G.R. No. 88912 July 3, 1992
TIERRA INTERNATIONAL CONSTRUCTION CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, SHERIFF OF THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION and ISIDRO P. OLIVAR, respondents.

FACTS

On March 7, 1984, private respondent Isidro P. Olivar was hired by FEBROE, a foreign shipping company, through its local agent, petitioner Tierra International Construction Corporation, to work as a shift supervisor in Diego Garcia for one year with a basic monthly salary of US$680.00. His contract was renewed, with the last renewal on May 8, 1986. On October 1, 1986, he was dismissed and repatriated to the Philippines. Upon his return, he filed a complaint with the POEA against petitioner and FEBROE for breach of contract, unfair labor practice, and moral damages, alleging improper termination through the systematic removal of high-salaried employees. Petitioner, in its Answer, denied illegal dismissal, stating that FEBROE conducted an audit to promote economy and efficiency, resulting in the abolition of redundant positions, including Olivar’s position as “Supervisor, Technical,” due to a reduction of force from a decrease in the scope of work. The POEA, on September 7, 1988, ruled the termination was for an authorized cause and ordered payment of separation pay equivalent to one month’s salary (US$680.00) and attorney’s fees. Both parties appealed. The NLRC, on May 30, 1989, reversed the POEA, ordering petitioner and FEBROE to pay Olivar his salaries for the unexpired portion of his contract (US$4,080.00) plus attorney’s fees. Petitioner filed this petition seeking annulment of the NLRC decision.

ISSUE

Whether or not private respondent’s termination from employment is illegal.

RULING

The Supreme Court ruled that the termination was legal and for a just and valid cause. The termination was due to redundancy, which is synonymous with a reduction of force due to a decrease in the scope or volume of work as stipulated in the employment contract and recognized under Article 283 of the Labor Code. The Court found that the employer’s determination of redundancy was a management prerogative, and no abuse of discretion was shown, as 28 other positions were also abolished and Olivar was not singled out. The NLRC’s reasoning that a technical position like Olivar’s could only be redundant in the remotest manner and that junior employees should have been terminated first was erroneous, as the law makes no such distinctions or requirements. However, the Court held that private respondent was entitled to separation pay as mandated by Article 283 of the Labor Code, which is deemed read into the employment contract, despite the contract’s silence on the matter. The POEA Administrator’s award of one month’s salary as separation pay was a valid exercise of the POEA’s power to protect overseas workers’ welfare. The Court denied petitioner’s claim for exemplary damages and attorney’s fees, finding that private respondent filed his complaint in good faith. The petition was partially granted. The NLRC decision was reversed and set aside, and the POEA Administrator’s decision was revived. The Temporary Restraining Order was made permanent.