G.R. No. 163554 - Pantoja vs. SCA Hygiene Products Corporation

Petitioner, Dannie M. Pantoja, was employed by respondent SCA Hygiene Products Corporation, a company engaged in the manufacture, sale, and distribution of industrial paper and tissue products, beginning on March 15, 1987.
Initially hired as a utility man, petitioner was eventually assigned to Paper Mill No. 4 as a back tender responsible for overseeing machinery operations.

On March 27, 1999, respondent issued a Notice of Transfer to petitioner in light of its reorganization plan.
The offer proposed petitioner’s reassignment to Paper Mill No. 5 on terms equivalent to his current employment, anticipating the permanent shutdown of Paper Mill No. 4 effective May 5, 1999.
The reorganization was driven by financial difficulties attributed to low sales and order volumes for the industrial paper products manufactured at Paper Mill No. 4.

Petitioner rejected the transfer offer, prompting respondent to issue a notice of termination of employment effective May 5, 1999, citing redundancy due to the shutdown of Paper Mill No. 4.
Following his termination, petitioner received separation pay amounting to P356,335.20, which was equivalent to two months’ pay for every year of service.
Petitioner subsequently executed a release and quitclaim in favor of respondent, ostensibly finalizing any claims against the company.

On June 20, 2000, petitioner filed a complaint for illegal dismissal, contending that the alleged closure of Paper Mill No. 4 was a pretext.
Petitioner presented evidence including:

Testimony from co-employee Nestor Agtang, who confirmed the continued operation of Paper Mill No. 4 and the employment of contractual workers.
Documentary evidence such as the Paper Mill Personnel Schedules for July 2000, and production reports/operating data evidencing operations at Paper Mill No. 4 in April and May 2000.

On March 23, 2001, the Labor Arbiter dismissed petitioner’s complaint for illegal dismissal, ruling that because petitioner rejected the reassignment and opted for separation pay, his claim failed.

On appeal, the National Labor Relations Commission reversed the Labor Arbiter’s decision.
The NLRC found that the shutdown of Paper Mill No. 4 was feigned, noting evidence of its actual and continuous operation.
The NLRC ruled petitioner’s separation illegal, setting aside the release and quitclaim due to allegations of fraud and misrepresentation, and ordered petitioner’s reinstatement with full backwages and attorney’s fees.

Respondent sought reconsideration of the NLRC ruling, arguing that the facility’s occasional operations post-shutdown were solely for maintenance purposes and that the reorganization was a genuine exercise of management prerogative.
The Court of Appeals, on January 30, 2004, reversed the NLRC decision, reinstating the Labor Arbiter’s dismissal of petitioner’s complaint.

The CA held that petitioner’s voluntary rejection of the transfer and acceptance of separation pay validated his separation from employment.

Petitioner’s motion for reconsideration before the CA was denied, leading to the present petition for review on certiorari.

Whether respondent’s act of streamlining operations and implementing a reorganization plan, which resulted in petitioner’s separation, amounts to illegal dismissal.
Whether petitioner’s voluntary rejection of the transfer offer and subsequent execution of a release and quitclaim, in exchange for separation pay, negates his claim of being illegally dismissed.

Whether the decision to shut down Paper Mill No. 4, as a measure to cut operational costs during financial difficulties, falls within the scope of respondent’s legitimate management prerogative.
Whether, in light of the available evidence, respondent acted in good faith and in accordance with its business judgment when offering a transfer prior to effectuating retrenchment.

Whether the execution of the release and quitclaim by petitioner can be considered voluntary, and thus, binding despite his subsequent claims of misrepresentation and fraud.