022. Andrada v. NLRCR

RepublicofthePhilippinesSUPREMECOURT

Manila

SECONDDIVISIONRUBENL.ANDRADA,BERNALDOG.R.No.173231V.DELOSSANTOS,JOVENM.PABUSTAN,FILAMERALFONSO,VICENTEA.MANTALA,JR.,HARVEYD.CAYETANO,andPresent:JOVENCIOL.POBLETE,Petitioners,QUISUMBING,J.,Chairperson,CARPIO,

versusCARPIOMORALES,TINGA,and

NATIONALLABORRELATIONSVELASCO,JR.,JJ.COMMISSION,SUBICLEGENDRESORTSANDCASINO,INC.,and/orMR.HWAPUAY,MS.FLORDELIZAMARIAREYESRAYEL,anditsPromulgated:CORPORATEOFFICERS,

Respondents.December28,2007xx

DECISION

VELASCO,JR.,J.:Toprovide full protection to labor, the employersprerogative tobringdown labor costs throughretrenchment must be exercised carefully and essentially as a measure of last resort. So shouldmanagements prerogative to declare the employees services redundant not be used aweapon tofrustrate labor. This case brings to fore the continuing labormanagement struggle for mutualsurvival.PetitionersRubenAndrada,JovencioPoblete,FilamerAlfonso,HarveyCayetano,VicenteMantala,Jr.,BernaldodelosSantos,andJovenPabustanwerehiredonvariousdatesfrom1995upto1997and worked as architects, draftsmen, operators, engineers, and surveyors in the Subic Legend

ResortsandCasino, Inc. (Legend)ProjectDevelopmentDivisiononvariousprojects.HwaPuay,Flordeliza Maria Reyes Rayel, and other corporate officers are impleaded in this case in theirofficialcapacitiesasofficersofLegend.On January 6, 1998, Legend sent notice to the Department of Labor and Employment of itsintention to retrench and terminate the employment of thirtyfour (34) of its employees, whichinclude petitioners, in the Project Development Division. Legend explained that it would beretrenchingitsemployeesonalastinfirstoutbasisonthestrengthoftheupdatedstatusreportofitsProjectDevelopmentDivision,as follows: (1)shelvingof thecondotelprojectuntileconomicconditions in the Philippines improve (2) completion of the temporary casino in Cubi bymidFebruary1998 (3)subcontracting thesuperstructureworkofGrandLegend toa thirdparty (4)completionofmostoftherectificationworkattheLegendaHotel(5)completionofthetemporarycasino inCubi and (6) abolition of thePersonnel andAdministrativeDepartment of theProjectDevelopmentDivisionandtransferofitsfunctionbacktoLegendsHumanResourcesDepartment.Thefollowingday,onJanuary7,1998,Legendsent the34employees their respectivenoticesofretrenchment, stating the same reasons for their retrenchment. It also offered the employees thefollowingoptions,towit:

1.Temporaryretrenchment/layoffforaperiodnottoexceedsixmonthswithinwhichweshallexplore your possible reassignment to other departments or affiliates, after sixmonths andredeployment and/or matching are unsuccessful, permanent retrenchment takes place andseparationpayisreleased.

2.Permanentretrenchmentandpaymentofseparationpayandotherbenefitsafterthethirty(30)

daysnoticehaslapsedor3.Immediateretrenchmentandpaymentofseparationpay,benefitsandonemonthssalaryin

lieuofnoticetoallowyoutolookforotheremploymentopportunities.[1]

LegendgavesaidemployeesaperiodofoneweekoruntilJanuary14,1998tochoosetheiroption,withoptionnumber2(permanentretrenchment)asthedefaultchoiceincasetheyfailedtoexpresstheirpreferences.Aftertheemployeesmadetheirchoices,theyalsoexpressedtheirreservationthattheirchoiceshouldnotbedeemedaswaiveroftheirrightsgrantedundertheLaborCodeortheirrighttoquestionthevalidityoftheirretrenchmentshouldtheirseparationbenefitsnotbesettledbyJanuary30,1998.

Curiously, on the same day, the Labor and Employment Center of the Subic Bay

MetropolitanAuthorityadvertisedthatLegendInternationalResorts,Inc.wasinneedofemployees

forpositionssimilartothosevacatedbypetitioners.[2]

Afterwards, on February 6, 1998, Legend informed the retrenched employees of their

permanentretrenchmentand/ortheiroptions.Legendpaid theretrenchedemployees theirsalariesup to February 6, 1998, separation pay, prorated 13thmonth pay, exgratia, meal allowance,unusedvacation leavecredits, and tax refund.Petitioners, in turn, signedquitclaimsbut reservedtheirrighttosueLegend.

Subsequently, on March 3, 1998, 14[3]

of the 34 retrenched employees filed before theRegionalArbitrationBranchoftheNationalLaborRelationsCommission(NLRC)inSanFernandoCity,Pampanga,acomplaintforillegaldismissalandmoneyclaimsforthepaymentoftheirshareintheservicecharges,unusedleaves,andtheirsalariesfortheunexpiredportionoftheirrespectiveemploymentcontracts,damages,andattorneysfeesagainstLegendanditsofficials,HwaPuayandFlordelizaMariaReyesRayel.ThecomplaintwasdocketedasNLRCRABIII03908098.

Before theLaborArbiter, complainants alleged that theywere illegally dismissed because

Legend,aftergivingretrenchmentasthereasonfortheirtermination,creatednewpositionssimilartothosetheyhadjustvacated.Legend,ontheotherhand,invokedmanagementprerogativewhenitterminated the retrenchedemployeesandsaid thatcomplainantsvoluntarilysignedquitclaimssothattheywerealreadybarredfromsuingLegend.

OnFebruary7,2000,theLaborArbiterrenderedaDecision,thefalloofwhichreads:

WHEREFORE, premises considered, respondents are hereby adjudged guilty of Illegaldismissal, and theyareordered to immediately reinstate thecomplainantswithout lossof seniorityrightsandtopaytothemthefollowing:

1.RubenAndrada:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of

P14,300.00 and the same amount every month thereafter until reinstated P343,200.00

b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24

months) and the same amount every month thereafter until reinstated P19,200.00

c)13thmonthpayfor2years(1998to1999)P28,600.00

d)14thmonthpayfor2years(1998to1999)P28,600.00e)DamagesP100,000.00TOTALP519,600.002.DarrylBautista:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P22,400.00d)14thmonthpayfor2years(1998to1999)P22,400.00TOTALP332,800.003.JovencioPobletea) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P24,000.00d)14thmonthpayfor2years(1998to1999)P24,000.00e)DamagesP100,000.00TOTALP455,200.004)RenatoPangilinan:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P34,000.00d)14thmonthpayfor2years(1998to1999)P34,000.00TOTALP495,200.00

5)DarioRapada:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P20,000.00d)14thmonthpayfor2years(1998to1999)P20,000.00TOTALP299,200.006)AdrianCamacho:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P14,000.00d)14thmonthpayfor2years(1998to1999)P14,000.00TOTALP215,200.007)MarvinSamaniego:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P14,000.00d)14thmonthpayfor2years(1998to1999)P14,000.00TOTALP215,200.008)FilamerAlfonso:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of


b) Meal allowance at P800.00 a month from February 6, 1998 to February 6, 2000 (24months) and the same amount every month thereafter until reinstated P19,200.00

c)13thmonthpayfor2years(1998to1999)P20,000.00d)14thmonthpayfor2years(1998to1999)P20,000.00TOTALP299,200.009)MiltonMaravilla:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P26,000.00d)14thmonthpayfor2years(1998to1999)P26,000.00e)DamagesP100,000.00TOTALP483,200.0010)HarveyCayetano:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P16,000.00d)14thmonthpayfor2years(1998to1999)P16,000.00e)DamagesP100,000.00TOTALP343,200.0011)VicenteMantala,Jr.:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P11,000.00d)14thmonthpayfor2years(1998to1999)P11,000.00e)DamagesP100,000.00TOTALP273,200.0012)CarlosMananquil:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P60,000.00d)14thmonthpayfor2years(1998to1999)P60,000.00e)DamagesP100,000.00TOTALP959,200.0013)BernaldodelosSantos:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P37,000.00d)14thmonthpayfor2years(1998to1999)P37,000.00e)DamagesP100,000.00f)ServicechargeatP1,500.00amonthfromMay15,1996toFebruary6,2000(44months)

andeverymonththereafteruntilreinstatedP72,000.00TOTALP709,200.0014)JovenPabustan:a) Back salaries from February 6, 1998 to February 6, 2000 (24 months) in the sum of




c)13thmonthpayfor2years(1998to1999)P20,000.00

d)14thmonthpayfor2years(1998to1999)P20,000.00e)DamagesP100,000.00TOTALP399,200.00The respondentsare furtherordered topay to thecomplainantsattorneys feesequivalent to

ten(10%)percentofthetotalawardduethecomplainants.Thepaymentofbacksalary,13thmonthpayand14thmonthpay,mealallowanceandservicechargeshallbecomputeduptothedateofthefinalityofthisdecision.

SOORDERED.[4]

TheLaborArbiterstatedthatthedocumentssubmittedbyLegendtojustifytheretrenchment

ofitspersonnelwereinsufficientbecausethedocumentsfailedtoshowthatLegendwassufferingfromactuallossesorthattherewasredundancyinthepositionsoccupiedbypetitioners.TheLaborArbiter also attributed bad faith on the part ofLegendwhen it advertised openings for positionssimilartothoseoccupiedbytheretrenchedemployeesatthesametimetheretrenchmentprogramwasbeingimplemented.

TheLaborArbitergavenoevidentiaryweighttocomplainantsquitclaimsbecause,according

to theLaborArbiter, thesequitclaimswerepartof theclearance formspreparedand imposedbyLegendontheretrenchedemployeesbeforetheirclearancescouldbeapproved.TheLaborArbiteralso found that in the conference held on January 28, 1998 between complainants and Legendsmanagement, complainants inscribed their reservations at the bottom of their clearance forms,statingthattheywouldacceptLegendsofferontheconditionthattheyreservedtheoptiontolaterfiletheirrespectiveclaimswiththeNLRC.

Withregardtotheissueofdamages,theLaborArbiterobservedthatcomplainants,whowere

licensed professionals, had sufficiently proven that they suffered social humiliation and mentaltraumabecause theirdismissalwasclearlyattendedbybad faithandcontrary to lawsandpublicpolicy.OnaccountofLegendsbadfaith,theLaborArbiterawardedattorneysfeesequivalenttotenpercent(10%)ofthetotalamountawardedtocomplainants.

OnApril7,2000,LegendfiledanappealwiththeNLRC.Notably, itsnewcounseldidnot

submithisformalsubstitutionascounsel.ComplainantsconsequentlyfiledtheirMemorandumonAppealwithaprayertodeclaretheLaborArbitersdecisionfinal.Theyaverthatsincetherewasnoformal substitution of counsel, Legends new counsel had no personality to file an appeal and

becausenoappealwasperfectedwithinthereglementaryperiod,theLaborArbitersdecisionshouldbedeemedfinalandexecutory.

Afterthreeyears,theNLRCrendereditsJune23,2003DecisionwhichreversedtheLabor

Arbiter. The NLRC held that the Labor Arbiter erred when he failed to consider the numerousdocumentspresentedandsubmittedbyLegendtoprovethatitwassufferingfromactuallosses,andthattherewasredundancyintheworkoftheretrenchedemployees.TheNLRCalsogavecredenceto Legends claim that it was Yap Yuen Khong, and not Legend, who asked for Subic BayMetropolitanAuthorityshelpinrecruitingpersonnelforGaehinInternationalInc.(Gaehin)asthesubcontractorfor theconstructionof theGrandLegendaHotelandCasino.TheNLRCobservedthatGaehinwasanentitydistinctandseparatefromLegend.

With regard to theLaborArbiters award of payment of service charges toBernaldo delos

SantosandCarlosMananquil,theNLRCheldthattheawardwasimpropersincedelosSantosandMananquilsemploymentcontractsdidnotprovideforthepaymentofservicecharges.Accordingtothe NLRC, though they previously received this benefit, it was because of an error in theadministrative system and since the benefits were paid by mistake, these did not ripen into acompanypractice.

The NLRC likewise held that the Labor Arbiter erred when it awarded the retrenched

employees14thmonthpay,orexgratiapayment.TheNLRCexplained that thiswasaonetimebonus for the year 1997 given for the employees hardwork and contribution for the year 1997.Further,noevidencesuggestedthatthiswasdoneinthepastorsubsequentyears.

The NLRC also held that Legend fully and properly complied with the 30day notice

requirementstotheDOLEandtotheretrenchedemployees.TheNLRCDecisionsfalloreads:WHEREFORE, premises considered, the assailed decision is hereby reversed and set aside.Respondents are adjudgednot guilty of illegal dismissal.Theorder of reinstatement aswell as allmonetaryawardsaredeletedfromthedecision.

SOORDERED.[5]

Complainantsmoved for the reconsiderationof theNLRCsDecision,but theirmotionwas

deniedbytheNLRC.Consequently,10[6]

outofthe14[7]

originalcomplainantsfiledaPetitionforCertiorariwiththeCourtofAppeals(CA),docketedasCAG.R.SPNo.81701.Thispetitionwas,

however,deniedbytheCAforlackofmeritinitsApril28,2006Decision.[8]

The CA held that the retrenched employees were validly dismissed from employment due toredundancy and not retrenchment. The CA ratiocinated that Legend had validly terminated theemploymentofitsemployeessinceithadproventhatcomplainantspositionsweresuperfluousandthattherewasanoversupplyofemployeesmorethanwhatitsprojectsneeded.OntheissueofLegendsrecruitmentofnewpersonnelafterterminatingcomplainantsemployment,theCAheldthattheNLRChadsufficientlyexplainedthatitwasnotLegendbutGaehin,throughMr.Khong,whichwasrecruitingforpersonnel.

AggrievedbytheCADecision,seven[9]

outofthe14originalcomplainantsfiledthepresentpetition.Theyraisethefollowingissues:

1. DidLegendperfect its appealbefore theNLRC, though ithadnot formallyandproperlysubstituteditscounsel?

2.Werecomplainantsillegallydismissed?Corrollarily,wasthereavalidretrenchment?

Or, did Legend prove the existence of redundancy in its Project DevelopmentDivision?

Petitioners argue that the Labor Arbiters decision should be deemed final and executory sinceLegendfailedtoformallysubstituteitscounsel,and,thus,failedtoperfectitsappeal.Legend, on the other hand, relies heavily on the CAs ruling, which held that lack of propersubstitution is not a sufficient ground to arrive at a finding of grave abuse of discretion. Evenwithout substitution, private respondents new lawyer could still be considered a collaboratingcounsel.Apartymayhavetwoormorelawyersworkingincollaborationinagivenlitigation.WeruleforLegend.TheCAcorrectlyheldinthiscasethatLegendperfecteditsappeal,albeit,throughanewcounsel.It

haslongbeensettledthattheNLRCisnotboundbythestricttechnicalrulesofprocedureoftheRulesofCourt.TheCAhadcorrectlyheldthatasageneralrule,ourpolicytowardsinvocationoftherighttoappealhasbeenoneofliberality,sinceitisanessentialpartofthejudicialsystem. Inlinewith this principle, courts have been advised to proceedwith caution so as not to deprive apartyof the right to appeal.Everyparty litigant shouldbegiven the amplest opportunity for theproperand justdispositionofhis/hercause freed from theconstraintsof technicalities.Thus, theNLRCdidnotcommitgraveabuseofdiscretionwhenitdecidedthecaseonthemeritsinsteadofdismissingtheappealonameretechnicality.With regard to the issue of the legality of the dismissals, petitioners argue thatLegend failed toprovethelegalandfactualexistenceofthecausefordismissal,andthatitfailedtocomplywiththerequirementsfortheimplementationofretrenchment.PetitionersfurtherarguethattheCAabuseditsdiscretioninrulingthattheemployeeswerevalidlydismissednotbecauseofretrenchmentbutforredundancy.Legend,incontrast,reliesonitsmanagementprerogativetojustifytheterminationofpetitionersemployment.LegendalsoreliesontheCAsrulingthatLegendsufficientlyprovedtheexistenceofredundancythatjustifiedpetitionersdismissalfromservice.Onthisissue,weruleforpetitioners.A companys exercise of its management prerogatives is not absolute. It cannot exercise itsprerogativeinacruel,repressive,ordespoticmanner.WeheldinF.F.MarineCorp.v.NLRC:

This Court is not oblivious of the significant role played by the corporate sector in the

countryseconomicandsocialprogress.Implicitinturninthesuccessofthecorporateformindoingbusiness is the ethos of business autonomywhich allows freedom of business determinationwithminimalgovernmentalintrusiontoensureeconomicindependenceanddevelopmentintermsdefinedbybusinessmen.Yet, thisvastexpanseofmanagementchoicescannotbeanunbridledprerogativethatcanriseabovetheconstitutionalprotectiontolabor.Employmentisnotmerelyalifestylechoiceto staveoff boredom.Employment to the commonman is his very life andblood,whichmust beprotectedagainstconcoctedcauses to legitimizeanotherwise irregular terminationofemployment.Imagined or undocumented business losses present the least propitious scenario to justify

retrenchment.[10]

Under the LaborCode, retrenchment and redundancy are authorized causes for separationfromservice.However,toprotectlabor,dismissalsduetoretrenchmentorredundancyaresubjecttostrictrequirementsunderArticle283oftheLaborCode,towit:

ART.283.CLOSUREOFESTABLISHMENTANDREDUCTIONOFPERSONNEL.Theemployermayalsoterminatetheemploymentofanyemployeeduetotheinstallationoflaborsavingdevices,redundancy,retrenchmenttopreventlossesortheclosingorcessationofoperationofestablishmentorundertakingunlesstheclosingisforthepurposeofcircumventingtheprovisionsofthisTitlebyservingawrittennoticeon theworkerand theMinistryofLaborandEmploymentat leastone(1)monthbeforetheintendeddatethereof.Incaseofterminationduetotheinstallationoflaborsavingdevicesorredundancy,theworkeraffectedtherebyshallbeentitledtoseparationpayequivalenttoatleast his one (1)month pay or at least one (1)month pay for every year of service,whichever ishigher.Incaseofretrenchmenttopreventlossesandincasesofclosuresorcessationofoperationsofestablishmentorundertakingnotduetoseriousbusinesslossesorfinancialreverses, theseparationpayshallbeequivalenttoone(1)monthpayoratleastonehalf(1/2)monthpayforeveryyearofservice,whicheverishigher.Afractionofatleastsix(6)monthsshallbeconsideredasone(1)wholeyear.

Retrenchmentisanexerciseofmanagementsprerogativetoterminatetheemploymentofits

employeesenmasse,toeitherminimizeorpreventlosses,orwhenthecompanyisabouttocloseorceaseoperationsforcausesnotduetobusinesslosses.

In Lopez Sugar Corporation v. Federation of Free Workers,[11]

this Court had theopportunitytolaydownthefollowingstandardsthatacompanymustmeettojustifyretrenchmenttopreventabusebyemployers:

Firstly,thelossesexpectedshouldbesubstantialandnotmerelydeminimisinextent.Ifthe

loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial andinconsequential incharacter, thebona fide nature of retrenchmentwould appear to be seriously inquestion. Secondly, the substantial loss apprehended must be reasonably imminent, as suchimminencecanbeperceivedobjectivelyand ingoodfaithby theemployer.Thereshould, inotherwords,beacertaindegreeofurgencyfortheretrenchment,whichisafteralladrasticrecoursewithseriousconsequencesforthelivelihoodoftheemployeesretiredorotherwiselaidoff.Becauseoftheconsequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely toeffectively prevent the expected losses. The employer should have taken other measures prior orparallel toretrenchment toforestall losses, i.e.,cutothercostsother than laborcosts.Anemployerwho,forinstance,laysoffsubstantialnumbersofworkerswhilecontinuingtodispensefatexecutivebonusesandperquisitesorsocalledgoldenparachutes,canscarcelyclaimtoberetrenchingingoodfaith to avoid losses. To impart operationalmeaning to the constitutional policy of providing fullprotection to labor, the employers prerogative to bring down labor costs by retrenching must beexercised essentially as a measure of last resort, after less drastic means e.g., reduction of bothmanagement and rankandfile bonuses and salaries, going on reduced time, improvingmanufacturing efficiencies, trimming ofmarketing and advertising costs, etc. havebeen tried andfoundwanting.

Lastly, but certainly not the least important, alleged losses if already realized, and the

expected imminent losses sought to be forestalled, must be proved by sufficient and convincingevidence. The reason for requiring this quantum of proof is readily apparent: any less exactingstandard of proof would render too easy the abuse of this ground for termination of services of

employees.

In Ariola v. Philex Mining Corporation,[12]

the Court summarized the requirements forretrenchment,asfollows:

Thus,therequirementsforretrenchmentare:(1)itisundertakentopreventlosses,whichare

notmerelydeminimis,butsubstantial,serious,actual,andreal,or ifonlyexpected,arereasonablyimminentasperceivedobjectivelyandingoodfaithbytheemployer(2)theemployerserveswrittennotice both to the employees and the DOLE at least one month prior to the intended date ofretrenchmentand(3)theemployerpaystheretrenchedemployeesseparationpayequivalenttoonemonthpayoratleastmonthpayforeveryyearofservice,whicheverishigher.TheCourtlateraddedtherequirementsthattheemployermustusefairandreasonablecriteriainascertainingwhowouldbedismissedandxxxretainedamongtheemployeesandthattheretrenchmentmustbeundertakeningoodfaith.Exceptfor thewrittennoticetotheaffectedemployeesandtheDOLE,noncompliancewithanyoftheserequirementsrender[s]theretrenchmentillegal.

Inthepresentcase,Legendglaringlyfailedtoshowitsfinancialconditionpriortoandatthetimeitenforceditsretrenchmentprogram.Itfailedtosubmitauditedfinancialstatementsregardingitsallegedfinanciallosses.ThoughLegendcompliedwiththenoticerequirementsandthepaymentof separation benefits to the retrenched employees, its failure to establish the basis for theretrenchmentofitsemployeesconstrainsustodeclaretheretrenchmentillegal.

However, the CA in its decision ruled that the petitioners were validly dismissed not for

retrenchment but for redundancy. The CA explained that Legend mistakenly used the termretrenchment when all its reasons and justifications for the dismissal of its employees point toredundancy.

Were petitioners positions redundant? Had Legend sufficiently established the fact of

redundancy?Petitioners claim that the CA erred in concluding that Legend substantially established

redundancy as the authorized cause underlying their dismissal from service. They aver thatretrenchment and redundancy are not interchangeable, and both were not proven by Legend tojustifytheirdismissal.

Legend,on theotherhand, claims thatpetitionersnever refuted the causes for termination

containedinthenoticeofretrenchment.Itfurtherexplainsthatitreallyhadintendedredundancyasthebasisfor the terminationof theemployees,asseenin itsargumentsbefore theLaborArbiter,NLRC,andCA,whereitclaimedthatbeforetheretrenchedemployeeswereactuallydismissed,theretrenchedemployeeswerenotdoinganyworkthattheworkoftheProjectDevelopmentDivisionhadalreadybeencompletedandaccomplishedandthattheEngineeringServicesDivisionandtheProjectDevelopmentDivisionperformedoverlappingfunctions.Legendpointsoutthatithadreallyintendedredundancyasthebasisfortheterminationoftheemployees,thatiswhyithadpaidonemonthspayinsteadofonehalfmonthspayforeveryyearofservice.

WerulethatLegendfailedtoestablishredundancy.Retrenchment and redundancy are two different concepts they are not synonymous and

thereforeshouldnotbeusedinterchangeably.ThisCourtexplainedindetailthedifferencebetween

thetwoconceptsinSebuguerov.NLRC:[13]

Redundancy existswhere the services of an employee are in excess ofwhat is reasonably

demanded by the actual requirements of the enterprise. A position is redundant where it issuperfluous,andsuperfluityofapositionorpositionsmaybe theoutcomeofanumberof factors,suchasoverhiringofworkers,decreasedvolumeofbusiness,ordroppingofaparticularproductlineorserviceactivitypreviouslymanufacturedorundertakenbytheenterprise.

Retrenchment, on the other hand, is used interchangeably with the term layoff. It is theterminationofemploymentinitiatedbytheemployerthroughnofaultoftheemployeesandwithoutprejudice to the latter, resorted to bymanagement during periods of business recession, industrialdepression, or seasonal fluctuations, or during lulls occasioned by lack of orders, shortage ofmaterials,conversionoftheplantforanewproductionprogramortheintroductionofnewmethodsormoreefficientmachinery,orofautomation.Simplyput,itisanactoftheemployerofdismissingemployeesbecauseoflossesintheoperationofabusiness,lackofwork,andconsiderablereductiononthevolumeofhisbusiness,arightconsistentlyrecognizedandaffirmedbythisCourt.Thus,simplyput,redundancyexistswhenthenumberofemployeesisinexcessofwhatis

reasonably necessary to operate the business. The declaration of redundant positions is amanagementprerogative.Thedeterminationthattheemployeesservicesarenolongernecessaryorsustainableandthereforeproperlyterminableisanexerciseofbusinessjudgmentbytheemployer.ThewisdomorsoundnessofthisjudgmentisnotsubjecttothediscretionaryreviewoftheLabor

ArbiterandNLRC.[14]

It is however not enough for a company to merely declare that positions have becomeredundant. It must produce adequate proof of such redundancy to justify the dismissal of the

affected employees.[15]

In Panlilio v. NLRC,[16]

we said that the following evidence may beproffered to substantiate redundancy: thenewstaffingpattern, feasibility studies/proposal, on theviabilityofthenewlycreatedpositions,jobdescriptionandtheapprovalbythemanagementoftherestructuring. In another case, it was held that the company sufficiently established the fact ofredundancy through affidavits executed by the officers of the respondent PLDT, explaining the

reasonsandnecessitiesfortheimplementationoftheredundancyprogram.[17]

AccordingtotheCA,Legendprovedtheexistenceofredundancywhenitsubmittedastatus

reviewofitsprojectdivisionwhereitreportedthatthe78manpersonnelexceededtheneedsofthecompany.Thereportfurtherstatedthattherewasduplicationoffunctionsandpositions,oranoversupplyofemployees,especiallyamongarchitects,engineers,draftsmen,andinteriordesigners.

WecannotagreewiththeconclusionoftheCA.The pieces of evidence submitted by Legend are mere allegations and conclusions not

supportedbyotherevidence.Legenddidnotevenbothertoillustrateorexplainindetailhowandwhyitconsideredpetitionerspositionssuperfluousorunnecessary.TheCAputstoomuchweighton petitioners failure to refute Legends allegations contained in the document it submitted.However,itmustberememberedthattheemployerbearstheburdenofprovingthecauseorcausesfortermination.Itsfailuretodosowouldnecessarilyleadtoajudgmentofillegaldismissal.

Again, it bears stressing that substantial evidence is the question of evidence required to

establish a fact in cases before administrative and quasijudicial bodies. Substantial evidence, asamplyexplainedinnumerouscases,isthatamountofrelevantevidencewhichareasonablemind

mightacceptasadequatetosupportaconclusion.[18]

Thus, in the same way, we held that the basis for retrenchment was not established by

substantialevidence,wealsorulethatLegendfailedtoestablishbythesamequantumofproofthefactofredundancyhence,petitionersterminationfromemploymentwasillegal.

WHEREFORE,thepetitionisGRANTED.TheApril28,2006DecisionoftheCAinCAG.R.SPNo.81701andtheJune23,2003DecisionoftheNLRCinNLRCNCRCANo.0243062000areherebyREVERSEDandSETASIDE.TheFebruary7,2000DecisionofLaborArbiterElias H. Salinas in NLRC RAB III03908098 is hereby REINSTATED with theMODIFICATIONthattheawardfor14thmonthpayorexgratiapaymenttoallcomplainantsinNLRCRABIII03908098andtheawardforservicechargestoBernaldodelosSantosandCarlosMananquilareherebyDELETED.

SOORDERED.

PRESBITEROJ.VELASCO,JR.AssociateJusticeWECONCUR:

LEONARDOA.QUISUMBING

AssociateJusticeChairperson

(OnLeave)

ANTONIOT.CARPIOCONCHITACARPIOMORALESAssociateJusticeAssociateJustice

DANTEO.TINGAAssociateJustice

ATTESTATIONIattestthattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.LEONARDOA.QUISUMBINGAssociateJusticeChairperson

CERTIFICATIONPursuanttoSection13,ArticleVIIIoftheConstitution,andtheDivisionChairpersonsAttestation,IcertifythattheconclusionsintheaboveDecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourtsDivision.

REYNATOS.PUNOChiefJustice

Onleave.[1]

Rollo,pp.5253.[2]

Id.at6769.[3]

RubenAndrada,BernaldodelosSantos,CarlosR.Mananquil,DarrylBautista,JovencioPoblete,RenatoPangilinan,DarioRapada,

MarvinSamaniego,JovenPabustan,HarveyCayetano,MiltonMaravilla,AdrianCamacho,VicenteMantala,Jr.,andFilamerAlfonso.[4]

Rollo,pp.8794.[5]

Id.at118.[6]

Ruben Andrada, Bernaldo delos Santos, CarlosMananquil, Jovencio Poblete, Dario Rapada, Joven Pabustan, Harvey Cayetano,MiltonMaravilla,VicenteMantala,Jr.,andFilamerAlfonso.[7]

DarrylBautista,RenatoPangilinan,MarvinSamaniego,andAdrianCamachowereunavailableatthetimethepetitionforcertiorariwasfiledbeforetheCA.[8]

Rollo,pp.5064.PennedbyPresidingJusticeRubenT.Reyes(nowamemberofthisCourt)andconcurredinbyAssociateJusticesRebeccadeGuiaSalvadorandAuroraSantiagoLagman.[9]

Ruben Andrada, Bernaldo delos Santos, Jovencio Poblete, Joven Pabustan, Harvey Cayetano, VicenteMantala, Jr., and FilamerAlfonso.

[10]G.R.No.152039,April8,2005,455SCRA154,164.

[11]G.R.Nos.7570001,August30,1990,189SCRA179,186187citationsomitted.

[12]G.R.No.147756,August9,2005,466SCRA152,170171.

[13]G.R.No.115394,September27,1995,248SCRA532,542.

[14]SanMiguelCorporationv.DelRosario,G.R.Nos.168194&168603,December13,2005,477SCRA604,614.

[15]Id.at614615.

[16]G.R.No.117459,October17,1997,281SCRA53,56.

[17]Sorianov.NLRC,G.R.No.165594,April23,2007.

[18]RenoFoods,Inc.v.NLRC,G.R.No.116462,October18,1995,249SCRA379,385.

Documents

022. Andrada v. NLRCR