The Supreme Court held that an employer’s claim of redundancy must be supported by substantial evidence, not just assertions. In Teletech Customer Care Management Philippines, Inc. v. Mario Gerona, Jr., the Court emphasized that employers cannot simply declare a position redundant; they must demonstrate a real decline in business that necessitates the termination of employment. This ruling protects employees from arbitrary dismissals under the guise of redundancy, ensuring that employers act in good faith and with justifiable cause.

When Transfer Offers Threaten Tenure: Teletech’s Redundancy Claim Under Scrutiny

Teletech, a BPO company, faced a decline in call volumes for its Accenture account and offered some employees, including Mario Gerona, Jr., a transfer to the Telstra account. This transfer, however, was conditional on passing additional training and examinations. Gerona refused the transfer, believing it infringed on his security of tenure. Teletech then terminated Gerona’s employment due to redundancy. Gerona filed a complaint for illegal dismissal, arguing that the redundancy was not genuine and the transfer conditions were prejudicial. The Labor Arbiter (LA) initially dismissed Gerona’s complaint, but the Court of Appeals (CA) later reversed this decision, finding that Teletech failed to prove the redundancy and that the transfer conditions were indeed prejudicial to Gerona’s security of tenure. The Supreme Court then took up the case to resolve the conflicting rulings.

The Supreme Court began its analysis by reiterating that a petition for review under Rule 45 is limited to questions of law. However, because the LA and NLRC’s findings conflicted with those of the CA, the Court exercised its equity jurisdiction to re-evaluate the factual issues. The Court emphasized that the CA’s role in such cases is to determine whether the NLRC committed grave abuse of discretion, meaning its findings were not supported by substantial evidence. In labor disputes, substantial evidence is defined as such amount of relevant evidence which a reasonable mind might accept to justify a conclusion.

Teletech argued that Gerona was not deprived of due process because he was given ample opportunity to present his side. The CA correctly noted that the NLRC did not act arbitrarily in affirming the LA’s decision, even without Gerona’s position paper. Due process in administrative proceedings simply requires an opportunity to explain one’s side or seek reconsideration. Gerona was granted additional time to file his position paper but failed to meet the extended deadline. Nevertheless, he was able to present his arguments to the NLRC. The Supreme Court found that the NLRC adequately considered Gerona’s arguments, even though it ultimately disagreed with them.

Turning to the legality of Gerona’s dismissal based on redundancy, the Supreme Court found Teletech’s evidence insufficient. Redundancy exists when an employee’s services exceed the reasonable demands of the business. To validly dismiss an employee due to redundancy, the employer must comply with certain requirements:

1. Provide written notice to both the employee and the DOLE at least one month before termination.
2. Pay separation pay equivalent to at least one month’s pay for every year of service.
3. Demonstrate good faith in abolishing the redundant positions.
4. Use fair and reasonable criteria to determine which positions are redundant.

Moreover, the employer must provide substantial proof that the employee’s services are genuinely in excess of the company’s needs.

Teletech claimed that a decline in business led to the redundancy, asserting that the expected volume of calls for the Accenture account would not be met. However, the evidence presented to support this claim fell short. Besides the assertion of the human capital delivery site manager, Joel Go, no concrete evidence was offered to prove the alleged low volume of calls. The Court found these documents insufficient to demonstrate the actual decline in Accenture’s business. Citing the case of AMA Computer College, Inc. v. Garcia, the Supreme Court reiterated that:

These, however, do not satisfy the requirement of substantial evidence that a reasonable mind might accept as adequate to support a conclusion. As they are, they are grossly inadequate and mainly self-serving. More compelling evidence would have been a comparison of the old and new staffing patterns, a description of the abolished and newly created positions, and proof of the set business targets and failure to attain the same which necessitated the reorganization or streamlining.

This means that an employer needs to present more than just internal documents to prove redundancy; objective evidence is required to show the actual decline in business. Similarly, the Court has held that an alleged email from a company’s client to downsize its manpower will also not suffice if such email was not presented in evidence, emphasizing the need for verifiable proof.
Teletech’s offer to transfer Gerona to the Telstra account was portrayed as a demonstration of good faith. However, the Court found that this transfer was prejudicial to Gerona, noting that the Transfer Agreement stipulated that failure to successfully pass the ACE and Product Training would be a justifiable ground for dismissal:

While this new opportunity was given to you in exercise of Management Prerogative to exhaust means and ways to retain your services with Teletech, successful passing of the ACE and Product Training are expected. After having acknowledged and consented in this transfer, you are expected to attend the scheduled training and nesting period since the same is a MANDATORY REQUIREMENT for movement. Failure to successfully pass these trainings will be a justifiable ground for dismissal.

As a regular employee, Gerona was entitled to security of tenure. Requiring him to pass additional trainings and examinations as a condition to retain his employment, under the threat of dismissal, infringed upon his right to security of tenure. The Court held that Teletech’s failure to prove redundancy, combined with the imposition of a prejudicial condition to retain employment, rendered the offer of transfer invalid. In Sumifru Philippines Corporation v. Baya, the Court clarified that for a transfer not to be considered a constructive dismissal, the employer must show that it is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of salaries, privileges, and other benefits. Given that Teletech had not met these parameters, the Supreme Court found in favor of Gerona.

As Gerona was illegally dismissed, he was entitled to reinstatement and full backwages. However, recognizing the strained relations between Teletech and Gerona, the Court deemed it appropriate to award separation pay in lieu of reinstatement. The liability rested solely with Teletech, as Gerona failed to demonstrate that the company’s officers had acted with gross negligence or bad faith. In termination cases, the employer bears the burden of proving a valid and authorized cause for dismissal. Failing to do so renders the dismissal illegal, entitling the employee to full backwages and separation pay.

FAQs

What was the key issue in this case?	The key issue was whether Teletech validly dismissed Mario Gerona, Jr. on the ground of redundancy. The Supreme Court examined whether Teletech presented sufficient evidence to prove the redundancy and whether the offer to transfer Gerona was prejudicial to his security of tenure.
What is redundancy in the context of labor law?	Redundancy exists when an employee’s services are in excess of what is reasonably demanded by the actual requirements of the business. An employer must prove a real and demonstrable decline in business that necessitates the termination of employment.
What are the requirements for a valid dismissal due to redundancy?	The requirements include written notice to the employee and DOLE, payment of separation pay, good faith in abolishing the redundant positions, and fair and reasonable criteria in ascertaining which positions are to be declared redundant. Substantial proof that the employee’s services are genuinely in excess of the company’s needs is also required.
What evidence did Teletech present to support its claim of redundancy?	Teletech presented an affidavit from its human capital delivery site manager, Gerona’s employment contract, FCR scores, FAQ’s for transition plans, attendance sheets, a Transfer Agreement, a recruitment flowchart, a comparison of duties, a notice of termination, and a termination report to DOLE. The Court, however, found this evidence insufficient to prove the redundancy.
Why did the Supreme Court find Teletech’s offer of transfer to be prejudicial?	The Court found the offer prejudicial because Gerona was required to pass additional trainings and examinations as a condition to retain his employment under the pain of dismissal. This requirement infringed upon his right to security of tenure as a regular employee.
What is security of tenure?	Security of tenure is the right of an employee to remain in their job unless there is a just or authorized cause for termination, as defined by law. It protects employees from arbitrary dismissals and ensures that employers follow due process.
What is constructive dismissal?	Constructive dismissal occurs when an employer makes continued employment so unbearable or difficult that the employee is forced to resign. This can include demotions, unreasonable transfers, or harassment.
What are the remedies available to an illegally dismissed employee?	An illegally dismissed employee is typically entitled to reinstatement to their former position, payment of full backwages from the time of dismissal until reinstatement, and other benefits. However, if reinstatement is not feasible due to strained relations, the employee may be awarded separation pay in lieu of reinstatement.
Are company officers solidarily liable in illegal dismissal cases?	Company officers are not automatically solidarily liable in illegal dismissal cases. They can be held solidarily liable only if they assented to patently unlawful acts of the corporation, were guilty of gross negligence or bad faith in managing the corporation’s affairs, or acquired personal interest in conflict with their duties.

In conclusion, Teletech Customer Care Management Philippines, Inc. v. Mario Gerona, Jr. underscores the importance of substantial evidence in redundancy cases and the protection of employees’ security of tenure. Employers must ensure that their claims of redundancy are supported by credible evidence and that any offers of transfer do not unduly prejudice the rights of their employees.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: TELETECH CUSTOMER CARE MANAGEMENT PHILIPPINES, INC. VS. MARIO GERONA, JR., G.R. No. 219166, November 10, 2021