Case Digest: Culili v. Eastern Telecommunications Phils, et al.

G.R. No. 165381 : February 9, 2011

NELSON A. CULILI, Petitioner, v. EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON (President and Chief Executive Officer), EMILIANO JURADO (Chairman of the Board), VIRGILIO GARCIA (Vice President) and STELLA GARCIA (Assistant Vice President), Respondents.



Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a telecommunications company engaged mainly in the business of establishing commercial telecommunications systems and leasing of international datalines or circuits that pass through the international gateway facility (IGF). The other respondents are ETPIs officers.

Petitioner Nelson A. Culili was employed by ETPI as a Technician in its Field Operations Department in 1981. In 1996, Culili was promoted to Senior Technician in the Customer Premises Equipment Management Unit of the Service Quality Department.

As a telecommunications company and an authorized IGF operator, ETPI was required, under RA No. 7925 and EO No. 109, to establish landlines in Metro Manila and certain provinces. However, due to interconnection problems with the PLDT, poor subscription and cancellation of subscriptions, and other business difficulties, ETPI was forced to halt its roll out of 129,000 landlines already allocated to a number of its employees.

In 1998, due to business troubles and losses, ETPI was compelled to implement a Right-Sizing Program which consisted of two phases: the first phase involved the reduction of ETPIs workforce to only those employees that were necessary and which ETPI could sustain; the second phase entailed a company-wide reorganization which would result in the transfer, merger, absorption or abolition of certain departments of ETPI.

As part of the first phase, ETPI offered to its employees who had rendered at least fifteen years of service, the Special Retirement Program, which consisted of the option to voluntarily retire at an earlier age and a retirement package equivalent to two and a half (2) months salary for every year of service. This offer was initially rejected by the Eastern Telecommunications Employees Union (ETEU), ETPIs duly recognized bargaining agent, which threatened to stage a strike. ETPI explained to ETEU the exact details of the Right-Sizing Program and the Special Retirement Program and after consultations with ETEUs members, ETEU agreed to the implementation of both programs. Thus, ETPI re-offered the Special Retirement Program and the corresponding retirement package to the one hundred two (102) employees who qualified for the program. Of all the employees who qualified to avail of the program, only Culili rejected the offer.

Among the departments abolished was the Service Quality Department. The functions of the Customer Premises Equipment Management Unit, Culilis unit, were absorbed by the Business and Consumer Accounts Department. As a result, Culilis position was abolished due to redundancy and his functions were absorbed by the Business and Consumer Accounts Department.

ETPI, through its Assistant Vice President Stella Garcia, informed Culili of his termination from employment effective April 8, 1999.

Culili alleged that neither he nor the DOLE were formally notified of his termination. Culili believed that ETPI had already decided to dismiss him even prior to the March 8, 1999 letter. Moreover, Culili asserted that ETPI had contracted out the services he used to perform to a labor-only contractor which not only proved that his functions had not become unnecessary, but which also violated their Collective Bargaining Agreement (CBA) and the Labor Code. Aside from these, Culili also alleged that he was discriminated against when ETPI offered some of his co-employees an additional benefit in the form of motorcycles to induce them to avail of the Special Retirement Program, while he was not.

ETPI denied singling Culili out for termination. ETPI claimed that because there was no more work for Culili, it was constrained to serve a final notice of termination to Culili, which Culili ignored. Thus, on March 26, 1999, ETPI tendered to Culili his final pay check of P859,033.99 consisting of his basic salary, leaves, 13th month pay and separation pay. ETPI claimed that Culili refused to accept his termination and continued to report for work.

Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor practice, and money claims before the Labor Arbiter.

The Labor Arbiter found ETPI guilty of illegal dismissal and unfair labor practice.

On appeal, the NLRC affirmed the Labor Arbiters decision but modified the amount of moral and exemplary damages awarded.

The Court of Appeals found that Culilis position was validly abolished due to redundancy. It further held that ETPI cannot be held guilty of unfair labor practice as mere contracting out of services being performed by union members does not per se amount to unfair labor practice unless it interferes with the employees right to self-organization. Hence, this petition.

ISSUE: Whether or not Culili is illegally dismissed.

HELD: The decision of the Court of Appeals is sustained.


There is redundancy when the service capability of the workforce is greater than what is reasonably required to meet the demands of the business enterprise. A position becomes redundant when it is rendered superfluous by any 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. Soriano, Jr. v. NLRC, G.R. No. 165594, April 23, 2007

This Court also held that the following evidence may be proffered to substantiate redundancy: the new staffing pattern, feasibility studies/ proposal on the viability of the newly created positions, job description and the approval by the management of the restructuring.

In the case at bar, ETPI was upfront with its employees about its plan to implement a Right-Sizing Program. Even in the face of initial opposition from and rejection of the said program by ETEU, ETPI patiently negotiated with ETEUs officers to make them understand ETPIs business dilemma and its need to reduce its workforce and streamline its organization. This evidently rules out bad faith on the part of ETPI.

The records show that ETPI had sufficiently established not only its need to reduce its workforce and streamline its organization, but also the existence of redundancy in the position of a Senior Technician. ETPI explained how it failed to meet its business targets and the factors that caused this, and how this necessitated it to reduce its workforce and streamline its organization. ETPI also submitted its old and new tables of organization and sufficiently described how limited the functions of the abolished position of a Senior Technician were and how it decided on whom to absorb these functions.


Although the Court finds Culilis dismissal was for a lawful cause and not an act of unfair labor practice, ETPI, however, was remiss in its duty to observe procedural due process in effecting the termination of Culili.

For termination of employment as defined in Article 283 of the Labor Code, the requirement of due process shall be deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the Department of Labor and Employment at least thirty days before effectivity of the termination, specifying the ground or grounds for termination.

ETPI does not deny its failure to provide DOLE with a written notice regarding Culilis termination. It, however, insists that it has complied with the requirement to serve a written notice to Culili as evidenced by his admission of having received it and forwarding it to his union president.

The Court of Appeals, in finding that Culili was not afforded procedural due process, held that Culilis dismissal was ineffectual, and required ETPI to pay Culili full backwages in accordance with our decision in Serrano v. NLRC, 387 Phil. 345 (2000).

Hence, since it has been established that Culilis termination was due to an authorized cause and cannot be considered unfair labor practice on the part of ETPI, his dismissal is valid. However, in view of ETPIs failure to comply with the notice requirements under the Labor Code, Culili is entitled to nominal damages in addition to his separation pay.