Aguilera vs. Coca-Cola Femsa Philippines, G.R. No. 238941, September 29, 2021 First Division, Lazaro-Javier, J. [Case Digest]

 

Aguilera vs. Coca-Cola Femsa Philippines,

G.R. No. 238941, September 29, 2021

First Division, Lazaro-Javier, J.

Case Digest

Topics:

            Authorized Caused of Termination

            Redundancy

 

Facts:

            Bernilo M. Aguilera averred that on July 1, 1995, CCFPI, formerly COCA-COLA BOTTLERS PHILIPPINES, INC. hired him as Refrigeration Technician with assignment at the company's South Luzon Cold Drink Equipment Group. He later on got promoted as Trade Asset Controller and Maintenance Coordinator, and much later, as Cold Drink Associate. He was principally tasked to supervise the maintenance work of third-party service providers on the electric coolers of the company installed in the stores of its customers.

            In May 2013, a new management group took over the company's operations. It marked the change of the company name to CCFPI. On May 6, 2013, CCFPI's Regional Director Chuck Jereos notified him that the new management would review the existing positions and performance of all plant employees.

            On August 6, 2013, the Human Resource (HR) Manager of the company's Canlubang Plant, Marge Del Rosario (Del Rosario), informed him that he failed the assessment, albeit the results were not disclosed to him. On even date, he received a notice of termination due to redundancy purportedly brought about by changes in the company's organizational structure and the consequent abolition of his position as Cold Drink Associate. His termination was to take effect on September 6, 2013.

            He pleaded with the company to reconsider his termination or at least just transfer him to another position, but his plea fell on deaf ears. Prior to his dismissal or sometime in August 2013, the company informed him that there were several vacancies available for Cold Drink Equipment Analyst. Thus, he immediately applied for this position but he failed to get the job. He later discovered that the company hired new employees for the position whose assigned tasks he used to do as a Cold Drink Associate.

            CCFPI countered that it had been compliant with all the requirements for redundancy under the Labor Code.[13] It did a regular review of its organizational structure for the purpose of achieving improved business efficiency and profitability. In the exercise of its management prerogative, it decided to outsource services for its non-core activities or activities other than manufacturing. This consequently rendered certain existing positions in the company redundant, including the position of Cold Drink Associate which petitioner used to hold. It did assess petitioner's performance to determine his qualifications for another available position in the company. Unfortunately, he was one of those who scored a below satisfactory rating, hence, the company had no choice but to let him go.

                        It adopted fair and reasonable criteria in determining who among the employees should go or stay. It considered the employees' assessment profiles, backgrounds, experiences, performance ratings for the last three (3) years, current salary bases, and locations.

            In keeping with due process, it served a notice of termination on petitioner. Also, in compliance with Article 298 of the Labor Code, it submitted an Employment Termination Report to the Department of Labor and Employment (DOLE) a month before petitioner's dismissal took effect. It also paid petitioner a total separation package of P1,840,681.72 comprising a) two hundred percent (200%) separation pay per year of service; b) commutation of earned and unused sick and vacation leaves; c) proportionate thirteenth (13th) month pay; and d) HMO coverage for five (5) years (effective September 6, 2013 to September 5, 2018) or upon turning sixty-five (65) years old, whichever comes first.

            LA held that Coca-Cola is guilty of illegal dismissal. NLRC. Labor Arbiter Guan noted that the company did not show good faith in abolishing petitioner's position as Cold Drink Associate. Nor did it follow fair and reasonable criteria in determining the positions to be declared redundant and the employees who ought to go or stay. The mere fact that petitioner got served with a notice of termination and signed a quitclaim did not automatically make the supposed redundancy valid. NLRC affirmed the Labor Arbiter with modification.  CA reversed the decision of NLRC.  CA found that CCFPI did comply with all the requisites for a valid redundancy program: 1) it sent a timely notice of termination to petitioner and submitted an Establishment Termination Report to the DOLE; 2) petitioner's separation pay was more than what the Labor Code requires; 3) it acted in good faith in abolishing petitioner's position, impelled by the streamlining of its organizational structure with the end in view of maximizing its workforce at a lesser operating cost - a valid exercise of management prerogative. The reorganization was demanded by the need to boost efficiency and increase profitability in accordance with the new plans of the company under the new management; and 4) it used fair and reasonable standards in determining the positions to be abolished or declared redundant. It was done only after consultation and deliberation with the other department heads of the company. Petitioner was properly informed of the basis of abolishing his position during a meeting held for that purpose.

 

Issue:

            Whether petitioner validly dismissed on the ground of redundancy.

 

Held:

            No; redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise. A position is redundant where it had become superfluous. Superfluity of a position or positions may be the outcome of a number of factors such as over-hiring of workers, decrease in volume of business, or dropping a particular product line or service activity previously manufactured or undertaken by the enterprise.

            The characterization of an employee's services as redundant, and therefore, properly terminable, is an exercise of management prerogative, considering that an employer has no legal obligation to keep more employees than are necessary for the operation of its business. But the exercise of such prerogative "must not be in violation of the law, and must not be arbitrary or malicious."

            For a redundancy program to be valid, the following requisites must concur: (a) written notice served on both the employees and the DOLE at least one (1) month prior to the intended date of termination of employment; (b) payment of separation pay equivalent to at least one (1) month pay for every year of service; (c) good faith in abolishing the redundant positions; and (d) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished, taking into consideration such factors as (i) preferred status; (ii) efficiency; and (iii) seniority, among others.

                        The burden is on the employer to prove by substantial evidence the factual and legal basis for the dismissal of its employees on the ground of redundancy.

            The presence of the first two (2) requisites is not in issue here. Both parties agree that petitioner and the DOLE were notified of the redundancy; and that petitioner was paid his corresponding separation pay.

            As for third and fourth requisites, however, the parties sharply disagree. On one hand, petitioner claims that although CCFPI supposedly abolished his position, it thereafter, simply adopted a different name therefor and hired new employees, albeit, in reality, the position carried essentially the same functions attached to his abolished position. On the other hand, CCFPI asserts that it did adopt a program to restructure its organization and streamline its workforce, the implementation of which called for the abolition of petitioner's position.

           

            CCFPI did not follow any set of criteria in determining the positions to be abolished and the employees to be dismissed. An employer cannot simply claim that it has become overmanned and thereafter declare the abolition of an employee's position without adequate proof of such redundancy. Nor can the employer just claim that it has reviewed its organizational structure and decided that a certain position has become redundant. Adequate proof of redundancy and criteria in the selection of the employees to be affected must be presented to dispel any suspicion of bad faith on the part of the employer."

            Here, CCFPI claims that its redundancy program called for organizational restructuring and streamlining of the then existing positions in the company. One of the positions it abolished was that of petitioner, in lieu of which, it opted to outsource its non-manufacturing activities.

            In Feati University v. Pangan, the Court rejected the bare claim of Feati that the decision to declare Pangan's position as Assistant Coordinator redundant came only after a review of its organizational structure. This did not establish good faith, much less, the use of fair and reasonable criteria in declaring the redundancy. Neither did the employer's general averment that Pangan's position was no longer necessary in the university in view of the reduced number of enrollees there at that time. The Court emphasized that proof of such alleged review and specific criteria used by Feati must be presented, otherwise, the dismissal of the employee cannot be sustained.

            Here, CCFPI presented the self-serving affidavit of its HR Manager Del Rosario that the department where petitioner belonged was restructured and that after assessments and meetings, petitioner's position was found to be redundant.

            The company also submitted, albeit belatedly on appeal the result of petitioner's psychometric examination which merely showed the numerical equivalent of the latter's IQ sans the accompanying interpretation as to his ability to comprehend or the lack thereof. This would have served as a competent basis of the management's decision to retain him or to let him go as an employee.

            Applying Feati University and Yulo, the bare declaration of CCFPI's HR Manager, without more, does not comply with the requirements of good faith and necessity. Neither does petitioner's "below ideal" IQ score conform with the presence of criteria in determining who among the employees should be dismissed. To repeat, CCFPI did not bother laying down the import of petitioner's psychometric examination on his chances of being retained in the company. No comparison was even drawn between petitioner's IQ score vis-à-vis the scores of the retained employees to show that indeed there are more qualified employees other than him. The validity of the company's action is further negated by the fact that just barely two (2) months before he was dismissed, petitioner was even given a merit increase in recognition of his successful work performance.

            Notably, for the longest time since 2014, starting when the complaint here was filed until seven years later, CCFPI never presented any single substantiating evidence of good faith and necessity. This notwithstanding petitioner's vigorous and relentless protestation that the company's so called redundancy program was tainted with bad faith and was not necessary at all.

            In any event, based on the documents submitted by the company itself, the so-called newly created Cold Drink Equipment Analyst position and petitioner's abolished Cold Drink Associate position have essentially similar, if not exactly the same functions.

            As a Cold Drink Associate, petitioner was responsible for updating CCFPI's data system on transactions and actions involving its cold drink equipment. He prepares and releases work orders to third party service providers. He also processes the work done by third party service providers. He prepares the inventories, evaluates documents, and conducts performance review meetings for all the services rendered. All these functions are basically the same, if not identical with the four (4) responsibilities attached to the newly created Cold Drink Equipment Analyst position (i.e. responsible for Accuracy of System and Trade reports; updates logistics on Cold Drinks Equipment; releases work orders; and processes finished work orders by third party). Clearly, the former position was simply replaced by another albeit the latter carried a different name and with a much lower compensation.

            On this score, Abbott Laboratories (Philippines), Inc. v. Torralba ordained that an employer's subsequent creation of new positions or the hiring of additional employees is inconsistent with the termination on the ground of redundancy; it exhibits the employer's intent to circumvent the employee's right to security of tenure.

            In Abbott, the company merged its PediaSure Division and Medical Nutrition Division pursuant to a study which recommended the restructuring of the sales force of its Specialty Nutrition Group. The Medical Nutrition Division allegedly generates a larger share in the Philippine market, as compared to the PediaSure Division, and for this reason Abbott retained the structure of the former division. As a result, Almazar, Navarre and Torralba's respective positions as National Sales Manager and Regional Sales Managers under the PediaSure Division were declared redundant.

            The Court found that Abbott failed to prove that it followed a set of criteria in determining the positions to be abolished and the employees to be dismissed or retained. Meanwhile, its bad faith was manifested by its subsequent creation of new positions in the company.

            In the notice furnished by Abbott to the DOLE, the company declared that the reason for the redundancy program, affecting four (4) of its employees, is to reduce the company's manpower by eliminating positions that were allegedly superfluous. However, this proffered justification is readily contradicted by the fact that the affected employees were offered newly-created District Sales Manager positions that were entitled to lower pay and benefits. To Our mind, the redundancy program is then a mere subterfuge to circumvent respondents' right to security of tenure. Hence, just as uniformly found by the Labor Arbiter. NLRC, and the CA, the redundancy program cannot be considered lawful.

            Consequently, the Deeds signed by the respondents could not therefore be deemed valid, premised as they were on an invalid termination. The case of Philippine Carpet Manufacturing Corporation v. Tagyamon (Philippine Carpet) is illustrative on this point.

            In the said case, the Court listed three specific instances wherein a waiver cannot estop a terminated employee from questioning the validity of his or her dismissal, in wit: (1) the employer used fraud or deceit in obtaining the waivers.

            In the same view, CCFPI here did not have an honest to goodness redundancy program. It did not have a definite set of criteria in determining who among its employees should stay and who should go. It abolished petitioner's position for being supposedly redundant only to later on recreate it assigning it another name and a reduced salary rate.

            Petitioner's quitclaim was void. Quitclaims and waivers are oftentimes frowned upon and are considered as ineffective in barring recovery for the full measure of the worker's rights and that acceptance of the benefits therefrom does not amount to estoppel. The reason being that the employer and employee, obviously do not stand on the same footing. But not all waivers and quitclaims art invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of change of mind.

            There are three (3) instances, however, where a waiver cannot preclude a dismissed employee from questioning the validity of his or her dismissal: (1) if the employer used fraud or deceit in obtaining the waivers; (2) if the consideration the employer paid is incredible and unreasonable; or (3) if the terms of the waiver are contrary to law, public order, public policy, morals, or good customs or prejudicial to a third person with a right recognized by law.

            Before the courts can consider a waiver valid, the legality of the termination itself should be able to withstand judicial scrutiny. Should the court find that either of the foregoing exceptions is attendant, the dismissed employee cannot be deemed barred from contesting the validity of the termination.

            In Becton Dickinson Phils., Inc. v. National Labor Relations Commission, the Court declared as invalid the quitclaims signed by the dismissed employees due to a supposed redundancy. The Court recognized the fact that the risk of not receiving anything, whatsoever, coupled with the probability of not being able to immediately secure a new job or means of income, constitutes enough pressure upon anyone who is asked to sign a release and quitclaim in exchange for some amount of money. That the employee may have held a supervisory position did not make him any less susceptible to accept the separation package forced as he is with the real threat of unemployment. So must it be.

            Here, CCFPI is liable to reinstate petitioner to his former position or to any similar or equivalent position. If reinstatement is no longer feasible, petitioner shall be entitled to separation pay equivalent to one (1) month salary for every year of service which shall be offset against the separation pay he initially received from CCFPI. In either case, he shall receive full backwages computed from the time compensation was withheld up to the date of actual reinstatement. Since petitioner had been momentarily reinstated pursuant to the labor arbiter's order of actual reinstatement, albeit he was again subsequently dismissed on November 13, 2017 following the contrary ruling of the Court of Appeals, the award of backwages shall be reckoned from November 13, 2017 until actual reinstatement or payment of separation pay, as the case may be.