. DYNAMIC SIGNMAKER OUTDOOR ADVERTISING SERVICES, INC., FILOMENO P.

HERNANDEZ,
ROMMEL A. HERNANDEZ, SEGUNDA A. HERNANDEZ, AND CINDERELLA A. HERNANDEZ-RAESES,
petitioners, vs. FRANCISCO POTONGAN, respondent.
G.R. No. 156589.
June 27, 2005.

Facts:
Respondent Francisco Potongan (Potongan) worked for Dynamic Signmaker Outdoor Advertising
Services (Corporation) as a Production Supervisor. The union of rank-and-file employees of corporation
declared a strike on the ground that the corporation replaced all its supervisors. Subsequently Potongan
did not receive his salary and he was advised to take an indefinite leave of absence. Then Potongan was
being charge by the company for the alleged burning of corporations main building and for the
disruption of work. However, Potangan denied all allegations. Potongan then filed a complaint for illegal
dismissal with NLRC against corporation.

The Labor Arbiter dismissed the case on the ground that the action was barred by prior judgment
regarding the strike of union. Potongan then appealed, contending that the Labor Arbiter did not
acquire jurisdiction over him because he was not even a member of the union. The NLRC set aside the
Labor Arbiters decision and directed respondent Potongan to go back to work.

The Labor Arbiter eventually dismissed Potongans complaint for lack of merit, holding that, inter alia,
Potongan should have reported back to work and/or inquired into the results of the investigation of the
charges against him; and that the belated filing of his complaint partakes of a "fishing expedition."

On appeal, the NLRC affirmed the decision of the Labor Arbiter. The Court of Appeals (CA) however,
reversed the decision of NLRC holding that Potongan was denied due process and was dismissed
without cause.

Issue:
Whether or not the dismissal of Potongan was a valid exercise of management prerogatives

Ruling:
The Supreme Court recognizes that management has wide latitude to regulate, according to its own
discretion and judgment, all aspects of employment, including the freedom to transfer and reassign
employees according to the requirements of its business. The scope and limits of the exercise of
management prerogatives, must, however, be balanced against the security of tenure given to labor.

If exercised in good faith for the purpose of advancing business interests, not of defeating or
circumventing the rights of employees, the managerial prerogative to transfer personnel from one area
of operation to another is justified.

The Supreme Court finds it difficult, however, to attribute good faith on the part of Dynamic. Potongan
was instructed to go on indefinite leave. He was asked to return to work only after more than three
years from the time he was instructed to go on indefinite leave during which period his salaries were
withheld, and only after the NLRC promulgated its decision of May 21, 1998 reversing the labor arbiters
dismissal of his complaint.