Respondent Roselle P. Almazar was employed by Abbott as the National Sales Manager of its PediaSure Division, while respondents Redel Ulysses M. Navarro and Manuel F. Torralba were Regional Sales Managers of the same department.
In November 2012, Abbott decided to integrate into one sales unit its Pediasure Division and its Medical Nutrition Division, both under the Specialty Nutrition Group. The decision was made after a 2013 Study revealed that both departments have similar business models and sales execution methods As a result of the merger, respondents’ positions were declared redundant.
Abbott subsequently informed both the Department of Labor and Employment (DOLE) and respondents of the latter’s termination effective March 2013 due to redundancy. The company then offered respondents the District Sales Manager positions, with a lower job rate with duties and responsibilities different from that of a National or Regional Sales Manager.
Respondents rejected the offer and signed their respective Deeds of Waiver, Release, and Quitclaim (Deeds) after receiving their separation pay and last pay.
On September 2013, respondents filed a complaint for illegal dismissal on the ground that Abbott allegedly did not observe the criteria of preference of status, efficiency, and seniority in determining who among its redundant employees are to be retained.
The Labor Arbiter ruled that the respondents were illegally dismissed. Accordingly, Abbott found wanting the evidence presented to establish that Abbott followed the required preference criteria of status, efficiency, and proficiency in determining who among the employees are going to be retained.
Meanwhile, the NLRC reversed the decision of the Labor Arbiter and ruled that the Deeds precluded them from claiming that they were illegally dismissed.
The Court of Appeals reinstated the decision of the Labor Arbtier. The appellate court noted that there was no valid redundancy program because Abbott failed to prove one of its requisites – that it used a fair and reasonable criteria in the selection of the employees who will be dismissed.
Issues:
- Whether the Court of Appeals erred in affirming the finding of the Labor Arbiter and the NLRC that the redundancy implemented by petitioners was invalid;
- Whether the Court of Appeals erred in reversing the NLRC’s finding that private respondents validly executed quitclaims after they were redundated;
- Whether the Court of Appeals erred in affirming the Labor Arbiter’s award of full backwages to private respondents; and
- Whether the Court of Appeals erred in affirming the Labor Arbiter’s award of damages to private respondents
Ruling:
The petition is denied.
No fair and reasonable criteria was utilized in determining who among the employees are to be redundated. Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirement of the enterprise. For a valid implementation of a redundancy program, the employer must comply with the following requisites: (1) written notice served on both the employee and the DOLE at least one month prior to the intended date of termination; (2) payment of separation pay equivalent to at least one month pay or at least one month pay for every year of service, whichever is higher; (3) good faith in abolishing the redundant position; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant.
As held in Golden Thread Knitting Industries, Inc. v. NLRC, in selecting the redundant employees to be dismissed, a fair and reasonable criteria must be used, such as but not limited to: (a) less preferred status, (b) efficiency, and (c) seniority.
The data presented in the 2013 Study, by itself, does not satisfy the evidentiary requirement to prove that respondents’ positions should be redundated. Absent substantial evidence tending to prove that the employees that would have been affected by the merger of these two departments were measured against specific criteria, the termination of the redundated employees cannot be sustained.
Bad faith was present in implementing the redundancy program and the consequence thereof. The Court has held that the employer’s subsequent act of hiring additional employees is inconsistent with the termination on the ground of redundancy. In this case, the fact that the affected employees were offered newly-created District Sales Manager positions was, to the Court, a mere subterfuge to circumvent respondents’ right to security of tenure.
The Deeds signed by the respondents could not be deemed valid as they were premised on an invalid termination. The quitclaims are deemed illegal as the employees’ consent had been vitiated by mistake or fraud. In the case of Philippine Carpet Manufacturing Corporation v. Tagyamon, the Court listed three specific instances wherein a waiver cannot estop a terminated employee from questioning the validity of his or her dismissal: (1) the employer used fraud or deceit in obtaining the waivers; (2) the consideration the employer paid is incredible and unreasonable; or (3) the terms of the waiver are contrary to law, public order, public policy, morals, or good customs or prejudicial to a third person with a right recognized by law.
Respondents are entitled to monetary awards. As upheld by the Court in previous cases, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement. But if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision.
