16 Labor Relations Case Digests

LABOR RELATIONS
Atty. Jefferson M. Marquez

16 [UNNUMBERED CASE IN TOPIC 3]
INTEGRATED CONTRACTOR AND PLUMBING WORKS, INC. vs. NATIONAL LABOR
RELATIONS 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
the projects it is able to contract with its clients. On February 23, 1998, while private
respondent was about to log out from work, he was informed by the warehouseman that the
main office had instructed them to tell him it was his last day of work as he had been
terminated. When private respondent went to the petitioner's office on February 24, 1998 to
verify his status, he found out that indeed, he had been terminated. He filed a complaint
alleging that he was illegally dismissed without just cause and without due process. the
Labor Arbiter ruled that private respondent was a regular employee and could only be
removed for cause. Petitioner was ordered to reinstate private respondent to his former
position with full backwages from the time his salary was withheld until his actual
reinstatement, and pay him service incentive leave pay, and 13th month pay for three
years. Petitioner further filed a
motion 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
whether an 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 specified at the time the employee is engaged in the project. 13 "Project" refers to a
particular job or undertaking that is within the regular or usual business of the employer,
but which is distinct and separate and identifiable from the undertakings of the company.
Such job or undertaking begins and ends at determined or determinable times.
A review of private respondent's work assignments patently showed he belonged to a work
pool tapped from where workers are and assigned whenever their services were needed. In
a work pool, the workers do not receive salaries and are free to seek other employment
during temporary breaks in the business. They are like regular seasonal workers insofar as
the effect of temporary cessation of work is concerned. This arrangement is beneficial to
both the employer 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
regular employees. 15 Nonetheless, the pattern of re-hiring and the recurring need for his
services are sufficient evidence of the necessity and indispensability of such services to
petitioner's business 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 same
tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the
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usual business or trade of the employer, then the employee must be deemed a regular
employee.
The test to determine whether employment is regular or not is the reasonable connection
between the particular activity performed by the employee in relation to the usual business
or trade of the employer. Also, if the employee has been performing the job for at least one
year, even if the performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of the necessity, if
not indispensability of that activity to the business. Thus, we held that where the
employment of project employees is extended long after the supposed project has been
finished, the employees are removed from the scope of project employees and are
considered regular employees.
While length of time may not be the controlling test for project employment, it is vital in
determining if the employee was hired for a specific undertaking or tasked to perform
functions 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 employment
ceased to be coterminous with specific projects when he was repeatedly re-hired due to the
demands of petitioner's business. 20 Where from the circumstances it is apparent that
periods 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's
termination to the nearest public employment office every time his employment was
terminated due to a completion of a project. The failure of the employer to file termination
reports is an indication that the employee is not a project employee. 22 Department Order
No. 19 superseding Policy Instructions No. 20 also expressly provides that the report of
termination is one of the indications of project employment. 23 In the case at bar, there was
only 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 a
termination 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 of
Northwest Airlines, Inc. in the Philippines. He has to his credit eleven (11) years of
continuous service with the company, including nine (9) years as Northwest Manager with
station at Manila. He received an inter-office communication from R.C. Jenkins, Northwest's
Vice President for Orient Region based in Tokyo, promoting him to the position of Director of
International 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 at the 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 to
remain in his position, of Manager-Philippines until such time that his services in that
capacity are no longer required by the company. Petitioner tried to resume his duties as
Manager after an authorized vacation but the Vice-President for the Orient Region of
Northwest advised petitioner that in view of his letter, his status as an employee of the
company ceased on the close of business and the company therefore considers his letter to
be a resignation without notice.
Issues:
1. Does the employers letter constitute a transfer as a valid exercise of a management
prerogative?
2. Assuming arguendo that the communication or letter of Mr. Jenkins was basically a
transfer, under the particular and peculiar facts obtaining in the case at bar, does
Dosch's inability 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 Philippine
manager to Director of International Sales in Minneapolis, U.S.A. It is not merely a transfer
order alone but as the Solicitor General correctly observes, "it is more in the nature of a
promotion that a transfer, the latter being merely incidental to such promotion." The interoffice communication of Vice President Jenkins is captioned "Transfer" but it is basically and
essentially 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
effective August 18, 1975, he was to be promoted to the position of Director of International
Sales, and his compensation would be upgraded and the payroll accordingly adjusted.
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Petitioner was, therefore, advanced to a higher position and rank and his salary was
increased and that is a promotion. It has been held that promotion denotes a scalar ascent
of an officer or an employee to another position, higher either in rank or salary. In the
Millares case above, the Supreme Court, speaking thru Acting Chief Justice J.B.L. Reyes,
distinguished between transfer and promotion as follows: "A transfer is a movement from
one position to another of equivalent rank, level or salary, without break in the service.
Promotion, on the other hand, is the advancement from one position to another with an
increase in duties and responsibilities as authorized by law, and usually accompanied by an
increase in salary. Whereas, promotion denotes a scalar ascent of a senior officer or
employee to another position, higher either in rank or salary, transfer refers to lateral
movement from one position to another, of equivalent rank, level or salary." There is no law
that compels an employee to accept a promotion, as a promotion is in the nature of a gift or
a reward, which a person has a right to refuse. When petitioner refused to accept his
promotion to Director of International Sales, he was exercising a right and he cannot be
punished for it as qui jure suo utitur neminem laedit. He who uses his own legal right injures
no one.
No, assuming for the sake of argument that the communication or letter of Mr. Jenkins was
basically 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.
While it may be true that the right to transfer or reassign an employee is an employer's
exclusive right and the prerogative of management, such right is not absolute. The right of
an employer to freely select or discharge his employee is limited by the paramount police
power for the relations between capital and labor are not merely contractual but impressed
with public interest (Article 1700, New Civil Code). And neither capital nor labor shall act
oppressively against each other (Article 1701, New Civil Code). There can be no dispute that
the constitutional guarantee of security of tenure mandated under Section 9, Article 2, 1973
Constitution 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 itself
exclude him from the protection of the constitutional guarantee of security of tenure. Even
a manager in a private concern has the right to be secure in his position, to decline a
promotion where, although the promotion carries an increase in his salary and rank but
results in his transfer to a new place of assignment or station and away from his family.
Such an order constitutes removal without just cause and is illegal. Indeed, the outright
dismissal of petitioner 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 loyal years, a strong and vital factor that must be taken into account in
labor law determinations which this Court, speaking thru Chief Justice Fernando in Meracap
vs. International Ceramics Manufacturing Co., Inc., L-48235-36, July 30, 1979, 92 SCRA 412
emphasized should not only be 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 by labor ought not to be visited with a consequence so severe.
It is not only because of the law's concern for the workingman. There is, in addition his
family to consider. Unemployment brings untold hardships and sorrows on those dependent
on the wage-earner. The misery and pain attendant on the loss of jobs then could be
avoided if there be acceptance of the view that under all the circumstances of this case,
petitioners should not be deprived of their means of livelihood. Nor is this to condone what
had been done by them. For all this to condone what had been done by them. For all this
while, since private respondent considered them 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, all the equities of the case must be accorded
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their due weight. Finally, labor law determinations, to quote from Bultmann, should be not
only secundum rationem but also secundum caritatem." (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:
The petitioner is a domestic corporation engaged in the business of providing telegraph and
communication services thru its branches all over the country. It employed various
employees, among whom were herein private respondents.
Sometime in 1997, after conducting a series of studies regarding the profitability of its retail
operations, its existing branches and the number of employees, the petitioner came up with
a 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 of employees occupying redundant positions.
On August 11, 1997, private respondents received separate letters from the petitioner,
giving them the option to choose the branch to which they could be transferred. Thereafter,
the private respondents and other petitioners employees were directed to relocate to
their new PT&T Branches. The affected employees were directed to report to their
respective relocation assignments in a Letter dated September 16, 1997. The petitioner
offered benefits/allowances to those employees who would agree to be transferred under its
new program.
The private respondents rejected the petitioners offer. Their main concern is the proximity
of their transfer; that it would be burdensome for them to leave their families and relocate
to those areas. Dissatisfied with this explanation, the petitioner considered the private
respondents refusal as insubordination and willful disobedience to a lawful order; hence,
the private respondents were dismissed from work. They forthwith filed their respective
complaints 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 before
the arbitration branch of the NLRC.
In their position paper, the complainants (herein private respondents) declared that their
refusal 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 its
part, the petitioner (respondent therein) alleged that the private respondents transfers
were made in the lawful exercise of its management prerogative and were done in good
faith. The transfers were aimed at decongesting surplus employees and detailing them to a
more demanding branch.
ISSUE:
1.) WON the transfer was tantamount to a promotion. And if it is, WON private respondents
committed insubordination in refusing such promotion/transfer which would then justify
PT&Ts act of dismissing them in exercise of management prerogative.
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RULING: The petition is denied due course.
1.) YES, the transfer was indeed in a nature of a promotion. Hence, there can be no
insubordination 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 private
respondents were transferred, they were also promoted, thus:
Clearly, the transfer of the complainants is not unreasonable nor does it involve demotion in
rank. They are being moved to branches where the complainants will function with
maximum benefit to the company and they were in fact promoted not demoted from a
lower job-grade to a higher job-grade and receive even higher salaries than before. Thus,
transfer of the complainants would not also result in diminution in pay benefit and privilege
since the salaries of the complainant would be receiving a bigger salary if not the same
salary plus additional special relocation package. Although the increase in the pay is not
significant this however would be translated into an increase rather than decrease in their
salary because the complainants who were transferred from the city to the province would
greatly benefit because it is of judicial notice that the cost of living in the province is much
lower than in the city. This would mean a higher purchasing power of the same salary
previously being received by the complainants.
Indeed, the increase in the respondents responsibility can be ascertained from the scalar
ascent of their job grades. With or without a corresponding increase in salary, the
respective transfer of the private respondents was in fact promotions, following the ruling
enunciated in 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 usually accompanied by an increase in salary. Apparently, the indispensable element
for there to be a promotion is that there must be an advancement from one position to
another or an upward vertical movement of the employees rank or position.
Any increase in salary should only be considered incidental but never determinative of
whether or not a promotion is bestowed upon an employee. This can be likened to the
upgrading of salaries of government employees without conferring upon the, the
concomitant elevation to the higher positions.
The admissions of the petitioner are conclusive on it. An employee cannot be promoted,
even if 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 away from 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
a promotion 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 as
insubordination, or willful disobedience of a lawful order of the employer. As such, there
was no valid cause for the private respondents dismissal.
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As the questioned dismissal is not based on any of the just or valid grounds under Article
282 of 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 to their 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
Facts:
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board
Resolution Nos. 99-52 and 99-53, which read:
Board Res. No. 99-52
RESOLVED 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
further strengthen the existing internal control system[,] all officers and employees
are subject to reshuffle of assignments. Moreover, this resolution does not preclude
the transfer of assignment of bank officers and employees from the branch office to
the head office and vice-versa.
Petitioner Elmer Mendoza expressed his opinion on the reshuffle in an undated letter
addressed to Daya, bank board chairman, that the reshuffling deemed to be a demotion
without any legal basis and is a blatant harassment on from the employer as a prelude
petitioners termination in due time. That it resulted to unfair labor practice. Daya replied
that it was never the intention (of management) to downgrade petitioners position, and
that the reshuffle will also afford management an effective tool in providing the bank a
sound internal control 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, 1999
petitioner filed a Complaint for illegal dismissal, underpayment, separation pay and
damages against the Rural Bank of Lucban and/or its president, Alejo B. Daya; and its
Tayabas branch manager, Briccio V. Cada.
Issue:
1. Whether or not the reshuffling or transfer is deemed to be a demotion on petitioners
position.
Ruling:
Management Prerogative to Transfer Employees. Jurisprudence recognizes the exercise of
management prerogatives. For this reason, courts often decline to interfere in legitimate
business decisions of employers. Indeed, labor laws discourage interference in employers
judgments concerning the conduct of their business. The law must protect not only the
welfare of employees, but also the right of employers. In the pursuit of its legitimate
business interest, management has the prerogative to transfer or assign employees from
one office or area 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
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discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause. This privilege is inherent in the right of employers to control and manage
their enterprise effectively. The right of employees to security of tenure does not give them
vested rights to their positions to the 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 policy
to familiarize bank employees with the various phases of bank operations and further
strengthen the existing internal control system of all officers and employees. We have
previously held that employees may be transferred -- based on their qualifications,
aptitudes and competencies -- to positions in which they can function with maximum
benefit to the company. There appears no justification for denying an employer the right to
transfer employees to expand their competence and maximize their full potential for the
advancement of the establishment. Petitioner was not singled out; other employees were
also reassigned without their express consent. Neither was there any demotion in the rank
of petitioner; or any diminution of his salary, privileges and other benefits. This fact is clear
in respondents Board Resolutions, the April 30, 1999 letter of Bank President Daya to
Branch Manager Cada, and the May 10, 1999 letter of Daya to petitioner.
4. Duncan Assn. of Detailman-PTFWO vs Glaxo Wellcome Phils. G.R. 162994
Facts:
Petitioner Tecson was hired by respondent Glaxo Wellcome Phils. as medical representative.
Tecson signed a contract of employment, which stipulates among others, that he agrees to
disclose existing or future relationship with co-employees and employees of competing
companies that should such relationship poses a conflict of interest, to resign from the
company. Despite repeated warnings, Tecson and Bettsy, an employee of a competing
company, got married. Glaxo transferred Tecson to Butuan, but he defied such orders and
continued acting as medical representative in Camarines area. The National Conciliation
and Mediation board rendered as valid the policy and the right to transfer.
Issue:
Whether or not the policy constitutes a prohibition against marriage.
Ruling:
No. Glaxos policy prohibiting an employee from having a relationship is a valid exercise of
management prerogatives as relationships of that nature might compromise the interests of
the company. Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information for competitors. The
right to protect its economic interests is recognized by the constitution which recognizes the
right of enterprises to adopt and enforce such a policy to protect its right to reasonable
returns on investments and for expansion and growth. Indeed, while our laws endeavor to
give life to the constitutional policy on social justice and the protection of labor, it does not
mean that every labor dispute will be decided in favor of the workers. The law also
recognized that management has rights which are also entitled to respect and enforcement
in the interest of fair play. The challenged company policy does not violate the equal
protection clause of the constitution as such clause is addressed only to the state or those
acting under color of its authority. The policy being questioned is not a policy against
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marriage. An employee of the company remains free to marry anyone of his or her
choosing. The policy is aimed at restricting a personal prerogative that belongs only to the
individual. However, an employees personal decision does not detract the employer from
exercising management prerogatives to ensure maximum profit and business success.
5. Norkis Trading Co., vs. NLRC, G.R. No. 168159, August 19, 2005
Facts:
Petitioner Norkis Trading Co., Inc. employed private respondent Ma. Arlene C. Gnilo on
March 8, 1990, initially trained as administration and finance officer assigned to the
companys branch at Calamba, Laguna. On January 24, 2001, she was promoted as Acting
Senior Branch Control Officer for Bicol Region. As such, she was instructed by her
immediate superior to confirm transactions pertaining to collections and deposits of BCO
Marivic Faura at Polangui. In a memorandum dated May 22, 2002, private respondent was
informed about a recent company audit which disclosed that she had disregarded the
detailed instructions of her superior and failed to perform her duties as a Senior Branch
Control Officer. An investigation by the companys Internal Audit Group ensued and private
respondent was formally charged with Negligence Resulting to Material Loss. After the
hearing of the IAP was concluded, private respondent made a written Request for Reassignment to be assigned as Cashier of the Naga Branch which is vacant and considering
that she is a resident of Naga City and a mother of three growing kids. On July 29, 2002, she
reiterated this request to be assigned anew in Naga City while waiting for the resolution of
her case. In August and September 2002, private respondent also requested to be furnished
a copy of the minutes and audit report of the IAP investigation. The company did not
accede to her requests and she continued reporting at the main office performing whatever
work assigned to her, such as monitoring of collections at Cubao Branch. For the period
March 18-April 1, 2003, the company withheld the Transportation and Travel Allowance
(TNT) being received by private respondent amounting to P7,555.00, prompting her to
formally protest her questionable assignment at the Home Office in Mandaluyong City
which she insisted is against her appointment as Senior BCO for Bicol Region and Samar.
She wrote a letter to the management criticizing them for wanting to ease her out of the
company due to a labor case filed by her husband, who also worked at Norkis for more than
13 years, and such withdrawal of her travel allowances is calculated to cause suffering on
her part. She expressed that the situation 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 to stay in the main office. Upon returning to Naga City,
however, private respondent learned that the management instructed to deny her entry to
the branch premises and access to company records. She was ordered to report back to the
main office and to explain why no disciplinary action should be taken against her for
abandonment of work, which under existing 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 company withdrew her monthly TNT. She asserted
that considering her difficult situation, she had no choice but to stick to her appointment as
Senior BCO-Bicol Region and Samar there being no superseding memo changing her
assignment. On April 14, 2003, private respondent received a 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 the company 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 for the reason that the
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situation had become unbearable for her tantamount to constructive dismissal, with claims
for nonpayment of salaries, service incentive leave pay, 13th month pay, 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 of Appeals,
on appeal, affirmed the decision. Petitioner contends that its acts were legitimate exercises
of the corporations management prerogative and that the private respondent was guilty 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,
to regulate all aspects of personnel administration including hiring, work assignments,
working 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-off of workers, and the dismissal and recall of workers. 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 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 right
in his position as would deprive the company of its prerogative to change his assignment or
transfer him where he will be most useful. When his transfer is not unreasonable, nor
inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or a
diminution of his salaries, benefits, and other privileges, the employee 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 it
is subject to limitations imposed by law, collective bargaining agreements, and general
principles of fair play and justice. The managerial prerogative to transfer personnel must be
exercised 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 cannot be used as a subterfuge by the employer to rid himself of an
undesirable 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 in rank or a diminution of his salaries, privileges and other benefits. Should the
employer fail to overcome this burden of proof, the employees transfer shall be tantamount
to constructive dismissal.
6. PLDT vs. Paquio, G.R. No. 152689, October 12, 2005
Facts:
Petitioner Philippine Long Distance Telephone Company, Inc. (PLDT) has 27 Exchanges in its
Greater 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 PLDT
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criteria for performance rating as unfair because they depended on manpower after
receiving its appraisal rating. He also suggested that the criteria failed to recognize that
exchanges with 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 rating in the GMM. Nevertheless, Paguio reiterated his letter to Santos and objected
to the performance rating as it was based only on the attainment of objectives, without
considering other relevant factors. Two years later on June 1996, PLDT rebalanced the
manpower of the East Center. Paguio wrote Santos and requested reconsideration of the
manpower rebalancing, claiming it was unfair to Garnet Exchange because as the oldest
exchange in the East Center, it was disallowed to use contractors for new installations and
was not made beneficiary 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 as Garnet 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 that his reassignment be deferred. He also filed a complaint against his
supervisor for grave abuse of authority and manipulation of the East Center performance.
Findings were that the memo was in order as it was based on the finding that Paguio was
not a team player and cannot accept decisions of management, which is short of
insubordination. He was then advised 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 action that 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 was later amended to illegal demotion with prayer for
reversion to old position, damages and attorneys 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
complaint alleged illegal demotion while the decision involved illegal transfer.
Prefatorily, we note from the records that there has been no change of cause of action from
illegal demotion to illegal transfer. Illegal demotion is a type of illegal transfer.
Moreover, it is familiar and fundamental doctrine that it is not the title of the action but the
allegations in the pleading that determines the nature of the action. An employer is free to
regulate, according to his own 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 employees qualifications, aptitudes, and competence, to
deploy its employees in the various areas of its business 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 right in his position as would deprive the
company of its prerogative to change his assignment or transfer him where he will be most
useful.
Nonetheless, there are limits to the management prerogative. While it may be conceded
that management is in the best position to know its operational needs, the exercise of
management prerogative cannot be utilized to circumvent the law and public policy on
labor and social justice. That prerogative accorded management should not defeat the very
purpose for which our labor laws exist: to balance the conflicting interests of labor and
management. By its very nature, management prerogative must be exercised always with
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the principles of fair play and justice. 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 in rank or a diminution of his salaries, privileges and other benefits. The
employer bears the burden of proving that the transfer of the employee has complied with
the foregoing test.
In the present case, we see no credible reason for Paguios transfer except his criticisms of
the companys performance evaluation methods. Based on the undisputed facts, Garnet
Exchange was doing well and excelled in the performance rating. In the same way, Paguios
performance was consistently rated as outstanding. There was also no proof that Paguio
refused to comply with any management policy. Patently, his transfer could not be due to
poor performance. Neither was it because he was needed in the new post for the new
assignment was functionless and it was nothing but a title. Paguios transfer could only be
caused 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
position with neither office nor staff.
Hence, transfer was not valid.
7. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006
Facts:
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 as a married but separated man. After he got her pregnant, she discovered that he
was not separated. Thus, she severed her relationship with him to avoid dismissal due to
the company policy. On November 30, 1999, she met an accident and was advised by the
doctor at the Orthopedic Hospital to recuperate for twenty-one (21) days. She returned to
work on December 21, 1999 but she found out that her name was on-hold at the gate. She
was denied entry. She was directed to proceed to the personnel office where one of the staff
handed her a 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 and has 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 the company. Due to her urgent need for money, she later
submitted a letter of resignation in exchange 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
is illegal and contravenes Article 136 of the Labor Code.
Issue:
Whether or not the 1995 Policy/Regulation of the company is violative of the Constitutional
rights towards marriage and the family of employees and of article 136 of the Labor Code.
Held:
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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.
The Civil Code likewise protects labor with the following provisions such as articles 1700
and 1702.
The Labor Code is the most comprehensive piece of legislation protecting labor. The case
at bar 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 or
continuation of employment that a woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting married a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of her marriage.
In denying the contention of the petitioner company, the SC applied the two factors to
justify a bona fide occupational qualification:
Since the finding of a bona fide occupational qualification justifies an employers no-spouse
rule, the exception is interpreted strictly and narrowly. There must be a compelling business
necessity for which no alternative exists other than the discriminatory practice. To justify a
bona fide occupational qualification, the employer must prove two factors: (1) that the
employment qualification is reasonably related to the essential operation of the
job involved; and, (2) that there is a factual basis for believing that all or
substantially all persons meeting the qualification would be unable to properly
perform the duties of the job.
The requirement that a company policy must be reasonable under the circumstances to
qualify as a valid exercise of management prerogative was also at issue in the 1997 case of
Philippine Telegraph and Telephone Company v. NLRC. In said case, the employee was
dismissed in violation of petitioners policy of disqualifying from work any woman worker
who contracts marriage. We held that the company policy violates the right against
discrimination afforded all women workers under Article 136 of the Labor Code, but
established a permissible exception, viz.:
A requirement that a woman employee must remain unmarried could be justified as a bona
fide occupational qualification, or BFOQ, where the particular requirements of the job
would justify the same, but not on the ground of a general principle, such as the desirability
of spreading work in the workplace. A requirement of that nature would be valid provided it
reflects an inherent quality reasonably necessary for satisfactory job performance.
The cases of Duncan and PT&T instruct us that the requirement of reasonableness must be
clearly established to uphold the questioned employment policy. The employer has the
burden to prove the existence of a reasonable business necessity. The burden was
successfully discharged in Duncan but not in PT&T.
The SC does not find a reasonable business necessity in the case at bar.
Petitioners sole contention that the company did not just want to have two (2) or more of
its employees related between the third degree by affinity and/or consanguinity is lame.
That the second paragraph was meant to give teeth to the first paragraph of the questioned
rule is evidently not the valid reasonable business necessity required by the law.
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It is significant to note that in the case at bar, respondents were hired after they were found
fit for the job, but were asked to resign when they married a co-employee. Petitioners failed
to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit,
then an employee of the Repacking Section, could be detrimental to its business operations.
Neither did petitioners explain how this detriment will happen in the case of Wilfreda Comia,
then a Production Helper in the Selecting Department, who married Howard Comia, then a
helper in the cutter-machine. The policy is premised on the mere fear that employees
married to each other will be less efficient. If we uphold the questioned rule without valid
justification, the employer can create policies based on an unproven presumption of a
perceived danger at the expense of an employees right to security of tenure.
Petitioners contend that their policy will apply only when one employee marries a coemployee, but they are free to marry persons other than co-employees. The questioned
policy may not facially violate Article 136 of the Labor Code but it creates a
disproportionate effect and under the disparate impact theory, the only way it could pass
judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit
disproportionate, effect. The failure of petitioners to prove a legitimate business concern in
imposing the questioned policy cannot prejudice the employees right to be free from
arbitrary discrimination based upon stereotypes of married persons working together in one
company. Decision of the CA affirmed.
8. Rivera vs. Solidbank, G.R. No. 163269, April 19, 2006
Facts:
Rivera started working with Solidbank Corporation as an audit clerk since July 1, 1977. Then
promoted as credit investigator, senior clerk, assistant accountant, and finally as assistant
manager. Prior to his retirement, he became the Manager of the banks Credit Investigation
and Appraisal Division of the Consumer's Banking Group. In the meantime, Rivera and his
brother-in-law put up a poultry business in Cavite. In December 1994, Solidbank offered two
retirement programs to its employees: (a) the Ordinary Retirement Program (ORP), under
which an employee would receive 85% of his monthly basic salary multiplied by the number
of years in service; and (b) the Special Retirement Program (SRP), under which a retiring
employee would receive 250% of the gross monthly salary multiplied by the number of
years in service. Rivera decided to devote his time and attention to his poultry business in
Cavite and applied for retirement under the SRP. Solidbank approved the application and
confirmed his separation from Solidbank on February 25, 1995. However, Solidbank
required Rivera to sign an undated Release, Waiver and Quitclaim, which was notarized on
March 1, 1995. He acknowledged receipt of the net proceeds of his separation and
retirement benefits and promised that "he would not, at any time, in any manner
whatsoever, directly or indirectly engage in any unlawful activity prejudicial to the interest
of Solidbank, its parent, affiliate or subsidiary companies, their stockholders, officers,
directors, agents or employees, and their successors-in-interest and will not disclose any
information concerning the business of Solidbank, its manner or operation, its plans,
processes, or data of any kind." He also signed in an Undertaking upon which he promised
that "not to seek employment with a competitor bank 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 entitle Solidbank to a cause of action against him
before the appropriate courts of law. But on May 1, 1995, Rivera got employed with
Equitable Banking Corporation (Equitable) as Manager of its Credit Investigation and
Appraisal Division of its Consumers' Banking Group. Upon learning this, Solidbank wrote a
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letter dated May 18, 1995, informing Rivera that he had violated the Undertaking and
demanded the return of all the monetary benefits he received in consideration of the SRP
within five (5) days from receipt; otherwise, appropriate legal action would 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 public policy.
Ruling:
The petition is meritorious. There is no dispute between the parties that, in consideration
for his availment of the SRP, petitioner executed the Release, Waiver and Quitclaim, and the
Undertaking as supplement thereto, and that he received retirement pay amounting to
P963,619.28 from respondent. We agree with petitioner's contention that the issue as to
whether the post-retirement competitive employment ban incorporated in the Undertaking
is against public policy is a genuine issue of fact, requiring the parties to present evidence
to support 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 full awareness of what he was doing and entered into and carried out in good faith.
Such a contract 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 or to render a decision different therefrom. They have no power to relieve parties
from obligation voluntarily assailed, simply because their contracts turned out to be
disastrous deals.
On the other hand, retirement plans, in light of the constitutional mandate of affording full
protection to labor, must be liberally construed in favor of the employee, it being the
general rule that pension or retirement plans formulated by the employer are to be
construed against it. Retirement benefits, after all, are intended to help the employee enjoy
the remaining years of his life, releasing him from the burden of worrying for his financial
support, and are a form of reward for being loyal to the employer. Undeniably, petitioner
retired under the SRP and received P963,619.28 from respondent. However, petitioner is
not proscribed, by waiver or estoppel, from assailing the post-retirement competitive
employment ban since under Article 1409 of the New Civil Code, those contracts whose
cause, object or purpose is contrary to law, morals, good customs, public order or public
policy are inexistent or void from the beginning. Estoppel cannot give validity to an act that
is prohibited by law or one that is against public policy.
Respondent, as employer, is burdened to establish that a restrictive covenant barring an
employee from accepting a competitive employment after retirement or resignation is not
an unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus,
unenforceable for being repugnant to public policy. Courts should carefully scrutinize all
contracts limiting a man's natural right to follow any trade or profession anywhere he
pleases and in any lawful manner. But it is just as important to protect the enjoyment of an
establishment in trade or profession, which its employer has built up by his own honest
application to every day duty and the faithful performance of the tasks which every day
imposes 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
him who labors the right by every legitimate means to protect the fruits of his labor and
secure the enjoyment of them to himself. 56 Freedom to contract must not be unreasonably
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abridged. Neither must the right to protect by reasonable restrictions that which a man by
industry, skill and good judgment has built up, be denied. Consideration must be given to
the employee's right to earn a living and to his ability to determine with certainty the area
within which his employment ban is restituted. A provision on territorial limitation is
necessary to guide an employee of what constitutes as violation of a restrictive covenant
and whether the geographic scope is co-extensive with that in which the employer is doing
business. In considering a territorial restriction, the facts and circumstances surrounding the
case must be considered.
Thus, in determining whether the contract is reasonable or
not, the trial court should 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 the employee; (c) whether the covenant is injurious to the public welfare; (d)
whether the time and territorial limitations contained in the covenant are reasonable; and
(e) whether the restraint is reasonable from the standpoint of public policy.
We are not impervious of the distinction between restrictive covenants barring an employee
to accept a post-employment competitive employment or restraint on trade in employment
contracts and restraints on post-retirement competitive employment in pension and
retirement plans either incorporated in employment contracts or in collective bargaining
agreements between the employer and the union of employees, or separate from said
contracts or collective bargaining agreements which provide that an employee who accepts
post retirement competitive employment will forfeit retirement and other benefits or will be
obliged to restitute the same to the employer. A post-retirement competitive employment
restriction is designed to protect the employer against competition by former employees
who may retire and obtain retirement or pension benefits and, at the same time, engage in
competitive employment.
9. Tiu v. Platinum Plans, Inc., G.R. No. 163512, February 28, 2007
FACTS:
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
its Hongkong and Asean operations. The parties executed a contract of employment valid
for five 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
corporation engaged also in the pre-need industry. Platinum Plans sued Tiu for damages
before the RTC of Pasig City, Branch 261. alleging, among others, that petitioners
employment with Professional Pension Plans, Inc. violated the non-involvement clause in
her contract of employment:
The EMPLOYEE further undertakes that during his/her engagement with EMPLOYER and in
case of separation from the Company, whether voluntary or for cause, he/she shall not, for
the next TWO (2) years thereafter, engage in or be involved with any corporation,
association or entity, whether directly or indirectly, engaged in the same business or
belonging to the same pre-need industry as the EMPLOYER. Any breach of the foregoing
provision shall render the 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 public
order or public policy: First, the restraint imposed was much greater than what was
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necessary to afford respondent a fair and reasonable protection. Petitioner contended that
the transfer to 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
the contract on her own will and volition. Thus, she bound herself to fulfill not only what was
expressly stipulated in the contract, but also all its consequences that were not against
good faith, 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
respondents business.
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 and
therefore against public policy. However, a non-involvement clause is not necessarily void
for being in restraint of trade as long as there are reasonable limitations as to time, trade,
and place.
Nevertheless, in this case, the non-involvement clause has a time limit: two years from the
time petitioners employment with respondent ends. It is also limited as to trade, since it
only prohibits petitioner from engaging in any pre-need business akin to respondents.
Since petitioner was the Senior Assistant Vice-President and Territorial Operations Head in
charge of respondents Hongkong and Asean operations, she had been privy to confidential
and highly sensitive marketing strategies of respondents business. To allow her to engage
in a rival business soon after she leaves would make respondents trade secrets vulnerable
especially in a highly competitive marketing environment. In sum, we find the noninvolvement clause not contrary to public welfare and not greater than is necessary to
afford a fair and reasonable protection to respondent.13
In any event, Article 1306 of the Civil Code provides that parties to a contract may establish
such stipulations, clauses, terms and conditions as they may deem convenient, provided
they are 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 have
the 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 not
contravene law, morals, good customs, public order or public policy, for to do so would be
to alter the real intent of the parties, and would run contrary to the function of the courts to
give force 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, and thus, should be complied with in good faith.
Thus, as held by the trial court and the Court of Appeals, petitioner is bound to pay
respondent P100,000 as liquidated damages. While we have equitably reduced liquidated
damages in certain cases, we cannot do so in this case, since it appears that even from the
start, petitioner had not shown the least intention to fulfill the non-involvement clause in
good faith.
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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. In August 1996, a certain law student filed a complaint against petitioner for alleged
irregularities in the performance of her work. Petitioner was told to submit her answer to the
complaint and given several extensions within which to do so. Despite the extensions, she
failed 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 to
file 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 with
students 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 her
transfer to the Office of the Principals of the High School and Elementary Departments. On
21 January 1997, the Administrative Investigating Committee found the Department Order
appropriate since it was intended to prevent the controversy between petitioner and the
complaining student from adversely affecting a harmonious relationship within the College
of Law among all its constituents. On 17 February 1997, petitioner filed a complaint for
constructive dismissal with prayer for moral and exemplary damages and attorneys fees
before 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,
the transfer also amounted to her demotion in rank. The NLRC dismissed the complaint for
lack of merit which decision was affirmed by the Court of Appeals.
Issue:
1. Whether petitioners transfer as secretary/clerk-typist from the College of Law to the
High School and Elementary Departments amounts to constructive dismissal.
Ruling:
There was no constructive dismissal. There is constructive dismissal if an act of clear
discrimination, insensibility, or disdain by an employer becomes so unbearable on the part
of the employee that it would foreclose any choice by him except to forego his continued
employment. It exists where there is cessation of work because "continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and
a diminution 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, and competence, to move them around in the various areas of its business
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 right in
his position as would deprive the company of its prerogative to change his assignment or
transfer him where he will be most useful. When his transfer is not unreasonable, nor
inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or a
diminution of his salaries, benefits, and other 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 a secretary/clerk-typist of the College of Law. As
such secretary/clerk-typist, she would only have to perform the same duties in the Office of
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the Principals of the High School and Elementary Departments. Petitioner was not denied
due process. Reassignments made by management pending investigation of irregularities
allegedly committed by an employee fall within the ambit of management prerogative. The
transfer, while incidental to the pending charges against petitioner, was not meant to be a
penalty, but rather a preventive measure to avoid further damage to the College of Law.
The purpose of reassignments is no different from that of preventive suspension which
management could validly impose as a measure of protection of the companys property
pending investigation of any malfeasance or misfeasance 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 a
Boeing 747 Systems Engineer. He successfully bid for the higher position of Airbus 300 (A300) First Officer. Since said higher position required additional training, he underwent, at
PALs expense, more than five months of training consisting of ground schooling
in Manila and flight simulation in Melbourne, Australia. After completing the training course,
Almario served as 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 will make him reimburse the training costs plus damages as he is required to
render 3 years of service because the company invested heavily on his professional
training. Almario denied the existence of any agreement with PAL and pointed out that the
CBA between PAL and Airlines Pilot Association carried no such agreement. RTC rendered
judgment in favor of Almario 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 A300 First Officer. Given that, PAL expected to recover the training costs by availing
of Almarios services for at least three years. The expectation of PAL was not fully realized,
however, due to Almarios resignation after only eight months of service following the
completion of his training course. He cannot, therefore, refuse to reimburse the costs of
training without violating the principle of unjust enrichment. The pertinent provision of the
CBA 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 or
legal ground, shall return the same to him,
12. San Miguel Corp. v. Pontillas, G.R. No. 155178, May 07, 2008
Facts:
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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-paid
employee which entitled him to yearly increases in salary. Respondent alleged that his
yearly salary 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 to
discrimination under Article 1004 of the Labor Code, as well as for recovery of salary
differential and backwages, against petitioner. Manager, issued a Memorandum ordering,
among others, the transfer of responsibility of the Oro Verde Warehouse to the newlyorganized VisMin Logistics Operations effecting the formal transfer of responsibility of the
security personnel and equipment in the Oro Verde Warehouse. Simultaneously, the
manager gave the same information to his Supervising Security Guards for them to relay
the information to the company security guards. Petitioner alleged that respondent was
properly notified of the transfer but he refused to receive
Respondent continued to report at Oro Verde Warehouse. He alleged that he was not
properly notified 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 also alleged that respondent was given notices of Guard Detail separately dated.
but he still refused to report for duty at the VisMin Logistics Operations.
In a letter, petitioner informed respondent that an administrative investigation would be
conducted on relative to his alleged offenses of Insubordination or Wilful Disobedience in
Carrying out Reasonable Instructions of his superior. , respondent filed an amended
complaint against petitioner for illegal dismissal and payment of backwages, termination
pay, moral and exemplary damages, and attorney's fees.
LA: Ruled in favour of the company and against Pontillas. The Labor Arbiter recognized the
management 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
the functions of the Materials Management of the Mandaue Brewery and the Physical
Distribution Group which resulted to the forming of the VisMin Logistics Operations. The
Labor Arbiter further ruled that petitioner did not violate Article 100 of the Labor Code.
Labor Arbiter ruled that respondent was accorded due process before his termination from
the service. He was investigated with the assistance of counsel, and he was able to confront
petitioner's witnesses and present evidence in his favor.
NLRC: Set aside the Labor Arbiter's Decision. The NLRC ruled that respondent was not
informed of his transfer from Oro Verde Warehouse to VisMin Logistics Operations. The
notices allegedly sent to respondent did not indicate any receipt from respondent. NLRC
further ruled that respondent was a victim of discrimination. The NLRC declared that
petitioner failed to justify why respondent was not entitled to the full rate of salary
increases enjoyed by other security guards.
CA: Court of Appeals affirmed with modification the NLRC's Decision. Court of Appeals ruled
that under Article 282(a) of the Labor Code, as amended, an employer may terminate an
employment for serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or his representative in connection with his work. The Court of
Appeals ruled that there was no sufficient evidence that would show that respondent's
failure to report to his new superior was willful and characterized by a perverse and
wrongful attitude.
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LABOR RELATIONS
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
by the employee of the lawful orders of his employer or representative in connection with
his work. Wilful disobedience requires the concurrence of two elements: (1) the
employee's assailed conduct must have been wilful, that is, characterized by a wrongful and
perverse attitude; and (2) the order violated must have been reasonable, lawful, made
known to the employee, 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 according to the requirements of its business, provided the transfer does not result in
demotion in rank or diminution of the employee's salary, benefits, and other privileges. In
this case, we found that the order of transfer was reasonable and lawful considering the
integration of Oro Verde Warehouse with VisMin Logistics Operations. Respondent was
properly informed of the transfer but he refused to receive the notices on the pretext that
he was wary because of his pending 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 veterinary
medicines and products. Tryco and the petitioners signed a Memorandum of Agreement
(MOA), providing for a compressed workweek schedule to be implemented in the company
effective May 20, 1996. The MOA was entered into pursuant to Department of Labor and
Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the
Implementation 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. The
MOA specifically stated that the employee waives the right to claim overtime pay for work
rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the
compressed workweek schedule is adopted in lieu of the regular workweek schedule which
also consists of 46 hours. However, should an employee be permitted or required to work
beyond 6:12 p.m., such employee shall be entitled to overtime pay. Tryco informed the
Bureau of Working Conditions of the Department of Labor and Employment of the
implementation of a compressed workweek in the company. In January 1997, BMT and Tryco
negotiated for the renewal of their collective bargaining agreement (CBA) but failed to
arrive at a new agreement. Meantime, Tryco received the Letter dated March 26, 1997 from
the Bureau of Animal Industry of the Department of Agriculture reminding it that its
production should be conducted in San Rafael, Bulacan, not in Caloocan City since its
operating permit was licensed there. Accordingly, Tryco issued a Memorandum dated April
7, 1997 which directed petitioners to report to the company's plant site in Bulacan. BMT
opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes
unfair labor practice. In protest, BMT declared a strike on May 26, 1997. Petitioners then
filed their complaints to the labor arbiter alleging that Tryco negotiated in bad faith and
unfair labor practice of Tryco by transferring the members of the union in order to paralyze
it and that therefore it amounted to constructive dismissal.
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LABOR RELATIONS
Issue:
1. Was there constructive dismissal due to the transfer of the petitioners from Caloocan
City to San Rafael Bulacan?
Ruling:
The petition has no merit. Findings of fact of labor officials, who are deemed to have
acquired expertise in matters within their respective jurisdiction, are generally accorded not
only respect 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 absolute
agreement. In this case, the Labor Arbiter, the NLRC, and the CA uniformly agreed that the
petitioners were not constructively dismissed.
Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of
whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the
scope of its inherent right to control and manage its enterprise effectively. While the law is
solicitous of the welfare of employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The free will of management to
conduct its 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 and
reassign employees according to the requirements of its business.Management's
prerogative of transferring and reassigning employees from one area of operation to
another in order to meet the requirements of the business is, therefore, generally not
constitutive of constructive dismissal. Thus, the consequent transfer of Tryco's personnel,
assigned to the Production Department was well within the scope of its management
prerogative.
When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and
it does 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, the employer has the burden of proving that the transfer of an employee is for
valid and legitimate 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 a diminution of his salaries, privileges and other benefits.
Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or
diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore,
anchor their objection solely on the ground that it would cause them great inconvenience
since they are all residents of Metro Manila and they would incur additional expenses to
travel daily from Manila to Bulacan.
The Court has previously declared that mere incidental inconvenience is not sufficient to
warrant a claim of constructive dismissal. Objection to a transfer that is grounded solely
upon the personal inconvenience or hardship that will be caused to the employee by reason
of the transfer is not a valid reason to disobey an order of transfer.
Hence petition was denied for lack of merit.
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LABOR RELATIONS
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 Physical
Distribution Fleet Manager with a job grade of S-7 and monthly salary of P50,000.00, aside
from the use of a company car, gasoline allowance, and annual foreign travel, among other
benefits. In 1992, as part of the reorganization of the Company, Del Villar became the
Transportation Services Manager, under the Business Logistic Directorate, headed by
Director Edgardo 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
in conspiracy with local truck manufacturers, overpricing the trucks purchased by the
Company by 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 the Executive Assistant in the Business Logistic Directorate in charge of
the Refrigeration Services of the Company.
Seven months after the submission of his Report on the fraudulent scheme of several
company 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
Control Manager, 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
company rules and policies; and (3) Del Villar was to turn over the vehicle assigned to
him as Transportation 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 Services
Manager, but his car and other privileges were withdrawn and he spent his time at
his new post sitting "at a desk with no meaningful work whatsoever." Del Villar believed that
he was demoted by the Company to force him to resign. Unable to endure any further the
harassment, Del Villar filed with the Arbitration Branch of the NLRC on November 11, 1996 a
complaint against the Company for illegal demotion and forfeiture of company privileges.
According to Coca-Cola [Del Villar] was not outrightly dismissed; instead, he was removed
from his former position as Transportation Services Manager, and demoted to Staff Assistant
to the Corporate Purchasing and Materials Control Manager. The Company embarked on a
reorganization of the Business Logistic Directorate. As a result, the functions related to
Refrigeration 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 conference
before the NLRC Arbitration Branch. The Company reasoned that in appointing Del Villar as
the Staff Assistant of the Corporate Purchasing and Materials Control Manager, from his
former position as Transportation Services Manager, the Company was merely exercising its
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 its
Page 102
LABOR RELATIONS
employees, in good faith the Company has initiated a special program called "Project New
Start". This program is intended to assist employees whose positions will be declared
redundant with the implementation of new distribution systems, utilization of improved
operational processes and functional re-organizations.
Labor Arbiter rendered a Decision in Del Villars favor. The Labor Arbiter held that the
allegations in Del Villars complaint sufficiently presented a cause of action against the
Company.
Del Villar appears to have been singled out or discriminated upon due to his having
reported the 1996 truck scam, and his present isolation can be seen as a punishment for
acting in a righteous and forthright manner. Otherwise, as a "Staff Assistant" [Del Villar]
should have been 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 good
faith. Mere conclusions of fact and law should not be used as bases for an automatic finding
of 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 logical consequence of such disclosure is for the president of the company to
dismiss the erring employees and officers for their highly irregular acts and not to penalize
[Del Villar] for making such disclosure.
This is amply supported by the fact that the [the Company] conducted a thorough
investigation of the reported scam and even obtained the services of an independent
auditor to determine whether the alleged anomalous transactions were actually irregular
and/or questionable. 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]
was retaliatory or penal in nature nor tainted with bad faith and/or malice. Otherwise, [the
Company] 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 an
employee whose position for example, requires that he stays in the office during working
hours. Benefits, privileges and perquisites that attach to a certain position do not provide
sufficient 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 Control
Manager, 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
the company from the act of taking the position from him?
RULING:
In the pursuit of its legitimate business interest, management has the prerogative to
transfer or assign employees from one office or area of operation to another provided there
is no demotion in rank or diminution of salary, benefits, and other privileges; and the action
Page 103
LABOR RELATIONS
is not motivated by discrimination, made in bad faith, or effected as a form of punishment
or demotion without sufficient cause. The right of employees to security of tenure does not
give them vested rights to their positions to the extent of depriving management of its
prerogative to 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 transfer
personnel must be exercised 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 cannot be used as a subterfuge by the employer to rid himself of an
undesirable 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 in rank or a diminution of his salaries, privileges and
other benefits. Should the employer fail to overcome this burden of proof, the
employees transfer shall be tantamount to constructive dismissal, which has been defined
as a quitting because 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 or
disdain by an employer has become so unbearable to the employee leaving him with no
option but to forego with his continued employment.uallawlibrary
After a careful scrutiny of the records, we agree with the Labor Arbiter and the
Court of Appeals that the Company failed to discharge this burden of proof. The
Company and its officials attempt to justify the transfer of Del Villar by alleging his
unsatisfactory performance as Transportation Services Manager. The Company disclosed
that: [Del Villar] displayed an utterly woeful performance. He was unable to submit basic
data 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 minimum
or no supervision. His activities needed to be closely and constantly monitored by his
superiors. [Del Villar] lacked initiative and had to be constantly reminded of what to do. He
merited a mediocre grade of 2 in a scale of one (1) to five (5), the latter number being the
highest grade
We are unconvinced. The dismal performance evaluations of Del Villar were
prepared by San Juan and Pineda after Del Villar already implicated his two
superiors in his Report 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 was not merely transferred from the position of Transportation
Services Manager to the position of Staff 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 or
salary, without break in service. Promotion, on the other hand, is the advancement from
one position to another with an increase in duties and responsibilities as authorized by law,
and usually accompanied by an increase in salary. Conversely, demotion involves a
situation where an employee is relegated to a subordinate or less important position
constituting a reduction to a lower grade or rank, with a corresponding decrease in duties
and responsibilities, and usually accompanied by a decrease in salary.
Page 104
LABOR RELATIONS
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 to
another manager, particularly, the Corporate Purchasing and Materials Control Manager.
Second, the two posts are not of the same weight in terms of duties and
responsibilities. Del Villars position as Transportation Services Manager involved a
high degree of responsibility, he being in charge of preparing the budget for all
of the vehicles of the Company nationwide. As Staff Assistant of the Corporate
Purchasing and Materials Control Manager, Del Villar contended that he was not assigned
any meaningful work at all.
Third, while Del Villars transfer did not result in the reduction of his salary, there
was a diminution in his benefits. The Company admits that as Staff Assistant of the
Corporate Purchasing and Materials Control Manager, Del Villar could no longer enjoy the
use of a company car, gasoline allowance, and annual foreign travel, which Del Villar
previously enjoyed as Transportation Services Manager.
Fourth, it was not bad enough that Del Villar was demoted, but he was even
placed by 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
of defrauding the Company in his Report dated January 4, 1996. It is not too difficult to
imagine that the working relations between Del Villar, the accuser, and Pineda, the accused,
had been strained and hostile. The situation would be more oppressive for Del Villar
because of his subordinate position vis--vis Pineda.
Fifth, all the foregoing caused Del Villar inconvenience and prejudice, so unbearable
for him that he was constrained to seek remedy from the NLRC. The Labor Arbiter
was correct in his observation that had Del Villar resigned immediately after his
"transfer," he could be said to have been constructively dismissed. There is
constructive 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 the
reorganization of the Business Logistic Directorate. Redundancy is one of the authorized
causes 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
also terminate 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 the establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice on the workers and the
Department of Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-saving devices or redundancy,
the worker affected thereby shall be entitled to a separation pay equivalent to at least his
one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half
Page 105
LABOR RELATIONS
(1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered one (1) whole year.
Redundancy, for purposes of the Labor Code, exists where the services of an employee are
in excess 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 a
position or positions may be the outcome of a number of factors, such as
overhiring of workers, decreased volume of business, or dropping of a particular
product line or service activity previously manufactured or undertaken by the
enterprise.
The determination that the employee's services are no longer necessary or
sustainable and, therefore, properly terminable for being redundant is an
exercise of business judgment of the employer. The wisdom or soundness of this
judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided
there is no violation 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 has
become overmanned. It must produce adequate proof of such redundancy to
justify the 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 of
Labor and Employment (DOLE) of the termination of Del Villars employment due to
redundancy 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 to
the whole business organization, and not because the employee unsatisfactorily performed
the duties and responsibilities required by his position.
An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and
reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In
awarding 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 of
service. Under Republic Act No. 6715, employees who are illegally dismissed are entitled to
full 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
of their actual reinstatement but if reinstatement is no longer possible, the backwages shall
be computed from the time of their illegal termination up to the finality of the decision. We
note that Del Villars reinstatement is no longer possible because the position he previously
occupied no longer exists, per San Juans Affidavit dated October 15, 1998. Also, Del Villar
had already received his separation pay sometime in October 1998.
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LABOR RELATIONS

Atty. Jefferson M. Marquez

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