Aparicio and Clarito vs. Manila Broadcasting Company

A valid redundancy program requires: (1) written notice served on both the employee and the DOLE at least one month before the intended termination date; (2) payment of separation pay equivalent to at least one month’s pay for every year of service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining which positions to declare redundant, taking into account preferred status, efficiency, and seniority. An employer’s determination that a business unit or function is duplicative and should be abolished will not be disturbed absent a showing that management acted arbitrarily or maliciously.

MBC operated DYEZ (local AM) and DZRH (a nationwide AM relay) through a transmitter site in Barangay Taloc, Bago City, designated FFES Bacolod. Petitioners Noli Aparicio and Renan Clarito were radio technicians assigned to that relay station. In the last quarter of 2001, MBC management reviewed the operations of all stations and discovered that several provincial stations were incurring losses and being subsidized by Manila-based stations. Chairman Fred Elizalde issued a memorandum dated January 10, 2002 introducing the “Hating Kapatid” policy, under which each station was considered financially independent and would no longer receive head-office subsidies. As a consequence, each station was directed to review its own manpower requirements. FFES Bacolod, identified as one of the losing stations, was shut down because MBC determined that DZRH could already be heard in Bacolod City through FFES Iloilo, rendering the relay station unnecessary.

• Employment and Assignment: Petitioners Noli Aparicio and Renan Clarito were radio technicians employed by MBC, a corporation engaged in radio broadcasting. Both were assigned at the transmitter site of DYEZ (local AM) and DZRH (a relaying station for nationwide AM broadcasts) located in Barangay Taloc, Bago City, known as FFES Bacolod.
• The “Hating Kapatid” Policy and Shutdown of FFES Bacolod: Sometime in the last quarter of 2001, MBC management reviewed the operations of all stations. The review revealed that several provincial stations were losing money and being subsidized by the more profitable Manila stations. Chairman Fred Elizalde issued a memorandum dated January 10, 2002 implementing the “Hating Kapatid” policy, which treated each station as an independent unit no longer entitled to head-office subsidies and required a review of manpower. FFES Bacolod, a relay station of DZRH, was among the losing stations. MBC determined that its continued operation was unnecessary because DZRH could be heard in Bacolod City through FFES Iloilo. Consequently, FFES Bacolod was shut down.
• Dismissal Notices and Separation Pay: On February 28, 2002, petitioners received a notice dated February 22, 2002 from MBC President Roberto Nicdao, Jr. terminating their employment effective thirty days later, or on March 31, 2002. On the same day, MBC submitted its Revised RRS Form and Establishment Termination Report to the Department of Labor and Employment (DOLE), stating that the retrenchment was brought about by redundancy, company reorganization, and downsizing. Petitioners subsequently received separation pay equivalent to one month’s salary for every year of service, effective thirty days from notice.
• Proceedings before the Labor Arbiter: The Labor Arbiter found the dismissal illegal on the ground that MBC failed to prove serious business losses or financial reverses and did not demonstrate the use of fair and reasonable criteria in selecting positions for retrenchment. Separation pay in lieu of reinstatement was awarded due to strained relations. On appeal, the NLRC reversed, ruling that reorganization is an acknowledged cost-saving measure and that actual financial losses need not be proven for redundancy to exist. The Court of Appeals partly modified the NLRC’s decision, invalidating the dismissal of three other co-complainants for lack of fair criteria but sustaining the dismissal of Aparicio and Clarito because their positions were abolished by reason of the complete shutdown of FFES Bacolod.

• Timeliness of MBC’s Appeal: Petitioners argued that the labor arbiter’s Decision dated July 27, 2007 had attained finality because MBC’s appeal to the NLRC was filed beyond the reglementary period. They contended that notice of the decision was served by registered mail on MBC’s counsel at his address on record, FJE Bldg., Esteban Street, Legaspi Village, Makati City, and that the mail was returned on November 5, 2007 with the notation “Moved out.” Since counsel allegedly transferred to a new office without notifying the labor arbiter, service was deemed complete five days later on November 10, 2007. The deadline to appeal was November 20, 2007; MBC’s appeal filed only on February 18, 2008 was, therefore, out of time.
• Validity of Redundancy Program: Petitioners maintained that the claimed redundancy was not proven. They asserted that the “Hating Kapatid” program lacked factual bases, its mechanics were never explained to the employees, and MBC had not established serious business losses or financial reverses. The dismissal was allegedly tainted with bad faith and was merely a ploy to replace personnel.

• Timeliness of Appeal: MBC countered that it actually received the labor arbiter’s decision only on February 7, 2008, when the NLRC furnished it with a copy after MBC manifested non-receipt. The notice sent to the FJE Building address was ineffective because counsel had already moved to the 2nd Floor, MBC Building, V. Sotto, CCP Complex, Roxas Boulevard, Pasay City, and there was no proof that counsel failed to notify the labor arbiter of this change of address. The memorandum of appeal filed on February 18, 2008 was within ten days from actual receipt and was thus timely.
• Validity of Redundancy: MBC argued that the retrenchment program was a valid exercise of management prerogative to adopt new and more economical methods. Reorganization and redundancy are recognized as authorized causes for termination. The law does not require financial losses to be actually suffered before an employer can declare redundancy. The shutdown of FFES Bacolod was justified because DZRH could already be heard through FFES Iloilo, rendering petitioners’ positions superfluous.

• Timeliness of MBC’s Appeal to NLRC: Whether the Court of Appeals committed reversible error in ruling that MBC’s appeal to the NLRC was timely filed, in light of the conflicting claims regarding constructive service by registered mail of the labor arbiter’s decision on MBC’s counsel.
• Validity of Dismissal on Ground of Redundancy: Whether the termination of petitioners Noli Aparicio and Renan Clarito on the ground of redundancy was valid, considering the requirements of adequate written notice, payment of separation pay, good faith, and the application of fair and reasonable criteria.

• Timeliness of MBC’s Appeal to NLRC: The appeal was timely filed. Under the rule on constructive service by registered mail as clarified in Bernarte v. PBA, there must be conclusive proof that a first notice was sent by the postmaster and received by the addressee; the best evidence is a certification from the postmaster or the testimony of the mailman. Petitioners presented only a mail carrier’s notation “Moved out 11/05/07,” which did not meet the required evidentiary standard. They failed to adduce a postmaster’s certification or the mailman’s testimony, and they likewise did not submit evidence that the address on record remained the old one or that counsel moved without notification. Consequently, MBC’s receipt of the decision was properly reckoned on February 7, 2008, the date it was furnished by the NLRC. The memorandum of appeal filed on February 18, 2008 fell well within the ten-day reglementary period.
• Validity of Dismissal on Ground of Redundancy: The dismissal was valid. Redundancy exists when an employee’s services are in excess of what is reasonably demanded by the actual requirements of the enterprise. A valid redundancy program under Article 298 of the Labor Code requires: (1) written notice served on both the employee and the DOLE at least one month before the intended termination date; (2) payment of separation pay of at least one month’s pay per year of service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in selecting the positions to be abolished, considering preferred status, efficiency, and seniority. Here, petitioners were served notices of termination effective thirty days later; MBC submitted an Establishment Termination Report to the DOLE setting out the redundancy program’s basis; and separation pay was promptly delivered. The “Hating Kapatid” program led to the shutdown of FFES Bacolod upon the finding that DZRH could be heard via FFES Iloilo, making the relay station and the positions of Aparicio and Clarito redundant. Absent any showing of arbitrariness or malice, the determination of redundancy by management is a matter of business judgment that courts will not disturb. Substantial evidence supported the conclusion that the redundancy was genuine and the dismissal lawful.

• Constructive Service by Registered Mail (Bernarte doctrine) — Constructive completion of service by registered mail requires conclusive proof that a first notice was sent by the postmaster to the addressee and actually received. The best evidence is a certification from the postmaster detailing how, when, and to whom the notice was delivered, or the testimony of the mail carrier. A mere notation of “Moved out” on the returned mail is insufficient; the presumption that official duty has been regularly performed does not apply in such circumstances.
• Requisites for Valid Redundancy Dismissal — A valid redundancy program demands: (1) written notice to the affected employee and to the DOLE at least one month prior to the date of termination; (2) payment of separation pay equivalent to at least one month’s pay for every year of service; (3) good faith in abolishing the redundant positions; and (4) fair and reasonable criteria in ascertaining which positions are redundant and should be abolished, taking into account such factors as preferred status, efficiency, and seniority, among others. The employer is not obligated to keep more employees than necessary for its operations, and the declaration of redundancy will be respected as a management prerogative absent proof of arbitrariness or malicious intent.

• “The best evidence to prove that notice was sent would be a certification from the postmaster, who should certify not only that the notice was issued or sent but also as to how, when and to whom the delivery and receipt was made. The mailman may also testify that the notice was actually delivered.” — This passage establishes the specific evidentiary requirement for proving constructive service by registered mail, providing the ratio for dismissing the petitioners’ claim that MBC’s appeal was filed out of time.
• “Redundancy exists when an employee’s services are in excess of what is reasonably demanded by the actual requirements of the enterprise. While a declaration of redundancy is ultimately a management decision, and the employer is not obligated to keep in its payroll more employees than are needed for its day-to-day operations, management must not violate the law nor declare redundancy without sufficient basis.” — This excerpt underscores the balance between management prerogative and statutory safeguards in redundancy dismissals, and was central to the finding that the abolition of the FFES Bacolod relay station justified the termination of petitioners’ employment.

• Bernarte v. PBA, 673 Phil. 384 (2011) — Controlling precedent on the rule of constructive service by registered mail. Applied to hold that petitioners failed to present the required postmaster’s certification or mailman’s testimony, rendering their theory of timely constructive service unproven.
• Manggagawa ng Komunikasyon sa Pilipinas v. PLDT, 809 Phil. 106 (2017) — Cited for the definition and nature of redundancy, emphasizing that an employer must have a sufficient basis for declaring positions redundant.
• PNB v. Dalmacio, 813 Phil. 127 (2017) — Cited to enumerate the four requisites for a valid redundancy dismissal, all of which were found to be satisfied.
• Lowe, Inc. v. Court of Appeals, 612 Phil. 1044 (2009) — Cited for the principle that an employer has no obligation to retain more employees than necessary and that courts will not interfere unless management acted arbitrarily or maliciously.
• Pascual v. Burgos, 776 Phil. 167 (2016) — Cited to affirm that the factual findings of the Court of Appeals, being supported by substantial evidence, will not be disturbed on appeal.

• Article 298, Labor Code of the Philippines — Enumerates redundancy as an authorized cause for termination of employment and prescribes the requirements of written notice to the employee and the DOLE at least one month prior to termination, as well as payment of separation pay. Applied to conclude that MBC complied with these statutory mandates, having given thirty days’ notice, filed the required report with DOLE, and paid separation pay.

Peralta, C.J. (Chairperson), Caguioa, J. Reyes, Jr., and Lopez, JJ., concurred.