G.R. No. 192394 - Pasos vs. Philippine National Construction Corp.

In April 1994, respondent Mitsubishi Motors Philippines Corporation (MMPC) hired petitioner Alfredo A. Mendros, Jr. as a regular body prepman; he was later promoted to assembler major in the company’s manufacturing division.
The company suffered severe financial setbacks due to a drastic slump in vehicle sales brought by the 1997 financial crisis in the country and other Asian economies.
MMPC’s audited financial statements recorded heavy losses of PhP 470 million in 1997 and PhP 771 million in 1998.

To mitigate its losses and continue operations, MMPC implemented various cost-cutting measures, which included:

Reduction in the use of office supplies and energy expenses.
Curtailment of representation and travel expenses.
A hiring freeze and the separation of casual employees and trainees.
Reduction in manpower services such as guards and janitorial services.
Intermittent plant shutdowns and a reduced work week for managerial and other monthly-salaried personnel.

In February 1998, MMPC conducted its first retrenchment program affecting around 531 hourly manufacturing employees. This initial step was later deemed insufficient to avert further business reversals.

In January 1999, petitioner Alfredo received a letter (dated December 19, 1998) informing him of a temporary suspension of his employment, inclusive of benefits.
The temporary lay-off was set for six months (from January 4, 1999, to July 2, 1999), amid continuous updates by MMPC regarding its deteriorating business condition.

On May 31, 1999, MMPC issued separate notices to Alfredo and other affected hourly employees, converting the temporary suspension into a permanent lay-off effective July 2, 1999, with retrenchment benefits.
The notice stated that the permanent lay-off was necessitated by a further drop in company sales and a decline in market share, though it did not include copies of the audited financial statements to substantiate the losses.
This permanent lay-off was the second retrenchment program for hourly employees in 1999 and the third overall since 1998.

In September 1999, Alfredo filed a case for illegal dismissal and damages before the NLRC’s Regional Arbitration Branch No. IV (NLRC Case No. RAB-IV-9-11454-99-R).
Labor Arbiter Enrico Portillo rendered a decision on February 27, 2001, dismissing Alfredo’s complaint and ruling in favor of MMPC.
Alfredo appealed the arbitrator’s decision to the NLRC, which on September 23, 2002, reversed the decision, set it aside, and ordered MMPC to reinstate Alfredo along with backwages and a 10% attorney’s fee.
MMPC sought further relief by filing a petition for certiorari with the Court of Appeals, which on November 18, 2004, entirely reversed the NLRC’s resolution and reinstated the Labor Arbiter’s decision.
Following the denial of MMPC’s motion for reconsideration by the CA, Alfredo filed the petition for review under Rule 45.

Whether petitioner Alfredo’s retrenchment was illegal or valid.
Whether the merit rating and ranking system used by MMPC forms an integral part of the selection criteria provided under the prevailing Collective Bargaining Agreement (CBA).
Whether MMPC can validly adopt additional criteria, such as a merit rating system, aside from the prescribed determinants of seniority and the “needs of the company.”
Whether MMPC was required to disclose to Alfredo his low merit rating and provide him with the audited financial statements (AFS) that substantiated the alleged business losses.
Whether the validity of Alfredo’s retrenchment can be upheld solely because previous retrenchments of his co-employees were deemed valid.

Whether the Court of Appeals correctly found that the NLRC committed grave abuse of discretion amounting to a lack or excess of jurisdiction when it reversed the Labor Arbiter’s decision and ordered reinstatement.