G.R. No. 106256. December 28, 1994.
MAYA FARMS EMPLOYEES ORGANIZATION, et al., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, MAYA REALTY & LIVESTOCK, INC., et al., respondents.

FACTS

Private respondents Maya Farms, Inc. and Maya Realty and Livestock Corporation, belonging to the Liberty Mills group, implemented a special redundancy program after a voluntary early retirement program failed to attract sufficient participants. This was a cost-cutting measure due to major business setbacks. Consequently, sixty-six (66) employees, who were members of the petitioner unions, were notified in January 1992 that their positions were declared redundant, with termination effective thirty days from notice. They received separation benefits.
The petitioners filed a complaint for unfair labor practice and violation of the Collective Bargaining Agreement (CBA), specifically alleging that the termination circumvented the CBA’s “Last-In-First-Out” (LIFO) rule for lay-offs. They argued the companies were not in a genuine economic crisis, citing a prior net income, and that the remaining workforce became overburdened. The case was certified for compulsory arbitration. The NLRC upheld the legality of the dismissals, prompting this petition.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in ruling that the termination of the sixty-six employees was a valid exercise of management prerogative, complied with the CBA’s LIFO rule, and satisfied the procedural requirements under the Labor Code.

RULING

The Supreme Court dismissed the petition, finding no grave abuse of discretion by the NLRC. The legal logic is anchored on the principle of management prerogative and the factual findings of the labor tribunal. The Court emphasized that the declaration of redundancy, a legitimate exercise of business judgment to promote efficiency, is generally not interfered with absent proof of bad faith or arbitrariness. The NLRC’s factual determination that the companies were suffering financial losses was conclusive.
Regarding the CBA’s LIFO rule, the Court deferred to the NLRC’s finding that the companies applied a valid and reasonable criteria beyond mere seniority. Management considered the nature of work, experience, and efficiency, retaining employees with broader skills necessary for streamlined operations. This selective process, based on reasonable factors, was not a violation of the CBA. Procedurally, the Court found the 30-day notice requirement was satisfied, as the termination letters explicitly stated the effectivity was one month from receipt, and separation pay was given in addition to, not in lieu of, this notice. Thus, the NLRC decision was affirmed.