Title
Atlantic Gulf and Pacific Company of Manila, Inc. vs. National Labor Relations Commission
Case
G.R. No. 127516
Decision Date
May 28, 1999
AG&P implemented a retrenchment program in 1988 due to financial losses, dismissing 177 employees. Despite waivers, employees sued for illegal dismissal. SC upheld the program, ruling it valid as retrenchment, not redundancy, and dismissed claims of unfair labor practice.
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Case Digest (G.R. No. 127516)

Facts:

1. Background of the Case:

  • Petitioner Atlantic Gulf and Pacific Company of Manila, Inc. (AG&P) is a corporation engaged in general construction work.
  • In the late 1980s, the construction industry experienced a significant slump, leading AG&P to incur substantial operating losses of P134.8 million and net losses of P35.42 million in 1987.

2. Redundancy Program Implementation:

  • To mitigate losses, AG&P implemented a redundancy program on March 1, 1988, resulting in the separation of 177 employees, including private respondents Enrique M. Gamboa, Claro M. Tuason, and John Din.
  • Private respondents were members of the AG&P United Rank and File Association (AG&P URFA), the certified collective bargaining representative for AG&P's rank-and-file employees.
  • They received separation pay equivalent to one month's salary for every year of service: Gamboa received P149,261.13, Tuason received P99,037.26, and Din received P46,111.56. They also signed releases indicating their conformity with the redundancy program.

3. Filing of Complaints:

  • More than a year later, on May 16, 1989, private respondents filed a complaint for unfair labor practice and illegal dismissal against AG&P.
  • Labor Arbiter Crisencio J. Ramos ruled in favor of private respondents on January 31, 1991, declaring AG&P's redundancy program illegal and ordering the reinstatement of private respondents with full backwages and attorney's fees.

4. NLRC Proceedings:

  • The NLRC's Third Division initially ruled in favor of private respondents, finding AG&P guilty of unfair labor practice and illegal dismissal.
  • However, after the NLRC was reorganized, the First Division reconsidered the decision and dismissed the complaints, citing evidence of AG&P's financial losses.
  • Private respondents filed a petition before the Supreme Court, which upheld the legality of AG&P's redundancy program in G.R. No. 108259.

5. Current Case:

  • In the present case, the NLRC's Second Division affirmed Labor Arbiter Ramos' decision, prompting AG&P to file this petition for certiorari.

Issue:

  1. Whether the Supreme Court's Decision in G.R. No. 108259, which upheld the legality of AG&P's redundancy program, is applicable to the present case.
  2. Whether the NLRC erred in disregarding the similarity between the present case and the cases decided in G.R. No. 108259.
  3. Whether the dismissal of private respondents was in accordance with law and public policy.

Ruling:

The Supreme Court granted the petition, setting aside the NLRC's Decision dated September 30, 1996, and Resolution dated December 6, 1996. The Court upheld the legality of AG&P's redundancy program, which was more accurately characterized as a retrenchment program due to the economic necessity of preventing business losses. The Court found that AG&P had sufficiently established its financial losses, justifying the termination of private respondents' employment. The Temporary Restraining Order issued on February 4, 1998, was made permanent.

Ratio:

  1. Applicability of G.R. No. 108259:

    • The Supreme Court held that its Decision in G.R. No. 108259 is decisive in the present case. Both cases stemmed from the same circumstances—AG&P's redundancy/retrenchment program in 1988—and raised the same core issue of the program's validity.
  2. Distinction Between Redundancy and Retrenchment:

    • The Court clarified that AG&P's program, though labeled as a redundancy program, was more accurately a retrenchment program. Retrenchment is an economic ground for dismissal aimed at preventing business losses, while redundancy involves the excess of employees relative to the needs of the enterprise.
  3. Management Prerogative:

    • The Court emphasized that the decision to retrench is a management prerogative, provided it is based on valid economic grounds. AG&P's financial statements demonstrated substantial and imminent losses, justifying the retrenchment.
  4. Validity of Waivers and Quitclaims:

    • The Court rejected private respondents' claim that their waivers were invalid. It ruled that the waivers were voluntarily executed, with full understanding of their contents, and represented reasonable settlements. The employees received separation pay exceeding their legal entitlements.
  5. No Union-Busting Scheme:

    • The Court found no evidence to support the claim that the retrenchment program was a union-busting scheme. The rehiring of some employees was consistent with AG&P's policy of prioritizing former workers for project-based employment.


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