Labor Standards Cases Full Text (E-SCRA)

8/10/2019 Labor Standards Cases Full Text (E-SCRA)

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Cebu Royal Plant vs. Deputy Minister of Labor

No. L-58639. August 12, 1987.*

CEBU ROYAL PLANT (SAN MIGUEL CORPORATION), petitioner, vs. THE HONORABLE DEPUTYMINISTER OF LABOR and RAMON PILONES, respondents.

Labor; Illegal Dismissal; Probationary Period; An employee who is allowed to work after a probationaryperiod shall be considered a regular employee. As there is no mention of the basis of the above order,we may assume it was the temporary payroll authority submitted by the petitioner showing that the privaterespondent was employed on probation on February 16, 1978. Even supposing that it is not self-serving,we find nevertheless that it is self-defeating. The six-month period of probation started from the said dateof appointment and so ended on August 17, 1978, but it is not shown that the private respondent'semployment also ended then; on the contrary, he continued working as usual. Under Article 282 of theLabor Code, "an employee who is allowed to work after a probationary period shall be considered aregular employee." Hence, Pilones was already on permanent status when he was dismissed on August21, 1978, or four days after he ceased to be a probationer.

Same; Same; Reinstatement; Employer's protestations that reinstatement of the employee wouldprejudice public health, not believed.The petitioner claims it could not have dismissed the privaterespondent earlier because the x-ray examination was made only on August 17, 1978, and the resultswere not immediately available. That excuse is untenable. We note that when the petitioner had all of sixmonths during which to conduct such examination, it chose to wait until exactly the last day of theprobation period. In the light of such delay, its protestations now that reinstatement of Pilones wouldprejudice public health cannot but sound hollow and hypocritical. By its own implied admission, thepetitioner had exposed its customers to the employee's disease because of its failure to examine himbefore entrusting him with the functions of a "syrup man." Its belated concern for the consuming public ishardly persuasive, if not clearly insincere and self-righteous.

Same; Same; Same; Constitution; Security of tenure; Since the private respondent was already a regularemployee when he was dismissed, he could validly claim the security of tenure guaranteed to him by theConstitution and the Labor Code. We are satisfied that whether his employment began on February 16,

1978, or even earlier as he claims, the private respondent was already a regular employee when he wasdismissed on August 21, 1978. As such, he could validly claim the security of tenure guaranteed to himby the Constitution and the Labor Code.

Same; Same; Absence of a medical certificate from a competent public health authority, indicates that theemployee's disease is not of such a nature that it will not be cured within a period of 6 months even withproper medical treatment, and thus his dismissal was a severe and unlawful sanction. The record doesnot contain the certification required by the above rule. The medical certificate offered by the petitionercame from its own physician, who was not a "competent public health authority," and merely stated theemployee's disease, without more. We may surmise that if the required certification was not presented, itwas because the disease was not of such a nature or seriousness that it could not be cured within aperiod of six months even with proper medical treatment. If so, dismissal was unquestionably a severeand unlawful sanction.

Same; Same; Prior clearance rule in force at the time requires that it must be obtained prior to theoperative act of termination of an employee. It is also worth noting that the petitioner's application forclearance to terminate the employment of the private respondent was filed with the Ministry of Labor onlyon August 28, 1978, or seven days after his dismissal. As the NLRC has repeatedly and correctly said,the prior clearance rule (which was in force at that time) was not a "trivial technicality." It required "not justthe mere filing of a petition or the mere attempt to procure a clearance" but that "the said clearance beobtained prior to the operative act of termination."


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Same; Same; Same; Reinstatement; Employer's attempt to circumvent the law by separating theemployee after 5 months service to prevent him from becoming a regular employee and then rehiring himon probation again without security of tenure, contrary to the mandate of social justice; Reinstatement ofemployee, conditioned on his fitness to resume his work as certified by competent authority. We agreethat there was here an attempt to circumvent the law by separating the employee after five months'service to prevent him from becoming a regular employee, and then rehiring him on probation, again

without security of tenure. We cannot permit this subterfuge if we are to be true to the spirit and mandateof social justice. On the other hand, we have also the health of the public and of the dismissed employeehimself to consider. Hence, although we must rule in favor of his reinstatement, this must be conditionedon his fitness to resume his work, as certified by competent authority.

Same; Same; Same; Concern for the lowly worker reaffirmed. We take this opportunity to reaffirm ourconcern for the lowly worker who, often at the mercy of his employers, must look up to the law for hisprotection. Fittingly, that law regards him with tenderness and even favor and always with faith and hopein his capacity to help in shaping the nation's future. It is error to take him for granted. He deserves ourabiding respect. How society treats him will determine whether the knife in his hands shall be a caring toolfor beauty and progress or an angry weapon of defiance and revenge. The choice is obvious, of course. Ifwe cherish him as we should, we must resolve to lighten "the weight of centuries" of exploitation anddisdain that bends his back but does not bow his head.

Same; Same; Same; Back wages for 3 years only and reinstatement only upon certification by acompetent public health authority that the employee is fit to return to work.The petition is DISMISSEDand the temporary restraining order of November 18,1981, is LIFTED. The Order of the public respondentdated July 14, 1981, is AFFIRMED, but with the modification that the back wages shall be limited to threeyears only and the private respondent shall be reinstated only upon certification by a competent publichealth authority that he is fit to return to work.

PETITION to review the order of the Ministry of Labor.

The facts are stated in the opinion of the Court.

CRUZ, J.:

The private respondent was removed by the petitioner and complained to the Ministry of Labor. Hiscomplaint was dismissed by the regional director, who was, however, reversed by the public respondent.Required to reinstate the separated employee and pay him back wages, the petitioner has come to us,faulting the Deputy Minister with grave abuse of discretion. We have issued in the meantime a temporaryrestraining order.

The public respondent held that Ramon Pilones, the private respondent, was already a permanentemployee at the time of his dismissal and so was entitled to security of tenure. The alleged ground for hisremoval, to wit, "pulmonary tuberculosis minimal," was not certified as incurable within six months as to justify his separation. Additionally, the private respondent insists that the petitioner should have firstobtained a clearance, as required by the regulations then in force, for the termination of his employment.

The petitioner for its part claims that the private respondent was still on probation at the time of hisdismissal and so had no security of tenure. His dismissal was not only in conformity with company policybut also necessary for the protection of the public health, as he was handling ingredients in theprocessing of soft drinks which were being sold to the public. It is also argued that the findings of theregional director, who had direct access to the facts, should not have been disturbed on appeal. For thesesame reasons, it contends, the employee's reinstatement as ordered by the public respondent should notbe allowed.


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The original findings were contained in a one-page order3 reciting simply that "complainant wasemployed on a probationary period of employment for six (6) months. After said period, he underwentmedical examination for qualification as regular employee but the results showed that he is suffering fromPTB minimal. Consequently, he was informed of the termination of his employment by respondent." The

order then concluded that the termination was "justified." That was all. As there is no mention of the basis of the above order, we may assume it was the temporary payrollauthority submitted by the petitioner showing that the private respondent was employed on probation onFebruary 16, 1978. Even supposing that it is not self-serving, we find nevertheless that it is self-defeating.The six-month period of probation started from the said date of appointment and so ended on August 17,1978, but it is not shown that the private respondent's employment also ended then; on the contrary, hecontinued working as usual. Under Article 282 of the Labor Code, "an employee who is allowed to workafter a probationary period shall be considered a regular employee." Hence, Pilones was already onpermanent status when he was dismissed on August 21, 1978, or four days after he ceased to be aprobationer.

The petitioner claims it could not have dismissed the private respondent earlier because the x-ray

examination was made only on August 17, 1978, and the results were not immediately available. Thatexcuse is untenable. We note that when the petitioner had all of six months during which to conduct suchexamination, it chose to wait until exactly the last day of the probation period. In the light of such delay, itsprotestations now that reinstatement of Pilones would prejudice public health cannot but sound hollowand hypocritical. By its own implied admission, the petitioner had exposed its customers to theemployee's disease because of its failure to examine him before entrusting him with the functions of a"syrup man." Its belated concern for the consuming public is hardly persuasive, if not clearly insincere andself-righteous.

There is proof in fact that the private respondent was first hired not on February 16, 1978, but earlier in1977. This is the 1977 withholding tax statement5 issued for him by the petitioner itself which it does notand cannot deny. The petitioner stresses that this is the only evidence of the private respondent's earlierservice and notes that he has not presented any co-worker to substantiate his claim. This is perfectly

understandable. Given the natural reluctance of many workers to antagonize their employers, we neednot wonder why none of them testified against the petitioner.

We are satisfied that whether his employment began on February 16, 1978, or even earlier as he claims,the private respondent was already a regular employee when he was dismissed on August 21, 1978. Assuch, he could validly claim the security of tenure guaranteed to him by the Constitution and the LaborCode.

The applicable rule on the ground for dismissal invoked against him is Section 8, Rule I, Book VI, of theRules and Regulations Implementing the Labor Code reading as follows:

"Sec. 8. Disease as a ground for dismissal. Where the employee suffers from a disease andhis continued employment is prohibited by law or prejudicial to his health or to the health of hisco-employees, the employer shall not terminate his employment unless there is a certification bya competent public health authority that the disease is of such nature or at such a stage that itcannot be cured within a period of six (6) months even with proper medical treatment. If thedisease or ailment can be cured within the period, the employer shall not terminate theemployee but shall ask the employee to take a leave. The employer shall reinstate suchemployee to his former position immediately upon the restoration of his normal health."


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The record does not contain the certification required by the above rule. The medical certificate offered bythe petitioner came from its own physician, who was not a "competent public health authority," and merelystated the employee's disease, without more. We may surmise that if the required certification was notpresented, it was because the disease was not of such a nature or seriousness that it could not be curedwithin a period of six months even with proper medical treatment. If so, dismissal was unquestionably asevere and unlawful sanction.

It is also worth noting that the petitioner's application for clearance to terminate the employment of theprivate respondent was filed with the Ministry of Labor only on August 28, 1978, or seven days after hisdismissal.6 As the NLRC has repeatedly and correctly said, the prior clearance rule (which was in force atthat time) was not a "trivial technicality." It required "not just the mere filing of a petition or the mereattempt to procure a clearance" but that "the said clearance be obtained prior to the operative act oftermination. "

We agree that there was here an attempt to circumvent the law by separating the employee after fivemonths' service to prevent him from becoming a regular employee, and then rehiring him on probation,again without security of tenure. We cannot permit this subterfuge if we are to be true to the spirit andmandate of social justice. On the other hand, we have also the health of the public and of the dismissedemployee himself to consider. Hence, although we must rule in favor of his reinstatement, this must be

conditioned on his fitness to resume his work, as certified by competent authority.We take this opportunity to reaffirm our concern for the lowly worker who, often at the mercy of hisemployers, must look up to the law for his protection. Fittingly, that law regards him with tenderness andeven favor and always with faith and hope in his capacity to help in shaping the nation's future. It is errorto take him for granted. He deserves our abiding respect. How society treats him will determine whetherthe knife in his hands shall be a caring tool for beauty and progress or an angry weapon of defiance andrevenge. The choice is obvious, of course. If we cherish him as we should, we must resolve to lighten "theweight of centuries" of exploitation and disdain that bends his back but does not bow his head.

WHEREFORE, the petition is DISMISSED and the temporary restraining order of November 18, 1981, isLIFTED. The Order of the public respondent dated July 141981, is AFFIRMED, but with the modificationthat the back wages shall be limited to three years only and the private respondent shall be reinstated

only upon certification by a competent public health authority that he is fit to return to work. Costs againstthe petitioner.

SO ORDERED.

Teehankee (Chairman, C.J.), Narvasa, Paras and Gancayco, JJ., concur.

Petition dismissed. Order affirmed.

Notes.Employee who was illegally dismissed is entitled to receive his back wages from date of hisillegal dismissal. The period of pendency of decision of a case should not be deducted in the computationof back wages. (New Manila Candy Workers Union vs. Court of Industrial Relations, 86 SCRA 37.)

Reinstatement is a restoration to a state from which one has been removed or separated. It is the returnto the position from which he was removed and assuming again the functions of the office already held.(Union of Supervisors vs. Secretary of Labor, 128 SCRA 442.)


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MANUEL SOSITO, petitioner, vs. AGUINALDO DEVELOPMENT CORPORATION, respondent.

Gr No. L-48926, Dec. 14, 1987

Constitutional Law; Labor Laws; While the constitution commit' ted to the policy of social justice and the

protection of the working class, it should not be supposed that every labor dispute will be automaticallydecided in favor of labor.While the Constitution is committed to the policy of social justice and theprotection of the working class, it should not be supposed that every labor dispute will be automaticallydecided in favor of labor. Management also has its own rights which, as such, are entitled to respect andenforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, thisCourt has inclined more often than not toward the worker and upheld his cause in his conflicts with theemployer. Such favoritism, however, has not blinded us to the rule that justice is in every case for thedeserving, to be dispensed in the light of the established f acts and the applicable law and doctrine.

Same; Same; Compassionate measure offered by the company deserves commendation and support. We note that under the law then in force the private respondent could have validly reduced its work forcebecause of its financial reverses without the obligation to grant separation pay. This was permitted underthe original Article 272(a), of the Labor Code, which was in force at the time. To its credit, however, thecompany voluntarily offered gratuities to those who would agree to be phased out pursuant to the termsand conditions of its retrenchment program, in recognition of their loyalty and to tide them over their ownfinancial difficulties. The Court feels that such compassionate measure deserves commendation andsupport but at the same time rules that it should be available only to those who are qualified therefor. Wehold that the petitioner is not one of them.

PETITION to review the decision of the National Labor Relations Commission.


CRUZ, J.:

We gave due course to this petition and required the parties to file simultaneous memoranda on the solequestion of whether or not the petitioner is entitled to separation pay under the retrenchment program ofthe private respondent.

The facts are as follows:

Petitioner Manuel Sosito was employed in 1964 by the private respondent, a logging company, and wasin charge of logging importation, with a monthly salary of P675.00, when he went on indefinite leave withthe consent of the company on January 16, 1976.2 On July 20, 1976, the private respondent, through itspresident, announced a retrenchment program and offered separation pay to employees in the activeservice as of June 30, 1976, who would tender their resignations not later than July 31, 1976. Thepetitioner decided to accept this offer and so submitted his resignation on July 29, 1976, "to avail himselfof the gratuity benefits" promised. However, his resignation was not acted upon and he was never giventhe separation pay he expected. The petitioner complained to the Department of Labor, where he wassustained by the labor arbiter. The company was ordered to pay Sosito the sum of P4,387.50,representing his salary for six and a half months. On appeal to the National Labor Relations Commission,this decision was reversed and it was held that the petitioner was not covered by the retrenchmentprogram. The petitioner then came to us.


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For a better understanding of this case, the memorandum of the private respondent on its retrenchmentprogram is reproduced in full as follows:

"July 20, 1976

"Memorandum To: ALL EMPLOYEES

"Re: RETRENCHMENT PROGRAM"As you are all aware, the operations of wood-based industries in the Philippines for the last two (2) yearswere adversely affected by the worldwide decline in the demand for and prices of logs and woodproducts. Our company was no exception to this general decline in the market, and has sufferedtremendous losses. In 1975 alone, such losses amounted to nearly P20,000,000.00.

"The company has made a general review of its operations and has come to the unhappy decision of theneed to make adjustments in its manpower strength if it is to survive. This is indeed an unfortunate andpainful decision to make, but it leaves the company no alternative but to reduce its tremendous andexcessive overhead expense in order to prevent an ultimate closure.

"Although the law allows the Company, in a situation such as this, to drastically reduce it manpowerstrength without any obligation to pay separation benefits, we recognize the need to provide ouremployees some financial assistance while they are looking for other jobs.

"The Company therefore is adopting a retrenchment program whereby employees who are in the activeservice as of June 30, 1976 will be paid separation benefits in an amount equivalent to the employee'sone-half (1/2) month's basic salary multiplied by his/her years of service with the Company. Employeesinterested in availing of the separation benefits offered by the Company must manifest such intention bysubmitting written letters of resignation to the Management not later than July 31, 1976. Those whoseresignations are accepted shall be informed accordingly and shall be paid their separation benefits.

"After July 31, 1976, this offer of payment of separation benefits will no longer be available. Thereafter,the Company shall apply for a clearance to terminate the services of such number of employees as maybe necessary in order to reduce the manpower strength to such desired level as to prevent further losses.

"(SGD.)JOSE G. RICAFORT

President

"N.B.

"For additional information

and/or resignation forms,please see Mr. Vic Maceda

or Atty. Ben Aritao."

It is clear from the memorandum that the offer of separation pay was extended only to those who were inthe active service of the company as of June 30, 1976. It is equally clear that the petitioner was noteligible for the promised gratuity as he was not actually working with the company as of the said date.Being on indefinite leave, he was not in the active service of the private respondent although, if one were


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to be technical, he was still in its employ. Even so, during the period of indefinite leave, he was notentitled to receive any salary or to enjoy any other benefits available to those in the active service.

It seems to us that the petitioner wants to enjoy the best of two worlds at the expense of the privaterespondent. He has insulated himself from the insecurities of the floundering firm but at the same timewould demand the benefits it offers. Being on indefinite leave from the company, he could seek and try

other employment and remain there if he should find it acceptable; but if not, he could go back to hisformer work and argue that he still had the right to return as he was only on leave.

There is no claim that the petitioner was temporarily laid off or forced to go on leave; on the contrary, therecord shows that he voluntarily sought the indefinite leave which the private respondent granted. It isstrange that the company should agree to such an open-ended arrangement, which is obviously one-sided. The company would not be free to replace the petitioner but the petitioner would have a right toresume his work as and when he saw fit.

We note that under the law then in force the private respondent could have validly reduced its work forcebecause of its financial reverses without the obligation to grant separation pay. This was permitted underthe original Article 272(a), of the Labor Code, which was in force at the time, To its credit, however, thecompany voluntarily offered gratuities to those who would agree to be phased out pursuant to the terms

and conditions of its retrenchment program, in recognition of their loyalty and to tide them over their ownfinancial difficulties. The Court feels that such compassionate measure deserves commendation andsupport but at the same time rules that it should be available only to those who are qualified therefor. Wehold that the petitioner is not one of them.

While the Constitution is committed to the policy of social justice and the protection of the working class, itshould not be supposed that every labor dispute will be automatically decided in favor of labor.Management also has its own rights which, as such, are entitled to respect and enforcement in theinterest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclinedmore often than not toward the worker and upheld his cause in his conflicts with the employer. Suchfavoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to bedispensed in the light of the established facts and the applicable law and doctrine.

WHEREFORE, the petition is DISMISSED and the challenged decision AFFIRMED, with costs againstthe petitioner.

SO ORDERED.

Teehankee (C.J.), Narvasa, Paras and Gancayco, JJ., concur.

Petition dismissed, Decision affirmed.

"Art. 272. Termination by employer. An employer may terminate an employment without a definiteperiod for any of the following just causes:

"(a) the closing or cessation of operation of the establishment or enterprise, or where the employer has toreduce his work force by more than one-half due to serious business reverses, unless the closing is forthe purpose of circumventing the provisions of this Chapter; x x x."

Notes. A person is not an independent contractor where he only manages a particular businessbelonging to another (CMS Estate vs. SSS, 132 SCRA 108.)

In the absence of existence of employer-employee relationship between the parties, the former CFI hadauthority to assume jurisdiction over the case. (National Mines & Allied Workers' Union vs. Valero, 132SCRA 578.)


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PHILIPPINE JAPAN ACTIVE CARBON CORPORATION AND TOKUICHI SATOFUKA, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION and OLGA S. QUIANOLA, respondents.

G.R. No. 83239 March 8, 1989

Labor Law; Dismissal; Constructive dismissal defined. A constructive discharge is defined as: A quitti ng

because continued employment is rendered impossible, unreasonable or unlikely; as, an offer involving ademotion in rank and a diminution in pay.

Same; Same; Same; Private respondents assignment as Production Secretary of the ProductionDepartment was not unreasonable and did not constitute a constructive dismissal. In this case, the privaterespondents assignment as Production Secretary of the Production Department was not unreasonableas it did not involve a demotion in rank (her rank was still that of a department secretary) nor a change inher place of work (the office is in the same building), nor a diminution in pay, benefits, and privileges. Itdid not constitute a constructive dismissal.

Same; Same; Employees right to security of tenure does n ot give him a vested right in his position aswould deprive the company of its prerogative to change his assignment or transfer him where he will bemost useful.It is the employers prerogative, based on its assessment and perception of its employeesqualifications, aptitudes, and competence, to move them around in the various areas of its businessoperations in order to ascertain where they will function with maximum benefit to the company. Anemployees right 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 he will be mostuseful. When his 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, the employeemay not complain that it amounts to a constructive dismissal.

Same; Same; Abandonment; Petitioners contention that private respondents absence from work on J une2 to June 3, 1986 constituted an abandonment of her job rejected. On the other hand, we reject thepetitioners contention that the private respondents absence from work on June 2 to June 3, 1986constituted an abandonment of her job in the company resulting in the forfeiture of the benefits due her.While she was guilty of insubordination of having refused to move out of her position as ExecutiveSecretary to the Executive Vice-President and General Manager of the company, dismissal from theservice would be a draconian punishment for it, as her complaint for illegal dismissal was filed in goodfaith.

PETITION for review from the decision of the National Labor Relations Commission.


Dominguez & Paderna Law Offices Co. for petitioners.

The Solicitor General for public respondent.

B.E. Militar and Associate Law Offices for private respondent.

GRIO-AQUINO, J.:This is a petition for review of the decision dated November 27, 1987 in NLRC Case No. 1966-LR-XI-86,entitled Olga S. Quianola, Complainant -Appellee vs. Philippine Japan Active Carbon Corporation and/orTokuichi Satofuka, Respondents- Appellants, affirming the decision dated June 5, 1987 of the Labor Arbiter finding that the private respondent Olga S. Quianola was illegally dismissed and ordering theappellants to reinstate her with back wages and damages.


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The private respondent, who had been employed in petitioner corporation since January 19, 1982, as Assistant Secretary/ Export Coordinator, was promoted on May 20, 1983 to the position of ExecutiveSecretary to the Executive Vice President and General Manager. On May 31, 1986, for no apparentreason at all and without prior notice to her, she was transferred to the Production Department asProduction Secretary, swapping positions with Ester Tamayo. Although the transfer did not amount to ademotion because her salary and workload remained the same, she believed otherwise so she rejected

the assignment and filed a complaint for illegal dismissal. The Labor Arbiter found, on the basis of theevidence of both parties, that the transfer would amount to constructive dismissal, hence, her refusal toobey the transfer order was justified (pp. 76-77, Rollo). The Labor Arbiter further observed that:

There was something perverse in the way she was dismissed from her work. She wasdismissed for causes that are unjustified, if not entirely non-existent, and foisted on her byrespondents illegal act the motivation of which reeks with bad faith . Accordingly, they should beassessed and required to pay complainant the sum of P25,000 as damages and P5,000 asattorneys fee.

he dispositive portion of his decision reads as follows:

WHEREFORE, judgment is hereby rendered declaring complainant Olga Quianolas

dismissal illegal and for respondents to reinstate her to her former position with back wagesequivalent to one year in the amount of P33,684 (P2,807 x 12 months) only, without loss ofseniority rights and other benefits also equivalent to one year or until the finality of this Decision,whichever is higher.

Likewise, respondents are hereby assessed and ordered to pay complainant the sum ofP25,000.00 as damages plus P5,000 as attorneys fee.

Total Awards: P63,684 only, exclusive of other benefits herein granted but not yetcomputed.

Upon appeal to the NLRC, the Commission approved the Labor Arbiters decision but reduced to P10,000the award of moral damages and the attorneys fees to 10% of the judgment.

The employer filed a petition for review of that decision in this Court alleging that:1. The decisions of the Labor Arbiter and of the NLRC are tainted with grave abuse of discretionin finding that the private respondent was constructively and illegally dismissed as a result of hertransfer or assignment to the Office of the Production Manager even if she would have receivedthe same salary, rank, rights and privileges;

2. In ordering her reinstatement with full back wages and without loss of seniority rights andother benefits;

3. In awarding to the private respondent moral damages of P10,000 and attorneys feesequivalent to 10% of the judgment; and

4. In not declaring that private respondent forfeited all her benefits for having abandoned her jobon June 2 to 3, 1986 and for insubordination.

In her comment to the petition, the private respondent argued that she was dismissed without dueprocess because she was not given the opportunity to be heard concerning the causes of her transfer.

Upon a careful consideration of the petition and the documents annexed thereto as well as privaterespondents comment, We find the petition to be meritorious.


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A constructive discharge is defined as: A quitting because continued employment is renderedimpossible, unreasonable or unlik ely; as, an offer involving a demotion in rank and a diminution in pay.

In this case, the private respondents assignment as Production Secretary of the Production Departmentwas not unreasonable as it did not involve a demotion in rank (her rank was still that of a departmentsecretary) nor a change in her place of work (the office is in the same building), nor a diminution in pay,

benefits, and privileges. It did not constitute a constructive dismissal.It is the employers prerogative, based on its assessment and perception of its employees qualifications,aptitudes, and competence, to move them around in the various areas of its business operations in orderto ascertain where they will function with maximum benefit to the company. An employees right tosecurity of tenure 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. When his transferis not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion in rank ora diminution of his salaries, benefits, and other privileges, the employee may not complain that it amountsto a constructive dismissal.

On the other hand, we reject the petitioners contention that the private respondents absence from workon June 2 to June 3, 1986 constituted an abandonment of her job in the company resulting in the

forfeiture of the benefits due her. While she was guilty of insubordination for having refused to move outof her position as Executive Secretary to the Executive Vice-President and General Manager of thecompany, dismissal from the service would be a draconian punishment for it, as her complaint for illegaldismissal was filed in good faith.

WHEREFORE, the decision of the NLRC insofar as it orders the petitioner to reinstate the privaterespondent is affirmed, but she shall be reinstated to her position as Production Secretary of theProduction Department of petitioners corporation without loss of seniority rig hts and other privileges. Theawards of back wages, moral damages and attorneys fees to the private respondent are hereby setaside. No pronouncement as to costs.

SO ORDERED.

Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.

Decision affirmed.

Notes.The right to dismiss or otherwise impose disciplinary sanctions upon an employee for just causeand valid cause, pertains in the first place to the employer, as well as the authority to determine theexistence of said cause in accordance with the norms of due process. (Richardson vs. Demetrion, 142SCRA 505.)

Prerogative of management to dismiss or lay-off a managerial employee must be made without abuse ofdiscretion. (D.M. Consunji, Inc. vs. NLRC, 143 SCRA 204.)


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ABBOTT LABORATORIES (PHILIPPINES), INC., and JAIME C. VICTA, petitioners, vs. NATIONALLABOR RELATIONS COMMISISON and ALBERT BOBADILLA, respondents.

GR No. L-76959. October 12, 1987.

Labor; Dismissal due to insubordination; Hiring, firing, transfer, demotion and promotion of employees, amanagement prerogative but subject to certain limitations. The hiring, firing, transfer, demotion, andpromotion of employees has been traditionally identified as a management prerogative subject tolimitations found in law, a collective bargaining agreement, or general principles of fair play and justice.This is a function associated with the employer's inherent right to control and manage effectively itsenterprise. Even as the law is solicitous of the welfare of employees, it must also protect the right of anemployer to exercise what are clearly management prerogatives. The free will of management to conductits own business affairs to achieve its purpose cannot be denied. (See Dangan v. National LaborRelations Commission, 127 SCRA 706).

Same; Same; Transfer, General rule that the right to transfer or reassign an employee is an employer'sexclusive right and a management prerogative. As a general rule, the right to transfer or reassign anemployee is recognized as an employer's exclusive right and the prerogative of management.

Same; Same; Same; An employee had no valid reason to disobey the order of transfer as he had tacitlygiven his consent thereto; Case at bar. Therefore, Bobadilla had no valid reason to disobey the order oftransfer. He had tacitly given his consent thereto when he acceded to the petitioners' policy of hiring salesstaff who are willing to be assigned anywhere in the Philippines which is demanded by the petitioners'business.

Same; Same; Same; Same; By the very nature of his employment a drug salesman or medicalrepresentative is expected to travel and should anticipate reassignment; Reassignments are part of theemployment contract of the employee.By the very nature of his employment, a drug salesman ormedical representative is expected to travel. He should anticipate reassignment according to thedemands of their business. It would be a poor drug corporation which cannot even assign itsrepresentatives or detail men to new markets calling for opening or expansion or to areas where the needfor pushing its products is great. Mere so if such reassignments are part of the employment contract.

PETITION for certiorari to review the decision of the National Labor Relations Commission.


GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the decision of respondent National Labor RelationsCommission (NLRC) which set aside the Labor Arbiter's decision dismissing the complaint and insteadentered a new decision ordering the complainant's reinstatement with full backwages from the date of histermination until his actual reinstatement.

The antecedent facts as found by the Labor Arbiter and reiterated in the NLRC decision are undisputed:

"Complainant Bobadilla started his employment with respondent company sometime in May1982. After undergoing training, in September, 1982, complainant was designated professionalmedical representative (PMR) and was assigned to cover the sales territory comprising of Sta.Cruz, Binondo and a part of Quiapo and Divisoria, of the Metro Manila district. In connection withthe respondent company's marketing and sales operations, it has been its policy andestablished practice of undertaking employment movements and/or reassignments from oneterritorial area to another as the exigencies of its operations require and to hire only applicantsalesmen, including professional medical representatives (PMRs) who are willing to takeprovincial assignments, at least insofar as male applicants were concerned. Likewise,


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respondent company had made reassignments or transfers of sales personnel, which includedPMRs, from one territorial area of responsibility to another on a more or less regular basis.

"In complainant's application for employment with respondent company, he agreed to thefollowing: 1) that if employed, he will accept assignment in the provinces and/or cities anywherein the Philippines; 2) he is willing and can move into and live in the territory assigned to him; and

(3) that should any answer or statement in his application for employment be found false orincorrect, he will be subject to immediate dismissal, if then employed.

"On 22 July 1983, respondent Victa called complainant to his office and informed the latter thathe was being transferred effective 1 August 1983 to the newly opened Cagayan territorycomprising the provinces of Cagayan, Nueva Vizcaya and Isabela. The transfer order was madeformal in a memorandum dated 29 July 1983. Among the reasons given for complainant'sselection as PMR for the Cagayan territory were: 'The territory required a veteran and seasonedPMR who can operate immediately with minimum training and supervision. Likewise, a PMRwho can immediately exploit the vast business potential of the area.

"In a letter dated 1 August 1983, which was received by Abbott on 4 August 1983, complainant,thru his lawyer, objected to the transfer on the grounds that it was not only a demotion but also

personal and punitive in nature without basis legally and factually."On 8 August 1983, Victa issued another inter-office correspondence to complainant, giving thelatter up to 15 August 1983 within which to comply with the transfer order, otherwise his namewould be dropped from the payroll for having abandoned his job. When complainant failed toreport to his new assignment, Abbott assigned thereat Fausto Antonio T. Tibi, another PED PMRwho was priorly covering the provinces of Nueva Ecija and Tarlac.

"Meanwhile, complainant filed applications for vacation leave from 2 to 9 August 1983, and thenfrom 10 to 13 August 1983. And on 18 August 1983, he filed the present complaint.

" After due consideration of the evidence adduced by the parties, the Arbiter below ruled for therespondent on the ground that the complainant is guilty of gross insubordination."

On appeal, the respondent National Labor Relations Commission reversed the Arbiter's decision and heldthat herein petitioners had no valid and justifiable reason to dismiss the complainant. The National LaborRelations Commission ordered the latter's reinstatement with back wages.

A motion for reconsideration subsequently filed by the petitioners was denied.

On September 8,1986, the petitioners filed their second motion for reconsideration which was notfavorably acted upon by respondent National Labor Relations Commission as the record of the case hadalready been transmitted to the labor arbiter for the execution of its decision.

On December 16, 1986, the petitioners and the private respondent agreed before the labor arbiter thatthe former would bring the case before this Court.

Hence, this present petition.

Petitioners assigned as errors the following:

"x x x [R]espondent NLRC acted in excess of jurisdiction and/or grave abuse of discretion inthat

a] Respondent NLRC disregarded settled law and altered the parties' contract when itstated that private respondent's prior consent was necessary for the validity of his transfer,rendering his consequent dismissal f or insubordination illegal.


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b] Granting arguendo that prior consent of an employee is required for the validity of histransfer to another territory, private respondent had explicitly given such prior consent as acondition for his hiring and continued employment by petitioner Abbott.

c] Respondent NLRC abused its discretion when it declared private respondent'sdismissal illegal despite his clear and willful insubordination."

When asked to comment on the petition as counsel for NLRC, the Solicitor General, assisted by AssistantSolicitor General Zoilo A. Andin and Trial Attorney Alexander Q. Gesmundo, agreed with the petitioners'stand that the dismissal of the private respondent from his employment was for valid reasons.

The main issue in this case is whether or not Albert Bobadilla could be validly dismissed from hisemployment on the ground of insubordination for refusing to accept his new assignment.

We are constrained to answer in the affirmative.

The hiring, firing, transfer, demotion, and promotion of employees has been traditionally identified as amanagement prerogative subject to limitations found in law, a collective bargaining agreement, or generalprinciples of fair play and justice. This is a function associated with the employer's inherent right to controland manage effectively its enterprise. Even as the law is solicitous of the welfare of employees, it mustalso protect the right of an employer to exercise what are clearly management prerogatives. The free willof management to conduct its own business affairs to achieve its purpose cannot be denied. (SeeDangan v, National Labor Relations Commission, 127 SCRA 706).

As a general rule, the right to transfer or reassign an employee is recognized as an employer's exclusiveright and the prerogative of management.

We agree with the Labor Arbiter's conclusions that:

"Settled is the rule in this regard that an employer, except when limited by special laws, has theright to regulate, according to his own discretion and judgment, all aspects of employment,which includes, among others, hiring, work assignments, place and manner of work, workingregulations and transfer of employees in accordance with his operational demands andrequirements. This right flows from ownership and from the established rule that labor lawdoes not authorize the substitution of judgment of the employer in the conduct of hisbusiness, unless it is shown to be contrary to law, morals or public policy (NLU v. Insular-

Yebana Tobacco Corp., 2 SCRA 924, 931; and Republic Savings Bank v, Court of IndustrialRelations, 21 SCRA 226, 235).

"x x x Abbott, in accordance with the demands and requirements of its marketing and salesoperations, adopted a policy to hire only sales applicants who are willing to accept assignmentsin the provinces anywhere in the Philippines, and to move into and live in the territory assignedto them.

The existence and implementation of this policy are clearly discernible from the questionsappearing in the application form under the heading: TO BE FILLED BY SALES APPLICANTSONLY/ and the fact that Abbott, depending upon the needs of its marketing and salesoperations, periodically made transfers or reassignments of its sales people.

"Complainant was precisely hired because he manifested at the outset as a job applicant hiswillingness to follow the conditions of his employment. In line with the policy, as practiced,

Abbott, thru Jaime Victa, issued an inter-office correspondence transferring complainant to anewly opened sales territorythe Cagayan Region, comprising the provinces of Cagayan,Nueva Vizcaya and Isabela, According to respondents, complainant was selected as PMR for


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the region primarily because he was a veteran and seasoned PMR who can operateimmediately with minimum training and supervision,

That complainant is a veteran and seasoned PMR is admitted. In fact, it is even conceded byrespondents that complainant was the leader of his peers in PED, as indicated in the letter dated20 December 1982 of Jaime Victa to complainant. That the Cagayan Region is relatively

inaccessible cannot be debated. That the territory needed a responsible PMR who could workunder the least supervision is a judgment of respondents. And that this judgment was arrived atupon consultations among the PED Marketing Manager Jaime Victa, the Director for

Administration Francisco Lim, and the General Manager A. C. Bout, has been proven byrespondents.

"It appearing, therefore, that the order to transfer complainant is based upon a judgment of hisemployer Abbott, which judgment to transfer is in line with a company practice which is notcontrary to law, morals or public policy. hence, beyond the competence of this office to question,the refusal of complainant to obey the lawful order of Abbott is gross insubordinationa validcause for dismissal.

"Complainant asserted that the true reason for his transfer was the personal ill motives on the

part of respondent Victa who resented the derogatory remarks attributed to him, as purportedlyshown in Victa's memoranda dated 20 December 1982 and 26 April 1983. However, a cursoryreading of said memoranda in question will show that the same were legitimately issued by Victain the exercise of his functions as PED Manager. And the fact that complainant never lifted afinger to formally question said memoranda is a mute admission on his part that the allegationstherein are true.

"Complainant also alleged that his transfer was a demotion. However, no explanation was givenmuch less any evidence presented in support of the allegation. On the other hand, it is clear thatthere was no change in complainant's position and salary, privileges and benefits he wasreceiving while in Manila. With respect to the sales commission, Abbott claimed that hadcomplainant accepted the assignment, he could have earned more because the sales prospectsin the Cagayan Territory, which comprises Nueva Vizcaya, Isabela and Cagayan Province were

much higher than the territory assigned to him in Manila. Besides, the assignment offered animportant avenue for future promotion, respondent concluded." (pp. 6-9, Labor Arbiter'sdecision).

Therefore, Bobadilla had no valid reason to disobey the order of transfer. He had tacitly given his consentthereto when he acceded to the petitioners' policy of hiring sales staff who are willing to be assignedanywhere in the Philippines which is demanded by the petitioners' business.

By the very nature of his employment, a drug salesman or medical representative is expected to travel.He should anticipate reassignment according to the demands of their business. It would be a poor drugcorporation which cannot even assign its representatives or detail men to new markets calling for openingor expansion or to areas where the need for pushing its products is great. More so if such reassignmentsare part of the employment contract.

WHEREFORE, the petition is hereby GRANTED. The questioned decision of the National LaborRelations Commission is SET ASIDE. The decision of the Labor Arbiter dated April 16, 1985 isREINSTATED.

SO ORDERED.

Fernan (Chairman), Bidin and Corts, JJ., concur.

Feliciano, J., no part. Former firm is counsel for one party.


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Petition granted.

Notes.Employer company in dismissing the employee has the prerogative to prescribe reasonable rules

and regulations necessary for the conduct of its business and to provide disciplinary rules to implementsaid rules and to assure that the same would be followed. (Soco vs. Mercantile Corporation of Davao,148 SCRA 526.)

Dismissed employee granted separation pay for equitable considerations for his 18 years of service.(Soco vs, Mercantile Corporation of Davao, 148 SCRA 526.) [Abbott Laboratories (Phils.) Inc. vs. NLRC,154 SCRA 713(1987)]


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RURAL BANK OF CANTILAN, INC., and WILLIAM HOTCHKISS III, petitioners, vs. ARJAY RONNELH. JULVE, respondent.

G.R. No. 169750. February 27, 2007.*

Labor Law; Management Prerogatives; Under the doctrine of management prerogative, every employerhas the inherent right to regulate, according to his own discretion and judgment, all aspects ofemployment, including hiring, work assignments, working methods, the time, place and manner of work,work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall ofemployees; Employees are not excused from complying with valid company policies and reasonableregulations for their governance and guidance. Under the doctrine of management prerogative, everyemployer has the inherent right to regulate, according to his own discretion and judgment, all aspects ofemployment, including hiring, work assignments, working methods, the time, place and manner of work,work supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall ofemployees. The only limitations to the exercise of this prerogative are those imposed by labor laws andthe principles of equity and substantial justice. While the law imposes many obligations upon theemployer, nonetheless, it also protects the employers right to expect from its employees not only goodperformance, adequate work, and diligence, but also good conduct and loyalty. In fact, the Labor Codedoes not excuse employees from complying with valid company policies and reasonable regulations for

their governance and guidance.Same; Same; Transfers and Reassignments; Guidelines. Concerning the transfer of employees, theseare the following jurisprudential guidelines: (a) a transfer is a movement from one position to another ofequivalent rank, level or salary without break in the service or a lateral movement from one position toanother of equivalent rank or salary; (b) the employer has the inherent right to transfer or reassign anemployee for legitimate business purposes; (c) a transfer becomes unlawful where it is motivated bydiscrimination or bad faith or is effected as a form of punishment or is a demotion without sufficient cause;(d) the employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicialto the employee.

Same; Same; Same; Words and Phrases; Constructive Dismissal, Defined. Constructive dismissal isdefined as quitting when continued employment is rendered impossi ble, unreasonable, or unlikely as theoffer of employment involves a demotion in rank and diminution of pay. Same; Same; Same; Bookkeepers; Under any standard, the work of the bookkeeper and bank assistantbranch head, charged with preparing financial reports and monthly bank reconciliations, as well as headof the Accounting Department of a branch, constitutes supervisory and administrative tasks which entailgreat responsibility.Respondent contends that the abolition of his position as planning and marketingofficer and his appointment as bookkeeper I and assistant branch head of the Madrid Branch is ademotion. However, a look at the functions of his new position shows the contrary. The bookkeeper andassistant branch head is not only charged with preparing financial reports and monthly bankreconciliations, he is also the head of the Accounting Department of a branch. Under any standard, theseare supervisory and administrative tasks which entail great responsibility. Moreover, respondents transferdid not decrease his pay.

PETITION for review on certiorari of the decision and resolution of the Court of Appeals.The facts are stated in the opinion of the Court.

Julius A. Magno for petitioners.

Henry C. Filoteo and James Reserva for respondent.

SANDOVAL-GUTIERREZ, J.:


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For our resolution is the instant Petition for Review on Certiorari assailing the Decision of the Court of Appeals (Twenty Second Division, Cagayan de Oro City) dated September 23, 2004 in CA-G.R. SP No.77206 and its Resolution of September 6, 2005.

The facts of this case as found by the Court of Appeals are:

On August 1, 1997, the Rural Bank of Cantilan, Inc., petitioner, hired respondent as a managementtrainee. Later, he was appointed as planning and marketing officer.

On June 18, 2001, William Hotchkiss III (also a petitioner), president of petitioner bank, issued amemorandum addressed to all its branch managers informing them of the abolition of the positions ofplanning and marketing officer and remedial officer; that this was undertaken in accordance with thebanks Personnel Streamlining Program; and that the operations officer shall absorb the functions of theabolished offices.

On July 18, 2001, Hotchkiss sent respondent a memorandum stating that he has been appointedbookkeeper I at the banks branch in Madrid, Surigao del Sur effective immediately with the same salarycorresponding to his old position. Initially, respondent agreed to accept the appointment, but eventually,he changed his mind and made the following notat ion on Hotchkiss memorandum, thus:

I am withdrawing my signature on this appointment because I feel that this is a demotion (on t he position itself and allowances) and not a lateral transfer as what the President told meyesterday. I believe I do not deserve a demotion.

Thank you.

On August 9, 2001, Hotchkiss appointed respondent as bookkeeper I and assistant branch head of theMadrid branch. However, he did not report for work.

On September 11, 2001, Hotchkiss directed respondent to explain why he should not be sanctioned forhis failure to assume his new post at the Madrid branch.

The following day, respondent submitted his written explanation, which partly reads:

I regret to say that I am not accepting the position of Asst. Branch Head of RBCI -Madrid Branchfor the very reason that the papers were not left with me by the Admin. Officer after she let meread them. Considering that Asst. Branch Head is a newly-created position, I requested her for acopy of the said papers first so I can thoroughly study them before making my decision. But sheimmediately took them back from me after I told her about this.

On September 14, 2001, respondent filed with the Regional Arbitration Branch No. XIII, National LaborRelations Commission (NLRC), Butuan City, a complaint for constructive dismissal against petitioners,docketed as NLRC Case No. RAB-13 09 00276 2001.

On January 14, 2002, the Labor Arbiter rendered a Decision, the dispositive portion of which is partlyreproduced below:

WHEREFORE, premises co nsidered, judgment is hereby entered:

1. Declaring complainant as constructively illegally dismissed;

2. Ordering respondents to reinstate complainant to his former or equivalent position withoutloss of seniority rights with full back wages from the time his salary was withheld from him up tothe time he is actually reinstated;

3. To pay complainant his partial back wages in the amount of P57,165.33 computed up to thedate of this decision as follows:


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A.

BACK WAGES FROM 16 Oct 2001 to 15 Jan 2002 (4 months) (Partial)

P12,192.50+1,000 x 4

= P52,768.00

Plus P52,768/13 (13th mo. Pay)

= P4,397.33

TOTAL BACKWAGES P57,165.33

and

4. Ordering respondents to pay complainant moral and exemplary damages in the total amountof P100,000.00 plus P15,718.53, as attorneys fees which is equivalent to 10% of the totalmonetary award.

Complainants other claims are dismissed for lack of mer it.

SO ORDERED. On appeal by petitioners, the NLRC, in its Resolution dated November 19, 2002, set aside the Labor

Arbiters judgment, thus:

WHEREFORE, foregoing premises considered, the appealed decision is Vacated and Set Aside. In lieu thereof, a new judgment is rendered dismissing the above-entitled case for lack ofmerit.

SO ORDERED.

The NLRC held that respondents reassignment is not a demotion. There was neither diminution infunctions and pay. Thus, he was not constructively dismissed from employment. Moreover, respondenthimself admitted that he decided not to report for work at his new station. Yet, he continued receiving hissalaries and allowances.

Respondent filed a motion for reconsideration but it was denied by the NLRC.

Respondent then filed with the Court of Appeals a petition for certiorari, docketed as CA-G.R. SP No.77206.

On September 23, 2004, the Court of Appeals rendered its Decision granting the petition, thus:

WHEREFORE, the instant Petition is hereby GRANTED. The NLRC Reso lutions dated 19November 2002 and 26 February 2003 are hereby ANNULLED and SET ASIDE. The Labor

Arbiters Decision dated 14 January 2002 is hereby REINSTATED.

SO ORDERED.

Petitioners filed a motion for reconsideration. However, it was denied by the appellate court in itsResolution dated September 6, 2005.

The only issue before us is whether the Court of Appeals erred in holding that respondent wasconstructively dismissed from employment.

In resolving this issue, we rely on the following guide posts:


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Under the doctrine of management prerogative, every employer has the inherent right to regulate,according to his own discretion and judgment, all aspects of employment, including hiring, workassignments, working methods, the time, place and manner of work, work supervision, transfer ofemployees, lay-off of workers, and discipline, dismissal, and recall of employees. The only limitations tothe exercise of this prerogative are those imposed by labor laws and the principles of equity andsubstantial justice.

While the law imposes many obligations upon the employer, nonetheless, it also protects the employersright to expect from its employees not only good performance, adequate work, and diligence, but alsogood conduct and loyalty. In fact, the Labor Code does not excuse employees from complying with validcompany policies and reasonable regulations for their governance and guidance.

Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a transfer is amovement from one position to another of equivalent rank, level or salary without break in the service or alateral movement from one position to another of equivalent rank or salary; (b) the employer has theinherent right to transfer or reassign an employee for legitimate business purposes;5 (c) a transferbecomes unlawful where it is motivated by discrimination or bad faith or is effected as a form ofpunishment or is a demotion without sufficient cause; (d) the employer must be able to show that thetransfer is not unreasonable, inconvenient, or prejudicial to the employee.

Constructive dismissal is defined as quitting when continued employment is rendered impossible,unreasonable, or unlikely as the offer of employment involves a demotion in rank and diminution of pay.

In light of the above guidelines, we agree with the NLRC in ruling that respondent was not constructivelydismissed from employment.

Respondent contends that the abolition of his position as planning and marketing officer and hisappointment as book-keeper I and assistant branch head of the Madrid Branch is a demotion. However, alook at the functions of his new position shows the contrary. The bookkeeper and assistant branch headis not only charged with preparing financial reports and monthly bank reconciliations, he is also the headof the Accounting Department of a branch. Under any standard, these are supervisory and administrativetasks which entail great responsibility. Moreover, respondents transfer did not decrease his pay.

Nor was respondent s transfer motivated by ill -will or prejudice on the part of petitioners. His position wasnot the only one abolished pursuant to the banks Personnel Streamlining Program. We recall that theposition of remedial officer was likewise abolished. Petitioner s reason was to acquire savings from thesalaries it would pay to full-time personnel in these positions.

Finally, we note that despite respondents refusal to accept the new appointment, petitioners did notdismiss him. Rather, it was he who opted to terminate his employment when he purposely failed to reportfor work.

In fine, we hold that the Court of Appeals erred when it concluded that respondent was constructivelydismissed from employment.

WHEREFORE, we GRANT the petition and REVERSE the Decision of the Court of Appeals in CA-G.R.

SP No. 77206. The Resolutions of the NLRC dated November 19, 2002 and February 26, 2003,dismissing respondents complaint are AFFIRMED.

SO ORDERED.

Puno (C.J., Chairperson), Corona and Garcia, JJ., concur.

Azcuna, J., On Official Leave.


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Petition granted, judgment reversed.

Notes.Employers rules cannot preclude the State from inquiring whether the strict and rigid applicationor interpretation thereof would be harsh to the employee. (Farrol vs. Court of Appeals, 325 SCRA 331[2000])

The right of an employer to regulate all aspects of employment, aptly called management prerogative,gives employers the freedom to regulate, according to their discretion and best judgment, all aspects ofemployment, including work assignment, working methods, processes to be followed, workingregulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal andrecall of workers. (Deles, Jr. vs. National Labor Relations Commission, 327 SCRA 540 [2000]) [RuralBank of Cantilan, Inc. vs. Julve, 517 SCRA 17(2007)]


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BLUE DAIRY CORPORATION and/or EDISON T. AVIGUETERO and PEDRO G. MIGUEL, petitioners,vs. NATIONAL LABOR RELATIONS COMMISSION and ELVIRA R. RECALDE, respondents.

G.R. No. 129843. September 14, 1999.*

Labor Law; Management Prerogatives; Transfers; It is the prerogative of management to transfer anemployee from one office to another within the business establishment based on its assessment andperception of the employees qu alifications, aptitudes and competence, and in order to ascertain wherehe can function with maximum benefit to the company.No grave abuse of discretion was committed bythe NLRC. Indeed, it is the prerogative of management to transfer an employee from one office to anotherwithin the business establishment based on its assessment and perception of the employeesqualifications, aptitudes and competence, and in order to ascertain where he can function with maximumbenefit to the company. This is a privilege inherent in the employers right to control and manage hisenterprise effectively. The freedom of management to conduct its business operations to achieve itspurpose cannot be denied.

Same; Same; Same; The managerial prerogative to transfer personnel must be exercised without graveabuse of discretion, bearing in mind the basic elements of justice and fair play it cannot be used as asubterfuge by the employer to rid himself of an undesirable worker. But, like other rights, there are limits

thereto. The managerial prerogative to transfer personnel must be exercised without grave abuse ofdiscretion, bearing in mind the basic elements of justice and fair play. Having the right should not beconfused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by theemployer to rid himself of an undesirable worker.

Same; Same; Same; Constructive Dismissal; Words and Phrases; The employer must be able to showthat the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does it involve ademotion in rank or a diminution of his salaries, privileges and other benefits. The employer must beable to show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does itinvolve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should theemployer fail to overcome this burden of proof, the employees transfer shall be tantamount toconstructive dismissal, which has been defined as a quitting because continued employment is renderedimpossible, 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 or disdain by anemployer has become so unbearable to the employee leaving him with no option but to forego with hiscontinued employment.

Same; Same; Same; Same; Demotion; Due Process; While due process required by law is applied indismissals, the same is also applicable to demotions as demotions likewise affect the employment of aworker whose right to continued employment, under the same terms and conditions, is also protected bylaw.Petitioners failed to justify Recaldes transfer from the position of food technologist in the labo ratoryto a worker in the vegetable processing section. We recall that what triggered Recaldes transfer was the21 October incident where she was found to have allegedly utilized company vehicle in looking for a newresidence during office hours without permission from management. In petitioners view, she wasdishonest such that they lost their trust and confidence in her. Yet, it does not appear that Recalde wasprovided an opportunity to refute the reason for the transfer. Petitioners merely relied on the narrations ofthe company driver. Nor was Recalde notified in advance of her impending transfer which was, as weshall elucidate later, a demotion in rank. In Gaco v. NLRC we noted While due process required by lawis applied in dismissals, the same is also applicable to demotions as demotions likewise affect theemployment of a worker whose right to continued employment, under the same terms and conditions, isalso protected by law. Moreover, considering that demotion is, like dismissal, also a punitive action, theemployee being demoted should, as in cases of dismissals, be given a chance to contest the same.


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Same; Illegal Dismissals; Reassignments; Loss of Trust and Confidence; Breach of trust and confidenceas a ground for dismissal from employment must be related to the performance of the duties of theemployee such as would show him to be thereby unfit to continue working for the employer; Breach oftrust and confidence as a ground for reassignment must be related to the performance of the duties of theemployee such as would show him to be thereby unfit to discharge the same task. Petitionersoverstretched the effect of Recaldes claimed wrongdoing. We have ruled that breach of trust and

confidence as a ground for dismissal from employment must be related to the performance of the dutiesof the employee such as would show him to be thereby unfit to continue working for the employer. Byanalogy, breach of trust and confidence as a ground for reassignment must be related to the performanceof the duties of the employee such as would show him to be thereby unfit to discharge the same task.Clearly, the act of dishonesty imputed to Recalde has no bearing at all to her work in the laboratory.

Same; Same; Same; Demotions; The transfer of an employee from being a food technologist in thelaboratory, occupying a highly technical position requiring use of her mental faculty, to being a worker inthe vegetable processing section performing mere mechanical work, is virtually a transfer from a positionof dignity to a servile or menial job, a demotion in rank, beyond doubt.We find insignificant thesubmission of petitioners that the coring of lettuce together with the other production jobs connectedtherewith is one of the most important aspects of the corporatio ns existence and that those assigned tothe vegetable processing section are mostly professionals like teachers, computer secretaries andforestry graduates. Rather, the focus should be on the comparison between the nature of Recaldes workin the laboratory and in the vegetable processing section. As food technologist in the laboratory, sheoccupied a highly technical position requiring use of her mental faculty. As a worker in the vegetableprocessing section, she performed mere mechanical work. It was virtually a transfer from a position ofdignity to a servile or menial job. We agree with the observation of the Office of the Solicitor General thatthe radical change in Recaldes nature of work unquestionably resulted in, as rightly perceived by her, ademeaning and humiliating work condition. The transfer was a demotion in rank, beyond doubt.

Same; Same; Same; Same; A transfer from a workplace where only highly trusted authorized personnelare allowed access to a workplace that is not as critical is another reason enough for an employee tohowl a protest.The laboratory is the place where the quality of the totality of petitioners products suchas dairy, juices, chocolates and vegetables is tested. On the other hand, the vegetable processing

section, as the name implies, involves processing of vegetables alone. Definitely, a transfer from aworkplace where only highly trusted authorized personnel are allowed access to a workplace that is notas critical is another reason enough for Recalde to howl a protest.

Same; Same; Back wages; To be included in the computation of back wages are the illegally dismissedemployees allowances and other benefits or their monetary equivalent. We reiterate that the NLRC didnot commit grave abuse of discretion in affirming the ruling of the Labor Arbiter that petitioners are guiltyof constructive dismissal. Recalde is entitled to reinstatement as food technologist without loss ofseniority rights and privileges and with full back wages, as directed by the Labor Arbiter. We clarifyhowever that conformably with Art. 279 of the Labor Code, as amended by Sec. 34 of RA 6715, to beincluded in the computation of back wages are the illegally dismissed employees allowances and otherbenefits or their monetary equivalent.

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.The facts are stated in the opinion of the Court.

Esmeraldo U. Guloy for petitioners.

The Solicitor General for public respondent.

BELLOSILLO, J.:


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BLUE DAIRY CORPORATION, engaged in the processing of dairy and chocolate products, juices andvegetables, hired on 14 May 1994 private respondent Elvira R. Recalde as a food technologist in itslaboratory with the following specific functions: microanalysis of toppings and syrup, onions and garlic,and liquid mixes (soft serve and milk shake); physical and chemical analysis of liquid mixes, including raw

materials for toppings and syrup and its inspection; routine computation for liquid mixes and supervisionwhile weighing the materials; performing chlorine test for lettuce, red onion, white onion and greenpepper; preparation of forms for toppings and syrup; sensory evaluation of toppings and syrup; productdevelopment (assistant); and, preparation of food coloring for orange syrup production.

On 22 May 1994, a Sunday, Recalde reported for work but claimed that she was not given her premiumpay.

On 21 October 1994 Recalde accompanied Production Manager Editha N. Nicolas in conducting asensory evaluation of vanilla syrup in one of the outlets of a client. While on their way back to the office apost fell on the company vehicle they were riding due to a raging typhoon damaging the vehicleswindshield and side mirror.

On 3 December 1994 Recalde was transferred from the laboratory to the vegetable processing sectionwhere she cored lettuce, minced and repacked garlic and performed similar work, and was restricted fromentering the laboratory. She was unhappy. She considered her new job humiliating and menial. On 14December 1994 she stopped reporting for work. The following day she sent a letter to petitioner Edison T. Aviguetero, the President and Chairman of the Board of Director of Blue Dairy Corporation, reading

I would like to inform you that I will no longer report for work because of your drastic andoppressive action. And besides, I have already filed a case against BLUE DAIRY CORPORATIONand/or EDISON T. AVIGUETERO,

PEDRO G. MIGUEL x x x x

On 16 December 1994 Recalde filed a complaint against petitioner Blue Dairy Corporation, Edison T. Aviguetero and Pedro G. Miguel3 for constructive dismissal and non-payment of premium pay. She also

claimed overtime pay as well as moral and exemplary damages plus attorneys fees. Petitioners contended that Recalde was given a less sensitive assignment outside of the laboratory onaccount of her dishonesty which resulted in loss of trust and confidence. They seriously took into accountthe result of the investigation concerning the 21 October incident that Recalde was actually scouting for anew residence using company vehicle without prior permission from the General Manager and duringoffice hours, in violation of par. IV, subpars. B and G, of the companys General Rules and Regulations.Petitioners accorded credence to the narrations of Rolando V. Flores, driver of the damaged vehicle, tothat effect which act of dishonesty could even have merited dismissal from employment had they adheredsimply to jurisprudential rule but took into account instead the spirit of the approaching Christmas season.

The Labor Arbiter was convinced that petitioners were guilty of constructive dismissal as he found the justification for Recaldes transfer unreasonable: first, the unofficial trip on the way back to the office on

21 October was undertaken through the bidding of the Production Manager; second, loss of trust andconfidence must necessarily occur in the performance of duties; and third, the new position of Recaldewas too humiliating and demeaning. The Labor Arbiter also found that petitioners failed to grant premiumpay to Recalde for her work performed on 22 May 1994, a Sunday.

On 31 October 1996 petitioners were thus ordered to reinstate Recalde to her former position as foodtechnologist assisting in the quality assurance processes of the company and performing laboratory workwithout loss of seniority rights and privileges, with full back wages as well as to grant her premium pay,initially computed thus


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Back Wages:

12/14/94 - 12/30/96 = 24.53 mos.

P183.33 x 30 days x 24.53 mos. - - - - - - - - -

P134,912.54

Premium Pay for Rest Day:

(May 22, 1994): P183.33 x 30% = P55.00

55.00

TOTAL AWARD: - - - - - - - - - - - - - - - - - - - -

P134,967.54The other claims were dismissed for lack of merit.

On 30 April 1997 public respondent National Labor Relations Commission (NLRC) affirmed the ruling.5On 19 June 1997 reconsideration was denied.

Petitioners insist that the transfer of Recalde from the laboratory to the vegetable processing section waseffected in the exercise of management prerogative. It did not amount to a constructive dismissal asRecalde erroneously maintained.

Moreover, petitioners submit that the coring of lettuce together with the other production jobs connectedtherewith is one of the most important aspects of the corporations existence; in fact, those assigned tothe vegetable processing section are mostly professionals like teachers, computer secretar-ies and

forestry graduates.No grave abuse of discretion was committed by the NLRC. Indeed, it is the prerogative of management totransfer an employee from one office to another within the business establishment based on itsassessment and perception of the employees qualifications, aptitudes and competence, and in order toascertain where he can function with maximum benefit to the company. This is a privilege inherent in theemployers right to control and manage his enterprise effectively. The freedom of management to conductits business operations to achieve its purpose cannot be denied.

But, like other rights, there are limits thereto. The managerial prerogative to transfer personnel must beexercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play.Having the right should not be confused with the manner in which that right is exercised. Thus, it cannotbe used as a subterfuge by the employer to rid himself of an undesirable worker.9 In particular, the

employer must be able to show that the transfer is not unreasonable, inconvenient or prejudicial to theemployee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and otherbenefits.10 Should the employer fail to overcome this burden of proof, the employees transfer shall betantamount to constructive dismissal, which has been defined as a quitting because continuedemployment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rankand diminution in pay. Likewise, constructive dismissal exists when an act of clear discrimination,insensibility or disdain by an employer has become so unbearable to the employee leaving him with nooption but to forego with his continued employment.


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In the present case, petitioners failed to justify Recaldes transfer from the position of food technologist inthe laboratory to a worker in the veget able processing section. We recall that what triggered Recaldestransfer was the 21 October incident where she was found to have allegedly utilized company vehicle inlooking for a new residence during office hours without permission from management. In petitioners view,she was dishonest such that they lost their trust and confidence in her. Yet, it does not appear thatRecalde was provided an opportunity to refute the reason for the transfer. Petitioners merely relied on the

narrations of the company driver. Nor was Recalde notified in advance of her impending transfer whichwas, as we shall elucidate later, a demotion in rank. In Gaco v. NLRC13 we noted

While due process required by law is applied in dismissals, the same is also applicable todemotions as demotions likewise affect the employment of a worker whose right to continuedemployment, under the same terms and conditions, is also protected by law. Moreover,considering that demotion is, like dismissal, also a punitive action, the employee beingdemoted should, as in cases of dismissals, be given a chance to contest the same.

Further, petitioners overstretched the effect of Recaldes claimed wrongdoing. We have ruled that breachof trust and confidence as a ground for dismissal from employment must be related to the performance ofthe duties of the employee such as would show him to be thereby unfit to continue working for theemployer. By analogy, breach of trust and confidence as a ground for reassignment must be related to

the performance of the duties of the employee such as would show him to be thereby unfit to dischargethe same task. Clearly, the act of dishonesty imputed to Recalde has no bearing at all to her work in thelaboratory.

Further still, granting that Recalde was proved guilty of dishonesty, the companys General Rules andRegulations provide the corresponding sanctions therefor. Recalde appears to have no prior record ofinfractions. For leaving post temporarily without permission during working hours committed for the first time, warning is imposable, whereas for unauthorized use of any company vehicle committed for thefirst time, the commensurate penalty is 15 days suspension. Although petitioners invoked the pertinentprovisions of the rules and regulations which Recalde allegedly violated, for reasons known only to them,they disregarded those sanctions. Instead, they gave her a less sensitive assignment outside of thelaboratory as they claimed that had they adhered to the rules she would have been dismissed outright forher dishonesty in the unauthorized use of company property. Then too is their claim that they were movedby compassion on account of the then approaching Christmas season. Commendable as thiscompassionate gesture may seem, nevertheless, petitione rs failed to realize that it was not relief fromdismissal which they provided to Recalde when they assigned her to the vegetable processing section butdiscomfiture.

We find insignificant the submission of petitioners that the coring of lettuce together with the otherproduction jobs connected therewith is one of the most important aspects of the corporations existenceand that those assigned to the vegetable processing section are mostly professionals like teachers,computer secretaries and forestry g raduates. Rather, the focus should be on the comparison betweenthe nature of Recaldes work in the laboratory and in the vegetable processing section. As foodtechnologist in the laboratory, she occupied a highly technical position requiring use of her mental faculty. As a worker in the vegetable processing section, she performed mere mechanical work. It was virtually a

transfer from a position of dignity to a servile or menial job. We agree with the observation of the Office ofthe Solicitor General that the radical change in Recaldes nature of work unquestionably resulted in, asrightly perceived by her, a demeaning and humiliating work condition. The transfer was a demotion inrank, beyond doubt.

Another aspect of comparison is the workplaces themselves. Petitioners admitted in their answer toRecaldes complaint that


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Respondents Laboratory is the most expensive area, on a persquare -meter basis, in thecompanys premises. It is here where the quality of the companys products is tested and assured. Since these products are food items ingested by the consuming public, this Laboratory becomesseveral folds critical. Hence, only highly trusted authorized personnel are allowed access to this place.

In other words, the laboratory is the place where the quality of the totality of petitioners products such as

dairy, juices, chocolates and vegetables is tested. On the other hand, the vegetable processing section,as the name implies, involves processing of vegetables alone. Definitely, a transfer from a workplacewhere only highly trusted authorized personnel are allowed access to a workplace that is not as critical isanother reason enough for Recalde to howl a protest.

We reiterate that the NLRC did not commit grave abuse of discretion in affirming the ruling of the Labor Arbiter that petitioners are guilty of constructive dismissal. Recalde is entitled to reinstatement as foodtechnologist without loss of seniority rights and privileges and with full back wages, as directed by theLabor Arbiter. We clarify however that conformably with Art. 279 of the Labor Code, as amended by Sec.34 of RA 6715, to be included in the computation of back wages are the illegally dismissed employeesallowances and other benefits or their monetary equivalent.

WHEREFORE, the petition is DISMISSED. The Decision of public respondent National Labor Relations

Commission finding that private respondent Elvira R. Recalde was constructively dismissed fromemployment and entitled to premium pay is AFFIRMED. Petitioners Blue Dairy Corporation, Edison T. Aviguetero and Pedro G. Miguel are ordered to reinstate private respondent Recalde as food technologistin the laboratory without loss of seniority rights and privileges and with full back wages inclusive ofallowances and other benefits or their monetary equivalent to be computed from her dismissal on 14December 1994 up to actual reinstatement, and to grant her premium pay of P55.00 for work performedon 22 May 1994, a Sunday. Costs against petitioners.

SO ORDERED.

Mendoza, Quisumbing and Buena, JJ., concur.

Petition dismissed; Questioned decision affirmed.

Notes.Being sidelined temporarily is a standard stipulation in employment contracts, as the availabilityof assignment for security guards is primarily dependent on the contracts entered into by the agency withthird parties; In security agency parlance, being placed off detail or on floating status means waiting tobe posted. (Sentinel Security Agency, Inc. vs. National Labor Relations Commission, 295 SCRA 123[1998])

On the basis of the qualifications, training and performance of the employee, the prerogative to determinethe place or station where he or she is best qualified to serve the interests of the company belongs to theemployer. (Tan vs. National Labor Relations Commission, 299 SCRA 169 [1998])

[Blue Dairy Corporation vs. NLRC, 314 SCRA 401(1999)]


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