G.R. No. 223611. October 19, 2022
MARCOS ANTONIO MORALES, GEORGINA D. TRIBUJENIA, CICERO A. CAJURAO, AND NOLI A. DEJAN, PETITIONERS, VS. CENTRAL AZUCARERA DE LA CARLOTA, INC., RESPONDENT.

FACTS

Petitioners were rank-and-file employees of respondent Central Azucarera de La Carlota, Inc., a sugar mill, performing housekeeping and utility functions in company guest houses. In August 2007, they were informed their positions were redundant due to business losses and their employment would be terminated. They were offered separation pay or an early retirement package, with an option to be re-hired by a cooperative at a lower salary. Petitioners refused the offer, proposing instead a transfer to other departments as regular employees, which was denied. Upon reporting for work after their termination date, they were barred from entering the premises. They subsequently filed a complaint for illegal dismissal.
The Labor Arbiter ruled in favor of petitioners, ordering reinstatement but denying backwages. The National Labor Relations Commission (NLRC) initially modified this, awarding backwages after finding the redundancy dismissal unjustified and procedurally defective. However, upon respondent’s motion for reconsideration, the NLRC reversed itself, upholding the dismissal based on audited financial statements showing business losses and finding the abolition of the non-essential guest house positions a valid exercise of management prerogative. The Court of Appeals affirmed the NLRC’s reversal via a Rule 65 certiorari petition, finding no grave abuse of discretion.

ISSUE

Whether the Court of Appeals erred in affirming the NLRC’s ruling that petitioners were validly dismissed on the ground of redundancy.

RULING

The Supreme Court granted the petition, reversed the Court of Appeals, and reinstated the NLRC’s initial finding of illegal dismissal. The legal logic centers on the employer’s failure to substantiate the claimed redundancy with clear and convincing evidence. While management has the prerogative to implement redundancy programs, this right is not absolute and must be exercised in good faith and with sufficient proof. The Court found respondent’s evidence lacking. The audited financial statements alone, showing net losses, were insufficient to prove that the specific positions of petitioners had become superfluous or in excess of the company’s needs. Respondent failed to present a master plan or study detailing the redundancy program, the criteria for selecting the abolished positions, and why petitioners’ functions were no longer necessary. The offer to re-hire them through a cooperative for lower pay further undermined the claim of genuine redundancy, suggesting the functions remained but were merely being outsourced under diminished conditions. Consequently, the dismissal was not for an authorized cause. The award of separation pay and nominal damages by the NLRC in its reversal was therefore erroneous; petitioners are entitled to reinstatement without loss of seniority rights and full backwages, inclusive of allowances and other benefits, from the date of dismissal until actual reinstatement.