G.R. No. 183526 - Lalican vs. Insular Life Assurance Co. Ltd.

Marcos Antonio Morales, Georgina D. Tribujenia, Cicero A. Cajurao, and Noli A. Dejan (collectively “Morales et al.”) were employees of Central Azucarera de La Carlota, Inc., a sugar mill based in La Carlota City, Negros Occidental.
The company’s facilities included operational mill buildings and guest houses used both as residence for the resident manager and as temporary accommodations for other employees, such as auditors, mechanics, and technicians.
Initially, petitioners were assigned to basic housekeeping, utility maintenance, and cooking functions in the guest houses and were classified as rank-and-file workers under the company’s Human Resource Department.
In 2006, they were transferred to the Office of the Resident Manager as confidential employees, resulting in their removal from the protection of the rank-and-file union.

On August 21, 2007, the head of HR, Jose Parcon, announced that the positions held by the guest house workers were redundant and that the affected employees would be terminated effective September 21, 2007.
Central Azucarera issued letters informing employees—including Morales et al. and another employee—to choose between an early retirement package and retrenchment (termination with lower re-employment terms via a separate entity), with corresponding compensation schemes.
While Fermin Suringa, Jr. accepted the early retirement offer, Morales et al. refused to sign the documents and instead proposed a transfer to a different department.
Efforts to negotiate an alternative assignment were unsuccessful; consequently, when petitioners reported for work on September 22, 2007, they found themselves locked out as their biometric Bundy clock no longer recognized them.

Morales et al. filed a complaint on March 30, 2009, before the Regional Arbitration Branch VI of the National Labor Relations Commission (NLRC) in Bacolod City, alleging illegal dismissal, nonpayment of overtime, moral and exemplary damages, and attorney’s fees.
The Labor Arbiter ruled in favor of petitioners by ordering their reinstatement, but withheld backwages because of the delay in filing the complaint.
Upon elevation, the NLRC modified the ruling and ordered Central Azucarera to pay backwages amounting to P1,377,251.25, finding that the company failed to justify the dismissal with sufficient evidence of a redundancy program or the abolition of positions.

Subsequent to the initial NLRC decision, Central Azucarera filed for reconsideration, and the Commission later reversed its earlier decision by holding that the company was experiencing business losses as evidenced by audited financial statements; petitioners were dismissed for an authorized ground of redundancy, although only separation pay and nominal damages were awarded.
Morales et al. then filed a Petition for Certiorari under Rule 65 with the Court of Appeals challenging the NLRC decision, which resulted in the CA affirming the NLRC ruling—with minor modifications such as the deletion of the nominal damages—upholding the redundancy dismissal on the basis of business losses and the repositioning of job functions.
During the appeal process, one of the petitioners, Cicero A. Cajurao, died and was substituted by his wife and son.
Dissatisfied with the outcome, Morales et al. filed a Petition for Review on Certiorari under Rule 45 before the Supreme Court, contending that the CA erred in ruling that there was no grave abuse of discretion.

Petitioners argued that there was no real redundancy since the guest houses continued operating and that the company’s reassignment offer through a different entity was nothing but a scheme to downgrade their employment status.
They challenged the procedural compliance of the company, asserting that the written notices of termination were not properly served, as personal service was refused and delivery via registered mail proved ineffective.
In contrast, Central Azucarera maintained that the redundancy dismissal was a bona fide exercise of management prerogative, compelled by substantial business losses, and that it had substantially complied with procedural due process by attempting personal service before resorting to registered mail.

Whether the positions held by Morales et al. were indeed redundant and unnecessary to the core operations of Central Azucarera.
Whether the procedures followed by the employer in terminating the petitioners were in accordance with the requirements under Article 298 of the Labor Code.

Whether Central Azucarera adequately served written notice of termination to the petitioners and to the Department of Labor and Employment.
Whether the methods employed by the company (personal service and registered mail) were sufficient to constitute proper notice, especially given the petitioners’ refusal to accept the notice.

Whether the Court of Appeals committed an error of law by determining that there was no grave abuse of discretion in the NLRC decision, in light of the limitations imposed by a Rule 45 petition which restricts review to questions of law only.