G.R. No. 222289 - East Cam Tech Corp. vs. Ferdez

East Cam Tech Corporation (East Cam), a manufacturer of bags, employed the respondents—Fernandez, Delos Santos, Trinidad, and Manalansan—as sewers beginning in May 2002.
Prior to the events in question, the respondents had filed an illegal dismissal complaint against East Cam which resulted in their reinstatement.
After reinstatement, the respondents were reassigned from their original positions to the sewing line within the sample department.

The machines they used were old and worn out.
They were stationed in areas distant from the location of special, well-maintained machines.

They were singled out for having to meet a production quota and submit hourly reports, unlike their co-workers.
The respondents alleged that the production quota imposed was unreasonable and not approved by the Department of Labor and Employment (DOLE).
Additionally, they claimed that company officers compelled them to work beyond their assigned tasks.

On January 12, 2010, East Cam charged the respondents with negligence of duty for failing to meet the production quota.
The respondents were advised by their supervisor that there was no need to contest the charge, and that the matter would be resolved.
However, on February 27, 2010, after failing to answer the charge, the respondents were dismissed from service.
In reaction to their dismissal, the respondents filed a new complaint for illegal dismissal against East Cam and its key officials, seeking reinstatement, back wages, other monetary claims, damages, and attorney’s fees.

East Cam defended its actions by asserting that it had adopted a Time and Motion Study (TMS) to ensure productivity and efficiency.
Under the TMS, specific production quotas were established:

For the first job order (280 pieces of bags), four sewers were expected to produce 100 pieces per day (25 per sewer) over a span of three days.
For a later job order (315 pieces of bags), the daily target was initially set at 100 pieces per day by four sewers, later reduced to 88 pieces per day, yet the respondents failed to meet the quota even after an extra sewer was assigned.

The respondents were issued a written warning for the first offense, pursuant to East Cam’s Management and Employee Handbook, which stipulated that a second offense warranted dismissal.
The failure to meet production quotas was characterized by East Cam as gross and habitual neglect of duty under Article 282 of the Labor Code.

The Executive Labor Arbiter (ELA) rendered a decision on April 21, 2011, dismissing the respondents’ complaint and upholding East Cam’s management prerogative in regulating employment matters, including work assignments and discipline.
The ELA found that the respondents’ repeated failure to meet production targets, which resulted in operational damage, justified their dismissal.
The National Labor Relations Commission (NLRC) upheld the ELA’s decision in its October 11, 2011 ruling by finding evidence of habitual neglect of duty.
A subsequent resolution by the NLRC on January 16, 2012 denied the respondents’ motion for reconsideration.

The respondents sought a petition for certiorari before the CA, contending that the NLRC had committed grave abuse of discretion in labeling them as habitually negligent.
In its May 29, 2015 decision and December 11, 2015 resolution, the CA reversed the NLRC’s finding:

The CA noted the respondents’ eight years of prior exemplary service and the fact that they had received a commendation before being transferred to the production line.
It was observed that the respondents attempted to meet unachievable production quotas, even requesting assistance on the second job order, thus indicating their willingness to comply.

The CA held that the production quotas, based on the newly implemented TMS, were unattainable and exercised in bad faith—serving as a pretext for their dismissal.
Accordingly, the CA set aside the prior decisions and ordered the respondents’ reinstatement without loss of benefits, full back wages (including allowances), and attorney’s fees amounting to 10% of the total monetary award.

East Cam elevated the case by filing a petition for review on certiorari under Rule 45, contesting the CA’s reversal of the NLRC decision.
The sole issue on appeal concerned whether the CA erred in its reversal of the NLRC decision and in ruling that the respondents were illegally dismissed.

Whether the Court of Appeals erred in reversing the NLRC’s decision which found the respondents guilty of gross and habitual neglect of duty.
Whether the imposition of the production quotas based on the TMS was conducted in good faith and whether such quotas were reasonable and attainable.
Whether the respondents’ failure to meet the production targets, given the existing unfavorable work conditions and the sudden reassignment from sample to production line, justified their dismissal.
Whether East Cam had met its burden of proving that the dismissal was caused by actual gross negligence and habitual neglect of duty.