FARLE P. ALMODIEL, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), RAYTHEON PHILS., INC., RESPONDENTS.

Subject of this petition for certiorari is the decision
dated March 21, 1991 of the National Labor Relations Commission in NLRC Case
No. 00-00645-89 which reversed and set aside the Labor Arbiter’s decision dated
September 27, 1989 and ordered instead the payment of separation pay and
financial assistance of P100,000.00. Petitioner imputes grave abuse of discretion on the part of the
Commission and prays for the reinstatement of the Labor Arbiter’s decision
which declared his termination on the ground of redundancy illegal.

Petitioner Farle P. Almodiel is a certified public accountant who
was hired in October, 1987 as Cost Accounting Manager of respondent Raytheon
Philippines, Inc. through a reputable placement firm, John Clements
Consultants, Inc. with a starting monthly salary of P18,000.00. Before said employment, he was the accounts
executive of Integrated Microelectronics, Inc. for several years. He left his lucrative job therein in view of
the promising career offered by Raytheon. He started as a
probationary or temporary employee. As
Cost Accounting Manager, his major duties were: (1) plan, coordinate and carry out year and physical inventory;
(2) formulate and issue out hard copies of Standard Product costing and other
cost/pricing analysis if needed and required and (3) set up the written Cost
Accounting System for the whole company. After a few months, he was given a regularization increase of P1,600.00
a month. Not long thereafter, his
salary was increased to P21,600.00 a month.

On August 17, 1988, he recommended and submitted a Cost
Accounting/Finance Reorganization, affecting the whole finance group but the
same was disapproved by the Controller. However, he was assured by the Controller that should his position or
department which was apparently a one-man department with no staff becomes
untenable or unable to deliver the needed service due to manpower constraint,
he would be given a three (3) year advance notice.

In the meantime, the standard cost accounting system was
installed and used at the Raytheon plants and subsidiaries worldwide. It was likewise adopted and installed in the
Philippine operations. As a
consequence, the services of a Cost Accounting Manager allegedly entailed only
the submission of periodic reports that would use computerized forms prescribed
and designed by the international head office of the Raytheon Company in
California, USA.

On January 27, 1989, petitioner was summoned by his immediate
boss and in the presence of IRD Manager, Mr. Rolando Estrada, he was told of
the abolition of his position on the ground of redundancy. He pleaded with management to defer its
action or transfer him to another department, but he was told that the decision
of management was final and that the same has been conveyed to the Department
of Labor and Employment. Thus, he was constrained to file the complaint
for illegal dismissal before the Arbitration Branch of the National Capital
Region, NLRC, Department of Labor and Employment.

On September 27, 1989, Labor Arbiter Daisy Cauton-­Barcelona
rendered a decision, the dispositive portion of which reads as follows:

“WHEREFORE,
judgment is hereby rendered declaring that complainant’s termination on the
ground of redundancy is highly irregular and without legal and factual basis,
thus ordering the respondents to reinstate complainant to his former position
with full backwages without lost of seniority rights and other benefits. Respondents are further ordered to pay
complainant P200,000.00 as moral damages and P20,000.00 as exemplary damages,
plus ten percent (10%) of the total award as attorney’s fees.”^[1]

Raytheon appealed therefrom on the grounds that the Labor Arbiter
committed grave abuse of discretion in denying its right to dismiss petitioner
on the ground of redundancy, in relying on baseless surmises and self-serving
assertions of the petitioner that its act was tainted with malice and bad faith
and in awarding moral and exemplary damages and attorney’s fees.

On March 21, 1991, the NLRC reversed the decision and directed
Raytheon to pay petitioner the total sum of P100,000.00 as separation pay/financial assistance. The dispositive portion of which is hereby
quoted as follows:

“WHEREFORE, the appealed decision is hereby set aside. In its stead, Order is hereby issued
directing respondent to pay complainant the total separation pay/financial
assistance of One Hundred Thousand Pesos (P100,000.00).

“SO ORDERED.”^[2]

From this decision, petitioner filed the instant petition
averring that:

“The public respondent committed grave abuse of discretion
amounting to (lack of) or in excess of jurisdiction in declaring as valid and
justified the termination of petitioner on the ground of redundancy in the face
of clearly established finding that petitioner’s termination was tainted with
malice, bad faith and irregularity.”^[3]

Termination of an employee’s services because of 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 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 worker and the Department of Labor and Employment at least one
(1) month before the intended date thereof. In case of termination due to installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay
equivalent 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 closure or cessation of operations of
establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to at least one (1) month pay
or at least one-half (1/2) month pay for every year of service, whichever is
higher. A fraction of at least six (6)
months shall be considered as one
(1) whole year.”

There is no dispute that petitioner was duly advised, one (1)
month before, of the termination of his employment on the ground of redundancy
in a written notice by his immediate superior, Mrs. Magdalena B.D. Lopez
sometime in the afternoon of January 27, 1989. He was issued a check for P54,863.00 representing separation pay but in
view of his refusal to acknowledge the notice and the check, they were sent to
him thru registered mail on January 30, 1989. The Department of Labor and Employment was served a copy of the notice
of termination of petitioner in accordance with the pertinent provisions of the
Labor Code and the implementing rules.

The crux of the controversy lies on whether bad faith, malice and
irregularity crept in the abolition of petitioner’s position of Cost Accounting
Manager on the ground of redundancy. Petitioner claims that the functions of his position were absorbed by
the Payroll/Mis/Finance Department under the management of Danny Ang Tan Chai,
a resident alien without any working permit from the Department of Labor and
Employment as required by law. Petitioner relies on the testimony of Raytheon’s witness to the effect
that corollary functions appertaining to cost accounting were dispersed to
other units in the Finance Department. And granting that his department has to be declared redundant, he claims
that he should have been the Manager of the Payroll/Mis/Finance Department
which handled general accounting, payroll and encoding. As a
B.S. Accounting graduate, a CPA with M.B.A. units, 21 years of work
experience, and a natural born Filipino, he claims that he is better qualified
than Ang Tan Chai, a B.S. Industrial Engineer, hired merely as a Systems
Analyst Programmer or its equivalent in early 1987, promoted as MIS Manager
only during the middle part of 1988 and a resident alien.

On the other hand, Raytheon insists that petitioner’s functions as Cost Accounting Manager had not
been absorbed by Ang Tan Chai, a permanent resident born in this country. It claims to have established below that Ang
Tan Chai did not displace petitioner or absorb his functions and duties as they
were occupying entirely different and distinct positions requiring different
sets of expertise or qualifications and discharging functions altogether
different and foreign from that of petitioner’s abolished position. Raytheon debunks petitioner’s reliance on
the testimony of Mr. Estrada saying that the same witness testified under oath
that the functions of the Cost Accounting Manager had been completely dispensed
with and the position itself had been totally abolished.

Whether petitioner’s functions as Cost Accounting Manager have
been dispensed with or merely absorbed by another is however immaterial. Thus, notwithstanding the dearth of evidence
on the said question, a resolution of this case can be arrived at without
delving into this matter. For even
conceding that the functions of petitioner’s position were merely transferred,
no malice or bad faith can be imputed from said act. A survey of existing case law will disclose that in Wiltshire File Co., Inc. v. NLRC,^[4] the position of Sales Manager was
abolished on the ground of redundancy as 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. In
adjudging said termination as legal, this Court said 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. The characterization of an
employee’s services as no longer necessary or sustainable, and therefore,
properly terminable, was an exercise of business judgment on the part of the
employer. 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.

In the case of International
Macleod, Inc. v. Intermediate Appellate Court,^[5] this Court also considered the
position of Government Relations Officer to have become redundant in view of
the appointment of the International Heavy Equipment Corporation as the
company’s dealer with the government. It held therein that the determination of the need for the phasing out
of a department as a labor and
cost saving device because it was no longer economical to retain said services
is a management prerogative and the courts will not interfere with the exercise
thereof as long as no abuse of
discretion or merely arbitrary or malicious action on the part of management is
shown.

In the same vein, this Court ruled in Bondoc v. People’s Bank and Trust Co.,^[6] that the bank’s board of directors
possessed the power to remove a department manager whose position depended on
the retention of the trust and confidence of management and whether there was
need for his services. Although some
vindictive motivation might have impelled the abolition of his position, this
Court expounded that it is undeniable that the bank’s board of directors
possessed the power to remove him and to determine whether the interest of the
bank justified the existence of his department.

Indeed, an employer has no legal obligation to keep more
employees than are necessary for the operation of its business. Petitioner does not dispute the fact that a cost accounting system was installed
and used at Raytheon subsidiaries and plants worldwide; and that the functions
of his position involve the submission of periodic reports utilizing
computerized forms designed and prescribed by the head office with the
installation of said accounting system. Petitioner attempts to controvert these realities by alleging that some
of the functions of his position were still indispensable and were actually dispersed to another department. What these indispensable functions that were
dispersed, he failed however, to specify and point out. Besides, the fact that the functions of a position
were simply added to the duties of another does not affect the legitimacy of
the employer’s right to abolish a position when done in the normal exercise of
its prerogative to adopt sound business practices in the management of its
affairs.

Considering further that petitioner herein held a position which was definitely
managerial in character, Raytheon had a broad latitude of discretion in
abolishing his position. An employer
has a much wider discretion in terminating employment relationship of managerial
personnel compared to rank and file employees.^[7] The
reason obviously is that officers in such key positions perform not only
functions which by nature require the employer’s full trust and confidence but
also functions that spell the success or failure of an enterprise.

Likewise destitute of merit is petitioner’s imputation of
unlawful discrimination when Raytheon caused corollary functions appertaining
to cost accounting to be absorbed by Danny Ang Tan Chai, a resident alien
without a working permit. Article 40 of
the Labor Code which requires employment permit refers to non-resident
aliens. The employment permit is
required for entry into the country for employment purposes and is issued after
determination of the non-availability of a person in the Philippines who is
competent, able and willing at the time of application to perform the services
for which the alien is desired. Since
Ang Tan Chai is a resident alien, he does not fall within the ambit of the
provision.

Petitioner also assails Raytheon’s choice of Ang Tan Chai to head
the Payroll/Mis/Finance Department, claiming that he is better qualified for
the position. It should be noted,
however, that Ang Tan Chai was promoted to the position during the middle part
of 1988 or before the abolition of petitioner’s position in early 1989. Besides the fact that Ang Tan Chai’s
promotion thereto is a settled matter, it has been consistently held that an
objection founded on the ground that one has better credentials over the
appointee is frowned upon so long as the latter possesses the minimum
qualifications for the position. In the
case at bar, since petitioner does not allege that Ang Tan Chai does not
qualify for the position, the Court cannot substitute its discretion and
judgment for that which is clearly and exclusively management prerogative. To do so would take away from the employer
what rightly belongs to him as aptly explained in National Federation of Labor Unions v. NLRC:^[8]

“It is a well-settled rule that labor laws do not authorize
interference with the employer’s judgment in the conduct of his business. The determination of the qualification and
fitness of workers for hiring and firing, promotion or reassignment are
exclusive prerogatives of management. The Labor Code and its implementing Rules do not vest in the Labor
Arbiters nor in the different Divisions of the NLRC (nor in the courts)
managerial authority. The employer is
free to determine, using his own discretion and business judgment, all elements
of employment, “from hiring to firing” except in cases of unlawful
discrimination or those which may be provided by law. There is none in the instant case.”

Finding no grave abuse of discretion on the part of the National
Labor Relations Commission in reversing and annulling the decision of the Labor
Arbiter and that on the contrary, the termination of petitioner’s employment
was anchored on a valid and authorized cause under Article 283 of the Labor
Code, the instant petition for certiorari must fail.

WHEREFORE, the petition for certiorari is hereby
DISMISSED for lack of merit.

SO ORDERED.

Narvasa, C.J., (Chairman), Padilla, and Regalado, JJ., concur.

^[1]
Rollo, p. 35.

^[2]
Penned by Commissioner Romeo B. Putong and concurred in by Presiding
Commissioner Bartolome S. Carale and Commissioner Vicente S.E. Veloso III, Rollo,
pp. 21-22.

^[3]
Rollo, p. 6.

^[4]
G.R. No. 82249, February 7, 1991, 193 SCRA 665.

^[5]
G.R. No. 73287, May 18, 1987, 149 SCRA 641.

^[6]
G.R. No. 43835, March 31, 1981, 103 SCRA 599.

^[7]
Coca-Cola Bottlers Phils., Inc. v. NLRC, et al., G.R. No. 82580, April
25, 1989, 172 SCRA 751; D.M. Consunji, Inc. vs. NLRC, G.R. No. 71459,
July 30, 1986, 143 SCRA 204.

^[8]
G.R. No. 90739, October 3, 1991, 202 SCRA 346.