COATS
MANILA BAY, INC., G.R. No. 172628
Petitioner,
Present:
QUISUMBING,
J.,
Chairperson,
-
versus - CARPIO
MORALES,
TINGA,
VELASCO,
JR., and
BRION,
JJ.
PURITA
M. ORTEGA (represented
by
Alejandro San Pedro, Jr.) and
MARINA A. MONTERO, Promulgated:
Respondents.
February 13, 2009
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Tinga,
J.:
In this Petition for Review,[1]
Coats Manila Bay, Inc. (petitioner)
assails the decision[2]
of the Court of Appeals dated 25 January 2002 which ruled that respondents were
illegally dismissed by petitioner as the latter failed to substantiate its
claim that it observed fair and reasonable criteria in selecting employees for
dismissal as part of its redundancy program. The appellate court set
aside the decision and resolution of the National Labor Relations Commission
(NLRC) reversing the labor arbiter’s decision granting respondents’ complaints
for illegal dismissal.
The
facts are as follows:
Petitioner, a corporation registered under Philippine
laws, is primarily engaged in the business of thread production. Purita
M. Ortega and Marina A. Montero (respondents) were both employed by petitioner as
Clerk Analysts in the Industrial Engineering Department. Both were members of
Anglo-KMU Monthly Union (
On
As a result of
this redundancy program, 135 employees were terminated, including respondents.
They were advised on
On 8 June 2000, respondents filed a complaint for illegal dismissal,
backwages, reinstatement, vacation/sick leave, 13th month pay, moral
and exemplary damages, attorney’s fees, litigation expenses and CBA benefits
with the NLRC against petitioner and/or
its Chief Executive Officer Arsenio N. Tanco (Tanco).[9]
Respondents asserted in their position
paper that despite their dismissal due to redundancy, their functions were
assigned to other workers.[10]
They also claimed that they were constrained to sign the quitclaims and release
waivers due to their pressing need for the separation pay. They further alleged that as a result of
their termination they had suffered humiliation, wounded feelings, mental
anguish and thus prayed for exemplary and morals damages well as attorney’s
fees.
Petitioner and Tanco claimed that they had
the management prerogative to implement a redundancy program as per Article 283
of the Labor Code.[11]
They aver that both respondents were
notified that they would be subject to redundancy and that they never
objected thereto as shown by the execution of their respective
waivers/quitclaims.
On
WHEREFORE, premises
considered, the complainants are hereby declared illegally dismissed, and
respondent Coats Manila Bay, Inc. is thereby directed to reinstate them to
their former positions without loss of seniority rights and other benefits, to
pay their full backwages, including their 13th month pay, from the
time of their termination up to the time of their actual reinstatement, and to
pay each complainant 10% of the total
award as attorney’s fees.
Nevertheless, the
sums of money already paid by and received from the respondents by the
complainants when they were terminated from the service shall be deducted from
the total amount of their respective awards in this case, in the amount as
computed by the NLRC NCR Computation Unit.
All other claims
are dismissed for lack of merit.
SO ORDERED.[13]
On
Undaunted, respondents filed a petition for certiorari with the Court of Appeals. The Court of Appeals granted
their petition, reversed the decision of the NLRC and reinstated the decision
of the Labor Arbiter. The dispositive portion of the decision states:
WHEREFORE, the
petition, being meritorious is GRANTED. The decision of the NLRC dated January
21, 2004 and its Resolution dated March 30, 2005 in NLRC NCR CA No. 033967-03
(NLRC NCR Case No. 06-03132-2000) are hereby REVERSED and SET ASIDE. The
decision of the Labor Arbiter dated
SO ORDERED.
The Court of Appeals ratiocinated that the
record is bare of any evidence that fair and reasonable criteria in selecting
the respondents were used. Moreover, the
waivers and quitclaims executed by respondents did not negate their right to
pursue their claims, the appellate court stated.
In the instant petition, petitioner
asserts that the implementation of its
redundancy program was not discriminatory, and that it implemented reasonable criteria in selecting
employees to be retrenched. Moreover, the decision to dismiss respondents was
reached after consultations with the
Respondents filed their comment,[14]
asserting that petitioner
raised no substantial argument to warrant reconsideration.[15]
They contend that petitioner cannot
invoke redundancy since there was no showing that the functions of respondents are
duplicitous or superfluous. They also assert that petitioner failed to show
that it was suffering from a serious downturn in business that would warrant
redundancy given that such serious
business downturn was the cause given by petitioner in the termination letters
sent to respondents. They also assert that their educational attainment is
irrelevant since the compelling factor in their acceptance of separation pay
was the dire economic necessity to be caused by their impending loss of jobs.
The issues
posed before the Court may thus be simplified into two: (i) the propriety of the redundancy
program implemented by petitioner; and (ii) the validity of the waivers and
quitclaims executed by respondents.
The petition
is meritorious.
Propriety of redundancy program
For purposes of the Labor Code, redundancy
exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. Succinctly put, 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.[16]
That no other person was holding the same position prior to the termination of one’s
services, does not show that his position had not become redundant. Indeed, in any well-organized business
enterprise, it would be surprising to find duplication of work and two (2) or
more people doing the work of one person.[17]
Just like installation of labor-saving devices, the ground of redundancy does
not require the exhibition of proof of losses or imminent losses. In fact, of
all the statutory grounds provided in Article 283 of the Labor Code, it is only
retrenchment which requires proof of losses or possible losses as justification
for termination of employment.[18]
The
Court recognizes that a host of relevant factors comes into play in determining
cost-efficient saving measures and in choosing who among the employees should
be retained or separated. It is well settled that the characterization of an
employee’s services as no longer necessary or sustainable, and, therefore,
properly terminable, is an exercise of business judgment on the part of the
employer. However, the wisdom or soundness of such characterization
or decision is not subject to discretionary review provided, of course, that
violation of law or arbitrary or malicious action is not shown.[19]
In several instances, the Court has held
that it is important for a company
to have
fair and reasonable criteria in implementing its
redundancy program, such as but not limited to, (a) preferred status, (b)
efficiency and (c) seniority.[20]
\
We are satisfied that petitioner
employed reasonable criteria in choosing which positions to declare
redundant.
The Court notes that considerable
deliberations were made before the redundancy program was implemented. As early
as
Records also show that petitioner held a
labor-management meeting on
Marina Montero and Purita Ortega’s
positions are redundant. The same is
true with Robert Higado’s position. As
earlier mentioned, Management told the
x x x
On the case of Marina Montero, Mr.
Dequito suggested that Management accommodate M. Montero for one or two more
years since she is already retirable. Engr. Valle told the
Moreover, a review of the records shows
that respondents’ positions were abolished because there was duplicity of
functions of clerk analysts in the Industrial Engineering Section and finishing
production clerks in the Operations Department. Even the union representatives
agreed that respondents’ positions were redundant. Petitioner found that it was more
cost-efficient to maintain only one employee to handle the computation of
incentives of the production employees with the use of computers. [23]
Respondents, as well as the Court of
Appeals, insist that petitioner did not present a clear criteria in
implementing its redundancy program. We do not agree. Petitioner’s failure to exactly
state in the memorandum or in the termination notices that respondents do not enjoy a “preferred status,” or are not
“efficient” or do not possess “seniority,” cannot be equated with failure to
apply reasonable criteria. A simple
reading of the memorandum and the deliberations during the labor-management
meeting shows that the fate of the affected employees was deliberated upon and
decided with circumspection. The
totality of the actions of petitioner shows that the redundancy program was fair,
well-thought of, and made in good faith.
Neither is the claim of discrimination
well-founded. Respondents compare themselves to the other employees who were
included in the redundancy program and allegedly “reinstated” by petitioner.
Upon closer scrutiny, however, we find that said employees were indeed part of
the redundancy program but were taken back, upon the agreement between the
Moreover, of the remaining terminated
employees who were not re-employed, only respondents complained of illegal
dismissal and discrimination. It would
probably be a different matter had petitioner re-employed each and every
terminated employee, save for respondents.
Had such been the case, it would have been easy to infer that
respondents were singled out and discriminated against, and more
important, it would prove that there was no valid reason to
implement a redundancy program. But,
precisely, that is not the case here. Besides,
petitioner and the
Validity of Release Waiver and Quitclaim
The Court of
Appeals ruled that the release waivers and quitclaims had not negated
respondents’ right to pursue their claims, ratiocinating that:
What
appears is that petitioners by reason of dire economic necessity were
constrained to accept their separation
pay and signed the quitclaims. When
petitioners signed the quitclaims, they faced the impending threat of losing
their jobs after
The Court
disagrees. Not all quitclaims are per se
invalid or against policy, except: (1) where there is clear proof that the
waiver was wangled from an unsuspecting or gullible person; or (2) where the
terms of settlement are unconscionable on their face; in these cases, the law
will step in to annul the questionable transaction.[26] Indeed, there are legitimate waivers that
represent a voluntary and reasonable settlement of laborers’ claims which
should be respected by the Court as the law between the parties. Where the
person making the waiver has done so voluntarily, with a full understanding
thereof, and the consideration for the quitclaim is credible and reasonable,
the transaction must be recognized as being a valid and binding undertaking,[27]
and may not later be disowned simply because of a change of mind.[28]
In the case at
bar, the release waivers and quitclaims were executed by respondents without
any force or duress exerted on them. Respondents merely alleged that they voluntarily executed the
documents by reason of dire economic necessity.
“Dire necessity” may be an acceptable ground to annul quitclaims if the
consideration is unconscionably low and the employee was tricked into accepting
it,[29]
but is not an acceptable ground for annulling the
release when it is not shown that the employee has been forced to execute it.[30]
The
release documents embodied reasonable settlement of the parties’ claims. Respondents received hefty sums—Ortega
received P363,594.28 while
Montero got P348,975.97—the said amounts being what they are by law
entitled to receive,[31]
much higher than the separation pay they would have received had petitioner’s
hand been forced and a retrenchment
program initiated. Respondents were made
fully aware of the implications of release documents. They are not unlearned
nor gullible. They even wrote down in Filipino that they understood the terms
of the release document and attested that they have received all the benefits
due them.[32] There would have been no question on their
right to file their complaint had they not signed and executed the Release
Waiver and Quitclaim. In the absence of
any showing that they were forced or tricked into signing the release
documents, the Court cannot set aside the same merely because respondents had subsequently
changed their minds.
WHEREFORE, the petition is GRANTED. The Decision of the Court of
Appeals dated
SO ORDERED.
DANTE O. TINGA
Associate
Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CONCHITA CARPIO MORALES PRESBITERO J.
VELASCO, JR.
Associate Justice Associate
Justice
ARTURO
D. BRION
Associate
Justice
ATTESTATION
I
attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
LEONARDO
A. QUISUMBING
Associate Justice
Chairperson,
Second Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief Justice
[2]Justice Hakim S. Abdulwahid ponente, Justices Remedios A. Salazar-Fernando and Estele M. Perlas-Bernabe members, id. at 49-58.
[8]Purita
Ortega received P360,844.28 while
Marina Montero received P348,975.97. The amounts consisted of their retirement pay, AVLB, 13th month
pay and tax refund.
[17]Escareal v. National Labor Relations Commission, et al., G.R. No. 99359, September 2, l992, 213 SCRA 472, 485.
[18]Chan, Law on Labor Relations and Termination of Employment, Second Revised Edition, 2000, pp. 803, 804.
[28]Periquet v. NLRC, G.R. No. 91298,
[30]Magsalin v.
National Organization of Working Men, 451
Phil. 255 (2003).
[31]Under Art. 283 of the Labor Code, a worker terminated due to redundancy is entitled to a separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher.