1.) CAONG V.

REGUALOS

Petitioners: Primo Caong, Alexander Tresquio, Loriano Daluyon

FACTS:

The petitioners are employed by the respondent under a boundary

agreement as drivers. Petitioners filed separate complaints for illegal
dismissal against respondent.

PRIMO CAONG ALEXANDER LORIANO DALUYON

TRESQUIO
Hired in Sept. 1998 Hired in August 1996 Hired in March 1998
Became permanent in Became permanent in Became permanent in
2000 1997 July 1999
Suspended on Oct. 9-15 Barred to return to work Barred to return to work
for failure to remit the on Nov. 8 after his on Nov. 8 after his
full amount of boundary failure to remit full failure to remit full
amount of boundary on amount of boundary of
Nov. 6 (450/500) the previous
day(470/500)

Petitioners allegations:
Respondent did not comply with due process requirements before
terminating their employment as they were not furnished notice apprising
them of their infractions and another informing them of their dismissal.
Questioned the respondents policy of automatically dismissing the drivers
who fail to remit the full amount of the boundary as it allegedly (a)
violates their right to due process; (b) does not constitute a just cause for
dismissal; (c) disregards the reality that there are days when they could
not raise the full amount of the boundary because of the scarcity of
passengers.

Respondents allegations:
Respondent manifested in the mandatory conference that petitioners
were not dismissed and that they could drive his jeepneys ONCE THEY
PAID THEIR ARREARS.
Respondent alleged that petitioners were lessees of his vehicles and not
his employees.
Petitioners actually incurred arrears since they started working. (Caong
P10,315; Tresquio - P10,760; Daluyon P6,890)
He found out that the lessees contracted loans with third parties and
used the income of the jeepneys in paying loans.
He gathered all the lessees on November 4, 2001 and informed them
that effective November 5,2001, those who would fail to fully pay the
 daily rental would not be allowed to rent a jeepney.- He further explained
that the jeepneys are acquired on installment basis and that he was
paying the monthly amortizations through the lease income.

LA: DECIDED IN FAVOR OF THE RESPONDENT

Employer-employee relationship existed between respondent and
petitioners
The petitioners were not dismissed considering that they could go back
to work once they have paid their arrears.
It is proper to impose reasonable sanction to the drivers who cannot pay
their boundary payments.
NLRC: AGREED WITH THE LABOR ARBITER
CA: FOUND NO ABUSE OF DISCRETION ON THE PART OF NLRC
The employer-employee relationship of the parties has not been severed,
but merely suspended when the respondent refused to allow the
petitioners to drive his jeepneys.
The fact that it was within the power or the petitioners to return to work
is proof that there was no termination of employment.
The petitioners were not denied of their due process. They were given
the opportunity to be heard in the meeting conducted by respondent
SC: Petition is without merit.
The relationship between jeepney owners/operators and jeepney
drivers under the boundary system is that of employer-employee and
not of lessor-lessee.
Petitioners were not dismissed from employment but merely
suspended pending payment of their arrears.
Respondents policy of suspending drivers who fail to remit the full
amount of the boundary was fair and reasonable under the
circumstances.
It is acknowledged that an employer has free rein and enjoys
wide latitude of discretion to regulate all aspects of
employment, including the prerogative to instill discipline on
his employees and to impose penalties, including dismissal, if
warranted, upon erring employees.
The manner in which management conducts its own affairs to achieve
its purpose is within the managements discretion. The only limitation
on the exercise of management prerogative is that the policies, rules
and regulations on work-related activities of the employees must
always be fair and reasonable, and the corresponding penalties, when
prescribed, commensurate to the offense involved and to the degree of
the infraction.

2.) DELES JR. vs NLRC

G.R. No. 121348, March 9, 2000

Petitioner: Angelito P. Deles, Jr

Respondents: NLRC, First Phil. Industrial Corp. And/Or Flaviano C. Santos

Ponente: Quisumbing, J.

FACTS:

Petition: Special civil action for certiorari

Respondent Company (First Philippine Industrial Corporation)

o Operates a pipeline system which transports petroleum products

from the refineries by Caltex and Shell in Batangas to terminal
receiving facilities in Metro Manila.

Petitioner (Angelito P. Deles, Jr.)

o Employed by respondent company as shift supervisor.

o Assigned at its joint terminal facility in Pandacan, Manila, where

he was the highest ranking officer at the terminal during his shift.

o Primary task: To oversee the entire pipeline operation in the

terminal.

o Member of the management team

March 19, 1993 (pm)

o Deles Jr. was the shift supervisor on duty while Eduardo Yumul
and Leonardo Espejon were the assigned shift operator and
gauger, respectively.

o There was a scheduled delivery for Shell through respondent

company's pipeline of about 3,000 barrels of kerosene, to be
followed by a delivery of aviation turbine fuel.
 o Deles Jr. instructed his chief operator (Yumul) to effect a batch
change from the kerosene tank to the aviation fuel tank when
the joint terminal facility turbine meter registers 2,944 barrels of
kerosene delivered.

o However, Yumul failed to execute correctly petitioner's order and

instead of effecting the batch change at the prescribed reading
of 2,944 barrels, causing the batch change when the reading
already reached 3,341 barrels.

o About 397 barrels of the succeeding batch of aviation turbine

fuel went to the kerosene batch thereby downgrading the former.

Thereafter, Respondent Company required petitioner to explain why he

should not be charged administratively for neglect of duty in view of
his failure:

a) to witness the actual batch change cutting of S83-KE/S84-AV;

b) to see to it that a batch change checklist was prepared and

followed, and;

c) to see to it that a batch change report was prepared.

Deles Jr. was placed under preventive suspension pending the outcome
of the investigation; Yumul and Espejon were asked to explain for
having been remiss in their duties.

March 30, 1993

o Respondent Company conducted a joint formal investigation of

the cases of the three aforementioned personnel.

March 31, 1993

o Respondent Company found Deles Jr., Yumul and Espejon guilty

as charged.

o Private Respondent (Flaviano Santos Company AVP) informed

Deles Jr. that he was found to have violated the section on
Neglect of Duty of respondent company's Code of Discipline and
 for this violation he was meted the penalty of three (3) months
suspension; Yumul was meted the penalty of dismissal and
Espejon was suspended for one and a half months.

Deles Jr. then filed a complaint before the NLRC questioning the legality
of his suspension since he believed that the suspension was too harsh.

While Deles Jr. was under suspension, Respondent Company received

reports that petitioner allowed the entry of two "bar girls" at the
terminal at an unholy hour (4:00 A.M.) on February 23, 1993.

o Deles Jr claimed that the two female visitors are his relatives.

Respondent Company required petitioner to explain in writing why he

should not be held liable for:

1) neglect of duty as he allowed unauthorized persons in a

restricted area, and;

2) dishonesty as he misrepresented to management that the two

women are his relatives.

o Deles Jr. failed to submit his written explanation.

Respondent Company conducted a formal inquiry on the matter which

was attended by petitioner.

o Findings:

- Deles Jr. tampered with the automatic shutdown feature of

Gravitometer No. 5 at the terminal on March 19, 1993.

- He opened the terminal's motor operated valve (MOV #10)

between 6:00 A.M. and 6:35 A.M. on said date which
caused the gravitation of the contents of Shell kerosene
tank to aviation fuel tank.

- The abovementioned gravitometer is equipped with a

safety feature which triggers the automatic closure of the
joint terminal facility pressure control valve which in turn
cause a shutdown of the pipeline operations. It prevents
 the entry of liquefied petroleum gas (LPG) or a product
mixture containing LPG, through the motor operated valve
and onwards to the other product tanks such as gasoline,
kerosene, jet fuel and diesel fuel. Hence, by disabling the
automatic shutdown feature of said gravitometer, LPG
could pass through the line to the gasoline tank
undetected, and since the gasoline tank is not designed to
accommodate LPG, the possibility of an explosion is
enhanced.

Deles Jr. was again required to explain why he should not be

administratively sanctioned for:

1) tampering with an operating equipment (MOV#IO), and;

2) tampering with the installation of a safety device of

gravitometer.

He was then placed under preventive suspension effective June 24,

1993, pending the outcome of the probe on the latest charges against
him.

July 24, 1993

o Deles Jr. was reinstated in the payroll

After the formal investigation, Respondent Company terminated the

employment of petitioner.

Deles Jr. then amended his complaint by including the charge of illegal
dismissal with a claim for unpaid wages.

Labor Arbiters Ruling (Labor Arbiter Potenciano Canizares, Jr., May

30, 1994 decision)

Dismissed complaint for lack of merit.

NLRCs Ruling

Upheld the LA's finding that petitioner's suspension for three months is
a reasonable disciplinary measure.
 NLRC also ruled that respondent company has sufficient basis to lose
its trust and confidence on petitioner.

It modified the decision of LA by including therein an indemnity in an

amount equivalent to petitioner's one month salary for alleged failure
of herein respondent company to strictly comply with due process
requirements prior to termination, thus:

ISSUE:

Whether or not public respondent committed grave abuse of discretion in

affirming the decision of the labor arbiter finding that petitioner's suspension
is legal and that his dismissal is for valid and just cause on account of loss of
confidence.

HELD: No.

Legality of Deles Jr.s Suspension

Deles Jr. was found remiss in his duties in connection with the wrong
batch change operation on March 19, 1993 however, he contends that his
suspension for three months is too harsh, whimsical and biased.

However, Deles Jr. lost sight of the fact that the right of an employer to
regulate all aspects of employment is well settled. This right, aptly called
management prerogative which gives employers the freedom to regulate,
according to their discretion and best judgment, all aspects of employment,
including work assignment, working methods, processes to be followed,
working regulations, transfer of employees, work supervision, lay-off of
workers and the discipline, dismissal and recall of workers. In general,
management has the prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company rules and
regulations. The Court found Deles Jr.s protestation unfounded. For, based
on the record, Respondent Company imposed said penalty pursuant to the
Company Code of Discipline which the labor agencies find to be fair and in
accordance with law. In fact, the penalty for violating the provision on
Neglect of Duty ranges from warning to dismissal depending on the gravity
of the offense. Respondent Company explained that mishandling the delivery
of highly flammable petroleum products could result in enormous damage to
properties and loss of lives at the terminal and surrounding areas. Hence, it
has to exercise extraordinary diligence in conducting its operations in view of
the delicate nature of its business. Considering the attendant circumstances,
the Court is constrained to agree that the penalty of suspension first imposed
on petitioner is reasonable and appropriate as well as legally unassailable.

Legality of Deles Jr.s Dismissal from Service

He insists that respondent company has no ground to lose trust and

confidence on him to justify his dismissal. He vehemently denies tampering
with the gravitometer, much less admitting doing it. He also avers that it is
inconceivable for him to do so since he was with his co-workers, Noel Valle
and Edgardo Yumul, at the time of said incident. Further, he claims that there
is no reason for him to commit such transgression.

On its face, Deles Jr.'s contention would require the Court to delve into
the findings of fact a quo. This the Court cannot do. In the review of NLRC
decisions through a special civil action for certiorari, the Court is confined
only to issues of want of jurisdiction and grave abuse of discretion on the
part of the labor tribunal. The Court is precluded from inquiring unto the
correctness of the evaluation of that evidence that underpins the labor
tribunal's conclusion on matters of fact. Nor could the Court re-examine the
evidence, re-evaluate the credibility of the witnesses, nor substitute our
findings of fact for those of an administrative body which has the authority
and expertise in its specialized field. Arguably, there may even be an error in
judgment. This however is not within the ambit of the extraordinary remedy
of certiorari.

Nevertheless, in this case, the Court noted that the labor arbiter used
every reasonable means to ascertain the facts by giving the parties ample
opportunity to present evidence. After both parties were heard, they filed
their respective affidavits, position papers and memoranda. In our view, the
labor arbiter properly found that despite considering these documentary
evidence, averments of Flaviano Santos in his affidavit indicting petitioner for
tampering with the gravitometer and admitting the wrongdoing stand on
solid ground. Further, petitioner did not quite succeed to convince the
respondent NLRC to rule otherwise.

Loss of Trust and Confidence as a Valid Ground for Dismissing an

Employee
 As provided for in the Labor Code:

"ART. 282. Termination by employer. An employer may terminate

an employment for any of the following causes:

(c) Fraud or willful breach by the employee of the trust reposed in

him by his employer or duly authorized representative"

It must also be stressed that loss of confidence as a just cause for

termination of employment is premised on the fact that an employee
concerned holds a position of trust and confidence. This situation holds
where an employee or official of the company is entrusted with responsibility
involving delicate matters, such as the custody, handling, or care and
protection of the employer's property. In the case of company personnel
occupying such positions of responsibility, the Court has repeatedly held that
loss of trust and confidence justifies termination.

As regards a managerial employee, moreover, mere existence of a

basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Proof beyond reasonable doubt is
not required, it being sufficient that there is some basis for such loss of
confidence, such as when the employer has reasonable ground to believe
that the employee concerned is responsible for the purported misconduct,
and the nature of his participation therein renders him unworthy of the trust
and confidence demanded by his position.

In the case at bar, Deles Jr. is tasked to perform key functions; he is

bound by an exacting work ethic. He should have realized that his position
requires the full trust and confidence of his employer in every exercise of
managerial discretion insofar as the conduct of his employer's business is
concerned. However, as found a quo, he committed acts which betrayed the
trust and confidence reposed on him by tampering with very sensitive
equipment at the joint terminal facility. In doing so, he exposed the terminal
complex and the residents in adjacent communities to the danger of a major
disaster that may be caused by tank explosions and conflagration. Verily, he
committed acts inimical to the interest of his employer which is mandated by
law to observe extraordinary diligence in its operations to ensure the safety
of the public. Indeed, the Court is constrained to conclude that petitioner's
admitted infraction as well his past violation of safety regulations is more
than sufficient ground for respondent company to terminate the employment
of petitioner.
 In sum, public respondent NLRC could not be faulted for any grave
abuse of discretion in ruling that petitioner's suspension is legal and his
dismissal well justified on the ground of loss of trust and confidence.

Procedural Aspect of Deles Jr.'s Dismissal

It appeared clear to the Court that Deles Jr. was given ample
opportunity to present his side and to defend himself against the charges
against him. Respondent Company sent petitioner a letter dated June 2,
1993, requiring him to answer the charges hurled against him. He
participated in the formal investigation conducted by respondent company
on July 23 and August 3, 1993. After the investigation was concluded, Deles
Jr. was notified of his dismissal. Under these attendant circumstances, the
Court found no basis for public respondent's ruling that Respondent
Company breached legal procedure prior to termination.

RULING:

Petition is DENIED for lack of merit. The assailed decision of NLRC,

which upheld the Labor Arbiter's decision dismissing petitioner's complaint,
is AFFIRMED with the MODIFICATION that the award of indemnity in
the amount equivalent to petitioner's one (1) month salary is
DELETED.

***3.) CAVITE APPAREL (di ko mabuksan file ni Carlos)

4.) BRICCIO "RICKY" A. POLLO, PETITIONER, VS. CHAIRPERSON

KARINA CONSTANTINO-DAVID, DIRECTOR IV RACQUEL DE GUZMAN
BUENSALIDA, DIRECTOR IV LYDIA A. CASTILLO, DIRECTOR III
ENGELBERT ANTHONY D. UNITE AND THE CIVIL SERVICE
COMMISSION, RESPONDENTS.

G.R. No. 181881, October 18, 2011

 (Searches and Seizures)

VILLARAMA, JR., J.:

FACTS: On January 3, 2007, an unsigned letter-complaint addressed to

respondent Civil Service Commission (CSC) Chairperson Karina
Constantino-David which was marked "Confidential" was received by
the Integrated Records Management Office (IRMO) at the CSC Central
Office. The aforesaid letter was given directly to Chairperson David.

The letter-complaint reads:

I would like to ask from you personally if it is just alright for

an employee of your agency to be a lawyer of an accused gov't
employee having a pending case in the [CSC]. I honestly think
this is a violation of law and unfair to others and your office.

I have known that a person have been lawyered by one of

your attorn[e]y in the [R]egion 4 office. He is the chief of the ]
Mamamayan Muna Hindi Mamaya Na Division]. He have been
helping many who have pending cases in the [CSC].

Chairperson David immediately formed a team of four personnel

with background in information technology (IT), and issued a memo
directing them to conduct an investigation and specifically "to back up
all the files in the computers found in the Mamamayan Muna (PALD)
and Legal divisions."

The same day, the investigating team finished their task. It was
found that most of the files in the 17 diskettes containing files copied
from the computer assigned to and being used by the petitioner,
numbering about 40 to 42 documents, were draft pleadings or letters
in connection with administrative cases in the CSC and other tribunals.
On the basis of this finding, Chairperson David issued the Show-Cause
Order requiring the petitioner, who had gone on extended leave, to
submit his explanation or counter-affidavit within five days from notice.

Petitioner filed his Comment, denying that he is the person

referred to in the anonymous letter-complaint which had no
attachments to it, because he is not a lawyer and neither is he
"lawyering" for people with cases in the CSC. He asserted that he had
protested the unlawful taking of his computer done while he was on
leave, citing the letter dated January 8, 2007 in which he informed
 Director Castillo that the files in his computer were his personal files
and those of his sister, relatives, friends and some associates and that
he is not authorizing their sealing, copying, duplicating and printing as
these would violate his constitutional right to privacy and protection
against self-incrimination and warrantless search and seizure. He
pointed out that though government property, the temporary use and
ownership of the computer issued under a Memorandum of Receipt
(MR) is ceded to the employee who may exercise all attributes of
ownership, including its use for personal purposes.

ISSUE: Whether or not petitioners Constitutional right against

unreasonable searches and seizures was violated.

HELD: No. The constitutional guarantee is not a prohibition of all

searches and seizures but only of "unreasonable" searches and
seizures. The Court, in deciding the case, addressed the following
questions: (1) Did petitioner have a reasonable expectation of privacy
in his office and computer files?; and (2) Was the search authorized by
the CSC Chair, the copying of the contents of the hard drive on
petitioner's computer reasonable in its inception and scope?

In the first question, Petitioner failed to prove that he had an

actual (subjective) expectation of privacy either in his office or
government-issued computer which contained his personal files.
Petitioner did not allege that he had a separate enclosed office which
he did not share with anyone, or that his office was always locked and
not open to other employees or visitors. Neither did he allege that he
used passwords or adopted any means to prevent other employees
from accessing his computer files. On the contrary, he submits that
being in the public assistance office of the CSC-ROIV, he normally
would have visitors in his office like friends, associates and even
unknown people, whom he even allowed to use his computer which to
him seemed a trivial request. He described his office as "full of people,
his friends, unknown people" and that in the past 22 years he had
been discharging his functions at the PALD, he is "personally assisting
incoming clients, receiving documents, drafting cases on appeals, in
charge of accomplishment report, Mamamayan Muna Program, Public
Sector Unionism, Correction of name, accreditation of service, and
hardly had anytime for himself alone, that in fact he stays in the office
as a paying customer." Under this scenario, it can hardly be deduced
 that petitioner had such expectation of privacy that society would
recognize as reasonable.

As to the second point of inquiry on the reasonableness of the

search conducted on petitioner's computer, we answer in the
affirmative. The search of petitioner's computer files was conducted in
connection with investigation of work-related misconduct prompted by
an anonymous letter-complaint addressed to Chairperson David
regarding anomalies in the CSC-ROIV where the head of the
Mamamayan Muna Hindi Mamaya Na division is supposedly
"lawyering" for individuals with pending cases in the CSC.

At the inception of the search, a complaint was received

recounting that a certain division chief in the CSCRO No. IV was
"lawyering" for parties having pending cases with the said regional
office or in the Commission. The nature of the imputation was
serious, as it was grievously disturbing. If, indeed, a CSC
employee was found to be furtively engaged in the practice of
"lawyering" for parties with pending cases before the Commission
would be a highly repugnant scenario, then such a case would have
shattering repercussions. It would undeniably cast clouds of doubt
upon the institutional integrity of the Commission as a quasi-judicial
agency, and in the process, render it less effective in fulfilling its
mandate as an impartial and objective dispenser of administrative
justice. It is settled that a court or an administrative tribunal must not
only be actually impartial but must be seen to be so, otherwise the
general public would not have any trust and confidence in it.

BERSAMIN, J., Concurring and Dissenting:

I hold, instead, that the petitioner is entitled to a reasonable

expectation of privacy in respect of the communications created,
stored, sent, or received after office hours through the office computer,
as to which he must be protected. For that reason, respondent David's
order to back up files should only cover the files corresponding to
communications created, stored, sent, or received during office hours.
There will be no difficulty in identifying and segregating the files
created, stored, sent, or received during and after office hours with the
constant advancement and improvement of technology and the
presumed expertise of the Commission's information systems analysts.

CARPIO, J., Concurring:

 The CSC's computer use regulation, which opens to access for
internal scrutiny anything CSC employees "create, store, send, or
receive in the computer system," has a statutory basis under the
Government Auditing Code of the Philippines. Section 4(2) of the Code
mandates that "[g]overnment x x x property shall be x x x used
solely for public purposes."[1] In short, any private use of a
government property, like a government-owned computer, is
prohibited by law. Consequently, a government employee cannot
expect any privacy when he uses a government-owned computer
because he knows he cannot use the computer for any private
purpose. The CSC regulation declaring a no-privacy expectation on
the use of government-owned computers logically follows from the
statutory rule that government-owned property shall be used "solely"
for a public purpose.

5.) EMIRATE v. MENESE

Facts:

Menese filed a complaint for constructive dismissal against Emirate agency

and it General Manager Robert Yan. From April 1999, Menese is a Payroll and
Billing Clerk and assigned in a detachment at PGH. Effective on May 2001,
her allowance was allegedly reduced to P1,500 and P100 was deducted from
her salary every month without notice. She was also getting pressures from
the agency for her to resign because it had been committed to a certain Amy
Claro, as requested by the new Chief of Security Division. Yan offered to
transfer her in a different detachment in a lower position. She realized that
she was actually being demoted in rank and salary so she refused the offer
and continue to report in the PGH instead. Thereafter, she received multiple
harassment calls, publicly humiliated and badly treated and prohibited to use
office computed when Claro already assumed her position. Additionally, they
also withheld her May 16-31 salary.

Emirates Contention:
Dapula received numerous complaints on her unprofessional conduct.
Menese also deliberately and unjustifiably refused to work despite several
notices which is an act if gross insubordination constituting a just cause for
termination.

Meneses Contention:
Petitioner dismissed her without just cause and due process but only through
a letter asking from Dapula for her immediate removal but they failed to
produce or present any evidence. She claimed that her alleged transfer was
motivated by ill-will and bad faith as it was done to facilitate the entry of a
favored applicant.

LA:
Held that she was constructively dismissed as she would be suffering a
demotion in rank and a diminution of pay in the offered position.

NLRC:
Held that she was not constructively dismissed but was merely transferred
and it was a valid exercise of the petitioners management prerogative.
However, she cannot be liable for abandonment because it was an honest
belief that she was being constructively dismissed.

CA:
Reinstated the decision of LA because Meneses transfer did not exist or that
no substantial evidence was presented in that regard. Although it is a
management prerogative to transfer employee to another office, it must be
exercised in such a way that there is no demotion in rank or diminution in
pay, benefits and other privileges.

Issue:
W/N the agency is justified in using its management prerogative

SC:
Menese was constructively dismissed and the use of management
prerogative is not justified.
Managerial prerogative to transfer personnel must be exercised
without 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 should not be used as a subterfuge by
the employer to get rid of an undesirable worker. Measured against this
basic precept, the petitioners undoubtedly abused their discretion or
authority in transferring Menese to the agencys head office. She had
become undesirable because she stood in the way of Claros entry into the
PGH detachment. Menese had to go, thus the need for a pretext to get rid of
her. The request of a client for the transfer became the overriding command
that prevailed over the lack of basis for the transfer.
It should not be used as a subterfuge by the employer to get rid of an
undesirable worker. Court cannot blame Menese for refusing Yans offer to
be transferred. Not only was the transfer arbitrary and done in bad faith, it
would also result, as Menese feared, in a demotion in rank and a diminution
in pay. Although Yan informed Menese that based on the request of the
client, she will be transferred to another assignment which however will not
involve any demotion in rank nor diminution in her salaries and other
benefits, the offer was such as to invite reluctance and suspicion as it was
 couched in a very general manner. We find credible Meneses submission on
this point, i.e., that under the offered transfer: (1) she would hold the
position of lady guard and (2) she would be paid in accordance with the
statutory minimum wage, or from P11,720.00 to P7,500.00.

6.) G.R. No. 198534 July 3, 2013

JENNY F. PECKSON, Petitioner,

vs.
ROBINSONS SUPERMARKET CORPORATION, JODY GADIA, ROENA
SARTE, and RUBY ALEX, Respondents.

FACTS:

The petitioner first joined the Robinsons Supermarket Corporation

(RSC) as a Sales Clerk.
Then, she was holding the position of Category Buyer when respondent
Roena Sarte, RSCs Assistant Vice-President for Merchandising,
reassigned her to the position of Provincial Coordinator. Claiming that
her new assignment was a demotion because it was non-supervisory
and clerical in nature, the petitioner refused to turn over her
responsibilities to the new Category Buyer, or to accept her new
responsibilities as Provincial Coordinator.
In a memorandum to the petitioner, the RSC, through Sarte, demanded
an explanation from her within 48 hours for her refusal to accept her
new assignment despite written and verbal demands. Sarte cited a
company rule, Offenses Subject to Disciplinary Action No. 4.07, which
provided that "[d]isobedience, refusal or failure to do assigned task or
to obey superiors/officials orders/instructions, or to follow established
procedures or practices without valid reason" would be meted the
penalty of suspension.
The petitioner ignored the 48-hour deadline to explain imposed by
Sarte.
Sarte issued her another memorandum, reiterating her demand to
explain in writing within 48 hours why she persistently refused to
assume her new position, and warning her that this could be her final
chance to present her side or be deemed to have waived her right to
be heard.
In her one-paragraph reply submitted, the petitioner stated that
she could not accept the position of Provincial Coordinator since
she saw it as a demotion. As it turned out, however, the
 petitioner had already filed a complaint for constructive
dismissal against RSC, Sarte, Gadia and Alex (respondents).
Sarte issued an instruction to the petitioner to report to RSCs
Metroeast Depot to help prepare all shipping manifests for Cagayan de
Oro and Bacolod, but as witnessed by RSC employees Raquel
Torrechua and Alex, she did not obey as instructed. Again, Sarte issued
a similar instruction, citing the need for certain tasks from the
petitioner in preparation for the coming Christmas holidays, but the
petitioner again refused to heed.
As culled from the assailed appellate court decision, the petitioner
argued before the LA that the true organizational chart of the RSC
showed that the position of Category Buyer was one level above that
of the Provincial Coordinator, and that moreover, the job description of
a Provincial Coordinator was largely clerical and did not require her to
analyze stock levels and order points, or source new local and
international suppliers, or monitor stock level per store and
recommend items for replenishment, or negotiate better items and
discounts from suppliers, duties which only a Category Buyer could
perform. She also claimed that she was instructed to file a courtesy
resignation in exchange for a separation pay of one-half salary per year
of service.

Respondents:

Maintained that her transfer was not a demotion since the Provincial
Coordinator occupied a "Level 5" position like the Category Buyer, with
the same work conditions, salary and benefits. But while both positions
had no significant disparity in the required skill, experience and
aptitude, the position of Category Buyer demanded the traits of
punctuality, diligence and attentiveness because it is a frontline
position in the day-to-day business operations of RSC which the
petitioner, unfortunately, did not possess.
Raised the petitioners record of habitual tardiness as far back as 1999,
as well as poor performance rating in 2005.
In addition to her performance rating of "2.8" out of "4.0" in 2005
equivalent to "below expectation," the petitioner was found to be tardy
in June and July 2005, 13 times, and for the entire 2005, 57 times; that
she was suspended twice in 2006 for 20 instances of tardiness and
absences from July to September 2006 alone. 13 We also note that the
petitioner was suspended for seven (7) days in September and October
2005 for deliberately violating a company policy after she was seen
having lunch with a company supplier.14
Denied that the reassignment of the petitioner as Provincial
Coordinator was motivated by a desire to besmirch the name of the
latter. SHE ASSERTED THAT IT WAS MADE IN THE EXERCISE OF
 MANAGEMENT PREROGATIVE AND SOUND DISCRETION, IN VIEW
OF THE NSITIVE POSITION OCCUPIED BY THE CATEGORY BUYER
IN RSCS DAILY OPERATIONS, VIS--VIS THE PETITIONERS
"BELOW EXPECTATION" PERFORMANCE RATING AND HABITUAL
TARDINESS.

LA : Dismissed the case

Ruled that job reassignment or classification is a strict prerogative of

the employer, and that the petitioner cannot refuse her transfer from
Category Buyer to Provincial Coordinator since both positions
commanded the same salary structure, high degree of responsibility
and impeccable honesty and integrity. Upholding the employers right
not to retain an employee in a particular position to prevent losses or
to promote profitability, the LA found no showing of any illegal motive
on the part of the respondents in reassigning the petitioner. The
transfer was dictated by the need for punctuality, diligence and
attentiveness in the position of Category Buyer, which the petitioner
clearly lacked.
Ruled that her persistent refusal to accept her new position amounted
to insubordination, entitling the RSC to dismiss her from employment.

A month after the above ruling, or on June 22, 2007, the petitioner tendered
her written "forced" resignation, wherein she complained that she was being
subjected to ridicule by clients and co-employees alike on account of her
floating status since the time she refused to accept her transfer. She likewise
claimed that she was being compelled to accept the position of Provincial
Coordinator without due process.

NLRC: sustained the findings of the LA.

Agreed that the lateral transfer of the petitioner from Category Buyer
to Provincial Coordinator was not a demotion amounting to
constructive dismissal, since both positions belonged to Job Level 5
and between them there is no significant disparity in terms of the
requirements of skill, experience and aptitude. Contrary to the
petitioners assertion, the NLRC found that the position of Provincial
Coordinator is not a rank-and-file position but in fact requires the
exercise of discretion and independent judgment, as well as
appropriate recommendations to management to ensure the faithful
implementation of its policies and programs; that it even exercises
influence over the Category Buyer in that it includes performing a
recommendatory function to guide the Category Buyer in making
decisions on the right assortment, price and quantity of the items,
articles or merchandise to be sold by the store.
 Reiterated the settled rule that MANAGEMENT MAY TRANSFER AN
EMPLOYEE FROM ONE OFFICE TO ANOTHER WITHIN THE
BUSINESS ESTABLISHMENT, PROVIDED THERE IS NO DEMOTION
IN RANK OR DIMINUTION OF SALARY, BENEFITS, AND OTHER
PRIVILEGES, AND THE ACTION IS NOT MOTIVATED BY
DISCRIMINATION OR BAD FAITH OR EFFECTED AS A FORM OF
PUNISHMENT WITHOUT SUFFICIENT CAUSE. It ruled that the
respondents were able to show that the petitioners transfer was not
unreasonable, inconvenient or prejudicial, but was prompted by her
failure to meet the demands of punctuality, diligence, and personal
attention of the position of Category Buyer; that management wanted
to give the petitioner a chance to improve her work ethic, but her
obstinate refusal to assume her new position has prejudiced
respondent RSC, even while she continued to receive her salaries and
benefits as Provincial Coordinator.

On appeal in CA, the petitioner insisted that her transfer from Category
Buyer to Provincial Coordinator was a form of demotion without due process,
and that the respondents unjustifiably depicted her as remiss in her duties,
flawed in her character, and unduly obstinate in her refusal to accept her
new post.

CA: Found no basis to deviate from the oft-repeated tenet that the findings
of fact and conclusions of the NLRC when supported by substantial evidence
are generally accorded not only great weight and respect but even finality,
and are thus deemed binding.

ISSUE:

Whether or not the lateral transfer from Category Buyer to Provincial

Coordinator of the petitioner was a demotion amounting to
constructive dismissal because her reassignment was not a valid
exercise of management prerogative, but was done in bad faith and
without due process.

HELD:

SC affirmed the decision of the lower court.

This Court has consistently refused to interfere with the exercise by

management of its prerogative to regulate the employees work
assignments, the working methods and the place and manner of work.

As we all know, there are various laws imposing all kinds of burdens and
obligations upon the employer in relation to his employees, and yet as a rule
this Court has always upheld the employers prerogative to regulate all
aspects of employment relating to the employees work assignment, the
working methods and the place and manner of work. Indeed, labor laws
discourage interference with an employers judgment in the conduct of his
business.

In Rural Bank of Cantilan, Inc. v. Julve, the Court had occasion to summarize
the general jurisprudential guidelines affecting the right of the employer to
regulate employment, including the transfer of its employees:

Under the doctrine of MANAGEMENT PREROGATIVE, every employer has

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

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

Concerning the TRANSFER OF EMPLOYEES, these are the following

jurisprudential guidelines:

(a) A transfer is a movement from one position to another of equivalent

rank, level or salary without break in the service or a lateral movement
from one position to another of equivalent rank or salary;

(b) The employer has the inherent right to transfer or reassign an

employee for legitimate business purposes;

(c) A transfer becomes unlawful where it is motivated by discrimination

or bad faith or is effected as a form of punishment or is a demotion
without sufficient cause;

(d) The employer must be able to show that the transfer is not
unreasonable, inconvenient, or prejudicial to the employee.

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.

As a privilege inherent in the employers right to control and manage its

enterprise effectively, its freedom to conduct its business operations to
achieve its purpose cannot be denied. We agree with the appellate court that
the respondents are justified in moving the petitioner to another equivalent
position, which presumably would be less affected by her habitual tardiness
or inconsistent attendance than if she continued as a Category Buyer, a
"frontline position" in the day-to-day business operations of a supermarket
such as Robinsons.

If the transfer of an employee is not unreasonable, or inconvenient, or

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.

As we have already noted, the respondents had the burden of proof that the
transfer of the petitioner was not tantamount to constructive dismissal,
which as defined in Blue Dairy Corporation v. NLRC, is a quitting because
continued employment is rendered impossible, unreasonable or unlikely, or
an offer involving a demotion in rank and diminution of pay:

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.

Thus, as further held in Philippine Japan Active Carbon Corporation, 28 when

the transfer of an employee is not unreasonable, or inconvenient, or
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.29

But like all other rights, there are limits to the exercise of managerial
prerogative to transfer personnel, and on the employer is laid the burden to
show that the same is without grave abuse of discretion, bearing in mind the
basic elements of justice and fair play. 30 Indeed, management prerogative
may not be used as a subterfuge by the employer to rid himself of an
undesirable worker.

(APPLICATION RE: BURDEN OF PROOF FOR CONSTRUCTIVE

DISMISSAL)

Interestingly, although the petitioner claims that she was

constructively dismissed, yet until the unfavorable decision of
the LA on May 30, 2007, for seven (7) months she continued to
collect her salary while also adamantly refusing to heed the order
of Sarte to report to the Metroeast Depot. It was only on June 22,
2007, after the LAs decision, that she filed her "forced"
resignation. Her deliberate and unjustified refusal to assume her
new assignment is a form of neglect of duty, and according to
the LA, an act of insubordination. We saw how the company
sought every chance to hear her out on her grievances and how
she ignored the memoranda of Sarte asking her to explain her
refusal to accept her transfer. All that the petitioner could say
was that it was a demotion and that her floating status
embarrassed her before the suppliers and her co-employees.

The respondents have discharged the burden of proof that the transfer of the
petitioner was not tantamount to constructive dismissal.

In Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, 32 a machinist who had
been employed with the petitioner company for 16 years was reduced to the
service job of transporting filling materials after he failed to report for work
for one (1) day on account of an urgent family matter. This is one instance
where the employees demotion was rightly held to be an unlawful
constructive dismissal because the employer failed to show substantial proof
that the employees demotion was for a valid and just cause:

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. Particularly, for a transfer not to
be considered a constructive dismissal, the employer must be able to show
that such 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. Failure of the employer to overcome
this burden of proof, the employees demotion shall no doubt be tantamount
to unlawful constructive dismissal.

(APPLICATION RE: MANAGEMENT PREROGATIVE):

In the case at bar, we agree with the appellate court that there is substantial
showing that the transfer of the petitioner from Category Buyer to Provincial
Coordinator was not unreasonable, inconvenient, or prejudicial to her.

The petitioner failed to dispute that the job classifications of Category

Buyer and Provincial Coordinator are similar, or that they command a
similar salary structure and responsibilities.
We agree with the NLRC that the Provincial Coordinators position does
not involve mere clerical functions but requires the exercise of
discretion from time to time, as well as independent judgment, since
the Provincial Coordinator gives appropriate recommendations to
management and ensures the faithful implementation of policies and
programs of the company. It even has influence over a Category Buyer
because of its recommendatory function that enables the Category
Buyer to make right decisions on assortment, price and quantity of the
items to be sold by the store.
We also cannot sustain the petitioners claim that she was not
accorded due process and that the respondents acted toward her
with discrimination, insensibility, or disdain as to force her to forego
her continued employment. In addition to verbal reminders from Sarte,
the petitioner was asked in writing twice to explain within 48 hours her
refusal to accept her transfer. In the first, she completely remained
silent, and in the second, she took four (4) days to file a mere one-
paragraph reply, wherein she simply said that she saw the Provincial
Coordinator position as a demotion, hence she could not accept it.
Worse, she may even be said to have committed insubordination when
she refused to turn over her responsibilities to the new Category Buyer,
Padilla, and to assume her new responsibilities as Provincial
Coordinator and report to the Metroeast Depot as directed. This was
precisely the reason why the petitioner was kept on floating status. To
her discredit, her defiance constituted a neglect of duty, or an act of
insubordination, per the LA.
Neither can we consider tenable the petitioners contention that the
respondents deliberately held her up to mockery and ridicule when
they cut off her email access, sent memoranda to her clients that she
was no longer a Category Buyer, and to the various Robinsons
branches that she was now a Provincial Coordinator on floating status
 and that Padilla was taking over her position as the new Category
Buyer. It suffices to state that these measures are the logical steps to
take for the petitioners unjustified resistance to her transfer, and were
not intended to subject her to public embarrassment.

Finally, as reiterated in Acebedo Optical, 35 this Court is not a trier of facts,

and only errors of law are generally reviewed in petitions for review on
certiorari criticizing decisions of the CA. Questions of fact are not
entertained, and in labor cases, this doctrine applies with greater force.

Factual questions are for labor tribunals to resolve.36 Thus:

Judicial Review or labor cases does not go beyond the evaluation of the
sufficiency of the evidence upon which its labor officials' findings rest. As
such, the findings of facts and conclusion of the NLRC are generally accorded
not only great weight and respect but even clothed with finality and deemed
binding on this Court as long as they are supported by substantial evidence.
This Court finds no basis for deviating from said doctrine without any clear
showing that the findings of the Labor Arbiter, as affirmed by the NLRC, are
bereft of substantiation. Particularly when passed upon and upheld by the
Court of Appeals, they are binding and conclusive upon the Supreme Court
and will not normally be disturbed.

As earlier stated, we find no basis for deviating from the oft espoused legal
tenet that findings of facts and conclusion of the labor arbiter are generally
accorded not only great weight and respect but even clothed with finality
and deemed binding on this Court as long as they are supported by
substantial evidence, without any clear showing that such findings of fact, as
affirmed by the NLRC, are bereft of substantiation. More so, when passed
upon and upheld by the Com1 of Appeals, they are binding and conclusive
upon us and will not normally be disturbed;

WHEREFORE, the premises considered, the Decision of the Court of Appeals

dated is AFFIRMED.

7.) G.R. No. 178125.March 18, 2013.*

THE ORCHARD GOLF AND COUNTRY CLUB, petitioner, vs. AMELIA R.
FRANCISCO, respondent.

TOPIC: Management Prerogative: Illegal Transfer

FACTS: Petitioner, The Orchard Golf and Country Club (the Club), operates
and maintains two golf courses in Dasmarias, Cavite for Club members and
their guests. On March 17, 1997, respondent Amelia R. Francisco (Francisco)
was employed as Club Accountant. As General Accounting Division head,
respondent reports directly to the Clubs Financial Comptroller, Jose Ernilo P.
Famy.

On May 18, 2000, Famy directed Francisco to draft a letter to SGV & Co.
(SGV), the Clubs external auditor, inquiring about the accounting treatment
that should be accorded property that will be sold or donated to the Club.
Francisco failed to prepare the letter, even after Famys repeated verbal and
written reminders, the last of which was made on June 22, 2000.

On June 27, 2000, Famy issued a memorandum requiring Franciscos written

explanation, under pain of an insubordination charge, relative to her failure
to prepare the letter. Instead of complying with the memorandum, Francisco
went to the Clubs General Manager, Tomas B. Clemente III (Clemente), and
personally explained to the latter that due to the alleged heavy volume of
work that needed her attention, she was unable to draft the letter. Clemente
assured her that he would discuss the matter with Famy personally. On this
assurance, Francisco did not submit the required written explanation. For this
reason, Famy issued a June 29, 2000 memorandum6suspending Francisco
without pay for a period of 15 days.

On July 1, 2000, Famy issued another memorandum8 informing Francisco

that her suspension shall be effective from July 3 to 19, 2000. On July 3, 2000
Francisco wrote to the Clubs General and Administrative Manager, Ma. Irma
Corazon A. Nuevo (Nuevo), questioning Famys act of charging, investigating,
and suspending her without coursing the same through the Clubs Personnel
Department.

On July 5, 2000, Francisco wrote a letter11 to Clemente requesting an

investigation into Famys possible involvement in the commission in 1997 of
alleged fraudulent and negligent acts relative to the questionable approval
and release of Club checks in payment of Bureau of Internal Revenue (BIR)
taxes, in which her counter-signature though required was not obtained. On
July 20, 2000, or a day after Franciscos period of suspension expired, Famy
issued separate memoranda to Francisco and Clemente informing them of
Franciscos transfer, without diminution in salary and benefits, to the Clubs
Cost Accounting Section while the investigation on Famys alleged illegal
activities is pending.

On August 11, 2000, Francisco filed a Complaint for illegal dismissal against
the Club, impleading Famy, Clemente and Nuevo as additional respondents.
Francisco amended her illegal dismissal Complaint to one for illegal
suspension. Meanwhile, she continued to report for work. On September 7,
2000, or a day after serving her suspension, Francisco again received a
September 6, 2000 memorandum from Nuevo, duly noted and approved by
Clemente, this time placing her on forced leave with pay for 30 days, or from
September 7, 2000 up to October 11, 2000, for the alleged reason that the
case filed against her has strained her relationship with her superiors. She
was again suspended.

After the expiration of her forced leave, or on October 12, 2000, Francisco
reported back to work. This time she was handed an October 11, 2000
memorandum25 from Clemente informing her that, due to strained relations
between her and Famy and the pending evaluation of her betrayal of
company trust charge, she has been permanently transferred, without
diminution of benefits, to the Clubs Cost Accounting Section effective
October 12, 2000.

Ruling of the LA: After considering the parties respective Position Papers
and evidence, Labor Arbiter Enrico Angelo C. Portillo issued a Decision dated
August 23, 2001 dismissing Franciscos Complaint for lack of merit.
NLRC: The NLRC held that while Franciscos suspensions were valid, her
subsequent permanent transfer on the ground of strained relations to the
Clubs Cost Accounting Section as Cost Controller on October 12, 2000 was
without just cause. It resulted in Franciscos demotion, since the position of
Cost Controller was merely of a supervisory character, while the position of
Club Accountant was of managerial rank.

The NLRC added that strained relationship is not a valid ground for
termination of employment under the Labor Code.
CA: The CA sustained the NLRC ruling. It held that while petitioner had the
right or prerogative to transfer the respondent from one office to another
within the Club, there should be no demotion in rank, salary, benefits
and other privileges.

Hence, this petition.

ISSUE: Whether or not petitioner acted in bad faith in abusing their right or
prerogative in transferring Francisco (respondent) from one office to another
therefore resulting in demotion in rank, salary, benefits, and other privileges
amounting to constructive dismissal.

RULING: Yes. The Supreme Court affirmed CAs decision and ordered
petitioners to reinstate respondent to her former position as Club
Accountant.

1. CONSTRUCTIVE DISMISSAL/ILLEGAL TRANSFER- There was

constructive dismissal when Francisco was transferred to the Cost
Accounting Section.
We agree with the NLRC and the CA that Franciscos transfer to the position
of Cost Controller was without valid basis and that it amounted to a demotion
in rank. Hence, there was constructive dismissal.

The Court shares the CAs observation that when Francisco was placed on
forced leave and transferred to the Cost Accounting Section, not once was
Francisco given the opportunity to contest these company actions taken
against her. Not even the claim that her relations with her superiors have
been strained could justify Franciscos transfer to Cost Accounting Section.
Indeed, it appears that her charge was never resolved. And if Famy, Nuevo
and Clemente truly believed that their relations with Francisco have been
strained, then it puzzles the Court why, despite her transfer, she continues to
remain under Famys direct supervision.

Franciscos July 20, 2000 temporary transfer and her October 12, 2000
permanent transfer to Cost Accounting Section must be invalidated. For one,
there was no valid reason to temporarily transfer Francisco to Cost
Accounting Section on July 20, 2000. She had already served her penalty for
her failure to draft the SGV letter, through the 15-day suspension period
which she just completed on July 20, 2000. Secondly, the transfer was not
even rooted in any new infraction she is accused of committing. There was
thus an absolute lack of basis for her July 20, 2000 temporary transfer.

As for her October 12, 2000 permanent transfer, the same is null and void for
lack of just cause. Also, the transfer is a penalty imposed on a charge that
has not yet been resolved. Definitely, to punish one for an offense that has
not been proved is truly unfair; this is deprivation without due process.
Finally, the Court sees no necessity for Franciscos transfer; on the contrary,
such transfer is outweighed by the need to secure her office and documents
from Famys possible intervention on account of the complaint she filed
against him.

We also agree with the findings of the NLRC, as affirmed by the CA, that
Franciscos transfer constituted a demotion, viz:

Obviously, the alleged August 15, 1998 Companys Organizational Chart

showing the Club Accountant and the Cost Controller occupying the same job
grade level, which was attached to Respondents February 21, 2001 Reply x
x x was never implemented, otherwise, the Department Head and the Acting
GM & COO would not have specifically indicated "Managerial-3" for
Complainants position of Club Accountant in the Notice of Personnel Action
issued to Complainant on July 10, 2000 or two (2) years after the date of the
alleged Organizational Chart. Clearly, Complainant was a manager when
she occupied the position of Club Accountant. However, when
management transferred her to the position of Cost
Controller/Accountant, she was demoted to a mere supervisor.
Moreover, in Complainants December 3, 1997 Job Description as Club
Accountant prepared by Jose Ernilo P. Famy and approved by Ian Paul
Gardner and Atty. Stellamar C. Flores of HR, it is specifically indicated therein
that as Club Accountant, Complainant directly supervises the Cost Controller
x x x. Notably, Complainant was never issued any amendment to her
December 3, 1997 Job Description, which would have removed from her
supervision the Cost Controller. In fact, Respondents do not refute
Complainants allegation that as Club Accountant, she was responsible for
the rating of the Cost Controllers performance for the years 1998 to 2000. It
is obvious, therefore, that Complainants position of Club Accountant is
higher in level/rank than that of Cost Controller/Accountant. Patently,
Complainants transfer from the position of Club Accountant to the position
of Cost Accountant resulted to her demotion in level/rank. Complainants
transfer resulting to her demotion is, therefore, tantamount to constructive
dismissal. x x x45

The fact that Francisco continued to report for work does not necessarily
suggest that constructive dismissal has not occurred, nor does it operate as
a waiver. Constructive dismissal occurs not when the employee ceases to
report for work, but when the unwarranted acts of the employer are
committed to the end that the employees continued employment shall
become so intolerable.

2. MANAGEMENT PREROGATIVE- "An employer is free to manage and

regulate, according to his own discretion and judgment, all phases of
employment, which includes hiring, work assignments, working methods,
time, place and manner of work, supervision of workers, working regulations,
transfer of employees, lay-off of workers, and the discipline, dismissal and
recall of work. While the law recognizes and safeguards this right of an
employer to exercise what are clearly management prerogatives, such right
should not be abused and used as a tool of oppression against labor. The
companys prerogatives must be exercised in good faith and with due regard
to the rights of labor. A priori, they are not absolute prerogatives but are
subject to legal limits, collective bargaining agreements and the general
principles of fair play and justice. The power to dismiss an employee is a
recognized prerogative that is inherent in the employers right to freely
manage and regulate his business. x x x. Such right, however, is subject to
regulation by the State, basically in the exercise of its paramount police
power. Thus, the dismissal of employees must be made within the
parameters of the law and pursuant to the basic tenets of equity, justice and
fair play. It must not be done arbitrarily and without just cause."

DECISION

DEL CASTILLO, J.:

Constructive dismissal occurs not when the employee ceases to report for
work, but when the unwarranted acts of the employer are committed to the
end that the employee's continued employment shall become so intolerable.
In these difficult times, an employee may he left with no choice but to
continue with his employment pespite abuses committed against him by the
employer, and even during the pendency of a labor dispute between them.
This should not be taken against the employee. Instead, we must share the
burden of his plight, ever aware of the precept that necessitous men are not
free men.

Assailed in this Petition for Review1 is the January 25, 2007 Decision2 of the
Court of Appeals (CA) which dismissed the Petition in CA-G.R. SP No. 80968
and affirmed the November 19, 2002 Resolution 3 of the National Labor
Relations Commission (NLRC). Likewise assailed is the May 23, 2007 CA
Resolution4 denying petitioner's Motion for Reconsideration.

Factual Antecedents

Petitioner, The Orchard Golf and Country Club (the Club), operates and
maintains two golf courses in Dasmarias, Cavite for Club members and their
guests. The Club likewise has a swimming pool, bowling alley, cinema,
fitness center, courts for tennis, badminton and basketball, restaurants, and
function rooms.

On March 17, 1997, respondent Amelia R. Francisco (Francisco) was

employed as Club Accountant, to head the Clubs General Accounting
Division and the four divisions under it, namely: 1) Revenue and Audit
Division, 2) Billing/ Accounts Receivable Division, 3) Accounts Payable
Division, and 4) Fixed Assets Division. Each of these four divisions has its own
Supervisor and Assistant Supervisor. As General Accounting Division head,
respondent reports directly to the Clubs Financial Comptroller, Jose Ernilo P.
Famy (Famy).

On May 18, 2000, Famy directed Francisco to draft a letter to SGV & Co.
(SGV), the Clubs external auditor, inquiring about the accounting treatment
that should be accorded property that will be sold or donated to the Club.
Francisco failed to prepare the letter, even after Famys repeated verbal and
written reminders, the last of which was made on June 22, 2000.

On June 27, 2000, Famy issued a memorandum 5 requiring Franciscos written

explanation, under pain of an insubordination charge, relative to her failure
to prepare the letter. Instead of complying with the memorandum, Francisco
went to the Clubs General Manager, Tomas B. Clemente III (Clemente), and
personally explained to the latter that due to the alleged heavy volume of
work that needed her attention, she was unable to draft the letter. Clemente
assured her that he would discuss the matter with Famy personally. On this
assurance, Francisco did not submit the required written explanation. For this
reason, Famy issued a June 29, 2000 memorandum 6suspending Francisco
without pay for a period of 15 days. The memorandum reads, as follows:

Considering the fact that you did [sic] explain in writing within 24 hours from
the date and time of my memorandum to you dated June 27, 2000 the
reason why you should not be charged with "Insubordination" as specified in
Rule 5 Section 2a of our handbook, it has been found that:

Findings: You willfully refused to carry out a legitimate and reasonable

instruction of your Department Head.

Act/Offense: Insubordination

Under the circumstances and pursuant to the rules and regulations of the
Club, you are hereby suspended for 15 working days without pay. Effective
dates of which shall be determined by the undersigned depending on the
exigency of your work.

(Signed)

Nilo P. Famy7

On July 1, 2000, Famy issued another memorandum 8 informing Francisco that

her suspension shall be effective from July 3 to 19, 2000. On July 3, 2000
Francisco wrote to the Clubs General and Administrative Manager, Ma. Irma
Corazon A. Nuevo (Nuevo), questioning Famys act of charging, investigating,
and suspending her without coursing the same through the Clubs Personnel
Department. Pertinent portions of her memorandum to Nuevo read:

This has reference to the memoranda of the Financial Controller, Mr. Ernilo
Famy of June 27, June 29 & July 1, 2000 x x x. I would like to know under
what authority x x x a department head could issue a memorandum and
make decisions without the intervention of the Personnel Department.

I believe that if ever a department head or superior has complaints against

his subordinate then he has to course them through the Personnel
Department which will be the one to initiate and conduct an inquiry and
investigation. A mere furnishing of the memorandum to the Personnel
Department does not substitute [sic] the actual authority and functions of
the Personnel Department because there will be no due process x x x. Nilo
Famy decided on his own complaint without merit (sic) x x x. Also I believe x
x x Nilo Famy abuse [sic] his authority as superior with full disregard of the
Personnel Department because he acted as the complainant, the investigator
and the judge, all by himself. For this I would like to file this complaint
against him for abuse of authority x x x.
x x x During our departmental meetings listed in his letter, I always made
him aware of the lined-up priorities that need to be given attention first and
pending works which during the year-end audit by the auditors were put on
hold and were not x x x finished by the assigned staff. In fact, he commented
that I should do something about the pending work. Also, if he really feels
[sic] the importance of that letter and [sic] cognizant of my present work
load, then why did he went [sic] on leave from June 23 until June 26. (his
leave was cut because of the board meeting. His leave [sic] supposed to be
until June 30) x x x.

Also, I would like to formally inform you that whenever we have some
disagreement or he has dissatisfaction [sic] he is creating [sic] a feeling of
job insecurity; it is very easy for Mr. Nilo Famy to directly tell me and the staff
to resign. The last time we had a talk prior to this issue, he made it clear
that he can transfer me to lower positions like the position of the
cashier, cost controller and the like. He is confident he can do it because
he had done it to the former Club Accountant. What do you think is the kind
of authority you expect from him if you always hear these wordings [sic]. 9

That very same day, Nuevo replied, 10 exonerating Famy and justifying the
latters actions as falling within his power and authority as department head.
Nuevo said that Francisco was accorded due process when she was given the
opportunity to explain her side; that she deliberately ignored her superiors
directive when she did not submit a written explanation, which act
constitutes insubordination; that Famy acted prudently though he did not
course his actions through the Personnel Department, for ultimately, he
would decide the case; and that she was consulted by Famy and that she
gave her assent to Famys proposed actions, which he later carried out.
Nuevo likewise brushed aside Franciscos accusation of abuse of authority
against Famy, and instead blamed Francisco for her predicament.

On July 5, 2000, Francisco wrote a letter11 to Clemente requesting an

investigation into Famys possible involvement in the commission in 1997 of
alleged fraudulent and negligent acts relative to the questionable approval
and release of Club checks in payment of Bureau of Internal Revenue (BIR)
taxes, in which her counter-signature though required was not obtained.
Famy belied Franciscos claims in a reply memorandum, saying the charges
were baseless and intended to malign him.

On July 20, 2000, or a day after Franciscos period of suspension expired,

Famy issued separate memoranda12 to Francisco and Clemente informing
them of Franciscos transfer, without diminution in salary and benefits, to the
Clubs Cost Accounting Section while the investigation on Famys alleged
illegal activities is pending. Relevant portions of these memoranda state:

MEMORANDUM TO CLEMENTE
In view of the recent developments, i.e. the suspension of Ms. Amelia
Francisco and her letter of July 5, 2000 x x x, I would like to formally inform
you that effective today, July 20, 2000, Ms. Francisco shall be temporarily
given a new assignment in my department pending the result of the
investigation she lodged against the undersigned.

x x x. She shall remain directly reporting to the Financial Comptroller

(Famy).13

MEMORANDUM TO FRANCISCO

This is to inform you that effective today, July 20, 2000, Management has
approved your temporary transfer of assignment pending the completion of
the investigation you lodged against the undersigned.

You shall be handling the Cost Accounting Section together with six (6)
Accounting Staffs and shall remain reporting directly to the undersigned.14

Yet again, in another memorandum15 dated August 1, 2000 addressed to

Nuevo, Famy sought an investigation into Franciscos alleged
insubordination, this time for her alleged unauthorized change of day-off
from July 30 to August 4, 2000, and for being absent on said date (August 4,
2000) despite disapproval of her leave/offset application therefor. In an
August 2, 2000 memorandum,16 Francisco was required to explain these
charges. In another memorandum17 dated August 5, 2000, Francisco was
asked to submit her explanation on the foregoing charges of insubordination,
negligence, inefficiency and violation of work standards relative to the
unauthorized change of day-off and disapproved offset/ leave. To these,
Francisco replied on August 8, 2000 claiming that her presence on July 30,
2000 which was a Sunday and supposedly her day-off, was nonetheless
necessary because it was the Clubs scheduled month-end inventory, and
she was assigned as one of the officers-in-charge thereof. She added that her
actions were in accord with past experience, where she would take a leave
during the first week of each month to make payments to Pag-Ibig, and Famy
very well knew about this. She accused Famy of waging a personal vendetta
against her for her seeking an inquiry into claimed anomalies embodied in
her July 5, 2000 letter. She also took exception to her transfer to Cost
Accounting Section, claiming that the same was humiliating and demeaning
and that it constituted constructive dismissal, and threatened to take legal
action or seek assistance from Club members to insure that Famys
impropriety is investigated.18

On August 11, 2000, Francisco filed a Complaint for illegal dismissal against
the Club, impleading Famy, Clemente and Nuevo as additional respondents.
The case was docketed as NLRC Case No. RAB-IV-812780-00-C. She prayed,
among others, for damages and attorneys fees.
On August 16, 2000, Francisco received another memorandum requiring her
to explain why she should not be charged with betrayal of company trust,
allegedly for the act of one Ernie Yu, a Club member, who was seen
distributing copies of Franciscos letter to the Clubs Chairman of the Board of
Directors.19 On August 18, 2000, Francisco submitted her written explanation
to the charges.20 On August 19, 2000, with the Club finding no merit in her
explanation, Clemente handed her a Notice of Disciplinary Action 21 dated
August 16, 2000 relative to her July 30, 2000 unauthorized change of day-off
and her August 4, 2000 unauthorized leave/absence. She was suspended for
another fifteen days, or from August 21 to September 6, 2000.22

Francisco amended her illegal dismissal Complaint to one for illegal

suspension. Meanwhile, she continued to report for work.

On September 7, 2000, or a day after serving her suspension, Francisco

again received a September 6, 2000 memorandum from Nuevo, duly noted
and approved by Clemente, this time placing her on forced leave with pay for
30 days, or from September 7, 2000 up to October 11, 2000, for the alleged
reason that the case filed against her has strained her relationship with her
superiors.23 On even date, Francisco wrote a letter to Nuevo seeking
clarification as to what case was filed against her, to which Nuevo
immediately sent a reply memorandum stating that the case referred to her
alleged "betrayal of company trust".24

After the expiration of her forced leave, or on October 12, 2000, Francisco
reported back to work. This time she was handed an October 11, 2000
memorandum25 from Clemente informing her that, due to strained relations
between her and Famy and the pending evaluation of her betrayal of
company trust charge, she has been permanently transferred, without
diminution of benefits, to the Clubs Cost Accounting Section effective
October 12, 2000. Notably, even as Clemente claimed in the memorandum
that Franciscos transfer was necessary on account of the strained relations
between her and Famy, Franciscos position at the Cost Accounting Section
was to remain under Famys direct supervision. The pertinent portion of the
memorandum in this regard reads:

Because of the strained relationship between you and your department

head, Mr. Ernilo Famy, we deem it necessary to transfer you permanently to
Cost Accounting effective October 12, 2000. You shall however continue to
receive the same benefits and shall remain under the supervision of Mr.
Famy. x x x26

In an October 13, 2000 memorandum27 to Clemente, Francisco protested her

permanent transfer, claiming that it was made in bad faith. She also
bewailed Clementes inaction on her July 5, 2000 letter charging Famy with
irregularities relative to BIR tax payments. Likewise, on account of her
transfer, Francisco once more amended her Complaint to include
illegal/constructive dismissal. And in her prayer, she sought to be reinstated
to her former position as Club Accountant.

On October 17, 2000, Clemente issued a memorandum28 addressed to

Francisco denying that her transfer was done in bad faith, and affirming
instead that it was made in the proper exercise of management prerogative.
In addition, Clemente clarified the matter of Famys alleged wrongdoing,
thus:

Secondly, I would also like to correct your assumptions that the case of Mr.
Famy has not yet been acted upon. For your information, the Committee
composed of Club members and myself tasked by the Board of Directors to
investigate the case and make the necessary recommendations has already
concluded its investigation and has made its recommendations to the Board.
The Board, likewise, has acted on the Committees recommendation x x x the
results of which have been given to Mr. Famy. Whatever that decision was, it
is a matter between the Board and Mr. Famy.29

Ruling of the Labor Arbiter

After considering the parties respective Position Papers and evidence, Labor
Arbiter Enrico Angelo C. Portillo issued a Decision 30 dated August 23, 2001
dismissing Franciscos Complaint for lack of merit. The Labor Arbiter noted
the "belligerence and animosity" between Francisco and Famy, making short
shrift of Franciscos accusations against her superior and dismissing them as
nothing more than attempts to get back at Famy for his reproach at her
failure to draft the SGV letter. The Labor Arbiter further admonished
Francisco, reminding her that

x x x A workplace is not a "bed of roses". While employers are expected to

show respect and courtesy to its employees, words and actions expectedly
tend to get somewhat disrespectful, if not outright insulting, when work
remains undone. Common experience tells us that the scolding and trash
talk bites harder as one climbs higher in the organization ladder
commensurate to the additional responsibility attached to the position. It is
at these times, when the fact [sic] and professionalism of an employee,
particularly a managerial employee, is put to test. x x x31

The Labor Arbiter further upheld Franciscos two suspensions as valid

exercises of the Clubs management prerogative, justifying the measures
taken as reasonable and necessary penalties for Franciscos failure to draft
the SGV letter and her taking a leave with full awareness yet in disregard of
her superior Famys disapproval of her leave application. He added that in
the conduct of proceedings leading to the decision to suspend Francisco, the
proper procedure was taken, and Francisco was afforded ample opportunity
to defend herself.
The Labor Arbiter likewise found Franciscos claim of constructive dismissal
to be baseless. On the contrary, he found Franciscos transfer as necessary
and in furtherance of the Clubs interests. He also noted that the transfer
was lateral, or to a position of the same rank and pay scale based on the
Clubs Organizational Chart.32 Both Club Accountant and Cost Controller
positions belonged to the same pay scale "9" and are rated as "Supervisor
V".

Finally, the Labor Arbiter held that the fact that Francisco continued to report
for work belies her claim of constructive dismissal.

Ruling of the National Labor Relations Commission

On September 17, 2001, Francisco appealed the Labor Arbiters Decision to

the NLRC, which took a contrary view. Thus, in its November 19, 2002
Resolution,33 the NLRC held that while Franciscos suspensions were valid,
her subsequent permanent transfer on the ground of strained relations to the
Clubs Cost Accounting Section as Cost Controller on October 12, 2000 was
without just cause. It resulted in Franciscos demotion, since the position of
Cost Controller was merely of a supervisory character, while the position of
Club Accountant was of managerial rank. Besides, by admission of herein
petitioner, Francisco held the rank of "Manager 3" with her position as Club
Accountant, while the Cost Controller is only a Supervisor position and is
precisely under the direct supervision and control of the Club
Accountant.34 This unwarranted demotion, according to the NLRC, is
equivalent to constructive dismissal.

The NLRC added that strained relationship is not a valid ground for
termination of employment under the Labor Code. It ordered Franciscos
reinstatement to her former position as Club Accountant and awarded her
attorneys fees in the amount of P50,000.00. However, the NLRC absolved
Famy, Nuevo and Clemente of wrongdoing. It also held that Francisco was
not entitled to moral and exemplary damages because she failed to show
proof that her constructive dismissal was attended by bad faith. Thus, the
NLRC held:

WHEREFORE, premises considered, Complainants appeal is partly GRANTED.

The Labor Arbiters decision in the above-entitled case is hereby MODIFIED. It
is hereby declared that Complainants transfer resulted in a demotion in
level/rank, which is considered as illegal constructive dismissal. Respondent
the Orchard Golf & Country Club, Inc. is hereby ordered to immediately
reinstate Complainant to her former position as Club Accountant without loss
of seniority rights and other privileges and to pay her attorneys fees in the
amount of P50,000.00

SO ORDERED.35
Petitioner moved for reconsideration, to no avail. Francisco moved for partial
reconsideration of the NLRCs Resolution with respect to its ruling declaring
her suspensions as valid and the denial of her claim for damages. Her motion
was denied as well.

Ruling of the Court of Appeals

Petitioner went up to the CA via Petition for Certiorari, 36 while respondent

Francisco no longer took issue with the denial of her motion.

In its January 25, 2007 Decision, the CA sustained the NLRC ruling. It held
that while petitioner had the right or prerogative to transfer the respondent
from one office to another within the Club, there should be no demotion in
rank, salary, benefits and other privileges. The CA added that the right may
not be used arbitrarily to rid the employer of an undesirable worker. Proper
notification and an opportunity to be heard or contest the transfer must be
given to the employee whose transfer is sought, conditions which were not
observed in Franciscos case. She was notified only of the Clubs decision to
permanently transfer her, without giving her the opportunity to contest the
same. The CA characterized Franciscos permanent transfer as a demotion in
the guise of a lateral transfer.

The CA sustained as well the award of attorneys fees, saying that Francisco
was forced to litigate and hire the services of counsel to protect her rights.

Thus, the Petition for Certiorari was dismissed. Petitioner filed a Motion for
Reconsideration,37 which was subsequently denied.

Issues

Hence, this Petition raising the following issues:

WHETHER X X X THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED

AND DECIDED A QUESTION OF SUBSTANCE IN A MANNER NOT IN ACCORD
WITH LAW AND WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT
WHEN IT HELD THAT THE TRANSFER OF RESPONDENT FROM THE POSITION
OF CLUB ACCOUNTANT TO COST ACCOUNTANT WAS TANTAMOUNT TO A
DEMOTION.

II

WHETHER X X X THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED

AND DECIDED A QUESTION OF SUBSTANCE IN A MANNER NOT IN ACCORD
WITH LAW AND WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT
WHEN IT AWARDED ATTORNEYS FEES TO RESPONDENT IN THE AMOUNT OF
FIFTY THOUSAND PESOS (P50,000.00).38

Petitioners Arguments

In seeking the annulment and setting aside of the CA Decision, petitioner

insists that respondent Franciscos transfer did not amount to a demotion,
and that she suffered no diminution in rank, salary, benefits, and position
because the position of Club Accountant and Cost Controller/Accountant are
of equal rank. Both positions belong to pay grade "9" and rated as
"Supervisor V"; a transfer from one of the positions to the other is merely a
lateral transfer and within the prerogative of Club management. Petitioner
directs the Courts attention to its

Organizational Chart39 which should bolster its claim in this regard.

Petitioner adds that Franciscos transfer to the Cost Accounting Section was
done in good faith, noting that the deteriorating relationship between Famy
and Francisco placed the Clubs business at risk. It had no choice but to
address this problem in order not to further jeopardize the Clubs day-to-day
operations. Petitioner claims further that Franciscos transfer did not
prejudice her. She continues to report to Famy and receive the same benefits
and privileges as the Club Accountant. It is of no consequence that as Cost
Controller, she has a lesser number of employees/staff (six) under her or that
she is relegated to a very small office space, as opposed to the position of
Club Accountant, which has 32 employees under it and holds office at the
bigger offices reserved for use by the Clubs executives.

On the issue of constructive dismissal, petitioner claims that it did not

commit any act which forced Francisco to quit; she continues to be employed
by the Club, and in fact continues to report for work.

Finally, petitioner argues that Francisco is not entitled to attorneys fees, in

the absence of an award of exemplary damages and in the wake of the
NLRCs finding that she is not entitled to such damages. It believes that if no
exemplary damages are adjudged, then no attorneys fees may be awarded
as well. It adds that Francisco could only blame herself for the fate she
suffered, knowing very well that she is not entitled to her claims; she should
bear her own litigation expenses.

Respondents Arguments

Francisco insists that the issues raised in the Petition have been sufficiently
addressed by the NLRC and the CA, and their findings should bind the Court.
Francisco stresses that petitioners own actions betrayed the fact that the
position of Cost Controller/Accountant is a mere Supervisor position and the
same is directly under the supervision of the Club Accountant. A
reassignment from Club Accountant to Cost Controller is clearly an
unwarranted demotion in rank. She adds that per the Clubs latest actions,
she has suffered not only a demotion in rank, but also a diminution in salary
and benefits. Petitioner illegally withheld her accrued salary differential,
merit increases and productivity bonuses since 2001.

Our Ruling

The Petition lacks merit.

At the outset, it must be emphasized that Franciscos two suspensions, i.e.,

for her failure to draft the SGV letter and for being absent without prior
leave, is no longer at issue before this Court. Records show that after the
NLRC declared the same as valid in its November 19, 2002 Resolution,
Francisco moved for reconsideration but to no avail. After the denial of her
motion, Francisco no longer brought the issue or appealed the same to the
CA. Hence, the only issues for our resolution are the propriety of Franciscos
transfer to the position of Cost Controller and the award of attorneys fees.

There was constructive dismissal when Francisco was transferred to

the Cost Accounting Section.

We agree with the NLRC and the CA that Franciscos transfer to the position
of Cost Controller was without valid basis and that it amounted to a demotion
in rank. Hence, there was constructive dismissal.

Records show that when Francisco returned to work on July 20, 2000 fresh
from her first suspension, she was unceremoniously transferred by Famy, via
his July 20, 2000 memorandum, to the Clubs Cost Accounting Section. Famy
stated the reason for her transfer:

This is to inform you that effective today, July 20, 2000, Management has
approved your temporary transfer of assignment pending the completion of
the investigation you lodged against the undersigned.

x x x x40

His memorandum of even date to his superior Clemente reveals the same
cause:

In view of the recent developments, i.e. the suspension of Ms. Amelia

Francisco and her letter of July 5, 2000 x x x, I would like to formally inform
you that effective today, July 20, 2000, Ms. Francisco shall be temporarily
given a new assignment in my department pending the result of the
investigation she lodged against the undersigned.

x x x x41
In other words, the cause of Franciscos temporary transfer on July 20, 2000
was her pending complaint against Famy.

And then again, on September 6, 2000, Nuevo issued another memorandum

duly noted and approved by Clemente, and personally delivered at
Franciscos residence on September 7, 2000 informing her this time that she
has been placed on forced leave with pay for 30 days, or from September 7,
2000 up to October 11, 2000, for the reason that the case filed against her
has strained her relationship with her superiors.

And just when her forced leave expired on October 11, or on October 12,
2000, Francisco was once more handed an October 11, 2000 memorandum
from Clemente informing her that, due to strained relations between her and
Famy and pending evaluation of her betrayal of company trust charge, she
has been permanently transferred, without diminution of benefits, to the
Clubs Cost Accounting Section effective October 12, 2000.

The Court shares the CAs observation that when Francisco was placed on
forced leave and transferred to the Cost Accounting Section, not once was
Francisco given the opportunity to contest these company actions taken
against her. It has also not escaped our attention that just when one penalty
has been served by Francisco, another would instantaneously take its place.
And all these happened even while the supposed case against her, the
alleged charge of "betrayal of company trust", was still pending and
remained unresolved. In fact, one of the memoranda was served even at
Franciscos residence.

Not even the claim that her relations with her superiors have been strained
could justify Franciscos transfer to Cost Accounting Section. Indeed, it
appears that her charge was never resolved. And if Famy, Nuevo and
Clemente truly believed that their relations with Francisco have been
strained, then it puzzles the Court why, despite her transfer, she continues to
remain under Famys direct supervision. Such is the tenor of the memoranda
relative to her temporary and subsequently, permanent, transfer to the Cost
Accounting Section:

JULY 20, 2000 MEMORANDUM OF FAMY TO CLEMENTE

In view of the recent developments, i.e. the suspension of Ms. Amelia

Francisco and her letter of July 5, 2000 x x x, I would like to formally inform
you that effective today, July 20, 2000, Ms. Francisco shall be temporarily
given a new assignment in my department pending the result of the
investigation she lodged against the undersigned.

x x x. She shall remain directly reporting to the Financial Comptroller

(Famy).42
JULY 20, 2000 MEMORANDUM OF FAMY TO FRANCISCO

This is to inform you that effective today, July 20, 2000, Management has
approved your temporary transfer of assignment pending the completion of
the investigation you lodged against the undersigned.

You shall be handling the Cost Accounting Section together with six (6)
Accounting Staffs and shall remain reporting directly to the undersigned.43

OCTOBER 11, 2000 MEMORANDUM OF CLEMENTE TO FRANCISCO

Because of the strained relationship between you and your department

head, Mr. Ernilo Famy, we deem it necessary to transfer you permanently to
Cost Accounting effective October 12, 2000. You shall however continue to
receive the same benefits and shall remain under the supervision of Mr.
Famy.44

Interestingly, Franciscos transfer was occasioned not by a past infraction or

a present one which has just been committed, but by her act of filing a
complaint for impropriety against Famy.

For this reason, Franciscos July 20, 2000 temporary transfer and her October
12, 2000 permanent transfer to Cost Accounting Section must be invalidated.
For one, there was no valid reason to temporarily transfer Francisco to Cost
Accounting Section on July 20, 2000. She had already served her penalty for
her failure to draft the SGV letter, through the 15-day suspension period
which she just completed on July 20, 2000. Secondly, the transfer was not
even rooted in any new infraction she is accused of committing. There was
thus an absolute lack of basis for her July 20, 2000 temporary transfer.

As for her October 12, 2000 permanent transfer, the same is null and void for
lack of just cause. Also, the transfer is a penalty imposed on a charge that
has not yet been resolved. Definitely, to punish one for an offense that has
not been proved is truly unfair; this is deprivation without due process.
Finally, the Court sees no necessity for Franciscos transfer; on the contrary,
such transfer is outweighed by the need to secure her office and documents
from Famys possible intervention on account of the complaint she filed
against him.

We also agree with the findings of the NLRC, as affirmed by the CA, that
Franciscos transfer constituted a demotion, viz:

x x x We however, hold that Complainants transfer resulted to a demotion in

her level/rank. The level of Club Accountant is not "Supervisor V" but
"Managerial-3" as indicated in the Notice of Personnel Action issued to
Complainant on July 20, 2000, signed by her immediate superior Jose Ernilo
P. Famy, Department Head of Respondent company on July 10, 2000, and
approved by Tomas B. Clemente III, Acting GM & COOO on July 11, 2000 x x
x. Obviously, the alleged August 15, 1998 Companys Organizational Chart
showing the Club Accountant and the Cost Controller occupying the same job
grade level, which was attached to Respondents February 21, 2001 Reply x
x x was never implemented, otherwise, the Department Head and the Acting
GM & COO would not have specifically indicated "Managerial-3" for
Complainants position of Club Accountant in the Notice of Personnel Action
issued to Complainant on July 10, 2000 or two (2) years after the date of the
alleged Organizational Chart. Clearly, Complainant was a manager when she
occupied the position of Club Accountant. However, when management
transferred her to the position of Cost Controller/Accountant, she was
demoted to a mere supervisor.

Moreover, in Complainants December 3, 1997 Job Description as Club

Accountant prepared by Jose Ernilo P. Famy and approved by Ian Paul
Gardner and Atty. Stellamar C. Flores of HR, it is specifically indicated therein
that as Club Accountant, Complainant directly supervises the Cost Controller
x x x. Notably, Complainant was never issued any amendment to her
December 3, 1997 Job Description, which would have removed from her
supervision the Cost Controller. In fact, Respondents do not refute
Complainants allegation that as Club Accountant, she was responsible for
the rating of the Cost Controllers performance for the years 1998 to 2000. It
becomes clearer now that the alleged August 15, 1998 Companys
Organizational Chart showing the Club Accountant and the Cost Controller
occupying the same job grade level, which was attached to Respondents
February 22, 2001 Reply x x x was, indeed, never implemented, otherwise,
management would have issued Complainannt an amendment to her
December 3, 1997 Job Description effectively removing from her supervision
the position of Cost Controller/Accountant and management would not have
let Complainant rate the performance of the Cost Controller/Accountant for
the years 1998 to 2000. It is obvious, therefore, that Complainants position
of Club Accountant is higher in level/rank than that of Cost
Controller/Accountant. Patently, Complainants transfer from the position of
Club Accountant to the position of Cost Accountant resulted to her demotion
in level/rank. Complainants transfer resulting to her demotion is, therefore,
tantamount to constructive dismissal. x x x45

The fact that Francisco continued to report for work does not necessarily
suggest that constructive dismissal has not occurred, nor does it operate as
a waiver. Constructive dismissal occurs not when the employee ceases to
report for work, but when the unwarranted acts of the employer are
committed to the end that the employees continued employment shall
become so intolerable. In these difficult times, an employee may be left with
no choice but to continue with his employment despite abuses committed
against him by the employer, and even during the pendency of a labor
dispute between them. This should not be taken against the employee.
Instead, we must share the burden of his plight, ever aware of the precept
that necessitous men are not free men.

"An employer is free to manage and regulate, according to his own

discretion and judgment, all phases of employment, which includes
hiring, work assignments, working methods, time, place and manner
of work, supervision of workers, working regulations, transfer of
employees, lay-off of workers, and the discipline, dismissal and
recall of work. While the law recognizes and safeguards this right of
an employer to exercise what are clearly management prerogatives,
such right should not be abused and used as a tool of oppression
against labor. The companys prerogatives must be exercised in
good faith and with due regard to the rights of labor. A priori, they
are not absolute prerogatives but are subject to legal limits,
collective bargaining agreements and the general principles of fair
play and justice. The power to dismiss an employee is a recognized
prerogative that is inherent in the employers right to freely
manage and regulate his business. x x x. Such right, however, is
subject to regulation by the State, basically in the exercise of its
paramount police power. Thus, the dismissal of employees must be
made within the parameters of the law and pursuant to the basic
tenets of equity, justice and fair play. It must not be done arbitrarily
and without just cause."46

The award of attorneys fees is proper.

With respect to the award of attorneys fees, we find the same to be due and
owing to respondent given the circumstances prevailing in this case as well
as the fact that this case has spanned the whole judicial process from the
Labor Arbiter to the NLRC, the CA and all the way up to this Court. Under
Article 2208 of the Civil Code, attorneys fees and expenses of litigation other
than judicial costs may be recovered if the claimant is compelled to litigate
with third persons or to incur expenses to protect his interest by reason of an
unjustified act or omission of the party from whom it is sought, 47 and where
the courts deem it just and equitable that attorneys fees and expenses of
litigation should be recovered.

As for petitioners argument that in the absence of an award of exemplary

damages, attorneys fees may not be granted, the Court finds this
unavailing. An award of attorneys fees is not predicated on a grant of
exemplary damages. Given the circumstances of this case, it is regretful that
the Labor Arbiter and the NLRC failed to award moral and exemplary
damages prayed for by the respondent. But because respondent did not
appeal the denial, the Court may no longer modify the ruling in this regard.

Respondent is entitled to receive her accrued salary differential, merit

increases and productivity bonuses since 2001.
Respondent raises the side issue pertaining to petitioners alleged
withholding of her accrued salary differential, merit increases and
productivity bonuses since 2001. 48 She claims that during the pendency of
this case, petitioner effected salary adjustments, merit increases and
productivity bonuses to other employees. As proof, she submitted the Notice
of Personnel Action-Salary Adjustment49 of Arsenio Rodrigo Neyra, the former
Cost Accountant which position she now occupies, and pertinent portions of
the Collective Bargaining Agreement.50She now seeks payment of these
amounts.

Notably, petitioner does not refute its grant of salary increases, merit
increases and productivity bonuses to other employees. In its attempt to
rebuff Franciscos claim, petitioner merely argues that the same should no
longer be entertained because it was never raised before the proceedings
below.51

Interestingly, it never categorically denied that such salary increases, merit

increases and productivity bonuses have indeed been given to the other
employees.

At this juncture, it must be stressed that "technical rules of procedure are not
binding in labor cases. The application of technical rules of procedure may be
relaxed to serve the demands of substantial justice." 52 "It is more in keeping
with the objective of rendering substantial justice if we brush aside technical
rules rather than strictly apply its literal reading. There [being] no objective
reason to further delay this case by insisting on a technicality when the
controversy could now be resolved."53 Moreover, "there is no need to remand
this case to the Labor Arbiter for further proceedings, as the facts are clear
and complete on the basis of which a decision can be made." 54 Based on the
foregoing, we find no reason to deprive herein respondent of the accrued
salary differential, merit increases and productivity bonuses due her since
2001.

WHEREFORE, the Petition is DENIED for lack of merit.1wphi1 The January

25, 2007 Decision and May 23, 2007 Resolution of the Court of Appeals in
CA-G.R. SP No. 80968 are AFFIRMED. Petitioner, The Orchard Golf and
Country Club, is ORDERED:

1. To immediately reinstate respondent Amelia R. Francisco to her former

position as Club Accountant without loss of seniority rights and other
privileges;

2. Within 15 days from receipt of this Decision, to return and/or pay to the
respondent, all her accrued salary differential, merit increases and
productivity bonuses due her, with 12o/o per annum interest 55 on
outstanding balance from finality of this Decision until full payment; and
 3. Within the same period, to pay the respondent attorney's fees in the
amount of P50,000.00.

SO ORDERED.

8.) NORKIS VS GNILO

FACTS:

Melvin R. Gnilo (respondent) was initially hired by Norkis Trading Co.,

Inc. (petitioner Norkis) as Norkis Installment Collector (NIC) in April 1988.
Manuel Gaspar E. Albos, Jr. (petitioner Albos) is the Senior Vice-President of
petitioner Norkis. Respondent held various positions in the company until he
was appointed as Credit and Collection Manager of Magna Financial Services
Group, Inc.-Legaspi Branch, petitioner Norkiss sister company, in charge of
the areas of Albay and Catanduanes with travel and transportation
allowances and a service car.

A special audit team was conducted in respondent's office in Legaspi,

Albay from March 13 to April 5, 2000 when it was found out that respondent
forwarded the monthly collection reports of the NICs under his supervision
without checking the veracity of the same.

It appeared that the monthly collection highlights for the months of

April to September 1999 submitted by respondent to the top management
were all overstated particularly the account handled by NIC Dennis Cadag,
who made it appear that the collection efficiency was higher than it actually
was; and that the top management was misled into believing that
respondents area of responsibility obtained a favorable collection efficiency.

Respondent was then charged by petitioners' Inquiry Assistance Panel

(Panel) with negligence of basic duties and responsibilities resulting in loss of
trust and confidence and laxity in directing and supervising his own
subordinates.

During the investigation, respondent admitted that he was negligent

for failing to regularly check the report of each NIC under his supervision;
that he only checked at random the NIC's monthly collection highlight
reports; and that as a leader, he is responsible for the actions of his
subordinates. He however denied being lax in supervising his subordinates,
as he imposed discipline on them if the need arose.
 Petitioner Norkis through its Human Resource Manager issued a
memorandum3 placing respondent under 15 days suspension without
pay, travel and transportation allowance, effective upon receipt
thereof.

Another memorandum4 dated June 30, 2000 was issued to respondent

requiring him to report on July 5, 2000 to the head office of petitioner Norkis
in Mandaluyong City for a re-training or a possible new assignment without
prejudice to his request for a reconsideration or an appeal of his suspension.
He was then assigned to the Marketing Division directly reporting to
petitioner Albos.

Respondent requested petitioner Albos that he be assigned as Sales

Engineer or to any position commensurate with his qualifications. However,
on July 28, 2000, respondent was formally appointed as Marketing Assistant
to petitioner Albos, which position respondent subsequently assumed.

Respondent filed with the Labor Arbiter (LA) a complaint for illegal
suspension, constructive dismissal, non-payment of allowance, vacation/sick
leave, damages and attorney's fees against petitioners.

LABOR ARBITER: Dismissed the case for lack of merit.

The LA found that the position of Credit and Collection Manager held
by respondent involved a high degree of responsibility requiring trust and
confidence; that his failure to observe the required procedure in the
preparation of reports, which resulted in the overstated collection reports
continuously for more than six months, was sufficient to breach the trust and
confidence of petitioners and was a valid ground for termination; that instead
of terminating him, petitioners merely imposed a 15-day suspension which
was not illegal; and that petitioners exercised their inherent prerogative as
an employer when they appointed respondent as a Marketing Assistant.

NLRC: Reversed the decision of the LA.

The NLRC found that the 15-day suspension cannot be considered

harsh and unconscionable as petitioners validly exercised their management
prerogative to impose discipline on an erring employee for negligence by
submitting unreliable and inaccurate reports for six consecutive months to
the top management who used the reports in their planning and decision-
making activities, and thus caused damage or injury one way or another to
petitioners. It however held that the transfer of respondent from the position
of Credit and Collection Manager to Marketing Assistant resulted in his
demotion in rank from Manager to a mere rank and file employee, which was
tantamount to constructive dismissal and therefore illegal.

NLRC ruled that respondent was constructively dismissed.

COURT OF APPEALS: CA rendered its assailed Decision denying the petition

and affirming the NLRC Resolutions.

Petitioners contend: that factual findings of quasi-judicial agencies, while

generally accorded finality, may be reviewed by this Court when the findings
of the NLRC and the LA are contradictory; that in the exercise of its equity
jurisdiction, this Court may look into the records of the case to re-examine
the questioned findings.

Petitioners claim: that they were merely exercising their inherent

prerogative as an employer when they appointed respondent as Marketing
Assistant to the Senior Vice-President for Marketing; that respondent's
performance evaluations during the previous years showed that he was weak
in the financial aspect of operation, but was good in marketing; thus, he
would function with utmost efficiency and maximum benefit to the company
in the Marketing Department; and that he had accepted his appointment
unconditionally.

Petitioners submit that the positions of Credit and Collection Manager

and Marketing Assistant are co-equal and of the same level of authority; that
the scope of work of a Marketing Assistant is wider, since he has access to
confidential information and has the chance to communicate directly with
higher officers of the company; that his area of responsibility as Credit and
Collection Manager was limited to branches located in Legaspi City and Virac,
Catanduanes; whereas as Marketing Assistant, he is responsible for analyzing
and coordinating all marketing information relevant to the company's
motorcycles from all over Luzon, and his reports are necessary for the
planning and decision-making activities of petitioners' top management; and
that there is no demotion, since respondent's position is more encompassing
and vital to the company and he is receiving the same salary.

ISSUE:

Whether or not petitioners action of transferring respondent is a valid

exercise of management prerogatives.

HELD:
 YES. Well-settled is the rule that it is the prerogative of the employer to
transfer and reassign employees for valid reasons and according to the
requirement of its business.13 An owner of a business enterprise is given
considerable leeway in managing his business. Our law recognizes certain
rights, collectively called management prerogative as inherent in the
management of business enterprises. We have consistently recognized
and upheld the prerogative of management to transfer an employee
from one office to another within the business establishment,
provided that there is no demotion in rank or diminution of his
salary, benefits and other privileges14 and the action is not
motivated by discrimination, made in bad faith, or effected as a
form of punishment or demotion without sufficient cause.15 This
privilege is inherent in the right of employers to control and manage
their enterprises 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. Managerial
prerogatives, however, are subject to limitations provided by law,
collective bargaining agreements, and general principles of fair play
and justice.17

The employer bears the burden of showing that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; and does not
involve a demotion in rank or a diminution of his salaries, privileges and
other benefits.18Should the employer fail to overcome this burden of proof,
the employees transfer shall be tantamount to constructive dismissal.19

In this case, while the transfer of respondent from Credit and Collection
Manager to Marketing Assistant did not result in the reduction of his salary,
there was a reduction in his duties and responsibilities which amounted to a
demotion tantamount to a constructive dismissal as correctly held by the
NLRC and the CA.

While petitioners have the prerogative to transfer respondent to another

position, such transfer should be done without diminution of rank and
benefits which has been shown to be present in respondent's case. He could
have been transferred to a job of managerial position and not to that of a
Marketing Assistant. Moreover, petitioners failed to substantiate their claim
that respondent was weak in the financial aspect of operation, but he was
good in marketing, as the performance evaluation report relied upon by
petitioners would not suffice.

9. COCA-COLA BOTTLERS PHILS INC. V. ANGEL U. DEL VILLAR

FACTS:

The Company, one of the leading and largest manufacturers of

beverages in the country, initially hired respondent Del Villar on May 1,
1990 as Physical Distribution Fleet Manager, 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, the respondent

became the Transportation Services Manager, under the Business
Logistic Directorate, headed by Director Edgardo I. San Juan (San Juan).
The respondent is responsible for the preparation of the budget for the
vehicles of the Company nationwide.

On January 4, 1996, the respondent submitted a Report dated 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. The respondent also implicated San Juan
and Pineda, 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

In 1996, the Company embarked on a reorganization of the Business

Logistic Directorate. As a result, the respondent became the Staff
Assistant of Pineda, who was then appointed as the Corporate
Purchasing and Materials Control Manager.

On July 8, 1996, the respondent received a Memorandum [5] from San

Juan informing the former that (1) he was designated as Staff Assistant
to the Corporate Purchasing and Materials Control Manager; (2) with
the respondents new assignment, he ceased to be entitled to the
benefits under existing company rules and policies; and (3) he was to
 turn over the vehicle assigned to him as Transportation Services
Manager to Pineda by July 10, 1996.

Although the respondent 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.[6] 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.

The Company filed a motion to dismiss for no cause of action and

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. The Company also contended
that the respondent had no vested right to the privileges he previously
enjoyed as Transportation Services Manager.

LA: In favor of the respondent

- The Labor Arbiter held that the allegations in respondents

complaint sufficiently presented a cause of action against the
Company

- The Company, in filing a Motion to Dismiss, hypothetically admitted

the truth of the facts alleged in the complaint, and the failure of the
Company to deny or rebut Del Villars allegations of bad faith on the
part of the Company, gave rise to the presumption against the
latter

- The issue as to whether or not the petitioner acted illegally in

demoting the respondent is, therefore, answered in the
affirmative.

- The reorganization of the company appears to have been

done after the respondent had filed his complaint to the
 company President detailing the scam involving the purchase
of the truck fleet of 1996.

- The respondent 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. Furthermore, as Staff
Assistant although he receives his usual salary but his car
privileges, gasoline allowances, and foreign travel were withdrawn
and he now sits at a desk with no meaningful work whatsoever

- The respondent 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 should have been given some meaningful or
responsible work appurtenant to the job designation.

- The concept of management prerogative is limited or

otherwise qualified. Procedurally and substantively, the
petitioner through its named officers appears to have acted
illegally and in bad faith in its purported reorganization, in
demoting and removing the company privileges of the
respondent

- In the matter of the unlawful withdrawal of respondents car,

gasoline allowance and foreign travel by petitioner, it is
obligated to rectify the withdrawal of privileges by returning to
former the said Toyota car, and if that is not possible, its value
as of the time said car was withdrawn including the value of
the gasoline allowance and foreign travel due him.

- The LA order to:

(1) reinstatement of the respondent to his former job;
(2) to return the car to the respondent or to compensate him
for the loss of his privileges such as the value of the Toyota
car as of the time of taking including the value of the gasoline
allowance and the foreign travel due to him
(3) indemnify the respondent for moral damages
of P1,000,000.00 Pesos and exemplary damages
of P1,000,000.00 Pesos, aside from attorneys fees of 10%
 - While the case was still pending appeal before the NLRC, Del Villar
received a letter dated April 28, 1998 stating that the respondent
will be separated from the company effective on May 31, 1998 due
to the new reorganization program which will result his position to
be redundant from the company.

NLRC: In favor of the petitioner and SET aside the ruling of LA

- The petitioner acted in good faith. There is no disclosure of scam

and the alleged demotion of the respondent.

- The logical consequence of such disclosure of the alleged scam is

for the president of the company to dismiss the erring employees
and officers for their highly irregular acts and not to penalize the
petitioner for making such disclosure.
- There is no demotion of the petitioner. There is no diminution of his
salary, and while his transportation expenses was removed, it is
because the 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,
like the petitioner who was hired as Staff Assistant in this case.
While it appears that his transportation benefits were withheld, it
does not follow that his position as Staff Assistant is inferior to that
of a Transportation Services Manager

- 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.

CA: In favor of the respondent and reinstated the LA

- Concededly, employers and their managers have all the leeway to

make the necessary adjustments in their organizations. But the
prerogative is not absolute. It must be accompanied by good faith.

- The reorganization theory poised by petitioner was a mere

afterthought. If indeed the respondent was removed due to a valid
reorganization, officials of the Company could have easily told him
in the several memos they issued to the respondent. Edgardo San
 Juan, in a memo dated April 29, 1996, merely informed him the
name of his replacement as Transportation Services Manager

- Of all the memos the respondent received from the petitioner, it did
not attributed the reorganization as the reason of his reassignment
as Staff Assistant.

ISSUE:

Whether or not the petitioner, in transferring the respondent from the

position of Transportation Services Manager to Staff Assistant to the
Corporate Purchasing and Materials Control Manager, validly exercised
its management prerogative

RULING:

NO. 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. 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. 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; 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.

In the case at bar, there is no dispute that the respondent was

transferred by the Company from the position of Transportation
Services Manager to the position of Staff Assistant. The burden thus
falls upon the Company to prove that respondents transfer was not
tantamount to constructive dismissal. 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, but left unsatisfactory. The Company and its officials
 attempt to justify the transfer of Del Villar by alleging his
unsatisfactory performance as Transportation Services Manager

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.
Respondents 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. The two posts are not of the same weight in terms of duties and
responsibilities.

Although it was not bad enough that respondent was demoted to a

Staff Assistant because his salary was not deducted, but he was
even placed by the Company under the control and supervision of Pineda,
the person whom the respondent verily accused in defrauding the
company. 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.
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. 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.

In this case, other than its own bare and self-serving allegation that
respondents position as Staff Assistant of Corporate Purchasing and
Materials Control Manager had already become redundant, no other
evidence was presented by the Company

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.

The notice to the DOLE would have afforded the labor department the
opportunity to look into and verify whether there is truth as to the
claim of the Company that Del Villars position had become redundant
with the implementation of new distribution systems, utilization of
improved operational processes, and functional reorganization of the
Company. Compliance with the required notices would have also
established that the Company abolished Del Villars position in good
faith

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.
 LABOR LAW CONCEPTS:

Management Prerogative: Jurisprudence recognizes the exercise of

management prerogative. For this reason, courts often decline to
interfere in legitimate business decisions of employers. In fact, labor
laws discourage interference in employers judgment concerning the
conduct of their business.

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 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.

Managerial prerogatives, however, are subject to limitations provided

by law, collective bargaining agreements, and general principles of fair
play and justice

SUMMARY:

Angel U. Del Villar, the petitioner, who was hired by the respondent as a
Transportation Services Manager and was demoted to a Staff Assistant under
Corporate Purchasing and Materials Control Manager after he reported the
fraud that transpired in the company. The petitioner contended that it was
due to the reorganization and management prerogative. The Court held that
the managements prerogative to assign the respondent as a Staff Assistant
is not just because the latters assignment was motivated by discrimination,
made in bad faith, or effected as a form of punishment or demotion without
sufficient cause.

10.) BISIG MANGGAGAWA VS. NLRC

FACTS:

Tryco Pharma Corporation (Tryco), the private respondent, is a

manufacturer of veterinary medicines in Caloocan City and the
petitioners are are its regular employees, occupying the positions of
 helper, shipment helper and factory workers, respectively, assigned to
the Production Department. Petitioners are members of Manggagawa
sa Tryco (BMT), the exclusive bargaining representative of the rank-
and-file employees.

Tryco and the petitioners signed separate MOA, providing for a

compressed workweek schedule to be implemented in the company.
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.

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, as Licensed to operate was designated there and not
in Caloocan City

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. Thus, petitioners filed their separate
complaints[8] for illegal dismissal, underpayment of wages,
nonpayment of overtime pay and service incentive leave, and refusal
to bargain against Tryco

Petitioners alleged that the company acted in bad faith during the CBA
negotiations because it sent representatives without authority to bind
the company, and this was the reason why the negotiations failed.
 They added that the management transferred some workers
from Caloocan to San Rafael, Bulacan to paralyze the union.

The respondent averred that the petitioners were not dismissed but
they refused to comply with the managements directive for them to
report to the companys plant in San Rafael, Bulacan.

Respondents further averred that, long before the start of the

negotiations, the company had already been planning to decongest
the Caloocan office to comply with the government policy to shift the
concentration of manufacturing activities from the metropolis to the
countryside.

LA: In favor of respondent

The Labor Arbiter held that the transfer of the petitioners would not
paralyze or render the union ineffective for the following reasons: (1)
complainants are not members of the negotiating panel; and (2) the
transfer was made pursuant to the directive of the Department of
Agriculture

The Labor Arbiter also denied the money claims, ratiocinating that the
nonpayment of wages was justified because the petitioners did not
render work from May 26 to 31, 1997; overtime pay is not due because
of the compressed workweek agreement between the union and
management; and service incentive leave pay cannot be claimed by
the complainants because they are already enjoying vacation leave
with pay for at least five days.

As for the claim of noncompliance with Wage Order No. 4, the Labor
Arbiter held that the issue should be left to the grievance machinery or
voluntary arbitrator.

NLRC: affirmed the LA

CA: affirmed LA and NLRC:

- The transfer order was a management prerogative not amounting to a

constructive dismissal or an unfair labor practice.
 - The enforceability of the MOA, particularly the waiver of overtime pay
in light of this Courts rulings upholding a waiver of benefits in
exchange of other valuable privileges.

ISSUE:

Whether or not the transfer order to the petitoners to Bulacan was a

proper management prerogative

RULING:

Yes. In this case, the Labor Arbiter, the NLRC, and the CA uniformly
agreed that the petitioners were not constructively dismissed and that
the transfer orders did not amount to an unfair labor practice.

Furthermore, Trycos 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.

Managements 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.[20] Thus, the consequent transfer of Trycos
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. [21] 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

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.
[23]
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. We cannot see how the mere transfer of its members can
paralyze the union. The union was not deprived of the membership of
the petitioners whose work assignments were only transferred to
another location.

More importantly, there was no showing or any indication that the

transfer orders were motivated by an intention to interfere with the
petitioners right to organize. With the exception of Article 248(f) of the
Labor Code of the Philippines, the prohibited acts are related to the
workers right to self-organization and to the observance of a CBA.
Without that element, the acts, no matter how unfair, are not unfair
labor practices.

Notably, the MOA complied with the following conditions set by the
DOLE, under D.O. No. 21, to protect the interest of the employees in
the implementation of a compressed workweek scheme

Considering that the MOA clearly states that the employee waives the
payment of overtime pay in exchange of a five-day workweek, there is
no room for interpretation and its terms should be implemented as
they are written.

LABOR LAW CONCEPTS:

This prerogative extends to the managements 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.
 [19]
Managements 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

SUMMARY:

The petitioner is a labor union regular employees of the respondent who

contests that the failure to conduct another CBA with the respondent was
due to the decongestion of the employees from Caloocan to Rizal. The
petitioner filed for illegal dismissal. The Court held that the transfer order
was a management prerogative in order to meet the requirements of
business.

11.) PROTACIO V. LAYA MANANGHAYA

FACTS:

KPMG Laya Mananghaya & Co. is a general professional partnership duly

organized under the laws of the Philippines.
Petitioner Zayber Protacio was hired as Tax Manager on April 1, 1996. He
was promoted as Senior Tax Manager and then as a Tax Principal on
October 1, 1997.
On August 30, 1999, petitioner tendered his resignation. On December
1,1999 petitioner sent a letter to respondent firm demanding the
immediate payment of his (1) 13th month pay; (2) cash commutation of
his leave credits; and (3) his 1999 Certificate of Income Tax Withheld on
Compensation. He even sent demand letters.
On December 15,1999, petitioner filed before the NLRC a complaint for
the non-issuance of petitioners W-2 tax form for 1999 and the non-
payment of the following benefits: 1) cash equivalent of petitioners leave
credits in the amount of P55,467.60; (2) proportionate 13th month pay for
the year 1999; (3) reimbursement claims in the amount of P19,012.00;
and (4) lump sum pay for the fiscal year 1999 in the amount
of P674,756.70. Petitioner also sought moral and exemplary damages and
attorneys fees.
PROTACIO KPMG LAYA MANANGHAYA
When he was promoted as Tax Denied it had intentionally
Principal in October 1997, his delayed the processing of
compensation package had petitioners claims but alleged
 consisted of a monthly gross that the abrupt departure of
compensation of P60,000, a 13th petitioner and three other
month pay and lump sum members of the firms Tax Division
payment for the year 1997 in the had created problems in the
amount of P240,000 that was paid determination of petitioners
to him on February 8,1998. various accountabilities, which
could be finished only by going
over voluminous documents.
Beginning October 1, his On three occasions sent check
compensation package was payments to petitioner in the
revised as follows: (a) monthly following amounts:
gross compensation (1) P71,250.00, representing
of P95,000.00, inclusive of petitioners 13th month pay;
nontaxable allowance; (b) 13th (2) P54,824.18, as payments for
month pay; and (c) a lump sum the cash equivalent of petitioners
amount in addition to the leave credits and reimbursement
aggregate monthly gross claims; and (3) P10,762.57, for the
compensation. On 12 April 1999, refund of petitioners taxes
petitioner received the lump sum withheld on his vacation leave
amount of P573,000.00 for the credits.
fiscal year ending 1998
Petitioners copies of his
withholding tax certificates were
sent to him along with the check
payments. Petitioner
acknowledged the receipt of the
13th month pay but disputed the
computation of the cash value of
his vacation leave credits and
reimbursement claims

LA
AWARDED BASIS
P12,681 representing the granted on the ground that
reimbursement claims of the respondent firms refusal to grant
complainant the same was not so much because
the claim was baseless but because
petitioner had faoiled to file the
reimbursement forms; the defect
was cured when petitioner filed
 several demand letters and the case
P28,407 representing the petitioner was not fully paid of the
underpayment of the cash cash equivalent based on the
equivalent of the unused leave computation on a basic pay of
credits of complainant P61,000. He was P95,000 inclusive
of the other benefits that were
deemed included and integrated in
the basic salary and that respondent
firm had computed the 13th month
pay on the same base.
P573,000 representing company policy of granting yearly
complainants 1999 year-end lump lump sum payments to petitioner
sum payment during all the years of service and
that the respondent firm had failed
to give petitioner the same benefit
for the year 1999 without any
explanation
10%of the total judgement awards
way of attorneys fees

NLRC: Affirmed LA with some modifications

P2,301 as REIMBURSEMENT CLAIMS for lack of basis.
CA: Reduced the total money award
P2,301 as REIMBURSEMENT CLAIMS
P9,802.83 as UNDERPAYMENT OF THE CASH EQUIVALENT OF
PRIVATE RESPONDENTS UNUSED LEAVE CREDITS
P10,000 as ATTORNEYS FEES

ISSUE: Whether the deletion of the year end lump sum is

reasonable

SUPREME COURT:
Used the base figure P95,000 The record reveals that the use of
the P71,250 is without basis and that the proper base figure to be used
is the monthly compensation of Protacio (P95,000) which consists the
basic salary of P61,000, advance incentive pay of P15,000,
transportation allowance of P15,000 and representation allowance of
P4,000.
 Deleted the award of the year end lump sum The Court fully
agrees that the lump sum award of P573,000 was baseless. Although
the petitioner received year-end lump sum for the first two years, the
distribution thereof is discretionary.

While the amount was drawn from the annual net income of the firm,
the distribution thereof to non-partners or employees of the firm was not,
strictly speaking, a profit-sharing arrangement between petitioner and
respondent firm contrary to the Court of Appeals finding. The payment
thereof to non-partners of the firm like herein petitioner was
discretionary on the part of the chairman and managing partner coming
from their authority to fix the compensation of any employee based on a
share in the partnerships net income.The distribution being merely
discretionary, the year-end lump sum payment may properly be
considered as a year-end bonus or incentive. Contrary to petitioners
claim, the granting of the year-end lump sum amount was precisely
dependent on the firms net income; hence, the same was payable only
after the firms annual net income and cash position were determined.

By definition, a "bonus" is a gratuity or act of liberality of the giver. It

is something given in addition to what is ordinarily received by or strictly
due the recipient. A bonus is granted and paid to an employee for his
industry and loyalty which contributed to the success of the employers
business and made possible the realization of profits. Generally, a bonus
is not a demandable and enforceable obligation. It is so only when it is
made part of the wage or salary or compensation. When considered as
part of the compensation and therefore demandable and enforceable, the
amount is usually fixed. If the amount would be a contingent one
dependent upon the realization of the profits, the bonus is also not
demandable and enforceable.

In the instant case, petitioners claim that the year-end lump sum
represented the balance of his total compensation package is incorrect.
The fact remains that the amounts paid to petitioner on the two
occasions varied and were always dependent upon the firms financial
position.
 Moreover, in Philippine Duplicators, Inc. v. NLRC,the Court held that if the
bonus is paid only if profits are realized or a certain amount of
productivity achieved, it cannot be considered part of wages. If the
desired goal of production is not obtained, of the amount of actual work
accomplished, the bonus does not accrue. Only when the employer
promises and agrees to give without any conditions imposed for its
payment, such as success of business or greater production or output,
does the bonus become part of the wage.

The granting of a bonus is basically a management prerogative which

cannot be forced upon the employer who may not be obliged to assume
the onerous burden of granting bonuses or other benefits aside from the
employees basic salaries or wages. Respondents had consistently
maintained from the start that petitioner was not entitled to the bonus as
a matter of right. The payment of the year-end lump sum bonus based
upon the firms productivity or the individual performance of its
employees was well within respondent firms prerogative. Thus,
respondent firm was also justified in declining to give the bonus to
petitioner on account of the latters unsatisfactory performance.

SUMMARY OF THE VALUES:

Prota KPMG LA NLR CA SC

cio C
th
13 month P71,250
pay (based
on P95K
rate)
Cash 55,46 54,824.1 28,407.0 Affir 9,802.83 39,855.8 =
equivalent 7.6 8 (of w/c 8 med = (95K/26
of leave P46,009. =(95K/3 LA (71,250/ days x 23.5
credits 67 cash 0days x 30 day- =
(23.5) equiv. of 23.5- divisorx2 85,865.48-
leave 46,009.6 3.5- 46,009.67)
credits) 7) 46,009.6
10,762.5 7)
Reimbursem 19,01 7 12,681 2,30 Affirmed Affirmed CA
ent claims 2.0 (refund) 1 NLRC
Year-end 674,7 X 573,000 Affir X Affirmed CA
lump sum 56.7 med
LA
Exemplary - - 10% of - 10K Affirmed CA
damages/ total
Atty.s fees award

12.) PAL vs NLRC

G.R. No. 85985 August 13, 1993

Petitioner: Philippine Airlines, Inc. (PAL)

Respondents: National Labor Relations Commission, Labor Arbiter Isabel P.

Ortiguerra And Philippine Airlines Employees Association (PALEA)

Ponente: Melo, J.

FACTS:

Petition: Petition for review on certiorari

March 15, 1985

o Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of

Discipline. The Code was circulated among the employees and
was immediately implemented, and some employees were
forthwith subjected to the disciplinary measures embodied
therein.

Respondents Contentions

August 20, 1995: Philippine Airlines Employees Association (PALEA)

filed a complaint before the NLRC for unfair labor practice with the
following remarks: "ULP with arbitrary implementation of PAL's Code of
Discipline without notice and prior discussion with Union by
Management".
 PALEA contended that PAL, by its unilateral implementation of the
Code, was guilty of unfair labor practice, specifically Paragraphs E and
G of Article 249 and Article 253 of the Labor Code.

PALEA alleged that copies of the Code had been circulated in limited
numbers; that being penal in nature the Code must conform with the
requirements of sufficient publication, and that the Code was arbitrary,
oppressive, and prejudicial to the rights of the employees.

It prayed that implementation of the Code be held in abeyance; that

PAL should discuss the substance of the Code with PALEA; that
employees dismissed under the Code be reinstated and their cases
subjected to further hearing; and that PAL be declared guilty of unfair
labor practice and be ordered to pay damages.

Petitioners Contentions

PAL filed a motion to dismiss the complaint, asserting its prerogative as

an employer to prescribe rules and regulations regarding employees'
conduct in carrying out their duties and functions, and alleging that by
implementing the Code, it had not violated the collective bargaining
agreement (CBA) or any provision of the Labor Code.

Assailing the complaint as unsupported by evidence, PAL maintained

that Article 253 of the Labor Code cited by PALEA referred to the
requirements for negotiating a CBA which was inapplicable as indeed
the current CBA had been negotiated.

Respondents Position Paper (reply to PALs contentions)

PALEA maintained that Article 249 (E) of the Labor Code was violated
when PAL unilaterally implemented the Code, and cited provisions of
Articles IV and I of Chapter II of the Code as defective for, respectively,
running counter to the construction of penal laws and making
punishable any offense within PAL's contemplation. These provisions
are the following:

Sec. 2. Non-exclusivity. This Code does not contain the

entirety of the rules and regulations of the company. Every
employee is bound to comply with all applicable rules,
 regulations, policies, procedures and standards, including
standards of quality, productivity and behavior, as issued
and promulgated by the company through its duly
authorized officials. Any violations thereof shall be punishable
with a penalty to be determined by the gravity and/or frequency
of the offense.

Sec. 7. Cumulative Record. An employee's record of offenses

shall be cumulative. The penalty for an offense shall be
determined on the basis of his past record of offenses of any
nature or the absence thereof. The more habitual an offender has
been, the greater shall be the penalty for the latest offense.
Thus, an employee may be dismissed if the number of his past
offenses warrants such penalty in the judgment of management
even if each offense considered separately may not warrant
dismissal. Habitual offenders or recidivists have no place in PAL.
On the other hand, due regard shall be given to the length of
time between commission of individual offenses to determine
whether the employee's conduct may indicate occasional lapses
(which may nevertheless require sterner disciplinary action) or a
pattern of incorrigibility.

Labor Arbiters Ruling (Labor Arbiter Isabel P. Ortiguerra, November

7, 1986 Decision)

LA called the parties to a conference, they failed to appear at the

scheduled date and such failure was interpreted as a waiver of the
parties' right to present evidence, the labor arbiter considered the case
submitted for decision.

The decision rendered found no bad faith on the part of PAL in adopting
the Code and ruled that no unfair labor practice had been committed.

However, the LA held that PAL was "not totally fault free" considering
that while the issuance of rules and regulations governing the conduct
of employees is a "legitimate management prerogative" such rules and
regulations must meet the test of "reasonableness, propriety and
fairness."
 The LA found Section 2 of the Code aforequoted as "an all embracing
and all-encompassing provision that makes punishable any offense one
can think of in the company"; while Section 7, likewise quoted above, is
"objectionable for it violates the rule against double jeopardy thereby
ushering in two or more punishment for the same misdemeanor."

The LA also found that PAL "failed to prove that the new Code was
amply circulated - PAL's assertion that it had furnished all its
employees copies of the Code is unsupported by documentary
evidence, she stated that such failure on the part of PAL resulted in the
imposition of penalties on employees who thought all the while that
the 1966 Code was still being followed.

The LA concluded that "the phrase ignorance of the law excuses

no one from compliance . . . finds application only after it has
been conclusively shown that the law was circulated to all the
parties concerned and efforts to disseminate information
regarding the new law have been exerted.

NLRCs RULING (Commissioner Encarnacion, with Presiding

Commissioner Bonto-Perez and Commissioner Maglaya, August 19,
1988 Decision)

The NLRC found no evidence of unfair labor practice committed by PAL

and affirmed the dismissal of PALEA's charge. Nonetheless, the NLRC
made the following observations:

Indeed, failure of management to discuss the provisions of a

contemplated code of discipline which shall govern the conduct
of its employees would result in the erosion and deterioration of
an otherwise harmonious and smooth relationship between them
as did happen in the instant case. There is no dispute that
adoption of rules of conduct or discipline is a prerogative
of management and is imperative and essential if an
industry, has to survive in a competitive world. But labor
climate has progressed, too. In the Philippine scene, at no time in
our contemporary history is the need for a cooperative,
supportive and smooth relationship between labor and
management more keenly felt if we are to survive economically.
Management can no longer exclude labor in the
 deliberation and adoption of rules and regulations that
will affect them.

The complainant union in this case has the right to feel isolated
in the adoption of the New Code of Discipline. The Code of
Discipline involves security of tenure and loss of
employment a property right! It is time that management
realizes that to attain effectiveness in its conduct rules, there
should be candidness and openness by Management and
participation by the union, representing its members. In fact, our
Constitution has recognized the principle of "shared
responsibility" between employers and workers and has likewise
recognized the right of workers to participate in "policy and
decision-making process affecting their rights . . ." The latter
provision was interpreted by the Constitutional Commissioners to
mean participation in "management"'

In a sense, participation by the union in the adoption of

the code of conduct could have accelerated and enhanced
their feelings of belonging and would have resulted in
cooperation rather than resistance to the Code. In fact,
labor-management cooperation is now "the thing.

ISSUE:

Whether or not management may be compelled to share with the union or its
employees its prerogative of formulating a code of discipline.

HELD:

YES.

PAL asserts that when it revised its Code on March 15, 1985, there was
no law which mandated the sharing of responsibility therefor between
employer and employee.
 Indeed, it was only on March 2, 1989, with the approval of Republic Act
No. 6715, amending Article 211 of the Labor Code, that the law explicitly
considered it a State policy "to ensure the participation of workers in decision
and policy-making processes affecting the rights, duties and welfare."
However, even in the absence of said clear provision of law, the exercise of
management prerogatives was never considered boundless. Thus, in Cruz vs.
Medina, it was held that management's prerogatives must be without abuse
of discretion.

In San Miguel Brewery Sales Force Union vs. Ople, the Court upheld the
company's right to implement a new system of distributing its products, but
gave the following caveat:

So long as a company's management prerogatives are exercised

in good faith for the advancement of the employer's interest and
not for the purpose of defeating or circumventing the rights of
the employees under special laws or under valid agreements,
this Court will uphold them.

All this points to the conclusion that the exercise of managerial

prerogatives is not unlimited. It is circumscribed by limitations found in law, a
collective bargaining agreement, or the general principles of fair play and
justice. Moreover, as enunciated in Abbott Laboratories vs. NLRC, it must be
duly established that the prerogative being invoked is clearly a managerial
one.

A close scrutiny of the objectionable provisions of the Code reveals

that they are not purely business-oriented nor do they concern the
management aspect of the business of the company as in the San
Miguel case. The provisions of the Code clearly have repercussions on the
employee's right to security of tenure. The implementation of the provisions
may result in the deprivation of an employee's means of livelihood which, as
correctly pointed out by the NLRC, is a property right. In view of these
aspects of the case which border on infringement of constitutional rights, the
Court must uphold the constitutional requirements for the protection of labor
and the promotion of social justice, for these factors, according to Justice
Isagani Cruz, tilt "the scales of justice when there is doubt, in favor of the
worker.

Verily, a line must be drawn between management prerogatives

regarding business operations per se and those which affect the rights of the
employees. In treating the latter, management should see to it that its
employees are at least properly informed of its decisions or modes action.
PAL asserts that all its employees have been furnished copies of the Code.
Public respondents found to the contrary, which finding, to say the least is
entitled to great respect.

PAL posits the view that by signing the 1989-1991 collective bargaining
agreement, on June 27, 1990, PALEA in effect, recognized PAL's "exclusive
right to make and enforce company rules and regulations to carry
out the functions of management without having to discuss the
same with PALEA and much less, obtain the latter's conformity
thereto" Petitioner's view is based on the following provision of the
agreement:

The Association recognizes the right of the Company to

determine matters of management it policy and Company
operations and to direct its manpower. Management of the
Company includes the right to organize, plan, direct and control
operations, to hire, assign employees to work, transfer
employees from one department, to another, to promote,
demote, discipline, suspend or discharge employees for just
cause; to lay-off employees for valid and legal causes, to
introduce new or improved methods or facilities or to change
existing methods or facilities and the right to make and enforce
Company rules and regulations to carry out the functions of
management.

The exercise by management of its prerogative shall be

done in a just reasonable, humane and/or lawful manner.

The provision in the collective bargaining agreement may not be

interpreted as cession of employees' rights to participate in the deliberation
of matters which may affect their rights and the formulation of policies
relative thereto. And one such mater is the formulation of a code of
discipline.

Indeed, industrial peace cannot be achieved if the employees are

denied their just participation in the discussion of matters affecting their
rights. Thus, even before Article 211 of the labor Code (P.D. 442) was
amended by Republic Act No. 6715, it was already declared a policy of the
State, "(d) To promote the enlightenment of workers concerning their rights
and obligations . . . as employees." This was, of course, amplified by Republic
Act No 6715 when it decreed the "participation of workers in decision and
policy making processes affecting their rights, duties and welfare." PAL's
position that it cannot be saddled with the "obligation" of sharing
management prerogatives as during the formulation of the Code, Republic
Act No. 6715 had not yet been enacted, cannot thus be sustained. While
such "obligation" was not yet founded in law when the Code was formulated,
the attainment of a harmonious labor-management relationship and the then
already existing state policy of enlightening workers concerning their rights
as employees demand no less than the observance of transparency in
managerial moves affecting employees' rights.

Petitioner's assertion that it needed the implementation of a new Code

of Discipline considering the nature of its business cannot be
overemphasized. In fact, its being a local monopoly in the business demands
the most stringent of measures to attain safe travel for its patrons.
Nonetheless, whatever disciplinary measures are adopted cannot be properly
implemented in the absence of full cooperation of the employees. Such
cooperation cannot be attained if the employees are restive on account, of
being left out in the determination of cardinal and fundamental matters
affecting their employment.

RULING:

The petition is DISMISSED and the questioned decision (NLRCs) is

AFFIRMED.

13.) SIME DARBY PILIPINAS, INC., vs. NATIONAL LABOR RELATIONS

COMMISSION (2ND DIVISION) and SIME DARBY SALARIED
EMPLOYEES ASSOCIATION (ALU-TUCP).

G.R. No. 119205. April 15, 1998

Sime Darby Pilipinas, Inc., petitioner,
is engaged in the manufacture of
automotive tires, tubes and other
rubber products.
Sime Darby Salaried Employees
Association (ALU-TUCP), private
respondent, is an association of
monthly salaried employees of
petitioner at its Marikina factory

Facts

Prior to the present controversy, all company factory workers in

Marikina including members of private respondent union worked
from 7:45 a.m. to 3:45 p.m. with a 30 minute paid on call lunch break.

On 14 August 1992 petitioner issued a memorandum to all factory-

based employees advising all its monthly salaried employees in its
Marikina Tire Plant, except those in the Warehouse and Quality
Assurance Department working on shifts, a change in work schedule
effective 14 September 1992 thus

TO: ALL FACTORY-BASED EMPLOYEES

RE: NEW WORK SCHEDULE

Effective Monday, September 14, 1992, the new work schedule factory
office will be as follows:

7:45 A.M. 4:45 P.M. (Monday to Friday)

7:45 A.M. 11:45 P.M. (Saturday).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. 10:30 A.M. and
2:30 P.M. 3:30 P.M.
Lunch break will be between:
12:00 NN 1:00 P.M. (Monday to Friday).

Excluded from the schedule are the Warehouse and QA employees who
are on shifting. Their work and break time schedules will be maintained as
it is now
 Since private respondent felt affected adversely by the change in
the work schedule and discontinuance of the 30-minute paid on call
lunch break, it filed on behalf of its members a complaint with the
Labor Arbiter for unfair labor practice, discrimination and evasion of
liability

Labor Arbiters Decision

the Labor Arbiter dismissed the complaint

the change in the work schedule and the elimination of the 30-
minute paid lunch break of the factory workers constituted a valid
exercise of management prerogative and that the new work
schedule, break time and one-hour lunch break did not have the
effect of diminishing the benefits granted to factory workers as the
working time did not exceed eight (8) hours.

The factory workers would be justly enriched if they continued to

be paid during their lunch break even if they were no longer on call
or required to work during the break.

NLRCs Ruling

National Labor Relations Commission (NLRC) which sustained the Labor

Arbiter and dismissed the appeal

Upon motion for reconsideration by private respondent, the NLRC, this

time with two (2) new commissioners replacing those who earlier
retired, REVERSED its earlier decision of 20 April 1994 as well as the
decision of the Labor Arbiter.

The NLRC considered the decision of the Supreme Court in the Sime
Darby case of 1990 as the law of the case wherein petitioner was
ordered to pay the money value of these covered employees deprived
of lunch and/or working time breaks.

The NLRC declared that the new work schedule deprived the
employees of the benefits of time-honored company practice of
 providing its employees a 30-minute paid lunch break resulting in an
unjust diminution of company privileges prohibited by Art. 100 of the
Labor Code, as amended.

The Office of the Solicitor General

The 14 August 1992 memorandum which contained the new work

schedule was not discriminatory of the union members nor did it
constitute unfair labor practice on the part of petitioner.

The Supreme Courts Decision

The Court agrees with petitioner.

The right to fix the work schedules of the employees rests principally
on their employer.

The reason for the adjustment is for the efficient conduct of its
business operations and its improved production. It rationalizes that
while the old work schedule included a 30-minute paid lunch break, the
employees could be called upon to do jobs during that period as they
were on call.

Even if denominated as lunch break, this period could very well be

considered as working time because the factory employees were
required to work if necessary and were paid accordingly for
working. With the new work schedule, the employees are now given a
one-hour lunch break without any interruption from their employer.

For a full one-hour undisturbed lunch break, the employees can freely
and effectively use this hour not only for eating but also for their rest
and comfort which are conducive to more efficiency and better
performance in their work.

Since the employees are no longer required to work during this one-
hour lunch break, there is no more need for them to be compensated
for this period.

The Labor Arbiter was correct that the new work schedule fully
complies with the daily work period of eight (8) hours without
 violating the Labor Code, the new schedule applies to all
employees in the factory similarly situated whether they are
union members or not.

The earlier Sime Darby case is not applicable. The present case does
not pertain to any controversy involving discrimination of employees
but only the issue of whether the change of work schedule, which
management deems necessary to increase production,
constitutes unfair labor practice.

The change effected by management with regard to working time is

made to apply to all factory employees engaged in the same line of
work whether or not they are members of private respondent
union. Hence, it cannot be said that the new scheme adopted by
management prejudices the right of private respondent to self-
organization.

Every business enterprise endeavors to increase its profits. In

the process, it may devise means to attain that goal. Even as
the law is solicitous of the welfare of the employees, it must also
protect the right of an employer to exercise what are clearly
management prerogatives.

management is free to regulate, according to its own discretion and

judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work,
processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay off of workers and
discipline, dismissal and recall of workers.

Management retains the prerogative, whenever exigencies of the

service so require, to change the working hours of its employees. So
long as such prerogative is exercised in good faith for the
advancement of the employers interest and not for the purpose of
defeating or circumventing the rights of the employees under special
laws or under valid agreements.

While the Constitution is committed to the policy of social justice and

the protection of the working class, it should not be supposed that
every dispute will be automatically decided in favor of
 labor. Management also has right which, as such, are entitled to
respect and enforcement in the interest of simple fair play.

14.) DUSIT HOTEL v. NUWHRAIN

G.R. No. 160391. August 9, 2005

MANAGEMENT PREROGATIVE

FACTS: The Philippine Hoteliers, Inc. (PHI) owned and operated the
Dusit Hotel Nikko. Respondent, Rowena Agoncillo was employed by the
Hotel. She was promoted as Supervisor of Outlet Cashiers and later
promoted as Senior Front Office Cashier. In January 1995, the Hotel
decided to trim down the number of its employees from the original count
of 820 to 750.4

The Hotel, through an Inter-Office Memorandum signed by the general

manager of Dusit, Yoshikazu Masuda, offered a Special Early Retirement
Program (SERP) to all its employees. It was stated therein that the program
was intended to "provide employees financial benefits prior to prolonged
renovation period and, at the same time, to enable management to
streamline the organization by eliminating redundant positions and having a
more efficient and productive manpower complement."5

The respondent National Union of Workers in Hotel, Restaurant and

Allied Industries, Hotel Nikko Manila Garden Chapter (NUWHRAIN), sought "a
commitment from the management that the employees terminated due to
redundancy will not be replaced by new employees; nor will their positions
be given to subcontractors, agencies or casual employees."

Consequently, a total of 243 employees, including Agoncillo, 161 of

whom were Union officers and members, were separated from the Hotels
employment. As a result, the membership of the Union was substantially
reduced.

On April 1, 1996, the Hotel wrote the DOLE, informing that the Hotel
terminated the employment of 243 employees due to redundancy. On the
same day, Agoncillo was summoned by Hotel Comptroller, who gave her a
letter of even date informing the latter of her "separation from service
due to redundancy effective close of office hours of April 30, 1996." 7

Agoncillo was advised to just avail of the Hotel's SERP, as embodied in

the inter-office memorandum of Masuda. However Agoncillo said that she
would not avail of the SERP benefits. By then, she had decided to file a
complaint for illegal dismissal against the Hotel.

Meanwhile, the Hotel temporarily closed operations because of the

renovation thereof. When news spread among the hotel employees that
Agoncillo would contest her termination before the NLRC, she was
summoned by Personnel Manager Leticia Delarmente to a conference. The
two met on May 21, 1996 in the presence of Willy Dizon, who later became
the Director for Personnel and Training of the Hotel. At the said meeting,
Delarmente and Dizon repeatedly asked Agoncillo to give back the original
copy of the April 1, 1996 termination letter. Agoncillo told them that the
letter was already in the possession of her counsel. Agoncillo was relieved
when she was given another letter of even date stating that, by reason of her
non-availment of the SERP, she was still considered an employee but on
temporary lay-off due to the ongoing renovation of the Hotel 9 and that she
will just be advised accordingly of her work schedule when the Hotel
reopens.10

But her relief was shortlived. Delarmente and Dizon offered to reinstate
Agoncillo but not to her former position as Senior Front Office Cashier.
Agoncillo objected but informed them that she could accept the position of
Reservation Clerk.11 However, no response was received.

Meanwhile, the Hotel hired six (6) Front Office Cashiers on October 1,
12
1996. On October 21, 1996, Agoncillo received a telegram from the Human
Resources Department of the Hotel directing her to report to Dizon as soon
as possible.13 She was told by Dizon that the Hotel was willing to reinstate
her but as an Outlet Cashier. Dizon explained that the Hotel had already
hired new employees for the positions of Reservation Clerks. Agoncillo,
however, pointed out that she was already an Outlet Cashier Supervisor
before her promotion as Senior Front Office Cashier and that if she accepted
the position, it would be an unjustified demotion on her part. Dizon,
however, explained that the management wanted "new graduates" as "front
liners," i.e., new graduates who would occupy the front desks and other
sections exposed to guests. On the other hand, Agoncillo reiterated that she
could accept the lower position of Reservation Clerk, but Dizon rejected the
suggestion. Dizon countered that Agoncillo could be reinstated as a Room
Service Cashier "para nakatago."

After Agoncillos meeting with Dizon on October 22, 1996, the latter
kept on promising to find a suitable position for her. In those meetings, Dizon
always offered reinstatement to positions that do not require guest exposure
like Linen Dispatcher at the hotel basement or Secretary of Roomskeeping.
When Agoncillo refused, Dizon just instructed her to return. Agoncillo had no
specific position or assigned task to perform.

The Labor Arbiter rendered judgment dismissing the complaint for

unfair labor practice and constructive dismissal. On March 10, 2000, the
Union and the Hotel executed a Memorandum of Agreement (MOA) in
which the Hotel agreed to pay P15,000.00 to each member of the Union by
way of amicable settlement of NCMB-NCR-NS-11-425-96 in addition to the
redundancy pay earlier paid to them and that they shall file with the DOLE a
motion praying for the following:

a. Dismissal of the case with prejudice in regard to:

(i) illegal redundancy as to those who have received the

settlement pay above and signed the Special Power of Attorney
and Release, Waiver and Quitclaim;

(ii) all ULP charges; and

b. Dismissal of the case without prejudice as to those who have

not yet received the settlement pay.24

However, the MOA was not submitted to the NLRC for its approval.
Neither did Agoncillo receive any monetary benefits based on the MOA.

On appeal, the NLRC ruled that Agoncillo was illegally

dismissed. The CA rendered judgment dismissing the petition.
Hence, this appeal.

ISSUES:
1. Whether or not Agoncillo was illegally dismissed.

2. Whether or not the redundancy program implemented by the hotel is

valid.

3. Whether or not the respondents transfer from the position of Senior Front
Office Cashier to the position of outlet cashier was a valid exercise of
management prerogative.

4. Whether or not the respondents are bound by the compromise agreement

between the union and the hotel.

HELD: The petition is unmeritorious.

1. Yes, Agoncillo was illegally dismissed.

It is plain as day that the petitioners terminated the employment of

respondent Agoncillo effective April 30, 1996, as evidenced by their letter.
The letter of the petitioners terminating the employment of Agoncillo on the
ground of redundancy was rejected by the Order of the SOLE in NCMB-NCR-
NS-11-425-96 where he ruled that the petitioners redundancy program was
but a ploy, a contrivance cunningly scripted by them to subvert the Union
and unlawfully dismiss many of its employees. The SOLE declared that, by
their acts, the petitioners were guilty of unfair labor practice.

2. No, the redundancy program implemented by the hotel is not valid.

Redundancy exists when the service capability of the workforce is in

excess of what is reasonably needed to meet the demands of the business
enterprise. A reasonably redundant position is one rendered superfluous
by any number of factors, such as overhiring of workers, decreased volume
of business, dropping of a particular product line previously manufactured by
the company or phasing out of service activity priorly undertaken by the
business. Among the requisites of a valid redundancy program are: (1)
the good faith of the employer in abolishing the redundant position; and (2)
fair and reasonable criteria in ascertaining what positions are to be declared
redundant and accordingly abolished.33 As found by the SOLE, the NLRC and
the CA, the position of respondent Agoncillo was not abolished or
declared redundant. In fact, the petitioners hired an entirely new set of
employees to perform the tasks of respondent Agoncillo.

2. No, the transfer of respondent to the position of Outlet Cashier was not a
valid exercise of management prerogative.

We agree with the contention of the petitioners that it is the

prerogative of management to transfer an employee from one office to
another within the business establishment based on its assessment and
perception of the employees qualification, aptitude and competence, and in
order to ascertain where he can function with the maximum benefit to the
company. However, this Court emphasized that:

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.35

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. 36

In the present case, the petitioners recalled the termination of

respondent Agoncillo when they learned that she was going to file a
complaint against them with the NLRC for illegal dismissal. However, instead
of reinstating her to her former position, she was offered the position of
Linen Dispatcher in the hotel basement or Secretary of the Roomskeeping
Section, positions much lower than that of a Supervisor of Outlet Cashiers
which the respondent held before she was promoted as Senior Front Office
Cashier. With the said positions, the respondent would not certainly be
receiving the same salary and other benefits as Senior Front Office Cashier.

We agree with the ruling of the NLRC that the offers by the
petitioners to transfer respondent Agoncillo to other positions were
made in bad faith, a ploy to stave off a suit for illegal dismissal. In
fact, respondent Agoncillo had not been transferred to another position at all.

Even assuming, for the sake of argument, that the hotel had a valid
ground for dismissing [the] complainant and that it had merely spared her
such fate, the hotel is still guilty of illegal dismissal. Had the hotel
made the transfer of complainant in good faith and in the normal course of
its operation, it would have been justified. In this case, however, the
supposed transfer was made only after complainant had been earlier
terminated. Complainants statement in her affidavit that she was
summoned by the hotel after news of her plan to contest her dismissal
circulated remains unrefuted. Furthermore, the hotel has not explained why
there was no official memorandum issued to complainant formally informing
her of her "transfer". All these lead to only one conclusion that the alleged
transfer was not made in good faith as a valid exercise of
management prerogative but was intended as a settlement offer to
complainant to prevent her from filing a case.38

3. No, As private respondents did not authorize the union to represent them
in the compromise settlement, they are not bound by the terms thereof.

There is no denying the right of the Union and the petitioners under
Article 227 of the Labor Code to enter into and execute a compromise
agreement with the assistance of the DOLE; and that such agreement is
binding not only on the Union generally but on its individual members.40

The Union executed the MOA in behalf of the members of the

bargaining unit. There is no showing that Agoncillo is a member of that
unit. The MOA applies only to the members of the bargaining unit who
agreed to the termination of their employment based on redundancy and
received redundancy pay. Agoncillo did not receive any redundancy pay or
any monetary benefits under the MOA or executed any deed or waiver or
release in favor of the petitioners.
 The MOA executed by the petitioners and the Union settled
only the case of the parties before the SOLE for unfair labor practice
and for illegal redundancy. It did not settle the case between the
petitioners and Agoncillo before the NLRC.

We have consistently ruled that "a compromise is governed by the

basic principle that the obligations arising therefrom have the force of law
between the parties." Consequently, private respondents may pursue their
individual claims against petitioners before the Labor Arbiter.

The judgment of the Labor Arbiter based on the compromise

agreement in question does not have the effect of res judicata upon
private respondent who did not agree thereto.

"A compromise, once approved by final orders of the court has the
force of res judicata between the parties and should not be disturbed except
for vices of consent or forgery." A compromise is basically a contract
perfected by mere consent. "Consent is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to
constitute the contract." A compromise agreement is not valid when a party
in the case has not signed the same or when someone signs for and in behalf
of such party without authority to do so.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of

merit.

15.) Mendoza v. Rural Bank of Lucban

Facts:
Board of Directors of Respondent Bank issued a Board Resolution to
implement a reshuffle in 4 employees without changes in salary, allowances,
and other benefits received. Thereafter, Mendoza expressed his opinion on
the reshuffle and claimed that the position is deemed to be a demotion
without any legal basis. The Board replied and claimed that it is a tool in
providing the bank a sound internal control system or check and balance.
The management merely shifted duties of employees and their position may
be retained if requested formally. Afterwards, petitioner applied for a leave of
absence from work initially for 10 days. He applied again for an additional of
20 days. During such leave, he filled a complaint for illegal dismissal against
the bank.
LA:
Respondent is guilty of illegal dismissal.

NLRC:
Reversed the ruling of LA. The Board acted in good faith and the resolution
was not aimed solely at the petitioner but for all the other employee of the
bank. How and by what manner a business concern conducts its affairs is not
for this Commission to interfere with, especially so if there is no showing, as
in the case at bar, that the reshuffle was motivated by bad faith or ill-will.

CA:
Affirmed the ruling of NLRC. The alleged harassment is only a figment of his
imagination as there is no evidence and such claims of the petitioner is
merely self-serving statements. He was not demoted as there was no
diminution of benefits and rank. He could even retain his position title. The
reshuffling of its employees was done in good faith and cannot be made the
basis of a finding of constructive dismissal. Mendoza separated himself from
the bank when he filled a complaint while on leave.

Issue:
W/N the agency is justified in using its management prerogative in
reshuffling its employees.

SC:
Yes. Jurisprudence recognizes the exercise of management
prerogatives.
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 anotherprovided there is no demotion in rank or diminution of
salary, benefits, and other privileges; and the action is not motivated by
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.
Managerial prerogatives, however, are subject to limitations provided
by law, collective bargaining agreements, and general principles of fair play
and justice. 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.
In the case at bar, theres no constructive dismissal because the
respondent bank proved through substantial evidence that it was in pursuit
of their policy to familiarise the employees with various phases of bank
operations. Additionally, Petitioner was not singled-out: other employees
were also reassigned without their express consent. Neither was there any
demotion and diminution based on the Board Resolution.

16.) GENERAL MILLING CORPORATION, Petitioner,

vs.
VIOLETA L. VIAJAR, Respondent.

FACTS:

GMC is a domestic corporation with principal office in Makati City and a

manufacturing plant in Lapu-Lapu City.
GMC terminated the services of thirteen employees for redundancy,
including herein respondent, Violeta Viajar. GMC alleged that it has
been gradually downsizing its Vismin (Visayas-Mindanao)
Viajar filed a Complaint for Illegal Dismissal with damages against
GMC, its Human Resource Department (HRD) Manager, Johnny T.
Almocera, and Purchasing Manager, Joel Paulino before the Regional
Arbitration Branch (RAB) No. VII, NLRC, Cebu City.
Viajar alleged that she was employed by GMC on August 6, 1979 as
Invoicing Clerk. Through the years, the respondent held various
positions in the company until she became Purchasing Staff.
Viajar received a Letter-Memorandum dated October 27, 2003 from
GMC, through Almocera, informing her that her services were no longer
needed, effective November 30, 2003 because her position as
Purchasing Staff at the Purchasing Group, Cebu Operations was
deemed redundant.
When Viajar reported for work on October 31, 2003, almost a month
before the effectivity of her severance from the company, the guard on
duty barred her from entering GMCs premises. She was also denied
access to her office computer and was restricted from punching her
daily time record in the bundy clock.
On November 7, 2003, Viajar was invited to the HRD Cebu Office where
she was asked to sign certain documents, which turned out to be an
"Application for Retirement and Benefits." The respondent refused
to sign and sought clarification because she did not apply for
retirement and instead asserted that her services were terminated for
alleged redundancy. Almocera told her that her signature on the
Application for Retirement and Benefits was needed to process her
separation pay.
GMC reasoned out that it was forced to terminate the services of the
respondent because of the economic setbacks the company was
suffering which affected the companys profitability, and the continuing
rise of its operating and interest expenditures. Redundancy was part of
 the petitioners concrete and actual cost reduction measures. GMC also
presented the required "Establishment Termination Report" which it
filed before the Department of Labor and Employment (DOLE) on
October 28, 2003, involving thirteen (13) of its employees, including
Viajar. Subsequently, GMC issued to the respondent two (2) checks
respectively amounting to P440,253.02 and P21,211.35 as her
separation pay.13

Labor Arbiter (LA): rendered a Decision declaring that respondents acted

in good faith in terminating the complainant from the service due to
redundancy of works, thus, complainants refusal to accept the payment of
her allowed separation pay and other benefits under the law is NOT
JUSTIFIED both in fact and law, and so, therefore complainants case for
illegal dismissal against the herein respondents and so are complainants
monetary claims are hereby ordered DISMISSED for lack of merit.

The LA found that the respondent was properly notified on

October 30, 2003 through a Letter-Memorandum dated October
27, 2003, signed by GMCs HRD Manager Almocera, that her
position as Purchasing Staff had been declared redundant.
It also found that the petitioner submitted to the DOLE on
October 28, 2003 the "Establishment Termination Report." The LA
even faulted the respondent for not questioning the companys
action before the DOLE Regional Office, Region VII, Cebu City so
as to compel the petitioner to prove that Viajars position was
indeed redundant. It ruled that the petitioner complied with the
requirements under Article 283 of the Labor Code, considering
that the nation was then experiencing an economic downturn
and that GMC must adopt measures for its survival.

NLRC: AFFIRMED. Respondent General Milling Corporation is hereby

ordered to pay complainants separation pay in the amount of P461,464.37.

The NLRC, however, stated that it did not agree with the LA that
Viajar should be faulted for failing to question the petitioners
declaration of redundancy before the DOLE Regional Office,
Region VII, Cebu City. It was not imperative for Viajar to challenge
the validity of her termination due to
redundancy. Notwithstanding, the NLRC affirmed the findings of
the LA that Viajars dismissal was legal considering that GMC
complied with the requirements provided for under Article 283 of
the Labor Code and existing jurisprudence, particularly citing
Asian Alcohol Corporation v. NLRC.
THE NLRC STATED THAT THE CHARACTERIZATION OF
POSITIONS AS REDUNDANT IS AN EXERCISE OF THE
 EMPLOYERS BUSINESS JUDGMENT AND PREROGATIVE. It
also ruled that the petitioner did not exercise this prerogative in
bad faith and that the payment of separation pay in the amount
of P461,464.37 was in compliance with Article 283 of the Labor
Code.20

CA: REVERSED. Petition for Certiorari is GRANTED. A new judgment is entered

DECLARING the dismissal ILLEGAL and ordering respondent to reinstate
petitioner without loss of seniority rights and other privileges with full
backwages inclusive of allowances and other benefits computed from the
time she was dismissed on 30 November 2003 up to the date of actual
reinstatement. Further, moral and exemplary damages, in the amount of Fifty
Thousand Pesos ([P]50,000.00) each; and attorneys fees equivalent to ten
percent (10%) of the total monetary award, are awarded.

ISSUE:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ABUSE

OF DISCRETION IN ITS DECISION OF SEPTEMBER 21, 2007 AND
RESOLUTION OF JANUARY 30, 2008 AS THE SAME ARE CONTRARY TO
THE EVIDENCE ON RECORD.

HELD:

The petition is denied.

The petitioner argues that the factual findings of the NLRC, affirming that of
the LA must be accorded respect and finality as it is supported by evidence
on record. Both the LA and the NLRC found the petitioners evidence
sufficient to terminate the employment of respondent on the ground of
redundancy. The evidence also shows that GMC has complied with the
procedural and substantive requirements for a valid termination. There was,
therefore, no reason for the CA to disturb the factual findings of the NLRC.

As a general rule:

The factual findings of quasi-judicial agencies such as the NLRC are

generally accorded not only respect, but at times, even finality
because of the special knowledge and expertise gained by these
agencies from handling matters falling under their specialized
jurisdiction. It is also settled that this Court is not a trier of facts and
does not normally embark in the evaluation of evidence adduced
during trial. This rule, however, allows for exceptions.

Exceptions:
 When the findings of fact of the trial court, or of the quasi-judicial
agencies concerned, are conflicting or contradictory with those of
the CA. When there is a variance in the factual findings, it is
incumbent upon the Court to re-examine the facts once again.
When the said findings are not supported by substantial evidence
or if on the basis of the available facts, the inference or conclusion
arrived at is manifestly erroneous.27Factual findings of administrative
agencies are not infallible and will be set aside when they fail the test
of arbitrariness.28 In the instant case, the Court agrees with the CA that
the conclusions arrived at by the LA and the NLRC are manifestly
erroneous.

GMC claims that Viajar was validly dismissed on the ground of redundancy
which is one of the authorized causes for termination of employment. The
petitioner asserts that it has observed the procedure provided by law and
that the same was done in good faith. To justify the respondents dismissal,
the petitioner presented: (i) the notification Letter-Memorandum dated
October 27, 2003 addressed to the respondent which was received on
October 30, 2003;29 (ii) the "Establishment Termination Report" as prescribed
by the DOLE;30 (iii) the two (2) checks issued in the respondents name
amounting to P440,253.02 and P21,211.35 as separation pay;31 and (iv) the
list of dismissed employees as of June 6, 2006 to show that GMC was in a
"reduction mode."32 Both the LA and the NLRC found these sufficient to prove
that the dismissal on the ground of redundancy was done in good faith.

The Court does not agree.

Article 283 of the Labor Code provides that redundancy is one of the
authorized causes for dismissal. It reads:

Article 283. Closure of establishment and reduction of personnel. The

employer may also terminate the employment of any employee due to the
installment 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 worker and the
Ministry 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 reverses, the separation pay shall be equivalent to one (1) month
pay or at least one-half (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. (Emphasis supplied)

From the above provision, it is imperative that the employer must comply
with the requirements for a valid implementation of the companys
redundancy program, to wit:

(a) the employer must serve a written notice to the affected employees
and the DOLE at least one (1) month before the intended date of
retrenchment;
(b) the employer must pay the employees a separation pay equivalent
to at least one month pay or at least one month pay for every year of
service, whichever is higher;
(c) the employer must abolish the redundant positions in good faith;
and
(d) the employer must set fair and reasonable criteria in ascertaining
which positions are redundant and may be abolished.

In Smart Communications, Inc., v. Astorga,34 the Court held that:

The nature of redundancy as an authorized cause for dismissal is explained

in the leading case of Wiltshire File Co., Inc. v. National Labor Relations
Commission, viz:

Redundancy in an employers personnel force necessarily or even ordinarily

refers to duplication of work. That no other person was holding the same
position that private respondent held prior to termination of his services does
not show that his position had not become redundant. Indeed, in any well
organized business enterprise, it would be surprising to find duplication of
work and two (2) or more people doing the work of one person. We believe
that 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 characterization of an employees services as superfluous or no longer

necessary and, therefore, properly terminable, is an exercise of business
judgment on the part of the employer. The wisdom and soundness of such
characterization or decision is not subject to discretionary review provided,
of course, that a violation of law or arbitrary or malicious action is not
shown.35 (Emphasis supplied and citations omitted)
While it is true that the "characterization of an employees services as
superfluous or no longer necessary and, therefore, properly terminable, IS
AN EXERCISE OF BUSINESS JUDGMENT ON THE PART OF THE
EMPLOYER,"36 THE EXERCISE OF SUCH JUDGMENT, HOWEVER, MUST
NOT BE IN VIOLATION OF THE LAW, AND MUST NOT BE ARBITRARY
OR MALICIOUS. The Court has always stressed that a company cannot
simply declare redundancy without basis. To exhibit its good faith and that
there was a fair and reasonable criteria in ascertaining redundant positions, a
company claiming to be over manned must produce adequate proof of the
same.

We reiterate what was held in Caltex (Phils.), Inc. v. NLRC:37

In Asufrin, Jr. v. San Miguel Corporation, we ruled that it is not enough for a
company to merely declare that it has become overmanned (sic). It must
produce adequate proof of such redundancy to justify the dismissal of the
affected employees.

In Panlilio v. National Labor Relations Commission, we held that evidence

must be presented to substantiate redundancy such as but not limited to the
new staffing pattern, feasibility studies/proposal, on the viability of the newly
created positions, job description and the approval by the management of
the restructuring. (Emphasis supplied and citations omitted)

APPLICATION:

In the instant case, the Court agrees with the CA when it held that the
petitioner failed to present substantial proof to support GMCs general
allegations of redundancy. As shown from the records, the petitioner simply
presented as its evidence of good faith and compliance with the law the
notification letter to respondent Viajar; the "Establishment Termination
Report" it submitted to the DOLE Office; 40 the two (2) checks issued in the
respondents name amounting to P440,253.02 and P21,211.35;41 and the list
of terminated employees as of June 6, 2006. 42 We agree with the CA that
these are not enough proof for the valid termination of Viajars employment
on the ground of redundancy.

The letter-memorandum which contains general allegations is not enough to

convince this Court that Viajars termination of employment due to
redundancy was warranted under the circumstances.

There is no showing that GMC made an evaluation of the

existing positions and their effect to the company.
Neither did GMC exert efforts to present tangible proof that it
was experiencing business slow down or over hiring.
 The "Establishment Termination Report" it submitted to the DOLE Office
did not account for anything to justify declaring the positions
redundant. The Court notes that the list of terminated employees
presented by GMC was a list taken as of June 6, 2006 or almost three
years after the respondent was illegally dismissed and almost a year
after the LA promulgated its decision. While the petitioner had been
harping that it was on a "reduction mode" of its employees, it has not
presented any evidence (such as new staffing pattern, feasibility
studies or proposal, viability of newly created positions, job description
and the approval of the management of the restructuring, audited
financial documents like balance sheets, annual income tax returns
and others)44 which could readily show that the companys declaration
of redundant positions was justified. Such proofs, if presented, would
suffice to show the good faith on the part of the employer or that this
business prerogative was not whimsically exercised in terminating
respondents employment on the ground of redundancy. Unfortunately,
these are wanting in the instant case. The petitioner only advanced a
self-serving general claim that it was experiencing business reverses
and that there was a need to reduce its manpower complement.

On the other hand, the respondent presented proof that the petitioner had
been hiring new employees while it was firing the old ones, 45 negating the
claim of redundancy. It must, however, be pointed out that in termination
cases, like the one before us, the burden of proving that the dismissal of the
employees was for a valid and authorized cause rests on the employer. It
was incumbent upon the petitioner to show by substantial evidence that the
termination of the employment of the respondent was validly made and
failure to discharge that duty would mean that the dismissal is not justified
and therefore illegal.46

Furthermore, the Court cannot overlook the fact that Viajar was prohibited
from entering the company premises even before the effectivity date of
termination; and was compelled to sign an "Application for Retirement and
Benefits." These acts exhibit the petitioners bad faith since it cannot be
denied that the respondent was still entitled to report for work until
November 30, 2003. The demand for her to sign the "Application for
Retirement and Benefits" also contravenes the fact that she was terminated
due to redundancy. Indeed, there is a difference between voluntary
retirement of an employee and forced termination due to authorized causes.

In Quevedo v. Benguet Electric Cooperative, Incorporated, 47 this Court

explained the difference between retirement and termination due to
redundancy, to wit

RETIREMENT TERMINATION
While termination of employment and retirement from service are common
modes of ending employment, they are mutually exclusive, with varying
juridical bases and resulting benefits.

Retirement from service is while termination of employment is

contractual (i.e. based on the statutory (i.e. governed by the Labor
bilateral agreement of the employer Code and other related laws as to its
and employee) grounds, benefits and procedure).

Benefits for retirement, Article 287 of The benefits resulting from

the Labor Code gives leeway to the termination vary, depending on the
parties to stipulate above a floor of cause
benefits.

Voluntary retirement cuts employment ties leaving no residual employer

liability; involuntary retirement amounts to a discharge, rendering the
employer liable for termination without cause. The employees intent is the
focal point of analysis. In determining such intent, the fairness of the process
governing the retirement decision, the payment of stipulated benefits, and
the absence of badges of intimidation or coercion are relevant parameters.

APPLICATION:

Clearly, the instant case is not about retirement since the term has its
peculiar meaning and is governed by Article 287 of the Labor Code. Rather,
this is a case of termination due to redundancy under Article 283 of the
Labor Code. Thus, the demand of GMC for the respondent to sign an
"Application for Retirement and Benefits" is really suspect.

Finally the Court agrees with the CA that the award of moral and exemplary
damages is proper.1wphi1 The Court has awarded moral damages in
termination cases when bad faith, malice or fraud attend the employees
dismissal or where the act oppresses labor, or where it was done in a manner
contrary to morals, good customs or public policy.

WHEREFORE, the petition is DENIED.

17.) G.R. No. 170054.January 21, 2013.*

GOYA, INC., petitioner, vs. GOYA, INC. EMPLOYEES UNION-FFW,
respondent.

Topic: Limitations on Management Prerogative

FACTS: Sometime in January 2004, petitioner Goya, Inc. (Company), a

domestic corporation engaged in the manufacture, importation, and
wholesale of top quality food products, hired contractual employees from
PESO Resources Development Corporation (PESO) to perform temporary and
occasional services in its factory in Parang, Marikina City. This prompted
respondent Goya, Inc. Employees UnionFFW (Union) to request for a
grievance conference on the ground that the contractual workers do not
belong to the categories of employees stipulated in the existing Collective
Bargaining Agreement (CBA).

During the hearing on July 1, 2004, the Company and the Union manifested
before Voluntary Arbitrator (VA) Bienvenido E. Laguesma that amicable
settlement was no longer possible. The Union asserted that the hiring of
contractual employees from PESO is not a management prerogative and in
gross violation of the CBA tantamount to unfair labor practice (ULP). It noted
that the contractual workers engaged have been assigned to work in
positions previously handled by regular workers and Union members, in
effect violating Section 4, Article I of the CBA, which provides for three
categories of employees in the Company. The Union contends that since
1970, the categories of employees had been a part of the CBA.

In countering the Unions allegations, the Company argued that: (a) the law
expressly allows contracting and subcontracting arrangements through
Department of Labor and Employment (DOLE) Order No. 18-02; (b) the
engagement of contractual employees did not, in any way, prejudice the
Union, since not a single employee was terminated and neither did it result in
a reduction of working hours nor a reduction or splitting of the bargaining
unit; and (c) Section 4, Article I of the CBA merely provides for the definition
of the categories of employees and does not put a limitation on the
Companys right to engage the services of job contractors or its
management prerogative to address temporary/occasional needs in its
operation.

Ruling of the Voluntary Arbitrator: On October 26, 2004, VA Laguesma

dismissed the Unions charge of ULP for being purely speculative and for
lacking in factual basis, but the Company was directed to observe and
comply with its commitment under the CBA.

While the foregoing agreement between the parties did eliminate

managements prerogative of outsourcing parts of its operations, it serves as
a limitation on such prerogative particularly if it involves functions or duties
specified under the aforequoted agreement. It is clear that the parties
agreed that in the event that the Company needs to engage the services of
additional workers who will perform "occasional or seasonal work directly
connected with the regular operations of the COMPANY," or "specific projects
of limited duration not connected directly with the regular operations of the
COMPANY", the Company can hire casual employees which is akin to
contractual employees. If we note the Companys own declaration that
PESO was engaged to perform "temporary or occasional services"
(See the Companys Position Paper, at p. 1), then it should have
directly hired the services of casual employees rather than do it
through PESO.

It is evident, therefore, that the engagement of PESO is not in keeping with

the intent and spirit of the CBA provision in question. It must, however, be
stressed that the right of management to outsource parts of its operations is
not totally eliminated but is merely limited by the CBA.

CA: The CA sustained the ruling of the Voluntary Arbitrator.

A careful reading of the above-enumerated categories of employees reveals

that the PESO contractual employees do not fall within the enumerated
categories of employees stated in the CBA of the parties. Following the said
categories, the Company should have observed and complied with the
provision of their CBA. Since the Company had admitted that it engaged the
services of PESO to perform temporary or occasional services which is akin to
those performed by casual employees, the Company should have tapped the
services of casual employees instead of engaging PESO.

Hence, this petition.

Issue: Whether or not the petitioner acted in excess of their powers in

engaging the services of PESO, contrary to the limitation given by the CBA.

Ruling: Yes. The Supreme Court denied petitioners motion for review and
upheld that the company should observe and comply with the Collective
Bargaining Agreement in hiring casual employees.

1. UNFAIR LABOR PRACTICE- While the engagement of PESO is in violation

of Section 4, Article I of the CBA, it does not constitute unfair labor practice
as it (sic) not characterized under the law as a gross violation of the CBA.
Violations of a CBA, except those which are gross in character, shall no
longer be treated as unfair labor practice. Gross violations of a CBA means
flagrant and/or malicious refusal to comply with the economic provisions of
such agreement.
2. LIMITATIONS ON MANAGEMENT PREROGATIVE- We confirm that the
VA ruled on a matter that is covered by the sole issue submitted for
voluntary arbitration. Resultantly, the CA did not commit serious error when
it sustained the ruling that the hiring of contractual employees from PESO
was not in keeping with the intent and spirit of the CBA. Indeed, the opinion
of the VA is germane to, or, in the words of the CA, "interrelated and
intertwined with," the sole issue submitted for resolution by the parties.

To emphasize, declaring that a particular act falls within the concept of

management prerogative is significantly different from acknowledging that
such act is a valid exercise thereof. What the VA and the CA correctly
ruled was that the Companys act of contracting out/outsourcing is
within the purview of management prerogative. Both did not say,
however, that such act is a valid exercise thereof. Obviously, this is
due to the recognition that the CBA provisions agreed upon by the
Company and the Union delimit the free exercise of management
prerogative pertaining to the hiring of contractual employees.
Indeed, the VA opined that "the right of the management to outsource parts
of its operations is not totally eliminated but is merely limited by the CBA,"
while the CA held that "this management prerogative of contracting out
services, however, is not without limitation. x x x These categories of
employees particularly with respect to casual employees serve as limitation
to the Companys prerogative to outsource parts of its operations especially
when hiring contractual employees." As repeatedly held, the exercise of
management prerogative is not unlimited; it is subject to the limitations
found in law, collective bargaining agreement or the general principles of fair
play and justice25 Evidently, this case has one of the restrictions- the
presence of specific CBA provisions.

DECISION

PERALTA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Civil
Procedure seeks to reverse and set aside the June 16, 2005 Decision 1 and
October 12, 2005 Resolution2 of the Court of Appeals in CA-G.R. SP No.
87335, which sustained the October 26, 2004 Decision 3 of Voluntary
Arbitrator Bienvenido E. Laguesma, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered declaring that the Company is

NOT guilty of unfair labor practice in engaging the services of PESO.

The company is, however, directed to observe and comply with its
commitment as it pertains to the hiring of casual employees when
necessitated by business circumstances.4

The facts are simple and appear to be undisputed.

Sometime in January 2004, petitioner Goya, Inc. (Company), a domestic
corporation engaged in the manufacture, importation, and wholesale of top
quality food products, hired contractual employees from PESO Resources
Development Corporation (PESO) to perform temporary and occasional
services in its factory in Parang, Marikina City. This prompted respondent
Goya, Inc. Employees UnionFFW (Union) to request for a grievance
conference on the ground that the contractual workers do not belong to the
categories of employees stipulated in the existing Collective Bargaining
Agreement (CBA).5 When the matter remained unresolved, the grievance was
referred to the National Conciliation and Mediation Board (NCMB) for
voluntary arbitration.

During the hearing on July 1, 2004, the Company and the Union manifested
before Voluntary Arbitrator (VA) Bienvenido E. Laguesma that amicable
settlement was no longer possible; hence, they agreed to submit for
resolution the solitary issue of "[w]hether or not the Company is guilty of
unfair labor acts in engaging the services of PESO, a third party service
provider, under the existing CBA, laws, and jurisprudence." 6 Both parties
thereafter filed their respective pleadings.

The Union asserted that the hiring of contractual employees from PESO is not
a management prerogative and in gross violation of the CBA tantamount to
unfair labor practice (ULP). It noted that the contractual workers engaged
have been assigned to work in positions previously handled by regular
workers and Union members, in effect violating Section 4, Article I of the
CBA, which provides for three categories of employees in the Company, to
wit:

Section 4. Categories of Employees. The parties agree on the following

categories of employees:

(a) Probationary Employee. One hired to occupy a regular rank-and-file

position in the Company and is serving a probationary period. If the
probationary employee is hired or comes from outside the Company (non-
Goya, Inc. employee), he shall be required to undergo a probationary period
of six (6) months, which period, in the sole judgment of management, may
be shortened if the employee has already acquired the knowledge or skills
required of the job. If the employee is hired from the casual pool and has
worked in the same position at any time during the past two (2) years, the
probationary period shall be three (3) months.

(b) Regular Employee. An employee who has satisfactorily completed his

probationary period and automatically granted regular employment status in
the Company.

(c) Casual Employee, One hired by the Company to perform occasional or

seasonal work directly connected with the regular operations of the
Company, or one hired for specific projects of limited duration not connected
directly with the regular operations of the Company.

It was averred that the categories of employees had been a part of the CBA
since the 1970s and that due to this provision, a pool of casual employees
had been maintained by the Company from which it hired workers who then
became regular workers when urgently necessary to employ them for more
than a year. Likewise, the Company sometimes hired probationary
employees who also later became regular workers after passing the
probationary period. With the hiring of contractual employees, the Union
contended that it would no longer have probationary and casual employees
from which it could obtain additional Union members; thus, rendering inutile
Section 1, Article III (Union Security) of the CBA, which states:

Section 1. Condition of Employment. As a condition of continued

employment in the Company, all regular rank-and-file employees shall
remain members of the Union in good standing and that new employees
covered by the appropriate bargaining unit shall automatically become
regular employees of the Company and shall remain members of the Union
in good standing as a condition of continued employment.

The Union moreover advanced that sustaining the Companys position would
easily weaken and ultimately destroy the former with the latters resort to
retrenchment and/or retirement of employees and not filling up the vacant
regular positions through the hiring of contractual workers from PESO, and
that a possible scenario could also be created by the Company wherein it
could "import" workers from PESO during an actual strike.

In countering the Unions allegations, the Company argued that: (a) the law
expressly allows contracting and subcontracting arrangements through
Department of Labor and Employment (DOLE) Order No. 18-02; (b) the
engagement of contractual employees did not, in any way, prejudice the
Union, since not a single employee was terminated and neither did it result in
a reduction of working hours nor a reduction or splitting of the bargaining
unit; and (c) Section 4, Article I of the CBA merely provides for the definition
of the categories of employees and does not put a limitation on the
Companys right to engage the services of job contractors or its
management prerogative to address temporary/occasional needs in its
operation.

On October 26, 2004, VA Laguesma dismissed the Unions charge of ULP for
being purely speculative and for lacking in factual basis, but the Company
was directed to observe and comply with its commitment under the CBA. The
VA opined:

We examined the CBA provision Section 4, Article I of the CBA allegedly

violated by the Company and indeed the agreement prescribes three (3)
categories of employees in the Company and provides for the definition,
functions and duties of each. Material to the case at hand is the definition as
regards the functions of a casual employee described as follows:

Casual Employee One hired by the COMPANY to perform occasional or

seasonal work directly connected with the regular operations of the
COMPANY, or one hired for specific projects of limited duration not connected
directly with the regular operations of the COMPANY.

While the foregoing agreement between the parties did eliminate

managements prerogative of outsourcing parts of its operations, it serves as
a limitation on such prerogative particularly if it involves functions or duties
specified under the aforequoted agreement. It is clear that the parties
agreed that in the event that the Company needs to engage the services of
additional workers who will perform "occasional or seasonal work directly
connected with the regular operations of the COMPANY," or "specific projects
of limited duration not connected directly with the regular operations of the
COMPANY", the Company can hire casual employees which is akin to
contractual employees. If we note the Companys own declaration that PESO
was engaged to perform "temporary or occasional services" (See the
Companys Position Paper, at p. 1), then it should have directly hired the
services of casual employees rather than do it through PESO.

It is evident, therefore, that the engagement of PESO is not in keeping with

the intent and spirit of the CBA provision in question. It must, however, be
stressed that the right of management to outsource parts of its operations is
not totally eliminated but is merely limited by the CBA. Given the foregoing,
the Companys engagement of PESO for the given purpose is indubitably a
violation of the CBA.7

While the Union moved for partial reconsideration of the VA Decision, 8 the
Company immediately filed a petition for review 9 before the Court of Appeals
(CA) under Rule 43 of the Revised Rules of Civil Procedure to set aside the
directive to observe and comply with the CBA commitment pertaining to the
hiring of casual employees when necessitated by business circumstances.
Professing that such order was not covered by the sole issue submitted for
voluntary arbitration, the Company assigned the following errors:

THE HONORABLE VOLUNTARY ARBITRATOR EXCEEDED HIS POWER WHICH

WAS EXPRESSLY GRANTED AND LIMITED BY BOTH PARTIES IN RULING THAT
THE ENGAGEMENT OF PESO IS NOT IN KEEPING WITH THE INTENT AND SPIRIT
OF THE CBA.10

THE HONORABLE VOLUNTARY ARBITRATOR COMMITTED A PATENT AND

PALPABLE ERROR IN DECLARING THAT THE ENGAGEMENT OF PESO IS NOT IN
KEEPING WITH THE INTENT AND SPIRIT OF THE CBA.11
On June 16, 2005, the CA dismissed the petition. In dispensing with the
merits of the controversy, it held:

This Court does not find it arbitrary on the part of the Hon. Voluntary
Arbitrator in ruling that "the engagement of PESO is not in keeping with the
intent and spirit of the CBA." The said ruling is interrelated and intertwined
with the sole issue to be resolved that is, "Whether or not the Company is
guilty of unfair labor practice in engaging the services of PESO, a third party
service provider, under existing CBA, laws, and jurisprudence." Both issues
concern the engagement of PESO by the Company which is perceived as a
violation of the CBA and which constitutes as unfair labor practice on the
part of the Company. This is easily discernible in the decision of the Hon.
Voluntary Arbitrator when it held:

x x x x While the engagement of PESO is in violation of Section 4, Article I of

the CBA, it does not constitute unfair labor practice as it (sic) not
characterized under the law as a gross violation of the CBA. Violations of a
CBA, except those which are gross in character, shall no longer be treated as
unfair labor practice. Gross violations of a CBA means flagrant and/or
malicious refusal to comply with the economic provisions of such agreement.
xxx

Anent the second assigned error, the Company contends that the Hon.
Voluntary Arbitrator erred in declaring that the engagement of PESO is not in
keeping with the intent and spirit of the CBA. The Company justified its
engagement of contractual employees through PESO as a management
prerogative, which is not prohibited by law. Also, it further alleged that no
provision under the CBA limits or prohibits its right to contract out certain
services in the exercise of management prerogatives.

Germane to the resolution of the above issue is the provision in their CBA
with respect to the categories of the employees:

xxxx

A careful reading of the above-enumerated categories of employees reveals

that the PESO contractual employees do not fall within the enumerated
categories of employees stated in the CBA of the parties. Following the said
categories, the Company should have observed and complied with the
provision of their CBA. Since the Company had admitted that it engaged the
services of PESO to perform temporary or occasional services which is akin to
those performed by casual employees, the Company should have tapped the
services of casual employees instead of engaging PESO.

In justifying its act, the Company posits that its engagement of PESO was a
management prerogative. It bears stressing that a management prerogative
refers to the right of the employer to regulate all aspects of employment,
such as the freedom to prescribe work assignments, working methods,
processes to be followed, regulation regarding transfer of employees,
supervision of their work, lay-off and discipline, and dismissal and recall of
work, presupposing the existence of employer-employee relationship. On the
basis of the foregoing definition, the Companys engagement of PESO was
indeed a management prerogative. This is in consonance with the
pronouncement of the Supreme Court in the case of Manila Electric Company
vs. Quisumbing where it ruled that contracting out of services is an exercise
of business judgment or management prerogative.

This management prerogative of contracting out services, however, is not

without limitation. In contracting out services, the management must be
motivated by good faith and the contracting out should not be resorted to
circumvent the law or must not have been the result of malicious arbitrary
actions. In the case at bench, the CBA of the parties has already provided for
the categories of the employees in the Companys establishment. These
categories of employees particularly with respect to casual employees serve
as limitation to the Companys prerogative to outsource parts of its
operations especially when hiring contractual employees. As stated earlier,
the work to be performed by PESO was similar to that of the casual
employees. With the provision on casual employees, the hiring of PESO
contractual employees, therefore, is not in keeping with the spirit and intent
of their CBA. (Citations omitted)12

The Company moved to reconsider the CA Decision, 13 but it was

denied;14 hence, this petition.

Incidentally, on July 16, 2009, the Company filed a Manifestation 15 informing

this Court that its stockholders and directors unanimously voted to shorten
the Companys corporate existence only until June 30, 2006, and that the
three-year period allowed by law for liquidation of the Companys affairs
already expired on June 30, 2009. Referring to Gelano v. Court of
Appeals,16 Public Interest Center, Inc. v. Elma, 17 and Atienza v. Villarosa,18 it
urged Us, however, to still resolve the case for future guidance of the bench
and the bar as the issue raised herein allegedly calls for a clarification of a
legal principle, specifically, whether the VA is empowered to rule on a matter
not covered by the issue submitted for arbitration.

Even if this Court would brush aside technicality by ignoring the supervening
event that renders this case moot and academic 19 due to the permanent
cessation of the Companys business operation on June 30, 2009, the
arguments raised in this petition still fail to convince Us.

We confirm that the VA ruled on a matter that is covered by the sole issue
submitted for voluntary arbitration. Resultantly, the CA did not commit
serious error when it sustained the ruling that the hiring of contractual
employees from PESO was not in keeping with the intent and spirit of the
CBA. Indeed, the opinion of the VA is germane to, or, in the words of the CA,
"interrelated and intertwined with," the sole issue submitted for resolution by
the parties. This being said, the Companys invocation of Sections 4 and 5,
Rule IV20 and Section 5, Rule VI21of the Revised Procedural Guidelines in the
Conduct of Voluntary Arbitration Proceedings dated October 15, 2004 issued
by the NCMB is plainly out of order.

Likewise, the Company cannot find solace in its cited case of Ludo & Luym
Corporation v. Saornido.22 In Ludo, the company was engaged in the
manufacture of coconut oil, corn starch, glucose and related products. In the
course of its business operations, it engaged the arrastre services of CLAS for
the loading and unloading of its finished products at the wharf. The arrastre
workers deployed by CLAS to perform the services needed were
subsequently hired, on different dates, as Ludos regular rank-and-file
employees. Thereafter, said employees joined LEU, which acted as the
exclusive bargaining agent of the rank-and-file employees. When LEU
entered into a CBA with Ludo, providing for certain benefits to the employees
(the amount of which vary according to the length of service rendered), it
requested to include in its members period of service the time during which
they rendered arrastre services so that they could get higher benefits. The
matter was submitted for voluntary arbitration when Ludo failed to act. Per
submission agreement executed by both parties, the sole issue for resolution
was the date of regularization of the workers. The VA Decision ruled that: (1)
the subject employees were engaged in activities necessary and desirable to
the business of Ludo, and (2) CLAS is a labor-only contractor of Ludo. It then
disposed as follows: (a) the complainants were considered regular employees
six months from the first day of service at CLAS; (b) the complainants, being
entitled to the CBA benefits during the regular employment, were awarded
sick leave, vacation leave, and annual wage and salary increases during such
period; (c) respondents shall pay attorneys fees of 10% of the total award;
and (d) an interest of 12% per annum or 1% per month shall be imposed on
the award from the date of promulgation until fully paid. The VA added that
all separation and/or retirement benefits shall be construed from the date of
regularization subject only to the appropriate government laws and other
social legislation. Ludo filed a motion for reconsideration, but the VA denied
it. On appeal, the CA affirmed in toto the assailed decision; hence, a petition
was brought before this Court raising the issue, among others, of whether a
voluntary arbitrator can award benefits not claimed in the submission
agreement. In denying the petition, We ruled:

Generally, the arbitrator is expected to decide only those questions expressly

delineated by the submission agreement. Nevertheless, the arbitrator can
assume that he has the necessary power to make a final settlement since
arbitration is the final resort for the adjudication of disputes. The succinct
reasoning enunciated by the CA in support of its holding, that the Voluntary
Arbitrator in a labor controversy has jurisdiction to render the questioned
arbitral awards, deserves our concurrence, thus:

In general, the arbitrator is expected to decide those questions expressly

stated and limited in the submission agreement. However, since arbitration
is the final resort for the adjudication of disputes, the arbitrator can assume
that he has the power to make a final settlement. Thus, assuming that the
submission empowers the arbitrator to decide whether an employee was
discharged for just cause, the arbitrator in this instance can reasonably
assume that his powers extended beyond giving a yes-or-no answer and
included the power to reinstate him with or without back pay.

In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator
had plenary jurisdiction and authority to interpret the agreement to arbitrate
and to determine the scope of his own authority subject only, in a proper
case, to the certiorari jurisdiction of this Court. The Arbitrator, as already
indicated, viewed his authority as embracing not merely the determination of
the abstract question of whether or not a performance bonus was to be
granted but also, in the affirmative case, the amount thereof.

By the same token, the issue of regularization should be viewed as two-

tiered issue. While the submission agreement mentioned only the
determination of the date or regularization, law and jurisprudence give the
voluntary arbitrator enough leeway of authority as well as adequate
prerogative to accomplish the reason for which the law on voluntary
arbitration was created speedy labor justice. It bears stressing that the
underlying reason why this case arose is to settle, once and for all, the
ultimate question of whether respondent employees are entitled to higher
benefits. To require them to file another action for payment of such benefits
would certainly undermine labor proceedings and contravene the
constitutional mandate providing full protection to labor.23

Indubitably, Ludo fortifies, not diminishes, the soundness of the questioned

VA Decision. Said case reaffirms the plenary jurisdiction and authority of the
voluntary arbitrator to interpret the CBA and to determine the scope of
his/her own authority. Subject to judicial review, the leeway of authority as
well as adequate prerogative is aimed at accomplishing the rationale of the
law on voluntary arbitration speedy labor justice. In this case, a complete
and final adjudication of the dispute between the parties necessarily called
for the resolution of the related and incidental issue of whether the Company
still violated the CBA but without being guilty of ULP as, needless to state,
ULP is committed only if there is gross violation of the agreement.

Lastly, the Company kept on harping that both the VA and the CA conceded
that its engagement of contractual workers from PESO was a valid exercise
of management prerogative. It is confused. To emphasize, declaring that a
particular act falls within the concept of management prerogative is
significantly different from acknowledging that such act is a valid exercise
thereof. What the VA and the CA correctly ruled was that the Companys act
of contracting out/outsourcing is within the purview of management
prerogative. Both did not say, however, that such act is a valid exercise
thereof. Obviously, this is due to the recognition that the CBA provisions
agreed upon by the Company and the Union delimit the free exercise of
management prerogative pertaining to the hiring of contractual employees.
Indeed, the VA opined that "the right of the management to outsource parts
of its operations is not totally eliminated but is merely limited by the CBA,"
while the CA held that "this management prerogative of contracting out
services, however, is not without limitation. x x x These categories of
employees particularly with respect to casual employees serve as limitation
to the Companys prerogative to outsource parts of its operations especially
when hiring contractual employees."

A collective bargaining agreement is the law between the parties:

It is familiar and fundamental doctrine in labor law that the CBA is the law
between the parties and they are obliged to comply with its provisions. We
said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda:

A collective bargaining agreement or CBA refers to the negotiated contract

between a legitimate labor organization and the employer concerning wages,
hours of work and all other terms and conditions of employment in a
bargaining unit.1wphi1 As in all contracts, the parties in a CBA may
establish such stipulations, clauses, terms and conditions as they may deem
convenient provided these are not contrary to law, morals, good customs,
public order or public policy. Thus, where the CBA is clear and unambiguous,
it becomes the law between the parties and compliance therewith is
mandated by the express policy of the law.

Moreover, if the terms of a contract, as in a CBA, are clear and leave no

doubt upon the intention of the contracting parties, the literal meaning of
their stipulations shall control. x x x.24

In this case, Section 4, Article I (on categories of employees) of the CBA

between the Company and the Union must be read in conjunction with its
Section 1, Article III (on union security). Both are interconnected and must be
given full force and effect. Also, these provisions are clear and unambiguous.
The terms are explicit and the language of the CBA is not susceptible to any
other interpretation. Hence, the literal meaning should prevail. As repeatedly
held, the exercise of management prerogative is not unlimited; it is subject
to the limitations found in law, collective bargaining agreement or the
general principles of fair play and justice 25 Evidently, this case has one of the
restrictions- the presence of specific CBA provisions-unlike in San Miguel
Corporation Employees Union-PTGWO v. Bersamira, 26 De Ocampo v.
NLRC,27 Asian Alcohol Corporation v. NLRC, 28 and Serrano v. NLRC29cited by
the Company. To reiterate, the CBA is the norm of conduct between the
parties and compliance therewith is mandated by the express policy of the
law.30

WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision, as
well as the October 12, 2005 Resolution of the Court of Appeals, which
sustained the October 26, 2004 Decision of the Voluntary Arbitrator, are
hereby AFFIRMED.

SO ORDERED.

18.) MEGA MAGAZINE VS DEFENSOR

FACTS:

Petitioner Mega Magazine Publications, Inc. (MMPI) first employed the

respondent as an Associate Publisher in 1996, and later promoted her as a
Group Publisher with a monthly salary of P60,000.00.

February 25, 1999, the respondent proposed to MMPIs Executive Vice-

President Sarita V. Yap (Yap) year-end commissions for herself and a special
incentive plan for the Sales Department.

Yap made marginal notes of her counter-proposals on her copy of the

respondents memorandum dated February 25, 1999 itself,4 crossing out
proposed items 1 and 2 from the schedule of the respondents commissions,
and proposing instead that outright commissions be at 0.1% of P35-P38
million in accordance with proposed item 3; and crossing out proposed items
1 and 2 from the schedule of the special incentive plan, and writing "start
here" and "stet" in reference to item 3. Yap also wrote on the memorandum:
"Marge, if everything is ok w/ you, draft something for me to sign "; "You
can also announce that at 5 M net for MMPI [acc to my computation,
achievable if they only meet their month min. quota] we can declare 14th
month pay for entire company."5

The respondent sent another memorandum on April 5, 1999 setting

out the 1999 advertisement sales, target and commissions, and proposing
that the schedule of her outright commissions should start at .05% of P34.5
million total revenue, or P175,000.00;6 and further proposing that the special
incentives be given when total revenues reached P35-P38 million.

On October 1999, the respondent tendered her letter of resignation

effective at the end of December 1999. Yap accepted the resignation.8
 On May 2000, after the respondent had left the company, she filed a
complaint for payment of bonus and incentive compensation with
damages,13 specifically demanding the payment ofP271,264.68 as sales
commissions, P60,000.00 as 14th month pay, and P8,500.00 as her share in
the incentive scheme for the advertising and sales staff.14

Ruling of the Labor Arbiter: the Labor Arbiter (LA) dismissed the
respondents complaint.

It ruled that the respondent had not presented any evidence showing
that MMPI had agreed or committed to the terms proposed in her
memorandum of April 5, 1999; that even assuming that the petitioners had
agreed to her terms, the table she had submitted justifying a gross revenue
of P36,216,624.07 was not an official account by MMPI;16and that the
petitioners had presented a 1999 statement of income and deficit prepared
by the auditing firm of Punongbayan & Araullo showing MMPIs gross revenue
for 1999 being only P31,947,677.00.

Decision of the NLRC: the NLRC concurred with the LAs ruling that there
had been no agreement between the petitioners and the respondent on the
terms and conditions of the incentives reached.

Judgment of the CA: CA dismissed the respondents petition for certiorari

and upheld the resolutions of the NLRC.

ISSUE:

Whether or not the respondent was entitled to the commissions and the
incentive bonus being claimed.

HELD:

The grant of a bonus or special incentive, being a management

prerogative, is not a demandable and enforceable obligation, except
when the bonus or special incentive is made part of the wage,
salary or compensation of the employee,29 or is promised by the
employer and expressly agreed upon by the parties.30 By its very
definition, bonus is a gratuity or act of liberality of the giver,31 and cannot
be considered part of an employees wages if it is paid only when profits are
realized or a certain amount of productivity is achieved. If the desired goal of
production or actual work is not accomplished, the bonus does not accrue.
 Due to the nature of the bonus or special incentive being a gratuity or
act of liberality on the part of the giver, the respondent could not validly
insist on the schedule proposed in her memorandum of April 5, 1999
considering that the grant of the bonus or special incentive
remained a management prerogative.

The Court agrees with the CAs ruling that the petitioners had already
exercised the management prerogative to grant the bonus or special
incentive. At no instance did Yap flatly refuse or reject the respondents
request for commissions and the bonus or incentive. This is plain from the
fact that Yap even "bargained" with the respondent on the schedule of the
rates and the revenues on which the bonus or incentive would be pegged.
What remained contested was only the schedule of the rates and the
revenues.

The Court agrees with the CAs ruling that the petitioners had already
exercised the management prerogative to grant the bonus or special
incentive. At no instance did Yap flatly refuse or reject the respondents
request for commissions and the bonus or incentive. This is plain from the
fact that Yap even "bargained" with the respondent on the schedule of the
rates and the revenues on which the bonus or incentive would be pegged.
What remained contested was only the schedule of the rates and the
revenues.

19.) MIRANT (PHILIPPINES) CORPORATION AND EDGARDO A.

BAUTISTA, Petitioners,
vs.
JOSELITO A. CARO, respondent

FACTS:

Petitioner Corporation is a holding company that owns shares in project

companies such as Mirant Sual Corporation and Mirant Pagbilao
Corporation (Mirant Pagbilao) which operate and maintain power
stations located in Sual, Pangasinan and Pagbilao, Quezon,
respectively.

Respondent was hired by Mirant Pagbilao on January 3, 1994 as its

Logistics Officer.
 At the time of the severance of his employment, respondent was the
Procurement Supervisor of Mirant Pagbilao assigned at Petitioner
Corporations corporate office. As Procurement Supervisor, his main
task was to serve as the link between the Materials Management
Department of Petitioner Corporation and its staff, and the suppliers
and service contractors in order to ensure that procurement is carried
out in conformity with set policies, procedures and practices.

In addition, respondent was put in charge of ensuring the timely,

economical, safe and expeditious delivery of materials at the right
quality and quantity to Petitioner Corporations plant. Respondent was
also responsible for guiding and overseeing the welfare and training
needs of the staff of the Materials Management Department. Due to
the nature of respondents functions, Petitioner Corporation considers
his position as confidential.

On November 3, 2004, Petitioner Corporation conducted a random

drug test where respondent was randomly chosen among its
employees who would be tested for illegal drug use.

Respondent avers that at around 11:30 a.m. of the same day, he

received a phone call from his wifes colleague who informed him that
a bombing incident occurred near his wifes work station in Tel Aviv,
Israel where his wife was then working as a caregiver.

Respondent claims that after the said phone call, he proceeded to the
Israeli Embassy to confirm the news on the alleged bombing incident.
Respondent further claims that before he left the office on the day of
the random drug test, he first informed the secretary of his
Department, Torres at around 12:30 p.m. that he will give preferential
attention to the emergency phone call that he just received. He also
told Torres that he would be back at the office as soon as he has
resolved his predicament.

On that same day, at around 6:15 p.m., respondent returned to

Petitioner Corporations office. He received a text message from
Cecilia, a member of the Drug Watch Committee that conducted the
drug test, informing him to participate in the said drug test.

He immediately called up Cecilia to explain the reasons for his failure

to submit himself to the random drug test that day. He also proposed
 that he would submit to a drug test the following day at his own
expense. Respondent never heard from Cecilia again.

On November 8, 2004, respondent received a Show Cause

Notice15 from Petitioner Corporation through Dulot, his immediate
supervisor, requiring him to explain in writing why he should not be
charged with "unjustified refusal to submit to random drug testing."

Respondent submitted his written explanation16 on November 11,

2004. Petitioner corporation further required respondent on December
14, 2004 to submit additional pieces of supporting documents to prove
that respondent was at the Israeli Embassy in the afternoon of
November 3, 2004 and that the said bombing incident actually
occurred. Respondent requested for a hearing to explain that he could
not submit proof that he was indeed present at the Israeli Embassy
during the said day because he was not allegedly allowed entry by the
embassy due to security reasons.

January 13, 2005, Petitioner Corporations Investigating Panel issued an

Investigating Report18 finding respondent guilty of "unjustified refusal
to submit to random drug testing" and recommended a penalty of four
working weeks suspension without pay, instead of termination.

On January 19, 2005, Petitioner Corporations VP for Operations

recommended that respondent be terminated from employment
instead of merely being suspended. Lamela argued that even if
respondent did not outrightly refuse to take the random drug test, he
avoided the same. It averred that "avoidance" was synonymous with
"refusal."

Respondent filed a complaint for illegal dismissal and money claims for
13th and 14th month pay, bonuses and other benefits, as well as the
payment of moral and exemplary damages and attorneys fees. He
also stated that we has denied of due process It is the contention of
respondent that he was illegally dismissed by petitioner corporation
due to the latters non-compliance with the twin requirements of notice
and hearing. He asserts that while there was a notice charging him of
"unjustified refusal to submit to random drug testing," there was no
notice of hearing and Petitioner Corporations investigation was not the
equivalent of the "hearing" required under the law which should have
accorded respondent the opportunity to be heard.

LA: In favor of the respondent

 - Respondent have been illegally dismissed

- The quitclaim purportedly executed by respondent was not a bona fide

quitclaim which effectively discharged petitioners of all the claims of
respondent in the case at bar.

- While petitioner corporation observed the proper procedure in the

termination of an employee for a purported authorized cause, such just
cause did not exist in the case at bar.

- The decision did not agree with the conclusions reached by Petitioner
Corporations own Investigating Panel that while respondent did not
refuse to submit to the questioned drug test and merely "avoided" it on
the designated day, "avoidance" and "refusal" are one and the same.

- LA held that terms "avoidance" and "refusal" are separate and distinct
and that "the two words are not even synonymous with each other. LA
considered as more tenable the stance of respondent that his omission
merely resulted to a "failure" to submit to the said drug test and not
an "unjustified refusal."

NLRC: In favor of petitioner and reversed the LA

- NLRC considered respondents omission as "unjustified refusal" in

violation of petitioner corporations drug policy.

- NLRC stated that the offer of respondent to submit to another drug test
the following day, even at his expense, cannot operate to free him
from liability. The NLRC opined that taking the drug test on the day
following the scheduled random drug test would affect both the
integrity and the accuracy of the specimen which was supposed to be
taken from a randomly selected employee who was notified of his/her
selection on the same day that the drug test was to be administered.

- The NLRC further asserted that a drug test, conducted many hours or a
day after the employee was notified, would compromise its results
because the employee may have possibly taken remedial measures to
metabolize or eradicate whatever drugs s/he may have ingested prior
to the drug test.

- These circumstances have clearly established the falsity of

respondents claims and found no justifiable reason for respondent to
refuse to submit to the petitioner corporations random drug test.
 - While the NLRC acknowledged that it was Petitioner Corporations own
Investigating Panel that considered respondents failure to take the
required drug test as mere "avoidance" and not "unjustified refusal," it
concluded that such finding was merely recommendatory to guide top
management on what action to take.

- The NLRC found that respondent was not only validly dismissed for
cause and ordered petitioner corporation to pay respondent financial
assistance equivalent to one-half (1/2) month pay for every year of
service in the amount of One Hundred Ninety-Nine Thousand Seventy-
Five Pesos (P199,075.00).

CA: reversed NLRC and reinstated LA

- it was immaterial whether respondent failed, refused, or avoided being

tested

- The singular fact material to this case was that respondent did not get
himself tested in clear disobedience of company instructions and
policy.

- To the appellate court, the singular fact material to this case was that
respondent did not get himself tested in clear disobedience of
company instructions and policy. Despite such disobedience, however,
the appellate court considered the penalty of dismissal to be too harsh
to be imposed on respondent

- While it is a management prerogative to terminate its erring employee

for willful disobedience, the Supreme Court has recognized that such
penalty is too harsh depending on the circumstances of each case.
"There must be reasonable proportionality between, on the one hand,
the willful disobedience by the employee and, on the other hand, the
penalty imposed therefor

- In this case, petitioner corporations own investigating panel has

revealed that the penalty of dismissal is too harsh to impose on
[respondent], considering that this was the first time in his 10-year
employment that the latter violated its company policies

ISSUE:

Whether or not the management prerogative to dismiss the respondent

for his failure to participate the drug test on the designated day is
proper
RULING:

NO. It is beyond debate that Petitioner Corporations enforcement of

its Anti-Drugs Policy is an exercise of its management prerogative.

It is also a conceded fact that respondent "failed" to take the random

drug test as scheduled, and under the said company policy, such
failure metes the penalty of termination for the first offense.

It is the crux of petitioners argument that respondents omission

amounted to "unjust refusal" because he could not sufficiently support
with convincing proof and evidence his defenses for failing to take the
random drug test. For petitioners, the inconsistencies in respondents
explanations likewise operated to cast doubt on his real reasons and
motives for not submitting to the random drug test on schedule.

While the adoption and enforcement by Petitioner Corporation of its

Anti-Drugs Policy is recognized as a valid exercise of its management
prerogative as an employer, such exercise is not absolute and
unbridled.

Managerial prerogatives are subject to limitations provided by law,

collective bargaining agreements, and the general principles of fair
play and justice.46 In the exercise of its management prerogative, an
employer must therefore ensure that the policies, rules and regulations
on work-related activities of the employees must always be fair and
reasonable and the corresponding penalties, when prescribed,
commensurate to the offense involved and to the degree of the
infraction. The Anti-Drugs Policy of Mirant fell short of these
requirements.

Petitioner Corporations subject Anti-Drugs Policy fell short of being fair

and reasonable.

The policy was not clear on what constitutes "unjustified refusal" when
the subject drug policy prescribed that an employees "unjustified
refusal" to submit to a random drug test shall be punishable by the
penalty of termination for the first offense.

To be sure, the term "unjustified refusal" could not possibly cover all
forms of "refusal" as the employees resistance, to be punishable by
termination, must be "unjustified."
 it is on this area where petitioner corporation had fallen short of
making it clear to its employees as well as to management as to
what types of acts would fall under the purview of "unjustified refusal.

The fact that petitioner corporations own Investigating Panel and its
Vice President for Operations, Sliman, differed in their
recommendations regarding respondents case are first-hand proof that
there, indeed, is ambiguity in the interpretation and application of the
subject drug policy.

The fact that petitioner corporations own personnel had to dissect the
intended meaning of "unjustified refusal" is further proof that it is not
clear on what context the term "unjustified refusal" applies to

The penalty of termination imposed by Petitioner Corporation upon

respondent fell short of being reasonable. Company policies and
regulations are generally valid and binding between the employer and
the employee unless shown to be grossly oppressive or contrary to
law50 as in the case at bar.

To be sure, the unreasonableness of the penalty of termination as

imposed in this case is further highlighted by a fact admitted by
Petitioner Corporation itself: that for the ten-year period that
respondent had been employed by petitioner corporation, he did not
have any record of a violation of its company policies.

LABOR LAW CONCEPTS:

Managerial prerogatives are subject to limitations provided by law,

collective bargaining agreements, and the general principles of fair
play and justice.46 In the exercise of its management prerogative, an
employer must therefore ensure that the policies, rules and regulations
on work-related activities of the employees must always be fair and
reasonable and the corresponding penalties, when prescribed,
commensurate to the offense involved and to the degree of the
infraction

SUMMARY:

The respondent, an employee of the petitioner failed to attend the

drug test on the designated day, which resulted to his dismissal. The
Court held that the management prerogative to dismiss the respondent
was not proper, as the interpretation avoidance and unjust refusal
stated on the Anti-Drug company policy was not clear as to whether
the non-attendance of the respondent is automatically equivalent to
unjust refusal on drug test.