GR 121314; (February, 1998) (Digest)
G.R. No. 121314 February 12, 1998
EDGE APPAREL, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Fourth Division, Cebu City; Regional Arbitration Branch No. 7, Cebu City; and JOSEPHINE ANTIPUESTO, NORINA ANDO, JULIET BAGUIO, APOLINARIA VELONTA, CORAZON PINO, and JOSEPHINE CAÑETE, respondents.
FACTS
Pursuing its retrenchment program, petitioner Edge Apparel, Inc., dismissed private respondents from employment effective 03 September 1992. The private respondents initially accepted separation pay upon the advice of a DOLE Regional Director but subsequently filed a complaint for illegal dismissal, alleging the retrenchment program was a mere subterfuge. Edge Apparel countered that serious financial losses constrained the company to adopt the retrenchment program, presenting financial statements showing losses from 1989 to 1992. The Labor Arbiter dismissed the complaint, finding the retrenchment legal. On appeal, the NLRC affirmed the legality of the dismissal but reclassified the cause from retrenchment to redundancy, noting the workers were assigned to a specific sewing line for simple garments that was phased out due to the dropping of that product line because buyers had ceased orders. Consequently, the NLRC ordered Edge Apparel to pay the complainants an additional separation pay equivalent to 1/2 month pay for every year of service, on top of the separation pay already received. Edge Apparel’s motion for partial reconsideration was denied, prompting this petition.
ISSUE
Whether the National Labor Relations Commission committed grave abuse of discretion in awarding additional separation pay to the private respondents by reclassifying the cause of their termination from retrenchment to redundancy.
RULING
No, the National Labor Relations Commission did not commit grave abuse of discretion. The Supreme Court affirmed the NLRC’s decision. While the Labor Arbiter and the NLRC both found a valid ground for dismissal, the NLRC correctly characterized the termination as due to redundancy, not retrenchment. The evidence showed that the specific line where the private respondents worked was phased out because the company’s buyers had ceased orders for that particular product line. This constitutes a dropping of a particular product line, which is a recognized instance of redundancy under the law and jurisprudence. In cases of termination due to redundancy, the affected workers are entitled to separation pay equivalent to one month pay or at least one month pay for every year of service, whichever is higher. Since the private respondents had only received separation pay equivalent to 1/2 month pay per year of service, the NLRC correctly ordered the payment of an additional 1/2 month pay per year of service to comply with the statutory requirement for redundancy. The petition was dismissed.