By Atty. Julius Gregory B. Delgado
3M PHILIPPINES, INC. VS. LAURO YUSECO, G.R. NO. 248941 (09 NOVEMBER 2020) RESTATEMENT OF REQUIREMENTS OF A VALID REDUNDANCY IN THE WORKPLACE
Because of the COVID-19 pandemic, several business establishments resorted to drastic reduction of workforce. Short of cessation of operations and closure, several companies resorted to retrenchment or declaring positions redundant as demand for goods and services plummeted down because of lockdowns and travel restrictions. However, as stated in the recent case of 3M Philippines, Inc. vs. Lauro Yuseco, G.R. No. 248941 (09 November 2020), “even if a business is doing well, an employer can still validly dismiss an employee from the service due to redundancy if the employee’s position has already become in excess of what the employer’s enterprise requires.”
In the case of 3M Philippines, Inc. vs. Yuseco, supra, respondent Lauro Yuseco worked as Country Business Leader since 1997 for 3M Company, an American multinational conglomerate corporation engaged in the manufacture and distribution of products such as adhesives, abrasives, laminates, passive fire protection, dental and medical products, electronic materials, car care products, and optical films. On 25 November 2015, respondent Yuseco was summoned to the office of the Managing Director, Anthony J. Bolzan, who together with the Human Resource Manager, Maria Theresa Chiongbian, asked him to sign and accept a severance package. Yuseco was told that his separation would be effective on 01 January 2016. He was also asked to sign a waiver and quitclaim. When Yuseco refused, he was surprised that on the next day, Bolzan announced it to all employees through an email. On 01 December 2015, Yuseco was formally served a letter declaring his position, separating him from service, and offering him a separation worth Php5,254,402.12, among other benefits.
Respondent Yuseco filed a case for illegal dismissal before the National Labor Relations Commission (“NLRC”). The Labor Arbiter held that Yuseco was illegally dismissed because the petitioner’s redundancy program was arbitrary, and its implementation, tainted with bad faith. The Labor Arbiter held that it was a mere afterthought because the letters sent to Yuseco on 25 November 2015 and 01 December 2015 were contradictory as the former stated he is voluntarily accepting the separation package and the latter stated that he was being separated because of redundancy. The Labor Arbiter also held that there was favoritism on the part of Bolzan who was the one who rated both Yuseco and his rival, Tomee Lopez of the other division of the company. Finally, the Labor Arbiter held that there was no sufficient proof that there was indeed a merger between the Industrial Business Group and Safety & Graphics Business Group considering that it was only the position of Yuseco which was declared redundant.
The NLRC reversed the ruling of the Labor Arbiter and held that the merger of two divisions could not have been a product of a quick decision but was well-thought of and carefully studied. The NLRC also held that the petitioner company was in good faith in selecting Lopez to be retained over Yuseco because of the vast experience of Lopez and his consistent high rating. Finally, the NLRC held that the letters dated 25 November 2015 and 01 December 2015 were consistent in terminating Yuseco’s employment because of redundancy of his position. On a Petition for Certiorari before the Court of Appeals, the appellate court reversed the ruling of the NLRC and restated the ruling of the Labor Arbiter.
In a Petition for Review on Certiorari, the Supreme Court reversed and set aside the decision of the Court of Appeals and restored the ruling of the NLRC. The Supreme Court held that the termination of Yuseco’s employment because of redundancy was validly done. The Supreme Court held that “redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise.” The Court further held that “A position is redundant where it had become superfluous. Superfluity of a position or positions may be the outcome of a number of factors such as over-hiring of workers, decrease in volume of business, or dropping a particular product line or service activity previously manufactured or undertaken by the enterprise.”
A valid redundancy program must comply with the following requisites: (a) written notice served on both the employees and the DOLE at least one (1) month prior to the intended date of termination of employment; (b) payment of separation pay equivalent to at least one (1) month pay for every year of service; (c) good faith in abolishing the redundant positions; and (d) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished, taking into consideration such factors as (i) preferred status; (ii) efficiency; and (iii) seniority, among others.
The determining factor of the Supreme Court that it decided in favor of the employer was the Affidavits of the petitioner’s HR Manager which stated that “petitioner’s innovative thrust to enhance its marketing and sales capability by aligning its business model with some of the 3M subsidiaries in South East Asian Region. Toward this end, petitioner ought to merge its Industrial Business Group and the Safety & Graphics Business Group to maximize the capabilities and efficiency of the workforce and remove their overlapping of functions. The redundancy program had thus become an essential tool for this purpose.”
With all due respect, I beg to disagree with the ruling of the Supreme Court. It merely relied on the Affidavits of the HR Manager who may not be privy to this merger of divisions, which the petitioner, being a multinational company, was hatched in its regional headquarters. I have had an experience on advising clients on the implementation of redundancy programs in the past and I advised client to make sure that there is a supporting study from an independent third party on justifying the existence of redundancy. I have discussed this in one of my previous columns on the case of Aboitiz Power Renewables, Inc.-Tiwi Consolidated Union, et al. vs. Aboitiz Power Renewables, Inc., et al., G.R. 237036 (08 July 2020). In that case, the employer was able to show a document entitled “Right-Sizing Program”. In the instant case, the petitioner merely presented testimonial evidence by way of Affidavits of the HR Manager. This may be self-serving and an afterthought. It can hardly be considered good faith implementation of a valid redundancy program.