G.R. No. 108259 November 29, 1996
AG&P UNITED RANK AND FILE ASSOCIATION (AG&P URFA), ET AL., petitioners, vs. NLRC (FIRST DIVISION) and ATLANTIC GULF and PACIFIC COMPANY OF MANILA, INC., respondents.

FACTS

Petitioner union is the certified bargaining agent for the rank-and-file employees of respondent Atlantic Gulf and Pacific Company of Manila, Inc. (AG&P). Following a deadlock in collective bargaining negotiations, the union declared a strike on September 22, 1987. The Secretary of Labor assumed jurisdiction over the dispute. Prior to the Secretary’s decision, AG&P’s president announced cost-cutting measures, including a “redundancy program,” to forestall impending financial losses. Implemented on March 1, 1988, this program led to the layoff of around 177 employees, including union officers and members. The affected employees received separation pay equivalent to one month’s pay for every year of service and signed corresponding waiver documents.
On March 14, 1988, petitioners filed a complaint for unfair labor practice and illegal dismissal. The Labor Arbiter dismissed the complaint, finding the redundancy program necessary and the waivers valid. On appeal, the NLRC’s Third Division reversed, finding the company profitable and ordering reinstatement with backwages. Upon AG&P’s motion for reconsideration, the case was reassigned to the NLRC’s First Division, which reinstated the Labor Arbiter’s decision after admitting newly-submitted audited financial statements showing company losses from 1987 to 1990.

ISSUE

Whether the NLRC committed grave abuse of discretion in: (1) admitting additional evidence on appeal; (2) upholding the legality of the dismissal under the redundancy/retrenchment program; and (3) recognizing the validity of the quitclaims executed by the employees.

RULING

The Supreme Court dismissed the petition, finding no grave abuse of discretion by the NLRC. On procedural grounds, the NLRC has the authority to admit additional evidence on appeal if the delay is justified and the evidence substantially proves a valid cause for dismissal. Here, the audited financial reports for 1987-1990, completed only in 1991, were properly admitted and satisfactorily explained the delay. This evidence substantiated AG&P’s claim of substantial and reasonably imminent losses.
On the substantive issue, the Court clarified that while termed a “redundancy program,” the layoffs constituted lawful retrenchment under Article 283 of the Labor Code, as they were a cost-cutting measure to prevent serious business losses. The financial evidence established that the expected losses were substantial, imminent, and that the retrenchment was reasonably necessary to prevent them. Finally, the quitclaims and releases were valid. The employees signed them voluntarily without coercion, and the consideration—separation pay exceeding statutory requirements—was credible and reasonable. The waivers thus constituted valid settlements.