Facts:

The case involves Atlantic Gulf and Pacific Company of Manila, Inc. (AG&P) as the petitioner and the National Labor Relations Commission (NLRC), along with private respondents Enrique M. Gamboa, Claro M. Tuason, and John Din, as respondents. The events leading to this case began in the late 1980s when the construction industry in the Philippines faced a significant downturn. In 1987, AG&P, a corporation engaged in general construction, reported substantial operating losses amounting to P134.8 million and net losses of P35.42 million. To mitigate these financial difficulties, AG&P implemented a redundancy program on March 1, 1988, resulting in the separation of 177 employees, including the private respondents, who were members of the AG&P United Rank and File Association (AG&P URFA), the certified collective bargaining representative for all rank-and-file employees. The separated employees received their separation pay, which was equivalent to one month’s s...

Facts:

Background and Economic Context

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

Implementation of the Redundancy (Retrenchment) Program

• On March 1, 1988, AG&P implemented a redundancy program as a cost-cutting measure.
• The program led to the separation of 177 employees, including rank and file, managerial, and staff positions.
• Among the affected employees were private respondents Enrique M. Gamboa, Claro M. Tuason, and John Din, members of the AG&P United Rank and File Association (the certified collective bargaining representative for rank and file employees).
• The affected employees received separation pay equivalent to one month’s salary for every year of service, with amounts received as follows:
• Gamboa: P149,261.13
• Tuason: P99,037.26
• Din: P46,111.56
• The private respondents executed releases indicating their acceptance and conformity with the redundancy program.

Filing of Complaints and Initial NLRC Actions

• More than a year after the program’s implementation, on May 16, 1989, AG&P was charged with unfair labor practice and illegal dismissal by the private respondents.
• On January 31, 1991, Labor Arbiter Crisencio J. Ramos rendered a decision in favor of the private respondents by:
• Declaring the redundancy program illegal.
• Ordering the reinstatement of the affected complainants to their former positions with full backwages (covering the period from April 1, 1988, to January 31, 1991).
• Awarding additional attorney’s fees.

Consolidated Cases and Related Proceedings

• The decision references four other complaints filed by the AG&P URFA and 36 union members regarding illegal dismissal and unfair labor practice stemming from similar circumstances.
• The NLRC’s Third Division found AG&P guilty of unfair labor practice and illegal dismissal in those related cases, and its findings were adopted by Labor Arbiter Ramos.
• The evidence indicated that the redundancy program was initiated in the wake of negotiations, a prior strike (September 22 to October 18, 1987), and ensuing labor disputes, thereby suggesting ulterior motives behind the separation of union-affiliated employees.

Reorganization of the NLRC and Subsequent Developments

• The NLRC was reorganized under Republic Act No. 6715 (New Labor Relations Law).
• After admitting evidence of losses from 1987 up to 1990, the First Division of the reorganized NLRC set aside the prior decision of the Third Division and dismissed the employees’ complaints for illegal dismissal.
• The affected employees then filed a petition before the Supreme Court alleging grave abuse of discretion by the NLRC.

Petitioner’s Arguments and the Role of G.R. No. 108259

• Petitioner argued that:
• The NLRC could not overturn the Supreme Court’s decision in G.R. No. 108259 which upheld the legality of AG&P’s redundancy program.
• The present case was similarly situated to earlier cases consolidated under the AG&P United Rank and File Association v. NLRC (First Division) decision.
• The dismissal of the private respondents’ employment was in accordance with law and public policy.
• The Solicitor General submitted for consideration that the decision in G.R. No. 108259 was binding and determinative of the current case.

Evidence Presented and Analysis by the Court

• Evidence of the company's sustained financial losses, including a continuous decline in income (from P205 million in 1984 to a loss of P34 million in 1987, and further losses amounting to P176,181,505.00 in 1990), was introduced belatedly but explained satisfactorily.
• The records showed that aside from the redundancy (retrenchment) program, AG&P employed other cost-cutting measures, underscoring the financial distress it was facing.
• Private respondent arguments that the program was a union-busting scheme were countered by evidence of substantial financial losses which justified the retrenchment.

Significance of Waivers and Releases

• The affected employees signed waivers and releases acknowledging receipt of separation pay and accepting that such separation had no connection with their union activities.
• The Court noted that waivers and quitclaims, if voluntarily entered into with full understanding and credible consideration, are generally binding and are not contrary to public policy.

Issue:

Applicability of the Prior Supreme Court Decision

• Whether the decision in G.R. No. 108259 (which upheld the legality of AG&P’s redundancy program as a retrenchment measure) is applicable and binding to the present case.

Legality of the Redundancy (Retrenchment) Program

• Whether the redundancy program, ostensibly a retrenchment to alleviate financial losses, was legally implemented in accordance with labor law.
• Whether the evidence of substantial company losses sufficiently justified the termination of employees.

Validity and Effect of Waivers and Releases

• Whether the employees’ signed waivers and releases, which acknowledged their acceptance of the separation pay and resignation of further claims, are enforceable and not contrary to public policy.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)