82108735 II Labor Relations Case Digests

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LABOR RELATIONSAtty. Jefferson M. Marquez

[UNNUMBERED CASE IN TOPIC 3]

INTEGRATED CONTRACTOR AND PLUMBING WORKS, INC. vs. NATIONAL LABORRELATIONS COMMISSION and GLEN SOLON, G.R. No. 152427. August 9, 2005

FACTS

Petitioner is a plumbing contractor. Its business depends on the number and frequency of theprojects it is able to contract with its clients. On February 23, 1998, while private respondentwas about to log out from work, he was informed by the warehouseman that the main officehad instructed them to tell him it was his last day of work as he had been terminated. Whenprivate respondent went to the petitioner's office on February 24, 1998 to verify his status, hefound out that indeed, he had been terminated. He filed a complaint alleging that he wasillegally dismissed without just cause and without due process. the Labor Arbiter ruled thatprivate respondent was a regular employee and could only be removed for cause. Petitionerwas ordered to reinstate private respondent to his former position with full backwages fromthe time his salary was withheld until his actual reinstatement, and pay him service incentiveleave pay, and 13th month pay for three years. Petitioner further filed amotion for reconsideration which was denied. It filed an appeal before the CA but it was

subsequently dismissed for lack of merit.

ISSUE

Whether the respondent is a project employee of the petitioner or a regular employee.

HELD

No. He was considered as a regular employee.

We held in Tomas Lao Construction v. NLRC 12 that the principal test in determining whetheran employee is a "project employee" or "regular employee," is, whether he is assigned to

carry out a "specific project or undertaking," the duration (and scope) of which are specifiedat the time the employee is engaged in the project. 13 "Project" refers to a particular job orundertaking that is within the regular or usual business of the employer, but which is distinctand separate and identifiable from the undertakings of the company. Such job or undertakingbegins and ends at determined or determinable times.

A review of private respondent's work assignments patently showed he belonged to a workpool tapped from where workers are and assigned whenever their services were needed. In awork pool, the workers do not receive salaries and are free to seek other employment duringtemporary breaks in the business. They are like regular seasonal workers insofar as the effectof temporary cessation of work is concerned. This arrangement is beneficial to both theemployer and employee for it prevents the unjust situation of "coddling labor at the expense

of capital" and at the same time enables the workers to attain the status of regularemployees. 15 Nonetheless, the pattern of re-hiring and the recurring need for his servicesare sufficient evidence of the necessity and indispensability of such services to petitioner'sbusiness or trade.

In Maraguinot, Jr. v. NLRC we ruled that once a project or work pool employee has been:(1) continuously, as opposed to intermittently, re-hired by the same employer for the sametasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to theusual business or trade of the employer, then the employee must be deemed a regularemployee.

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The test to determine whether employment is regular or not is the reasonable connectionbetween the particular activity performed by the employee in relation to the usual business ortrade of the employer. Also, if the employee has been performing the job for at least oneyear, even if the performance is not continuous or merely intermittent, the law deems therepeated and continuing need for its performance as sufficient evidence of the necessity, ifnot indispensability of that activity to the business. Thus, we held that where the employmentof project employees is extended long after the supposed project has been finished, theemployees are removed from the scope of project employees and are considered regularemployees.

While length of time may not be the controlling test for project employment, it is vital indetermining if the employee was hired for a specific undertaking or tasked to performfunctions vital, necessary and indispensable to the usual business or trade of the employer.Here, private respondent had been a project employee several times over. His employmentceased to be coterminous with specific projects when he was repeatedly re-hired due to thedemands of petitioner's business. 20 Where from the circumstances it is apparent thatperiods have been imposed to preclude the acquisition of tenurial security by the employee,they should be struck down as contrary to public policy, morals, good customs or public order.

Further, Policy Instructions No. 20 requires employers to submit a report of an employee'stermination to the nearest public employment office every time his employment wasterminated due to a completion of a project. The failure of the employer to file terminationreports is an indication that the employee is not a project employee. 22 Department OrderNo. 19 superseding Policy Instructions No. 20 also expressly provides that the report oftermination is one of the indications of project employment. 23 In the case at bar, there wasonly one list of terminated workers submitted to the Department of Labor and Employment.24 If private respondent was a project employee, petitioner should have submitted atermination report for every completion of a project to which the former was assigned.

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4. GENERAL PRINCIPLES

CASES

1. Dosch vs. NLRC, 123 SCRA 296 [1983]

Facts:

Helmut Dosch, an American citizen, married to a Filipina, was the resident Manager ofNorthwest Airlines, Inc. in the Philippines. He has to his credit eleven (11) years of continuousservice with the company, including nine (9) years as Northwest Manager with station atManila. He received an inter-office communication from R.C. Jenkins, Northwest's VicePresident for Orient Region based in Tokyo, promoting him to the position of Director ofInternational Sales and transferring him to Northwest's General Office in Minneapolis, U.S.A.,effective immediately. Dosch in his letter, expressed appreciation for the promotion and atthe same time regretted that "for personal reasons and reasons involving his family, he is

unable to accept a transfer from the Philippines and that he would, therefore, prefer toremain in his position, of Manager-Philippines until such time that his services in that capacityare no longer required by the company. Petitioner tried to resume his duties as Manager afteran authorized vacation but the Vice-President for the Orient Region of Northwest advisedpetitioner that in view of his letter, his status as an employee of the company ceased on theclose of business and the company therefore considers his letter to be a resignation withoutnotice.

Issues:

1. Does the employers letter constitute a transfer as a valid exercise of a managementprerogative?

2. Assuming arguendo that the communication or letter of Mr. Jenkins was basically atransfer, under the particular and peculiar facts obtaining in the case at bar, does Dosch'sinability or refusal to be transferred a valid cause for dismissal?

Rulings:

No, Jenkins letter is a letter directing the promotion of Dosch from his position as Philippinemanager to Director of International Sales in Minneapolis, U.S.A. It is not merely a transferorder alone but as the Solicitor General correctly observes, "it is more in the nature of apromotion that a transfer, the latter being merely incidental to such promotion." The inter-office communication of Vice President Jenkins is captioned "Transfer" but it is basically andessentially a promotion for the nature of an instrument is characterized not by the title given

to it but by its body and contents. The communication informed the petitioner that effectiveAugust 18, 1975, he was to be promoted to the position of Director of International Sales, andhis compensation would be upgraded and the payroll accordingly adjusted. Petitioner was,therefore, advanced to a higher position and rank and his salary was increased and that is apromotion. It has been held that promotion denotes a scalar ascent of an officer or anemployee to another position, higher either in rank or salary. In the Millares case above, theSupreme Court, speaking thru Acting Chief Justice J.B.L. Reyes, distinguished betweentransfer and promotion as follows: "A transferis a movement from one position to another ofequivalent rank, level or salary, without break in the service. Promotion, on the other hand, isthe advancement from one position to another with an increase in duties and responsibilitiesas authorized by law, and usually accompanied by an increase in salary. Whereas, promotion

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denotes a scalar ascent of a senior officer or employee to another position, higher either inrank or salary, transfer refers to lateral movement from one position to another, of equivalentrank, level or salary." There is no law that compels an employee to accept a promotion, as apromotion is in the nature of a gift or a reward, which a person has a right to refuse. Whenpetitioner refused to accept his promotion to Director of International Sales, he wasexercising a right and he cannot be punished for it as qui jure suo utitur neminem laedit. Hewho uses his own legal right injures no one.

No, assuming for the sake of argument that the communication or letter of Mr. Jenkins wasbasically a transfer, under the particular and peculiar facts obtaining in the case at bar,petitioner's inability or his refusal to be transferred was not a valid cause for dismissal. Whileit may be true that the right to transfer or reassign an employee is an employer's exclusiveright and the prerogative of management, such right is not absolute. The right of an employerto freely select or discharge his employee is limited by the paramount police power for therelations between capital and labor are not merely contractual but impressed with publicinterest (Article 1700, New Civil Code). And neither capital nor labor shall act oppressivelyagainst each other (Article 1701, New Civil Code). There can be no dispute that theconstitutional guarantee of security of tenure mandated under Section 9, Article 2, 1973Constitution applies to all employees and laborers, whether in the government service or in

the private sector. The fact that petitioner is a managerial employee does not by itselfexclude him from the protection of the constitutional guarantee of security of tenure. Even amanager in a private concern has the right to be secure in his position, to decline a promotionwhere, although the promotion carries an increase in his salary and rank but results in histransfer to a new place of assignment or station and away from his family. Such an orderconstitutes removal without just cause and is illegal. Indeed, the outright dismissal ofpetitioner from his position as Manager-Philippines of Northwest Airlines is much too severe,considering the length of service that petitioner has rendered for eleven (11) fruitful and loyalyears, a strong and vital factor that must be taken into account in labor law determinationswhich this Court, speaking thru Chief Justice Fernando in Meracap vs. International CeramicsManufacturing Co., Inc., L-48235-36, July 30, 1979, 92 SCRA 412 emphasized should not onlybe secundum rationem but also secundum caritatem, to wit: "It would imply at the very least

that where a penalty less punitive would suffice, whatever missteps may be committed bylabor ought not to be visited with a consequence so severe. It is not only because of the law'sconcern for the workingman. There is, in addition his family to consider. Unemploymentbrings untold hardships and sorrows on those dependent on the wage-earner. The misery andpain attendant on the loss of jobs then could be avoided if there be acceptance of the viewthat under all the circumstances of this case, petitioners should not be deprived of theirmeans of livelihood. Nor is this to condone what had been done by them. For all this tocondone what had been done by them. For all this while, since private respondent consideredthem separated from the service, they had not been paid. For the strictly juridical standpoint,it cannot be too strongly stressed, to follow Davis in his masterly work, Discretionary Justice,that where a decision may be made to rest on informed judgment rather than rigid rules, allthe equities of the case must be accorded their due weight. Finally, labor law determinations,

to quote from Bultmann, should be not only secundum rationem but also secundumcaritatem." (This excerpt was cited in Almira vs. B.F. Goodrich Philippines, Inc., 58 SCRA 120,131.)

2. PT&T v. Court of Appeals, G.R. No. 152057, September 23, 2003

FACTS:

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The petitioner is a domestic corporation engaged in the business of providing telegraph andcommunication services thru its branches all over the country. It employed variousemployees, among whom were herein private respondents.

Sometime in 1997, after conducting a series of studies regarding the profitability of its retailoperations, its existing branches and the number of employees, the petitioner came up witha Relocation and Restructuring Program designed to (a) sustain its (PT&Ts) retail operations;(b) decongest surplus workforce in some branches, to promote efficiency and productivity; (c)lower expenses incidental to hiring and training new personnel; and (d) avoid retrenchment ofemployees occupying redundant positions.

On August 11, 1997, private respondents received separate letters from the petitioner, givingthem the option to choose the branch to which they could be transferred. Thereafter, theprivate respondents and other petitioners employees were directed to relocate to their newPT&T Branches. The affected employees were directed to report to their respective relocationassignments in a Letter dated September 16, 1997. The petitioner offeredbenefits/allowances to those employees who would agree to be transferred under its newprogram.

The private respondents rejected the petitioners offer. Their main concern is the proximity oftheir transfer; that it would be burdensome for them to leave their families and relocate tothose areas. Dissatisfied with this explanation, the petitioner considered the privaterespondents refusal as insubordination and willful disobedience to a lawful order; hence, theprivate respondents were dismissed from work. They forthwith filed their respectivecomplaints against the petitioner before the appropriate sub-regional branches of the NLRC.Subsequently, the private respondents bargaining agent, PT&T Workers Union-NAFLU-KMU,filed a complaint against the petitioner for illegal dismissal and unfair labor practice beforethe arbitration branch of the NLRC.

In their position paper, the complainants (herein private respondents) declared that theirrefusal to transfer could not possibly give rise to a valid dismissal on the ground of willful

disobedience, as their transfer was prejudicial and inconvenient; thus unreasonable. For itspart, the petitioner (respondent therein) alleged that the private respondents transfers weremade in the lawful exercise of its management prerogative and were done in good faith. Thetransfers were aimed at decongesting surplus employees and detailing them to a moredemanding branch.

ISSUE:

1.) WON the transfer was tantamount to a promotion. And if it is, WON privaterespondents committed insubordination in refusing such promotion/transfer which wouldthen justify PT&Ts act of dismissing them in exercise of management prerogative.

RULING: The petition is denied due course.

1.) YES, the transfer was indeed in a nature of a promotion. Hence, there can be noinsubordination in refusing such promotion and subsequently, there can be no valid

justification in dismissing the private respondents.

In its position with the labor arbiter, the petitioner adverted that when the privaterespondents were transferred, they were also promoted, thus:

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Clearly, the transfer of the complainants is not unreasonable nor does it involve demotion inrank. They are being moved to branches where the complainants will function with maximumbenefit to the company and they were in fact promoted not demoted from a lower job-gradeto a higher job-grade and receive even higher salaries than before. Thus, transfer of thecomplainants would not also result in diminution in pay benefit and privilege since thesalaries of the complainant would be receiving a bigger salary if not the same salary plusadditional special relocation package. Although the increase in the pay is not significant thishowever would be translated into an increase rather than decrease in their salary becausethe complainants who were transferred from the city to the province would greatly benefitbecause it is of judicial notice that the cost of living in the province is much lower than in thecity. This would mean a higher purchasing power of the same salary previously beingreceived by the complainants.

Indeed, the increase in the respondents responsibility can be ascertained from the scalarascent of their job grades. With or without a corresponding increase in salary, the respectivetransfer of the private respondents was in fact promotions, following the ruling enunciatedin Homeowners Savings and Loan Association, Inc. v. NLRC:

[P]romotion, as we defined in Millares v, Subido, is the advancement from one position

to another with an increase in duties and responsibilities as authorized by law,and usuallyaccompanied by an increase in salary. Apparently, the indispensable element forthere to be a promotion is that there must be an advancement from one position to anotheror an upward vertical movement of the employees rank or position.

Any increase in salary should only be considered incidental but never determinative ofwhether or not a promotion is bestowed upon an employee. This can be likened to theupgrading of salaries of government employees without conferring upon the, the concomitantelevation to the higher positions.

The admissions of the petitioner are conclusive on it. An employee cannot be promoted, evenif merely as a result of a transfer, without his consent. A transfer that results in promotion

or demotion, advancement or reduction or a transfer that aims to lure the employee awayfrom his permanent position cannot be done without the employees consent.

There is no law that compels an employee to accept a promotion for the reason that apromotion is in the nature of a gift or reward, which a person has a right to refuse.

Hence, the exercise by the private respondents of their right cannot be considered in law asinsubordination, or willful disobedience of a lawful order of the employer. As such, there wasno valid cause for the private respondents dismissal.

As the questioned dismissal is not based on any of the just or valid grounds under Article 282of the Labor Code, the NLRC correctly ordered the private respondents reinstatement without

loss of seniority rights and the payment of backwages from the time of their dismissal up totheir actual reinstatement.

IN LIGHT OF THE ALL THE FOREGOING, the Decision of the Court of Appeals dated June 15,2001 is hereby AFFIRMED.

SO ORDERED.

3. Mendoza vs. Rural Bank of Lucban, G.R. No. 155421, July 7, 2004

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Facts:

On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued BoardResolution Nos. 99-52 and 99-53, which read:

Board Res. No. 99-52RESOLVED AS IT IS HEREBY RESOLVED that in line with the policy of the bank to

familiarize bank employees with the various phases of bank operations and furtherstrengthen the existing internal control system[,] all officers and employees aresubject to reshuffle of assignments. Moreover, this resolution does not preclude thetransfer of assignment of bank officers and employees from the branch office to thehead office and vice-versa.

Petitioner Elmer Mendoza expressed his opinion on the reshuffle in an undated letteraddressed to Daya, bank board chairman, that the reshuffling deemed to be a demotionwithout any legal basis and is a blatant harassment on from the employer as a preludepetitioners termination in due time. That it resulted to unfair labor practice. Daya replied thatit was never the intention (of management) to downgrade petitioners position, and that thereshuffle will also afford management an effective tool in providing the bank a sound internalcontrol system/check and balance and a basis in evaluating the performance of each

employee. Petitioner availed 30 days in total leave of absence and on June 24, 1999petitioner filed a Complaint for illegal dismissal, underpayment, separation pay and damagesagainst the Rural Bank of Lucban and/or its president, Alejo B. Daya; and its Tayabas branchmanager, Briccio V. Cada.

Issue:

1. Whether or not the reshuffling or transfer is deemed to be a demotion on petitionersposition.

Ruling:

Management Prerogative to Transfer Employees. Jurisprudence recognizes the exercise ofmanagement prerogatives. For this reason, courts often decline to interfere in legitimatebusiness decisions of employers. Indeed, labor laws discourage interference in employers

judgments concerning the conduct of their business. The law must protect not only thewelfare of employees, but also the right of employers. In the pursuit of its legitimate businessinterest, management has the prerogative to transfer or assign employees from one office orarea of operation to another -- provided there is no demotion in rank or diminution of salary,benefits, and other privileges; and the action is not motivated by discrimination, made in badfaith, or effected as a form of punishment or demotion without sufficient cause. This privilegeis inherent in the right of employers to control and manage their enterprise effectively. Theright of employees to security of tenure does not give them vested rights to their positions tothe extent of depriving management of its prerogative to change their assignments or to

transfer them.

Petitioners Transfer Lawful. Petitioners transfer was made in pursuit of respondents policyto familiarize bank employees with the various phases of bank operations and furtherstrengthen the existing internal control system of all officers and employees. We havepreviously held that employees may be transferred -- based on their qualifications, aptitudesand competencies -- to positions in which they can function with maximum benefit to thecompany. There appears no justification for denying an employer the right to transferemployees to expand their competence and maximize their full potential for theadvancement of the establishment. Petitioner was not singled out; other employees were alsoreassigned without their express consent. Neither was there any demotion in the rank of

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superior and failed to perform her duties as a Senior Branch Control Officer. An investigationby the companys Internal Audit Group ensued and private respondent was formally chargedwith Negligence Resulting to Material Loss. After the hearing of the IAP was concluded,private respondent made a written Request for Re-assignment to be assigned as Cashier ofthe Naga Branch which is vacant and considering that she is a resident of Naga City and amother of three growing kids. On July 29, 2002, she reiterated this request to be assignedanew in Naga City while waiting for the resolution of her case. In August and September2002, private respondent also requested to be furnished a copy of the minutes and auditreport of the IAP investigation. The company did not accede to her requests and shecontinued reporting at the main office performing whatever work assigned to her, such asmonitoring of collections at Cubao Branch. For the period March 18-April 1, 2003, thecompany withheld the Transportation and Travel Allowance (TNT) being received by privaterespondent amounting to P7,555.00, prompting her to formally protest her questionableassignment at the Home Office in Mandaluyong City which she insisted is against herappointment as Senior BCO for Bicol Region and Samar. She wrote a letter to themanagement criticizing them for wanting to ease her out of the company due to a labor casefiled by her husband, who also worked at Norkis for more than 13 years, and such withdrawalof her travel allowances is calculated to cause suffering on her part. She expressed that thesituation has become unbearable for her so that she is forced to report back to Naga City

effective March 24, 2003, there being no written order issued by the management for her tostay in the main office. Upon returning to Naga City, however, private respondent learnedthat the management instructed to deny her entry to the branch premises and access tocompany records. She was ordered to report back to the main office and to explain why nodisciplinary action should be taken against her for abandonment of work, which underexisting company policy, carries the penalty of dismissal. Private respondent, however,maintained her position that she could no longer report to the Home Office after the companywithdrew her monthly TNT. She asserted that considering her difficult situation, she had nochoice but to stick to her appointment as Senior BCO-Bicol Region and Samar there being nosuperseding memo changing her assignment. On April 14, 2003, private respondent receiveda memo from the IAP for an investigation on the charges of abandonment of work,insubordination and refusal to report back to the place of work, and directing her to attend a

hearing set on April 16, 2003 at the main office, which she failed to attend because thecompany did not act on her request to allow her cash advances to defray her travel expenses.Her salary then was withheld, prompting her to file a case with the NLRC on April 21, 2003 forthe reason that the situation had become unbearable for her tantamount to constructivedismissal, with claims for nonpayment of salaries, service incentive leave pay, 13th monthpay, and praying for reinstatement with full back wages, and moral and exemplary damages,and attorneys fees. On April 30, 2003, the company terminated her services effective May 2,2003. The Labor Arbiter found Norkis guilty of illegal dismissal and the NLRC and the Court ofAppeals, on appeal, affirmed the decision. Petitioner contends that its acts were legitimateexercises of the corporations management prerogative and that the private respondent wasguilty of insubordination and willful disobedience justifying her the termination.

Issues:

1. What are the scope and the limitations on the exercise of management prerogatives,particularly on the transfer of employees?

2. What is the test to determine the validity of the transfer of employees?

Ruling:

Concededly, employers are allowed, under the broad concept of management prerogative, toregulate all aspects of personnel administration including hiring, work assignments, working

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methods, time, place and manner of work, tools to be used, processes to be followed,supervision of workers, working regulations, transfer of employees, work supervision, lay-offof workers, and the dismissal and recall of workers. It is the employers prerogative, based onits assessment and perception of its employees qualifications, aptitudes, and competence, tomove them around in the various areas of its business operations in order to ascertain wherethey will function with maximum benefit to the company. An employees right to security oftenure does not give him such a vested right in his position as would deprive the company ofits prerogative to change his assignment or transfer him where he will be most useful. Whenhis transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does notinvolve a demotion in rank or a diminution of his salaries, benefits, and other privileges, theemployee may not complain that it amounts to a constructive dismissal.

The managements right to transfer or re-assign its personnel, however, is not absolute as itis subject to limitations imposed by law, collective bargaining agreements, and generalprinciples of fair play and justice. The managerial prerogative to transfer personnel must beexercised without grave abuse of discretion, bearing in mind the basic elements of justice andfair play. Having the right should not be confused with the manner in which that right isexercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of anundesirable worker. In particular, the employer must be able to show that the transfer is not

unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion inrank or a diminution of his salaries, privileges and other benefits. Should the employer fail toovercome this burden of proof, the employees transfer shall be tantamount to constructivedismissal.

6. PLDT vs. Paquio, G.R. No. 152689, October 12, 2005

Facts:

Petitioner Philippine Long Distance Telephone Company, Inc. (PLDT) has 27 Exchanges in itsGreater Metro Manila (GMM) Network. Alfredo S. Paguio was the Head of the Garnet

Exchange who sent a letter to his immediate supervisor and Asst. VP criticizing the PLDTcriteria for performance rating as unfair because they depended on manpower after receivingits appraisal rating. He also suggested that the criteria failed to recognize that exchangeswith new plants could easily meet the objectives of GMM compared to those with old plants.Despite Paguios criticism, Garnet Exchange, the oldest plant in GMM, obtained the top ratingin the GMM. Nevertheless, Paguio reiterated his letter to Santos and objected to theperformance rating as it was based only on the attainment of objectives, without consideringother relevant factors. Two years later on June 1996, PLDT rebalanced the manpower of theEast Center. Paguio wrote Santos and requested reconsideration of the manpowerrebalancing, claiming it was unfair to Garnet Exchange because as the oldest exchange in theEast Center, it was disallowed to use contractors for new installations and was not madebeneficiary of the cut-over bonus. He was then was reassigned as Head for Special

Assignment at the Office of the GMM East Center and asked to turn over his functions asGarnet Exchange Head to Tessie Go. Believing that his transfer was a disciplinary action,Paguio requested the first VP for a formal hearing of the charges against him and asked thathis reassignment be deferred. He also filed a complaint against his supervisor for graveabuse of authority and manipulation of the East Center performance. Findings were that thememo was in order as it was based on the finding that Paguio was not a team player andcannot accept decisions of management, which is short of insubordination. He was thenadvised to transfer to any group in the company that may avail of his services. Likewise,another memo informed Paguio that his transfer was not in the nature of a disciplinary actionthat required investigation and that he agreed with the reasons of the transfer. Aggrieved,Paguio files a complaint for illegal dismissal with prayer for reinstatement and damages which

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was later amended to illegal demotion with prayer for reversion to old position, damages andattorneys fees.

Issue:

1. In brief, the petitioner asks this Court to resolve now the legality of Paguios transfer.

Ruling:

PLDT alleges that the NLRC ruling would allow a change of cause of action since the complaintalleged illegal demotion while the decision involved illegal transfer. Prefatorily, we notefrom the records that there has been no change of cause of action from illegal demotion toillegal transfer. Illegal demotion is a type of illegal transfer. Moreover, it is familiar andfundamental doctrine that it is not the title of the action but the allegations in the pleadingthat determines the nature of the action. An employer is free to regulate, according to hisown discretion and judgment, all aspects of employment, including the transfer of employees.It is the employers prerogative, based on its assessment and perception of its employeesqualifications, aptitudes, and competence, to deploy its employees in the various areas of itsbusiness operations in order to ascertain where they will function with maximum benefit to

the company. An employees right to security of tenure does not give him such a vested rightin his position as would deprive the company of its prerogative to change his assignment ortransfer him where he will be most useful.

Nonetheless, there are limits to the management prerogative. While it may be conceded thatmanagement is in the best position to know its operational needs, the exercise ofmanagement prerogative cannot be utilized to circumvent the law and public policy on laborand social justice. That prerogative accorded management should not defeat the verypurpose for which our labor laws exist: to balance the conflicting interests of labor andmanagement. By its very nature, management prerogative must be exercised always withthe principles of fair play and justice. In particular, the employer must be able to show thatthe transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it

involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Theemployer bears the burden of proving that the transfer of the employee has complied withthe foregoing test.

In the present case, we see no credible reason for Paguios transfer except his criticisms ofthe companys performance evaluation methods. Based on the undisputed facts, GarnetExchange was doing well and excelled in the performance rating. In the same way, Paguiosperformance was consistently rated as outstanding. There was also no proof that Paguiorefused to comply with any management policy. Patently, his transfer could not be due topoor performance. Neither was it because he was needed in the new post for the newassignment was functionless and it was nothing but a title. Paguios transfer could only becaused by the managements negative reception of his comments. It is prejudicial to Paguio

because it left him out for a possible promotion as he was assigned to a functionless positionwith neither office nor staff.

Hence, transfer was not valid.

7. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006

Facts:

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According to the respondents, Simbol and Comia allege that they did not resign voluntarily;they were compelled to resign in view of an illegal company policy. As to respondent Estrella,she alleges that she had a relationship with co-worker Zuiga who misrepresented himself asa married but separated man. After he got her pregnant, she discovered that he was notseparated. Thus, she severed her relationship with him to avoid dismissal due to the companypolicy. On November 30, 1999, she met an accident and was advised by the doctor at theOrthopedic Hospital to recuperate for twenty-one (21) days. She returned to work onDecember 21, 1999 but she found out that her name was on-hold at the gate. She was deniedentry. She was directed to proceed to the personnel office where one of the staff handed hera memorandum. The memorandum stated that she was being dismissed for immoral conduct.She refused to sign the memorandum because she was on leave for twenty-one (21) days andhas not been given a chance to explain. The management asked her to write an explanation.However, after submission of the explanation, she was nonetheless dismissed by thecompany. Due to her urgent need for money, she later submitted a letter of resignation inexchange for her thirteenth month pay.

Respondents later filed a complaint for unfair labor practice, constructive dismissal,separation pay and attorneys fees. They averred that the aforementioned company policy isillegal and contravenes Article 136 of the Labor Code.

Issue:

Whether or not the 1995 Policy/Regulation of the company is violative of the Constitutionalrights towards marriage and the family of employees and of article 136 of the Labor Code.

Held:

The Supreme Court held that The 1987 Constitution under Article II, Section 18; Article XIII,Section 3 state our policy towards the protection of labor under the following provisions. TheCivil Code likewise protects labor with the following provisions such as articles 1700 and1702.

The Labor Code is the most comprehensive piece of legislation protecting labor. The case atbar involves Article 136 of the Labor Code which provides:

Art. 136. It shall be unlawful for an employer to require as a condition of employment orcontinuation of employment that a woman employee shall not get married, or to stipulateexpressly or tacitly that upon getting married a woman employee shall be deemedresigned or separated, or to actually dismiss, discharge, discriminate or otherwiseprejudice a woman employee merely by reason of her marriage.

In denying the contention of the petitioner company, the SC applied the two factors to justifya bona fide occupational qualification:

Since the finding of a bona fide occupational qualification justifies an employers no-spouserule, the exception is interpreted strictly and narrowly. There must be a compelling businessnecessity for which no alternative exists other than the discriminatory practice. To justify abona fide occupational qualification, the employer must prove two factors: (1) that theemployment qualification is reasonably related to the essential operation of the

job involved; and, (2) that there is a factual basis for believing that all orsubstantially all persons meeting the qualification would be unable to properlyperform the duties of the job.

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manager. Prior to his retirement, he became the Manager of the banks Credit Investigationand Appraisal Division of the Consumer's Banking Group. In the meantime, Rivera and hisbrother-in-law put up a poultry business in Cavite. In December 1994, Solidbank offered tworetirement programs to its employees: (a) the Ordinary Retirement Program (ORP), underwhich an employee would receive 85% of his monthly basic salary multiplied by the numberof years in service; and (b) the Special Retirement Program (SRP), under which a retiringemployee would receive 250% of the gross monthly salary multiplied by the number of yearsin service. Rivera decided to devote his time and attention to his poultry business in Caviteand applied for retirement under the SRP. Solidbank approved the application and confirmedhis separation from Solidbank on February 25, 1995. However, Solidbank required Rivera tosign an undated Release, Waiver and Quitclaim, which was notarized on March 1, 1995. Heacknowledged receipt of the net proceeds of his separation and retirement benefits andpromised that "he would not, at any time, in any manner whatsoever, directly or indirectlyengage in any unlawful activity prejudicial to the interest of Solidbank, its parent, affiliate orsubsidiary companies, their stockholders, officers, directors, agents or employees, and theirsuccessors-in-interest and will not disclose any information concerning the business ofSolidbank, its manner or operation, its plans, processes, or data of any kind." He also signedin an Undertaking upon which he promised that "not to seek employment with a competitorbank or financial institution within one (1) year from February 28, 1995, and that any breach

of the Undertaking or the provisions of the Release, Waiver and Quitclaim would entitleSolidbank to a cause of action against him before the appropriate courts of law. But on May1, 1995, Rivera got employed with Equitable Banking Corporation (Equitable) as Manager ofits Credit Investigation and Appraisal Division of its Consumers' Banking Group. Upon learningthis, Solidbank wrote a letter dated May 18, 1995, informing Rivera that he had violated theUndertaking and demanded the return of all the monetary benefits he received inconsideration of the SRP within five (5) days from receipt; otherwise, appropriate legal actionwould be taken against him.

Issue:

1. Whether the employment ban incorporated in the Undertaking which petitioner

executed upon his retirement is unreasonable, oppressive, hence, contrary to publicpolicy.

Ruling:

The petition is meritorious. There is no dispute between the parties that, in consideration forhis availment of the SRP, petitioner executed the Release, Waiver and Quitclaim, and theUndertaking as supplement thereto, and that he received retirement pay amounting toP963,619.28 from respondent. We agree with petitioner's contention that the issue as towhether the post-retirement competitive employment ban incorporated in the Undertaking isagainst public policy is a genuine issue of fact, requiring the parties to present evidence tosupport their respective claims. The well-entrenched doctrine is that the law does not relieve

a party from the effects of an unwise, foolish or disastrous contract, entered into with fullawareness of what he was doing and entered into and carried out in good faith. Such acontract will not be discarded even if there was a mistake of law or fact. Courts have no

jurisdiction to look into the wisdom of the contract entered into by and between the parties orto render a decision different therefrom. They have no power to relieve parties fromobligation voluntarily assailed, simply because their contracts turned out to be disastrousdeals.

On the other hand, retirement plans, in light of the constitutional mandate of affording fullprotection to labor, must be liberally construed in favor of the employee, it being the generalrule that pension or retirement plans formulated by the employer are to be construed against

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it. Retirement benefits, after all, are intended to help the employee enjoy the remainingyears of his life, releasing him from the burden of worrying for his financial support, and are aform of reward for being loyal to the employer. Undeniably, petitioner retired under the SRPand received P963,619.28 from respondent. However, petitioner is not proscribed, by waiveror estoppel, from assailing the post-retirement competitive employment ban since underArticle 1409 of the New Civil Code, those contracts whose cause, object or purpose is contraryto law, morals, good customs, public order or public policy are inexistent or void from thebeginning. Estoppel cannot give validity to an act that is prohibited by law or one that isagainst public policy.

Respondent, as employer, is burdened to establish that a restrictive covenant barring anemployee from accepting a competitive employment after retirement or resignation is not anunreasonable or oppressive, or in undue or unreasonable restraint of trade, thus,unenforceable for being repugnant to public policy. Courts should carefully scrutinize allcontracts limiting a man's natural right to follow any trade or profession anywhere he pleasesand in any lawful manner. But it is just as important to protect the enjoyment of anestablishment in trade or profession, which its employer has built up by his own honestapplication to every day duty and the faithful performance of the tasks which every dayimposes upon the ordinary man. What one creates by his own labor is his. Public policy does

not intend that another than the producer shall reap the fruits of labor; rather, it gives to himwho labors the right by every legitimate means to protect the fruits of his labor and securethe enjoyment of them to himself. 56 Freedom to contract must not be unreasonablyabridged. Neither must the right to protect by reasonable restrictions that which a man byindustry, skill and good judgment has built up, be denied. Consideration must be given to theemployee's right to earn a living and to his ability to determine with certainty the area withinwhich his employment ban is restituted. A provision on territorial limitation is necessary toguide an employee of what constitutes as violation of a restrictive covenant and whether thegeographic scope is co-extensive with that in which the employer is doing business. Inconsidering a territorial restriction, the facts and circumstances surrounding the case must beconsidered. Thus, in determining whether the contract is reasonable or not, the trial courtshould consider the following factors: (a) whether the covenant protects a legitimate business

interest of the employer; (b) whether the covenant creates an undue burden on theemployee; (c) whether the covenant is injurious to the public welfare; (d) whether the timeand territorial limitations contained in the covenant are reasonable; and (e) whether therestraint is reasonable from the standpoint of public policy.

We are not impervious of the distinction between restrictive covenants barring an employeeto accept a post-employment competitive employment or restraint on trade in employmentcontracts and restraints on post-retirement competitive employment in pension andretirement plans either incorporated in employment contracts or in collective bargainingagreements between the employer and the union of employees, or separate from saidcontracts or collective bargaining agreements which provide that an employee who acceptspost retirement competitive employment will forfeit retirement and other benefits or will be

obliged to restitute the same to the employer. A post-retirement competitive employmentrestriction is designed to protect the employer against competition by former employees whomay retire and obtain retirement or pension benefits and, at the same time, engage incompetitive employment.

9. Tiu v. Platinum Plans, Inc., G.R. No. 163512, February 28, 2007

FACTS:

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Platinum Plans Philippines, Inc. is a domestic corporation engaged in the pre-need industry.From 1987 to 1989, petitioner Daisy B. Tiu was its Division Marketing Director. Platinum Inc.rehired Tiu as Senior Assistant Vice-President and Territorial Operations Head in charge of itsHongkong and Asean operations. The parties executed a contract of employment valid forfive years. On September 16, 1995, petitioner stopped reporting for work. In November 1995,she became the Vice-President for Sales of Professional Pension Plans, Inc., a corporationengaged also in the pre-need industry. Platinum Plans sued Tiu for damages before the RTCof Pasig City, Branch 261. alleging, among others, that petitioners employment withProfessional Pension Plans, Inc. violated the non-involvement clause in her contract ofemployment:

The EMPLOYEE further undertakes that during his/her engagement with EMPLOYER and incase of separation from the Company, whether voluntary or for cause, he/she shall not, forthe next TWO (2) years thereafter, engage in or be involved with any corporation, associationor entity, whether directly or indirectly, engaged in the same business or belonging to thesame pre-need industry as the EMPLOYER. Any breach of the foregoing provision shall renderthe EMPLOYEE liable to the EMPLOYER in the amount of One Hundred Thousand Pesos(P100,000.00) for and as liquidated damages.

Tiu countered that the non-involvement clause was unenforceable for being against publicorder or public policy: First, the restraint imposed was much greater than what was necessaryto afford respondent a fair and reasonable protection. Petitioner contended that the transferto a rival company was an accepted practice in the pre-need industry.

Court of Appeals and trial court ruled against Tiu. It reasoned that petitioner entered into thecontract on her own will and volition. Thus, she bound herself to fulfill not only what wasexpressly stipulated in the contract, but also all its consequences that were not against goodfaith, usage, and law. The appellate court also ruled that the stipulation prohibiting non-employment for two years was valid and enforceable considering the nature of respondentsbusiness.

ISSUE:

WON the non-involvement clause is valid.

RULING: The petition is DENIED for lack of merit.

Supreme Court held that said that such clause was unreasonable restraint of trade andtherefore against public policy. However, a non-involvement clause is not necessarily void forbeing in restraint of trade as long as there are reasonable limitations as to time, trade, andplace.

Nevertheless, in this case, the non-involvement clause has a time limit: two years from thetime petitioners employment with respondent ends. It is also limited as to trade, since it onlyprohibits petitioner from engaging in any pre-need business akin to respondents.

Since petitioner was the Senior Assistant Vice-President and Territorial Operations Head incharge of respondents Hongkong and Asean operations, she had been privy to confidentialand highly sensitive marketing strategies of respondents business. To allow her to engage ina rival business soon after she leaves would make respondents trade secrets vulnerableespecially in a highly competitive marketing environment. In sum, we find the non-involvement clause not contrary to public welfare and not greater than is necessary to afforda fair and reasonable protection to respondent.13

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In any event, Article 1306 of the Civil Code provides that parties to a contract may establishsuch stipulations, clauses, terms and conditions as they may deem convenient, provided theyare not contrary to law, morals, good customs, public order, or public policy.

Article 115914 of the same Code also provides that obligations arising from contracts havethe force of law between the contracting parties and should be complied with in good faith.Courts cannot stipulate for the parties nor amend their agreement where the same does notcontravene law, morals, good customs, public order or public policy, for to do so would be toalter the real intent of the parties, and would run contrary to the function of the courts to giveforce and effect thereto.15 Not being contrary to public policy, the non-involvement clause,which petitioner and respondent freely agreed upon, has the force of law between them, andthus, should be complied with in good faith.

Thus, as held by the trial court and the Court of Appeals, petitioner is bound to payrespondent P100,000 as liquidated damages. While we have equitably reduced liquidateddamages in certain cases, we cannot do so in this case, since it appears that even from thestart, petitioner had not shown the least intention to fulfill the non-involvement clause in goodfaith.

10. Duldulao vs. Court of Appeals, G.R. No. 164893, March 1, 2007

Facts:

Petitioner Constancia P. Duldulao was hired by respondent Baguio Colleges Foundation (BCF)as secretary/clerk-typist and assigned to the College of Law sometime in June of 1987. InAugust 1996, a certain law student filed a complaint against petitioner for allegedirregularities in the performance of her work. Petitioner was told to submit her answer to thecomplaint and given several extensions within which to do so. Despite the extensions, shefailed to submit her answer. On 1 October 1996, Dean Honorato V. Aquino of the College of

Law informed respondents President, Atty. Edilberto B. Tenefrancia, of petitioners failure tofile her answer and recommended the assignment of petitioner outside the College of Law,not only because of such failure to answer but also her having admitted fraternizing withstudents of the College. On the same day, respondents Vice President for Administration,Leonardo S. dela Cruz, issued a Department Order to Mrs. Duldulao informing her of hertransfer to the Office of the Principals of the High School and Elementary Departments. On 21

January 1997, the Administrative Investigating Committee found the Department Orderappropriate since it was intended to prevent the controversy between petitioner and thecomplaining student from adversely affecting a harmonious relationship within the College ofLaw among all its constituents. On 17 February 1997, petitioner filed a complaint forconstructive dismissal with prayer for moral and exemplary damages and attorneys feesbefore the NLRC Regional Arbitration Branch-Cordillera Administrative Region. She stated that

aside from being tainted with procedural lapses in violation of her right to due process, thetransfer also amounted to her demotion in rank. The NLRC dismissed the complaint for lack ofmerit which decision was affirmed by the Court of Appeals.

Issue:

1. Whether petitioners transfer as secretary/clerk-typist from the College of Law to theHigh School and Elementary Departments amounts to constructive dismissal.

Ruling:

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There was no constructive dismissal. There is constructive dismissal if an act of cleardiscrimination, insensibility, or disdain by an employer becomes so unbearable on the part ofthe employee that it would foreclose any choice by him except to forego his continuedemployment. It exists where there is cessation of work because "continued employment isrendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and adiminution in pay." The factual milieu in this case is different. It is the employers prerogative,based on its assessment and perception of its employees qualifications, aptitudes, andcompetence, to move them around in the various areas of its business operations in order toascertain where they will function with maximum benefit to the company. An employeesright to security of tenure does not give him such a vested right in his position as woulddeprive the company of its prerogative to change his assignment or transfer him where hewill be most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial tohim, and it does not involve a demotion in rank or a diminution of his salaries, benefits, andother privileges, the employee may not complain that it amounts to a constructive dismissal.

The transfer of petitioner does not amount to a demotion in rank and status. Petitioner was asecretary/clerk-typist of the College of Law. As such secretary/clerk-typist, she would onlyhave to perform the same duties in the Office of the Principals of the High School andElementary Departments. Petitioner was not denied due process. Reassignments made bymanagement pending investigation of irregularities allegedly committed by an employee fall

within the ambit of management prerogative. The transfer, while incidental to the pendingcharges against petitioner, was not meant to be a penalty, but rather a preventive measureto avoid further damage to the College of Law. The purpose of reassignments is no differentfrom that of preventive suspension which management could validly impose as a measure ofprotection of the companys property pending investigation of any malfeasance ormisfeasance committed by the employee.

11. Almario v. Philippine Airlines, G.R. No. 170928, September 11, 2007

Facts:

Vicente S. Almario (Almario), was hired by respondent, Philippine Airlines, Inc. (PAL), as aBoeing 747 Systems Engineer. He successfully bid for the higher position of Airbus 300 (A-300) First Officer. Since said higher position required additional training, he underwent, atPALs expense, more than five months of training consisting of ground schooling in Manila andflight simulation in Melbourne, Australia. After completing the training course, Almario servedas A-300 First Officer of PAL, but after eight months of service, he tendered his resignation,for personal reasons. PAL sent Almario a letter informing that his proposed resignation willmake him reimburse the training costs plus damages as he is required to render 3 years ofservice because the company invested heavily on his professional training. Almario deniedthe existence of any agreement with PAL and pointed out that the CBA between PAL andAirlines Pilot Association carried no such agreement. RTC rendered judgment in favor ofAlmario and CA reversed the decision, hence this petition.

Issue:

WON Almario should reimburse the training cost.

Ruling: Yes.

PAL invested for the training of Almario to enable him to acquire a higher level of skill,proficiency, or technical competence so that he could efficiently discharge the position of A-300 First Officer. Given that, PAL expected to recover the training costs by availingof Almarios services for at least three years. The expectation of PAL was not fully realized,

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however, due to Almarios resignation after only eight months of service following thecompletion of his training course. He cannot, therefore, refuse to reimburse the costs oftraining without violating the principle of unjust enrichment. The pertinent provision of theCBA and its rationale aside, contrary to Almarios claim, Article 22 of the Civil Code applies.

Art. 22. Every person who through an act of performance by another, or any other means,acquires or comes into possession of something at the expense of the latter without just orlegal ground, shall return the same to him,

12. San Miguel Corp. v. Pontillas, G.R. No. 155178, May 07, 2008

Facts:

On 24 October 1980, San Miguel Corporation (petitioner) employed Angel C. Pontillas(respondent) as a daily wage company guard. In 1984 respondent became a monthly-paidemployee which entitled him to yearly increases in salary. Respondent alleged that his yearlysalary increases were only a percentage of what the other security guards received.

On 19 October 1993, respondent filed an action for recovery of damages due todiscrimination under Article 1004 of the Labor Code, as well as for recovery of salarydifferential and backwages, against petitioner. Manager, issued a Memorandum ordering,among others, the transfer of responsibility of the Oro Verde Warehouse to the newly-organized VisMin Logistics Operations effecting the formal transfer of responsibility of thesecurity personnel and equipment in the Oro Verde Warehouse. Simultaneously, the managergave the same information to his Supervising Security Guards for them to relay theinformation to the company security guards. Petitioner alleged that respondent was properlynotified of the transfer but he refused to receive

Respondent continued to report at Oro Verde Warehouse. He alleged that he was not properlynotified of the transfer and that he did not receive any written order Petitioner alleged that

respondent was properly notified of the transfer but he refused to receive Petitioner alsoalleged that respondent was given notices of Guard Detail separately dated. but he stillrefused to report for duty at the VisMin Logistics Operations.

In a letter, petitioner informed respondent that an administrative investigation would beconducted on relative to his alleged offenses of Insubordination or Wilful Disobedience inCarrying out Reasonable Instructions of his superior. , respondent filed an amended complaintagainst petitioner for illegal dismissal and payment of backwages, termination pay, moral andexemplary damages, and attorney's fees.

LA: Ruled in favour of the company and against Pontillas. The Labor Arbiter recognized themanagement prerogative to transfer its employees from one station to another. The Labor

Arbiter found nothing prejudicial, unjust, or unreasonable to petitioner's decision to merge thefunctions of the Materials Management of the Mandaue Brewery and the Physical DistributionGroup which resulted to the forming of the VisMin Logistics Operations. The Labor Arbiterfurther ruled that petitioner did not violate Article 100 of the Labor Code. Labor Arbiter ruledthat respondent was accorded due process before his termination from the service. He wasinvestigated with the assistance of counsel, and he was able to confront petitioner'switnesses and present evidence in his favor.

NLRC: Set aside the Labor Arbiter's Decision. The NLRC ruled that respondent was notinformed of his transfer from Oro Verde Warehouse to VisMin Logistics Operations. Thenotices allegedly sent to respondent did not indicate any receipt from respondent. NLRC

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further ruled that respondent was a victim of discrimination. The NLRC declared thatpetitioner failed to justify why respondent was not entitled to the full rate of salary increasesenjoyed by other security guards.

CA: Court of Appeals affirmed with modification the NLRC's Decision. Court of Appeals ruledthat under Article 282(a) of the Labor Code, as amended, an employer may terminate anemployment for serious misconduct or willful disobedience by the employee of the lawfulorders of his employer or his representative in connection with his work. The Court of Appealsruled that there was no sufficient evidence that would show that respondent's failure toreport to his new superior was willful and characterized by a perverse and wrongful attitude.

Issue:

Legality of respondent's dismissal from employment.

Held: Respondent was dismissed for a just cause.

An employer may terminate an employment for serious misconduct or wilful disobedience bythe employee of the lawful orders of his employer or representative in connection with his

work. Wilful disobedience requires the concurrence oftwo elements: (1) the employee'sassailed conduct must have been wilful, that is, characterized by a wrongful and perverseattitude; and (2) the order violated must have been reasonable, lawful, made known to theemployee, and must pertain to the duties which he had been engaged to discharge.Employer exercises the prerogative to transfer an employee for valid reasons and accordingto the requirements of its business, provided the transfer does not result in demotion in rankor diminution of the employee's salary, benefits, and other privileges. In this case, we foundthat the order of transfer was reasonable and lawful considering the integration of Oro VerdeWarehouse with VisMin Logistics Operations. Respondent was properly informed of thetransfer but he refused to receive the notices on the pretext that he was wary because of hispending case against petitioner. REINSTATE Decision of the Labor Arbiter.

13. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008

Facts:

Petitioners are employees of Tryco Pharmaceuticals Corporation, maker of veterinarymedicines and products. Tryco and the petitioners signed a Memorandum of Agreement(MOA), providing for a compressed workweek schedule to be implemented in the companyeffective May 20, 1996. The MOA was entered into pursuant to Department of Labor andEmployment Department Order (D.O.) No. 21, Series of 1990, Guidelines on theImplementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m.,from Monday to Friday, shall be considered as the regular working hours, and no overtime

pay shall be due and payable to the employee for work rendered during those hours. TheMOA specifically stated that the employee waives the right to claim overtime pay for workrendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that thecompressed workweek schedule is adopted in lieu of the regular workweek schedule whichalso consists of 46 hours. However, should an employee be permitted or required to workbeyond 6:12 p.m., such employee shall be entitled to overtime pay. Tryco informed theBureau of Working Conditions of the Department of Labor and Employment of theimplementation of a compressed workweek in the company. In January 1997, BMT and Tryconegotiated for the renewal of their collective bargaining agreement (CBA) but failed to arriveat a new agreement. Meantime, Tryco received the Letter dated March 26, 1997 from theBureau of Animal Industry of the Department of Agriculture reminding it that its production

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should be conducted in San Rafael, Bulacan, not in Caloocan City since its operating permitwas licensed there. Accordingly, Tryco issued a Memorandum dated April 7, 1997 whichdirected petitioners to report to the company's plant site in Bulacan. BMT opposed thetransfer of its members to San Rafael, Bulacan, contending that it constitutes unfair laborpractice. In protest, BMT declared a strike on May 26, 1997. Petitioners then filed theircomplaints to the labor arbiter alleging that Tryco negotiated in bad faith and unfair laborpractice of Tryco by transferring the members of the union in order to paralyze it and thattherefore it amounted to constructive dismissal.

Issue:

1. Was there constructive dismissal due to the transfer of the petitioners from CaloocanCity to San Rafael Bulacan?

Ruling:

The petition has no merit. Findings of fact of labor officials, who are deemed to have acquiredexpertise in matters within their respective jurisdiction, are generally accorded not onlyrespect but even finality, and bind us when supported by substantial evidence.This is

particularly true when the findings of the Labor Arbiter, the NLRC and the CA are in absoluteagreement. In this case, the Labor Arbiter, the NLRC, and the CA uniformly agreed that thepetitioners were not constructively dismissed.

Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless ofwhether it was made pursuant to the letter of the Bureau of Animal Industry, was within thescope of its inherent right to control and manage its enterprise effectively. While the law issolicitous of the welfare of employees, it must also protect the right of an employer toexercise what are clearly management prerogatives. The free will of management to conductits own business affairs to achieve its purpose cannot be denied.

This prerogative extends to the management's right to regulate, according to its own

discretion and judgment, all aspects of employment, including the freedom to transfer andreassign employees according to the requirements of its business.Management's prerogativeof transferring and reassigning employees from one area of operation to another in order tomeet the requirements of the business is, therefore, generally not constitutive of constructivedismissal. Thus, the consequent transfer of Tryco's personnel, assigned to the ProductionDepartment was well within the scope of its management prerogative.

When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and itdoes not involve a demotion in rank or diminution of salaries, benefits, and other privileges,the employee may not complain that it amounts to a constructive dismissal. However, theemployer has the burden of proving that the transfer of an employee is for valid andlegitimate grounds. The employer must show that the transfer is not unreasonable,

inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or adiminution of his salaries, privileges and other benefits.

Indisputably, in the instant case, the transfer orders do not entail a demotion in rank ordiminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore,anchor their objection solely on the ground that it would cause them great inconveniencesince they are all residents of Metro Manila and they would incur additional expenses to traveldaily from Manila to Bulacan.

The Court has previously declared that mere incidental inconvenience is not sufficient towarrant a claim of constructive dismissal. Objection to a transfer that is grounded solely upon

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the personal inconvenience or hardship that will be caused to the employee by reason of thetransfer is not a valid reason to disobey an order of transfer.

Hence petition was denied for lack of merit.

14. Coca-Cola Bottlers Philippines, Inc. v. Del Villar, G.R. No. 163091, October 6,2010

FACTS:

Coca-Cola hired respondent Angel U. del Villar (Del Villar) on May 1, 1990 as PhysicalDistribution Fleet Manager with a job grade of S-7 and monthly salary of P50,000.00, asidefrom the use of a company car, gasoline allowance, and annual foreign travel, among otherbenefits. In 1992, as part of the reorganization of the Company, Del Villar became the

Transportation Services Manager, under the Business Logistic Directorate, headed by DirectorEdgardo I. San Juan (San Juan).

As Transportation Services Manager, Del Villar prepares the budget for the vehicles of

the Company nationwide. Del Villar submitted a Report to the Company President,detailing an alleged fraudulent scheme undertaken by certain Company officials inconspiracy with local truck manufacturers, overpricing the trucks purchased by the Companyby as much as P70,000.00 each. Del Villar implicated San Juan and Jose L. Pineda, Jr.,among other Company officials, as part of the conspiracy. Pineda then served as theExecutive Assistant in the Business Logistic Directorate in charge of the RefrigerationServices of the Company.

Seven months after the submission of his Report on the fraudulent scheme of severalcompany officials, Del Villar received a Memorandum from San Juan, informing him that(1) he was designated as Staff Assistant to the Corporate Purchasing and Materials ControlManager, with a job grade of NS-VII; (2) with Del Villars new assignment, he ceased to

be entitled to the benefits accruing to an S-7 position under existing companyrules and policies; and (3) Del Villar was to turn over the vehicle assigned to him asTransportation Services Manager to Pineda by July 10, 1996.

Although as the Staff Assistant of the Corporate Purchasing and Materials Control Manager,Del Villar continued to receive the same salary as Transportation ServicesManager, but his car and other privileges were withdrawn and he spent his time at hisnew post sitting "at a desk with no meaningful work whatsoever." Del Villar believed that hewas demoted by the Company to force him to resign. Unable to endure any further theharassment, Del Villar filed with the Arbitration Branch of the NLRC on November 11, 1996 acomplaint against the Company for illegal demotion and forfeiture of company privileges.

According to Coca-Cola [Del Villar] was not outrightly dismissed; instead, he was removedfrom his former position as Transportation Services Manager, and demoted to Staff Assistantto the Corporate Purchasing and Materials Control Manager. The Company embarked on areorganization of the Business Logistic Directorate. As a result, the functions related toRefrigeration were assigned to the Transportation Services Manager, which was renamed the

Transportation and Refrigeration Services Manager.

The Company failed to appear, despite due notice, at the scheduled preliminary conferencebefore the NLRC Arbitration Branch. The Company reasoned that in appointing Del Villar asthe Staff Assistant of the Corporate Purchasing and Materials Control Manager, from hisformer position as Transportation Services Manager, the Company was merely exercising its

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inherent management prerogative to transfer an employee from one position to another.They contended that Del Villar had no vested right to the privileges he previously enjoyed as Transportation Services Manager. Since the various programs will affect some of itsemployees, in good faith the Company has initiated a special program called "Project NewStart". This program is intended to assist employees whose positions will be declaredredundant with the implementation of new distribution systems, utilization of improvedoperational processes and functional re-organizations.

Labor Arbiter rendered a Decision in Del Villars favor. The Labor Arbiter held that theallegations in Del Villars complaint sufficiently presented a cause of action against theCompany.

Del Villar appears to have been singled out or discriminated upon due to his having reportedthe 1996 truck scam, and his present isolation can be seen as a punishment for acting in arighteous and forthright manner. Otherwise, as a "Staff Assistant" [Del Villar] should havebeen given some meaningful or responsible work appurtenant to the job designation.NLRC reversed the Labor Arbiter, reasoning that:virtualaw

Contrary to the Labor Arbiters pronouncement that [the Company] should have rebutted

allegations of bad faith and malice, we are more inclined to apply the presumption of goodfaith. Mere conclusions of fact and law should not be used as bases for an automatic findingof bad faith. As it is, we do not even see any disclosure of the scam and his alleged demotion.If indeed the so-called "great grandmother of Coca cola scams of 1996" were true, the logicalconsequence of such disclosure is for the president of the company to dismiss the erringemployees and officers for their highly irregular acts and not to penalize [Del Villar] formaking such disclosure.

This is amply supported by the fact that the [the Company] conducted a thoroughinvestigation of the reported scam and even obtained the services of an independent auditorto determine whether the alleged anomalous transactions were actually irregular and/orquestionable. This manifests that [Del Villars] disclosure was taken seriously contrary to his

claims of discrimination. Accordingly, it cannot be said that the act of the [Company] wasretaliatory or penal in nature nor tainted with bad faith and/or malice. Otherwise, [theCompany] would not have given grave attention to the disclosure of [Del Villar].

A company cannot, however, be reasonably expected to provide the same benefits to anemployee whose position for example, requires that he stays in the office during workinghours. Benefits, privileges and perquisites that attach to a certain position do not providesufficient bases for determining the superiority or inferiority of the position so held.

ISSUE:

Whether or not Company, in transferring Del Villar from the position of Transportation

Services Manager to Staff Assistant to the Corporate Purchasing and Materials ControlManager, validly exercised its management prerogative or committed constructive dismissal,or demotion?Whether or not there has been redundancy in the position held by Del Villar that justified thecompany from the act of taking the position from him?

RULING:

In the pursuit of its legitimate business interest, management has the prerogative to transferor assign employees from one office or area of operation to another provided there is nodemotion in rank or diminution of salary, benefits, and other privileges; and the action is not

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motivated by discrimination, made in bad faith, or effected as a form of punishment ordemotion without sufficient cause. The right of employees to security of tenure does not givethem vested rights to their positions to the extent of depriving management of its prerogativeto change their assignments or to transfer them.virtuallawlibrary

Managerial prerogatives, however, are subject to limitations provided by law,collective bargaining agreements, and general principles of fair play and justice.But, like other rights, there are limits thereto. The managerial prerogative to transferpersonnel must be exercised without grave abuse of discretion, bearing in mind the basicelements of justice and fair play. Having the right should not be confused with the manner inwhich that right is exercised.

Thus, it cannot be used as a subterfuge by the employer to rid himself of anundesirable worker. In particular, the employer must be able to show that thetransfer is not unreasonable, inconvenient or prejudicial to the employee; nor doesit involve a demotion in rank or a diminution of his salaries, privileges and otherbenefits. Should the employer fail to overcome this burden of proof, the employeestransfer shall be tantamount to constructive dismissal, which has been defined as a quittingbecause continued employment is rendered impossible, unreasonable or unlikely; as an offer

involving a demotion in rank and diminution in pay.

Likewise, constructive dismissal exists when an act of clear discrimination, insensibility ordisdain by an employer has become so unbearable to the employee leaving him with nooption but to forego with his continued employment.uallawlibrary

After a careful scrutiny of the records, we agree with the Labor Arbiter and theCourt of Appeals that the Company failed to discharge this burden of proof. TheCompany and its officials attempt to justify the transfer of Del Villar by alleging hisunsatisfactory performance as Transportation Services Manager. The Company disclosedthat: [Del Villar] displayed an utterly woeful performance. He was unable to submit basicdata as to type and brand of vehicles with highest/lowest maintenance cost as requested.

[Del Villar] could not even update the records of his office. He could not work with minimumor no supervision. His activities needed to be closely and constantly monitored by hissuperiors. [Del Villar] lacked initiative and had to be constantly reminded of what to do. Hemerited a mediocre grade of 2 in a scale of one (1) to five (5), the latter number being thehighest grade

We are unconvinced. The dismal performance evaluations of Del Villar were preparedby San Juan and Pineda after Del Villar already implicated his two superiors in hisReport dated January 4, 1996 in an alleged fraudulent scheme against the Company.More importantly, we give weight to the following instances establishing that Del Villar wasnot merely transferred from the position of Transportation Services Manager to the position ofStaff Assistant to the Corporate Purchasing and Materials Control Manager; he was evidently

demoted.

A transfer is a movement from one position to another which is of equivalent rank, level orsalary, without break in service. Promotion, on the other hand, is the advancement from oneposition to another with an increase in duties and responsibilities as authorized by law, andusually accompanied by an increase in salary. Conversely, demotion involves a situationwhere an employee is relegated to a subordinate or less important position constituting areduction to a lower grade or rank, with a corresponding decrease in duties andresponsibilities, and usually accompanied by a decrease in salary.

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Del Villars demotion is readily apparent in his new designation. Formerly, he was the Transportation Services Manager; then he was made a Staff Assistant a subordinate toanother manager, particularly, the Corporate Purchasing and Materials Control Manager.

Second, the two posts are not of the same weight in terms of duties andresponsibilities. Del Villars position as Transportation Services Manager involved ahigh degree of responsibility, he being in charge of preparing the budget for all ofthe vehicles of the Company nationwide. As Staff Assistant of the Corporate Purchasingand Materials Control Manager, Del Villar contended that he was not assigned any meaningfulwork at all.

Third, while Del Villars transfer did not result in the reduction of his salary, therewas a diminution in his benefits. The Company admits that as Staff Assistant of theCorporate Purchasing and Materials Control Manager, Del Villar could no longer enjoy the useof a company car, gasoline allowance, and annual foreign travel, which Del Villar previouslyenjoyed as Transportation Services Manager.

Fourth, it was not bad enough that Del Villar was demoted, but he was even placedby the Company under the control and supervision of Pineda as the latters Staff

Assistant. To recall, Pineda was one of the Company officials who Del Villar accused ofdefrauding the Company in his Report dated January 4, 1996. It is not too difficult to imaginethat the working relations between Del Villar, the accuser, and Pineda, the accused, had beenstrained and hostile. The situation would be more oppressive for Del Villar because ofhis subordinate position vis--vis Pineda.

Fifth, all the foregoing caused Del Villar inconvenience and prejudice, so unbearablefor him that he was constrained to seek remedy from the NLRC. The Labor Arbiterwas correct in his observation that had Del Villar resigned immediately after his"transfer," he could be said to have been constructively dismissed. There isconstructive dismissal when there is a demotion in rank and/or diminution in pay;or when a clear discrimination, insensibility or disdain by an employer becomes

unbearable to the employee.

Eventually, however, the Company actually terminated Del Villars services effective May 31,1998, as his position was no longer necessary or was considered redundant due to thereorganization of the Business Logistic Directorate. Redundancy is one of the authorizedcauses for the dismissal of an employee. It is governed by Article 283 of the Labor Code,which reads:

ART. 283. Closure of establishment and reduction of personnel. The employer may alsoterminate 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 theestablishment 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 Department ofLabor and Employment at least one (1) month before the intended date thereof. In case oftermination due to the installation of labor-saving devices or redundancy, the worker affectedthereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or toat least one (1) month pay for every year of service, whichever is higher. In case ofretrenchment to prevent losses and in cases of closures or cessation of operations ofestablishment or undertaking not due to serious business losses or financial reverses, theseparation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) monthpay for every year of service, whichever is higher. A fraction of at least six (6) months shall beconsidered one (1) whole year.

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Redundancy, for purposes of the Labor Code, exists where the services of an employee are inexcess 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 aposition or positions may be the outcome of a number of factors, such asoverhiring of workers, decreased volume of business, or dropping of a particularproduct line or service activity previously manufactured or undertaken by theenterprise.

The determination that the employee's services are no longer necessary orsustainable and, therefore, properly terminable for being redundant is an exerciseof business judgment of the employer. The wisdom or soundness of this judgment is notsubject to discretionary review of the Labor Arbiter and the NLRC, provided there is noviolation of law and no showing that it was prompted by an arbitrary or malicious act.

In other words, it is not enough for a company to merely declare that it hasbecome overmanned. It must produce adequate proof of such redundancy to justifythe dismissal of the affected employees.

Coca Cola presented no other evidence , Neither did the Company present proof that it had

complied with the procedural requirement in Article 283 of prior notice to the Department ofLabor and Employment (DOLE) of the termination of Del Villars employment due toredundancy one month prior to May 31, 1998.

Del Villars poor employee performance is irrelevant as regards the issue on redundancy.Redundancy arises because there is no more need for the employees position in relation tothe whole business organization, and not because the employee unsatisfactorily performedthe duties and responsibilities required by his position.

An employee who is illegally dismissed is entitled to the twin reliefs of full backwages andreinstatement. If reinstatement is not viable, separation pay is awarded to the employee. Inawarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the

amount to be awarded shall be equivalent to one month salary for every year ofservice. Under Republic Act No. 6715, employees who are illegally dismissed are entitled tofull backwages, inclusive of allowances and other benefits or their monetary equivalent,computed from the time their actual compensation was withheld from them up to the time oftheir actual reinstatement but if reinstatement is no longer possible, the backwages shall becomputed from the time of their illegal termination up to the finality of the decision. We notethat Del Villars reinstatement is no longer possible because the position he previouslyoccupied no longer exists, per San Juans Affidavit dated October 15, 1998. Also, Del Villar hadalready received his separation pay sometime in October 1998.

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82108735 II Labor Relations Case Digests