FIRST DIVISION

[G.R. No. 216787. February 15, 2022.]

ILAW AT BUKLOD NG MANGGAGAWA [IBM] SA GENERAL

MILLING CORPORATION, petitioner, vs. GENERAL MILLING
CORPORATION, respondent.

NOTICE

Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution
dated February 15, 2022 which reads as follows:
"G.R. No. 216787 (Ilaw at Buklod ng Manggagawa [IBM] sa
General Milling Corporation v. General Milling Corporation). — Before
the Court is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of
Court filed by Ilaw at Buklod ng Manggagawa sa General Milling Corporation
(IBM sa GMC) against respondent General Milling Corporation (GMC)
assailing the Decision 2 dated February 6, 2014 and the Resolution 3 dated
January 14, 2015 rendered by the Court of Appeals (CA) in CA-G.R. SP No.
07065, which affirmed the Decision 4 dated August 30, 2012 of the National
Conciliation and Mediation Board (NCMB), Region VII, Cebu City.
The Antecedents
GMC is a corporation engaged in the manufacture, process by milling,
packing, supply, sale, and delivery of human food products for domestic and
international public consumption, while IBM sa GMC is the registered union
of the employees of GMC. 5
On May 24, 2012, GMC filed a written notice before the Department of
Labor and Employment (DOLE) Regional Office No. VII of its intention to
terminate the employment of 33 employees and to transfer 18 employees to
a different department as a consequence of the implementation of its
business strategy. Specifically, GMC was going to outsource its bagging and
loading departments where the affected employees and members of IBM sa
GMC were assigned to an independent contractor, PertServe, Inc. 6 The
notice also served as an invitational request for the DOLE to send its
representative to witness the release of severance pay to the affected
employees. 7
On May 31, 2012, GMC sent notices of termination to the affected
employees whose positions were to be declared redundant 30 days prior to
the intended date of termination on July 1, 2012. 8
On June 2, 2012, IBM sa GMC filed a Notice of Strike on the ground of
unfair labor practice and union busting at the regional office of the NCMB
and, thereafter, conducted the strike vote. After a series of conciliation
conferences, the NCMB convinced the parties to have the dispute resolved
through voluntary arbitration. 9
In its position paper, IBM sa GMC claimed that GMC acted in bad faith
in terminating the affected employees and that what transpired was a mass
lay-off in the guise of redundancy. However, the positions of the affected
employees were not, in fact, redundant considering that GMC availed of the
services of agency-hired employees. Thus, the termination of said
employees was illegal. 10
GMC refuted the allegations claiming good faith as it was merely
exercising its management prerogative to employ a policy to increase
productivity in their bagging and loading sections without necessarily hiring
new employees. According to GMC, after a careful study conducted by the
management, it was proven that outsourcing resulted in an increase in the
productivity rate of at least 40% and a decrease of labor cost of at least
64%. In the end, GMC maintained that it validly terminated the affected
employees in compliance with the requirements prescribed by Article 283 of
the Labor Code. 11
On August 30, 2012, the Voluntary Arbitrator (VA) disposed of the case
as follows:TIADCc

WHEREFORE, it is hereby declared that the outsourcing to an

independent legitimate contractor and the resulting termination of
the 55 job/position for reason of redundancy undertaken by
Respondent General Milling Corporation are valid and lawful exercise
of management prerogative for being made in good faith, for having
complied with the basic requirements of the law and the
jurisprudence.
The matter of whether the bagging section was necessary,
usual and desirable to the business of respondent is of no moment as
the law on legitimate contracting does not distinguish whether the
contracted job is related or not related at all to the main business as
discussed. The other peripheral issues of "reinstatement" and "union
busting" must be set aside as they no longer present justiciable
controversy by this declaration of validity (Funa vs. Ermita , 612 SCRA
308 (2010); Pormento vs. Estrada, 629 SCRA 530 (2010)).
SO ORDERED. 12

In a Decision dated February 6, 2014, the CA affirmed the ruling of the

VA. It held that GMC's streamlining scheme was a valid labor-saving device
supported by jurisprudence. It also found that the requisites for a valid
redundancy program are present in this case. Indeed, courts shall not
interfere with the management's prerogative of contracting out in the
absence of showing that it was done in a malicious or arbitrary manner. 13
In its Resolution 14 dated January 14, 2015, the CA denied IBM sa
GMC's motion for reconsideration for lack of merit.
Aggrieved, IBM sa GMC filed the present petition on March 5, 2015
insisting that: (1) GMC failed to prove the requisites for a valid dismissal
based on redundancy; (2) contracting out of jobs is prohibited when the
same results in the termination of regular employees who perform functions
necessary to the business; (3) the positions of the terminated employees
cannot be considered redundant because they were replaced by third-party
agency workers; and (4) GMC is guilty of unfair labor practice which is
equivalent to union busting. 15
Issue
Whether the CA erred in affirming the VA's ruling upholding the validity
of respondent's redundancy program.
Our Ruling
Prefatorily, it must be remembered that factual findings of labor
officials, who have acquired expertise in matters within their jurisdiction, are
generally accorded not only respect but even finality by the courts especially
when affirmed by the CA. 16 Indeed, in the absence of exceptional
circumstances 17 to warrant a relaxation of this rule, the Court's review shall
be limited only to questions of law and shall refrain from trying facts or
examining testimonial or documentary evidence on record. The Court finds
no such exceptional circumstance herein.
Under Article 298 (formerly Article 283) 18 of the Labor Code,
redundancy is considered as an authorized cause for termination of
employment. The article states:
ARTICLE 298. Â [283] 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. 19
Accordingly, redundancy exists when the service of an employee is in
excess of what is reasonably demanded by the actual requirements of the
business. 20 In Coca-Cola Femsa Philippines v. Macapagal, 21 the Court
discussed that while the determination of whether the employees' services
are no longer sustainable, and therefore, properly terminable for
redundancy, is an exercise of business judgment, such decision must not be
in violation of the law nor without sufficient basis. 22
As such, case law ensures a reasonable balance between an
employer's management prerogative and an employee's labor rights in
requiring the following for a valid redundancy program: (1) written notice
served on both the employees and the DOLE 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. 23 As duly found by the VA
and the CA, the foregoing requirements are present in this case. HEITAD

First, respondent served a written notice on the affected employees

and the DOLE one month prior to the intended date of termination on July 1,
2012. 24
Second , respondent paid the affected employees their separation pay
in the amount stipulated in the collective bargaining agreement as shown by
the quitclaims signed by the latter. 25
Third, as the CA observed, there is no showing of malice on the part of
respondent in implementing its redundancy program. On the contrary, its
scheme of realigning the bagging and loading section constitutes a valid
introduction of a labor-saving device. Prior to the implementation of the
program, respondent conducted a careful study of the effectiveness of such
scheme to outsource its bagging and loading sections. It revealed that not
only had respondent's productivity rate increased, its labor cost was also
significantly reduced. 26
Fourth, while the Court requires the redundancy program to impose fair
and reasonable criteria in ascertaining what positions are to be declared
redundant and accordingly abolished, there is no longer a need for this in
the present case. As the CA observed, respondent outsourced the functions
of the bagging and loading section in its entirety to PertServe, Inc. In Coca-
Cola Femsa Philippines v. Macapagal , 27 citing Asian Alcohol Corporation v.
NLRC, 28 it was held that there is no need to choose from the positions that
will be declared as redundant since the entire department was abolished.
Hence, the fair and reasonable criteria to determine which employees should
be dismissed from service, no longer finds application.
In view of the foregoing, the Court finds no cogent reason to deviate
from the findings of the VA and the CA. Records reveal that respondent was
motivated by good faith in its exercise of management prerogative to
achieve the optimum business strategy. In the absence of proof that a
company's management prerogative was exercised in a malicious or
arbitrary manner, the Court shall not disturb the dismissal of employees as a
consequence of the survival of the business.
Indeed, the implementation of a redundancy program is not adversely
affected by the employer availing itself of the services of an independent
contractor to replace the services of the terminated employees. 29 Contrary
to the claims of petitioner, the Court has had several occasions to rule that
the reduction of the number of workers made necessary by the introduction
of an independent contractor is justified when the latter is undertaken to
effectuate more economic methods of production. 30

Accordingly, the Court cannot sustain petitioner's charges of unfair

labor practice against respondent. Unfair labor practice refers to acts that
violate the workers' right to organize. To hold an employer liable for the
same, the alleging party has the burden to prove that the acts of the former
negatively affects in whatever manner the right of his or her employees to
self-organize. 31 Nonetheless, as found by the VA and the CA, petitioner
failed to discharge its burden of proving that respondent violated the
affected employee's right to organize.
I n San Fernando Coca-Cola Rank-and-File Union v. Coca-Cola Bottlers
Philippines, Inc., 32 the Court held that the consequent dismissal of 27 union
members due to redundancy is not per se an act of unfair labor practice
amounting to union busting. While the number of union membership was
diminished due to the termination of the members, the company had valid
reason to terminate their services in furtherance of a legitimate business
strategy.
Similarly, the Court ruled in Bankard, Inc. v. National Labor Relations
Commission 33 that a redundancy program might have affected the number
of union membership does not necessarily mean that the company
purposely sought such result. Without proof that the company's program
was aimed at interfering with the employee's right to organize, there can be
no unfair labor practice.
The same conclusion can be drawn in this case. The VA and the CA are
one in finding no indication that respondent deliberately terminated the
services of the affected employees to restrict their freedoms as union
members. To repeat, respondent closed its bagging and loading sections and
hired an independent agency as a legitimate cost-cutting measure to meet
business exigencies. 34 There is, therefore, no cogent reason for the Court to
hold otherwise.
Notwithstanding the foregoing, petitioner insists that contracting out of
jobs is prohibited when the same results in the termination of regular
employees who perform functions necessary to the business. The contention
lacks merit. In BPI Employees Union-Davao City-FUBU v. Bank of the
Philippine Islands, 35 the Court held that it is the management prerogative to
farm out any of its activities, regardless of whether such activity is
peripheral or core in nature. For as long as the contracting out is done in
good faith without violating basic labor principles and that the contractor
hired is legitimate, not merely a labor-only contractor, the Court shall uphold
the management's decision to outsource.
As duly noted by the VA, PertServe, Inc., the contractor chosen by
respondent to assume the functions of its bagging and loading sections, is a
legitimate, independent job contractor, to wit: ATICcS

From the papers, secured in the office of the respondent during

the ocular inspection and made in the presence of the responsible
officials of the complainant, it is beyond cavil that this PertServe, Inc.
is a legitimate independent contractor. It has its own business —
 identifiable services offered to the public with due compliance to
government regulations such as its SEC registration, BIR, TIN, SSS,
and PhilHealth registration and, importantly, its DOLE Permit and DO
18-02 registration. It has its own office located at Don Sergio Suico
St., Barangay Tingub, Mandaue City. From the brochures with colored
pictures, it appears that it has substantial capital as shown in the
numerous companies that it has served and its branches in Metro
Manila, Davao, Cagayan de Oro City, Leyte and Panay. It also has
subsidiaries nationwide, and was first established in the year 1988. It
was noted in the contract of services with the respondent that there
were provisions expressly made as to the exercise of supervision and
control of PertServe, Inc. over its own personnel, and which provisions
are one of the most important attributes of a contractor to be
considered legitimate and independent. x x x. 36
Hence, there is no reason to suspect the intentions of respondent in its
reasonable exercise of judgment in the pursuit of the ideal business
structure. Verily, management has the ultimate determination of whether
company functions should be performed by its personnel or contracted to
outside agencies. 37
As for the payment of separation pay, the VA correctly found that
respondent already paid the same to the affected employees as evidenced
by the quitclaims they executed. 38 Settled is the rule that quitclaims are
valid when: (1) there was no fraud or deceit on the part of any of the parties;
(2) the consideration for the quitclaim is credible and reasonable; and (3) the
contract is not contrary to law, public order, public policy, morals or good
customs, or prejudicial to a third person with a right recognized by law. 39 In
this case, in the absence of any showing that the affected employees were
tricked or coerced into signing the reasonable and lawful quitclaims, the
admissions they made therein as to the full payment of their separation pay
stand.
All told, the Court finds that respondent executed a valid redundancy
program, having complied with the requisites for its validity. Indeed,
contracting out of services is a valid exercise of business judgment or
management prerogative. 40 In view of petitioner's failure to present any
evidence to prove that respondent acted maliciously or arbitrarily, the Court
shall refrain from interfering with the latter's business prerogative.
WHEREFORE, premises considered, the instant petition is DENIED.
The Decision dated February 6, 2014 and the Resolution dated January 14,
2015 rendered by the Court of Appeals in CA-G.R. SP No. 07065, finding that
respondent General Milling Corporation validly terminated the employment
of the affected employees and members of petitioner Ilaw at Buklod ng
Manggagawa sa General Milling Corporation on the basis of a valid
redundancy program, are AFFIRMED.
SO ORDERED."

By authority of the Court:

 (SGD.) LIBRADA C. BUENA
Division Clerk of Court

By:

MARIA TERESA B. SIBULO

Deputy Division Clerk of Court

Footnotes

1. Rollo, pp. 3-19.

2. Penned by Associate Justice Ma. Luisa C. Quijano-Padilla, with Associate Justices

Ramon Paul L. Hernando (now a member of this Court) and Carmelita
Salandanan-Manahan, concurring; id. at 216-224.

3. Penned by Associate Justice Ma. Luisa C. Quijano-Padilla, with Associate Justices

Ramon Paul L. Hernando (now a member of this Court) and Marie Christine
Azcarraga-Jacob, concurring; id. at 236-237.

4. Penned by Voluntary Arbitrator Manuel M. Monzon; id. at 26-30.

5. Id. at 80.

6. Id. at 29; 217.

7. Id. at 81.

8. Id. at 217.

9. Id.

10. Id. at 218.

11. Id.

12. Id. at 219.

13. Id. at 220-224.

14. Supra note 3.

15. Rollo, pp. 11-18.

16. Philippine National Bank v. Dalmacio , 813 Phil. 127, 133 (2017); Bankard, Inc.
v. NLRC, 705 Phil. 428, 436 (2013).

17. In certain exceptional cases, however, the Court may be urged to probe and
resolve factual issues, viz.: (a) When the findings are grounded entirely on
speculation, surmises, or conjectures; (b) When the inference made is
manifestly mistaken, absurd, or impossible; (c) When there is grave abuse of
discretion; (d) When the judgment is based on a misapprehension of facts;
(e) When the findings of facts are conflicting; (f) When in making its findings
 the CA went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (g) When the CA's
findings are contrary to those by the trial court; (h) When the findings are
conclusions without citation of specific evidence on which they are based; (i)
When the facts set forth in the petition, as well as in the petitioner's main
and reply briefs, are not disputed by the respondent; (j) When the findings of
fact are premised on the supposed absence of evidence and contradicted by
the evidence on record; or (k) When the CA manifestly overlooked certain
relevant facts not disputed by the parties, which, if properly considered,
would justify a different conclusion. Philippine National Bank v. Dalmacio ,
supra at 132, citing De Vera, et al. v. Spouses Santiago, Sr., et al., 761 Phil.
90, 105 (2015).

18. Department Advisory No. 1, series 2015, "Renumbering of the Labor Code of
the Philippines, as Amended."

19. Labor Code of the Philippines, Presidential Decree No. 442 (Amended &
Renumbered), July 21, 2015.

20. HCL Technologies Philippines, Inc. v. Guarin, Jr., G.R. No. 246793, March 18,
2021.

21. G.R. No. 232669, July 29, 2019.

22. Id.

23. HCL Technologies Philippines, Inc. v. Guarin, Jr., supra note 20.

24. Rollo, pp. 30; 217.

25. Id.

26. Id. at 218-220.

27. Coca-Cola Femsa Philippines v. Macapagal, supra note 21.

28. 364 Phil. 912 (1999).

29. Coca-Cola Femsa Philippines v. Macapagal, supra note 21.

30. San Fernando Coca-Cola Rank-and-File Union v. Coca-Cola Bottlers Philippines,

Inc., 819 Phil. 326, 336 (2017).

31. Id. at 337-338, citing Zambrano v. Philippine Carpet Manufacturing Corp. , 811
Phil. 569, 582 (2017); Bankard, Inc. v. NLRC , supra note 16, at 437-438.

32. Supra note 30.

33. Bankard, Inc. v. NLRC , supra note 16.

34. Rollo, pp. 217-218.

35. 715 Phil. 35 (2013), citing Alviado, et al. v. Procter & Gamble Phils., Inc., 628
Phil. 469 (2010).

36. Rollo, p. 29.

37. Mejila v. Wrigley Philippines, Inc. , G.R. Nos. 199469 & 199505, September 11,
2019.

38. Rollo, pp. 92-133.

39. HCL Technologies Philippines, Inc. v. Guarin, Jr., supra note 20.

40. Bankard, Inc. v. NLRC , supra note 16, at 440.