GIRLY G.

ICO, Petitioner,
vs.
SYSTEMS TECHNOLOGY INSTITUTE, INC., MONICO V. JACOB and PETER K. FERNANDEZ, Respondents.
G.R. No. 185100 July 9, 2014

Facts:
-STI is an educational institution duly incorporated and organize and existing under the Philippine laws,
while Jacob and Fernandez are officers of STI the former being the President and Chief Executive Officer
(CEO) and the latter Senior Vice-President.
-Girly G. Ico on one hand degree holder with doctorate units earned was hired as Faculty Member by STI
College Makati a wholly-owned subsidiary of STI. She was later promoted as Dean and later COO of STI-
Makati.
-Sometime in July 2003 during the stint of Ico as COO of STI-Makati a plan of merger was executed
between STI and STI-Makati, whereby the latter will be absorbed to STI, which was later approved by SEC.
As a result STI College Makati ceased to exist, and STI-Makati was placed under STI’s Education
Management Division.
-In a 2004 Memorandum. Petitioner was re-appointed as COO of STI-Makati, and reporting directly to the
Head thereof, herein respondent Fernandez.
-2 months after, another memorandum from STI HR Department was issued wherein the COO position of
the petitioner was to be abolished, and Ico was appointed as Compliance Manager According to STI, the
"organizational re-structuring" was undertaken "in order to streamline operations. In the process, the
positions of Chief Executive Officer and Chief Operating Officer of STI Makati were abolished.
-Thereafter, Fernandez summons Ico accusing her of disobedience. An investigation then was made and
she was place under Preventive Suspension. Afterwards the investigating committee found out that Ico
committed grave abuse of authority, falsification, gross dishonesty, maligning and causing intrigues,
commission of acts tending to cast negativity upon Fernandez person , and other charges, which resulted
to her dismissal.
-Petitioner then file a case for Constructive illegal dismissal to Labor Arbiter She contends that her transfer
was illegal for it constituted a demotion because there was no prior notice of her transfer, which places
her in an embarrassing situation. Secondly, the basis of her dismissal is without basis and that it was not
proven by adequate evidence.
-On one hand respondent contend that the transfer of position is a result of the merger which requires the
abolition of Ico’s position as COO in order to streamline its operation thus they are in good faith. It further
argued that there was no demotion because the position of COO and compliance manager is of the same
rank.
-LABOR ARBITER: ruled that there was an illegally constructively and in bad faith dismissal by respondents
in Petiole’s legally acquired status as regular employee. It held that petitioner’s transfer which STI claimed
was the result of STI’s restructuring was irregular, because at the time of such transfer, the reorganization
and restructuring of STI-Makati had already been affected, and the 2004 Memorandum that was issued
confirms petitioner’s appointment as COO. Moreover, petitioner was appointed to the position of
Compliance Manager which did not actually exist for under STI Corporate structure there are only two
compliance manager which are already occupied. As a result Ico was appointed to Compliance officer who
in effect demoted her rank.
-NLRC: reversed Labor Arbiter Decision. It held that that any action taken by STI after the merger can be
reasonably concluded as one of the valid consequences thereof for the regulation of manpower is a
management prerogative enjoyed by STI, and it was free to regulate according to its own discretion and
judgment all aspects of petitioner’s employment. In this light, and since no concrete evidence was
presented by petitioner to show that respondents acted with malice or bad faith, the NLRC held that it
may not be said that the abolition of the position of STI-Makati COO was done to unduly ease her out of
STI.
-CA; Upheld decision of NLRC

Issue: Whether or not the transfer of petitioner is a valid managerial prerogative and not it does not result
to a illegal constructive dismissal

Held:

The Supreme Court ruled in favor of the Petitioner due to the following reasons:

First the position of STI-Makati COO was actually never abolished. As a matter of fact, soon after
petitioner was removed from the position, Fernandez was appointed to take her place as STI-Makati COO;
his appointment was even publicly announced via an official communication disseminated company-wide.
Whatever the reason could be for Fernandez’s appointment as STI-Makati COO, the fact still remains that
such position continued to exist.

Second, petitioner’s appointment as Compliance Manager appears to be contrived as well. At the

time of petitioner’s appointment, there are only two Compliance Manager Positions within STI’s
compliance department which were already filled up The only positions within the department that were
at the time vacant were those of Compliance Officers, which are of lower rank. In other words, petitioner
could not have been validly appointed as Compliance Manager, a position within STI that was then very
much occupied; if ever, petitioner took the position of a mere Compliance Officer, the only vacant position
within the department.

Constructive dismissal exists where there is cessation of work because ‘continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in
pay’ and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to
appear as if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could
foreclose any choice by him except to forego his continued employment.

In cases of a transfer of an employee, the rule is settled that the employer is charged with the
burden of proving that its conduct and action are for valid and legitimate grounds such as genuine
business necessity and that the transfer is not unreasonable, inconvenient or prejudicial to the employee.
If the employer cannot overcome this burden of proof, the employee’s transfer shall be tantamount to
unlawful constructive dismissal.59

Thus, because STI failed to show that the transfer is unreasonable and it likewise failed to prove
that the transfer of petitioner for valid and legitimate grounds, the transfer of petitioner can therefore be
concluded as constructive dismissal and that it is not valid managerial prerogative.