[ LABOR 2 | ATTY.
NOLASCO ] 1
6. Maya Farms Employees Org v. NLRC
G.R. No. 106256, December 28 1994
Ponente: Kapunan
Digest by: Bacina
TOPIC: Standards; Reasonable criteria
PARTIES:
Employer: Maya Farm
Union: Maya Farms Employees Org, Maya Realty and Livestock Supervisor Union,
Maya Farms Employees Assoc and Maya Farms Inc. Supervisory unions.
DOCTRINE:
LIFO (last in first out) provides that when there are two or more employees
occupying the same position in the company affected by the retrenchment
program, the last one employed will necessarily be the first to go. However,
management may still take into account the nature of the work and experience of
each EE as criteria.
RECIT-READY:
The companies enforced a retrenchment program due to losses. The
petitioner associations/unions argue that respondents committed a CBA
violation when it violated the LIFO rule in retaining an ASI who was
employed 5 yrs later than the other. Under the LIFO rule, when there are
two or more employees occupying the same position in the company
affected by the retrenchment program, the last one employed will
necessarily be the first to go. SC ruled that they used reasonable criteria-
the nature of work and experience. Such is not whimsical nor capricious.
FACTS:
 Respondents Mara Farms and Maya Realty and Livestock Corp belong to
the Liberty Flour Mills group of companies whose undertakings include the
operation of a meat processing plant.
 They adopted an early retirement program as a cost-cutting measure due
to major set-backs. There were only a few takers so it was converted into a
special redundancy program to reduce the work force to an optimum
number to make operations more viable. 69 EEs availed of the special
redundancy program.
 66 other EEs were also sent letters informing them that their positions had
been declared redundant and their services would be terminated 30 days
from its receipt. Separation and other benefits under the CBA were paid.
o Meat processing dept originally 3 sections, each with its own ASI:
(1) meat processing; (2) slaughterhouse; and (3) packing. Mgt
limited meat processing to sausages and so, only one ASI was
retained- Bandong.
o Slicer/seater operator. Debonner/skinner, ham and bacom
operatives were scrapped. Packers from 21 to 5 and egg
sorters/stockers from 10 to 4;
 Petitioners filed a notice of strike on the ground of ULP, violation of CBA
and discrimination. Conciliation failed.
 Then Acting/Now Secretary Confesor certified the case to NLRC for
compulsory arbitration upon petition by ERs. Petitioners argued that:
o The dismissal its union officers and members violated the CBA
provisions which required strict observation of the Last-In- First-
Out (LIFO) rule in cases of lay-off or retrenchment. In particular,
the company dismissed Cabrera (ASI for packing) who was
employed 5 years earlier than Bandong (ASI for meat
processing).
o Economic crises was fabricated because Liberty Flour Mills Group
generated 83m net income.
o Due to the special redundancy program, the remaining work force
was overworked and overburdened.
 NLRC confirmed the legality of their separation and ordered compliance
with notice of termination and payment of separation benefits. Hence,
present pet for review on certiorari.
ISSUE/S: Was there a violation of the LIFO rule?
HELD: No. The experience and nature of work of each ASI were taken into account
by management.
The companies have a prerogative to adopt redundancy/retrenchment programs to
minimize/avert losses.
• The basis for the action must be far from being whimsical and must be proven by
substantial evidence.
• The implementation must be in accordance with existing laws, rules, procedure
and CBA.
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 [ LABOR 2 | ATTY. NOLASCO ] 2

• As long as the company's exercise is in good faith to advance its interest and not
for the purpose of defeating or circumventing the rights of employees under the
laws or valid agreements, such exercise will be upheld.

It is true that the Liberty Flour Mills Group earned 83m. However, the meat and
livestock processing had 2m losses.

LIFO: This contemplates a situation where employees occupying the same position
in the company are to be affected by the retrenchment program. Since there
ought to be a reduction in the number of personnel in such positions, the length
of service of each employees is the determining factor, such that the employee
who has a longer period of employment will be retained.

Packers: The most senior packers were retained. Those employed after 1975 were
separated.
Egg sorters: Only those employed before 1972 were retained.
Drivers: Only the 2 most senior in terms of period of employment were retained.
ASIs: Bandong, as former meat proc asst superintendent, was already capable of
taking care of the operations of the other sections. The nature of work of each
assistant superintendent as well as experience were taken into account by
management. Such criteria was not shown to be whimsical nor carpricious.

There is nothing on record to show that the 30 day notice of termination was
disregarded.

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