Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=82951:56840&catid=1582&Itemid=566
Timestamp: 2019-04-24 16:32:56+00:00

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G.R. No. 181719, April 21, 2014 - EUGENE S. ARABIT, EDGARDO C. SADSAD, LOWELL C. FUNTANOZ, GERARDO F. PUNZALAN, FREDDIE M. MENDOZA, EMILIO B. BELEN, VIOLETA C. DIUMANO AND MB FINANCE EMPLOYEES ASSOCIATION FFW CHAPTER (FEDERATION OF FREE WORKERS), Petitioners, v. JARDINE PACIFIC FINANCE, INC. (FORMERLY MB FINANCE), Respondent.
EUGENE S. ARABIT, EDGARDO C. SADSAD, LOWELL C. FUNTANOZ, GERARDO F. PUNZALAN, FREDDIE M. MENDOZA, EMILIO B. BELEN, VIOLETA C. DIUMANO AND MB FINANCE EMPLOYEES ASSOCIATION FFW CHAPTER (FEDERATION OF FREE WORKERS), Petitioners, v. JARDINE PACIFIC FINANCE, INC. (FORMERLY MB FINANCE), Respondent.
We resolve in this petition for review on certiorari1 the challenge to the March 23, 2007 decision2 and the February 11, 2008 resolution3 of the Court of Appeals (CA) in CA G.R. SP No. 91952. These assailed CA rulings annulled and set aside the December 1, 2004 decision4 and the July 21, 2005 resolution5 of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 029753–01 (NLRC NCR Case No. 06–06112–99). The NLRC rulings, in turn, fully affirmed the September 29, 2000 decision6 of Labor Arbiter (LA) Jovencio Ll. Mayor, Jr. The LA’s decision ordered the petitioners Eugene S. Arabit, Edgardo C. Sadsad, Lowell C. Funtanoz, Gerardo F. Punzalan, Freddie M. Mendoza, Emilio B. Belen and Violeta C. Diumano’s reinstatement to their former positions without loss of seniority rights and the payment of full backwages, computed from the time of their dismissal on May 30, 1999.
Petitioners were former regular employees of respondent Jardine Pacific Finance, Inc. (formerly MB Finance) (Jardine). The petitioners were also officers and members of MB Finance Employees Association–FFW Chapter (the Union), a legitimate labor union and the sole exclusive bargaining agent of the employees of Jardine. The table below shows the petitioners’ previously occupied positions, as well as their total length of service with Jardine before their dismissal from employment.
On the claim of financial losses, Jardine decided to reorganize and implement a redundancy program among its employees. The petitioners were among those affected by the redundancy program. Jardine thereafter hired contractual employees to undertake the functions these employees used to perform.
The Union filed a notice of strike with the National Conciliation and Mediation Board (NCMB), questioning the termination of employment of the petitioners who were also union officers. The Union alleged unfair labor practice on the part of Jardine, as well as discrimination in the dismissal of its officers and members.
On June 1, 1999, the petitioners and the Union filed a complaint against Jardine with the NLRC for illegal dismissal and unfair labor practice.
Before the LA, the parties decided to limit the issues to two, namely: (a) whether the separation of the petitioners was valid or not; and (b) whether Jardine committed an unfair labor practice against the Union.
On the petitioners’ allegation of unfair labor practice, the LA held that not enough evidence was presented to prove the claim against Jardine.
In its decision28 dated March 23, 2007, the CA reversed the LA’s and the NLRC’s rulings, and granted Jardine’s petition for certiorari.
The reduction of the number of workers in a company made necessary by the introduction of the services of Gemac Machineries in the maintenance and repair of its industrial machinery is justified. There can be no question as to the right of the company to contract the services of Gemac Machineries to replace the services rendered by the terminated mechanics with a view to effecting more economic and efficient methods of production.
In the same case, We ruled that “(t)he characterization of (petitioners’) services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of (private respondent) company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown” (ibid, p. 673).
These justifications led to the CA’s ruling which annulled and set aside the December 1, 2004 decision and the July 21, 2005 resolution of the NLRC and to its own ruling that the petitioners had not been illegally dismissed.
The CA denied the petitioners’ subsequent motion for reconsideration. The petitioners are now before this Court on a petition for review on certiorari under Rule 45 of the Rules of Court.
In their petition, the petitioners maintain that the CA gravely abused its discretion and that its ruling is not in conformity with the law and jurisprudence.
Finally, the petitioners also reiterate the findings of the LA and of the NLRC that Jardine’s act of hiring contractual employees as their replacements is contrary to Jardine’s claim that there was redundancy.42 They also contend that the hiring of new employees negates Jardine’s argument that it was suffering from substantial losses.43 Based on these premises, the petitioners posit that the CA erred in annulling and setting aside the NLRC’s decision, and pray instead for its reinstatement.
In this context, the primary question we confront is: did the CA correctly rule that the NLRC committed grave abuse of discretion when it found that Jardine validly terminated the petitioners’ employment because of redundancy?
Jardine, in its petition for certiorari with the CA, posited that the distinction between redundancy and retrenchment is not material.48 It contended that employers resort to these causes of dismissal for purely economic considerations.49 Jardine further argued that the immateriality of the distinction between these two just causes for dismissal is shown by the fact that redundancy and retrenchment are found and lumped together in just one single provision of the Labor Code (Article 283 thereof).
Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as over hiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term “lay–off.” It is the termination of employment initiated by the employer through no fault of the employee’s and without prejudice to the latter, resorted to by management during periods of business recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program or the introduction of new methods or more efficient machinery, or of automation. Simply put, it is an act of the employer of dismissing employees because of losses in the operation of a business, lack of work, and considerable reduction on the volume of his business, a right consistently recognized and affirmed by this Court.
These rulings appropriately clarify that redundancy does not need to be always triggered by a decline in the business. Primarily, employers resort to redundancy when the functions of an employee have already become superfluous or in excess of what the business requires. Thus, even if a business is doing well, an employer can still validly dismiss an employee from the service due to redundancy if that employee’s position has already become in excess of what the employer’s enterprise requires.
From this perspective, it is illogical for Jardine to terminate the petitioners’ employment and replace them with contractual employees. The replacement effectively belies Jardine’s claim that the petitioners’ positions were abolished due to superfluity. Redundancy could have been justified if the functions of the petitioners were transferred to other existing employees of the company.
This Court, in several cases, sufficiently explained that the employer must follow certain guidelines to dismiss employees due to redundancy. These guidelines aim to ensure that the dismissal is not implemented arbitrarily and is not tainted with bad faith against the dismissed employees.
As the petitioners pointed out, the records are bereft of indications that Jardine employed clear criteria when it decided who among its employees, who held similar positions as the petitioners, should be removed from their posts because of redundancy. Jardine never bothered to explain how and why the petitioners were the ones dismissed. Jardine’s acts became more suspect given that the petitioners were all union officers and some of them were panel members in the scheduled CBA negotiations between Jardine and the Union.
Admittedly, Jardine complied with guidelines 1 and 2 of the guidelines in Asian Alcohol. Jardine informed the Department of Labor and Employment of the petitioners’ separation from the service due to redundancy on April 30, 1999, one month before their termination’s effectivity. Also, the petitioners were given their individual separation packages, composed of their severance pay, plus their grossed up transportation allowance.
Guidelines 3 and 4 of Asian Alcohol, however, are different matters. These last two guidelines are interrelated to ensure good faith in abolishing redundant positions; the employer must clearly show that it used fair and reasonable criteria in ascertaining what positions are to be declared redundant.
In 1992, the lease contract, which also provided for a right of way leading to the site of the wells, was terminated. Also, the water from the wells had become salty due to extensive prawn farming nearby and could no longer be used by Asian Alcohol for its purpose. The wells had to be closed and needless to say, the services of Carias, Martinez and Sendon had to be terminated on the twin grounds of redundancy and retrenchment.
Jardine never undertook what the employer in Asian Alcohol did. Jardine was never able to explain in any of its pleadings why the petitioners’ positions were redundant. It never even attempted to discuss the attendant facts and circumstances that led to the conclusion that the petitioners’ positions had become superfluous and unnecessary to Jardine’s business requirements. Thus, we can only speculate on what actually happened.
To sum up, based on the guidelines set by the Court in the cases of Golden Thread and Asian Alcohol, we find that at two levels, Jardine failed to set the required fair and reasonable criteria in the termination of the petitioners’ employment, leading to the conclusion that the termination from the service was arbitrary and in bad faith.
The first level, based on Asian Alcohol, is broader as the case recognized distinctions on a per position basis. At this level, Jardine failed to explain why among all of the existing positions in its organization, Jardine chose the petitioners’ posts as the ones which have already become redundant and terminable.
The second level, derived from Golden Thread, is more specific. Here the distinction narrows down to the particular employees occupying the same positions which were already declared to be redundant. At this level, Jardine’s lapse is shown by its failure to explain why among all of its employees whose positions were determined to be redundant, the petitioners were the ones selected to be dismissed from the service.
Notably, the LA and the NLRC also arrived at the same conclusion that the redundancy program was not valid because Jardine hired contractual employees as replacements, thus, contradicting underlying reasons of redundancy. The CA significantly chose to disregard these coherent labor findings without fully justifying its move. At the very least, this was an indicator that something was wrong somewhere in these dismissals. It was clear legal error for the CA to recognize grave abuse of discretion when none occurred.
WHEREFORE, we hereby GRANT the petition. We REVERSE the decision dated March 23, 2007 and the resolution dated February 11, 2008 of the Court of Appeals in CA G.R. SP No. 91952, and uphold the decision dated December 1, 2004 and the resolution dated July 21, 2005 of the National Labor Relations Commission which affirmed in its entirety the September 29, 2000 decision of the Labor Arbiter.
Carpio, (Chairperson), Bersamin,* Perez, and Perlas–Bernabe, JJ., concur.
* In lieu of Associate Justice Mariano C. del Castillo per Raffle dated October 1, 2012.
2 Penned by Associate Justice Lucenito N. Tagle, and concurred in by Presiding Justice Ruben T. Reyes (now a retired member of this Court) and Associate Justice Amelita G. Tolentino; id. at 30–42.
32 G.R. No. 101539, September 4, 1992, 213 SCRA 652, 662; emphases ours, italics supplied.
38 364 Phil. 215 (1999).
44Career Philippines Shipmanagement, Inc. v. Serna, G.R. No. 172086, December 3, 2012, 686 SCRA 676, 683.
46Tongonan Holdings and Development Corporation v. Escaño, Jr., G.R. No. 190994, September 7, 2011, 657 SCRA 306, 314.
47Montoya v. Transmed Manila Corporation, supra note 46, 343; citation omitted, italics supplied.
50 Andrada v. National Labor Relations Commission, G.R. No. 173231, December 28, 2007, 565 SCRA 821, 842.
51 Id. at 842–843; emphases ours.
52 G.R. No. 115394, September 27, 1995, 248 SCRA 532, 542.
53 Rollo, p. 74; emphasis ours.
54Golden Thread Knitting Industries, Inc. v. NLRC, supra note 38, at 228.
57De Ocampo v. National Labor Relations Commission, supra note 32, at 662.
58Golden Thread Knitting Industries, Inc. v. NLRC, supra note 38, at 228.
61 364 Phil. 912 (1999).
62 Id. at 930; citations omitted, emphasis ours.
63 Id. at 931; emphases ours.

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