On November 1, 2009, the employer hired Manuel as a technical consultant. Under the agreement, Manuel was tasked to:
- Prepare reports;
- Be the intermediary of certain teams;
- Attend coordination meetings;
- Evaluate billings; and
- Conduct Site visits.
Through a letter dated June 27, 2013, the employer informed Manuel of the termination of his employment due to the cessation of delivery operations and diminution of activities. Aggrieved by the actions of his employer, Manuel filed a complaint for illegal dismissal against it.
The employer contended that it had sufficiently established redundancy of Manuel’s position. It presented certain documents to prove that there was a significant diminution in the volume of materials business and that the completion of shipment had rendered his position irrelevant. The employer further argued that it did not dismiss Manuel in bad faith, contending that it complied with labor law requirements in terminating his employment. The employer pointed out that he was given a notice of termination with computation of his separation pay, and that the Department of Labor and Employment was also notified.
Was Manuel validly dismissed from employment on the ground of redundancy?
The Supreme Court ruled that Manuel was not validly dismissed on said ground.
The Court stated that redundancy is recognized as one of the authorized causes for dismissing an employee under the Labor Code of the Philippines. Redundancy exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. A position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as 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 employer has no legal obligation to keep in its payroll more employees than are necessary for the operation of its business.
The Court further stated that for the implementation of a redundancy program to be valid, the employer must comply with the following requisites:
- written notice served on both the employees and the Department of Labor and Employment at least one month prior to the intended date of retrenchment;
- 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;
- good faith in abolishing the redundant positions in that the employer must provide substantial proof that the services of the employees are in excess of what it requires; and
- fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.
In the present case, the Court acknowledged that the employer complied with the first and second requisites. It was able to notify Manuel and the Department of Labor and Employment at least a month before the planned redundancy. Manuel also received a computation of his separation pay corresponding to at least one month pay for every year of service with additional payment for economic assistance.
However, the Court found that the employer failed to establish compliance with the third and fourth requisites.
The Court discovered that the employer’s only basis for declaring petitioner’s position redundant was that his function, which was to monitor the delivery of supplies, became unnecessary upon completion of shipment.
However, the Court discovered that Manuel’s employment agreement reveals the contrary as there was no mention of monitoring shipment as part of his tasks. The Court said that if his work pertains mainly to the delivery of supplies, it should have been specifically stated in his job description. Thus, the Court found no basis for the employer to consider Manuel’s position irrelevant when shipment had been completed.
The Court also found that the employer failed to show that they used fair and reasonable criteria in determining what positions should be declared redundant.
The Court explained that fair and reasonable criteria may take into account the preferred status, efficiency, and seniority of employees to be dismissed due to redundancy.
However, the Court found that the employer never showed that it used any of these in choosing Manuel as among the employees affected by redundancy.
The Court accordingly declared Manuel to have been illegally dismissed from employment.
Further reading:
- Acosta v. Matiere SAS, G.R. No. 232870, June 3, 2019.
