MANILA — The Supreme Court has affirmed the validity of the redundancy program implemented by Coca-Cola Beverages Philippines that resulted in the dismissal of more than 600 employees, bringing to a close a labor dispute that has lasted for 17 years.

In a 42-page ruling written by Maria Filomena Singh, the High Court’s Third Division dismissed the illegal dismissal complaints filed by over 600 workers against the company.

The case stemmed from a restructuring initiative undertaken by Coca-Cola Beverages Philippines in 2008 after it reviewed its distribution operations amid negative operating income. The company found that its Market Execution Partners under the Route-to-Market scheme and Key Accounts posted the lowest cost-to-serve metrics, prompting the adoption of a Revised Route to Market strategy.

As part of the restructuring, the company discontinued its Conventional Routing Scheme and shut down its mini-bodegas, resulting in the displacement of route salesmen and route drivers/helpers.

Affected employees underwent evaluation for possible redeployment. However, 610 workers, including Menardo Osongco Jr. and his co-complainants, were declared redundant after failing to meet the company’s standards. The employees were issued separation notices and received separation benefits that were nearly double the amount required by law. They also signed quitclaims and releases.

The workers later filed complaints for illegal dismissal, alleging that the redundancy program was carried out in bad faith and was intended to undermine their security of tenure. They also claimed that their functions were effectively transferred to an in-house contractor, The Red System Company Inc.

A labor arbiter initially ruled in favor of the employees, finding that the company failed to comply with procedural requirements in implementing the redundancy program. The ruling, however, was overturned by the National Labor Relations Commission, which held that the company had sufficiently justified the redundancy as part of its operational restructuring.

The Court of Appeals later sided with the employees, ruling that Coca-Cola failed to adequately prove that the streamlining measures resulted from a comprehensive assessment of its operations and organizational structure.

Reversing the appellate court’s findings, the Supreme Court ruled that an employer’s decision to streamline operations or abolish a department to improve efficiency and competitiveness falls within the scope of management prerogative.

The Court said the requirement to apply fair and reasonable standards such as efficiency, seniority and loyalty in selecting employees for termination does not apply when an entire department or service line is abolished.

According to the ruling, there is no need to compare employees or determine who should remain when all positions within the affected unit are eliminated.

The Court also reiterated that an employer must immediately comply with a labor arbiter’s reinstatement order either through actual reinstatement or payroll reinstatement while an appeal is pending.

However, it ruled that the affected employees are entitled to reinstatement wages only from Dec. 27, 2013, when the labor arbiter issued the reinstatement order, until April 8, 2015, when the NLRC Fourth Division issued a perpetual restraining order against the execution of the writ.

The Supreme Court noted that although reinstatement orders are immediately executory even if later reversed on appeal, the employees’ entitlement to reinstatement wages ceased after the restraining order took effect and remained unlifted by the Court of Appeals.

As a result, the workers may recover reinstatement wages only for the period when the labor arbiter’s reinstatement order remained enforceable.