THIRD DIVISIONG.R. No. 82249 February 7, 1991WILTSHIRE FILE CO., INC.,petitioner,vs.THE NATIONAL LABOR RELATIONS COMMISSION and VICENTE T. ONG,respondents.Angara, Abello, Concepcion, Regala & Cruz for petitioner.Jose R. Millares & Associates for private respondent.

FELICIANO,J.:Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire File Co., Inc. ("Wiltshire") from 16 March 1981 up to 18 June 1985. As such, he received a monthly salary of P14,375.00 excluding commissions from sales which averaged P5,000.00 a month. He also enjoyed vacation leave with pay equivalent to P7,187,50 per year, as well as hospitalization privileges to the extent of P10,000.00 per year.On 13 June 1985, upon private respondent's return from a business and pleasure trip abroad, he was informed by the President of petitioner Wiltshire that his services were being terminated. Private respondent maintains that he tried to get an explanation from management of his dismissal but to no avail. On 18 June 1985, when private respondent again tried to speak with the President of Wiltshire, the company's security guard handed him a letter which formally informed him that his services were being terminated upon the ground of redundancy.Private respondent filed, on 21 October 1985, a complaint before the Labor Arbiter for illegal dismissal alleging that his position could not possibly be redundant because nobody (save himself) in the company was then performing the same duties. Private respondent further contended that retrenching him could not prevent further losses because it was in fact through his remarkable performance as Sales Manager that the Company had an unprecedented increase in domestic market share the preceding year. For that accomplishment, he continued, he was promoted to Marketing Manager and was authorized by the President to hire four (4) Sales Executives five (5) months prior to his termination.In its answer, petitioner company alleged that the termination of respondent's services was a cost-cutting measure: that in December 1984, the company had experienced an unusually low volume of orders: and that it was in fact forced to rotate its employees in order to save the company. Despite the rotation of employees, petitioner alleged; it continued to experience financial losses and private respondent's position, Sales Manager of the company, became redundant.On 2 December 1986, during the proceedings before the Labor Arbiter, petitioner, in a letter1addressed to the Regional Director of the then Ministry of Labor and Employment, notified that official that effective 2 January 1987, petitioner would close its doors permanently due to substantial business losses.In a decision dated 11 March 1987, the Labor Arbiter declared the termination of private respondent's services illegal and ordered petitioner to pay private respondent backwages in the amount of P299,000.00, unpaid salaries in the amount of P22,352.11, accumulated sick and vacation leaves in the amount of P12,543.91, hospitalization benefit package in the amount of P10,000.00, unpaid commission in the amount of P57,500,00, moral damages in the amount of P100,000.00 and attorney's fees in the amount of P51,639.60.On appeal by petitioner Wiltshire, the National Labor Relations Commission ("NLRC") affirmedin totoon 9 February 1988 the decision of the Labor Arbiter. The NLRC held that:The termination letter clearly spelled out that the main reason in terminating the services of complainant isREDUNDANTand not retrenchment.The supposed duplication of work of herein complainant and Mr. Deliva, the Vice-President is absent that would justify redundancy. . . .On the claim for moral damages, the NLRC pointed out that the effective date of private respondent's termination was 18 July 1985, although it was only 18 June 1985 that he received the letter of termination, and concluded that he was not given any opportunity to explain his position on the matter. The NLRC held that the termination was attended by malice and bad faith on the part of petitioner, considering the manner of private respondent was ordered by the President to pack up and remove his personal belongings from the office. Private respondent was said to have been embarrassed before his immediate family and other acquaintance due to his inability to explain the reasons behind the termination of his services.In this Petition forCertiorari, it is submitted that private respondent's dismissal was justified and not illegal. Petitioner maintains that it had been incurring business losses beginning 1984 and that it was compelled to reduce the size of its personnel force. Petitioner also contends that redundancy as a cause for termination does not necessarily mean duplication of work but a "situation where the services of an employee are in excess of what is demanded by the needs of an undertaking . . ."Having reviewed the record of this case, the Court has satisfied itself that indeed petitioner had serious financial difficulties before, during and after the termination of the services of private respondent. For one thing, the audited financial statements of the petitioner for its fiscal year ending on 31 July 1985 prepared by a firm of independent auditors, showed a net loss in the amount of P4,431,321.00 and a total deficit or capital impairment at the end of year of P6,776,493.00.2In the preceding fiscal year (1983-1984), while the company showed a net after tax income of P843,506.00, it actually suffered a deficit or capital impairment of P2,345,172.00. Most importantly, petitioner Wiltshire finally closed its doors and terminated all operations in the Philippines on January 1987, barely two (2) years after the termination of private respondent's employment. We consider that finally shutting down business operations constitutes strong confirmatory evidence of petitioner's previous financial distress. The Court finds it very difficult to suppose that petitioner Wiltshire would take the final and irrevocable step of closing down its operations in the Philippines simply for the sole purpose of easing out a particular officer or employee, such as the private respondent.Turning to the legality of the termination of private respondent's employment, we find merit in petitioner's basic argument. We are unable to sustain public respondent NLRC's holding that private respondent's dismissal was not justified by redundancy and hence illegal. In the first place, we note that while the letter informing private respondent of the termination of his services used the word "redundant", that letter also referred to the company having "incur[red] financial losses which [in] fact has compelled [it] to resort to retrenchment to prevent further losses".3Thus, what the letter was in effect saying was that because of financial losses, retrenchment was necessary, which retrenchment in turn resulted in the redundancy of private respondent's position.In the second place, we do not believe that redundancy in an employer's personnel force necessarily or even ordinarily refers to duplication of work. That no other person was holding the same position that private respondent held prior to the termination of his services, does not show that his position had not become redundant. Indeed, in any well-organized business enterprise, it would be surprising to find duplication of work and two (2) or more people doing the work of one person. We believe that redundancy, for purposes of our Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or dropping of a particular product line or service activity previously manufactured or undertaken by the enterprise.4The employer has no legal obligation to keep in its payroll more employees than are necessarily for the operation of its business.In the third place, in the case at bar, petitioner Wiltshire, in view of the contraction of its volume of sales and in order to cut down its operating expenses, effected some changes in its organization by abolishing some positions and thereby effecting a reduction of its personnel. Thus, the position of Sales Manager was abolished and the duties previously discharged by the Sales Manager simply added to the duties of the General Manager, to whom the Sales Manager used to report.It is of no legal moment that the financial troubles of the company were not of private respondent's making. Private respondent cannot insist on the retention of his position upon the ground that he had not contributed to the financial problems of Wiltshire. The characterization of private respondent's services as no longer necessary or sustainable, and therefore properly terminable, was an exercise of business judgment on the part of petitioner company. The wisdom or soundness of such characterization or decision was not subject to discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary and malicious action is not shown. It should also be noted that the position held by private respondent, Sales Manager, was clearly managerial in character. InD.M. Consunji, Inc. v. National Labor Relations Commission,5the Court held:An employer has a much wider discretion in terminating the employment relationship of managerial personnel as compared to rank and file employees. However, such prerogative of management to dismiss or lay off an employee must be made without abuse of discretion, for what is at stake is not only the private respondent's position but also his means of livelihood . . . .6The determination of the continuing necessity of a particular officer or position in a business corporation is management's prerogative, and the courts will not interfere with the exercise of such so long as no abuse of discretion or merely arbitrary or malicious action on the part of management is shown.7On the issue of moral damages, petitioner assails the finding of the NLRC that the dismissal was done in bad faith. Petitioner argues that it had complied with the one-month notice required by law; that there was no need for private respondent to be heard in his own defense considering that the termination of his services was for a statutory or authorized cause; and that whatever humiliation might have been suffered by private respondent arose from a lawful cause and hence could not be the basis of an award of moral damages.Termination of an employee's services because of retrenchment to prevent further losses or redundancy, is governed by Article 283 of the Labor Code which provides as follows:Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.Termination of services for any of the above described causes should be distinguished from termination of employment by reason of some blameworthy act or omission on the part of the employee, in which case the applicable provision is Article 282 of the Labor Code which provides as follows:Art. 282. Termination by employer.An employer may terminate an employment for any of the following causes:(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;(b) Gross and habitual neglect by the employee of his duties;(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and(e) Other causes analogous to the foregoing.Sections 2 and 5 of Rule XIV entitled "Termination of Employment:" of the "Rules to Implement the Labor Code" read as follows:Sec. 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal. In cases of abandonment of work, the notice shall be served at the worker's last known address.x x x x x x x x xSec. 5. Answer and hearing. The worker may answerthe allegations stated against him in the notice of dismissalwithin a reasonable period from receipt of such notice. The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. (emphasis supplied)We note that Section 2 of Rule XIV quoted above requires the notice to specify "the particular acts or omissions constituting the ground for his dismissal", a requirement which is obviously applicable where the ground for dismissal is the commission of some act or omission falling within Article 282 of the Labor Code. Again, Section 5 gives the employee the right to answer and to defend himself against "the allegations stated against him in the notice of dismissal". It is such allegations by the employer and any counter-allegations that the employee may wish to make that need to be heard before dismissal is effected. Thus, Section 5 may be seen to envisage charges against an employee constituting one or more of the just causes for dismissal listed in Article 282 of the Labor Code. Where, as in the instant case, the ground for dismissal or termination of services does not relate to a blameworthy act or omission on the part of the employee, there appears to us no need for an investigation and hearing to be conducted by the employer who does not, to begin with, allege any malfeasance or non-feasance on the part of the employee. In such case, there are no allegations which the employee should refute and defend himself from. Thus, to require petitioner Wiltshire to hold a hearing, at which private respondent would have had the right to be present, on the business and financial circumstances compelling retrenchment and resulting in redundancy, would be to impose upon the employer an unnecessary and inutile hearing as a condition for legality of termination.This is not to say that the employee may not contest the reality or good faith character of the retrenchment or redundancy asserted as grounds for termination of services. The appropriate forum for such controversion would, however, be the Department of Labor and Employment and not an investigation or hearing to be held by the employer itself. It is precisely for this reason that an employer seeking to terminate services of an employee or employees because of "closure of establishment and reduction of personnel", is legally required to give a written notice not only to the employee but also to the Department of Labor and Employment at least one month before effectivity date of the termination. In the instant case, private respondent did controvert before the appropriate labor authorities the grounds for termination of services set out in petitioner's letter to him dated 17 June 1985.We hold, therefore, that the NLRC's finding that private respondent had not been accorded due process, is bereft of factual and legal bases. The award of moral damages that rests on such ground must accordingly fall.While private respondent may well have suffered personal embarrassment by reason of termination of his services, such fact alone cannot justify the award of moral damages. Moral damages are simply a species of damages awarded to compensate one for injuries brought about by a wrongful act.8As discussed above, the termination of private respondent's services was not a wrongful act. There is in this case no clear and convincing evidence of record showing that the termination of private respondent's services, while due to an authorized or statutory cause, had been carried out in an arbitrary, capricious and malicious manner, with evident personal ill-will. Embarrassment, even humiliation, that is not proximately caused by a wrongful act doesnotconstitute a basis for an award of moral damages.Private respondent is, of course, entitled to separation pay and other benefits under Act 283 of the Labor Code and petitioner's letter dated 17 June 1985.ACCORDINGLY, the Court Resolved to GRANT due course to the Petition forCertiorari. The Resolutions of the National Labor Relations Commission dated 9 February 1988 and 7 March 1988 are hereby SET ASIDE and NULLIFIED. The Temporary Restraining Order issued by this Court on 21 March 1988 is hereby made PERMANENT. No pronouncement as to costs.SO ORDERED.[G.R. No. 139013.September 17, 2002]ZEL T. ZAFRA and EDWIN B. ECARMA,petitioners, vs. HON. COURT OF APPEALS, PHILIPPINE LONG DISTANCE TELEPHONE CO., INC., AUGUSTO COTELO, and ERIBERTO MELLIZA,respondents.D E C I S I O NQUISUMBING,J.:For review on certiorari is the decision[1]of the Court of Appeals dated December 22, 1998, in CA-G.R. SP. No. 48578, reversing that of the voluntary arbitrator which ordered respondent Philippine Long Distance Telephone Co. (PLDT) to reinstate petitioners.Also impugned is the resolution dated May 24, 1999, denying petitioners motion for reconsideration.The undisputed facts, as set forth in the decision of the Court of Appeals, are as follows:Petitioner Zel T. Zafra was hired by PLDT on October 1, 1984 as Operations Analyst II with a monthly salary of P14,382 while co-petitioner Edwin B. Ecarma was hired as Junior Operations Analyst I on September 16, 1987 at a monthly rate of P12,032.Both were regular rank-and-file employees assigned at the Regional Operations and Maintenance Control Center (ROMCC) of PLDTs Cebu Provincial Division. They were tasked to maintain the operations and maintenance of the telephone exchanges in the Visayas and Mindanao areas.[2]In March 1995, petitioners were chosen for the OMC Specialist and System Software Acceptance Training Program in Germany in preparation for ALCATEL 1000 S12, a World Bank-financed PLDT project in line with its Zero Backlog Program. ALCATEL, the foreign supplier, shouldered the cost of their training and travel expenses.Petitioners left for Germany on April 10, 1995 and stayed there until July 21, 1995.[3]On July 12, 1995, while petitioners were in Germany, a certain Mr. R. Relucio, SwitchNet Division Manager, requested advice, through an inter-office memorandum, from the Cebu and Davao Provincial Managers if any of the training participants were interested to transfer to the Sampaloc ROMCC to address the operational requirements therein.The transfer was to be made before the ALCATEL exchanges and operations and maintenance center in Sampaloc would become operational.Upon petitioners return from Germany, a certain Mr. W.P. Acantillado, Senior Manager of the PLDT Cebu Plant, informed them about the memorandum.They balked at the idea, but PLDT, through an inter-office memorandum dated December 21, 1995, proceeded to transfer petitioners to the Sampaloc ROMCC effective January 3, 1996.[4]Petitioners left Cebu for Manila on December 27, 1995 to air their grievance to PLDT and to seek assistance from their union head office in Mandaluyong. PLDT ordered petitioners to report for work on January 16, 1996, but they asked for a deferment to February 1, 1996.Petitioners reported for work at the Sampaloc office on January 29, 1996.Meanwhile PLDT moved the effectivity date of their transfer to March 1, 1996. On March 13, 1996, petitioners again appealed to PLDT to no avail.And, because all their appeals fell on deaf ears, petitioners, while in Manila, tendered their resignation letters on March 21, 1996. Consequently, the expenses for their training in Germany were deducted from petitioners final pay.On September 11, 1996, petitioners filed a complaint with the National Labor Relations Commission Regional Arbitration Branch No. 7 for alleged constructive dismissal and non-payment of benefits under the Collective Bargaining Agreement.[5]In an order dated November 10, 1996, the presiding labor arbiter referred the complaint to the National Conciliation and Mediation Board, Cebu City, for appropriate action.[6]On January 17, 1997, the parties agreed to designate lawyer Rolando M. Lim as their voluntary arbitrator.[7]In their complaint, petitioners prayed that their dismissal from employment be declared illegal.They also asked for reinstatement with full backwages, refund of unauthorized deductions from their final pay, including damages, costs of litigation, and attorneys fees.[8]Respondent PLDT, for its part, averred that petitioners agreed to accept any assignment within PLDT in their application for employment[9]and also in the undertaking[10]they executed prior to their training in Germany.It prayed that petitioners complaint be dismissed.After submission of their respective position papers and admission of facts, the case was set for hearing.Petitioners presented their witnesses and made their formal offer of documentary evidence. PLDT, however, requested for a re-setting of the hearing from October 9 and 10, 1997 to November 10 and 11, 1997.[11]But on those dates PLDT did not appear.Nor did it file any notice of postponement or motion to cancel the hearings.[12]Upon petitioners motion and pursuant to Article 262-A of the Labor Code,[13]the voluntary arbitrator issued an order admitting all documentary exhibits offered in evidence by petitioners and submitting the case for resolution.[14]In said order, PLDT was declared to have waived its right to present evidence on account of its unjustified failure to appear in the November 10 to 11 hearings.On December 1, 1997, the voluntary arbitrator issued a decision which reads:IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, judgment is hereby rendered in the above case, in favor of complainants Zel Zafra and Edwin Ecarma and against respondent PLDT, as follows:1. Declaring that complainants were illegally dismissed by reason of the forced resignations or constructive discharge from their respective employment with PLDT;2. Ordering the reinstatement of complainants without loss of seniority rights and other privileges, and granting the award of full backwages from April 22, 1996, inclusive of allowances granted in the CBA or their monetary equivalent computed from the time complainants compensation were withheld up to the time of their actual reinstatement, or in lieu thereof, ordering the payment of separation pay with full backwages;3. Ordering the refund of P35,721.81 to complainant Zafra and P24,186.67 to complainant Ecarma, which amounts constitute as unauthorized deductions from their final pay;4. Ordering payment of P50,000.00 as moral damages; P20,000.00 as exemplary damages and P20,000.00 as refund for litigation expenses;5. Ordering payment of 10% Attorneys Fees computed on all adjudicated claims.SO ORDERED.[15]PLDTs motion for reconsideration of the above decision was denied on July 10, 1998.[16]On August 7, 1998, PLDT initiated a special civil action for certiorari with the Court of Appeals,[17]which was treated as a petition for review.[18]On December 22, 1998, the CA ruled in favor of PLDT and reversed the voluntary arbitrators decision, in this wise:WHEREFORE, the instant petition is hereby given due course.Accordingly, the assailed Order is hereby REVERSED with the exception of the refund, which is hereby ordered, of the amount of P35,721.81 to respondent Zafra and P24,186.67 to respondent Ecarma representing unauthorized deductions from their final pay.SO ORDERED.[19]Zafra and Ecarma as respondents below moved for reconsideration of the CA decision which, however, was denied on May 24, 1999.[20]Petitioners now anchor their petition on the following grounds:I. THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN THE RESPONDENTS PETITION IN A WAY PROBABLY NOT IN ACCORD WITH THE LAW OR THE APPLICABLE DECISIONS OF THE SUPREME COURT.A. THE COURT A QUO, INSTEAD OF RESOLVING ERRORS OF JURISDICTION ALLEGED IN THE RESPONDENTS PETITION ERRED IN RENDERING THE DECISION ON ITS MERITS, IN EFFECT NOT ACCORDING RESPECT AND SETTING ASIDE THE VOLUNTARY ARBITRATORS EVALUATION OF THE EVIDENCE AND FACTUAL FINDINGS BASED THEREON.B. THE COURT A QUO, IN GIVING DUE COURSE TO THE RESPONDENTS PETITION ERRED IN PROCEEDING TO RESOLVE THE SAME ON THE MERITS, WITHOUT FIRST REVIEWING THE ENTIRE RECORD OF THE PROCEEDINGS OF THE VOLUNTARY ARBITRATOR.II. THE COURT OF APPEALS HAS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS, AS TO CALL FOR AN EXERCISE OF THE HONORABLE SUPREME COURTS SUPERVISION.A. THE COURT A QUO COMMITTED GRAVE ABUSE OF DISCRETION IN RENDERING THE DECISION THROUGH ITS UTTER DISREGARD OF THE APPROPRIATE MODE OF APPEAL TO BE TAKEN BY THE RESPONDENTS FROM THE JUDGMENT OF THE VOLUNTARY ARBITRATOR.B. THE COURT A QUO COMMITTED GRAVE ABUSE OF ITS DISCRETION IN TREATING JOINTLY THE RESPONDENTS PETITION EITHER AS AN APPEAL UNDER RULE 43, OR IN THE ALTERNATIVE, A SPECIAL CIVIL ACTION FOR CERTIORARI UNDER RULE 65.C. THE COURT A QUO COMMITTED GRAVE ABUSE OF ITS DISCRETION IN FAILING TO DISMISS THE RESPONDENTS PETITION FOR CERTIORARI OUTRIGHTLY FOR FAILURE TO COMPLY WITH THE STRICT REQUIREMENTS IN THE FILING THEREOF.[21]Briefly, the issues in this case may be restated as follows: (1) whether or not the CA erred in treating the special civil action for certiorari filed by respondent as a petition for review, and (2) whether or not the CA erred in its appreciation of facts and the decision it rendered.Petitioners invokeLuzon Development Bank vs. Association of Luzon Development Bank Employees, et al.[22]and Rule 43 of the 1997 Rules of Civil Procedure[23]in arguing that an appeal and not a petition for certiorari should be the proper remedy to question the decision or award of the voluntary arbitrator.Even assuming that Rule 65 applies, petitioners argue that PLDT, nevertheless, erred in not including the voluntary arbitrator as one of the respondents in the petition and in not serving him a copy thereof.[24]These procedural flaws, they aver, merit the outright dismissal by the CA of the petition.[25]A perusal of the petition before the CA shows that the mode chosen by PLDT was a petition for review under Rule 43 and not a special civil action for certiorari under Rule 65.While it was captioned as a petition for certiorari, it is not the caption of the pleading but the allegations therein that determine the nature of the action.[26]The appellate court was not precluded from granting relief as warranted by PLDTs allegations in the petition and the evidence it had presented to support the petition.A perusal of the petition before the CA discloses the following:First, under the heading Nature of the Action, the PLDT averred it wasa petition for review on certiorariof the Decision dated December 1, 1997 and Order dated July 10, 1998 of Voluntary Arbitrator Atty. Rolando M. Lim.[27]Second, while the assigned errors alleged that the voluntary arbitrator acted with grave abuse of discretion, nevertheless, the issue set forth waswhether or not there existed sufficient evidence to show that complainants [herein petitioners] were constructively dismissed, and whether they were entitled to reinstatement, back wages and other monetary awards.[28]Clearly, the issue was factual and not limited to questions of jurisdiction and grave abuse of discretion.Third, the petition was filed within the 15-day period to perfect an appeal and did not implead the voluntary arbitrator as a respondent. All of these indicate that the petition below was indeed one for review.Moreover, contrary to petitioners contention that the voluntary arbitrator was not furnished a copy of the petition, the records reveal otherwise.Attached to the petition filed before the appellate court was a registry receipt of the copy sent to the voluntary arbitrator.[29]Coming now to the substantive merits of the petition before us.Considering that the CAs findings of fact clash with those of the voluntary arbitrator, with contradictory results, this Court is compelled to go over the records of the case as well as the submissions of the parties.Having done so carefully, we are not convinced that the voluntary arbitrator erred in his factual conclusions so as to justify reversal thereof by the appellate court.We are persuaded to rule in favor of the complaining workers, herein petitioners, following the well-established doctrine in labor-management relations that in case of doubt, labor should prevail.The fact that petitioners, in their application for employment,[30]agreed to be transferred or assigned to any branch[31]should not be taken in isolation, but rather in conjunction with the established company practice in PLDT.The standard operating procedure in PLDT is to inform personnel regarding the nature and location of their future assignments after training abroad.This prevailing company practice is evidenced by the inter-office memorandum[32]of a certain PLDTs First Vice President (Reyes), dated May 3, 1996 to PLDTs Chief Operating Officer (Perez), duly-acknowledged by private respondents:x x xTo:Atty. E.D. Perez, SEVP & COOThru:J.P. de Jesus, EVP - Meet Demand GroupFrom:FVP - Program Planning & Engineering SectorSubject:NON-ASSIGNABLE TRAINED PERSONNEL=====================================================During the Group Heads Meeting on 03 April 1996, Mr. R.R. Zarate reported on the case of some provincial personnel who had foreign training for functions intended for Manila Operations but refused to be relocated and assigned to Manila, and who eventually resigned on account of the said transfer.In view of this situation, two (2) issues were raised as follows:1.Network Services to be involved in the planning of facilities, specially when this involves trainees from Network.2.Actual training to be undertaken only after the sites where such training will be utilized have been determined.x x xA total of 53 slots (for the Exchange O&M, System Software/Acceptance Engineering and OMC Specialist Courses) were allocated to Network Services by the Steering Committee composed of representatives from ProgPlan and TechTrain.The O&M slots were equally distributed to Provincial Operations on the basis where Alcatel switches will be geographically installed.With regards to NSC, since the contract has defined its location to be in Sampaloc and considering that its monitoring function would focus on provincial exchanges, slots were opened both for Provincial and Metro Manila Operations.Please note that all these relevant informations were disseminated to concerned parties as inputs, to enable them to recommend the appropriate training participants.The choice of trainees were made by Network and, therefore, it is incumbent upon them to brief the participants or trainees they selected on the nature and assignment of their employment after training.To prevent similar instances in the future, we strongly recommend the following:1.Prior to the training, all concerned groups should conform with the standard practice of informing personnel regarding the nature and/or location of their future assignments after the training.2.The contractual obligation of the trainees should include a provision on their willingness and commitment to perform the related training functionalities required by the company.x x x (Underscoring supplied.)The want of notice of transfer to petitioners was the subject of another inter-office memorandum dated November 24, 1995, from one Mr. Relucio, SwitchNet Division Manager, to a certain Mr. Albania, First Vice President-Regional & Toll Network. It states:As the cheaper option is to relocate personnel who have attended the training already, we have solicited the desire of the Cebu and Davao-based provincial personnel to transfer to SwitchNet Sampaloc ROMCC which they declined, x x xWe should note that these personnel were not made aware prior to start of training, that they will be transferred to Manila.[33]A third inter-office memorandum dated November 29, 1995 confirmed this procedural flaw, thus:Alternative 1: Require the four Jones and Davao ROMCC personnel to transfer [to] the Sampaloc ROMCC, as service requirement.This is the least cost alternative. x x xWe should note however, that these personnel were not aware that they would relocate after training.[34]Under these circumstances, the need for the dissemination of notice of transfer to employees before sending them abroad for training should be deemed necessary and later to have ripened into a company practice or policy that could no longer be peremptorily withdrawn, discontinued, or eliminated by the employer.Fairness at the workplace and settled expectations among employees require that we honor this practice and commend this policy.The appellate courts justification that petitioners transfer was a management prerogative did not quite square with the preceding evidence on record, which are not disputed.To say that petitioners were not constructively dismissed inasmuch as the transfer was effected without demotion in rank or diminution of salary benefits is, to our mind, inaccurate. It is well to remember that constructive dismissal does not always involve forthright dismissal or diminution in rank, compensation, benefits, and privileges. For an act of clear discrimination,insensibility, or disdain by an employer may become sounbearableon the part of the employee that it could foreclose any choice by him except to forego his continued employment.[35]The insensibility of private respondents is at once deducible from the foregoing circumstances.Despite their knowledge that the lone operations and maintenance center of the 33 ALCATEL 1000 S12 Exchanges would be homed in Sampaloc,[36]PLDT officials neglected to disclose this vital piece of information to petitioners before they acceded to be trained abroad. On arriving home, they did not give complaining workers any other option but placed them in an either/or straightjacket, that appeared too oppressive for those concerned.As pointed out in the abovementioned inter-office memorandum by Mr. Reyes:All sites where training will be utilized are already pre-determined and pinpointed in the contract documents and technical protocols signed by PLDT and the contractor. Hence, there should be no reason or cause for the misappointment of the training participants.[37]Needless to say, had they known about their pre-planned reassignments, petitioners could have declined the foreign training intended for personnel assigned to the Manila office.The lure of a foreign trip is fleeting while a reassignment from Cebu to Manila entails major and permanent readjustments for petitioners and their families.We are not unaware that the transfer of an employee ordinarily lies within the ambit of management prerogatives.However, a transfer amounts to constructive dismissal when the transfer isunreasonable, inconvenient,orprejudicialto the employee, and involves a demotion in rank or diminution of salaries, benefits, and other privileges.[38]In the present case, petitioners were unceremoniously transferred, necessitating their families relocation from Cebu to Manila.This act of management appears to be arbitrary without the usual notice that should have been done even prior to their training abroad.From the employees viewpoint, such action affecting their families are burdensome, economically and emotionally.It is no exaggeration to say that their forced transfer is not only unreasonable, inconvenient, and prejudicial, but to our mind, also in defiance of basic due process and fair play in employment relations.WHEREFORE,this petition for review is GRANTED.The decision of the Court of Appeals in CA-G.R. SP No. 48578, dated December 22, 1998, is REVERSED and SET ASIDE.The decision of the Voluntary Arbitrator dated December 1, 1997, is REINSTATED.No pronouncement as to costs.SO ORDERED.Bellosillo, (Chairman), Mendoza, Austria-Martinez,andCallejo, Sr., JJ.,concur.

G.R. No. 188747 January 29, 2014MANILA WATER COMPANY,Petitioner,vs.CARLITO DEL ROSARIO,Respondent.D E C I S I O NPEREZ,J.:This is a Petition for Review on Certiorari1filed pursuant to Rule 45 of the Revised Rules of Court, assailing the 31 March 2009 Decision2rendered by the Fifth Division of the Court of Appeals in CA-G.R. SP No. 925 83. In its assailed decision, the appellate court: ( 1) reversed as grave abuse of discretion the Resolution of the National Labor Relations Commission (NLRC) which dismissed the petition of Manila Water Company (Manila Water) on technical grounds; and (2) proceeded to affirm with modification the ruling of the Labor Arbiter. Manila Water was ordered to pay respondent Carlito Del Rosario (Del Rosario) separation pay to be computed from 1 August 1997 up to June 2000.In a Resolution3dated 7 July 2009, the appellate court refused to reconsider its earlier decision.The FactsOn 22 October 1979, Del Rosario was employed as Instrument Technician by Metropolitan Waterworks and Sewerage System (MWSS). Sometime in 1996, MWSS was reorganized pursuant to Republic Act No. 8041 or the National Water Crisis Act of 1995, and its implementing guidelines Executive Order No. 286. Because of the reorganization, Manila Water absorbed some employees of MWSS including Del Rosario. On 1 August 1997, Del Rosario officially became an employee of Manila Water.Sometime in May 2000, Manila Water discovered that 24 water meters were missing in its stockroom. Upon initial investigation, it appeared that Del Rosario and his co-employee, a certain Danilo Manguera, were involved in the pilferage and the sale of water meters to the companys contractor. Consequently, Manila Water issued a Memorandum dated 23 June 2000, directing Del Rosario to explain in writing within 72 hours why he should not be dealt with administratively for the loss of the said water meters.4In his letter-explanation,5Del Rosario confessed his involvement in the act charged and pleaded for forgiveness, promising not to commit similar acts in the future.On 29 June 2000, Manila Water conducted a hearing to afford Del Rosario the opportunity to personally defend himself and to explain and clarify his defenses to the charge against him. During the formal investigation Del Rosario was found responsible for the loss of the water meters and therefore liable for violating Section 11.1 of the Companys Code of Conduct.6Manila Water proceeded to dismiss Del Rosario from employment on 3 July 2000.7This prompted Del Rosario to file an action for illegal dismissal claiming that his severance from employment is without just cause. In his Position Paper submitted before the labor officer, Del Rosario averred that his admission to the misconduct charged was not voluntary but was coerced by the company. Such admission therefore, made without the assistance of a counsel, could not be made basis in terminating his employment.Refuting the allegations of Del Rosario, Manila Water pointed out that he was indeed involved in the taking of the water meters from the companys stock room and of selling these to a private contractor for personal gain. Invoking Section 11.1 of the Companys Code of Conduct, Manila Water averred that such act of stealing the companys property is punishable by dismissal. The company invited the attention of this Court to the fact that Del Rosario himself confessed his involvement to the loss of the water meters not only in his letter-explanation, but also during the formal investigation, and in both instances, pleaded for his employers forgiveness.8After weighing the positions taken by the opposing parties, including the evidence adduced in support of their respective cases, the Labor Arbiter issued a Decision9dated 30 May 2002 dismissing for lack of merit the complaint filed by Del Rosario who was, however, awarded separation pay. According to the Labor Arbiter, Del Rosarios length of service for 21 years, without previous derogatory record, warrants the award of separation pay. The decretal portion of the decision reads:WHEREFORE, viewed from the foregoing, judgment is hereby rendered DISMISSING the complaint for illegal dismissal for lack of merit.[Manila Water] is hereby ordered to pay complainant separation pay equivalent to one-half (1/2) months salary for every year of service based on his basic salary (Php 11,244.00) at the time of his dismissal. This shall be computed from [1 August 1997] up to June 2000, the total amount of which is ONE HUNDRED EIGHTEEN THOUSAND SIXTY-TWO (Php 118,062.00) PESOS.10In a Resolution11dated 30 September 2003, the NLRC dismissed the appeal interposed by Manila Water for its failure to append a certification against forum shopping in its Memorandum of Appeal.Similarly ill-fated was Manila Waters Motion for Reconsideration which was denied by the NLRC in a Resolution12dated 28 April 2005.On Certiorari, the Court of Appeals in its Decision dated 31 March 2009, reversed the NLRC Resolution and held that it committed a grave abuse of discretion when it dismissed Manila Waters appeal on mere technicality. The appellate court, however, proceeded to affirm the decision of the Labor Arbiter awarding separation pay to Del Rosario. Considering that Del Rosario rendered 21 years of service to the company without previous derogatory record, the appellate court considered the granting of separation pay by the labor officer justified. The fallo of the assailed Court of Appeals Decision reads:WHEREFORE, the petition is partly granted. The assailed Resolutions dated September 30, 2003 and [April 28, 2005] of public respondent NLRC are set aside. The Decision dated May 30, 2002 of the [L]abor [A]rbiter is reinstated, subject to the modification that the computation of the award of separation pay [to] private respondent shall be counted from August 1, 1997 x x x up to June 2000.13In a Resolution14dated 7 July 2009, the Court of Appeals refused to reconsider its earlier decision.Unrelenting, Manila Water filed the instant Petition for Review on Certiorari assailing the foregoing Court of Appeals Decision and Resolution on the sole ground that:THE [COURT OF APPEALS] SERIOUSLY ERRED IN ISSUING THE QUESTIONED DECISION AND RESOLUTION WHICH DIRECTLY CONTRAVENE BOOK VI, RULE 1, AND SECTION 7 OF THE OMNIBUS RULES IMPLEMENTING THE LABOR CODE AND PREVAILING JURISPRUDENCE WHICH CATEGORICALLY PROVIDE THAT AN EMPLOYEE SEPARATED FROM SERIOUS MISCONDUCT IS NOT ENTITLED TO TERMINATION (SEPARATION) PAY.15The Courts RulingIn the instant petition, Manila Water essentially questions the award of separation pay to respondent who was dismissed for stealing the companys property which amounted to gross misconduct. It argues that separation pay or financial assistance is not awarded to employees guilty of gross misconduct or for cause reflecting on his moral character.16Del Rosario for his part maintains that there is no legal ground to justify his termination from employment. He insists that his admission pertaining to his involvement in the loss of the water meters was merely coerced by the company. Since his dismissal was without valid or just cause, Del Rosario avers that Manila Water is guilty of illegal dismissal rendering it liable for the payment of backwages and separation pay.17It must be stressed at the outset that the correctness of the Labor Arbiters pronouncement on the legality of Del Rosarios dismissal is no longer an issue and is beyond modification. While Manila Water timely appealed the ruling of the Labor Arbiter awarding separation pay to Del Rosario, the latter did not question the dismissal of his illegal termination case.18It is settled in our jurisprudence that a party who has not appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the appealed decision.19Due process prevents the grant of additional awards to parties who did not appeal.20Having said that, this Court will no longer dwell on the issue of whether or not Del Rosario was illegally dismissed from employment. Included in the closed aspect of the case is respondents argument that the absence of his counsel when he admitted the charge against him diminished the evidentiary value of such admission. Nonetheless, it may be mentioned that the constitutional right to counsel is available only during custodial investigation. If the investigation is merely administrative conducted by the employer and not a criminal investigation, the admission made during such investigation may be used as evidence to justify dismissal.21Our focus will be on the propriety of the award for separation pay.As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 28222of the Labor Code is not entitled to a separation pay.23Section 7, Rule I, Book VI of the Omnibus Rules implementing the Labor Code provides:Sec. 7. Termination of employment by employer. The just causes for terminating the services of an employee shall be those provided in Article 282 of the Code. The separation from work of an employee for a just cause does not entitle him to the termination pay provided in the Code, without prejudice, however, to whatever rights, benefits and privileges he may have under the applicable individual or collective agreement with the employer or voluntary employer policy or practice.In exceptional cases, however, the Court has granted separation pay to a legally dismissed employee as an act of "social justice" or on "equitable grounds."24In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral character of the employee.25In the leading case of Philippine Long Distance Telephone Company v. NLRC,26we laid down the rule that separation pay shall be allowed as a measure of social justice only in the instances where the employee is validly dismissed for causes other than serious misconduct reflecting his moral character. We clarified that:We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice.A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern of the Constitution.The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged. At best[,] it may mitigate the penalty but it certainly will not condone the offense. Compassion for the poor is an imperative of every humane society but only when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be permitted to be refuge of scoundrels any more than can equity be an impediment to the punishment of the guilty. Those who invoke social justice may do so only if their hands are clean and their motives blameless and not simply because they happen to be poor. This great policy of our Constitution is not meant for the protection of those who have proved they are not worthy of it, like the workers who have tainted the cause of labor with the blemishes of their own character.27In the subsequent case of Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission,28we expanded the exclusions and elucidated that separation pay shall be allowed as a measure of social justice only in instances where the employee is validly dismissed for causes other than serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, commission of a crime against the employer or his family, or those reflecting on his moral character. In the same case, we instructed the labor officials that they must be most judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress the employers.29The commitment of the court to the cause of the labor should not embarrass us from sustaining the employers when they are right, as here. In fine, we should be more cautious in awarding financial assistance to the undeserving and those who are unworthy of liberality of the law.30Guided by the foregoing rules, we have carefully treaded the path of compassionate justice in the subsequent cases so as not to slip and favor labor at the expense of management.In Tirazona v. Phillippine EDS Techno-Service, Inc. (PET, Inc.),31we denied the award of separation pay to an employee who was dismissed from employment due to loss of trust and confidence.While [this] Court commiserates with the plight of Tirazona, who has recently manifested that she has since been suffering from her poor health condition, the Court cannot grant her plea for the award of financial benefits based solely on this unfortunate circumstance. For all its conceded merit, equity is available only in the absence of law and not as its replacement. Equity as an exceptional extenuating circumstance does not favor, nor may it be used to reward, the indolent or the wrongdoer for that matter. This Court will not allow a party, in guise of equity, to benefit from its own fault.32(Emphasis supplied).The attendant circumstances in the present case considered, we are constrained to deny Del Rosario separation pay since the admitted cause of his dismissal amounts to serious misconduct. He is not only responsible for the loss of the water meters in flagrant violation of the companys policy but his act is in utter disregard of his partnership with his employer in the pursuit of mutual benefits.In the recent case of Daabay v. Coca-Cola Bottlers,33this Court reiterated our ruling in Toyota and disallowed the payment of separation pay to an employee who was found guilty of stealing the companys property. We repeated that an award of separation pay in such an instance is misplaced compassion for the undeserving who may find their way back and weaken the fiber of labor.That Del Rosario rendered 21 years of service to the company will not save the day for him.1wphi1To this case, Central Pangasinan Electric Cooperative, Inc. v. National Labor Relations Commission is on all fours, thus:Although long years of service might generally be considered for the award of separation benefits or some form of financial assistance to mitigate the effects of termination, this case is not the appropriate instance for generosity under the Labor Code nor under our prior decisions. The fact that private respondent served petitioner for more than twenty years with no negative record prior to his dismissal, in our view of this case, does not call for such award of benefits, since his violation reflects a regrettable lack of loyalty and worse, betrayal of the company. If an employee's length of service is to be regarded as a justification for moderating the penalty of dismissal, such gesture will actually become a prize for disloyalty, distorting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of undesirables.34(Emphasis supplied).Indubitably, the appellate court erred in awarding separation pay to Del Rosario without taking into consideration that the transgression he committed constitutes a serious offense. The grant of separation pay to a dismissed employee is determined by the cause of the dismissal. The years of service may determine how much separation pay may be awarded. It is, however, not the reason why such pay should be granted at all.In sum, we hold that the award of separation pay or any other kind of financial assistance to Del Rosario, under the nomenclature of compassionate justice, is not warranted in the instant case. A contrary rule would have the effect of rewarding rather than punishing an erring employee, disturbing the noble concept of social justice.WHEREFORE, premises considered, the petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals are hereby REVERSED and SET ASIDE.SO ORDERED.DANNIE M. PANTOJA,G.R. No. 163554

Petitioner,

Present:

CARPIO,J.,Chairperson,

- versus -DELCASTILLO,

ABAD,

PEREZ,and

MENDOZA,*JJ.

SCA HYGIENE PRODUCTS

CORPORATION,Promulgated:

Respondent.April 23, 2010

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - xD E C I S I O NDELCASTILLO,J.:Once again, we uphold the employers exercise of its management prerogative because it was done for the advancement of its interest and not for the purpose of defeating the lawful rights of an employee.This petition for review oncertiorari[1]assails the Decision[2]dated January 30, 2004 and Resolution[3]dated May 13, 2004 of the Court of Appeals (CA) in CA-G.R. SP No. 73076, which affirmed the May 30, 2002 Decision[4]of the National Labor Relations Commission (NLRC) and reinstated the Labor Arbiters dismissal of the illegal dismissal complaint filed by petitioner Dannie M. Pantoja against respondent SCA Hygiene Products Corporation.Factual AntecedentsRespondent, a corporation engaged in the manufacture, sale and distribution of industrial paper and tissue products, employed petitioner as a utility man onMarch 15, 1987. Petitioner was eventually assigned at respondents Paper Mill No. 4, the section which manufactures the companys industrial paper products, as a back tender in charge of the proper operation of the sections machineries.In a Notice of Transfer datedMarch 27, 1999,[5]respondent informed petitioner of its reorganization plan and offered him a position at Paper Mill No. 5 under the same terms and conditions of employment in anticipation of the eventual closure and permanent shutdown of Paper Mill No. 4 effectiveMay 5, 1999.The closure and concomitant reorganization is in line with respondents decision to streamline and phase out the companys industrial paper manufacturing operations due to financial difficulties brought about by the low volume of sales and orders for industrial paper products.However, petitioner rejected respondents offer for his transfer. Thus, a notice of termination[6]of employment effectiveMay 5, 1999was sent to petitioner as his position was declared redundant by the closure of Paper Mill No. 4.He then received his separation pay equivalent to two months pay for every year of service in the amount ofP356,335.20 and thereafter executed a release and quitclaim[7]in favor of respondent. OnApril 5, 1999, respondent informed the Department of Labor and Employment (DOLE) of its reorganization and partial closure by submitting with the said office an Establishment Termination Report[8]together with the list[9]of 31 terminated employees.OnJune 20, 2000, petitioner filed a complaint for illegal dismissal against respondent assailing his termination as without any valid cause.He averred that the alleged redundancy never occurred as there was no permanent shutdown of Paper Mill No. 4 due to its continuous operation since his termination.A co-employee, Nestor Agtang, confirmed this fact and further attested that several contractual workers were employed to operate Paper Mill No. 4.[10]Petitioner also presented in evidence documents pertaining to the actual and continuous operation of Paper Mill No. 4 such as the Paper Mill Personnel Schedule forJuly 2-8, 2000[11]and 23-29, 2000[12]and Paper Machine No. 4 Production Report and Operating Data datedApril 28, 2000[13]andMay 18, 2000.[14]In its defense, respondent refuted petitioners claim of illegal dismissal.It argued that petitioner has voluntarily separated himself from service by opting to avail of the separation benefits of the company instead of accepting reassignment/transfer to another position of equal rank and pay. According to respondent, petitioners discussion on the alleged resumption of operation of Paper Mill No. 4 is rendered moot by the fact of petitioners voluntary separation.Ruling of the Labor ArbiterOnMarch23,2001,theLaborArbiterrenderedaDecision[15]dismissing petitioners complaint for lack of merit. The Labor Arbiter ruled that inasmuch as petitioner rejected the position offered to him, opted to receive separation pay and executed a release and quitclaim releasing the company from any claim or demand in connection with his employment, petitioners claim that he was illegally dismissed must perforce fail.Ruling of the National Labor Relations CommissionUpon appeal by petitioner, the NLRC reversed the Labor Arbiters Decision by finding petitioners separation from employment illegal. The NLRC gave credence to petitioners evidence of Paper Mill No. 4s continuous operation and consequently opined that the feigned shutdown of operations renders respondents redundancy program legally infirm. According to the NLRC, petitioners refusal to be transferred to an equal post in Paper Mill No. 5 is of no consequence since he would not have had the need to make a choice where the situation, in the first place, never called for it. The NLRC further disregarded the validity of the quitclaim because its execution cannot be considered as having been done voluntarily by petitioner there being fraud and misrepresentation on the part of respondent.The dispositive portion of the NLRC Decision reads:WHEREFORE, premises considered, the decision under review is hereby REVERSED and SET ASIDE, and another entered, declaring complainants dismissal from employment as ILLEGAL.Accordingly, respondent is ordered to REINSTATE the complainant to his former position without loss of seniority rights and pay him FULL BACKWAGES in the amount corresponding to the period when he was actually dismissed until actual reinstatement, less the sum of THREE HUNDRED FIFTY SIX THOUSAND THREE HUNDRED THIRTY FIVE & 20/100 Pesos (P356,335.20) representing his separation pay.Respondent is further ordered to pay the complainant, by way of attorneys fees, ten percent (10%) of the total net amount due as backwages.SO ORDERED.[16]Respondent sought reconsideration of the NLRCs ruling.It denied the fact that Paper Mill No. 4 continued to be fully operational in 1999.Respondent asseverated that when Paper Mill No. 4 was shut down in 1999 due to its low production output as certified in an affidavit[17]executed by SCAs VP-Tissue Manufacturing Director, there was a necessity to occasionally run from time to time the machines in Paper Mill No. 4 only for the purpose of maintaining and preserving the same and does not mean that Paper Mill No. 4 continued to be operational.It was only in 2000 that Paper Mill No. 4 was subsequently reopened due to a more favorable business climate, which decision is recognized as a rightful exercise of management prerogative. Moreover, respondent maintained that this is a case of voluntary separation and not illegal dismissal.In a Resolution[18]datedAugust 22, 2002, respondents motion was denied.Ruling of the Court of AppealsAggrieved, respondent filed a petition forcertiorariwith the CA. OnJanuary 30, 2004, the CA reversed the NLRCs Decision and reinstated the Labor Arbiters Decision dismissing the compliant.It ruled that there was no illegal dismissal as the act of petitioner in rejecting the transfer and accepting the separation pay constitutes a valid basis for the separation from employment.Respondents Motion to Annul the NLRCs Entry of Judgment was granted by the CA.Petitioner filed a motion for reconsideration but it was denied.IssueThe lone issue in this petition for review oncertiorariis whether or not respondent is guilty of illegal dismissal.Petitioner contends that respondents streamlining of operations which resulted in the reduction of personnel was a mere scheme to get rid of regular employees whose security of tenure is protected by law.As there was evident bad faith in the implementation of a flawed retrenchment program, petitioner argued that his separation from employment due to his decision to accept separation pay is illegal since respondent has no valid basis to give him an option either to be transferred or be separated.Further, neither can the quitclaim he executed stamp legality to his precipitate separation.Our RulingThe petition lacks merit.Respondents right of management prerogative was exercised in good faith.Respondent presented evidence of the low volume of sales and orders for the production of industrial paper in 1999 which inevitably resulted to the companys decision to streamline its operations. This fact was corroborated by respondents VP-Tissue Manufacturing Director and was not disputed by petitioner. Exercising its management prerogative and sound business judgment, respondent decided to cut down on operational costs by shutting down one of its paper mill. As held inInternational Harvester Macleod, Inc. v. Intermediate Appellate Court,[19]the determination of the need to phase out a particular department and consequent reduction of personnel and reorganization as a labor and cost saving device is a recognized management prerogative which the courts will not generally interfere with.In this case, the abolishment of Paper Mill No. 4 was undoubtedly a business judgment arrived at in the face of the low demand for the production of industrial paper at the time.Despite an apparent reason to implement a retrenchment program as a cost-cutting measure, respondent, however, did not outrightly dismiss the workers affected by the closure of Paper Mill No. 4 but gave them an option to be transferred to posts of equal rank and pay.As can be seen, retrenchment was utilized by respondent only as an available option in case the affected employee would not want to be transferred.Respondent did not proceed directly to retrench.This, to our mind, is an indication of good faith on respondents part as it exhausted other possible measures other than retrenchment.Besides, the employers prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means have been tried and found wanting.Giving the workers an option to be transferred without any diminution in rank and pay specifically belie petitioners allegation that the alleged streamlining scheme was implemented as a ploy to ease out employees, thus, the absence of bad faith. Apparently, respondent implemented its streamlining or reorganization plan with good faith, not in an arbitrary manner and without prejudicing the tenurial rights of its employees.Petitioner harps on the fact that there was no actual shutdown of Paper Mill No. 4 but that it continued to be operational. No evidence, however, was presented to prove that there was continuous operation after the shutdown in the year 1999.What the records reveal is that Paper Mill No. 4 resumed its operation in 2000 due to a more favorable business climate.The resumption of its industrial paper manufacturing operations does not, however, make respondents streamlining/reorganization plan illegal because, again, the abolishment of Paper Mill No. 4 in 1999 was a business judgment arrived at to prevent a possible financial drain at that time.As long as no arbitrary or malicious action on the part of an employer is shown, the wisdom of a business judgment to implement a cost saving device is beyond this courts determination. After all, the free will of management to conduct its own business affairs to achieve its purpose cannot be denied.[20]Petitioners voluntary separation from employment renders his claim of illegal dismissal unfounded and baseless.Petitioner claims that he had no choice but to resign on the belief that Paper Mill No. 4 will be permanently closed as misrepresented by respondent and thus can invalidate the release and quitclaim executed by him.We find this contention untenable.We held that work reassignment of an employee as a genuine business necessity is a valid management prerogative.[21]After being given an option to be transferred, petitioner rejected the offer for reassignment to Paper Mill No. 5 even though such transfer would not involve any diminution of rank and pay. Instead, he opted and preferred to be separated by executing a release and quitclaim in consideration of which he received separation pay in the amount ofP356,335.20 equal to two months pay for every year of service plus other accrued benefits. Clearly, petitioner freely and voluntarily consented to the execution of the release and quitclaim. Having done so apart from the fact that the consideration for the quitclaim is credible and reasonable, the waiver represents a valid and binding undertaking.[22]As aptly concluded by the CA, the quitclaim was not executed under force or duress and that petitioner was given a separation pay more than what the law requires from respondent.WHEREFORE, the petition isDENIED.The assailedJanuary 30, 2004Decision of the Court of Appeals in CA-G.R. SP No. 73076 dismissing petitioner Dannie M. Pantojas complaint for illegal dismissaland the May 13, 2004 Resolution denying the Motion for Reconsideration areAFFIRMED.SO ORDERED.