SECURITY BANK SAVINGS CORPORATION v. CHARLES M. SINGSON ..............................................................................

2
COCOPLANS, INC AND CAESAR T. MICHELENA vs. MA. SOCORRO R. VILLAPANDO ................................................5
UNILEVER PHILIPPINES, INC. V. RIVERA .......................................................................................................................................6
RUBEN SERRANO vs. NLRC & ISETANN DEPARTMENT STORE..........................................................................................8
JENNY M. AGABON AND VIRGILIO C. AGABON vs. NLRC ..................................................................................................... 10
JULITO SAGALES v. RUSTANS COMMERCIAL ............................................................................................................................ 13
SUMIFRU (PHILIPPINES) CORPORATION v. BERNABE BAYA........................................................................................... 15
CHATEAU ROYALE SPORTS and COUNTRY CLUB, INC v. RACHELLE G. BALBA and MARINEL N.
CONSTANTE ............................................................................................................................................................................................... 17
UNIVERSAL CANNING INC., MS. MA. LOURDES LOSARIA AND ENGR. ROGELIO DESOSA vs. COURT OF
APPEALS AND DANTE SAROSAL, FRANCISCO DUMAGAL, JR. NELSON FRANCISCO, ELMER SAROMINES
AND SAMUEL CORONEL....................................................................................................................................................................... 20
DIVINE WORD COLLEGE OF LAOAG vs. MINA .......................................................................................................................... 22
ECHO 2000 COMMERCIAL CORPORATION vs. OBRERO FILIPINO-ECHO 2000 CHAPTER-CLO, ARLO C.
CORTES and DAVE SOMIDO ............................................................................................................................................................... 24
SOLIMAN SECURITY SERVICES, INC. v. IGMEDIO SARMIENTO, et. al. ........................................................................... 26
REPUBLIC OF THE PHILIPPINES vs. MINERVA M.P. PACHEO ........................................................................................... 28
Social Justice

SECURITY BANK SAVINGS CORPORATION v. CHARLES M. SINGSON

G.R. No. 214230
February 10, 2016

FACTS:

Respondent Singson was initially employed by petitioner Premiere Development Bank (now
Security Bank Savings Corporation [SBSC]) as messenger until his promotion as loans processor.
Thereafter, he was appointed as Acting Branch Accountant and subsequently as Acting Branch Manager.
He was then assigned to its Quezon Avenue Branch under the supervision of Branch Manager Corazon
Pinero and held the position of Customer Service Operations Head tasked with the safekeeping of its
checkbooks and other bank forms.

Arguments:

(a) Petitioner

Petitioner SBSC claims that respondent failed to perform his duties diligently, and therefore, not
only violated established company policy but also put the bank's credibility and business at risk.
Petitioner also rejected the resignation of respondent in view of its decision to terminate his employment
on the ground of habitual neglect of duties. Petitioners maintained that respondent was validly dismissed
for cause on the ground of gross negligence in the performance of his duties when he repeatedly allowed
Pinero to bring outside the bank premises its pre-encoded checks and accountable forms in flagrant
violation of the bank's policies and procedures, and in failing to call Pinero's attention on the matter
which was tantamount to complicity and consent to the commission of said irregularity

(b) Respondent

Respondent received a show-cause memorandum and was charged of violating the bank's Code of
Conduct when he mishandled various checkbooks under his custody. Upon investigation, it was
discovered that forty-one (41) pre-encoded checkbooks of the Quezon Avenue Branch were missing.
Respondent readily admitted that he allowed Branch Manager Pinero to bring out of the bank's premises
the missing checkbooks and other bank forms on the justification that the latter was a senior officer with
lengthy tenure and good reputation and that it was part of Pinero's marketing strategy to procure more
clients for the bank.

Respondent was transferred to SBSC's Pedro Gil Branch pending investigation. He was again
issued a memorandum directing him to explain his inaccurate reporting of some Returned Checks and
Other Cash Items. The said uncovered amount was treated as an account receivable for his account.
Dismayed by his frequent transfer to different branches, respondent tendered his resignation.

Respondent instituted a complaint for illegal dismissal with prayer for back wages, damages, and
attorney's fees against SBSC and its President before the NLRC.

Labor Arbiter

The Labor Arbiter (LA) dismissed the complaint and accordingly, declared respondent to have
been terminated from employment for a valid cause. The LA found that respondent not only committed a
violation of SBSC's Code of Conduct but also gross and habitual neglect of duties when he repeatedly
allowed Pinero to bring outside the bank premises the checkbooks and bank forms despite knowledge of
the bank's prohibition on the matter.

NLRC

The NLRC affirmed the LA decision, ruling that the grant of separation pay was justified on
equitable grounds such as respondent's length of service, and that the cause of his dismissal was not due
to gross misconduct or that reflecting on his moral character but rather, a weakness of disposition and
grievous error in judgment.

Court of Appeals

The CA denied the petition and sustained the award of separation pay. The CA pointed out that
separation pay may be allowed as a measure of social justice where an employee was validly dismissed
for causes other than serious misconduct or those reflecting on his moral character.

Since respondent's infractions involved violations of company policy and habitual neglect of duties
and not serious misconduct, and that his dismissal from work was not reflective of his moral character,
the NLRC committed no grave abuse of discretion in sustaining the award of separation pay by way of
financial assistance. It further concluded that respondent did not commit a dishonest act since he readily
admitted to the petitioners that he allowed the Branch Manager to bring out the subject checkbooks.
Moreover, it ruled that while respondent acquiesced to the latter's marketing strategy that was contrary
to the bank's rules and regulations; there was no showing that his conduct was perpetrated with self-
interest or for an unlawful purpose.

ISSUE:

Did the CA err in upholding the award of separation pay as financial assistance to respondent
despite having been validly dismissed?

RULING:

YES.

The Court holds that separation pay shall be allowed as a measure of social justice only in
those instances where the employee is validly dismissed for causes other than serious misconduct
or those reflecting on his moral character. The non-grant of such right to separation pay is premised
on the reason that an erring employee should not benefit from their wrongful acts. There is no doubt that
it is compassion to give separation pay to a salesman if he is dismissed for his inability to fill his quota but
surely he does not deserve such generosity if his offense is misappropriation of the receipts of his sales.
This is no longer mere incompetence but clear dishonesty. Indeed, if the employee who steals from the
company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a
similar offense in his next employment because he thinks he can expect a little leniency if he is again
found out. This kind of misplaced compassion is not going to do labor in general any good as it will
encourage the infiltration of its ranks by those who do not deserve the protection and concern of the
Constitution.

Respondent's established act of repeatedly allowing Branch Manager Pinero to bring the
checkbooks and bank forms outside of the bank's premises in violation of the company's rules and
regulations had already been declared by the LA to be gross and habitual neglect of duty under Article
282 of the Labor Code, which finding was not contested on appeal by respondent. It was petitioners who
interposed an appeal solely with respect to the award of separation pay as financial assistance. As they
aptly pointed out, the infractions, while not clearly indicative of any wrongful intent, is, nonetheless,
serious in nature when one considers the employee's functions, rendering it inequitable to award
separation pay based on social justice.

It bears stressing that the banking industry is imbued with public interest. Banks are required to
possess not only ordinary diligence in the conduct of its business but extraordinary diligence in the care
of its accounts and the interests of its stakeholders. The banking business is highly sensitive with a
fiduciary duty towards its client and the public in general, such that central measures must be strictly
observed. It is undisputed that respondent failed to perform his duties diligently, and therefore, not only
violated established company policy but also put the bank's credibility and business at risk.

All told, the Court finds that the award of separation pay to respondent as a measure of
social justice is riot warranted in this case. A contrary ruling would effectively reward respondent
for his negligent acts instead of punishing him for his offense, in observation of the principle of
equity.

PETITION IS GRANTED.
Social Justice

COCOPLANS, INC AND CAESAR T. MICHELENA vs. MA. SOCORRO R. VILLAPANDO

G.R. No. 183129
May 30, 2016

FACTS:

Ma. Socorro R. Villapando, began working as a financial Advisor for petitioner Cocoplans, Inc., in
1995. On October 11, 2000, she was eventually promoted to Division Head/Senior Sales Manager. On
September 25, 2002, Michelena talked to complainant and accused the latter of ordering her
subordinates to "stop selling" and of influencing them to "leave the company" by way of sympathy to
Dado B. Martinez who was compelled to resign from the company due to a personal quarrel with
Michelena. On September 27, 2002, Jaclyn Yang, the Secretary of Michelena persistently followed up from
complainant the resignation letter being required by Michelena. On November 4, 2002, however, her
employment was terminated by Cocoplans, through its President, Caesar T. Michelena, on the alleged
ground that she was deliberately influencing people to transfer to another company thereby breaching
the trust and losing the confidence given to her by Cocoplans. Consequently, Villapando filed an action for
illegal dismissal alleging that she was dismissed without the just cause mandated by law.

ISSUE:

Is the dismissal of respondent Villapando valid and based on just cause?

RULING:

Settled is the rule that to constitute a valid dismissal from employment, two (2) requisites must
concur, viz.: (a) the employee must be afforded due process, and (b) the dismissal must be for a valid
cause, as provided in Article 282 of the Labor Code, or for any of the authorized causes under Articles 283
and 284 of the same Code. In the case before the Court, it is already undisputed that petitioners duly
afforded Villapando the opportunity to be heard and defend herself, thereby complying with the first
requisite. In justifying dismissals due to loss of trust and confidence, there must be an actual breach of
duty committed by the employee, established by substantial evidence. The Court held that respondents
failed to establish with substantial evidence that Villapando had, indeed, wilfully influenced her
subordinates to transfer to a competing company, their claims of loss of confidence could not be
sustained. The petitioners terminated the services of Villapando on the mere basis of the Joint Affidavit
executed by Ms. Perez and Mr. Sandoval, which, as previously discussed, is put in doubt by conflicting
evidence. Hence, in the absence of sufficient proof, the Court finds that petitioners failed to discharge the
onus of proving the validity of Villapando's dismissal.
Social Justice

UNILEVER PHILIPPINES, INC. V. RIVERA

G.R. No. 201701
June 3, 2013

FACTS:

Unilever is a company engaged in the production, manufacture, sale, and distribution of various
food, home and personal care products, while Rivera was employed as its Area Activation Executive for
Area 9 South in the cities of Cotabato and Davao. She was primarily tasked with managing the sales,
distribution and promotional activities in her area and supervising Ventureslink International, Inc., a
third party service provider for the company’s activation projects. Unilever enforces a strict policy that
every trade activity must be accompanied by a Trade Development Program (TDP) and that the allocated
budget for a specific activity must be used for such activity only.

Sometime in 2007, Unilever’s internal auditor found out that there were fictitious billings and
fabricated receipts supposedly from Ventureslink amounting to ₱11,200,000.00. Some funds were
diverted from the original intended projects. Ventureslink reported that the fund deviations were upon
the instruction of Rivera.

On July 16, 2007, Unilever issued a show-cause notice to Rivera asking her to explain the following
charges, to wit: a) Conversion and Misappropriation of Resources; b) Breach of Fiduciary Trust; c) Policy
Breaches; and d) Integrity Issues.

Rivera admitted the fund diversions, but explained that such actions were mere resourceful
utilization of budget because of the difficulty of procuring funds from the head office. She insisted that the
diverted funds were all utilized in the company’s promotional ventures in her area of coverage.

Unilever found Rivera guilty of serious breach of the company’s Code of Business Principles
compelling it to sever their professional relations. Rivera asked for reconsideration and requested
Unilever to allow her to receive retirement benefits having served the company for fourteen (14) years
already. Unilever denied her request, reasoning that the forfeiture of retirement benefits was a legal
consequence of her dismissal from work.

Rivera filed a complaint for Illegal Dismissal and other monetary claims against Unilever.

Labor Arbiter

The LA dismissed her complaint for lack of merit and denied her claim for retirement benefits, but
ordered Unilever to pay a proportionate 13th month pay and the corresponding cash equivalent of her
unused leave credits.

NLRC

The NLRC partially granted Rivera’s prayer. The NLRC held that although she was legally
dismissed from the service for a just cause, Unilever was guilty of violating the twin notice requirement in
labor cases. Thus, Unilever was ordered to pay her ₱30,000.00 as nominal damages, retirement benefits
and separation pay.
 Unilever asked for a reconsideration of the NLRC decision. In its Resolution, the NLRC modified its
earlier ruling by deleting the award of separation pay and reducing the nominal damages from
₱30,000.00 to ₱20,000.00, but affirmed the award of retirement benefits to Rivera.

Court of Appeals

The CA affirmed with modification the NLRC resolution. Justifying the deletion of the award of
retirement benefits, the CA explained that, indeed, under Unilever’s Retirement Plan, a validly dismissed
employee cannot claim any retirement benefit regardless of the length of service. Thus, Rivera is not
entitled to any retirement benefit. It stated, however, that there was no proof that she personally gained
any pecuniary benefit from her infractions, as her instructions were aimed at increasing the sales
efficiency of the company and competing in the local market. For said reason, the CA awarded separation
pay in her favor as a measure of social justice.

ISSUE:

Whether or not a validly dismissed employee, like Rivera, is entitled to an award of separation
pay.

RULING:

NO.

As a general rule, an employee who has been dismissed for any of the just causes enumerated
under Article 282 of the Labor Code is not entitled to a separation pay.

In exceptional cases, however, the Court has granted separation pay to a legally dismissed
employee as an act of "social justice" or on "equitable grounds." In both instances, it is required that the
dismissal (1) was not for serious misconduct; and (2) did not reflect on the moral character of the
employee.

Rivera was dismissed from work because she intentionally circumvented a strict company policy,
manipulated another entity to carry out her instructions without the company’s knowledge and approval,
and directed the diversion of funds, which she even admitted doing under the guise of shortening the
laborious process of securing funds for promotional activities from the head office. These transgressions
were serious offenses that warranted her dismissal from employment and proved that her termination
from work was for a just cause. Hence, she is not entitled to a separation pay.

Unilever questions the grant of nominal damages in favor of Rivera for its alleged non-observance
of the requirements of procedural due process. It insists that she was given ample opportunity "to explain
her side, interpose an intelligent defense and adduce evidence on her behalf."

The Court is not persuaded. Unilever was not direct and specific in its first notice to Rivera. The
words it used were couched in general terms and were in no way informative of the charges against her
that may result in her dismissal from employment. Evidently, there was a violation of her right to
statutory due process warranting the payment of indemnity in the form of nominal damages. Hence, the
Court finds no compelling reason to reverse the award of nominal damages in her favor. The Court,
however, deems it proper to increase the award of nominal damages from ₱20,000.00 to ₱30,000.00, as
initially awarded by the NLRC, in accordance with existing jurisprudence.
Due Process

RUBEN SERRANO vs. NLRC & ISETANN DEPARTMENT STORE

GR No.117040
January 27, 2000

FACTS:

Ruben Serrano was employed in Isetann Department Store as a security checker for the
apprehension of shoplifters and maintaining security of the premises since 1985. In 1988, he was
promoted to the head position of the security department of the store. However, sometime in 1991, the
management opted to engage the services of an independent security agency and resolved to retrench
the entirety of the security department already housed in the department store.

Though Serrano was notified of the management’s resolution to retrench him, he received a
termination notice on October 11, 1991, and was deemed to be dismissed on that very same day. This
prompted Serrano to file with the labor arbiter a complaint for illegal dismissal, on the ground that the
retrenchment was wrought with caprice and he has been denied of due process for the lack of the
mandatory 30-day notice for termination grounded on authorized causes under the labor code. The
management maintained that such resolution to retrench the entire security department was a part of
the cost-cutting measures of the company.

The Labor Arbiter

The labor arbiter rendered judgment in favor of Serrano, the rationale of which is grounded on the
fact that there was a denial of due process for Serrano; there was no substantial proof that the
retrenchment was to remedy serious business losses and that the manner and standard of selecting the
employees to be retrenched is unreasonable. Aggrieved, the management appealed to the NLRC

The NLRC

The NLRC reversed the labor arbiter and upheld that the retrenchment was valid on that ground
that it is the product of a well-assessed situation determined by the management itself which should be
accorded respect for the minute details of which are only for the management itself to understand, there
being a lack of patent bad faith on the management’s part, the retrenchment is valid. Serrano then
appeals to the Supreme Court.

ISSUES:

Is the denial of due process, for the lack of the 30-day notice, tantamount to the illegality of the
dismissal?
Is the petitioner entitled to some relief for such denial of due process?

RULING:
 There is denial of due process, but it does not render a dismissal illegal if such was justified on
valid grounds. It has been established by the lower tribunals that the retrenchment of Serrano was
justified on authorized causes; pursuant to Article 298 of the Labor Code, as renumbered, it provides
“retrenchment” as one of the authorized causes for dismissal. It likewise provides for procedural
mandates to facilitate the validity of such retrenchment, that is, the furnishing of the Secretary of Labor,
as well as the employees to be retrenched, a notice of such retrenchment at least 1 month prior to the
effectivity of the termination.

Jurisprudential history contemplated on the question on whether the failure of such issuance of
notices, thereby resulting to denial of due process, will render the dismissal illegal, despite the existence
of valid grounds. It has been resolved by the Supreme Court in Wenphil Corp. vs. NLRC [170 SCRA 69
(1989)] that allowing the reinstatement of an otherwise validly terminated employee would be inimical
to the interests of the employer, thus, the dismissal must be upheld in such instance.

Ruben Serrano is entitled to reliefs, not only as to his termination in the form of separation pay,
among others, but also in the form of indemnity for such denial of due process. The Supreme Court thus
establishes the following rule:

There being denial of due process, his dismissal shall be deemed ineffectual on October 11, 1991,
however, Serrano is entitled to indemnity in the form of full backwages, covering from the time he was
dismissed without due process until the day his dismissal was judicially deemed founded on authorized
cause. Otherwise applied, he shall receive backwages covering the period from October 11, 1991 up until
the time this decision becomes final.
Social Justice

JENNY M. AGABON AND VIRGILIO C. AGABON vs. NLRC

GR No. 158693
November 17, 2004

FACTS:

Petitioners were employed by Riviera Home as gypsum board and cornice installers from January
1992 to February 23, 1999 when they were dismissed for abandonment of work.

Arguments:

(a) Petitioners

They were dismissed because the private respondent refused to give them assignments unless
they agreed to work on a pakyaw basis when they reported for duty on February 23, 1999. They did not
agree on this arrangement because it would mean losing benefits as Social Security System (SSS)
members. Petitioners also claim that private respondent did not comply with the twin requirements of
notice and hearing.

(b) Private respondent Riviera Home Improvements, Inc

Petitioners were not dismissed but had abandoned their work. In fact, private respondent sent
two letters to the last known addresses of the petitioners advising them to report for work. Private
respondent’s manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to
tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice
installation work. However, petitioners did not report for work because they had subcontracted to
perform installation work for another company. Petitioners also demanded for an increase in their wage
to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed the
illegal dismissal case.

Labor Arbiter

The termination of the complainants illegal. Accordingly, respondent is hereby ordered to pay
them their backwages up to November 29, 1999 and, in lieu of reinstatement to pay them their
separation pay of one (1) month for every year of service from date of hiring up to November 29, 1999.
Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay
for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days and Virgilio
Agabons 13th month pay differential.

NLRC

Petitioners had abandoned their work, and were not entitled to backwages and separation pay.
The other money claims awarded by the Labor Arbiter were also denied for lack of evidence.
Court of Appeals

The dismissal of the petitioners was not illegal because they had abandoned their employment but
ordered the payment of money claims.

ISSUE:
 Were the petitioners, spouses Agabon, illegally dismissed?

RULING (in realtion to social justice):

NO.

To dismiss an employee, the law required not only the existence of a just and valid cause but also
enjoins the employer to give the employee the right to be heard and to defend himself. Abandonment is
the deliberate and unjustified refusal of an employee to resume his employment. For a valid finding or
abandonment, two factors are considered: failure to report for work without a valid reason; and, a clear
intention to sever employer-employee relationship with the second as the more determinative factor
which is manifested by overt acts from which it may be deduced that the employees has no more
intention to work.

Where the employer had a valid reason to dismiss an employee but did not follow the due process
requirement, the dismissal may be upheld but the employer will be penalized to pay an indemnity to the
employee. This became known as the Wenphil Doctrine of the Belated Due process Rule.

Art. 279 means that the termination is illegal if it is not for any of the justifiable or authorized by
law. Where the dismissal is for a just cause, the lack of statutory due process should not nullify the
dismissal but the employer should indemnify the employee for the violation of his statutory rights. The
indemnity should be stiffer to discourage the abhorrent practice of “dismiss now, pay later” which the
court sought to deter in Serrano ruling because such can cause unfairness and injustices. The violation of
employees’ rights warrants the payment of nominal damages.

After carefully analyzing the consequences of the divergent doctrines in the law on employment
termination, the court believes that in cases involving dismissals for cause but without observance of the
twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to
follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer.
Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be
able to achieve a fair result by dispensing justice not just to employees, but to employers as well.

The constitutional policy to provide full protection to labor is not meant to be a sword to oppress
employers. The commitment of this Court to the cause of labor does not prevent us from sustaining the
employer when it is in the right, as in this case. Certainly, an employer should not be compelled to pay
employees for work not actually performed and in fact abandoned.

The employer should not be compelled to continue employing a person who is admittedly guilty of
misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The
law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the
employer.

An employee who is clearly guilty of conduct violative of Article 282 should not be protected by
the Social Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to
correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on
the recognition of the necessity of interdependence among diverse units of a society and of the
protection that should be equally and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and paramount objective of the state of
promoting the health, comfort, and quiet of all persons, and of bringing about the greatest good to the
greatest number.
 The violation of the petitioner’s right to statutory due process by the private respondent warrants
the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to
the sound discretion of the court, taking into account the relevant circumstances. Considering the
prevailing circumstances in the case at bar, the court deem it proper to fix it at P30,000.00.The
court believes this form of damages would serve to deter employers from future violations of the
statutory due process rights of employees.
JULITO SAGALES v. RUSTANS COMMERCIAL
G.R. No. 166554

FACTS:

Julito Sagales was employed by Rustans Commercial Corporation from October 1970 until July 26,
2001, when he was terminated. At the time of his dismissal, he was the Chief Cook at the Yum Yum Tree
Coffee Shop located at Rustans Supermarket in Ayala Avenue, Makati City. Petitioner conveyed to
respondent his intention of retiring, after reaching thirty-one (31) years in service, however, was not
allowed to retire with his honor intact. Security Guard Waldo Magtangob, apprehended petitioner in the
act of taking out from Rustans Supermarket a plastic bag which contained 1.335 kilos of squid heads
worth P50.00. Petitioner was not able to show any receipt when confronted. Thus, he was brought to the
Security Office of respondent corporation. Subsequently, petitioner was brought to the Makati Police
Criminal Investigation Division where he was detained. Petitioner was later ordered released pending
further investigation Assistant Prosecutor Pineda recommended the dismissal of the case for lack of
evidence which was approved upon review by City Prosecutor Feliciano Aspi. Notwithstanding the
dismissal of the complaint, respondent, on June 25, 2001, required petitioner to explain in writing within
forty-eight (48) hours why he should not be terminated in view of the June 18, 2001 incident.
Respondent also placed petitioner under preventive suspension. Respondent did not find merit in the
explanation of petitioner. Thus, petitioner was dismissed from service on July 26, 2001. At that time,
petitioner had been under preventive suspension for one (1) month.

Labor Arbiter

According to the Labor Arbiter, the nature of the responsibility of petitioner was not that of an
ordinary employee. It then went on to categorize petitioner as a supervisor in a position of responsibility
where trust and confidence is inherently infused. As such, it behooved him to be more knowledgeable if
not the most knowledgeable in company policies on employee purchases of food scrap items in the
kitchen. Per the evidence presented by respondent, petitioner breached company policy which justified
his dismissal.

National Labor Relations Commission (NLRC)

The NLRC held that the position of complainant is not supervisory covered by the trust and
confidence rule. On the contrary, petitioner is a mere rank-and-file employee. The evidence is also
wanting that petitioner committed the crime charged. The NLRC did not believe that petitioner would
trade off almost thirty-one (31) years of service for P50.00 worth of squid heads. The NLRC further ruled
that petitioner was illegally dismissed as respondent failed to establish a just cause for dismissal.

Court of Appeals (CA)

In reversing the NLRC, the CA opined that the position of petitioner was supervisory in nature. The
CA also held that the evidence presented by respondent clearly established loss of trust and confidence
on petitioner.Lastly, the CA, although taking note of the long years of service of petitioner and his
numerous awards, refused to award separation pay in his favor. According to the CA, the award of
separation pay cannot be sustained under the social justice theory because the instant case involves theft
of the employers property.

ISSUE

Is act of respondent in dismissing petitioner proper?

RULING

No. The free will of management to conduct its own business affairs to achieve its purpose cannot
be denied. The only condition is that the exercise of management prerogatives should not be done in bad
faith or with abuse of discretion.Truly, while the employer has the inherent right to discipline, including
that of dismissing its employees, this prerogative is subject to the regulation by the State in the exercise
of its police power. In this regard, it is a hornbook doctrine that infractions committed by an employee
should merit only the corresponding penalty demanded by the circumstance. The penalty must be
commensurate with the act, conduct or omission imputed to the employee and must be imposed in
connection with the disciplinary authority of the employer. In the case at bar, petitioner deserves
compassion more than condemnation. At the end of the day, it is undisputed that: (1) petitioner has
worked for respondent for almost thirty-one (31) years; (2) his tireless and faithful service is attested by
the numerous awards he has received from respondent; (3) the incident on June 18, 2001 was his first
offense in his long years of service; (4) the value of the squid heads worth P50.00 is negligible; (5)
respondent practically did not lose anything as the squid heads were considered scrap goods and usually
thrown away in the wastebasket; (6) the ignominy and shame undergone by petitioner in being
imprisoned, however momentary, is punishment in itself; and (7) petitioner was preventively suspended
for one month, which is already a commensurate punishment for the infraction committed.
Management Prerogative

SUMIFRU (PHILIPPINES) CORPORATION v. BERNABE BAYA

G.R. No. 188269
APR 17, 2017

FACTS:

Bernabe Baya had been employed by AMSFC and hold the position of supervisory rank. As
supervier, Baya joined the union of supervisors, and formed AMS Kapalong Agrarian Reform
Beneficiaries Multipurpose Cooperative (AMSKARBEMCO), the agrarian reform organization of the
regular employees of AMSFC. Baya was reassigned to a series of supervisory positions in AMSFC’s sister
company, DFC, where he also became a member of the latter’s supervisory union while at the same time,
remaining active at AMSKARBEMCO.

Some 220 hectares of AMSFC’s 513-hectare banana plantation were covered by the
Comprehensive Agrarian Reform Law. Eventually, said portion was transferred to AMSFC’s regular
employees as Agrarian Reform Beneficiaries (ARBs), including Baya.

Thereafter, the ARBs explored a possible agribusiness venture agreement with AMSFC, but the
talks broke down, prompting the Provincial Agrarian Reform Officer to terminate negotiations and give
AMSKARBEMCO freedom to enter similar agreement with other parties.

In October 2001, the ARBs held a referendum in order to choose as to which group between
AMSKARBEMCO or SAFFPAI, an association of pro-company beneficiaries, they wanted to belong. 280
went to AMSKARBEMCO while 85 joined SAFFPAI. Subsequently, AMSFC summoned AMSKARBEMCO
officers, including Baya, threatening the that the ARBs’ takeover of the lands would not push through
entered into an export agreement with another company. Baya was also summoned by a DFC manager
and told Baya would put himself a “difficult situation” if he will not shift his loyalty to SAFFPAI. However,
Baya refused to shift loyalty. Baya received a letter stating that his secondment with DFC has ended, thus,
ordering his return to AMSFC. However, upon Baya’s return to AMSFC on August 30, 2002, he was
informed that there were no supervisory positions available; thus, he was assigned to different rank-and-
file positions instead. He requested to be restored but was denied. Prompting Baya to file a complaint of
constructive dismissal.

Arguments:

(a) Petitioner

AMSFC and DFC maintained that they did not illegally/ constructively dismiss Baya, considering
that his termination from employment was the direct result of the ARBs’ takeover of AMSFC’s banana
plantation through the government’s agrarian reform program.

(b) Respondent

His assignment to different rank-and-file positions from supervisory rank constitutes constructive
dismissal.

Labor Arbiter
The LA ruled there was indeed a constructive dismissal as his demotion to various rank-and-file
positions without any justifiable reason upon his return to AMSFC.
 The NLRC Ruling

The NLRC reversed the ruling of LA and found that the termination of Baya’s employment was not
caused by illegal/ constructive dismissal, but by the cessation of AMSFC’s business operation or
undertaking in large portions of its banana plantation due to the implementation of the agrarian reform
program.

The CA Ruling

The CA set aside the NLRC ruling and reinstated that of the LA as it establish constructive
dismissal for in spite of knowing that there was no available supervisory position in AMSFC, the top
management still proceeded to order Baya’s return there to force him to accept rank-and file positions
and such “return to AMSFC” was done after Baya was harassed.

ISSUE:

Was Baya constructively dismissed by AMSFC and DFC?

RULING

Yes. Constructive dismissal exists where there is cessation of work, because ‘continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or
a diminution in pay’ and other benefits. In Peckson v. Robinsons Supermarket Corp., the Court held that the
burden is on the employer to prove that the transfer or demotion of an employee was a valid exercise of
management prerogative and was not a mere subterfuge to get rid of an employee; failing in which, the
employer will be found liable for constructive dismissal. In case of a constructive dismissal, the employer
has the burden of proving that the transfer and demotion of an employee are for valid and legitimate
grounds such as genuine business necessity.

In this case, both AMSFC and DFC, which were sister companies at the time, were well-aware of
the lack of supervisory positions in AMSFC. However, they still proceeded to order Baya’s return therein,
thus, forcing him to accept rank-and-file positions. Moreover, the alleged expiration of his “end of
secondment with DFC” only occurred after they were subjected to harassment and his refusal to shift
loyalty to the pro management association.Therefore, The Court cannot lend credence to the contention
that Baya’s termination was due to the ARBs’ takeover of the banana plantation, because the said
takeover only occurred on September 20, 2002, while the acts constitutive of constructive dismissal
were performed as early as August 30, 2002, when Baya returned to AMSFC. Thus, AMSFC and DFC are
guilty of constructively dismissing Baya.

Moreover, under doctrine of strained relations, the payment of separation pay is considered an
acceptable alternative to reinstatement when the latter option is no longer desirable or viable. Thus, it is
more prudent that Baya be awarded separation pay, instead of being reinstated.
Management Prerogative

CHATEAU ROYALE SPORTS and COUNTRY CLUB, INC v. RACHELLE G. BALBA and
MARINEL N. CONSTANTE
January 18, 2017
G.R. No. 197492

FACTS:

Petitioner, a domestic corporation operating a resort complex in Nasugbu, Batangas, hired the
respondents as Account Executives on probationary status. The respondents were promoted to Account
Managers with the monthly salary rate of ₱9,000.00 plus allowances totaling to ₱5,500.

As part of their duties as Account Managers, they were instructed by the Director of Sales and
Marketing to forward all proposals, event orders and contracts for an orderly and systematic bookings in
the operation of the petitioner' s business. However, they failed to comply with the directive. Accordingly,
a notice to explain was served on them, to which they promptly responded.

Petitioner’s Corporate Infractions Committee had found them to have committed acts of
insubordination and that they were being suspended for seven days however it was lifted before
implementation.

Respondents filed a case for illegal suspension and non-payment of allowances and commissions.
The complaint was later amended to include constructive dismissal based on the information from the
Chief Financial Officer of the petitioner on the latter's plan to transfer them to the Manila Office. The
proposed transfer was prompted by the shortage of personnel at the Manila Office as a result of the
resignation of three account managers and the director of sales and marketing. Despite attempts to
convince them to accept the transfer to Manila, they declined because their families were living in
Nasugbu, Batangas.

Arguments:

(a) Petitioner Chateau

The petitioner argues that the resignations of the Account Managers and the Director of Sales and
Marketing caused serious disruptions in the operations of the Manila office, thereby making the
immediate transfer of the respondents crucial and indispensable; that there was no diminution of income
and benefits as a result of the transfer; and that their immediate rejection of the transfer directive
prevented the parties from negotiating for additional allowances beyond their regular salaries.

(b) Respondents Balba and Constante

Respondents counter that there was no valid cause for their transfer; that they were forced to
transfer to the Manila office without consideration of the proximity of the place and without
improvements in the employment package; that the alleged shortage of personnel in the Manila office due
to the resignation of the account managers was merely used to conceal the petitioner's illegal acts.

Ruling of the Labor Arbiter

 Labor Arbiter rendered his decision declaring that the respondents had been constructively
dismissed where he opined that the respondents' transfer to Manila would not only be physically and
financially inconvenient, but would also deprive them of the psychological comfort that their families
provided; that being the top sales performers in Nasugbu, they should not be punished with the transfer;
and that their earnings would considerably diminish inasmuch as sales in Manila were not as lively as
those in Nasugbu.

Ruling of the NLRC

On appeal, the NLRC reversed the ruling of the Labor Arbiter, and dismissed the complaint for lack
of merit.

Decision of the CA

The CA promulgated its decision granting the respondents' petition for certiorari, and setting aside
the decision of the NLRC.

The CA ruled that the transfer of the respondents from the office in Nasugbu, Batangas to the
Manila office was not a legitimate exercise of management prerogative and constituted constructive
dismissal; that the transfer to the Manila office was not crucial as to cause serious disruption in the
operation of the business if the respondents were not transferred thereat; that the directive failed to
indicate that the transfer was merely temporary; that the directive did not mention the shortage of
personnel that would necessitate such transfer; and that the transfer would be inconvenient and
prejudicial to the respondents.

ISSUE:

Is the transfer of the respondents work to manila considered as constructive dismissal or

management prerogative?

HELD:

It is a management prerogative.

Management has a wide discretion to regulate all aspects of employment, including the transfer
and re-assignment of employees according to the exigencies of the business and, on the other, that the
transfer constitutes constructive dismissal when it is unreasonable, inconvenient or prejudicial to the
employee, or involves a demotion in rank or diminution of salaries, benefits and other privileges, or when
the acts of discrimination, insensibility or disdain on the part of the employer become unbearable for the
employee, forcing him to forego her employment.

In constructive dismissal, burden of proof lies on the management that the transfer of employees
from one area of operation to another was for a valid and legitimate ground, like genuine business
necessity.

The transfer was found out to be brought about by the sudden resignation of the directing boards
and managers in the manila office that prompted immediate action replacement with personnel having
commensurate experience and skills. The resignations gave rise to an urgent and genuine business
necessity that fully warranted the transfer from the Nasugbu, Batangas office to the main office in Manila
of the respondents, undoubtedly the best to perform the task assigned to the resigned employees.
 Even though the transfer to Manila might be potentially inconvenient for the respondents because
it would entail additional expenses on their part aside from their being forced to be away from their
families, it was neither unreasonable nor oppressive. The transfer will be without any diminution to rank,
salary, and benefits. The transfer would open the way for the respondent’s career growth and increase in
pay.

The respondents failed to prove that the transfer was acting in bad faith or had ill motive in
transfer. The right of the employee to security of tenure does not give her a vested right to her position as
to deprive management of its authority to transfer or re-assign her where she will be most useful.
Management Prerogative

UNIVERSAL CANNING INC., MS. MA. LOURDES LOSARIA AND ENGR. ROGELIO DESOSA
vs. COURT OF APPEALS AND DANTE SAROSAL, FRANCISCO DUMAGAL, JR. NELSON
FRANCISCO, ELMER SAROMINES AND SAMUEL CORONEL
GR No. 215047
November 23, 2016

FACTS:

Respondents Sarosal, Dumagal, Francisco, Saromines and Coronel, employed by petitioner

Universal Canning Inc., were caught by Almazan (Purchasing Officer) playing cards at the company
premises during work hours which was immediately reported to Losaria (Personnel Officer). An
investigation was was immediately conducted to determine who were involved and that same day they
were placed under preventive investigation. Respondents were later on required to file their written
explanation of the incident. On the basis of the investigation, respondents were dismissed from
employment.

Arguments:

(a) Petitioners

Playing of cards during working hours is considered to be an infraction of the company’s rules and
regulations. Also, their severance from employment is unlawful because of lack of sufficient basis for
their termination.

(b) Respondents

Playing cards inside the company premises is not considered gambling as there was no money
involved and that it took place during noon break.

Labor Arbiter

It dismissed the complaint for lack of merit because respondents were dismissed for just cause
and after compliance with due process.

NLRC

It affirmed the dismissal of respondents complaint. It was declared that playing cards during office
hours whether for stake or fun is considered a dishonest act of stealing company time. The company’s
working hours could be used for more profitable activities since they are paid by the company. The fact
that they have been employed by the company for a long period of time could not work in their favor.
Their attitude towards work is smocked with disloyalty, lack of concern and enthusiasm.
Court of Appeals

It reversed and set aside the NLRC decision on the ground that it was rendered with grave abuse
of discretion amounting to lack or excess in jurisdiction. As rank and file employees, respondents could
not be dismissed for lack of trust and confidence as they were not holding positions imbued with trust
and confidence.
ISSUE:

Were respondents dismissed from employment without just cause?

RULING (in relation to management prerogative):

NO.

The respondents were dismissed by two reasons: 1.) for violation of company rules and
regulations under Paragraph IV, Number 4 under Offenses Against Public Morals; and 2.) for loss of trust
and confidence. Infraction of the company rules and regulation is akin to serious misconduct is a just
cause for termination of employment recognized under Article 282 (a) of the Labor Code.

It is the recognized prerogative of the employer to transfer and reassign employees according to
the requirements of its business. For indeed, regulation of manpower by the company clearly falls within
the ambit of management prerogative. A valid exercise of management prerogative is one which covers:
work assignment, working methods, time, supervision of workers, transfer of employees, work
supervision and the discipline, dismissal and recall of workers.

Except as provided for, or limited by special laws, an employer is free to regulate, according to his
own discretion and judgment, all aspects of employment. As a general proposition, an employer has free
reign over every aspect of its business, including the dismissal of his employees as long as the exercise of
its management prerogative is done reasonably, in good faith, and in a manner not otherwise intended to
defeat or circumvent the rights of workers.
Management Prerogative

DIVINE WORD COLLEGE OF LAOAG vs. MINA

G.R. No. 195155,
APRIL 13, 2016

FACTS:

Divine Word College of Laoag (DWCL) is a non-stock educational Institution which is run by the
Society of Divine Word (SVD), a congregation of Catholic priests. The Society of Divine Word Educational
Institution (DWEA) established a retirement plan to provide retirement benefits for employees of DWEA
member institution including DWCL. The Retirement Plan includes a “portability clause” which provides
that if a member who resigns or is separated from employment from one participating employer and was
subsequently transferred to another participating employer will carry his credit of service from that of
his former participating employer to his new participating employer and both of his credits from the
former and new participating employer shall be taken into consideration in computing his years of
service.
Delfin A. Mina (Mina) was first employed as a high school teacher and later on a high school principal at
the Academy of St. Joseph (ASJ), a school run by SVD. He was then transferred to DWCL as an associate
professor III. After sometime, he was assigned as the College Laboratory Custodian of the school of
nursing and was divested of his teaching load, effective for 1 year only subject to automatic termination
and without need for any further notification.

He was then offered an early retirement by Prof. Noreen dela Rosa OIC of DWCL’s school of
Nursing but he refused because of his family’ dependence on him for support. He later received a
Memorandum from the office of the Dean enumerating specific acts of gross or habitual negligence,
insubordination, and reporting for work under the influence of alcohol. He answered the allegations
against him, however, sensing that it was pointless to continue his employment with DWCL, he requested
that his retirement date be adjusted to September 2004 to avail of the 25-year benefits and for the
inclusion of his 8 years of service back in ASJ to make his total service to 33 years pursuant to the
portability clause, but his 8 years’ service credit from ASJ was denied by DWCL and he was given a total
amount of only P275,513.10 as retirement pay and was made to appear that his services were terminated
by reason of redundancy to avoid tax implications.
Arguments:
a) Petitioner DWCL – Mina was not constructively dismissed. The services of Mina was terminated by
reason of redundancy to avoid any tax implication
b) Respondent Mina - filed a case for illegal dismissal and recovery of separation pay and other monetary
claims against DWCL on the ground that when he was appointed as a College Laboratory Custodian, he
was divested of teaching load. However, pending the resolution, Mina passed away.

LABOR ARBITER

The Labor Arbiter rendered its decision finding that Mina was not constructively dismissed but
ordered that the computation of his retirement pay should include the 8 years of service he rendered
with ASJ based on the portability clause in the DWEA retirement plan and ruled that he’s membership of
the plan was not severed when he left ASJ to work with DWCL.

NLRC
 Upon appeal with the NLRC, it ruled that Mina was constructively dismissed when he was
appointed as College Laboratory Custodian and was divested of his teaching load but disregarded his 8
years of service with ASJ.
DWCL filed a petition for certiorari before the CA.

COURT OF APPEALS

DWCL then appealed to the CA, which sustained the ruling of the NLRC and entitled Mina to
receive backwages. Hence, this petition with the Supreme Court.

ISSUE:

Was there a constructive dismissal with Mina by DWCL?

RULING:

Yes. The Constitution and the Labor Code mandate that employees be accorded security of tenure.
The right of employees to security of tenure, however, does not give the employees vested rights to their
positions to the extent of depriving management of its prerogative to change their assignments or to
transfer them. In case of transfer of an employee, the employer is charged with the burden of proving that
its conduct and action are for valid and legitimate grounds such as genuine business necessity and that
the transfer is not unreasonable, inconvenient, or prejudicial to the employee. If the employer cannot
overcome this burden of proof, the employee’s transfer shall be tantamount to unlawful constructive
dismissal.

Constructive dismissal is a dismissal in disguise. To be considered as such, an act must be a display

of utter discrimination or insensibility on the part of the employer so intense that it becomes unbearable
for the employee to continue with his employment. In this case, Mina’s transfer clearly amounted to a
Constructive Dismissal. For almost 22 years, he was a high chool teacher enjoying a permanent status in
DWCL’s high school department. He was then assigned as an associate professor at the college
department and later on as a college laboratory custodian, which is a clear demotion from his previous
position. Not only that, he was also divested of his teaching load and his appointment became contractual
in nature and was subject to automatic termination after one year. DWCL also failed to show any reason
for Mina’s transfer and that it was not unreasonable, inconvenient, or prejudicial to him.

Finding that Mina was constructively dismissed, he should be awarded separation pay and
backwages, which are two different payments. The basis for computing separation pay is usually the
length of the employee’s pst service, while that for backwages is the actual period when the employee
was unlawfully prevented from working. Thus, the computation of Mina’s backwages should be from the
time he was appointed as a college laboratory custodian. The computation of separation pay of Mina shall
begin to run when he was transferred to DWCL from ASJ, until his death, or for a period of 26 years.
However, the 8 years of service he has rendered with ASJ should not be included with the computation of
his retirement benefits since he failed to prove that he met the conditions set forth under the portability
clause of the DWEA Retirement Plan.
Management Prerogative

ECHO 2000 COMMERCIAL CORPORATION vs. OBRERO FILIPINO-ECHO 2000

CHAPTER-CLO, ARLO C. CORTES and DAVE SOMIDO
G.R. No. 214092
January 11, 2016

FACTS:

Respondents Arlo Cortes and Dave Somido were employees of Echo 2000 Commercial Corporation
(Echo) as Forklift Operator and Warehouse Checker, respectively. Echo, in the exercise of its
management prerogative, decided to re-assign the staff after they received information about shortages
in peso value arising from the movement of products to and from its warehouse. After an immediate
audit, Echo suspected that there was a conspiracy among the employees in the warehouse. The
respondents were among those affected.

Enriquez (Echo's General Manager) issued a memorandum informing the respondents of their
transfer to the Delivery Section, which was within the premises of Echo's warehouse. The transfer would
entail no change in ranks, status and salaries. Somido and Cortes declined Echo’s offer to be promoted as
“Delivery Supervisors”. They explained that they were already contented in their current positions, as
they also lack prior supervisory experience.

Arguments:

(a) Petitioners (Echo 2000 Commercial Corporation)

The petitioners insisted that the respondents were merely transferred, and not promoted. Further,
the respondents arrogantly refused to comply with Enriquez's directives. Their insubordination
constituted just cause to terminate them from employment.

(b) Respondents (Arlo Cortes & Dave Somido)

The respondents claimed that they were offered promotions, which were mere ploys to remove
them as rank-and-file employees, and oust them as Union members.

Labor Arbiter

Labor Arbiter dismissed the respondents' complaint for reasons stated below: (a) the claims of
union-busting, harassment and discrimination were not supported by evidence; (b) no promotions
occurred as the duties of the Delivery Supervisors/Coordinators were merely reportorial in nature and
not indicative of any authority to hire, fire or change the status of other employees; and (c) Echo properly
exercised its MANAGEMENT PREROGATIVE to order the transfer, and this was done without intended
changes in the ranks, salaries, status or places of assignment of the respondents.

NLRC

The NLRC reversed the decision of the LA and declared petitioners guilty of unfair labor practice
and illegal dismissal of the respondents. The NLRC explained that at the time of the farmer's dismissal,
they had been employed by Echo for several years since 2002 and 2004, respectively. There were no
prior untoward incidents. However, things changed when the Union was formed. When the two did not
agree to be transferred, they were terminated for insubordination, a mere ploy to lend a semblance of
legality to a pre-conceived management strategy.

CA

The CA affirmed in toto the NLRC's ruling.

ISSUE:

Were the respondents illegally suspended and terminated?

RULING:

Yes.

The Court ruled that the offer of transfer is, in legal contemplation, a promotion, which the
respondents validly refused. Such refusal cannot be the basis for the respondents' dismissal from service.

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. An employee is not bound to accept a promotion, which is in the nature of a gift or
reward. Refusal to be promoted is a valid exercise of a right. Such exercise cannot be considered in law as
insubordination, or willful disobedience of a lawful order of the employer, hence, it cannot be the basis of
an employee's dismissal from service.

In the case at bench, a Warehouse Checker and a Forklift Operator are rank-and-file employees. On
the other hand, the job of a Delivery Supervisor/Coordinator requires the exercise of discretion and
judgment from time to time. Specifically, a Delivery Supervisor/Coordinator assigns teams to man the
trucks, oversees the loading of goods, checks the conditions of the trucks, coordinates with account
specialists in the outlets regarding their delivery concerns, and supervises other personnel about their
performance in the warehouse. A Delivery Supervisor/Coordinator's duties and responsibilities are
apparently not of the same weight as those of a Warehouse Checker or Forklift Operator. Hence, despite
the fact that no salary increases were effected, the assumption of the post of a Delivery
Supervisor/Coordinator should be considered a promotion. The respondents' refusal to accept the same
was therefore valid.
Constructive Dismissal

SOLIMAN SECURITY SERVICES, INC. v. IGMEDIO SARMIENTO, et. al.

G.R. No. 194649
August 10, 2016

FACTS:

Respondents Igmedio Sarmiento, Jose Jun Cada and Ervin Robis were hired as security guards by
petitioner Soliman Security Services, Inc. and were assigned to Interphil Laboratories, working seven (7)
days a week for twelve (12) straight hours daily.

Arguments:

(a) Respondent Security Guards

Respondents alleged that during their employment, they were merely paid Php 325 for 12 hours
of work, their benefits were unpaid and amounts were deducted from their salary for cash bond and
mutual aid contributions. Respondents tried to discuss the matter with petitioner Teresita Soliman, but
the latter refused and told them to render their resignations instead. According to respondents, on 21
January 2007, they received an order relieving them from their posts and since then, they were not given
any assignments.

(b) Petitioner Teresita Soliman

Petitioners admitted relieving respondents from their duty but insists that it was in pursuance of
the contract they entered into with Interphil. The contract contained stipulations pertaining to the
client's policy of replacing guards on duty every six ( 6) months without repeat assignment. The agency
further posits that respondent guards were directed several times to report to the office for their new
assignments but they failed to comply with such directives. Petitioners called this as putting respondents
in a “floating status.”

Labor Arbiter

Finding that respondents' failure to comply with the Memoranda amounted to abandonment, the
Labor Arbiter dismissed the complaint. The Labor Arbiter concluded that there can be no dismissal to
speak of, much less an illegal dismissal.

NLRC

The NLRC reversed the Labor Arbiter’s decision and ruled that the letters directing respondents to
"clarify their intentions" were not in the nature of return-to-work orders, which may effectively interrupt
their floating status.

Court of Appeals

The CA affirmed the NLRC decision and directed the petitioners to pay respondents separation
pay, backwages and salary differentials.

ISSUE:
 Did the placement of the respondents in floating status constitute constructive dismissal?

RULING (in relation to constructive dismissal):

YES.

Placing security guards under floating status or temporary off-detail has been an established
industry practice and is a valid exercise of management prerogative. However, such practice must be
exercised in good faith and courts must be vigilant in assessing the different situations, especially
considering that the security guard does not receive any salary or any financial assistance provided by
law when placed on floating status. It must be emphasized, that they cannot be placed under floating
status indefinitely.

Placing employees on floating status requires the dire exigency of the employer's bona fide
suspension of operation. In security services, this happens when there is a surplus of security guards over
available assignments as when the clients that do not renew their contracts with the security agency are
more than those clients that do.
Management Prerogatives

REPUBLIC OF THE PHILIPPINES vs. MINERVA M.P. PACHEO

G.R. No. 178021
January 25, 2012

FACTS:

Minerva M.P. Pacheo was a Revenue Attorney IV, Assistant Chief of the Legal Division of the
Bureau of Internal Revenue (BIR) in Revenue Region No. 7 (RR7) Quezon City.

On May 7, 2002, the BIR issued Revenue Travel Assignment Order No. 25-2002, ordering the
reassignment of Pacheo as Assistant Chief, Legal Division from RR7 in Quezon City to RR4 in San
Fernando, Pampanga. The BIR cited exigencies of the revenue service as basis for the issuance of the said
RTAO.

Arguments:

(a) Pacheo

She considered her transfer from Quezon City to Pampanga as amounting to a constructive
dismissal, since the transfer would mean economic dislocation and physical burden on her part, and that
that her reassignment was merely intended to harass and force her out of the BIR in the guise of
exigencies of the revenue service.

(b) BIR

It contended that her reassignment could not be considered constructive dismissal as she
maintained her position as Revenue Attorney IV and was designated as Assistant Chief of Legal Division.
It emphasized that her appointment to the position of Revenue Attorney IV was without a specific station.
Consequently, she could properly be reassigned from one organizational unit to another within the BIR.
Lastly, she could not validly claim a vested right to any specific station, or a violation of her right to
security of tenure.

Civil Service Commission

CSC granted the appeal of Pacheo on the ground that her reassignment is not valid. Although
reassignment is a management prerogative, the same must be done in the exigency of the service without
diminution in rank, status and salary on the part of the officer or employee being temporarily reassigned.
Clearly, Pacheo’s salary shall be significantly reduced as a result of her reassignment. Accordingly, Pacheo
should now be reinstated to her original station without any right to claim back salary as she did not
report to work either at her new place of assignment or at her original station.

 Still not satisfied, Pacheo moved for reconsideration arguing that the CSC erred in not finding that
she was constructively dismissed and, therefore, entitled to back salary. CSC denied the motion.
Undaunted, Pacheo sought recourse before the CA via a petition for review.

Court of Appeals

The CA reversed the CSC Resolution and ruled in favor of Pacheo for having been constructively
dismissed and ordering her immediate reinstatement with full backwages and benefits. In this case,
petitioner’s reassignment will result in the reduction of her salary, not to mention the physical burden
that she would suffer in waking up early in the morning to travel daily from Quezon City to San Fernando,
Pampanga and in coming home late at night.

ISSUE:

Was the reassignment of Pacheo from Quezon City to Pampanga constituted constructive
dismissal?

RULING:

YES.

It appears undisputed that the reassignment of Pacheo was not valid.

While a temporary transfer or assignment of personnel is permissible even without the

employee's prior consent, it cannot be done when the transfer is a preliminary step toward his removal,
or a scheme to lure him away from his permanent position, or when it is designed to indirectly terminate
his service, or force his resignation. Such a transfer would in effect circumvent the provision which
safeguards the tenure of office of those who are in the Civil Service.

Significantly, Section 6, Rule III of CSC Memorandum Circular No. 40, series of 1998, defines
constructive dismissal as a situation when an employee quits his work because of the agency head’s
unreasonable, humiliating, or demeaning actuations which render continued work impossible. Hence, the
employee is deemed to have been illegally dismissed. This may occur although there is no diminution or
reduction of salary of the employee. It may be a transfer from one position of dignity to a more servile or
menial job.

The CSC, through the OSG, contends that the deliberate refusal of Pacheo to report for work either
in her original station in Quezon City or her new place of assignment in San Fernando, Pampanga negates
her claim of constructive dismissal. It is clear, however, from E.O. 292, Book V, Title 1, Subtitle A, Chapter
5, Section 26 (7) that there is no such duty to first report to the new place of assignment prior to
questioning an alleged invalid reassignment imposed upon an employee. Pacheo was well within her
right not to report immediately to RR4, San Fernando, Pampanga, and to question her reassignment.

The principal distinctions between a detail and reassignment lie in the place where the employee
is to be moved and in its effectivity pending appeal with the CSC. Based on the definition, a detail requires
a movement from one agency to another while a reassignment requires a movement within the same
agency. Moreover, pending appeal with the CSC, an order to detail is immediately executory, whereas a
reassignment order does not become immediately effective. In the case at bench, the lateral movement of
Pacheo as Assistant Chief, Legal Division from Quezon City to San Fernando, Pampanga within the same
agency is undeniably a reassignment.

Reassignments involving a reduction in rank, status or salary violate an employee’s security of

tenure, which is assured by the Constitution, the Administrative Code of 1987, and the Omnibus Civil
Service Rules and Regulations. Security of tenure covers not only employees removed without cause, but
also cases of unconsented transfers and reassignments, which are tantamount to illegal/constructive
removal.

Having ruled that Pacheo was constructively dismissed, she is entitled to reinstatement without
loss of seniority rights, but is only entitled to the payment of back salaries corresponding to 5 years from
the date of her invalid reassignment on May 7, 2002. It is a settled jurisprudence that an illegally
dismissed civil service employee is entitled to back salaries but limited only to a maximum period of 5
years and not full back salaries from his illegal dismissal up to his reinstatement.