ORDUÑA, Paterno Jr. C. Prof.

De Vera
2010-24096 Labor Law Review

Manuel G. Acosta v. Matiere SAS and Philippe Gouvary

G.R. No. 232870
3 June 2019

Book Six – Post-Employment (Redundancy)

FACTS:

1. Matiere SAS, a French company engaged in the fabrication, supply, and delivery of
unibridges and flyovers, executed a contract on 29 Oct. 2008 for the construction of
flyovers and bridges with the DPWH and another contract on 9 March 20009 for the
construction of bridges with the DAR.
2. On 1 Nov. 2009, Matiere SAS, represented by its resident manager, Philippe Gouvary
(Gouvary), executed a consulting agreement with Manuel Acosta (Acosta) wherein the
former engaged the latter as its technical consultant for 12 months with a monthly salary
of P70,000.00.
3. Upon the expiration of the consulting agreement’s expiration, Matiere SAS hired Acosta
as its technical assistant, as enforced through an employment agreement dated 1 Nov. 2010,
with the same monthly salary.
4. On 26 June 2013, Matiere SAS informed the DOLE, through a letter, that it was terminating
the employment of five of its employees, including Acosta.
5. On 27 June 2013, Matiere SAS sent Acosta a letter with the subject “ending of the
employment agreement,” informing the latter that his employment was to end on 31 July
2013. According to Matiere SAS, the decision to terminate Acosta’s employment was due
to the “cessation of [their] delivery operations and the diminution of [their] activities.”
6. On 28 June 2013, Matiere SAS filed before the DOLE an Establishment Employment
Report citing redundancy and completion of deliver of supplies as the reasons for the
termination of the employment of five of its employees. It also filed a List of Affected
Workers by Displacements/Flexible Work Arrangements, enumerating therein the names
of the five dismissed employees.
7. On 23 July 2013, Acosta filed a case for illegal dismissal against Matiere SAS and
Gouvary.
a. The LA found Acosta’s dismissal illegal because Matiere SAS and Gouvary failed
to prove the factual bases for the reduction of its workforce, thereby pointing out
that Matiere SAS failed to submit a Certificate of Completion regarding the project
with DAR. Moreover, the LA determined that Matiere SAS failed to submit any
redundancy plan and to “provide fair and reasonable criteria in ascertaining what
positions are redundant and how the selection of employees to be dismissed was
made.”
b. Both parties appealed the Decision of the LA. Matiere SAS and Gouvary argued
that the termination of Acosta’s employment was valid and that they implemented
the redundancy based on fair and reasonable criteria.
 c. The NLRC reversed the Decision of the LA, holding that Matiere SAS and Gouvary
proved that there was a significant decrease in the volume of their business when
they presented before the National Labor Relations Commission a Certificate of
Completion from the DAR. The NLRC noted that the completion of the government
contracts would render unnecessary the services offered by Acosta. The NLRC
further held that the termination of Acosta’s employment was not done with ill
motive or in bad faith. Thus, the decision of Matiere SAS was a valid exercise of
management prerogative.
d. Acosta appealed to the CA through a Petition for Certiorari. The CA, however,
upheld the Resolution of the NLRC, holding that Matiere SAS and Gouvary were
able to establish that Acosta's position became redundant upon the completion of
its contracts with the DPWH and the DAR. Thus, Acosta filed a Petition for Review
on Certiorari to the SC.

ISSUE:

[1] Whether or not Acosta was validly dismissed on the ground of redundancy – NO, the dismissal
was illegal.

RATIO:

1. With regard to the completion of the projects with DPWH and DAR, Acosta argued that
the completeness of delivery merely pertained to one of his tasks as technical assistant.
Thus, he claimed that it was wrong to dismiss him based only on those certifications. In
particular, Acosta maintained that the supply contract satisfies only the delivery of the
supply of bridging material. The design, technical supervision during the erection,
installation and commissioning were still ongoing and to be completed in 2016. He further
contended that he was tasked with checking the designs of the Design Consultants,
coordinating with them, and evaluating their billings, which were activities that were still
ongoing when he was terminated.
2. Matiere SAS and Gouvary insisted that the certifications from the DPWH and DAR already
proved that “there was a significant diminution in the volume of material business.” They
also claimed that Acosta’s position became irrelevant because the tasks that he enumerated
were merely incidental to his main function as technical assistant. Moreover, they argued
that they complied with all labor law requirements in terminating Acosta’s employment,
i.e., notice of termination with computation of separation pay and notice to the DOLE.
3. Redundancy is recognized as one of the authorized causes for dismissing an employee
under the Labor Code. Art. 298 of the Labor Code states that:
a. 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 year of service, whichever is higher. A
fraction of at least six (6) months shall be considered one (1) whole year.
4. In Wiltshire File Company v. NLRC, it was held that “a position is redundant where it is
superuous, and superuity of a position or positions may be the outcome of a number of
factors, such as over-hiring of workers, decreased volume of business, or dropping of a
particular product line or service activity previously manufactured or undertaken by the
enterprise. The employer has no legal obligation to keep in its payroll more employees than
are necessary for the operation of its business.”
5. In Asian Alcohol Corp. v. NLRC, the requirements of a valid redundancy were
enumerated as follows:
a. Written notice served on both the employees concerned and the DOLE at least one
month prior to the intended date of retrenchment;
b. 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;
c. Good faith in abolishing the redundant positions; and
d. Fair and reasonable criteria in ascertaining what positions are to be declared
redundant and accordingly abolished.
6. In Panlilio v. NLRC, the SC held that “fair and reasonable criteria may take into account
the preferred status, efficiency, and seniority of employees to be dismissed due to
redundancy.”
7. In this case, Matiere SAS and Gouvary failed to comply with the abovementioned
requirements, particularly the third and fourth requirements.
8. In order to establish good faith, the company must provide substantial proof that the
services of the employees are in excess of what is required of the company, and that fair
and reasonable criteria were used to determine the redundant positions.
9. Matiere SAS and Gouvary, however, stated that the only basis for declaring Acosta’s
position as redundant was that his function became unnecessary for the completion of the
shipments. Upon careful scrutiny of the Employment Agreement, it can be determined that
Acosta’s responsibilities as technical assistant were not confined merely to the delivery of
supplies. Considering that the actual shipment had not been completed and that Acosta’s
allegations regarding his actual tasks was proven by the agreement, it was deemed that
Matiere SAS and Gouvary failed to show that they used fair and reasonable criteria in
determining what positions should be declared redundant.

RULING:

The Petition for Review on Certiorari was Granted. Acosta was deemed to have been illegally
terminated.