Punished for acting righteously

Redundancy is one of the authorized causes for the dismissal of an employee. It exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. This case of Manny explains when it can be considered as a just cause for dismissal.

On May 1, 1990 Manny was initially hired by one of the largest manufacturers of beverages in the country (the Company) as Physical Distribution Fleet Manager with a job grade of S-7 and monthly salary of P50,000 aside from the use of the company car, gasoline allowance and annual foreign travel.

In 1992, Manny became the Transportation Services Manager (TSM) in charge of preparing the budget for the vehicles of the Company nationwide. On January 4, 1996, while still serving as TSM, he submitted a report to the Company President detailing an alleged fraudulent scheme of overpricing the trucks purchased by the Company by as much as P70,000 undertaken by certain company officials in conspiracy with local truck manufacturers. In said report, he implicated his immediate boss Johnny, the Business Logistics Director, as well as Pete, the Refrigeration Services Manager.

Thereafter, or on May 1, 1996, the Company had a reorganization of the Business Logistics Directorate wherein the Transportation Services was merged with the Refrigeration Services with a new Manager replacing both Manny and Pete. Pete was then appointed as the Corporate Purchasing and Materials Manager with Manny as his Staff Assistant. Johnny retained his post as Business Logistics Director.

In his new post, Manny spent most of his time sitting at his desk with no meaningful work whatsoever. Worse was that on July 8, 1996, he received a Memorandum from Johnny informing him that his new post has a job grade of NS-7 wherein he ceased to be entitled to the benefits accruing to an S-7 position although he would continue receiving the same salary. Thus he was required to turn over to Pete the vehicle assigned to him as TSM by July 10, 1996.

Manny thought that he was demoted to force him to resign. Thus on November 11, 1996, unable to endure further harassment, Manny filed with the Arbitration Branch of the NLRC a complaint against the Company for illegal demotion and damages impleading Johnny and Pete together with the Company President, General Manager, and Human Resources Director.

On March 3, 1998, the Labor Arbiter (LA) rendered a decision in favor of Manny. The LA found that Manny was singled out or discriminated against due to his report of the 1996 truck scam, and his isolation was a punishment for acting in a righteous and forthright manner. The LA said that had Manny resigned immediately after his transfer he could even be considered as constructively dismissed. So for demoting Manny without justifiable cause, the LA ordered the Company and its impleaded officials to reinstate Manny to his former job level, return the car or compensate him for the loss of his privileges, indemnify him moral damages of P1 million, exemplary damages of P1 million and attorney's fees equivalent to 10 percent of the sums awarded.

Eventually however, even as it appealed the LA decision to the NLRC, the Company actually terminated Manny’s services effective May 31, 1998 and paid his separation pay because the Company said that his position was no longer necessary or was considered redundant due to the reorganization of the Business Logistics Directorate. Was the Company correct?

No. Redundancy is indeed one of the authorized causes for dismissal of an employee; and the determination that the employee’s services is no longer necessary or sustainable and therefore terminable for being redundant, is an exercise of business judgment of the employer. But it is not enough for a company to merely declare that it has become overmanned. It must produce substantial evidence or evidence that a reasonable mind might accept as adequate to support such conclusion like a comparison of the old and new staffing pattern, a description of the abolished and newly created positions and proof of the set business targets and failure to attain the same which necessitated the reorganization or streamlining.

In this case, other than its bare allegations of redundancy, no other evidence was presented by the Company. Neither did it present proof that it had complied with the procedural requirements of prior notice to the Department of Labor and Employment (DOLE) of Manny’s termination due to redundancy one month prior to May 31, 1998. Such notice would have afforded the DOLE the opportunity to look into and verify whether there is truth to the claim that Manny’s position had become redundant and that the Company abolished his position in good faith.

There being no authorized cause for termination of Manny’s employment, his dismissal was illegal. He should be entitled to reinstatement with full back-wages but considering that his position no longer exists and that he already received his separation pay, reinstatement is no longer possible.

The LA decision is therefore affirmed with the modifications that he should be awarded back-wages computed from the date of his illegal dismissal on May 31, 1998 until finality of judgment and that the amount of moral and exemplary damages should be reduced to P100,000 and P50,000 respectively (Coca Cola Bottlers Philippines Inc. vs. Del Villar, G.R. 163091, October 3, 2010, 632 SCRA, 293)

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

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