Culili v. Eastern Telecommunications Philippines

LEONARDO-DE CASTRO, J.:

Before Us is a petition for review on certiorari 1 of the February 5, 2004 Decision2 and September 13, 2004 Resolution3 of the Court of Appeals in CA-G.R. SP No. 75001 , wherein the Court of Appeals set aside the March 1, 2002 Decision4 and September 24, 2002 Resolution5 of the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiter's Decision6 dated April 30, 2001. Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a telecommunications company engaged mainly in the business of establishing commercial telecommunications systems and leasing of international datalines or circuits that pass through the international gateway facility (IGF).7 The other respondents are ETPI's officers: Salvador Hizon, President and Chief Executive Officer; Emiliano Jurado, Chairman of the Board; Virgilio Garcia, Vice President; and Stella Garcia, Assistant Vice President. Petitioner Nelson A. Culili (Culili) was employed by ETPI as a Technician in its Field Operations Department on January 27, 1981.

On December 12, 1996, Culili was promoted to Senior Technician in the Customer Premises Equipment Management Unit of the Service Quality Department and his basic salary was increased.8 As a telecommunications company and an authorized IGF operator, ETPI was required, under Republic Act. No. 7925 and Executive Order No. 109, to establish landlines in Metro Manila and certain provinces.9 However, due to interconnection problems with the Philippine Long Distance Telephone Company (PLDT), poor subscription and cancellation of subscriptions, and other business difficulties, ETPI was forced to halt its roll out of one hundred twenty-nine thousand (129,000) landlines already allocated to a number of its employees.10 In 1998, due to business troubles and losses, ETPI was compelled to implement a Right-Sizing Program which consisted of two phases: the first phase involved the reduction of ETPI's workforce to only those employees that were necessary and which ETPI could sustain; the second phase entailed a company-wide reorganization which would result in the transfer, merger, absorption or abolition of certain departments of ETPI.11 As part of the first phase, ETPI, on December 10, 1998, offered to its employees who had rendered at least fifteen years of service, the Special Retirement Program, which consisted of the option to voluntarily retire at an earlier age and a retirement package equivalent to two and a half (2½) months' salary for every year of service.12 This offer was initially rejected by the Eastern Telecommunications Employees' Union (ETEU), ETPI's duly recognized bargaining agent, which threatened to stage a strike.

ETPI explained to ETEU the exact details of the Right-Sizing Program and the Special Retirement Program and after consultations with ETEU's members, ETEU agreed to the implementation of both programs.13 Thus, on February 8, 1999, ETPI re-offered the Special Retirement Program and the corresponding retirement package to the one hundred two (102) employees who qualified for the program.14 Of all the employees who qualified to avail of the program, only Culili rejected the offer.15 After the successful implementation of the first phase of the Right-Sizing Program, ETPI, on March 1, 1999 proceeded with the second phase which necessitated the abolition, transfer and merger of a number of ETPI's departments.16 Among the departments abolished was the Service Quality Department.

The functions of the Customer Premises Equipment Management Unit, Culili's unit, were absorbed by the Business and Consumer Accounts Department. The abolition of the Service Quality Department rendered the specialized functions of a Senior Technician unnecessary. As a result, Culili's position was abolished due to redundancy and his functions were absorbed by Andre Andrada, another employee already with the Business and Consumer Accounts Department.17 On March 5, 1999, Culili discovered that his name was omitted in ETPI's New Table of Organization.

Culili, along with three of his co-employees who were similarly situated, wrote their union president to protest such omission.18 In a letter dated March 8, 1999, ETPI, through its Assistant Vice President Stella Garcia, informed Culili of his termination from employment effective April 8, 1999. The letter reads: March 8, 1999 To: N. Culili Thru: S. Dobbin/G. Ebue From: AVP-HRD As you are aware, the current economic crisis has adversely affected our operations and undermined our earlier plans to put in place major work programs and activities. Because of this, we have to implement a Rightsizing Program in order to cut administrative/operating costs and to avoid losses.

In line with this program, your employment with the company shall terminate effective at the close of business hours on April 08, 1999. However, to give you ample time to look for other employment, provided you have amply turned over your pending work and settled your accountabilities, you are no longer required to report to work starting tomorrow. You will be considered on paid leave until April 08, 1999.

You will likewise be paid separation pay in compliance with legal requirements (see attached), as well as other benefits accruing to you under the law, and the CBA. We take this opportunity to thank you for your services and wish you well in your future endeavors. (Signed) Stella J. Garcia19 This letter was similar to the memo shown to Culili by the union president weeks before Culili was dismissed.

The memo was dated December 7, 1998, and was advising him of his dismissal effective January 4, 1999 due to the Right-Sizing Program ETPI was going to implement to cut costs and avoid losses.20 Culili alleged that neither he nor the Department of Labor and Employment (DOLE) were formally notified of his termination. Culili claimed that he only found out about it sometime in March 1999 when Vice President Virgilio Garcia handed him a copy of the March 8, 1999 letter, after he was barred from entering ETPI's premises by its armed security personnel when he tried to report for work.21 Culili believed that ETPI had already decided to dismiss him even prior to the March 8, 1999 letter as evidenced by the December 7, 1998 version of that letter. Moreover, Culili asserted that ETPI had contracted out the services he used to perform to a labor-only contractor which not only proved that his functions had not become unnecessary, but which also violated their Collective Bargaining Agreement (CBA) and the Labor Code.

Aside from these, Culili also alleged that he was discriminated against when ETPI offered some of his co-employees an additional benefit in the form of motorcycles to induce them to avail of the Special Retirement Program, while he was not.22 ETPI denied singling Culili out for termination. ETPI claimed that while it is true that they offered the Special Retirement Package to reduce their workforce to a sustainable level, this was only the first phase of the Right-Sizing Program to which ETEU agreed. The second phase intended to simplify and streamline the functions of the departments and employees of ETPI.

The abolition of Culili's department - the Service Quality Department - and the absorption of its functions by the Business and Consumer Accounts Department were in line with the program's goals as the Business and Consumer Accounts Department was more economical and versatile and it was flexible enough to handle the limited functions of the Service Quality Department. ETPI averred that since Culili did not avail of the Special Retirement Program and his position was subsequently declared redundant, it had no choice but to terminate Culili.23 Culili, however, continued to report for work. ETPI said that because there was no more work for Culili, it was constrained to serve a final notice of termination24 to Culili, which Culili ignored.

ETPI alleged that Culili informed his superiors that he would agree to his termination if ETPI would give him certain special work tools in addition to the benefits he was already offered. ETPI claimed that Culili's counter-offer was unacceptable as the work tools Culili wanted were worth almost a million pesos. Thus, on March 26, 1999, ETPI tendered to Culili his final pay check of Eight Hundred Fifty-Nine Thousand Thirty-Three and 99/100 Pesos (₱859,033.99) consisting of his basic salary, leaves, 13th month pay and separation pay.25 ETPI claimed that Culili refused to accept his termination and continued to report for work.26 ETPI denied hiring outside contractors to perform Culili's work and denied offering added incentives to its employees to induce them to retire early.

ETPI also explained that the December 7, 1998 letter was never given to Culili in an official capacity. ETPI claimed that it really needed to reduce its workforce at that time and that it had to prepare several letters in advance in the event that none of the employees avail of the Special Retirement Program. However, ETPI decided to wait for a favorable response from its employees regarding the Special Retirement Program instead of terminating them.27 On February 8, 2000, Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor practice, and money claims before the Labor Arbiter.

On April 30, 2001, the Labor Arbiter rendered a decision finding ETPI guilty of illegal dismissal and unfair labor practice, to wit:

WHEREFORE, decision is hereby rendered declaring the dismissal of complainant Nelson A. Culili illegal for having been made through an arbitrary and malicious declaration of redundancy of his position and for having been done without due process for failure of the respondent to give complainant and the DOLE written notice of such termination prior to the effectivity thereof. In view of the foregoing, respondents Eastern Telecommunications Philippines and the individual respondents are hereby found guilty of unfair labor practice/discrimination and illegal dismissal and ordered to pay complainant backwages and such other benefits due him if he were not illegally dismissed, including moral and exemplary damages and 10% attorney's fees. Complainant likewise is to be reinstated to his former position or to a substantially equivalent position in accordance with the pertinent provisions of the Labor Code as interpreted in the case of Pioneer texturing [ Pioneer Texturizing Corp. v. National Labor Relations Commission], G.R. No. 11865, 16 October 1997. Hence, Complainant must be paid the total amount of TWO MILLION SEVEN HUNDRED FORTY[-]FOUR THOUSAND THREE [HUNDRED] SEVENTY[-] NINE and 41/100 (₱2,744,379.41), computed as follows: I. Backwages (from 16 March 1999 to 16 March 2001) a. Basic Salary (₱29,030 x 24 mos.) ₱696,720.96 b. 13th Month Pay (₱692,720.96/12) 58,060.88 c. Leave Benefits 1. Vacation Leave (30 days/annum) ₱1,116.54 x 60 days 66,992.40 2. Sick Leave (30 days/annum) ₱1,116.54 x 60 days 66,992.40 3. Birthday Leave (1 day/annum) ₱1,116.54 x 2 days 2,233.08 d. Rice and Meal Subsidy 16 March - 31 July 1999 (₱1,750 x 4.5 mos. = ₱7,875.00) 01 August 1991 - 31 July 2000 (₱1,850 x 12 mos = ₱22,200.00) 01 August 2000 - 16 March 2001 (₱1,950 x 7.5 mos. = ₱14,625.00) 44,700.00 e. Uniform Allowance ₱7,000/annum x 2 years 14,000.00