3M Philippines, Inc. vs. Lauro D. Yuseco

A valid dismissal on the ground of redundancy requires the employer to prove the existence of redundancy and to show compliance with four requisites: (a) written notice to both the employee and the DOLE at least one month before the intended termination; (b) payment of separation pay of at least one month’s pay for every year of service; (c) good faith in abolishing the redundant position; and (d) fair and reasonable criteria in ascertaining which positions to declare redundant, considering factors such as preferred status, efficiency, and seniority. Affidavits of company officers explaining the business reorganization and the resulting superfluity of a position, if complemented by documentary proof such as formal notices and company communications, may constitute substantial evidence of redundancy.

Petitioner 3M Philippines, Inc., a subsidiary of the American multinational 3M Company, had a marketing and sales arm organized into several Business Groups, each headed by a Country Business Leader. In 2015, the company decided to align its business model with other 3M subsidiaries in Southeast Asia by shifting from a “Business Group” organization to a “Market Focused” organization. This required merging the Industrial Business Group, led by respondent Lauro D. Yuseco, with the Safety & Graphics Business Group, led by Tommee Lopez, into a single Industrial & Safety Market Center. The new structure needed only one Market Leader. Petitioner evaluated both Yuseco and Lopez and, applying criteria of work experience breadth and performance ratings over three years, selected Lopez as the head of the new unit. Respondent’s position was consequently declared redundant effective January 1, 2016.

• Corporate Reorganization: Petitioner’s marketing and sales arm was initially divided into Business Groups headed by Country Business Leaders, with respondent Yuseco leading the Industrial Business Group and Tommee Lopez leading the Safety & Graphics Business Group. In 2015, petitioner adopted a “Market Focused” model, merging the two groups into the Industrial & Safety Market Center, which required only one Market Leader.
• Selection of Retained Employee: Petitioner evaluated Yuseco and Lopez based on work experience and three-year performance ratings. Lopez had broader experience spanning both Safety & Graphics and Industrial operations, while Yuseco’s experience was confined to Industrial. Lopez also had higher performance ratings for 2013–2015. Petitioner selected Lopez and declared Yuseco’s position redundant effective January 1, 2016. A search for alternative positions within the company was unsuccessful.
• Notification and Meetings: On November 25, 2015, Managing Director Anthony Bolzan and HR Manager Maria Theresa Chiongbian met with Yuseco to inform him of the redundancy and present a separation package, including a draft waiver and quitclaim. Yuseco refused to sign the waiver. The parties discussed tax implications, leave arrangements, and an employee-wide announcement. Yuseco requested time to inform his team before the electronic mail announcement was made. After Yuseco communicated with his team, the company announced his separation on November 26, 2015. Text messages between Yuseco and Chiongbian showed he sought advice on next steps and clarifications on his benefits.
• Formal Notices: On December 1, 2015, petitioner served Yuseco with a formal Notice of Separation citing redundancy, and simultaneously sent a written notice to the DOLE-NCR indicating the redundancy-based termination of Yuseco and another employee effective at the close of business on December 31, 2015. Yuseco refused to acknowledge receipt.
• Separation Package: Petitioner offered Yuseco a special separation package totaling P5,254,402.12, which included separation pay, retirement plan proceeds, an additional payout (later increased to cover tax liability), two years of extended health coverage, and two years of life insurance—more than the statutory minimum.
• Yuseco’s Version: Yuseco alleged that the November 25 meeting agenda was undisclosed and that he was surprised with a demand to conform to a purported request for a separation package. He claimed that Bolzan immediately told him not to report for work, that the company-wide announcement was humiliating, and that the redundancy was a mere afterthought. He argued that the November 25 letter suggested he had agreed to a separation package, while the December 1 letter declared redundancy, revealing inconsistency and bad faith. He also asserted bias on Bolzan’s part in giving him a poor rating in 2014.
• Petitioner’s Version: Petitioner maintained that the redundancy was the result of a genuine business reorganization, that Yuseco was fully informed during the November 25 meeting, that the two letters were complementary, and that no pressure was exerted to sign the quitclaim. It contended that the criteria used were fair, objective, and documented, and that procedural requirements were strictly observed.

• Substantial Evidence of Redundancy: Petitioner argued that the affidavit of HR Manager Chiongbian, which detailed the business rationale, the merger, and the resulting superfluity, together with the documentary evidence of notices and communications, constituted substantial evidence of redundancy, consistent with Soriano v. NLRC. The CA erred in holding that more than an affidavit was required.
• Good Faith and Fair Criteria: Petitioner maintained that the redundancy was implemented in good faith to enhance marketing and sales capabilities, and that the criteria used—breadth of work experience in the merging groups and performance ratings over three years—were fair, reasonable, and applied objectively. The selection of Lopez over Yuseco was based on documented qualifications, not bias.
• Procedural Compliance: Petitioner asserted that it complied with the one-month notice requirement by serving separate written notices on Yuseco and the DOLE on December 1, 2015, with the termination effective January 1, 2016. The separation package offered exceeded the statutory minimum.
• Complementary Nature of Letters: Petitioner contended that the November 25 letter and the December 1 letter were complementary, both referring to redundancy; the former communicated the terms of the separation benefits, while the latter served as the formal notice of termination, consistent with the discussions held on November 25.

• Lack of Substantial Proof of Redundancy: Respondent maintained that petitioner failed to prove redundancy by substantial evidence, as it presented only Chiongbian’s affidavit without supporting documents such as a feasibility study or new staffing pattern. The redundancy was a pretext to ease him out.
• Bad Faith and Arbitrary Criteria: Respondent argued that the selection criteria were predetermined to favor Lopez, whom Bolzan had promoted, and that the comparison of experience and ratings was unfair because Lopez’s scope of responsibility was narrower prior to his promotion. Bolzan’s 2014 performance rating was allegedly biased.
• Contradictory Letters: Respondent highlighted the inconsistency between the November 25 letter, which purported to accept his request for a separation package, and the December 1 letter declaring redundancy, contending that this contradiction evinced bad faith.
• Constructive Dismissal: Respondent claimed that he never consented to the separation package and that the pressure to sign a waiver and quitclaim during the November 25 meeting, together with the immediate instruction not to report for work, constituted forced resignation or illegal dismissal.

• Validity of Redundancy Dismissal: Whether respondent Lauro D. Yuseco was legally dismissed on ground of redundancy.

• Validity of Redundancy Dismissal: The dismissal was valid. Petitioner discharged its burden of proving redundancy through substantial evidence. Chiongbian’s affidavits, which explained the corporate shift to a “Market Focused” organization, the merger of two Business Groups, and the consequent superfluity of one Country Business Leader position, together with the formal notices, text messages, and letters, constituted substantial evidence under the standard that the amount of evidence be such as a reasonable mind might accept as adequate. The CA’s insistence on additional documentary proof like a staffing pattern or feasibility study was unnecessary; Soriano v. NLRC established that affidavits of responsible officers may suffice. The third requisite, good faith, was satisfied because the merger was a genuine business decision to align with regional practices and enhance capabilities, not a subterfuge to remove respondent. The allegation of bias lacked evidentiary support. The fourth requisite, fair and reasonable criteria, was met: petitioner considered the candidates’ breadth of work experience in the merging groups and comparative performance ratings over three years—both objective, documented measures that reasonably favored Lopez. Procedural requisites were also fully observed: the December 1, 2015 letters to respondent and the DOLE provided the mandated one-month notice, and the separation package exceeded the statutory separation pay. The alleged contradiction between the November 25 and December 1 letters was more apparent than real; both referenced redundancy, with the earlier letter containing the financial offer and the latter serving as formal notice. The text messages further demonstrated that respondent was aware of the redundancy and sought clarifications on post-employment matters, undermining his claim of surprise or forced resignation.

• Redundancy Defined — Redundancy exists when the service capability of the workforce exceeds what is reasonably needed to meet business demands. A position is redundant when it has become superfluous due to factors such as over-hiring, drop in business volume, discontinuance of a product line, or departmental reorganization. An employer has no legal duty to retain employees beyond operational requirements and may validly dismiss on this ground even if the business is profitable.
• Requisites for Valid Redundancy (Article 298, Labor Code) — To effect a legal dismissal for redundancy, the employer must comply with: (a) written notice to the employee and to the DOLE at least one month before the termination date; (b) payment of separation pay equal to at least one month’s pay per year of service; (c) good faith in abolishing the position; and (d) fair and reasonable criteria in choosing which positions to abolish, considering preferred status, efficiency, seniority, and similar factors.
• Substantial Evidence of Redundancy — The employer need not present a formal feasibility study or new staffing pattern. Affidavits of responsible company officers, if they detail the business justification and organizational changes resulting in redundancy, and if supported by documentary evidence such as notices and correspondence, constitute substantial evidence. The controlling standard is that amount of relevant evidence which a reasonable mind might accept as adequate to support a conclusion.

• “Redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise. A position is redundant where it had become superfluous. Superfluity of a position or positions may be the outcome of a number of factors such as over-hiring of workers, decrease in volume of business, or dropping a particular product line or service activity previously manufactured or undertaken by the enterprise.” — Establishes the legal meaning and triggers of redundancy.
• “A valid redundancy program must comply with the following requisites: (a) written notice served on both the employees and the DOLE at least one (1) month prior to the intended date of termination of employment; (b) payment of separation pay equivalent to at least one (1) month pay for every year of service; (c) good faith in abolishing the redundant positions; and (d) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished, taking into consideration such factors as (i) preferred status; (ii) efficiency; and (iii) seniority, among others.” — The four indispensable elements for a valid redundancy dismissal.
• “It is clear that the foregoing documentary evidence constituted substantial evidence to support the findings … that petitioner’s employment was terminated by respondent PLDT due to a valid or legal redundancy program since substantial evidence merely refers to that amount of evidence which a reasonable mind might accept as adequate to support a conclusion.” — Quoted from Soriano v. NLRC, affirming that affidavits and documents can suffice as proof.
• “Time and again, it has been ruled that an employer has no legal obligation to keep more employees than are necessary for the operation of its business. In fact, even if a business is doing well, an employer can still validly dismiss an employee from the service due to redundancy if that employee’s position has already become in excess of what the employer’s enterprise requires.” — Reaffirms the breadth of management prerogative in redundancy situations.

• Soriano v. NLRC, et al., 550 Phil. 111 (2007) — Followed. Held that affidavits of company officers explaining the necessity of redundancy, combined with documentary proof, constitute substantial evidence of a valid redundancy program.
• Philippine National Bank v. Dalmacio, 813 Phil. 127 (2017) — Cited for the four requisites of a valid redundancy program and the rule that an employer is not obliged to maintain employees beyond business needs.
• Ocean East Agency Corporation v. Lopez, 771 Phil. 179 (2015) — Cited for the principle that redundancy may be lawfully invoked even if the business is not suffering losses, as long as the position is in excess of operational requirements.
• Status Maritime Corporation, et al. v. Sps. Delalamon, 740 Phil. 175 (2014) — Cited solely to support the Court’s exceptional review of factual findings when the lower tribunals’ conclusions conflict.

• Article 298 (formerly Article 283), Labor Code of the Philippines — Prescribes the authorized causes for termination, including redundancy, and mandates one-month prior written notice to the employee and the DOLE, and payment of separation pay of at least one month’s salary per year of service. The Court found that petitioner’s notices and separation package satisfied these requirements.

Justices Estela M. Perlas-Bernabe (Chairperson), Alexander G. Gesmundo, Mario V. Lopez, and Ricardo R. Rosario (designated additional member per S.O. No. 2797) concurred. No separate concurring opinions were registered.