ABC Corp. was a construction company. It faced severe economic headwinds when the 1997 Asian financial crisis hit. It had to make hard decisions. The company decided to cut costs across the board so that it can still finish its contracted projects on schedule. It was not enough.

The next thing they did was to reduce their workforce. ABC tried to comply with the law.

Pedro was one of the laid-off employees. He filed a case for illegal dismissal. Was he correct?

Let’s see if ABC complied with the check list.

1. Proof of losses – ✅ 1995 to 1997 financial statements were submitted
2. Written notice to DOLE of planned employment termination – ✅ ABC showed their submission to the DOLE
3. Payment of separation pay of 1 month or 1/2 month for every year of service, whichever is higher – ✅ Pedro refused the offer, but ABC showed that they offered Pedro the separation pay. The best way of doing this is to put it in writing, dated, and emailed and sent via LBC to the worker.
4. Good faith was shown ✅ ABC undertook several measures in cutting down its costs: withdrawing certain privileges of petitioner’s executives and expatriates; limiting the grant of additional monetary benefits to managerial employees and cutting down expenses; selling of company vehicles; and infusing fresh capital into the company. 
5. Fair and reasonable criteria – ✅ ABC’s criteria was worker efficiency. Pedro was found to have several administrative violations.

Shimizu Phils. Contractors, Inc. v. Callanta. G.R. No. 165923, September 29, 2010.