G.R. No. 172628 February 13, 2009
COATS MANILA BAY, INC., Petitioner, vs. PURITA M. ORTEGA (represented by Alejandro San Pedro, Jr.) and MARINA A. MONTERO, Respondents.

FACTS

Petitioner Coats Manila Bay, Inc., a thread production company, implemented a redundancy program, terminating 135 employees, including respondents Purita M. Ortega and Marina A. Montero, who were Clerk Analysts in the Industrial Engineering Department and members of the Anglo-KMU Monthly Union. The redundancy was announced via a memorandum on April 27, 2000, citing the need to prevent further losses. Respondents were notified of their dismissal effective June 15, 2000. On May 31, 2000, a labor-management meeting was held with the Union to discuss the program. On June 1, 2000, respondents received separation payments and executed release waivers and quitclaims. Subsequently, on June 8, 2000, they filed a complaint for illegal dismissal, alleging their functions were assigned to others and they signed the quitclaims due to pressing need. The Labor Arbiter declared the dismissal illegal and ordered reinstatement with backwages. The NLRC reversed, upholding the redundancy dismissal. The Court of Appeals then reinstated the Labor Arbiter’s decision, finding no evidence of fair and reasonable criteria in selecting employees for redundancy and ruling the quitclaims did not negate their claims.

ISSUE

The issues are: (1) the propriety of the redundancy program implemented by petitioner; and (2) the validity of the waivers and quitclaims executed by respondents.

RULING

The Supreme Court ruled in favor of the petitioner, reversing the Court of Appeals and reinstating the NLRC decision validating the dismissal.
1. Propriety of Redundancy Program: The Court found the redundancy program proper. Redundancy exists where services are in excess of enterprise requirements, and it does not require proof of losses, unlike retrenchment. The employer has management prerogative to implement such programs, subject to fair and reasonable criteria. Petitioner established it used reasonable criteria (performance, absenteeism, disciplinary record, efficiency, work attitude, and seniority) as stated in its April 22, 2000 memorandum. The program was implemented after consultations with the Union, as shown in the May 31, 2000 meeting minutes where the Union agreed respondents’ positions were redundant due to duplicity of functions with other clerks. The Court held the characterization of positions as redundant was a business judgment not subject to discretionary review absent arbitrariness.
2. Validity of Waivers and Quitclaims: The Court held the quitclaims valid. Respondents, both college graduates, voluntarily signed the documents acknowledging receipt of separation pay and benefits, and the waivers contained a specific declaration of understanding. There was no evidence of fraud or deceit; economic necessity alone does not invalidate a quitclaim. The amounts received were more than required by law, indicating a voluntary and reasonable settlement. Thus, the quitclaims barred respondents from pursuing further claims.