G.R. No. 194410 October 14, 2015
OCEAN EAST AGENCY, CORPORATION, ENGR. ARTURO D. CARMEN, and CAPT. NICOLAS SKINITIS, Petitioners vs. ALLAN I. LOPEZ, Respondent

FACTS

Petitioner Ocean East Agency Corporation (Ocean East) is a manning agency. Respondent Allan I. Lopez was employed as a Documentation Officer on March 7, 1988. On February 5, 2001, Ocean East served notice to Lopez that his services would be terminated on March 6, 2001, on the ground of redundancy, as his position duplicated those of two other Documentation Clerks. On February 7, 2001, Lopez received separation pay and a Certificate of Service. On May 23, 2001, Lopez filed an Amended Complaint for illegal dismissal, alleging he was falsely accused and maligned due to his physical handicap. The Labor Arbiter dismissed the complaint, upholding the employer’s management prerogative. The NLRC affirmed the dismissal. The Court of Appeals reversed, finding Lopez was illegally dismissed because Ocean East failed to prove the validity of the redundancy and failed to give written notice to the DOLE as required by Article 283 of the Labor Code. The CA awarded backwages, 12% interest, and attorney’s fees. Petitioners sought review, arguing redundancy was valid and notice to DOLE was unnecessary as Lopez accepted separation pay.

ISSUE

Whether the Court of Appeals committed serious error in finding respondent to have been illegally dismissed and in awarding backwages and attorney’s fees.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals Amended Decision. The Court held that for a valid dismissal due to redundancy, the employer must prove: (1) written notice to the employee and the DOLE at least one month before termination; (2) payment of separation pay; (3) good faith in abolishing the redundant position; and (4) fair and reasonable criteria in selecting employees to be dismissed. Ocean East failed to provide written notice to the DOLE, which is mandatory. The Court rejected the argument that notice to DOLE was unnecessary because Lopez accepted separation pay, stating that acceptance does not constitute waiver of illegal dismissal claims. The Court also found that Ocean East failed to substantiate its claim of redundancy with sufficient evidence, such as a concrete redundancy program or proof of financial losses. The award of backwages from dismissal until finality of the decision, plus 12% interest per annum on the monetary award from finality until full satisfaction, and attorney’s fees equivalent to 10% of the total award, was upheld as proper under the law.