A. Flores, and several others.

In 2005, respondents reported a reduction in their working days from six days per week to between two and four days.
Respondents discovered that, in contrast, Intec had hired about 188 contractual employees to perform tasks similar to those of the complainants.
On May 17, 2006, respondents claimed they had effectively been terminated, supported by an Establishment Termination Report filed with the Department of Labor and Employment (DOLE).
Two days after the alleged termination, respondents filed a complaint for illegal dismissal.

Intec argued that the reduction of workdays was due to a lack of job orders.
The company explained that it originally supplied parts for Kenwood Precision Corporation until Kenwood ceased operations in the Philippines, prompting Intec to launch a new product line for Pentax Cebu Phils. Corporation.
A decline in job orders from Pentax in December 2005 led to a memorandum – dated January 4, 2006 – informing employees of the reduction to three to four workdays, with a further memorandum extending this scheme from April to June 2006.
Intec justified its decision by presenting financial statements for the years 2001–2006, highlighting a net loss in 2005 and a net income in 2006, and attributing some losses to acquisition costs.

Labor Arbiter Jermelina Pasignajen-Ay-Ad ruled on May 17, 2007, that respondents were illegally dismissed (i.e., constructively dismissed) and found Intec liable for separation pay and backwages, noting that casual employees were hired to replace the regular ones.
The National Labor Relations Commission (NLRC) later set aside the Labor Arbiter’s decision on December 14, 2007, finding that Intec had suffered tremendous financial losses which justified the reduction in working days and, therefore, awarded a lesser separation pay without backwages.
The Court of Appeals, in a decision dated April 22, 2009, reversed the NLRC’s decision and reinstated the Labor Arbiter’s ruling regarding the claim of constructive dismissal for the affected respondents.
Certain respondents (for failure to sign a particular verification) had their case dismissed.

Intec elevated the matter to the Supreme Court via a petition for certiorari under Rule 65 of the Rules of Court.
Intec alleged grave abuse of discretion by the Court of Appeals on several grounds, including:

Primarily, overturning its own resolution and giving deference to a motion for reconsideration without proper basis.
Disregarding factual findings by the NLRC that established the absence of actual or constructive dismissal.
Questioning the veracity of its financial statements by asserting they were self-serving and not prepared by an independent auditor.
Misapplication of the Jardine Davis doctrine limiting judicial review under Rule 65.
Errors in the computation of separation pay and backwages if reinstated by the appellate court.

The petitioner argued that its financial evidence corroborated that the reduction in workdays was a cost-cutting measure to forestall business losses and insisted that the employees had either resigned, abandoned their work, or voluntarily ceased reporting, thereby negating the claim of constructive dismissal.

Whether Intec’s unilateral reduction of employees’ working days, justified by its financial losses and operational adjustments, amounts to constructive dismissal.

Did the reduction of workdays, without proper notification to the DOLE prior to its implementation as later required by Department Advisory No. 2, 2009, render the employment termination illegal?
Whether the purchasing of additional contractual employees while reducing regular employees’ workdays is indicative of discriminatory practice amounting to constructive dismissal.

Whether the Court of Appeals and lower tribunals committed grave abuse of discretion in overturning previous decisions and in their evidentiary determinations.

Is the reversal of the NLRC’s decision and the subsequent reinstatement of the Labor Arbiter’s ruling justified under the established jurisprudence?
Whether Intec’s claims regarding its financial condition and cost-cutting measures were properly considered in the evaluation of the legality of the reduction of workdays.