G.R. No. 111105 June 27, 1995
ROLANDO REVIDAD, et al., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and ATLANTIC, GULF AND PACIFIC COMPANY OF MANILA, INC., respondents.

FACTS

Petitioners were among 178 employees terminated by private respondent AG&P in March 1988 under a redundancy program. They filed a complaint for illegal dismissal and were subsequently reinstated on July 8, 1991. Shortly after, on July 25, 1991, AG&P issued a directive to lay off 40% of its workforce due to serious financial losses incurred from 1989-1990. This led to a strike by the employees’ union. The parties agreed to submit the legality of the lay-offs to voluntary arbitration. Concurrently, the unions and company management held a conference on September 7, 1991, resulting in an agreement wherein the company would extend financial assistance to laid-off employees and grant them preference in rehiring.
Pursuant to this agreement, petitioners were served notices of temporary lay-off on September 17, 1991. They were not recalled after six months. The voluntary arbitrator, in a decision dated January 7, 1992, upheld AG&P’s management prerogative to implement the temporary lay-off due to financial reverses. Petitioners then filed a complaint for illegal dismissal, which the Labor Arbiter dismissed, a decision reversed by the NLRC. The NLRC found the lay-off illegal due to AG&P’s failure to prove serious business losses and ordered reinstatement with backwages. AG&P moved for reconsideration, which the NLRC granted, setting aside its earlier decision and dismissing the complaint, hence this petition.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in reversing its own decision and dismissing petitioners’ complaint for illegal dismissal.

RULING

The Supreme Court found no grave abuse of discretion and affirmed the NLRC’s modified decision. The legal logic rests on the established principle that an employer has the inherent right to control its business, including the prerogative to dismiss or lay off employees for authorized causes such as serious business losses. The Court emphasized that while the Constitution mandates protection for labor, this does not authorize the oppression or self-destruction of the employer. Management rights are also entitled to respect.
The Court held that the financial statements presented by AG&P, showing consistent net losses from 1987 to 1991, constituted sufficient and convincing proof of serious business losses justifying the lay-off. The agreement forged on September 7, 1991, which petitioners accepted by receiving financial assistance, effectively estopped them from challenging the lay-off’s legality. By accepting benefits under the agreement, petitioners waived their right to question its terms. The lay-off was therefore a valid exercise of management prerogative. However, since petitioners were not recalled after six months, the temporary lay-off effectively became a termination. Consequently, the Court ordered AG&P to pay petitioners separation pay equivalent to one month pay or at least one-half month pay for every year of service, whichever is higher, deductible from any financial assistance already received.