G.R. No. 213934 , November 09, 2016
MARY ANN G. VENZON, EDDIE D. GUTIERREZ, JOSE M. GUTIERREZ, JR. AND MONA LIZA L. CABAL, PETITIONERS, VS. ZAMECO II ELECTRIC COOPERATIVE, INC. AND ENGR. FIDEL S. CORREA, GENERAL MANAGER, RESPONDENTS.

FACTS

Petitioners were regular employees of ZAMECO II Electric Cooperative, Inc. (ZAMECO II). A power struggle ensued between two factions vying for control of the cooperative’s board of directors. The National Electrification Administration (NEA), asserting its regulatory authority, removed the incumbent board led by Jose Dominguez and appointed an Interim Board. This board, through General Manager Fidel Correa, terminated petitioners’ employment. Petitioners filed a complaint for illegal dismissal, claiming they were mere casualties of the internal dispute. The Labor Arbiter ruled in their favor, declaring the dismissals illegal.
The National Labor Relations Commission (NLRC) initially affirmed the illegal dismissal but later, upon reconsideration by a Special Third Division, reversed itself. The NLRC held that the dismissals were valid, finding that the Interim Board and General Manager Correa were the legitimate representatives of ZAMECO II with the authority to hire and fire. The Court of Appeals affirmed the NLRC’s reversal. Petitioners elevated the case to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

Whether the NLRC and the Court of Appeals committed reversible error in ruling that petitioners were not illegally dismissed.

RULING

The Supreme Court denied the petition and affirmed the assailed rulings. The Court held that the NLRC and the CA correctly found no illegal dismissal. The legal logic centered on the doctrine of good faith in management prerogative and the identification of the employer’s legitimate representatives. At the time of the dismissals, the NEA-appointed Interim Board was recognized as the lawful governing body of ZAMECO II pursuant to the NEA’s ongoing regulatory authority over electric cooperatives, which was upheld by the Supreme Court in a related case ( G.R. No. 176935 -36). Consequently, General Manager Correa, appointed by this legitimate board, possessed the authority to exercise management prerogatives, including termination of employment.
The Court found that the dismissals were executed in good faith, stemming from a legitimate belief in the need for reorganization due to the cooperative’s critical financial and operational state, and were not merely due to the power struggle. Petitioners failed to substantiate their claim of dismissal without cause. The employer presented evidence of the cooperative’s dire condition, justifying managerial actions. The Court emphasized that while labor laws protect security of tenure, they do not deprive employers of the right to exercise sound business judgment in good faith. The findings of the NLRC, affirmed by the CA, that the dismissals were for authorized causes and not unlawful, are accorded finality as they are supported by substantial evidence. No grave abuse of discretion attended these findings.