Title
Que vs. Asia Brewery, Inc.
Case
G.R. No. 202388
Decision Date
Apr 10, 2019
Former regional sales manager Que contested termination, alleging constructive dismissal; Supreme Court upheld redundancy as valid, citing business necessity and compliance with legal requirements.
asia brewery
constructive dismissal
redundancy

Case Summary (G.R. No. 202388)

Procedural Antecedents and Tribunal Coverage

The Court of Appeals affirmed the NLRC, and the NLRC had reversed an earlier adverse ruling of the Labor Arbiter (LA) in favor of Que. The LA ruled that Que had been constructively dismissed and awarded backwages, separation pay, 13th month pay, unpaid salary, EISP reimbursements, money value of sick and vacation leave credits, moral damages, exemplary damages, and attorney’s fees. On appeal, the NLRC found no illegal dismissal and held that Que’s employment was validly terminated on the ground of redundancy under Article 283 of the Labor Code. The CA sustained the NLRC, and Que then brought the matter to the Supreme Court through a Rule 45 petition raising the single core question of whether the CA committed grave abuse of discretion when it affirmed the NLRC’s conclusion of valid termination.

Factual Background: Que’s Role and the Reorganization

Que had served as RSM for eight years under a regional structure that previously involved twelve sales offices forming the North Central Luzon Region (NCLR) under one RSM. In February 2004, Asia Brewery split the region into two parts to spur growth and provide more direct, focused handling. One part composed sales offices at San Leonardo, Tarlac, Sta. Maria, San Fernando, Olongapo, Bataan, La Union, Baguio, and Dagupan. The second part, which was placed under Que as RSM, consisted of Vigan, Tuguegarao, and Cauayan.

On May 2, 2005, internal evaluation by Gatmaitan recommended reverting to the previous one-RSM setup, asserting that the experimental split produced no gain. Gatmaitan specifically recommended abolishing Que’s RSM position because reversion would create redundancy in the RSM office. The parties then narrated conflicting accounts of what transpired thereafter, particularly as to whether Que was pressured into resigning or whether he negotiated terms for separation after being informed of redundancy.

Conflicting Narratives on Que’s Separation

In Que’s version, Gatmaitan informed him that Tan wanted to extend an offer to him because his performance was no longer effective. Que met Tan and was told he would receive a separation package, with assurances that they would presumably deal again given his skills in distribution. Que did not indicate that he was retiring or resigning. Afterward, he was brought to a meeting where he was shown computation of the amount he was to receive, and later was asked to submit a resignation letter. Que repeatedly insisted he was not retiring or resigning, and he alleged he was pressured to surrender company property, including his vehicle, while being obstructed from entering sales office premises after his functions were disrupted. He recounted attempts to resume work, including seeking sheriff assistance to enter the Vigan sales office, but he was handed letters barring him from entering. He further asserted that after a later letter dated June 21, 2005, he claimed that his status had been affected in a manner that supervened earlier termination correspondence.

In Asia Brewery’s version, Que was verbally informed on May 4, 2005 by Manipor about the plan to consolidate North and Central Luzon under a single RSM, which would abolish his position once implemented. The company showed Que an initial separation pay computation of Php536,000.00. Asia Brewery asserted that Que negotiated for higher separation pay, first asking to round off to Php600,000.00 and to have the service vehicle transferred to him. It maintained that Que, in his meeting with Tan, discussed separation pay and distributorship prospects, and that he would submit his resignation letter after he bade farewell to the sales offices. Asia Brewery asserted that although separation pay was increased during further meeting on May 30, 2005, no agreement was reached because Que demanded Php888,888.00 and the vehicle. It also claimed Que refused to turn over the vehicle key and later demanded an even larger separation package of Php8,876,189.70, which the company rejected for lack of legal or factual basis. Asia Brewery’s narrative thus framed Que’s separation as the consequence of redundancy after failed negotiations rather than harassment or coercion.

Labor Arbiter’s Ruling: Constructive Dismissal

The LA ruled that Que was constructively dismissed. It found that after being informed of his impending dismissal, Que could no longer work with ease because he was constantly prodded to submit his resignation letter. The LA also credited Que’s account of being irregularly prevented from reporting to work when security guards refused entry to the sales offices, and it noted the cancellation of his fleet card for gas expenses. Finally, the LA ruled Asia Brewery failed to prove redundancy because no financial statement from an independent auditor was submitted.

As a result, the LA entered judgment against Asia Brewery and ordered payment of backwages, separation pay, 13th month pay, unpaid salary, EISP reimbursements, money value of sick and vacation leave credits, moral damages, exemplary damages, and attorney’s fees, totaling P3,218,929.52.

NLRC’s Ruling: Valid Termination for Redundancy

Both parties appealed to the NLRC. Que argued he was entitled to higher monetary awards, while Asia Brewery insisted Que was not illegally dismissed. The NLRC reversed the LA and found that Que was not pressured into relinquishing employment. Instead, it concluded that Que negotiated for a separation package after being informed that his position would be redundated because the company would revert to having one RSM for the combined North and Central Luzon areas.

The NLRC relied heavily on a letter from Que dated May 18, 2005, which it interpreted as showing that Que was not against the planned reversion and redundancy implementation and as contradicting claims of coercion or hostility. The NLRC thus declared that Asia Brewery committed no illegal dismissal and that Que’s termination was valid under Article 283 of the Labor Code. Accordingly, the NLRC deleted awards for backwages, moral damages, and exemplary damages, while affirming separation pay and other monetary benefits already allowed by the LA.

Court of Appeals: No Grave Abuse of Discretion

Que’s petition to the CA challenged the NLRC’s determinations. The CA affirmed in toto. It ruled that the NLRC did not commit grave abuse of discretion when it held that Que’s May 18, 2005 letter showed he was not coerced, and when it treated the letter as inconsistent with his allegations of animosity or pressure. The CA further ruled that Asia Brewery complied with the formal and substantial requirements for termination due to redundancy.

In sustaining the NLRC’s approach, the CA emphasized the redundancy requisites recognized in jurisprudence, including written notice to the employee and the DOLE, payment of separation pay, good faith in abolishing the redundant position, and fair and reasonable criteria in choosing the employees to be declared redundant.

Supreme Court Issues and Review Framework

Before the Supreme Court, the issue posed by Que was whether the CA abused its discretion amounting to lack or excess of jurisdiction when it affirmed the NLRC finding that Asia Brewery did not illegally terminate Que. The Supreme Court noted that Que’s essential challenge was a factual one, directed at the validity of the redundancy claim.

The Court held that such factual reconsideration could not be undertaken under a Rule 45 petition in labor cases, where review was limited. It applied the established review prism that CA decisions in labor cases are assessed only through whether the CA correctly determined the presence or absence of grave abuse of discretion in the NLRC’s ruling. The Court further reiterated that Rule 45 restricts review to questions of law and requires examining the CA decision through the grave-abuse-of-discretion lens rather than simply reweighing the merits.

Legal Basis: Redundancy Requirements and Management Prerogative

In assessing whether the NLRC committed grave abuse of discretion, the Court referred to Article 298 (283) of the Labor Code, which allows termination due to redundancy, provided that the employer serves written notice to workers and the Ministry of Labor and Employment (at least one month before) and provides separation pay of at least one month pay or one month pay for every year of service, whichever is higher. The Court also recalled the definition of redundancy as the situation where an employee’s service is excess of what is reasonably demanded by actual business requirements, and a redundant position is one rendered superfluous by factors such as overhiring, decreased volume of business, dropping product lines, or phasing out of service activity.

The Court then relied on the redundancy requisites laid down in Lowe, Inc. v. Court of Appeals. It reiterated that for a redundancy program to be valid, the employer must comply with: (1) written notice served on both the employee and the DOLE at least one month prior to termination; (2) payment of separation pay in the legally required minimum; (3) good faith in abolishing the redundant position; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant.

The Court further underscored that the determination of the continuing necessity of an officer or position in a business corporation is part of management prerogative, and courts generally do not interfere absent proof of arbitrary or malicious action. It also recognized that it is within management’s prerogative to determine qualifications and fitness for hiring, firing, promotion, or reassignment, and that an employer has no legal obligation to keep more employees than are necessary for its operations.

Application: Substantial Evidence for Redundancy

Applying the above framework, the Court found that Que’s main argument—lack of supporting documents showing business deterioration—was belied by the findings of the NLR

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