SC rules Coca-Cola layoffs valid under restructuring plan

THE Supreme Court (SC) upheld the legality of a restructuring program implemented by Coca-Cola Europacific Aboitiz Philippines, Inc., reversing a Court of Appeals ruling that found hundreds of employee dismissals illegal.

In a 42-page decision penned by Associate Justice Maria Filomena D. Singh, the SC Third Division ruled that the company validly abolished sales routes as part of efforts to address declining operating income.

The restructuring program, implemented in 2008, initially affected about 1,246 workers. By 2009, the company had redeployed 636 employees to new positions, while the remaining 610 workers were declared redundant after failing to meet the requirements for the available roles.

The Court of Appeals had previously ruled in favor of the employees, citing insufficient documentary evidence to support the studies used by the company to justify the redundancy program.

The SC, however, disagreed and said redundancy is among the authorized causes for termination under the Labor Code.

“Redundancy is one of the authorized causes for termination of employment. While the Constitution upholds social justice and the protection of labor, it also guarantees the employer’s right to a reasonable return on investment,” the SC said in its ruling.

“In line with this balance, the Court has consistently recognized the employer’s prerogative to adopt measures that promote efficiency, reduce overhead costs, and improve economic viability, so long as these are carried out within the bounds of the law,” it added.

The tribunal said the company acted in good faith in carrying out the restructuring program. It also noted that the separation packages provided to affected employees reached up to 200% of the separation pay required under the Labor Code and included extended healthcare coverage.

The SC upheld the validity of the dismissals but ordered the company to pay reinstatement wages and recomputed benefits covering the period under the Labor Arbiter’s executory order. — Erika Mae P. Sinaking