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RepublicofthePhilippines
SUPREMECOURT
Manila
FIRSTDIVISION

G.R.No.106256December28,1994
MAYAFARMSEMPLOYEESORGANIZATION,MAYAREALTYANDLIVESTOCKSUPERVISORYUNION,
MAYAFARMSEMPLOYEESASSOCIATION,andMAYAFARMS,INC.SUPERVISORYUNION,petitioners,
vs.
NATIONALLABORRELATIONSCOMMISSION,MAYAREALTY&LIVESTOCK,INC.,MAYAFARMS,INC.,
andLIBERTYFLOURMILLS,INC.,respondents.
PaternoD.MenzonLawOfficeforpetitioners.
Angara,Abello,Concepcion,Regala&Cruzforprivaterespondents.

KAPUNAN,J.:
ThispetitionforreviewoncertiorariseekstosetasidethedecisionofpublicrespondentNationalLaborRelations
Commission(NLRC)whichupheldthelegalityoftheseparationofsixtysix(66)employeeswhoaremembersof
petitioner unions, thereby dismissing petitioners' complaint against private respondents for violation of collective
bargainingagreement(CBA)andunfairlaborpractice.
Private respondents Maya Farms, Inc. and Maya Realty and Livestock Corporation belong to the Liberty Mills
groupofcompanieswhoseundertakingsincludetheoperationofameatprocessingplantwhichproducesham,
bacon,coldcuts,sausagesandothermeatandpoultryproducts.
Petitioners,ontheotherhand,aretheexclusivebargainingagentsoftheemployeesofMayaFarms,Inc.andthe
MayaRealtyandLivestockCorporation.
OnApril12,1991,privaterespondentsannouncedtheadoptionofanearlyretirementprogramasacostcutting
measure considering that their business operations suffered major setbacks over the years. The program was
voluntary and could be availed of only by employees with at least eight (8) years of service. 1 Dialogues were
thereafterconductedtogivethepartiesanopportunitytodiscussthedetailsoftheprogram.Accordingly,theprogramwas
amendedtoreducetheminimumrequirementofeight(8)yearsofservicetoonlyfive(5)years.

However, the response to the program was nil. There were only a few takers. To avert further losses, private
respondentswereconstrainedtolookintothecompanies'organizationalsetupinordertostreamlineoperations.
Consequently,theearlyretirementprogramwasconvertedintoaspecialredundancyprogramintendedtoreduce
theworkforcetoanoptimumnumbersoastomakeoperationsmoreviable.
InDecember1991,atotalofsixtynine(69)employeesfromthetwocompaniesavailedofthespecialredundancy
program.
On January 17, 1992, the two companies sent letters to sixtysix (66) employees informing them that their
respective positions had been declared redundant. The notices likewise stated that their services would be
terminated effective thirty (30) days from receipt thereof. Separation benefits, including the conversion of all
earnedleavecreditsandotherbenefitsdueunderexistingCBAswerethereafterpaidtothoseaffected.
On January 24, 1992, a notice of strike was filed by the petitioners which accused private respondents, among
others, of unfair labor practice, violation of CBA and discrimination. Conciliation proceedings were held by the
NationalConciliationandMediationBoard(NCMB)butthepartiesfailedtoarriveatasettlement.
OnFebruary6,1992,thetwocompaniesfiledapetitionwiththeSecretaryofLaborandEmploymentaskingthe

lattertoassumejurisdictionoverthecaseand/orcertifythesameforcompulsoryarbitration.Thus,onFebruary
12, 1992, the then Acting Labor Secretary (now Secretary) Nieves Confesor certified the case to herein public
respondentforcompulsoryarbitration.
OnMarch4,1992,thepartieswerecalledtoahearingtoidentifytheissuesinvolvedinthecase.Thereafter,they
wereorderedtosubmittheirrespectivepositionpapers.
Intheirpositionpaper,petitionersaverredthatinthedismissalof
sixtysix (66) union officers and members on the ground of redundancy, private respondents circumvented the
provisionsintheirCBA,moreparticularly,Section2,ArticleIIIthereof.Saidprovisionreads:
Sec.2.LIFORULE.Inallcasesoflayofforretrenchmentresultinginterminationofemployment
inthelineofwork,the
LastInFirstOut(LIFO)Rulemustalwaysbestrictlyobserved.
Petitioners also alleged that the companies' claim that they were in economic crisis was fabricated because in
1990, a net income of over 83 million pesos was realized by Liberty Flour Mills Group of Companies. 2
Furthermore,withtheterminationofthesixtysix(66)employeespursuanttothespecialredundancyprogram,theremaining
work force, especially the drivers, became overworked and overburdened so much so that they found themselves doing
overtimeworkandreportingfordutyevenduringrestdays.

Invokingtheworkers'constitutionalrighttosecurityoftenure,petitionersprayedforthereinstatementofthesixty
six(66)employeesandthepaymentofattorney'sfeesastheywereconstrainedtohiretheservicesofcounselin
ordertoprotecttheworkers'rights.
Ontheirpart,privaterespondentscontendthattheirdecisiontoimplementaspecialredundancyprogramwasan
exerciseofmanagementprerogativewhichcouldnotbeinterferedwithunlessitisshowntobetaintedwithbad
faith and ill motive. Private respondents explained that they had no choice but to reduce their work force,
otherwise,theywouldsuffermorelosses.Furthermore,theydeniedthattheprogramviolatedCBAprovisions.
OnJune29,1992,publicrespondentrenderedadecision,3thedispositiveportionofwhichreads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered confirming the legality of the
separationofthe66employeesofmanagementtherebydismissingthechargesofviolationofCBA
and unfair labor practice on the part of management. Accordingly, Maya Farms Incorporated and
Maya Realty and Livestocks Inc. are hereby ordered to comply with its (sic) undertaking per the
notice of termination dated January 17, 1992 issued to the remaining fifty three (53) employees
paying them their respective separation benefits as listed in the attached sheet considered part of
thisDecision.Saidawards(sic)isinadditiontootherbenefitsasextendedbythecompaniesinthe
letteroftermination.
SOORDERED.4
Notsatisfiedwiththeabovequoteddecision,petitionersinterposedtheinstantpetition.
Petitionersmaintainthatpublicrespondentgrosslyerredandgravelyabuseditsdiscretionwhenitruledthat:(a)
the termination of the sixtysix (66) employees was in accordance with the LIFO rule in the CBA (b) the
termination of the sixtysix (66) employees was in accordance with Article 283 of the Labor Code and (c) the
paymentorofferofpaymentcansubstituteforthe30dayrequirednoticepriortotermination.5
Aclosescrutinyoftheseassignederrorshowever,showsthatthesameprimarilydealwiththefactualfindingsof
publicrespondentwhichwearenotatlibertytosetasideintheabsenceofgraveabuseofdiscretionamounting
tolackorinexcessofjurisdiction.
This Court has consistently ruled that findings of fact of administrative agencies and quasijudicial bodies which
haveacquiredexpertisebecausetheirjurisdictionisconfinedtospecificmattersaregenerallyaccordednotonly
respect but even finality6 and are binding upon this Court unless there is a showing of grave abuse of discretion,7 or
whereitisclearlyshownthattheywerearrivedatarbitrarilyorindisregardoftheevidenceonrecord.8

Nevertheless, we will look into the factual findings of public respondent if only to determine whether there was
graveabuseofdiscretionamountingtolackorinexcessofjurisdiction.
TheterminationofthesixtysixemployeeswasdoneinaccordancewithArticle283oftheLaborCode.Thebasis
for this was the companies' study to streamline operations so as to make them more viable. Positions which
overlappedeachother,orwhichareinexcessoftherequirementsoftheservice,weredeclaredredundant.
Article283provides:

Art.283.Closureofestablishmentandreductionofpersonnel.Theemployermayalsoterminate
the employment of any employee due to the installation of laborsaving devises, 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 in the provisions of this title, by
servingawrittennoticeontheworkersandtheDepartmentofLaborandEmploymentatleastone
(1)monthbeforetheintendeddatethereof.Incaseofretrenchmenttopreventlossesofoperations
ofestablishmentorundertakingnotduetoseriousbusinesslossesorfinancialreverses,theone(1)
monthpayoratleast
onehalf(1/2)payforeveryyearofservice,whicheverishigher.Afractionofatleastsix(6)months
shallbeconsideredone(1)wholeyear.
Wefullyagreewiththefindingsandconclusionsofthepublicrespondentontheissueoftermination,towit:
We sustain the companies' prerogative to adopt the alleged redundancy/retrenchment program to
minimizeifnot,toavertlossesintheconductofitsoperations.Thishasbeenrecognizedinalineof
cases.(WiltshireFileCo.vs.NLRC,G.R.No.L82249,February7,1991).However,thecompanies'
decisiononthismatterisnotabsolute.Thebasisforsuchanactionmustbefarfrombeingwhimsical
and the same must be proved by substantial evidence. In addition, the implementation of such a
decision or policy must be in accordance with existing laws, rules and procedure and provisions of
theCBAbetweentheparties,iftherebeany.Shortofanyoftheseconditions,managementpolicyto
pursueandterminateitsemployeesallegedlytoavertlosses,mustfail.
In subject case, the 66 complaining employees were separated from service as a result of the
decisionofmanagementtolimititsoperationsandstreamlinepositionsandpersonnelrequirements.
In the case of Maya Farms, Inc. its meat processing department, prior to the adoption of special
redundancyprogramhadfour(4)sectionseachofwhichisheadedbyanassistantsuperintendent.
These3sectionsare:(a)meatprocessing(b)slaughterhouse(c)packing.Withtheimplementation
ofthedecisionofmanagementtolimitmeatprocessingwithsausagesastheonlyoutput,onlyone
position for assistant superintendent was retained that of Asst. Superintendent for meat processing
held by Lydia Bandong. (Plantilla attached to the letter of May 24, 1992 also Exh. "E." Likewise,
positions of slicer/seater operator, debonner/skinner, ham and bacon operative, were scrapped.
Similarly,positionsforpackersweredecreasedretainingonlyfivepositionsoutof21packers.Also
affectedwerethepositionsofeggsorters/stockersasonly4positionswereretainedoutoften(10)
positions.
Acloseexaminationofthepositionsretainedbymanagementshowthatsaidpositionssuchasegg
sorter,debonnerwerebuttheminimalpositionsrequiredtosustainthelimitedfunctions/operations
ofthemeatprocessingdepartment.Intheabsenceofanyevidencetoprovebadfaithonthepartof
managementinarrivingatsuchdecision,whichrecordsonhandfailedtoshowininstantcase,the
rationalityoftheactofmanagementinthisregardmustbesustained.Whileitmaybetruethatthe
Liberty Flour Mills Group of Companies as a whole posted a net income of P83.3 Million, it is
admittedthatwithrespecttooperationsofthemeatprocessingandlivestockwhichwereundertaken
byhereincompaniessustainedlossesinthesumofP2,257,649.88(Exh."3").Thisisthereason,as
advanced by management, for its decision to streamline positions resulting in the reduction of
manpowercompliment(sic).9
InAbbott Laboratories (Phils.) Inc. vs. NLRC, 10 we had occasion to uphold the employer in its exercise of what are
clearlymanagementprerogatives,thus:

Thehiring,firing,transfer,demotion,andpromotionofemployeeshasbeentraditionally,identifiedas
a management prerogative subject to limitations found in law, a collective bargaining agreement or
generalprinciplesoffairplayandjustice.Thisisafunctionassociatedwiththeemployer'sinherent
right to control and manage effectively its enterprise. Even as the law is solicitous of the welfare of
the employees, it must also protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to conduct its own business affairs to
achieve its purpose cannot be denied (see Dangan vs. National Labor Relations Commission, 127
SCRA706).
Theruleiswellsettledthatlaborlawsdiscourageinterferencewithanemployer'sjudgmentintheconductofhis
business.Evenasthelawissolicitousofthewelfareofemployees,itmustalsoprotecttherightofanemployerto
exercisewhatareclearlymanagementprerogatives.Aslongasthecompany'sexerciseofthesameisingood
faithtoadvanceitsinterestandnotforthepurposeofdefeatingorcircumventingtherightsofemployeesunder
thelawsorvalidagreements,suchexercisewillbeupheld.11
TheNLRCcorrectlyheldthatprivaterespondentsdidnotviolatetheLIFOruleunderSection2,ArticleIIIofthe

CBAwhichprovides:
Sec.2.LIFORULE.Inallcasesoflayofforretrenchmentresultinginterminationofemploymentin
thelineofwork,the
LastinFirstOut(LIFO)Rulemustalwaysbestrictlyobserved.
It is not disputed that the LIFO rule applies to termination of employment in the line of work. 12 Verily, what is
contemplatedintheLIFOruleisthatwhentherearetwoormoreemployeesoccupyingthesamepositioninthecompany
affectedbytheretrenchmentprogram,thelastoneemployedwillnecessarilybethefirsttogo.

Moreover,thereasonwhytherewasnoviolationoftheLIFOrulewasamplyexplainedbypublicrespondentin
thiswise:
....TheLIFOruleundertheCBAisexplicit.Itisordainedthatincasesofretrenchmentresultingin
terminationofemploymentinlineofwork,theemployeewhowasemployedonthelatestdatemust
be the first one to go. The provision speaks of termination in the line of work. This contemplates a
situation where employees occupying the same position in the company are to be affected by the
retrenchment program. Since there ought to be a reduction in the number of personnel in such
positions,thelengthofserviceofeachemployeesisthedeterminingfactor,suchthattheemployee
whohasalongerperiodofemploymentwillberetained.
In the case under consideration, specifically with respect to Maya Farms, several positions were
affected by the special involuntary redundancy program. These are packers, egg sorters/stockers,
drivers.Inthecaseofpackers,priortotheinvoluntaryredundancyprogram,
twentyoneemployeesoccupiedthepositionofpackers.Outofthisnumber,only5wereretained.In
this group of employees, the earliest date of employment was October 27, 1969, and the latest
packer was employed in 1989. The most senior employees occupying the position of packers who
wereretainedareasfollows:
Santos,LauraC.Oct.27,1969
Estrada,MercedesAug.20,1970
Hortaleza,LitaJune11,1971
Jimenez,LolitaApril25,1972
Aquino,TeresitaJune25,1975
AlltheotherpackersemployedafterJune2,1975(sic)wereseparatedfromtheservice.
Thesameistruewithrespecttoeggsorters.TheeggsortersemployedonorbeforeApril26,1972
wereretained.Allthoseemployedaftersaiddatewereseparated.
With respect to the position of drivers, there were eight drivers prior to the involuntary redundancy
program. Thereafter only 3 positions were retained. Accordingly, the three drivers who were most
seniorintermsofperiodofemployment,wereretained.Theyare:CeferinoD.Narag,EfrenMacaraig
andPablitoMacaraig.
The case of Roberta Cabrera and Lydia C. Bandong, Asst. Superintendent for packing and Asst.
Superintendentformeatprocessingrespectivelywaspresentedbytheunionasaninstancewhere
theLIFOrulewasnotobservedbymanagement.TheunionpointedoutthatLydiaBandongwhowas
retainedbymanagementwasemployedonamuchlaterdatethanRobertaCabrera,andbothare
Assistant Superintendent. We cannot sustain the union's argument. It is indeed true that Roberta
Cabrerawasemployedearlier(January28,1961)and(sic)LydiaBandong(July9,1966).However,
itismaintainedthatinmeatprocessingdepartmenttherewere3Asst.Superintendentsassignedas
headofthe3sectionsthereat.ThereasonadvancedbythecompanyinretainingBandongwasthat
as Asst. Superintendent for meat processing she could "already take care of the operations of the
other sections." The nature of work of each assistant superintendent as well as experience were
taken into account by management. Such criteria was not shown to be whimsical nor carpricious
(sic).13(Emphasissupplied).
Finally,contrarytopetitioners'contention,thereisnothingonrecordtoshowthatthe30daynoticeoftermination
to the workers was disregarded and that the same substituted with separation pay by private respondents. As
foundbypublicrespondent,writtennoticesofseparationweresenttotheemployeesonJanuary17,1992.The
notices expressly stated that the termination of employment was to take effect one month from receipt thereof.
Therefore,theallegationthatseparationpaywasgiveninlieuofthe30daynoticerequiredbylawisbaseless.
WHEREFORE, finding no grave abuse of discretion amounting to lack or in excess of jurisdiction on the part of
publicrespondent,theinstantpetitionisherebyDISMISSED.

SOORDERED.
Padilla,Davide,Jr.,BellosilloandQuiason,JJ.,concur.

#Footnotes
1Exhibit162.
2Rollo,p.48.
3DecisionpennedbyNLRCPresidingCommissionerLourdesC.Javier.
4Id.,atpp.2324.
5Petition,p.3Rollo,p.4.
6FiveJTaxiv.NLRC,212SCRA225SanMiguelCorporationv.Javate,Jr.,205SCRA469Reyes
andLimCo.v.NLRC,201SCRA772FilipinasPortServices,Inc.v.NLRC,200SCRA773Rabago
v.NLRC,200SCRA158AboitizShippingCorporationv.DelaSerna,199SCRA568PanPacific
IndustrialSalesCo.,Inc.v.NLRC,194SCRA633.
7Evangelistav.NLRC,195SCRA603.
8Icasianov.OfficeofthePresident,209SCRA25DeVerav.NLRC,191SCRA632Eternit
EmployeesandWorkersUnionv.JesusdeVeyra,189SCRA752PhilippineAirlinesEmployees'
Association(PALEA)v.FerrerCalleja,162SCRA426Mantrade/FMMCDivisionEmployeesand
WorkersUnion
v.Bacungan,144SCRA510ZamboangaCityWaterDistrictv.Bartolome,140SCRA432.
9NLRCDecision,pp.1719Rollo,pp.3032.
10154SCRA713[1987].
11UnionCarbideLaborUnionv.UnionCarbidePhilippines,215SCRA554NationalFederationof
LaborUnions(NAFLU)v.NLRC,202SCRA346PhilippineTelegraphandTelephoneCorporationv.
Laplana,199SCRA485Cruzv.Medina,177SCRA565SanMiguelBrewerySalesForceUnion
(PTGWO)v.Ople,170SCRA25.
12Rollo,p.33.
13Rollo,pp.3336.
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