Republic of the Philippines

COURT OF APPEALS
Manila
*****

SECOND DIVISION

ATALIAN GLOBAL SERVICES CA-G.R. SP NO. 155164

PHILIPPINES, INC.
/CONSOLIDATED BUILDING Members:
MAINTENANCE, INC.,
Petitioner, LAMPAS PERALTA, F.,
Chairperson,
- versus - BUESER, D. Q., and
MARTIN, R. R. B., JJ.
NATIONAL LABOR
RELATIONS COMMISSION Promulgated:
AND REYMOND DIAZ DE
CASTRO, August 28, 2019
Respondents.

x-----------------------------------------------------------------------------------------x

DECISION
BUESER, J.:

Before this Court is a Petition for Certiorari under Rule 65 of the

Rules of Court seeking to reverse and set aside the following
issuances of public respondent National Labor Relations Commission
(“NLRC”) in relation to the present complaint for illegal dismissal and
money claims filed by Reymond Diaz De Castro (“Private
Respondent”) against Atalian Global Services Philippines, Inc.
(“Petitioner company”), to wit:
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(1) The Decision dated 27 October 2019,1 which

partially granted complainant's appeal, and reversed and
set aside the Labor Arbiter’s Decision dated 07 August
20172, with respect to the findings that complainant was
validly dismissed, and a new one is rendered declaring the
complainant to have been illegally dismissed from his
employment, thus entitled to reinstatement and to
backwages

(2) The Resolution dated 29 December 2017, 3

which denied petitioners’ motion for reconsideration for
lack of merit.

The Facts

The pertinent facts and antecedent proceedings, as borne by

the records, are as follows:

Private respondent Reymond De Castro was a timekeeping

specialist of herein petitioner Atalian Global Services Philippines, Inc.
He was hired on 16 December 2013 and at the time of termination
was paid a basic salary of Php15,000.00 plus allowance of Php
7,000.00 or an aggregate amount of Php 22,000.00 4.

Private respondent alleged that he was required to work

overtime and night-shift duties but was not paid overtime pay and
nightshift differential. Moreover, he alleged that he was not paid
holiday pay, rest day premium, service incentive leave pay and 13 th
month pay5.

Sometime in 2016, herein petitioner company allegedly ended

its service contract with the Araneta Group of Companies, one of its
clients. Consequently, on 01 September 2016, private respondent
1
Rollo, pp. 29-37.
2
Id. at pp. 29.
3
Id. at pp. 24-27.
4
Id. at pp. 30-31
5
Id. at pp. 30-31
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was served Notice of Termination citing redundancy as basis thereof

and informing him that his employment will be terminated by the end
of business day of 01 October 20166.

Thereafter, on 14 October 2016, private respondent filed an

illegal dismissal case against petitioner anchored on constructive
dismissal7. Private respondent maintained that there was no actual
redundancy within the Araneta Group of Companies, citing that the
same was a whimsical scheme by the company 8. Allegedly, private
respondent claimed that he was forced to sign a quitclaim by
petitioner company9.

Countering said claims, petitioner company averred that it had

valid ground to terminate the services of private respondent on the
ground of redundancy. Petitioner company asserted that the
termination of its contract with the Araneta Group of Companies as
reason for the redundancy. Moreover, petitioner company alleged
that it underwent a reorganization concurrent with the termination of
the service contract with the Araneta Group of Companies, its major
client, and that top management was impelled by serious
considerations in its decisions10.

Petitioner company also averred that it complied with the twin

requisites in effecting a valid termination by furnishing private
respondent with a Notice of Termination due to Redundancy as well
as paying him his separation pay in the amount of Php89,423.08 less
respondent's existing loan obligation in the amount of
Php23,000.0011.

On 07 August 2017, the Labor Arbiter dismissed the complaint

ruling that private respondent failed to prove with clear and
convincing evidence that he was constructively dismissed. The Labor
Arbiter observed that respondent failed to adduce any proof that he

6
Rollo, at p. 8.
7
Id. at p. 380.
8
Id. at p. 9.
9
Id. at p. 367
10
Id. at p. 81.
11
Id. at p. 8.
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was indeed, coerced or even intimidated to resign 12. According to the

Labor Arbiter there was no constructive dismissal when private
respondent was terminated due to an authorized cause through the
company's redundancy program13.

Dissatisfied with the pronouncement, private respondent filed

an appeal with the NLRC, which in turn reversed the decision of the
Labor Arbiter. The NLRC found that petitioner company failed to
establish the validity of the redundancy program citing its failure to
prove the termination of its service contract with the Araneta Group of
Companies. The dispositive portion of the NLRC Decision read:

“WHEREFORE, premises considered,

complainant's Appeal is hereby PARTIALLY GRANTED.
The Decision of Labor Arbiter Vivia Magsino-Gonzalez
dated August 7, 2017 is hereby REVERSED and SET
ASIDE with respect to her findings that complainant was
validly dismissed, and a new one is rendered declaring
complainant Reymond Diaz De Castro to have been
illegally dismissed from his employment, thus, entitled to
reinstatement and to backwages. However, in the
computation of backwages, the amount received by
complainant as “offer” in the amount of Php45,000.00 must
be deducted.
Complainant's money claims for overtime pay, night
shift differential, premium pay for holidays and rest days,
service incentive leave pay and 13th month pay are hereby
DENIED for lack of merit.
However, complainant is entitled to ten percent
(10%) of the the total judgment award by way of attorney's
fees.
SO ORDERED14.”

Expectedly, petitioner company moved for the reconsideration

of said NLRC Decision. In its Resolution dated 29 December 2017,
the NLRC denied said motion for lack of merit15.
12
Rollo, p. 105.
13
Id. at p. 106.
14
Rollo, p. 37.
15
Id. at p. 24.
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Ascribing grave abuse of discretion amounting to lack or excess

of jurisdiction on the part of the NLRC, petitioner company filed the
present legal recourse.

The Issues

The issues to be resolved in the present petition may be

summarized as follows:

1. Whether or not the NLRC committed grave abuse of

discretion amounting to lack or excess of jurisdiction when it ruled
that petitioner failed to establish that the redundancy program was
valid with respect to complainant despite evidence presented.

2. Whether or not the NLRC committed grave abuse of

discretion amounting to lack or excess when it awarded backwages
and attorney's fees to complainant considering the validity of his
termination.

The Court’s Ruling

We find the instant petition meritorious.

Settled is the rule that redundancy is one of the authorized

causes for termination of employment as provided under Article 298
of the Labor Code, as amended. There exists redundancy when the
service capability of the workforce is in excess of what is reasonably
needed to meet the labor demand of the employer 16.

The Supreme Court in the case of Asian Alcohol Corporation

vs. National Labor Relations Commission, et al. 17, expounded the
requirements for a valid implementation of a redundancy program, as
follows: (a) a written notice must first be served on both the employee
and Department of Labor and Employment at least one month prior to
the intended date of termination; (b) payment of separation pay

16
G.R. No. 194410, October 14, 2015.
17
G.R. No. 131108, March 25, 1999.
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equivalent to at least one month pay or at least one month pay for
every year of service, whichever is higher; (c) good faith in abolishing
the redundant position; and (d) fair and reasonable criteria in
ascertaining what positions are to be declared redundant.

As gleaned from the records of the present case, anent the first
requirement, herein petitioner company presented a Notice of
Termination dated 01 September 2016 that was sent to private
respondent and duly received by the latter on even date 18. Through
the notice, respondent was properly appraised that the termination
was to take effect on the end of close of business hours of 01
October 2016, thereby satisfying the thirty (30) days prior notice rule.
Subsequently, another notice was sent to the Department of Labor
and Employment dated 03 August 2016 19 and duly received by the
department on the same day, also within the required 30-day prior
notice.

Proceeding with the second requirement, the records show that

private respondent was given the proper separation pay by petitioner
company. While private respondent claimed the amount given falls
short of the required one (1) month pay for every year of service,
petitioner company claimed the contrary stating the amount of
separation pay given was even beyond what was legally required. A
perusal of the records show that the amount given to private
respondent complies with law. To expound, private respondent has
been employed by petitioner company for three (3) years and prior to
his termination received monthly salary pegged at Php22,000.00.
Hence, private respondent stood to received a lump sum amount of
Php66,000.00 as separation pay. In addition to private respondent's
separation pay, petitioner company added to the package the
remaining Service Incentive Leave pay and 13 th Month Pay
amounting to Php5,923.08 and Php16,500.00 but deducting his
outstanding obligation amounting to Php23,000.00. Clearly, the
amount given to respondent fulfills the legal requirement on
separation pay20.

18
Rollo, at p. 363.
19
Rollo, at p. 379
20
Ibid.
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As for the third requirement, which is the existence of good

faith, it is but natural for petitioner company to alleged good faith,
while for the respondent to cry foul. As shown by the records, the
Labor Arbiter sided with petitioner company, while the National Labor
Relations Commission sided with the respondent. These
contradicting appreciation of facts renders imperative for this Court to
make further inquiry into the factual antecedents and the evidence on
record.

Respondent alleged existence of a malicious scheme on the

part of petitioner company. To prove the same, respondent attached
the Notice of Termination Due to Redundancy, the Deed of Release,
Waiver, and Quitclaim, and his Overtime Summary.

On the contrary, herein petitioner company interposed as a

defense that its implementation of the redundancy program was
valid. To support its claim of validity, petitioner company attached the
Notice of Termination Due to Redundancy; Deed of Release, Waiver,
and Quitclaim; the computation and voucher for the separation pay
with respondent's signature; Employment and Accountability
Clearance; a copy of its organizational structure; a copy of its new
organizational structure; and a copy of the Notice to DOLE. Moreover,
petitioner presented copies of the letters between Consolidated
Building Maintenance and Araneta Group, a copy of another notice to
DOLE involving six (6) employees, and a copy of Establishment
Employment Report placed on temporary layoff 21.

As the instant case progressed, respondent submitted a copy of

another case wherein his fellow employees won in a decision penned
by Labor Arbiter Makasiar to show that there is a “malicious scheme”
on the part of petitioner company to constructively dismiss the
former22.

As culled from the records of the instant petition, this Court

finds that the evidence presented by private respondent to
substantiate his claim that a “malicious scheme” was employed to
terminate him to be insufficient. Absent any clear and substantial
21
Rollo, at pp. 342-363.
22
Id. at p. 111 and p.124.
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evidence to prove such allegation, the same will not hold water in this
Court. To illustrate, the Notices sent by herein petitioner company
belies respondent's claim of an invalid redundancy program. On the
contrary, the same bolstered petitioner company's claim of following
necessary procedural due process23.

In the matter of the aforecited decision penned by Labor Arbiter

Makasiar, the same is of no moment as no proof was made whether
or not the same has attained finality. This Court cannot be limited to a
single decision sans proof that the same has attained finality, as
decisions of lower tribunals are susceptible of challenge before a
higher court. It bears stressing that the instant case should be
decided based on the evidence presented with regard to the facts
and circumstances of respondent himself.

Verily, petitioner company has sufficiently established its

version of the facts supported by substantial evidence. The attached
letters between petitioner company and the Araneta Group confirms
the termination of its service contract with the latter, therein revealing
a rather nasty parting of ways between the two companies 24. This
Court is inclined to believe Atalian's allegation that the account was a
sizable one due to the notice to DOLE informing said department of
temporary lay off of almost 600 employees. Petitioner company also
presented its old and new organizational structures, therein revealing
a much more streamlined staffing. As found by Labor Arbiter
Magsino-Gonzales:

“Respondents have discharged the burden of proof

surrounding complainant's employment and the
consequent unavailability of a similar position for him, as
shown in the company's old and new organizational charts
which streamlined the corporate operations; and limited the
number of employees, particularly, from six (6) to only one
remaining Timekeeping Specialist. Complainant's bare
assertion that after his supposed constructive dismissal, he
was replaced by another person who serves as the new
specialist, is belied by the adduced old and new
organizational charts which showed that the only remaining

23
Ibid.
24
Rollo, at pp. 276-294.
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Timekeeping Specialist is not new to the job but an old

specialist herself25.”

The NLRC questions as to why only one employee was

mentioned in the notice was belied by evidence on record. A review
of the records reveal that the NLRC took against petitioner company
the simultaneous termination of the service agreement and the
termination of respondent. To the mind of the NLRC petitioner
company failed to exert earnest effort to reassign complainant to
other vacant post as timekeeper. This query when placed side by
side with the new staffing pattern will reveal an answer that only one
timekeeping specialist remained from an original complement of six
(6) specialists. Thus, petitioner company as the employer has no
legal obligation to keep in its payroll more employees than are
necessary for the operation of its business26.

It is also worthy to note the opinion of Commissioner Mercedes

R. Posadas-Lacap that she is in favor for the granting of the Motion
for Reconsideration because the termination of the contract of
service was established. Commissioner Posadas-Lacap observed
the fact that the date of dismissal coincided with the termination of
the service agreement does not necessarily follow that the thirty (30)
day notice requirement was not complied with27.

Verily, there is no rule that the date of termination of an

employee be different from the date of termination of service contract.
The only rule is that there must be a thirty (30) day notice to the
employee prior to the intended date of dismissal for terminations due
to authorized causes. What matters is the notice was served at least
thirty (30) days prior and that respondent in his pleadings submitted
to the tribunal a quo never contested this fact.

To be sure, the case of Wiltshire File Co., Inc. vs. NLRC and
Vicente T. Ong finds relevance in the present petition. Ruling that a
characterization of an employee's services as no longer necessary,

25
Id. at p. 381.
26
Wiltshire File Co., Inc. vs NLRC and Vicente T. Ong, G.R. No. 82259, 07 February 1991.
27
Rollo, at p. 27.
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and therefore properly terminable, was an exercise of management

prerogative on the part of the employer, the Supreme Court said:

“The characterization of private respondent's services as

no longer necessary or sustainable, and therefore properly
terminable, was an exercise of business judgment on the
part of the petitioner company. The wisdom or soundness
of such characterization or decision was not subject to
discretionary review on the part of the Labor Artbiter nor of
the NLRC so long, of course, as violation of law or merely
arbitrary and malicious action is not shown. xxx

The determination of the continuing necessity of a

particular officer or position in a business corporation is
management's prerogative, and the courts will not interfere
with the exercise of such so long as no abuse of discretion
or merely arbitrary or malicious action on the part of the
management is shown.”

All told, petitioner company's redundancy program does not

appear to be tainted by bad faith and this Court is not convinced that
respondent was illegally dismissed.

In the matter of backwages, this Court finds that private

respondent was validly terminated due to redundancy – an
authorized cause as provided in the Labor Code. To reiterate,
backwages attach only as a relief to illegally dismissed employee's.
There being none in the present case, the award of backwages lacks
any basis.

WHEREFORE, the foregoing considered, the instant Petition is

GRANTED. The Decision of the National Labor Relations
Commission dated 27 October 2017 is REVERSED and SET ASIDE
and the Decision of the Labor Arbiter is REINSTATED.

SO ORDERED.

DANTON Q. BUESER
Associate Justice
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WE CONCUR:

FERNANDA LAMPAS PERALTA

Associate Justice

RONALDO ROBERTO B. MARTIN

Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is

hereby certified that the conclusions in the above decision were
reached in consultation before the opinion of the Court was written.

FERNANDA LAMPAS PERALTA

Associate Justice
Chairperson, Second Division