ORLANDO M.

ESCAREAL, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION,

[G.R. No. 99359. September 2, 1992.]

FACTS:

The controversy stemmed from the dismissal of the petitioner from the private respondent
Philippine Refining Company, Inc. (hereinafter, PRC) after almost eleven (11) years of gainful
employment.

Petitioner was hired by the PRC for the position of Pollution Control Manager effective on 16
September 1977 with a starting monthly pay of P4,230 00; the employment was made permanent effective
on 16 March 1978. The contract of employment provides, inter alia, that his "retirement date will be the
day you reach your 60th birthday, but there is provision (sic) for voluntary retirement when you reach your
50th birthday. Bases for the hiring of the petitioner are Letter of Instruction (LOI) No. 588 implementing
the National Pollution Control Decree, P.D No. 984, dated 19 August 1977 and Memorandum Circular No.
02, 6 dated 3 August 1981 and implementing LOI No. 588, which amended Memorandum Circular No.
007, Series of 1977, issued by the National Pollution Control Commission (NPCC).

On 1 April 1979, petitioner was also designated as Safety Manager pursuant to Article 162 of the Labor
Code (P.D. 442, as amended) and the pertinent implementing rule thereon. At the time of such designation,
petitioner was duly accredited as a Safety Practitioner by the Bureau of Labor Standards, Department of
Labor and Employment (DOLE) and the Safety Organization of the Philippines. Article 162 of the Labor
Code, as amended.

In addition, the pertinent rules on Occupational Health and Safety implementing the Labor Code provide
for the designation of full-time safety men to ensure compliance with the safety requirements prescribed by
the Bureau of Labor Standards. Consequently, petitioner’s designation was changed to Pollution Control
and Safety Manager.

In the course of his employment, petitioner’s salary was regularly upgraded; the last pay hike was granted
on 28 March 1988 when he was officially informed that his salary was being increased to P23,100.00 per
month effective 1 April 1988. This last increase is indisputably a far cry from his starting monthly salary of
P4,230.00.

Sometime in the first week of November 1987, private respondent George B. Ditching, who was then
PRC’s Personnel Administration Manager, informed petitioner about the company’s plan to declare the
position of Pollution Control and Safety Manager redundant. Ditching attempted to convince petitioner to
accept the redundancy offer or avail of the company’s early retirement plan. Petitioner refused and instead
insisted on completing his contract as he still had about three and a half (3 1/2) years left before reaching
the mandatory retirement age of sixty (60).

On 15 June 1988, Jesus P. Javelona, PRC’s Engineering Department Manager and petitioner’s immediate
superior, formally informed the petitioner that the position of "Safety and Pollution Control Manager will
be declared redundant effective at the close of work hours on 15th July 1988." Petitioner was also
notified that the functions and duties of the position to be declared redundant will be absorbed and
integrated with the duties of the Industrial Engineering Manager; as a result thereof, the petitioner
"will receive full separation benefits provided under the PRC Retirement Plan and additional
redundancy payment under the scheme applying to employees who are 50 years old and above and
whose jobs have been declared redundant by Management."
On 5 August 1988, petitioner had a meeting with private respondent Cesar Bautista and Dr. Reynaldo
Alejandro, PRC’s President and Corporate Affairs Director, respectively. To his plea that he be allowed to
finish his contract of employment as he only had three (3) years left before reaching the mandatory
retirement age, Bautista retorted that the termination was final.

On 8 August 1988, petitioner presented to Javelona a computation showing the amount of P2,436,534.50
due him (petitioner) by way of employee compensation and benefits.

On the date of the effectivity of his termination, petitioner was only fifty-seven (57) years of age. He had
until 21 July 1991, his sixtieth (60th) birth anniversary, before he would have been compulsorily retired.

Also, on the date of effectivity of petitioner’s termination, 16 August 1988, Miguelito S. Navarro, PRC’s
Industrial Engineering Manager, was designated as the Pollution Control and Safety Officer. Such
appointment is evidenced by two (2) company correspondences. In its letter dated 6 September 1988 to the
Laguna Lake Development Authority, PRC informed the said Authority, to wit:

"With effect from 16 August 1988 the functions and duties of our Safety and Pollution Control Officer has
(sic) been integrated and absorbed with those of our Industrial Engineering Manager.

The main tasks of our Industrial Engineering Manager, Mr. Miguelito S. Navarro, now includes (sic) safety
and pollution control.

Attached to (sic) the bio-data of Mr. Navarro for your accreditation as our designated Pollution Control
Officer."

In its letter to the Safety Organization of the Philippines dated 14 December 1988, PRC articulated Mr.
Miguelito S. Navarro’s designation as "Safety Officer of Phil. Refining Company."

ISSUE: WON EMPLOYERS DECISION THAT THE POSITION OF THE EMPLOYEE SHALL
BE DECLARED REDUNDANT AND THAT HIS TERMINATION IS VALID?

RULING:

LA: The determination as to the usefulness of a particular department or section as an integral aspect of
company prerogative, may not be questioned, the objective of which being to (sic) achieve profitability.
(Special Events Control Shipping Office Workers Union v. San Miguel Corporation, 122 SCRA 557).

To submit to the argument of herein Complainant that there is no basis in the management’s decision to
declare his position redundant is to deny the company of its inherent prerogative, without due process of
law.

The (sic) latter being a condition sine-qua non before he became a regular worker. Consequently, the
averment of breach of Contract pursuant to Article 1159, 1306 and 1308 of the New Civil Code of the
Phils., is not in point. Additionally, to subscribe to the protestation of herein complainant that the reference
of the retirement age at 60 in the company’s letter dated August 22, 1977 meant fixed duration is to tie the
hands of management in doing what is necessary to meet the exigencies of the business 

the appealed decision is hereby Affirmed, with modification ordering respondent-company to pay
complainant his retirement pay in accordance with the company policy and other benefits granted to him
thereunder, less outstanding obligations of the complainant with the company at the time of his dismissal.

NLRC: Complainant’s motion for reconsideration other than his pecuniary interest is hereby Dismissed for
lack of merit. Accordingly, respondent-company (PRC) is ordered to pay Mr. Escareal’s redundancy
benefits in accordance with the company policy
on the matter as follows:

(a) Retirement credit of 1.5 months pay for every year of service in the amount of P363,825.00; and

(b) Ex-gratia, amounting to:

TOTAL P445,321.80

SC: Article 283 of the Labor Code(READ)

In Wiltshire File Co., Inc. v. NLRC, this Court held that redundancy, for purposes of the Labor Code, exists
where the services of an employee are in excess of what is reasonably demanded by the actual requirements
of the enterprise; a position is redundant when it is superfluous, and superfluity of a position or positions
may be the outcome of a number of factors, such as the overhiring of workers, a decreased volume of
business or the dropping of a particular product line or service activity previously manufactured or
undertaken by the enterprise. Redundancy in an employer’s personnel force, however, does not necessarily
or even ordinarily refer to duplication of work. That no other person was holding the same position which
the dismissed employee held prior to the termination of his services does not show that his position had not
become redundant.

In Wiltshire File Co., v. NLRC in declaring that the employer has no legal obligation to keep in its payroll
more employees than are necessary for the operation of its business. Aside from the fact that in the case at
bar, there was no compelling reason to dismiss the petitioner as the company was not incurring any losses,
the position declared redundant in the Wiltshire case was that of a Sales Manager, a management created
position. In the case at bar, petitioner’s position is one created by law.

PRC had no valid and acceptable basis to declare the position of Pollution Control and Safety Manager
redundant as the same may not be considered as superfluous; by the express mandate of the provisions
earlier cited, said positions are required by law. Thus, it cannot be gainsaid that the services of the
petitioner are in excess of what is reasonably required by the enterprise. Otherwise, PRC would not have
allowed ten (10) long years to pass before opening its eyes to that fact; neither would it have increased the
petitioner’s salary to P23,100.00 a month effective 1 April 1988. The latter by itself is an unequivocal
admission of the specific and special need for the position and an open recognition of the valuable services
rendered by the petitioner. Such admission and recognition are inconsistent with the proposition that
petitioner’s positions are redundant. It cannot also be argued that the said functions were duplicative, and
hence could be absorbed by the duties pertaining to the Industrial Engineering Manager. If indeed they
were, and assuming that the Industrial Engineering department of the PRC had been created earlier,
petitioner’s positions should not have been created and filled up. If, on the other hand, the department was
created later, and there is no evidence to this effect, and it was to absorb the petitioner’s positions, then
there would be no reason for the unexplained delay in its implementation, the restructuring then should
have been executed long before the salary increases in petitioner’s favor. That petitioner’s positions were
not duplicitous is best evidenced by the PRC’s recognition of their imperative need thereof, this is
underscored by the fact that Miguelito S. Navarro, the company’s Industrial Engineering Manager, was
designated as Pollution Control and Safety Manager on the very same day of petitioner’s termination.
While the petitioner had over ten (10) years of experience as a pollution control and safety officer, Navarro
was a virtual greenhorn lacking the requisite training and experience for the assignment. A cursory perusal
of his bio-data 31 reveals that it was only several months after his appointment that he attended his first
Occupational Safety & Health Seminar (14-17 November 1988), moreover, it was only after his second
seminar (Loss Control Management Seminar — 6-9 December 1988) that the PRC requested his
accreditation with the Safety Organization of the Philippines. 32 In trying to prop up Navarro’s competence
for the position, PRC alleges that the former finished from the University of the Philippines with a degree
in Chemical Engineering, took some units in pollution in the process and had "undergone job training in
pollution in cement firms through the Bureau of Mines." 33 Compared to the training and experience of the
petitioner, Navarro’s orientation would seem to pale

Thus, it is evident from the foregoing that petitioner’s right to security of tenure was violated by the
private respondent PRC. Both the Constitution (Section 3, Article XIII) and the Labor Code (Article
279, P.D. 442, as amended) enunciate this right as available to an employee. In a host of cases, this
Court has upheld the employee’s right to security of tenure in the face of oppressive management
behavior and management prerogative. 43 Security of tenure is a right which may not be denied on
mere speculation of any unclear and nebulous basis.

In this regard, it could be concluded that the respondent PRC was merely in a hurry to terminate the
services of the petitioner as soon as possible in view of the latter’s impending retirement; it appears
that said company was merely trying to avoid paying the retirement benefits the petitioner stood to
receive upon reaching the age of sixty (60). PRC acted in bad faith.