That is just plain waste, how did it make it that far if there was a problem that called for that outcome!
from they way they were looking at it they were unhappy with the finish/binding
Which just makes chopping it up all the worse. They could have stripped the finish, even if it was a stain on that top they could have sanded it down a bit, & surely binding isn't all that difficult to remove & redo?
I could only imagine the guitar being totally unrecoverable if there was something really fundamental like the neck being misaligned by several degrees - in which case, why did it get as far as the paint room?
The only scenario I can imagine where you decide that a guitar which is so far towards completion is beyond help is if a big crack suddenly opened up in the wood or someone dropped it in the workshop...