Question

Why oxygen -16 was replaced by carbon-12 as a reference atom

Answer 1

Because carbon 12 was more perfect as it has 6 protons and 6 neutrons

Answer 2

   Initially Hydrogen was chosen as the reference. Later Oxygen was used.

By 1960s Carbon was also used as a base for mass spectroscopy. Earlier Oxygen was being used.  Also awareness of Oxygen isotopes O17 and O18 in natural Oxygen did introduce some difficulty in using it as a reference.
 
Using Carbon-12 as a reference was better as the mass of C-12 was more accurately determinable. Using C-12 as reference made the necessary changes very small and not big, for the masses of other elements.