Republic of the Philippines

Supreme Court
Manila
THIRD DIVISION
CALTEX (PHILS.), INC. (now
CHEVRON PHILIPPINES, INC.),
Petitioner,

G.R. No. 159641

Present:

- versus -

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.

NATIONAL LABOR RELATIONS

COMMISSION AND
ROMEO T. STO. TOMAS,
Respondents.

Promulgated:
October 15, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
DECISION
AUSTRIA-MARTINEZ, J.:
Before us is a Petition for Review on Certiorari under Rule 45 filed by Caltex (Philippines) Inc., now
Chevron Philippines, Inc. (petitioner) seeking to annul and set aside the Decision[1] dated May 15, 2003, and the
Resolution[2] dated August 21, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 65405.
Romeo T. Sto Tomas (private respondent) was a regular employee of petitioner since February 2, 1984. He
was a Senior Accounting Analyst receiving a monthly salary of P29,860.00 at the time of his termination on July 31,
1997.
In a letter[3] dated October 21, 1996, petitioner informed the Department of Labor and Employment (DOLE) of
its plan to implement a redundancy program in its Marketing Division and some departments in
its Batangas Refinery for the period starting October 1996 to December 1998. The letter alleged that the redundancy
program is a response to the market situation which constrained petitioner to rationalize and simplify its business
processes; that petitioner undertook a review, restructuring and streamlining of its organization which resulted in
consolidation, abolition and outsourcing of certain functions and in the identification of certain redundant
positions. The letter also states that petitioner will provide the DOLE a list of affected employees as it implements
each phase of the redundancy program.
Petitioner, through a letter [4] dated June 30, 1997, notified private respondent of his termination effective July
31, 1997 due to the redundancy of his position and awarded him a separation package in the amount
of P559,458.90 consisting of the following:
Regular separation/retirement benefits
under the New Retirement Plan; and

P352,721.25

Ex-gratia payment computed at months

basic pay for every year of service
TOTAL

206,737.65
P559,458.90[5]

On June 8, 1998, respondent filed with the Labor Arbiter a complaint [6] for illegal dismissal against petitioner
and its President and Chief Executive Officer, Mr. Clifton Hon. Private respondent alleged that: being petitioners
regular employee, he is entitled to security of tenure; he did not commit any serious misconduct, willful
disobedience, gross and habitual neglect of duty or fraud and willful breach of trust to warrant the penalty of
dismissal from employment; there was no independent proof or evidence presented by petitioner to substantiate its
claim of redundancy nor was he afforded due process as he was not given any opportunity to present his side; he
was dismissed due to his active participation in union activities; petitioner opened positions for hiring some of which
offered jobs that are the same as what private respondent was performing; petitioner failed to give written notice to
him and DOLE at least one month before the intended date of termination as required by the Labor Code.
In its position paper, petitioner and Mr. Hon averred that private respondents dismissal from the service was
due to redundancy of his position which was determined after petitioners business process re-engineering study and
organization review, conducted with private respondents knowledge; that redundancy is an authorized cause to
terminate an employee which is a management prerogative and cannot be interfered with absent any abuse of
discretion; and that there is nothing in the law that requires petitioner to conduct impartial investigation or hearing to
terminate an employee due to redundancy.
On March 31, 1999, the Labor Arbiter (LA) rendered a decision [7] dismissing the complaint without prejudice
to the payment of private respondents separation pay as required by law or as granted by petitioner pursuant to
company practice whichever is higher.
The LA found that private respondent's dismissal from the service on the ground of redundancy was done in
good faith and a valid exercise of management prerogative; that redundancy did not deter the employer to hire
additional workers when it is deemed best for proper management; and that there is no need for petitioner to conduct
an impartial investigation or hearing since private respondents dismissal was not related to his blameworthy act or
omission. While the LA found that petitioner failed to give notice to DOLE one month before the intended date of
private respondents termination, the LA ruled that non-compliance with the procedural requirement will not per se
make the termination illegal and held that requirement of procedural process was not totally disregarded.
Respondent filed his appeal with the National Labor Relations Commission (NLRC) which in a
Decision[8] dated January 30, 2001, reversed the decision of the LA, the dispositive portion of which reads:
WHEREFORE, the decision of the Labor Arbiter is hereby VACATED and SET ASIDE
and judgment is hereby rendered:
1.

Declaring the dismissal of complainant to be without a just or authorized cause and, therefore,
illegal.

2.

Ordering respondent Caltex (Phils.) Inc. to reinstate the complainant to his former or substantially
equivalent position, without loss of seniority rights and other privileges and to pay complainant his
full backwages inclusive of allowance and other benefits computed from August 1, 1997 up to his
actual reinstatement. However, should complainants reinstatement be no longer feasible due to
some valid reasons, respondent Caltex (Phils.) Inc., is hereby ordered to pay complainant his
separation pay computed at one (1) month pay for every year of service, a fraction of at least six
(6) months to be considered as one (1) whole year. The separation pay shall be in addition to
complainants full backwages.
All other claims of complainant are hereby DISMISSED for lack of merit.[9]

In so ruling, the NLRC expounded that although Article 283 of the Labor Code authorizes termination due to
redundancy, there must be factual basis; that the records did not disclose any evidence to show basis
for respondents termination; that neither did petitioner send notice to DOLE one month prior to respondents
dismissal.
Petitioners Motion for Reconsideration was denied in a Resolution[10] dated March 27, 2001.
Petitioner filed with the CA a Petition for Certiorari alleging grave abuse of discretion committed by the
NLRC in finding respondents termination illegal.
In a Decision dated May 15, 2003, the CA denied the petition. The CA ruled that there was no reason to
deviate from the findings of the NLRC since the pieces of evidence presented by petitioner are not only insufficient
but also baseless and self-serving; that petitioners main argument that private respondents dismissal on the ground
of redundancy was only resorted to after a conduct of thorough business process reengineering study and research is
nothing but a bare assertion; that nowhere in the records can it be found that there was indeed a study conducted by
petitioner which culminated in the abolition and consolidation of certain positions in the office; that neither was
there any proof that petitioner truly had a concrete redundancy program that is reflective of any financial loss or
possible and obtainable substantial profits in case the program is implemented nor were there any named factors
considered by the petitioner in undertaking the reduction program; that what petitioner presented was merely a copy
of its letter to the DOLE informing the latter of its intention to implement a redundancy program and nothing more;
and that petitioner failed to apply the criteria in effecting private respondents dismissal due to redundancy as there
was no showing that it underwent painstaking selection from among its employees to be dismissed.
The CA further found that petitioner failed to send DOLE a written notice of its implementation of the
redundancy program one month prior to the intended date thereof since petitioner had admitted such failure in its
Answer to respondents appeal to the NLRC.
The CA likewise found that petitioners belated submission to the CA of the letter dated June 30, 1997
purportedly notifying DOLE of the plan to implement a redundancy program is dubious because of petitioners
earlier admission that it did not send DOLE a written notice of termination; that petitioner should have submitted the
evidence at the earliest opportunity; and that the letter was self-serving since it did not bear any proof of receipt by
the DOLE.
The CA denied petitioners Motion for Reconsideration in a Resolution dated August 21, 2003.
Hence, herein petition filed by petitioner on the following grounds:
THE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF ITS JURISDICTION WHEN
IT ISSUED THE DECISION DATED MAY 15, 2003 AND THE RESOLUTION DATED
AUGUST 21, 2003 AFFIRMING THE ORDERS DATED JANUARY 30, 2001 AND MARCH
27, 2001 OF THE RESPONDENT NLRC CONSIDERING THAT THEY ARE NOT
SUPPORTED BY SUBSTANTIAL EVIDENCE.
THE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT
AFFIRMED THE FINDING OF THE RESPONDENT NLRC THAT THE DISMISSAL OF THE
PRIVATE RESPONDENT WAS WITHOUT JUST AND AUTHORIZED CAUSE.
THE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF ITS JURISDICTION WHEN
IT AFFIRMED THE FINDING OF THE RESPONDENT NLRC DIRECTING THE
REINSTATEMENT OF THE PRIVATE RESPONDENT AND THE PAYMENT OF HIS
BACKWAGES COMPUTED FROM AUGUST 1, 1997.[11]
Petitioner insists that it had already informed the DOLE Secretary through a letter-notice dated October 21,
1996 of its plan to implement a redundancy program which was received on October 24, 1996; that the CA ignored

such earlier notice and concentrated on its alleged failure to send notice one month prior to private respondents
termination; that the June 30, 1997 notice to DOLE was belatedly submitted since it was not easily located; that the
belated submission should not be taken against petitioner; that the subsequent notice to the DOLE was only a follow
up to the earlier notice dated October 21, 1996; and that there was substantial compliance with the notice
requirement of the Labor Code for a valid redundancy program.
Petitioner further argues that private respondents termination due to redundancy is valid considering that he
consented to his termination by accepting and benefiting from the package given by petitioner in the total amount
of P559,458.90; that his separation package is equivalent to 1.39 months basic pay for every year of service, way
above the minimum separation pay required by law; that if private respondents termination is indeed illegal and that
he should be reinstated with full backwages, he should be ordered to pay back petitioner the benefits he received on
account of its redundancy program as he unjustly enriched himself in the amount of P206,737.65 representing exgratia benefit paid only to terminated employees on account of the redundancy program.
Petitioner further claims that private respondent was not retrenched but dismissed on account of petitioners
redundancy program, thus, the finding that petitioner was not able to provide proof that it truly had an extensive
engineering study on account of business losses arising out of massive oil deregulation is misplaced; that
retrenchment and redundancy are two different authorized causes terminating employment relationship and the
elements of one do not apply to the other; that its right to terminate respondents employment is embodied under
Article 283 of the Labor Code which required employers to give notice of redundancy to the worker and the DOLE
one month before the intended date of actual termination; that the twin notice requirement is the only condition
precedent mandated by law before any valid redundancy may be effected which petitioner had duly complied with;
that termination due to redundancy is a valid exercise of management prerogative which courts ordinarily hesitate to
interfere with unless the act is marked with bad faith.
The issues for resolution are (1) whether private respondents termination on the ground of redundancy was
valid, and (2) whether petitioner gave a written notice to DOLE as required under Article 283 of the Labor Code.
Under Rule 45 of the Rules of Court, only questions of law may be raised in this Court. However, factual
issues may be considered and resolved when the findings of facts and the conclusions of the Labor Arbiter are
inconsistent with those of the NLRC and the CA,[12] as obtaining in the present case.
The CA correctly dismissed herein petitioners petition for certiorari. The NLRC did not commit grave abuse
of discretion in finding that respondent was illegally dismissed.
Private respondent was dismissed by petitioner on the ground of redundancy, one of the authorized causes for
dismissal under Article 283 of the Labor Code, to wit:
Article 283.
Closure of establishment and reduction of personnel.- The employer may
also terminate the employment of any employee due to the installment of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the provisions
of this Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of termination
due to the installation of labor saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month
pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not due to serious
business losses or reverses, the separation pay shall be equivalent to one (1) month pay or at least
one half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six
(6) months shall be considered one (1) whole year (emphasis supplied).
In Becton Dickinson Phils., Inc. v. National Labor Relations Commission,[13] citing the leading case, Wiltshire
File Co., Inc. v. National Labor Relations Commission,[14] we explained the nature of redundancy as an authorized
cause for dismissal in the following manner:

x x x redundancy in an employers personnel force necessarily or even ordinarily refers to

duplication of work. That no other person was holding the same position that private respondent
held prior to the termination of his 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. We believe that
redundancy, for purposes of the Labor Code, 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 overhiring of workers, decrease in volume of
business, or dropping of a particular product line or service activity previously manufactured or
undertaken by the enterprise.[15]
We are mindful of the rule that the characterization of an employees services as no longer necessary or
sustainable, and therefore, properly terminable, is an exercise of business judgment on the part of the employer, and
that the wisdom or soundness of such characterization or decision is not subject to discretionary review. However,
such characterization may be rejected if the same is found to be in violation of law or is arbitrary or malicious. [16]
We have held that the employer must comply with the following requisites to ensure the validity of the
implementation of a redundancy program: 1) a written notice served on both the employees and the Department of
Labor and Employment (DOLE) at least one month prior to the intended date of retrenchment; 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 positions; and 4) fair and reasonable criteria in ascertaining what
positions are to be declared redundant and accordingly abolished.[17]
In Asufrin, Jr. v. San Miguel Corporation,[18] we ruled that it is not enough for a company to merely declare
that it has become overmanned. It must produce adequate proof of such redundancy to justify the dismissal of the
affected employees.
In Panlilio v. National Labor Relations Commission,[19] we held that evidence must be presented to
substantiate redundancy such as but not limited to the new staffing pattern, feasibility studies/proposal, on the
viability of the newly created positions, job description and the approval by the management of the restructuring.
In the instant case, we find no reversible error committed by the CA in upholding the findings of the NLRC
that there was no substantial evidence presented by petitioner to justify private respondent's dismissal due to
redundancy. As correctly found by the CA, petitioners evidence to show redundancy merely consisted of a copy of
petitioners letter to the DOLE informing the latter of its intention to implement a redundancy program and nothing
more. The letter which merely stated that petitioner undertook a review, restructuring and streamlining of its
organization which resulted in consolidation, abolition and outsourcing of certain functions; and which resulted in
identified and redundant positions instead of simplifying its business process restructuring, does not satisfy the
requirement of substantial evidence, that is, the amount of evidence which a reasonable mind might accept as
adequate to justify a conclusion.[20]
Petitioner failed to demonstrate the superfluity of private respondents position as there was nothing in the
records that would establish any concrete and real factors recognized by law and relevant jurisprudence, [21] such
as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise, which were adopted by petitioner in implementing the
redundancy program.
Petitioner also failed to show any fair and reasonable criteria in ascertaining what positions are redundant and
how the selection of employees to be dismissed was made.
In Capitol Wireless, Inc. v. Confesor,[22] we have held that in selecting the employee to be dismissed, fair and
reasonable criteria must be used such as but not limited to (a) less preferred status, e.g. temporary employee; (b)

efficiency; and (c) seniority. No such appraisal was done in the present case. The absence of criteria in the selection
of an employee to be dismissed renders the dismissal arbitrary.
Moreover, petitioner failed to refute private respondents assertion that it opened positions of accountants for
hiring to which he could have qualified rather than be dismissed. In petitioners Memorandum dated May 28,
1997[23] and July 4, 1997,[24] it declared vacant the positions of Terminal Accountant and Internal Auditor,
respectively, the minimum requirements of which are being accountants and having 4-5 years experience in handling
accounting and supervisory functions, among others. There is no showing that private respondent could not perform
the functions demanded of the vacant positions considering his experience as petitioners Senior Accounting Analyst
for 13 years and to which he could be transferred instead of being dismissed. We find such hiring of accountants
inconsistent with respondents termination due to redundancy.
In fact, petitioner expressly stated in its Answer to private respondents Appeal Memorandum filed with the
NLRC that it may still hire additional employees so long as it is not for the position previously declared and
determined to be redundant.[25]
As we ruled, redundancy exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirement of the enterprise.[26] It is the burden of petitioner, as employer, to prove the
factual and legal basis for the dismissal of its employees on the ground of redundancy.[27]
The CA committed no reversible error when it found that petitioner failed to discharge the burden of proving
respondents dismissal as valid.
There is merit in petitioners claim that the CAs finding that it (petitioner) failed to provide proof that it truly
had an extensive reengineering study on account of business losses arising out of massive oil deregulation is
misplaced considering that Article 283 of the Labor Code does not require that the employer should be suffering
financial losses before he can terminate the services of the employee on the ground of redundancy. [28] Nevertheless,
the CA finding on this matter does not detract from the fact that petitioner failed to show proof of fair and reasonable
criteria for the implementation of a valid redundancy program. Thus, whether it is retrenchment or redundancy, or
any of the other authorized causes, no employee may be dismissed without observance of the fundamentals of fair
play.[29]
Petitioner committed a fatal error when it failed to give a written notice to DOLE as required under Article 283
of the Labor Code. All three, the LA, NLRC and the CA, found the absence of notice sent by petitioner to DOLE
one month before the intended date of private respondents termination. While petitioner claims that it sent a notice
to the DOLE through a letter dated June 30, 1997, petitioner failed to show that the same was actually received by
DOLE. The purpose of the written notice to the DOLE is to give it the opportunity to ascertain the verity of the
alleged authorized cause of termination.[30]
Petitioners insistence that its written notice of redundancy program per its October 1996 letter addressed to
DOLE is a substantial compliance with the notice requirement, is not persuasive since the said letter merely stated
its plan of implementing a redundancy program but did not contain the details necessary to effect the program such
as the reason for finding certain portions as redundant, the name of the employees to be terminated and the actual
date of termination. In fact, petitioner in its October letter wrote that it would provide DOLE with a list of affected
employees as it implements each phase of the redundancy program which it failed to do.
Petitioners failure to show an authorized cause for private respondents termination is sufficient to declare the
dismissal illegal.
Petitioners claim that private respondent consented to his termination by accepting his separation pay
deserves scant consideration. Private respondent had no other recourse but to accept his separation pay since
petitioners letter made it clear that his position had been determined to be redundant and his services shall be
terminated effective July 31, 1997. As private respondent was dismissed allegedly due to redundancy, he is entitled
to separation pay under Article 283 of the Labor Code. And since there was no extra consideration for the private
respondent to give up his employment, such undertaking cannot be allowed to bar the action for illegal dismissal. [31]

Petitioner asserts that private respondents reinstatement is no longer possible since his former position was
already abolished when it was declared redundant. Notably, this matter was only raised for the first time in
petitioners motion for reconsideration[32] of the assailed CA decision dated May 15, 2003. Private respondent, in his
comment[33] to the motion, contends that petitioners claim is doubtful considering that the establishment where he is
to be reinstated has not ceased operation or closed. The CA disregarded the claim of petitioner that private
respondents reinstatement is no longer possible and denied the motion for reconsideration finding no cogent reason
to reconsider its earlier decision.
The issue of whether private respondents reinstatement to his former or substantially equivalent position is
no longer possible, is a factual matter which is not a proper subject of the present petition for review
on certiorari since we are not a trier of facts. The parties conflicting claims on this matter can be best determined
by the Labor Arbiter upon the execution of the judgment after our Decision shall have become final and executory.
Finally, we find merit in petitioners claim that private respondent should return the amount of P206,737.65
representing ex-gratia benefit paid only to terminated employees on account of the redundancy program. While we
note that this matter is raised only for the first time, we have ample authority to review and resolve it if we find the
consideration and determination of the same essential and indispensable in order [34] to arrive at a just decision in the
case. The ex-gratia benefit should be returned following the principle against unjust enrichment which is held
applicable in labor cases.[35]
WHEREFORE, the petition is DENIED. The Decision dated May 15, 2003 and the Resolution dated August
21, 2003 of the Court of Appeals in CA-G.R. SP No. 65405 are AFFIRMED. However, in the higher interest of
justice, private respondent is ordered to return the amount of P206,737.65, representing the ex-gratia benefit paid to
him by petitioner.
No costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 181738

January 30, 2013

GENERAL MILLING CORPORATION, Petitioner,

vs.
VIOLETA L. VIAJAR, Respondent.
DECISION
REYES, J.:
This is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Court filed by petitioner General
Milling Corporation (GMC), asking the Court to set aside the Decision 2 dated September 21, 2007 and the
Resolution3dated January 30, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 01734; and to
reinstate the Decision4dated October 28, 2005 and Resolution5 dated January 31, 2006 of the National
Labor Relations Commission (NLRC) in NLRC Case No. V-000416-05.
The antecedent facts are as follows:
GMC is a domestic corporation with principal office in Makati City and a manufacturing plant in Lapu-Lapu
City.
In October 2003, GMC terminated the services of thirteen (13) employees for redundancy, including
herein respondent, Violeta Viajar (Viajar). GMC alleged that it has been gradually downsizing its Vismin
(Visayas-Mindanao) Operations in Cebu where a sizeable number of positions became redundant over a
period of time.6
On December 2, 2003, Viajar filed a Complaint7 for Illegal Dismissal with damages against GMC, its
Human Resource Department (HRD) Manager, Johnny T. Almocera (Almocera), and Purchasing
Manager, Joel Paulino before the Regional Arbitration Branch (RAB) No. VII, NLRC, Cebu City.
In her Position Paper,8 Viajar alleged that she was employed by GMC on August 6, 1979 as Invoicing
Clerk. Through the years, the respondent held various positions in the company until she became
Purchasing Staff.
On October 30, 2003, Viajar received a Letter-Memorandum dated October 27, 2003 from GMC, through
Almocera, informing her that her services were no longer needed, effective November 30, 2003 because
her position as Purchasing Staff at the Purchasing Group, Cebu Operations was deemed redundant.
Immediately thereafter, the respondent consulted her immediate superior at that time, Thaddeus Oyas,
who told her that he too was shocked upon learning about it. 9
When Viajar reported for work on October 31, 2003, almost a month before the effectivity of her
severance from the company, the guard on duty barred her from entering GMCs premises. She was also
denied access to her office computer and was restricted from punching her daily time record in the bundy
clock.10
On November 7, 2003, Viajar was invited to the HRD Cebu Office where she was asked to sign certain
documents, which turned out to be an "Application for Retirement and Benefits." The respondent refused

to sign and sought clarification because she did not apply for retirement and instead asserted that her
services were terminated for alleged redundancy. Almocera told her that her signature on the Application
for Retirement and Benefits was needed to process her separation pay. The respondent also claimed that
between the period of July 4, 2003 and October 13, 2003, GMC hired fifteen (15) new employees which
aroused her suspicion that her dismissal was not necessary.11 At the time of her termination, the
respondent was receiving the salary rate ofP19,651.41 per month.12
For its part, the petitioner insisted that Viajars dismissal was due to the redundancy of her position. GMC
reasoned out that it was forced to terminate the services of the respondent because of the economic
setbacks the company was suffering which affected the companys profitability, and the continuing rise of
its operating and interest expenditures. Redundancy was part of the petitioners concrete and actual cost
reduction measures. GMC also presented the required "Establishment Termination Report" which it filed
before the Department of Labor and Employment (DOLE) on October 28, 2003, involving thirteen (13) of
its employees, including Viajar. Subsequently, GMC issued to the respondent two (2) checks respectively
amounting to P440,253.02 andP21,211.35 as her separation pay.13
On April 18, 2005, the Labor Arbiter (LA) of the NLRC RAB No. VII, Cebu City, rendered a Decision, the
decretal portion of which reads:
WHEREFORE, foregoing considered, judgment is hereby rendered declaring that respondents acted in
good faith in terminating the complainant from the service due to redundancy of works, thus,
complainants refusal to accept the payment of her allowed separation pay and other benefits under the
law is NOT JUSTIFIED both in fact and law, and so, therefore complainants case for illegal dismissal
against the herein respondents and so are complainants monetary claims are hereby ordered
DISMISSED for lack of merit.
SO ORDERED.14
The LA found that the respondent was properly notified on October 30, 2003 through a LetterMemorandum dated October 27, 2003, signed by GMCs HRD Manager Almocera, that her position as
Purchasing Staff had been declared redundant. It also found that the petitioner submitted to the DOLE on
October 28, 2003 the "Establishment Termination Report." The LA even faulted the respondent for not
questioning the companys action before the DOLE Regional Office, Region VII, Cebu City so as to
compel the petitioner to prove that Viajars position was indeed redundant. It ruled that the petitioner
complied with the requirements under Article 283 of the Labor Code, considering that the nation was then
experiencing an economic downturn and that GMC must adopt measures for its survival. 15
Viajar appealed the aforesaid decision to the NLRC. On October 28, 2005, the NLRC promulgated its
decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the Decision of the Labor Arbiter declaring the validity of
complainants termination due to redundancy is hereby AFFIRMED. Respondent General Milling
Corporation is hereby ordered to pay complainants separation pay in the amount of P461,464.37.
SO ORDERED.16
The NLRC, however, stated that it did not agree with the LA that Viajar should be faulted for failing to
question the petitioners declaration of redundancy before the DOLE Regional Office, Region VII, Cebu
City. It was not imperative for Viajar to challenge the validity of her termination due to
redundancy.17 Notwithstanding, the NLRC affirmed the findings of the LA that Viajars dismissal was legal
considering that GMC complied with the requirements provided for under Article 283 of the Labor Code
and existing jurisprudence, particularly citing Asian Alcohol Corporation v. NLRC. 18 The NLRC further
stated that Viajar was aware of GMCs "reduction mode," as shown in the GMC Vismin Manpower
Complement, as follows:

No. of Employees
Terminated (Redundancy)

Year

Manpower Profile

2000

795

2001

782

2002

736

41

2003

721

24

2004

697

16

2005

696 (As of June 2005)

0619

The NLRC stated that the characterization of positions as redundant is an exercise of the employers
business judgment and prerogative. It also ruled that the petitioner did not exercise this prerogative in bad
faith and that the payment of separation pay in the amount of P461,464.37 was in compliance with Article
283 of the Labor Code.20
Respondent Viajar filed a Motion for Reconsideration which was denied by the NLRC in its Resolution
dated January 31, 2006.
Undaunted, Viajar filed a petition for certiorari before the CA. In the now assailed Decision dated
September 21, 2007, the CA granted the petition, reversing the decision of the NLRC in the following
manner:
WHEREFORE, premises considered, this Petition for Certiorari is GRANTED. The Decision, dated 28
October 2005, and Resolution, dated 31 January 2006 respectively, of public respondent National Labor
Relations Commission-Fourth Division, Cebu City, in NLRC Case No. V-000416-05 (RAB VII-12-2495-03)
are SET ASIDE. A new judgment is entered DECLARING the dismissal ILLEGAL and ordering respondent
to reinstate petitioner without loss of seniority rights and other privileges with full backwages inclusive of
allowances and other benefits computed from the time she was dismissed on 30 November 2003 up to
the date of actual reinstatement. Further, moral and exemplary damages, in the amount of Fifty Thousand
Pesos ([P]50,000.00) each; and attorneys fees equivalent to ten percent (10%) of the total monetary
award, are awarded.
Costs against respondent.
SO ORDERED.21
Aggrieved by the reversal of the NLRC decision, GMC filed a motion for reconsideration. However, in its
Resolution dated January 30, 2008, the CA denied the same; hence, this petition.
The petitioner raises the following issues, to wit:
I. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF JANUARY 30, 2008
OF THE COURT OF APPEALS ARE CONTRARY TO LAW AND ESTABLISHED
JURISPRUDENCE.
II. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF JANUARY 30, 2008
OF THE COURT OF APPEALS VIOLATE THE LAW AND ESTABLISHED JURISPRUDENCE ON
THE OBSERVANCE OF RESPECT AND FINALITY TO FACTUAL FINDINGS OF THE
NATIONAL LABOR RELATIONS COMMISSION.

III. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN ITS

DECISION OF SEPTEMBER 21, 2007 AND RESOLUTION OF JANUARY 30, 2008 AS THE
SAME ARE CONTRARY TO THE EVIDENCE ON RECORD.22
The petition is denied.
The petitioner argues that the factual findings of the NLRC, affirming that of the LA must be accorded
respect and finality as it is supported by evidence on record. Both the LA and the NLRC found the
petitioners evidence sufficient to terminate the employment of respondent on the ground of redundancy.
The evidence also shows that GMC has complied with the procedural and substantive requirements for a
valid termination. There was, therefore, no reason for the CA to disturb the factual findings of the NLRC. 23
The rule is that factual findings of quasi-judicial agencies such as the NLRC are generally accorded not
only respect, but at times, even finality because of the special knowledge and expertise gained by these
agencies from handling matters falling under their specialized jurisdiction. 24 It is also settled that this Court
is not a trier of facts and does not normally embark in the evaluation of evidence adduced during
trial.25 This rule, however, allows for exceptions. One of these exceptions covers instances when the
findings of fact of the trial court, or of the quasi-judicial agencies concerned, are conflicting or
contradictory with those of the CA. When there is a variance in the factual findings, it is incumbent upon
the Court to re-examine the facts once again.26
Furthermore, another exception to the general rule is when the said findings are not supported by
substantial evidence or if on the basis of the available facts, the inference or conclusion arrived at is
manifestly erroneous.27Factual findings of administrative agencies are not infallible and will be set aside
when they fail the test of arbitrariness.28 In the instant case, the Court agrees with the CA that the
conclusions arrived at by the LA and the NLRC are manifestly erroneous.
GMC claims that Viajar was validly dismissed on the ground of redundancy which is one of the authorized
causes for termination of employment. The petitioner asserts that it has observed the procedure provided
by law and that the same was done in good faith. To justify the respondents dismissal, the petitioner
presented: (i) the notification Letter-Memorandum dated October 27, 2003 addressed to the respondent
which was received on October 30, 2003;29 (ii) the "Establishment Termination Report" as prescribed by
the DOLE;30 (iii) the two (2) checks issued in the respondents name amounting to P440,253.02
and P21,211.35 as separation pay;31 and (iv) the list of dismissed employees as of June 6, 2006 to show
that GMC was in a "reduction mode."32 Both the LA and the NLRC found these sufficient to prove that the
dismissal on the ground of redundancy was done in good faith.
The Court does not agree.
Article 283 of the Labor Code provides that redundancy is one of the authorized causes for dismissal. It
reads:
Article 283. Closure of establishment and reduction of personnel. The employer may also terminate the
employment of any employee due to the installment of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
worker and the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at
least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking not due to
serious business losses or reverses, the separation pay shall be equivalent to one (1) month pay or at
least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year. (Emphasis supplied)

From the above provision, it is imperative that the employer must comply with the requirements for a valid
implementation of the companys redundancy program, to wit: (a) the employer must serve a written
notice to the affected employees and the DOLE at least one (1) month before the intended date of
retrenchment; (b) the employer must pay the employees a separation pay equivalent to at least one
month pay or at least one month pay for every year of service, whichever is higher; (c) the employer must
abolish the redundant positions in good faith; and (d) the employer must set fair and reasonable criteria in
ascertaining which positions are redundant and may be abolished. 33
In Smart Communications, Inc., v. Astorga,34 the Court held that:
The nature of redundancy as an authorized cause for dismissal is explained in the leading case of
Wiltshire File Co., Inc. v. National Labor Relations Commission, viz:
"x x x redundancy in an employers personnel force necessarily or even ordinarily refers to duplication of
work. That no other person was holding the same position that private respondent held prior to
termination of his 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. We believe that redundancy, for purposes of the Labor Code, 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 overhiring of
workers, decreased volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise."
The characterization of an employees services as superfluous or no longer necessary and, therefore,
properly terminable, is an exercise of business judgment on the part of the employer. The wisdom and
soundness of such characterization or decision is not subject to discretionary review provided, of course,
that a violation of law or arbitrary or malicious action is not shown. 35 (Emphasis supplied and citations
omitted)
While it is true that the "characterization of an employees services as superfluous or no longer necessary
and, therefore, properly terminable, is an exercise of business judgment on the part of the
employer,"36 the exercise of such judgment, however, must not be in violation of the law, and must not be
arbitrary or malicious. The Court has always stressed that a company cannot simply declare redundancy
without basis. To exhibit its good faith and that there was a fair and reasonable criteria in ascertaining
redundant positions, a company claiming to be over manned must produce adequate proof of the same.
We reiterate what was held in Caltex (Phils.), Inc. v. NLRC: 37
In Asufrin, Jr. v. San Miguel Corporation, we ruled that it is not enough for a company to merely declare
that it has become overmanned (sic). It must produce adequate proof of such redundancy to justify the
dismissal of the affected employees.
In Panlilio v. National Labor Relations Commission, we held that evidence must be presented to
substantiate redundancy such as but not limited to the new staffing pattern, feasibility studies/proposal, on
the viability of the newly created positions, job description and the approval by the management of the
restructuring.38 (Emphasis supplied and citations omitted)
In the instant case, the Court agrees with the CA when it held that the petitioner failed to present
substantial proof to support GMCs general allegations of redundancy. As shown from the records, the
petitioner simply presented as its evidence of good faith and compliance with the law the notification letter
to respondent Viajar;39 the "Establishment Termination Report" it submitted to the DOLE Office; 40 the two
(2) checks issued in the respondents name amounting to P440,253.02 and P21,211.35;41 and the list of

terminated employees as of June 6, 2006.42 We agree with the CA that these are not enough proof for the
valid termination of Viajars employment on the ground of redundancy.
The letter-memorandum which contains general allegations is not enough to convince this Court that
Viajars termination of employment due to redundancy was warranted under the circumstances. There is
no showing that GMC made an evaluation of the existing positions and their effect to the company.
Neither did GMC exert efforts to present tangible proof that it was experiencing business slow down or
over hiring. The "Establishment Termination Report" it submitted to the DOLE Office did not account for
anything to justify declaring the positions redundant. The Court notes that the list of terminated employees
presented by GMC was a list taken as of June 6, 2006 or almost three years after the respondent was
illegally dismissed and almost a year after the LA promulgated its decision. While the petitioner had been
harping that it was on a "reduction mode" of its employees, it has not presented any evidence (such as
new staffing pattern, feasibility studies or proposal, viability of newly created positions, job description and
the approval of the management of the restructuring, 43audited financial documents like balance sheets,
annual income tax returns and others)44 which could readily show that the companys declaration of
redundant positions was justified. Such proofs, if presented, would suffice to show the good faith on the
part of the employer or that this business prerogative was not whimsically exercised in terminating
respondents employment on the ground of redundancy. Unfortunately, these are wanting in the instant
case. The petitioner only advanced a self-serving general claim that it was experiencing business
reverses and that there was a need to reduce its manpower complement.
On the other hand, the respondent presented proof that the petitioner had been hiring new employees
while it was firing the old ones,45 negating the claim of redundancy. It must, however, be pointed out that
in termination cases, like the one before us, the burden of proving that the dismissal of the employees
was for a valid and authorized cause rests on the employer. It was incumbent upon the petitioner to show
by substantial evidence that the termination of the employment of the respondent was validly made and
failure to discharge that duty would mean that the dismissal is not justified and therefore illegal. 46
Furthermore, the Court cannot overlook the fact that Viajar was prohibited from entering the company
premises even before the effectivity date of termination; and was compelled to sign an "Application for
Retirement and Benefits." These acts exhibit the petitioners bad faith since it cannot be denied that the
respondent was still entitled to report for work until November 30, 2003. The demand for her to sign the
"Application for Retirement and Benefits" also contravenes the fact that she was terminated due to
redundancy. Indeed, there is a difference between voluntary retirement of an employee and forced
termination due to authorized causes.
In Quevedo v. Benguet Electric Cooperative, Incorporated, 47 this Court explained the difference between
retirement and termination due to redundancy, to wit:
While termination of employment and retirement from service are common modes of ending employment,
they are mutually exclusive, with varying juridical bases and resulting benefits. Retirement from service is
contractual (i.e. based on the bilateral agreement of the employer and employee), while termination of
employment is statutory (i.e. governed by the Labor Code and other related laws as to its grounds,
benefits and procedure). The benefits resulting from termination vary, depending on the cause. For
retirement, Article 287 of the Labor Code gives leeway to the parties to stipulate above a floor of benefits.
xxxx
The line between voluntary and involuntary retirement is thin but it is one which this Court has drawn.
Voluntary retirement cuts employment ties leaving no residual employer liability; involuntary retirement
amounts to a discharge, rendering the employer liable for termination without cause. The employees
intent is the focal point of analysis. In determining such intent, the fairness of the process governing the
retirement decision, the payment of stipulated benefits, and the absence of badges of intimidation or
coercion are relevant parameters.48 (Emphasis supplied and citations omitted)

Clearly, the instant case is not about retirement since the term has its peculiar meaning and is governed
by Article 287 of the Labor Code. Rather, this is a case of termination due to redundancy under Article 283
of the Labor Code. Thus, the demand of GMC for the respondent to sign an "Application for Retirement
and Benefits" is really suspect.
Finally, the Court agrees with the CA that the award of moral and exemplary damages is
proper.1wphi1 The Court has awarded moral damages in termination cases when bad faith, malice or
fraud attend the employees dismissal or where the act oppresses labor, or where it was done in a
manner contrary to morals, good customs or public policy.49 We quote with favor the findings of the CA:
We also award moral and exemplary damages to petitioner. While it is true that good faith is presumed,
the circumstances surrounding the dismissal of petitioner negate its existence. Moral damages may be
recovered only where the dismissal of the employee was tainted by bad faith or fraud, or where it
constituted an act oppressive to labor, and done in a manner contrary to morals, good customs or public
policy while exemplary damages are recoverable only if the dismissal was done in a wanton, oppressive,
or malevolent manner. To reiterate, immediately after receipt of her termination letter which was effective
on 30 November 2003, petitioner was no longer treated as an employee of respondent as early as the
31st of October 2003; she was already barred from entering the company premises; she was deprived
access to her office computer; and she was excluded from the bandy [sic] clock. She was also made to
sign documents, including an "APPLICATION FOR RETIREMENT AND BENEFITS" in the guise of
payment of her separation pay. When petitioner confronted her immediate superior regarding her
termination, the latters shock aggravated her confusion and suffering. She also learned about the
employment of a number of new employees, several of whom were even employed in her former
department. Petitioner likewise suffered mental torture brought about by her termination even though its
cause was not clear and substantiated.50 (Citations omitted)
WHEREFORE, the petition is DENIED. The Decision dated September 21, 2007 of the Court of Appeals,
as well as its Resolution dated January 30, 2008 in CA-G.R. SP No. 01734, are hereby AFFIRMED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 82249 February 7, 1991

WILTSHIRE FILE CO., INC., petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and VICENTE T. ONG, respondents.
Angara, Abello, Concepcion, Regala & Cruz for petitioner.
Jose R. Millares & Associates for private respondent.

FELICIANO, J.:p
Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire File Co., Inc.
("Wiltshire") from 16 March 1981 up to 18 June 1985. As such, he received a monthly salary of
P14,375.00 excluding commissions from sales which averaged P5,000.00 a month. He also enjoyed
vacation leave with pay equivalent to P7,187,50 per year, as well as hospitalization privileges to the
extent of P10,000.00 per year.
On 13 June 1985, upon private respondent's return from a business and pleasure trip abroad, he was
informed by the President of petitioner Wiltshire that his services were being terminated. Private
respondent maintains that he tried to get an explanation from management of his dismissal but to no
avail. On 18 June 1985, when private respondent again tried to speak with the President of Wiltshire, the
company's security guard handed him a letter which formally informed him that his services were being
terminated upon the ground of redundancy.
Private respondent filed, on 21 October 1985, a complaint before the Labor Arbiter for illegal dismissal
alleging that his position could not possibly be redundant because nobody (save himself) in the company
was then performing the same duties. Private respondent further contended that retrenching him could
not prevent further losses because it was in fact through his remarkable performance as Sales Manager
that the Company had an unprecedented increase in domestic market share the preceding year. For that
accomplishment, he continued, he was promoted to Marketing Manager and was authorized by the
President to hire four (4) Sales Executives five (5) months prior to his termination.
In its answer, petitioner company alleged that the termination of respondent's services was a cost-cutting
measure: that in December 1984, the company had experienced an unusually low volume of orders: and
that it was in fact forced to rotate its employees in order to save the company. Despite the rotation of
employees, petitioner alleged; it continued to experience financial losses and private respondent's
position, Sales Manager of the company, became redundant.
On 2 December 1986, during the proceedings before the Labor Arbiter, petitioner, in a letter 1 addressed
to the Regional Director of the then Ministry of Labor and Employment, notified that official that effective 2
January 1987, petitioner would close its doors permanently due to substantial business losses.

In a decision dated 11 March 1987, the Labor Arbiter declared the termination of private respondent's
services illegal and ordered petitioner to pay private respondent backwages in the amount of
P299,000.00, unpaid salaries in the amount of P22,352.11, accumulated sick and vacation leaves in the
amount of P12,543.91, hospitalization benefit package in the amount of P10,000.00, unpaid commission
in the amount of P57,500,00, moral damages in the amount of P100,000.00 and attorney's fees in the
amount of P51,639.60.
On appeal by petitioner Wiltshire, the National Labor Relations Commission ("NLRC") affirmed in toto on
9 February 1988 the decision of the Labor Arbiter. The NLRC held that:
The termination letter clearly spelled out that the main reason in terminating the services
of complainant is REDUNDANT and not retrenchment.
The supposed duplication of work of herein complainant and Mr. Deliva, the VicePresident is absent that would justify redundancy. . . .
On the claim for moral damages, the NLRC pointed out that the effective date of private respondent's
termination was 18 July 1985, although it was only 18 June 1985 that he received the letter of termination,
and concluded that he was not given any opportunity to explain his position on the matter. The NLRC held
that the termination was attended by malice and bad faith on the part of petitioner, considering the
manner of private respondent was ordered by the President to pack up and remove his personal
belongings from the office. Private respondent was said to have been embarrassed before his immediate
family and other acquaintance due to his inability to explain the reasons behind the termination of his
services.
In this Petition for Certiorari, it is submitted that private respondent's dismissal was justified and not
illegal. Petitioner maintains that it had been incurring business losses beginning 1984 and that it was
compelled to reduce the size of its personnel force. Petitioner also contends that redundancy as a cause
for termination does not necessarily mean duplication of work but a "situation where the services of an
employee are in excess of what is demanded by the needs of an undertaking . . ."
Having reviewed the record of this case, the Court has satisfied itself that indeed petitioner had serious
financial difficulties before, during and after the termination of the services of private respondent. For one
thing, the audited financial statements of the petitioner for its fiscal year ending on 31 July 1985 prepared
by a firm of independent auditors, showed a net loss in the amount of P4,431,321.00 and a total deficit or
capital impairment at the end of year of P6,776,493.00. 2 In the preceding fiscal year (1983-1984), while
the company showed a net after tax income of P843,506.00, it actually suffered a deficit or capital
impairment of P2,345,172.00. Most importantly, petitioner Wiltshire finally closed its doors and terminated
all operations in the Philippines on January 1987, barely two (2) years after the termination of private
respondent's employment. We consider that finally shutting down business operations constitutes strong
confirmatory evidence of petitioner's previous financial distress. The Court finds it very difficult to suppose
that petitioner Wiltshire would take the final and irrevocable step of closing down its operations in the
Philippines simply for the sole purpose of easing out a particular officer or employee, such as the private
respondent.
Turning to the legality of the termination of private respondent's employment, we find merit in petitioner's
basic argument. We are unable to sustain public respondent NLRC's holding that private respondent's
dismissal was not justified by redundancy and hence illegal. In the first place, we note that while the letter
informing private respondent of the termination of his services used the word "redundant", that letter also
referred to the company having "incur[red] financial losses which [in] fact has compelled [it] to resort to
retrenchment to prevent further losses". 3 Thus, what the letter was in effect saying was that because of
financial losses, retrenchment was necessary, which retrenchment in turn resulted in the redundancy of
private respondent's position.

In the second place, we do not believe that redundancy in an employer's personnel force necessarily or
even ordinarily refers to duplication of work. That no other person was holding the same position that
private respondent held prior to the termination of his 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. We believe that
redundancy, for purposes of our Labor Code, 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 overhiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the enterprise. 4 The
employer has no legal obligation to keep in its payroll more employees than are necessarily for the
operation of its business.
In the third place, in the case at bar, petitioner Wiltshire, in view of the contraction of its volume of sales
and in order to cut down its operating expenses, effected some changes in its organization by abolishing
some positions and thereby effecting a reduction of its personnel. Thus, the position of Sales Manager
was abolished and the duties previously discharged by the Sales Manager simply added to the duties of
the General Manager, to whom the Sales Manager used to report.
It is of no legal moment that the financial troubles of the company were not of private respondent's
making. Private respondent cannot insist on the retention of his position upon the ground that he had not
contributed to the financial problems of Wiltshire. The characterization of private respondent's services as
no longer necessary or sustainable, and therefore properly terminable, was an exercise of business
judgment on the part of petitioner 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. It should also be noted
that the position held by private respondent, Sales Manager, was clearly managerial in character.
In D.M. Consunji, Inc. v. National Labor Relations Commission, 5the Court held:
An employer has a much wider discretion in terminating the employment relationship of
managerial personnel as compared to rank and file employees. However, such
prerogative of management to dismiss or lay off an employee must be made without
abuse of discretion, for what is at stake is not only the private respondent's position but
also his means of livelihood . . . . 6
The determination of the continuing necessity of a particular officer or position in a business
corporation is management's prerogative, and the courts will not interfere with the exercise of
such so long as no abuse of discretion or merely arbitrary or malicious action on the part of
management is shown. 7
On the issue of moral damages, petitioner assails the finding of the NLRC that the dismissal was done in
bad faith. Petitioner argues that it had complied with the one-month notice required by law; that there was
no need for private respondent to be heard in his own defense considering that the termination of his
services was for a statutory or authorized cause; and that whatever humiliation might have been suffered
by private respondent arose from a lawful cause and hence could not be the basis of an award of moral
damages.
Termination of an employee's services because of retrenchment to prevent further losses or redundancy,
is governed by Article 283 of the Labor Code which provides as follows:
Art. 283. Closure of establishment and reduction of personnel. The employer may also
terminate the employment of any employee due to the installation of labor saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operation of the establishment or undertaking unless the closing is for the purpose of

circumventing the provisions of this Title, by serving a written notice on the workers and
the Ministry of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent
to at least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in cases of
closures or cessation of operations of establishment or undertaking not due to serious
business losses or financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
Termination of services for any of the above described causes should be distinguished from
termination of employment by reason of some blameworthy act or omission on the part of the
employee, in which case the applicable provision is Article 282 of the Labor Code which provides
as follows:
Art. 282. Termination by employer. An employer may terminate an employment for any
of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate member of his family or his duly
authorized representative; and
(e) Other causes analogous to the foregoing.
Sections 2 and 5 of Rule XIV entitled "Termination of Employment:" of the "Rules to Implement the Labor
Code" read as follows:
Sec. 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall furnish
him a written notice stating the particular acts or omission constituting the grounds for his
dismissal. In cases of abandonment of work, the notice shall be served at the worker's
last known address.
xxx xxx xxx
Sec. 5. Answer and hearing. The worker may answer the allegations stated against
him in the notice of dismissal within a reasonable period from receipt of such notice. The
employer shall afford the worker ample opportunity to be heard and to defend himself
with the assistance of his representative if he so desires. (emphasis supplied)
We note that Section 2 of Rule XIV quoted above requires the notice to specify "the particular
acts or omissions constituting the ground for his dismissal", a requirement which is obviously
applicable where the ground for dismissal is the commission of some act or omission falling within
Article 282 of the Labor Code. Again, Section 5 gives the employee the right to answer and to

defend himself against "the allegations stated against him in the notice of dismissal". It is such
allegations by the employer and any counter-allegations that the employee may wish to make that
need to be heard before dismissal is effected. Thus, Section 5 may be seen to envisage charges
against an employee constituting one or more of the just causes for dismissal listed in Article 282
of the Labor Code. Where, as in the instant case, the ground for dismissal or termination of
services does not relate to a blameworthy act or omission on the part of the employee, there
appears to us no need for an investigation and hearing to be conducted by the employer who
does not, to begin with, allege any malfeasance or non-feasance on the part of the employee. In
such case, there are no allegations which the employee should refute and defend himself from.
Thus, to require petitioner Wiltshire to hold a hearing, at which private respondent would have
had the right to be present, on the business and financial circumstances compelling retrenchment
and resulting in redundancy, would be to impose upon the employer an unnecessary and inutile
hearing as a condition for legality of termination.
This is not to say that the employee may not contest the reality or good faith character of the
retrenchment or redundancy asserted as grounds for termination of services. The appropriate forum for
such controversion would, however, be the Department of Labor and Employment and not an
investigation or hearing to be held by the employer itself. It is precisely for this reason that an employer
seeking to terminate services of an employee or employees because of "closure of establishment and
reduction of personnel", is legally required to give a written notice not only to the employee but also to the
Department of Labor and Employment at least one month before effectivity date of the termination. In the
instant case, private respondent did controvert before the appropriate labor authorities the grounds for
termination of services set out in petitioner's letter to him dated 17 June 1985.
We hold, therefore, that the NLRC's finding that private respondent had not been accorded due process,
is bereft of factual and legal bases. The award of moral damages that rests on such ground must
accordingly fall.
While private respondent may well have suffered personal embarrassment by reason of termination of his
services, such fact alone cannot justify the award of moral damages. Moral damages are simply a species
of damages awarded to compensate one for injuries brought about by a wrongful act. 8 As discussed
above, the termination of private respondent's services was not a wrongful act. There is in this case no
clear and convincing evidence of record showing that the termination of private respondent's services,
while due to an authorized or statutory cause, had been carried out in an arbitrary, capricious and
malicious manner, with evident personal ill-will. Embarrassment, even humiliation, that is not proximately
caused by a wrongful act does not constitute a basis for an award of moral damages.
Private respondent is, of course, entitled to separation pay and other benefits under Act 283 of the Labor
Code and petitioner's letter dated 17 June 1985.
ACCORDINGLY, the Court Resolved to GRANT due course to the Petition for Certiorari. The Resolutions
of the National Labor Relations Commission dated 9 February 1988 and 7 March 1988 are hereby SET
ASIDE and NULLIFIED. The Temporary Restraining Order issued by this Court on 21 March 1988 is
hereby made PERMANENT. No pronouncement as to costs.
SO ORDERED.

FIRST DIVISION
[G.R. No. 156658. March 10, 2004]
BONIFACIO ASUFRIN, JR., petitioner, vs. SAN MIGUEL CORPORATION and the COURT OF
APPEALS, respondents.
DECISION
YNARES-SANTIAGO, J.:
Coca Cola Plant, then a department of respondent San Miguel Beer Corporation (SMC), hired
petitioner as a utility/miscellaneous worker in February 1972. On November 1, 1973, he became a
regular employee paid on daily basis as a Forklift Operator. On November 16, 1981, he became a
monthly paid employee promoted as Stock Clerk.
Sometime in 1984, the sales office and operations at the Sum-ag, Bacolod City Sales Office were
reorganized. Several positions were abolished including petitioners position as Stock Clerk. After
reviewing petitioners qualifications, he was designated warehouse checker at the Sum-ag Sales Office.
On April 1, 1996, respondent SMC implemented a new marketing system known as the pre-selling
scheme at the Sum-ag Beer Sales Office. As a consequence, all positions of route sales and warehouse
personnel were declared redundant. Respondent notified the DOLE Director of Region VI that 22
personnel of the Sales Department of the Negros Operations Center[1] would be retired effective March
31, 1995.
Respondent SMC thereafter wrote a letter[2] to petitioner informing him that, owing to the
implementation of the pre-selling operations scheme, all positions of route and warehouse personnel will
be declared redundant and the Sum-ag Sales Office will be closed effective April 30, 1996. Thus,
from April 1, 1996 to May 15, 1996, petitioner reported to respondents Personnel Department at the Sta.
Fe Brewery, pursuant to a previous directive.
Thereafter, the employees of Sum-ag sales force were informed that they can avail of respondents
early retirement package pursuant to the retrenchment program, while those who will not avail of early
retirement would be redeployed or absorbed at the Brewery or other sales offices. Petitioner opted to
remain and manifested to Acting Personnel Manager Salvador Abadesco his willingness to be assigned to
any job, considering that he had three children in college. [3]
Petitioner was surprised when he was informed by the Acting Personnel Manager that his name was
included in the list of employees who availed of the early retirement package. Petitioners request that he
be given an assignment in the company was ignored by the Acting Personnel Manager.
Petitioner thus filed a complaint for illegal dismissal with the NLRC, docketed as RAB Case No. 0606-10233-96. On December 27, 1996, the Labor Arbiter dismissed the complaint for lack of
merit. Petitioner appealed to the National Labor Relations Commission (NLRC) which set aside the Labor
Arbiters decision and ordered respondent SMC to reinstate petitioner to his former or equivalent position
with full backwages.[4]

Respondent filed a petition with the Court of Appeals which reversed the decision of the NLRC and
reinstated the judgment of the Labor Arbiter dismissing the complaint for illegal dismissal. Petitioners
motion for reconsideration[5] was denied in a Resolution dated December 11, 2002.[6]
Hence, this petition for review assigning the following errors:
1.

THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS, WITH DUE RESPECT,

COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING THAT PETITIONER WAS
NOT SINGLED-OUT FOR TERMINATION, AS MANY OTHERS WERE ALSO
ADVERSELY AFFECTED.

2.

THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GROSS

MISAPPREHENSION OF FACT WHEN IT AFFIRMED THE FINDING OF THE LABOR
ARBITER THAT THE POSITION OF PETITIONER BECAME REDUNDANT AT THE SUMAG SALES OFFICES.

3.

THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE

ABUSE OF DISCRETION WHEN IT HELD THAT THE DISMISSAL OF PETITIONER WAS
VALID.

4.

THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS ERRED IN DISMISSING

THE ENTIRE RELIEFS PRAYED FOR BY THE PETITIONER.

The primordial issue to be resolved is whether or not the dismissal of petitioner is based on a just
and authorized cause.
Factual findings of administrative bodies, being considered experts in their fields, are binding on this
Court. However, this is a general rule which holds true only when established exceptions do not obtain.
One of these exceptive circumstances is when the findings of the Labor Arbiter and the NLRC are
conflicting. Considering that the ruling of the Labor Arbiter was reversed by the NLRC whose judgment
was in turn overturned by the appellate court, it behooves us in the exercise of our equity jurisdiction to
determine which findings are more conformable to the evidentiary facts. [7]
In the case at bar, petitioner was dismissed on the ground of redundancy, one of the authorized
causes for dismissal.[8] In Dole Philippines, Inc. v. NLRC,[9] citing the leading case of Wiltshire File Co.,
Inc. v. NLRC,[10]we explained the nature of redundancy as an authorized cause for dismissal thus:
. . . redundancy in an employers personnel force necessarily or even ordinarily refers to duplication of work. That
no other person was holding the same position that private respondent held prior to the termination of his 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. We
believe that redundancy, for purposes of the Labor Code, 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
overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.

The determination that employees services are no longer necessary or sustainable and, therefore,
properly terminable is an exercise of business judgment of the employer. The wisdom or soundness of
this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is
no violation of law and no showing that it was prompted by an arbitrary or malicious act. [11] In other words,
it is not enough for a company to merely declare that it has become overmanned. It must produce
adequate proof that such is the actual situation to justify the dismissal of the affected employees for
redundancy.[12]
Persuasive as the explanation proffered by respondent may be to justify the dismissal of petitioner, a
number of disturbing circumstances, however, leave us unconvinced.
First, of the 23 SMC employees assigned at the Sum-ag Sales Office/Warehouse, 9 accepted the
offer of SMC to avail of the early retirement whose separation benefits was computed at 250% of their
regular pay. The rest, including petitioner, did not accept the offer. Out of the remaining fourteen
14, only petitioner clearly manifested, through several letters, [13] his desire to be redeployed to the Sta. Fe
Brewery or any sales office and for any position not necessarily limited to that of a warehouse
checker. In short, he was even willing to accept a demotion just to continue his employment. Meanwhile,
other employees who did not even write a letter to SMC were redeployed to the Sta. Fe Brewery or
absorbed by other offices/outlets outside Bacolod City.[14]
Second, petitioner was in the payroll of the Sta. Fe Brewery and assigned to the Materials Section,
Logistics Department, although he was actually posted at the Sum-ag Warehouse. [15] Thus, even
assuming that his position in the Sum-ag Warehouse became redundant, he should have been returned
to the Sta. Fe Brewery where he was actually assigned and where there were vacant positions to
accommodate him.
Third, it appears that despite respondents allegation that it ceased and closed down its warehousing
operations at the Sum-ag Sales Office, actually it is still used for warehousing activities and as a transit
point where buyers and dealers get their stocks. [16] Indeed, the Sum-ag Office is strategically situated on
the southern part of Bacolod City making it convenient for dealers from the southern towns of Negros
Occidental to get their stocks and deposit their empty bottles in the said warehouse, thereby
decongesting the business activities at the Sta. Fe Brewery.
Fourth, in selecting employees to be dismissed, a fair and reasonable criteria must be used, such as
but not limited to (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority.[17] In
the case at bar, no criterion whatsoever was adopted by respondent in dismissing
petitioner. Furthermore, as correctly observed by the NLRC, respondent has not shown how the
cessation of operations of the Sum-ag Sales Office contributed to the ways and means of improving
effectiveness of the organization with the end in view of efficiency and cutting distribution overhead and
other related costs. Respondent, thus, clearly resorted to sweeping generalization[s] in dismissing
complainant.[18] Indeed, petitioners predicament may have something to do with an incident where he
incurred the ire of an immediate superior in the Sales Logistics Unit for exposing certain irregularities
committed by the latter.[19]
In the earlier case of San Miguel Corporation v. NLRC,[20] respondents reasons for terminating the
services of its employees in the very same Sum-ag Sales Office was rejected, to wit:

Even if private respondents were given the option to retire, be retrenched or dismissed, they were made to
understand that they had no choice but to leave the company. More bluntly stated, they were forced to swallow the
bitter pill of dismissal but afforded a chance to sweeten their separation from employment. They either had to
voluntarily retire, be retrenched with benefits or be dismissed without receiving any benefit at all.
What was the true nature of petitioners offer to private respondents? It was in reality a Hobsons choice. [21] All that
the private respondents were offered was a choice on the means or method of terminating their services but never as
to the status of their employment. In short, they were never asked if they wanted to work for petitioner.
In the case at bar, petitioner is similarly situated. It bears stressing that whether it be by redundancy
or retrenchment or any of the other authorized causes, no employee may be dismissed without
observance of the fundamentals of good faith.
It is not difficult for employers to abolish positions in the guise of a cost-cutting measure and we
should not be easily swayed by such schemes which all too often reduce to near nothing what is left of
the rubble of rights of our exploited workers. [22] Given the nature of petitioners job as a Warehouse
Checker, it is inconceivable that respondent could not accommodate his services considering that the
warehousing operations at Sum-ag Sales Office has not shut down.
All told, to sustain the position taken by the appellate court would be to dilute the workingmans most
important right: his constitutional right to security of tenure. While respondent may have offered a
generous compensation package to those whose services were terminated upon the implementation of
the pre-selling scheme, we find such an offer, in the face of the prevailing facts, anathema to the
underlying principles which give life to our labor statutes because it would be tantamount to likening an
employer-employee relationship to a salesman and a purchaser of a commodity. It is an archaic
abomination. To quote what has been aptly stated by former Governor General Leonard Wood in his
inaugural message before the 6th Philippine Legislature on October 27, 1922 labor is neither a chattel nor
a commodity, but human and must be dealt with from the standpoint of human interest. [23]
As has been said: We do not treat our workers as merchandise and their right to security of tenure
cannot be valued in precise peso-and-centavo terms. It is a right which cannot be allowed to be devalued
by the purchasing power of employers who are only too willing to bankroll the separation pay of their
illegally dismissed employees to get rid of them. [24] This right will never be respected by the employer if
we merely honor it with a price tag. The policy of dismiss now and pay later favors moneyed employers
and is a mockery of the right of employees to social justice. [25]
WHEREFORE, in view of all the foregoing, the petition is GRANTED. The Decision of the Court of
Appeals in CA-G.R. SP No. 53521 dated April 10, 2002, and the Resolution dated December 11,
2002 denying petitioners Motion for Reconsideration, are SET ASIDE. The decision of the National Labor
Relations Division dated February 20, 1998 is REINSTATED. Accordingly, petitioners dismissal is
declared illegal, and respondent is ordered to reinstate him to his former or equivalent position, with full
backwages computed from April 1, 1996 up to his actual reinstatement. Respondent is likewise ordered
to pay petitioner the sum equivalent to ten percent (10%) of his total monetary award as attorneys fees.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 117459 October 17, 1997

MOISES B. PANLILIO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC FIRST DIVISION) AND FINDSTAFF
PLACEMENT SERVICES, INC. AND OMAN SHERATON HOTEL, INC., respondents.

ROMERO, J.:

Herein petitioner, unfazed by countless tales of overseas workers who embark adventurously on trips to
"Promised Lands" only to find themselves shortchanged, or worse jobless, dares to trek the same path.
His glorious dream lasted but six months when he was peremptorily dismissed on the ground that his
position had become redundant.
The facts as borne out by the records reveal that:
Petitioner Moises B. Panlilio was recruited by private respondent Findstaff Placement Services (FPS) for
employment in the Sheraton Hotel in Oman as Recreational Manager in October 1991. The contract was
for a period of two years with a monthly compensation of one thousand one hundred dollars ($1,100.00).
Petitioner's good fortune, however, did not last long, for in March 1992 his services were terminated on
the ground that his position had become redundant.
He then filed a complaint for illegal dismissal before the Adjudication Office of the Philippine Overseas
Employment Administration (POEA) which was docketed as POEA Case No. (L) 92-03-551. After due
trial, the POEA rendered a decision dated April 21, 1993 ruling that petitioner was illegally dismissed on
the premise that the alleged redundancy of his position was not adequately proven. 1
FPS filed an appeal before the National Labor Relations Commission. In its decision dated April 19,
1994, 2despite newly submitted affidavits from the officers of the Director of Personnel and Training
Division of Sheraton Hotel by FPS substantiating the redundancy of petitioner's position, the NLRC
affirmed the POEA's decision and dismissed the appeal for lack of merit.
Undaunted by another setback, FFS filed a motion for reconsideration. To petitioner's surprise and
dismay, the NLRC reversed itself and rendered a new decision 3 upholding the validity of his dismissal on
ground of redundancy. Hence, this petition.
Petitioner claims that the NLRC gravely abused its discretion when it reversed its original ruling on the
basis of the affidavits which it had earlier ruled out as self-serving and of no evidentiary value.
After a careful study of the relevant facts, we are constrained to reverse the findings of the NLRC.
In the case at bar, FPS failed to present substantial evidence to justify the dismissal of petitioner on the
ground of redundancy. The affidavits and documents it submitted are entitled to little weight, for it does not
prove the superfluity of petitioner's position. 4 In fact, these documents do not even present the necessary
factors which would confirm that a position is indeed redundant, such as overhiring of workers, decreased
volume of business or dropping of a product line or service activity. 5
On this matter, we agree with the observation and conclusion of the POEA which we quote, to wit:
Not a single evidence was submitted to bolster their contention. It is not enough for
respondent to allege that complainant's position became redundant and that there was
restructuring of the staff at the Health Club of the Oman Sheraton Hotel. Respondents
should have presented evidence to support this contention, such as but not limited to the
new staffing pattern, feasibility studies/proposal, on the viability of the newly created
positions, job description and the approval by the management of the restructuring. 6
This view was bolstered by the NLRC in its original decision wherein it held.
The affidavits just recently submitted merely touched on the issue of discrimination
denying it ever existed or that complainant was its victim. Apart from being self-serving as
having been issued by present employees of respondent Oman Sheraton Hotel to whom
their loyalty are (sic) expected to lie, we simply cannot give much weight to it in the light

of our inability and that of the complainant to confront them with the documents they
purportedly signed under oath. More so, even granting arguendo that no discrimination
transpired still, the fact remains that the restructuring and redundancy that became the
basis of complainant's severance from employment remains an imaginary preposition
unsupported by concrete evidence. 7
In its resolution granting FPS's motion for reconsideration, however, the NLRC made a sudden
turnaround and, relying on the same evidence, ruled that redundancy of petitioner's position was
adequately proven, necessitating the reversal of its original decision. We cannot accommodate the new
stance of the NLRC.
In overturning its earlier decision, the NLRC reasoned out that since it could have summoned one of the
affiants to amplify his statement, it erred in ruling that said affidavits were self-serving and of little value.
This argument fails to impress us. Undoubtedly, said documents still do not sufficiently explain the reason
why petitioner's position had become redundant, but only elucidated the fact that he was not a victim of
any discrimination in effecting the termination.
We have 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. 8Unfortunately for FPS, such appraisal was not done in the instant case.
Petitioner alleges that the NLRC erred in considering these affidavits which were introduced for the first
time on appeal. We rule that the NLRC acted correctly when it admitted the affidavits submitted by FPS
on appeal, for it cannot be disputed that technical rules of evidence are not binding in labor cases. 9 Labor
officials should use every reasonable means to ascertain the facts in each case speedily and objectively,
without regard to technicalities of law or procedure, all in the interest of due process. 10
In line with the Court's liberal stance regarding procedural deficiencies in labor cases, we have held that
even if the evidence was not submitted at the earliest possible opportunity, the fact that it was duly
introduced on appeal to the NLRC is enough basis for its eventual admission. 11
The admissibility of the affidavits notwithstanding, we cannot affirm the decision of the NLRC especially
when its findings of fact on which the conclusion was based are not supported by substantial
evidence, 12 that is, the amount of relevant evidence which a reasonable mind might accept as adequate
to justify a conclusion. 13
WHEREFORE, the instant petition is GRANTED. The challenged resolution is SET ASIDE and the
decision of the Philippine Overseas Employment Agency is hereby REINSTATED. Costs against private
respondent.
SO ORDERED.

SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR CODE; TERMINATION OF EMPLOYMENT; CRITERIA
IN SELECTING EMPLOYEES TO BE DISMISSED.- Petitioner misses the point. Its violation of due
process consists in its failure, as found by respondent Secretary of Labor, to aprise
respondent Union of any fair and reasonable criteria for implementation of its redundancy
program. In Asiaworld we laid down the principle that in selecting the employees to be dismissed a
fair and reasonable criteria must be used, such as but not limited to: (a) less preferred status (e.g.,
temporary employee), (b) efficiency and (c) seniority. Although the case of Asiaworld dealt with
retrenchment, still the principle is applicable to the present case because in effecting the dismissals
petitioner had to select from among its employees.
2. ID.; ID.; ID.; REDUNDANCY PROGRAM; THE COMPANY MUST APPRAISE THE UNION OF ANY
FAIR AND REASONABLE CRITERIA FOR ITS IMPLEMENTATION.- As has been made clear, even
this Office recognized that an authorized cause for dismissal did exist; what it could not countenance
is the means employed by the Company in making the cause effective. But no matter what kind of
justification the Company presents now, this has become moot, academic and irrelevant. The same
should have been communicated to the affected employees prior to or simultaneously with the
implementation of the redundancy, or at the very least, before the assailed order was rendered. In

any event, the explanantion being advanced by the Company now purportedly based on areas of
assignment - loses significance from the more compelling viewpoint of efficiency and seniority. For
instance, during the period covered by the Company's own time and motion analysis, Rogelio Varona
delivered 96 messages but was dismissed; Resurrecion Bordeos delivered only an average of 75 but
was retained. In terms of seniority, the Company itself states that "Ms. Bordeos holds the same
position/area as Rogelio Varona, however, she was retained because she is more senior than the
latter." The Company should look at its own evidence again. Bordeos had only 16 years of
service. Varona had 19, Neves 18, and Valle, Basig and Santos 17, yet all five were dismissed. One
should also consider that the redundancy was implemented at the height of bargaining
negotiations. The bargaining process could have been the best opportunity for the Company to
apprise the Union of the necessity for redundancy. For unknown reasons, the Company did not take
advantage of it. Intended or not, the redundancy reinforced the conditions for a deadlock, giving the
Union members the impression that it was being used by the Company to obtain a bargaining
leverage.
3. ID.; ID.; ID.; WHERE PROCEDURAL DUE PROCESS WAS NOT AFFORDED THE DISMISSED
EMPLOYEES THE EMPLOYER MUST INDEMNIFY THE FORMER; THE MEASURE OF THE
AWARD DEPENDS ON THE FACTS OF EACH CASE AND THE GRAVITY OF THE OMISSION
COMMITTED BY THE EMPLOYER.- Petitioner argues next that granting procedural due process
was not afforded the dismissed emloyees, still, the award of two (2) months salary for each of them
is not in accord with existing jurisprudence. The Wenphil doctrine teaches, as in other cases, that
where the dismissal of an employee is for a just cause but without due process, the employer must
indemnify the dismissed employee. Petitioner must have failed to read the full text to Wenphil or
simply chose to ignore the sentence immediately succeeding the P1,000.00 indemnify enunciated
therein. The case is explicit that the measure of the award depends on the facts of each case and
the gravity of the omission committed by the employer. In fact, in the recent case of Reta vs. NLRC,
the Court saw fit ti impose P10,000.00 as penalty for the employer's failure to comply with the due
process requirement. The ratiocination of respondent Secretary of Labor should have out
petitioner's argument at rest - xxx Wenphil, however, simply provies the authority to impose the
indemnity; it is not meant to be definitive as to the amount of indemnity applicable in all cases, this
being dependent on the particular circumstances of a case. Indeed, in the later case of Maritime
Seahorse vs. NLRC, G.R. No. 84712, 5 May 1989, the Supreme COurt applied the Wenphil doctrine
but awarded an indemnity of P5,000.00. Clearly, there is a recognition that the amount of indemnity
to be awarded is subject to the discretion of the agency making the award, considering all attendant
circumstances.
4. ID.; ID.; RETIREMENT FROM THE SERVICE; MEANING OF ONE HALF (1/2) MONTH SALARY;
DEFINED.- The records fail to disclose that petitioner bothered to inform the Court how it arrived at
21.82 days as basis in the computation of the retirement pay. Anyway, it is clear in the law that the
term "one-half (1/2) month salary" means 22.5 days: 15 days plus 2.5 days representing one-twelfth
(1/12) of the 13th month pay plus 5 days of service incentive leave. In this regard, there is no reason
for petitioner to complain that the retirement benefits granted by respondent Secretary of Labor
exceeded the requirements of the law.
5. ID.; ID.; ID.; AN EMPLOYEE MAY RECEIVE MORE RETIREMENT BENEFITS PROVIDED FOR BY
LAW AND ANY CBA OR OTHER AGREEMENTS.- With respect to the additional six (6) days for
compulsory retirement and three (3) days for optional retirement, these may appear in excess of the
requirements of the law and the demand of respondent Union. Yet, it should be noted that the law
merely establishes the minimum retirement benefits as it recognized that an employeemay receive

more under existing laws and any CBA or other agreements. Besides, respondent Secretary of
Labor had to break the bargaining deadlock. After taking into account all the circumstances, public
respondent found it expedient to strike a reasonable middle ground between the parties' respective
positions.
6. REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF THE SECRETARY OF LABOR, GENERALLY
RESPECTED ON APPEAL.- Unless these are cogent reasons, and we do not find any, this Court
will not alter, modify or reverse the factual findings of the Secretary of Labor because, by reason of
her official position, she is considerd to have acquired expertise as her jurisdiction is confined to
specific matters.

FIRST DIVISION
[G.R. No. 117174. November 13, 1996]
CAPITOL WIRELESS, INC., petitioner, vs. HONORABLE SECRETARY MA. NIEVES R. CONFESOR
and KILUSANG MANGGAGAWA NG CAPWIRE KMC-NAFLU, respondents.
DECISION
BELLOSILLO, J.:
Petitioner Capitol Wireless, Inc., and respondent Kilusang Manggagawa ng Capwire KMC-NAFLU
(Union) entered into a Collective Bargaining Agreement (CBA) on 15 November 1990 covering a period of
five (5) years. Towards the end of the third year of their CBA the parties renegotiated the economic
aspects of the agreement. On 18 July 1993 when the negotiations were on-going petitioner dismissed on
the ground of redundancy eight (8) out of its eleven (11) couriers who were Union members.
As a consequence, respondent Union filed a notice of strike with the National Conciliation and
Mediation Board (NCMB) on the ground of bargaining deadlock and unfair labor practice, specifically, for
illegal dismissal and violations of the CBA. Conciliation proceedings were conducted by the NCMB but
the same yielded negative results. On 20 August 1993 respondent Union went on strike. On the same
day, respondent Secretary assumed jurisdiction over the controversy.
In the conference held on 14 September 1993 the parties agreed to confine the scope of the dispute
to the following issues: (a) unfair labor practice, consisting of CBA violations and acts inimical to the
workers right to self-organization; (b) redundancy, affecting the dismissed employees; and (c) CBA
deadlock, which includes all items covered by respondent Unions proposals.
On 2 May 1994 respondents Secretary of Labor resolved the controversy in this manner: (1) the
parties were ordered to modify the fourth and fifth years of their CBA in accordance with the dispositions
she found just and equitable [1] the same to be retroactive to 1 July 1993 and effective until 30 June 1995
or until superseded by a new agreement; (2) all other provisions of the existing CBA were deemed
retained but all new demands of respondent Union that were not passed upon by her deemed denied; (3)
the dismissal of the eight (8) employees on the ground of redundancy was upheld, but due to defective
implementation by petitioner the latter was ordered to pay each of the former an indemnity equivalent to

two (2) months salary based on their adjusted rate for the fourth year in addition to the separation
benefits due them under the law and the CBA, and if still unpaid, petitioner to pay the same immediately;
and (4) the charge of unfair labor practice was dismissed for lack of merit. [2]
On 28 July 1994 the motion for reconsideration of petitioner was denied. [3]
Petitioner imputes grave abuse of discretion on respondent Secretary of Labor for holding that it
failed to accord due process to the dismissed employees; in not applying to the letter the ruling in Wenphil
Corp. v. NLRC;[4] and, in awarding retirement benefits beyond those granted by R.A. 7641. [5]
Petitioner argues that what it implemented was not retrenchment but redundancy program, as such,
respondent Secretary of Labor should not have relied upon Asiaworld Publishing House, Inc. v. Ople [6] in
holding that the dismissed employees were not accorded procedural due process. The additional
requirements enumerated in Asiaworld are inapplicable to the present case because that case involved
retrenchment, and petitioners basis in deciding those to be covered by the redundancy program was the
area serviced by the couriers. All areas outside the vicinity of its head office, which were the areas of
delivery of the dismissed employees, were declared redundant.
Petitioner misses the point. Its violation of due process consists in its failure, as found by respondent
Secretary of Labor, to apprise respondent Union of any fair and reasonable criteria for implementation of
its redundancy program. In Asiaworld we laid down the principle that in selecting employees to be
dismissed a fair and reasonable criteria must be used, such as but not limited to: (a) less preferred status
(e.g., temporary employee), (b) efficiency and (c) seniority. Although the case of Asiaworld dealt with
retrenchment, still the principle is applicable to the present case because in effecting the dismissals
petitioner had to select from among its employees.
We agree with respondent Secretary of Labor in her observation and conclusion that the
implementation by petitioner of its redundancy program was inconsistent with established principles of
procedural due process. She elaborated on this point in her resolution of the motion for
reconsideration. Thus
Whether it is redundancy or retrenchment, no employee may be dismissed without observance of the rudiments of
good faith. This is the point of our assailed order. If the Company (were) really convinced of the reasons for
dismissal, the least it could have done to the employees affected was to observe fair play and transparency in
implementing the decision to dismiss. To stress, the redundancy was implemented without the Company so much
apprising the Union of any fair and reasonable criteria for implementation.
As a matter of fact, this office called the parties to a conference on 14 March 1994, at which the Company was given
an opportunity to clarify the criteria it used in effecting redundancy. Represented by Ms. Ma. Lourdes Mendoza of
Mercado and Associates, its counsel of record, the Company submitted quitclaims which do not contain any
amounts purportedly executed by five of the eight dismissed employees. More importantly, the minutes of the
conference show that within two days thereafter, the Company committed to submit a pleading to explain the criteria
it used in effecting the redundancy; where no such submission is made by 17 March 1994, the case shall be deemed
submitted for resolution. The Company never complied with this commitment.
As has been made clear, even this Office recognized that an authorized cause for dismissal did exist; what it could
not countenance is the means employed by the Company in making the cause effective. But no matter what kind of
justification the Company presents now, this has become moot, academic and irrelevant. The same should have

been communicated to the affected employees prior to or simultaneously with the implementation of the redundancy,
or at the very least, beforethe assailed order was rendered.
In any event, the explanation being advanced by the Company now purportedly based on areas of assignment loses
significance from the more compelling viewpoint of efficiency and seniority. For instance, during the period
covered by the Companys own time and motion analysis, Rogelio Varona delivered 96 messages but was dismissed;
Ressurecion Bordeos delivered only an average of 75 but was retained. In terms of seniority, the Company itself
states the Ms. Bordeos holds the same position/area as Rogelio Varona, however, she was retained because she is
more senior than the latter. The Company should look at its own evidence again. Bordeos had only 16 years of
service. Varona had 19, Neves 18, and Valle, Basig and Santos 17, yet all five were dismissed.
One should also consider that the redundancy was implemented at the height of bargaining negotiations. The
bargaining process could have been the best opportunity for the Company to apprise the Union of the necessity for
redundancy. For unknown reasons, the Company did not take an advantage of it. Intended or not, the redundancy
reinforced the conditions for a deadlock, giving the Union members the impression that it was being used by the
Company to obtain a bargaining leverage.[7]
Petitioner argues next that granting that procedural due process was not afforded the dismissed
employees, still, the award of two (2) months salary for each of them is not in accord with existing
jurisprudence. The Wenphil doctrine teaches, as in other cases, that where the dismissal of an employee
is for a just cause but without due process, the employer must indemnify the dismissed employee.
Petitioner must have failed to read the full text of Wenphil or simply chose to ignore the sentence
immediately succeeding the P1,000.00 indemnity enunciated therein. The case is explicit that the
measure of the award depends on the facts of each case and the gravity of the omission committed by
the employer. In fact, in the recent case of Reta v. NLRC, [8] the Court saw fit to impose P10,000.00 as
penalty for the employers failure to comply with the due process requirement. The ratiocination of
respondent Secretary of Labor should have put petitioners argument at rest
x x x x Wenphil, however, simply provides the authority to impose the indemnity; it is not meant to be definitive as
to the amount of indemnity applicable in all cases, this being dependent on the particular circumstances of a
case. Indeed, in the later case of Maritime Seahorse v. NLRC, G.R. No. 84712, 5 May 1989, the Supreme Court
applied the Wenphil doctrine but awarded an indemnity of P5,000.00. Clearly, there is a recognition that the amount
of indemnity to be awarded is subject to the discretion of the agency making the award, considering all attendant
circumstances.[9]
Lastly, petitioner argues that the retirement benefits granted by respondent Secretary of Labor are in
excess of what is required of it under the law and what the Union demands. In particular, R.A. 7641
grants to the employee retirement pay equivalent to 21.82 days per year of service only but respondent
Secretary of Labor granted the equivalent of 22.5 days. To this, six (6) more days were granted for
compulsory retirement and three (3) days for optional retirement. The existing provisions of the CBA, the
respective proposals of the parties, and the award of respondent Secretary of Labor are reproduced
hereunder
EXISTING PROVISIONS OF THE CBA
a. Normal Retirement

compulsory upon reaching 60 years of age or after 35 years of continuous service, whichever comes first, provided
that those who reach 55 or have 10 years of uninterrupted service may be retired at employees or Compulsory
option.
PETITIONER'S PROPOSAL
a. Normal Retirement
60 years old R.A. 7641
b. Optional Retirement
55 years old or 10 years of continuous service months basic salary for every year of continuous service plus 1
day equivalent pay
UNIONS PROPOSAL
a. Normal Retirement
150 % of basic salary
b. Optional Retirement
50 % of basic salary commencing in the 5th year of service
SECRETARYS AWARD
a. Compulsory Retirement
An employee shall be compulsory retired upon reaching the age of sixty (60), or after thirty-five (35) years of
continuous service, whichever comes first.
An employee shall be entitled to a retirement benefit of month salary plus six (6) days multiplied by the number
of years in service.
b. Optional Retirement
At his option, an employee may retire upon reaching the age of fifty-five (55) or more if he has served for at least
five (5) years;
Provided, however, that any employee who is under fifty-five (55) years old may retire if he has rendered at least ten
(10) years of continuous service.
Such an employee shall be entitled to a retirement benefit of month salary plus three (3) days multiplied by the
number of years in service.

For purposes of computing compulsory sand optional retirement benefits and to align the current retirement plan
with the minimum standards of Art. 287 of the Labor Code, as amended by R.A. 7641, and Sec. 5 (5.2) of its
implementing rules, 1/2 month salary means 22.5 days salary, exclusive of leave conversion benefits.
Article 287 of the Labor Code, as amended by R.A. 7641, provides
Art. 287. Retirement. Any employee may be retired upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under
existing laws and any collective bargaining agreement and other agreements: provided, however, That an
employees retirement benefits under any collective bargaining and other agreements shall not be less than those
provided herein.
In the absence of a retirement plan or agreement plan providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years
which is hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for
every year of service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days
plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service
incentive leaves x x x x (italics supplied).
The records fail to disclose that petitioner bothered to inform the Court how it arrived at 21.82 days
as basis in the computation of the retirement pay. Anyway, it is clear in the law that the term one-half
(1/2) month salary means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th
month pay plus 5 days of service incentive leave. In this regard, there is no reason for petitioner to
complain that the retirement benefits granted by respondent Secretary of Labor exceeded the
requirements of law.
With respect to the additional six (6) days for compulsory retirement and three (3) days for optional
retirement, these may appear in excess of the requirements of the law and the demand of respondent
Union. Yet, it should be noted that the law merely establishes the minimum retirement benefits as it
recognizes that an employee may receive more under existing laws and any CBA or other
agreements. Besides, respondent Secretary of Labor had to break the bargaining deadlock. After taking
into account all the circumstances, public respondent found it expedient to strike a reasonable middle
ground between the parties respective positions. Unless there are cogent reasons, and we do not find
any, this Court will not alter, modify or reverse the factual findings of the Secretary of Labor because, by
reason of her official position, she is considered to have acquired expertise as her jurisdiction is confined
to specific matters.[10]
As we perceive it, by design or otherwise, petitioners arguments only scratch the surface, so to
speak. They do not extend beneath, as our studies of jurisprudence and the law disclose. Otherwise, the
baseless of the instant petition and the absence of any of discretion, much less grave, would have earlier
been exposed.

WHEREFORE, the petition is DISMISSED. The Order of 2 May 1994 of respondent Secretary of
Labor and her Resolution of 28 July 1994 are AFFIRMED.
SO ORDERED.