Republic of the Philippines

NATIONAL LABOR RELATIONS COMMISSION

National Capital Region

Quezon City

JAYSON S. MARCOS, NLRC-NCR CASE NO. 09-108231-18

Complainant,

-versus-

PHILIP MORRIS, INC.

Respondent,
x---------------------x

POSITION PAPER

RESPONDENT unto this Honorable Labor Arbitration Office most respectfully submits this
position paper and avers the following to wit:

PREFATORY STATEMENT

The Complainant in this case is JAYSON S. MARCOS, of legal age, single, with post office address
at 753 Quirino Highway San Bartolome Novaliches, Quezon City where he could be served with
summons and other legal processes of this Honorable Office.
The Respondent is PHILIP MORRIS, INC., a domestic company engaged in manufacturing and
selling of tobacco products, with business address at EU State Tower, 30 Quezon Ave. Quezon
City, where the said establishment and representative could be served with summons and
other legal processes of this Honorable Office.

STATEMENT OF FACTS

The Complainant was an employee, hired as a Sales Supervisor by the Respondent, Philip Morris,
Inc. on September 2010. From then on, he was assigned by the Respondent to its various clients
within Metro Manila area. Annex
The Complainant receives a monthly salary of P80,000.00 plus other benefits depending on his
sales quotas as shown in Annex “A“
For eight consecutive months the record as herein attached in Annex “B” showed that the
Complainant failed to meet sales target as set by the management.
On July 2013, due to the increase in excise tax and laws enacted to prohibit smoking, the demand
of tobacco went down. Annex “C”
“MGA COST CUTTING measures OF PM basta kay last resort na ang retrenchment”
The Respondent continued to suffer losses for three consecutive years as reflected in the Audited
Financial Statement submitted to BIR and SEC Annex “D” hence, the Respondent initiated a
retrenchment program to prevent further business losses.
On August 2017 the Respondent notified all of its employees of the criteria for retrenchment.
And on the following month, the Petitioner along with 6 other sales supervisor and the DOLE
received a notice of retrenchment effective after 30 days from the date of receipt. The
Respondent has given the retrenched employees of their separation pay as mandated by law. All
of the separated employees signed the Deeds of Release and Quitclaims in Philip Morris’ favor.
The Complainant felt that he was illegally dismissed hence, filed a case for illegal dismissal against
the employer.
On January 16 and 23, 2018, a mandatory conciliation and mediation conferences were held but
no settlement was reached. As a consequence, this Honorable Office issued an order directing
the parties to submit their respective position paper.
Hence, this position paper.

ISSUE
WHETHER OR NOT THE COMPLAINANT WAS ILLEGALLY DISMISSED
DISCUSSIONS

Article 283 of the Labor Code governs retrenchment to prevent losses, to wit:

The employer may also terminate the employment of any employee due to the installation of
labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and the
Ministry of Labor and Employment at least one (1) month before the intended date thereof. In
case of termination due to the installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay
or to at least one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay
for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year. (Emphasis supplied)

Thus, the requirements for retrenchment are: (1) it is undertaken to prevent losses, which are
not merely de minimis, but substantial, serious, actual, and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith by the employer; (2) the
employer serves written notice both to the employees and the DOLE at least one month prior to
the intended date of retrenchment; and (3) the employer pays the retrenched employees
separation pay equivalent to one month pay or at least ½ month pay for every year of service,
whichever is higher. The Court later added the requirements that the employer must use fair and
reasonable criteria in ascertaining who would be dismissed and who would be retained among
the employees and that the retrenchment must be undertaken in good faith. Except for the
written notice to the affected employees and the DOLE, non-compliance with any of these
requirements renders the retrenchment illegal. (ARIOLA V PHILEX MINING CORPORATION)

In the present case, “Philip Morris’ financial condition before and at the time of petitioners’
retrenchment justified respondent’ retrenchment. An independent auditor confirmed Philip
Morris’ claim of financial losses, finding that Philip Morris suffered an operational loss of
₱178,743,000 in 2014. This ballooned to ₱300,173,000 in 2015, beyond Philex’s projected loss of
₱200 million. Thus, Philex could ill afford to experiment with other cost-cutting measures before
resorting to retrenchment as the situation called for immediate and drastic action.

Philp Morris has employed First In Last Out method as one of the bases of who would be
dismissed as the management believed that the employees with much experience must be
retained. Jayson was the last sales supervisor hired by the Respondent before it incurred business
losses. The respondent likewise considered the performance of the employees. Based on records,
the complainant has repeatedly failed to meet its target sales quota. Philip Morris has not been
unreasonable nor selection of employees to be separated was arbitrary therefore, the
Complainant cannot claim that he was illegally dismissed.
Philip Morris also complied with the requirements in Article 283 to serve written notices of
retrenchment to petitioners and to the DOLE a month before the effective date of retrenchment
and to pay petitioners separation pay equivalent to one month pay for every year of service.