The main thought in the case:

An employer's declaration of redundancy becomes a valid and authorized cause for

dismissal when the employer proves by substantial evidence that the services of an
employee are more than what is reasonably demanded by the requirements of the business
enterprise

G.R. No. 190389

MANGGAGAWA NG KOMUNIKASYON SA PILIPINAS, Petitioner vs. PHILIPPINE LONG
DISTANCE TELEPHONE COMPANY INCORPORATED, Respondent
x-----------------------x
G.R. No. 190390
MANGAGAWA NG KOMUNIKASYON SA PILIPINAS, Petitioner, vs. PHILIPPINE LONG DISTANCE TELEPHONE
COMPANY INCORPORATED, Respondent

Facts:
The petitioner, MANGGAGAWA NG KOMUNIKASYON SA PILIPINAS or MKP for brevity, filed two notices of strike
with the National Conciliation and Mediation Board against the respondent, PLDT, and charged the same with
unfair labor practice for :

1. PLDT's abolition of the Provisioning Support Division. Such action, together with the consequent
redundancy of PSD employees and the farming out of the jobs to casuals and contractual, violates the duty to
bargain collectively with MKP in good faith.

2. PLDT's unreasonable refusal to honor its commitment before this Honorable Office that it will provide
MKP its comprehensive plan/s with respect to personnel downsizing/ reorganization and closure of exchanges.
Such refusal violates its duty to bargain collectively with MKP in good faith.

3. PLDT's continued hiring of "contractual," "temporary," "project," and "casual" employees for regular
jobs performed by union members, resulting in the decimation of the union membership and in the denial of the
right to self-organization to the concerned employees.

4. PLDT's alleged restructuring of its [Greater Metropolitan Manila] Operation services and its closure of
traffic operations at the Batangas, Calamba, Davao, Iloilo, Lucena, Malolos and Tarlac Regional Operator Services.
These twin moves unjustly imperil the job security of 503 of MKP's members and will substantially decimate the
parties' bargaining unit. And in the light of PLDT' s previous commitment before this Honorable Office that it will
provide MKP its comprehensive plan/s with respect to personnel downsizing/reorganization and closure of
exchanges and of its more recent declaration that the Davao operator services will not be closed, these moves are
treacherous and are thus violative of PLDT's duty to bargain collectively with MKP in good faith. That these moves
were affected with PLOT paying only lip service to its duties under Art. III, Section 8 of the parties' CBA do signifies
PLDT's gross violation of said CBA.

MKP went on to a strike and thereafter, the company redeployed 180 of previously laid off employees. After 2
days, the secretary of labor certified the labor dispute for compulsory arbitration and ordered the striking workers
to return to work except those who were terminated due to redundancy. It also ordered the PLDT to accept the
striking workers under the same terms and conditions prevailing prior to the strike.

MKP filed a petition for certiorari before the courts of appeals against the order of the Secretary of Labor as it
created a distinction among the striking workers in the return-to-work order. The court granted the petition and
nullify the order of the Secretary of Labor. An appeal was filed by PLDT but the court upheld its decision directing
PLDT to readmit all striking workers under the same terms and conditions prevailing before the strike.
Sometime later, the NLRC dismissed the unfair labor charges against PLDT. It held that the defendant’s redundancy
program was valid and did not constitute unfair legal practice since this was based on the decline of subscribers
brought by advances in the communication industry. The petitioner filed several motions for reconsideration and
petition for certiorari for the NLRC’s decision but the court upheld the same and found no grave abuse of
discretion on the part of the NLRC when it found that the redundancy program was justified and valid, as it was
based on substantial evidence. the Court of Appeals confirmed that its assailed order of reinstatement indicated
that all employees, even those declared separated should be reinstated but the same was held to be of non-effect
since the NLRC upheld the validity of the dismissal of the employees affected by the redundancy program. The
court also denied the prayer that the employees should at least be paid their salaries during the period from the
working day immediately following the effectivity of their separation to the date when the decision of the NLRC
(declaring the employees' dismissal as valid) became final and executory. The petitioner filed a motion for
reconsideration but it was like was denied by the court and thus, the case.

Issue:

Whether the return-to-work order of the Secretary of Labor and Employment was rendered moot when the
National Labor Relations Commission upheld the validity of the redundancy program?

Held:

Yes, according to the Supreme Court, when petitioner filed its Motion for Execution pursuant to this Court's ruling
in Philippine Long Distance Telephone Co. Inc., there was no longer any existing basis for the return-to-work order.
This was because the Secretary of Labor and Employment's return-to-work order had been superseded by the
National Labor Relations Commission's Resolution. Hence, the Secretary of Labor and Employment did not err in
dismissing the motion for execution on the ground of mootness.

Rulings:

Redundancy is one of the authorized causes for the termination of employment provided for in Article 298 76 of
the Labor Code, as amended:

Article 298. Closure of Establishment and Reduction of Personnel. - The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the
installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation
pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service,
whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations
of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6) months shall be considered one (1) whole year.

Wiltshire File Co. Inc. v. National Labor Relations Commission has explained that redundancy exists when "the
services of an employee are in excess of what is reasonably demanded by the actual requirements of the
enterprise.

Asian Alcohol Corporation v. National Labor Relations Commission listed down the elements for the valid
implementation of a redundancy program:
For the implementation of a redundancy program to be valid, the employer must comply with the following
requisites: (1) written notice served on both the employees and the Department of Labor and Employment at least
one month prior to the intended date of retrenchment; (2) payment of separation pay equivalent to at least one
month pay or at least one month pay for every year of service, whichever is higher; (3) good faith in abolishing the
redundant positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared
redundant and accordingly abolished.

To establish good faith, the company must provide substantial proof that the services of the employees are in
excess of what is required of the company, and that fair and reasonable criteria were used to determine the
redundant positions.

Philippine Long Distance Telephone Company's declaration of redundancy was backed by substantial evidence
showing a consistent decline for operator-assisted calls for both local and international calls because of cheaper
alternatives like direct dialing services, and the growth of wireless communication. Thus, the National Labor
Relations Commission did not commit grave abuse of discretion when it upheld the validity of PLDT's redundancy
program. Redundancy is ultimately a management prerogative, and the wisdom or soundness of such business
judgment is not subject to discretionary review by labor tribunals or even this Court, as long as the law was
followed and malicious or arbitrary action was not shown.

Nonetheless, there is a need to review the redundancy package awarded to the employees terminated due to
redundancy. For either redundancy or retrenchment, the law requires that the employer give separation pay
equivalent to at least one (1) month pay of the affected employee, or at least one (1) month pay for every year of
service, whichever is higher. The employer must also serve a written notice on both the employees and the
Department of Labor and Employment at least one (1) month before the effective date of termination due to
redundancy or retrenchment.

When an employer declares redundancy, Article 298 of the Labor Code requires that the employer provides a
separation pay equivalent to at least one (1) month pay of the affected employee, or at least one (1) month pay for
every year of service, whichever is higher. In this case, Philippine Long Distance Telephone Company claims that
the terminated workers received a generous separation package of about 2.75 months' worth of salary for every
year of service. But it seems that the retirement benefits of the terminated workers were added to the separation
pay due them, hence the large payout. This should not be the case.

Separation pay is required in the cases enumerated in Articles 283 and 284 of the Labor Code, which include
retrenchment, and is computed at least one month salary or at the rate of one-half month salary for every month
of service, whichever is higher. We have held that it is a statutory right designed to provide the employee with the
wherewithal during the period that he is looking for another employment.

Retirement benefits, where not mandated by law, may be granted by agreement of the employees and their
employer or as a voluntary act on the part of the employer. Retirement benefits are intended to help the
employee enjoy the remaining years of his life, lessening the burden of worrying for his financial support, and are a
form of reward for his loyalty and service to the employer.

Separation pay brought about by redundancy is a statutory right, and it is irrelevant that the retirement benefits
together with the separation pay given to the terminated workers resulted in a total amount that appeared to be
more than what is required by the law. The facts show that instead of the legally required one (1) month salary for
every year of service rendered, the terminated workers who were with Philippine Long Distance Telephone
Company for more than 15 years received a separation pay of only 75% of their basic pay for every year of service,
despite the clear wording of the law.

The workers, who were terminated from employment as a result of redundancy, are entitled to the separation pa y
due them under the law.