Case Digested By: Dawn Marie Angeli M. B.

JULIE’S BAKESHOP AND/OR EDGAR REYES

V. ARNAIZ, NAPAL AND TOLORES
GR NO. 173882 February 15, 2012
J. Del Castillo

Facts: Respondents herein were hired by Reyes as chief bakers of his three branches of
Julie’s bakeshop in Antique.
On January 2000, they filed a complaint against petitioner Reyes for
underpayment of wages, payment of premium pay for holiday and rest day, service
incentive leave pay, 13th month pay, cost of living allowance (COLA) and attorney’s fees.
Subsequently, in February of the same year, Reyes through a memorandum,
reassigned respondents as utility/ security personnel tasked to clean the outside vicinity
of his bakeshops and to maintain peace and order in the area. Respondents however
refused to sign the same and likewise refused to perform their new assignments by not
reporting to work.
With this, in March 2000, Reyes gave them a letter- memorandum directing
respondents to report back for work and to explain why they failed to assume their duties,
but they did not heed the same.
Meanwhile during the preliminary conference in February 2000, they amended
their complaint to include illegal dismissal and claims for reinstatement and back wages,
because they hinge their claim on the fact that their designation from chief bakers to
utility/ security personnel is undoubtedly a demotion in rank which involved a drastic
change in the nature of work resulting to demeaning and humiliating work condition.
As for petitioners, they contended that respondents are guilty of abandonment of
work, that furthermore, there was no constructive dismissal as there was no diminution in
pay and privileges; and that the reassignment is within the ambit of management
prerogative as employer. To justify the reassignment, petitioners insisted that it was in
accordance with the requirements of business to protect the goodwill and reputation of
the buying public as it would be likely for respondents, after filing the complaint, to do
something prejudicial to the business as chief bakers like mixing harmful ingredients to the
bread they bake. This was based on the suspicion of the management that Tolores was
the culprit in putting harmful substances on the bread they baked.

Isue: Was there constructive dismissal?

Ruling: Yes, the transfer or reassignment of respondents constitutes constructive dismissal.

The management is free to regulate, according to its own discretion and
judgment, all aspects of employment including transfer of employees. The exercise of
this management prerogative however is not absolute, as it must be exercised in good
faith and with due regard to the rights of labor.
In this case, petitioners insist that the transfer of respondents was a measure of self-
preservation and was prompted with the desire to protect the buying public, claiming
that respondents must be transferred in a position that they cannot sabotage the
business pending resolution of the case.
However, petitioners failed to substantiate these claims on valid grounds.
The imputed act of Tolores was mere suspicion, concluded without having an
investigation for that purpose. Besides, Reyes still retained Tolores as chief baker when
he could have dismissed him for a cause had the allegations been true.
Case Digested By: Dawn Marie Angeli M. B.

It was even admitted by petitioner that the transfer was due to the pending
complaints in the NLRC filed against him.
The drastic change in the nature of work resulted in, as rightly perceived by them,
a demeaning and humiliating work condition. The transfer was therefore a diminution in
rank.
There is demotion when an employee is relegated to a subordinate or less
important position constituting a reduction to lower grade or rank, with corresponding
decrease in duties and responsibilities, and usually accompanied by decrease in salary.
Although there was no diminution in pay, there was undoubtedly diminution in
titular rank. Respondents were even prohibited from entering the bakeshop. The change
in the nature of their work resulted to demeaning and humiliating work condition.
Furthermore, abandonment of work is inconsistent with the filing of complaint of
constructive dismissal.
In constructive dismissal cases, the employer has the burden of proof that the
transfer of the employee is for just or valid ground, such as genuine business necessity.
The employer must demonstrate that the transfer is not unreasonable, inconvenient or
prejudicial to the employee and that the transfer does not involve a demotion in rank or
a diminution in salary and other benefits. If the employer fails to overcome this burden
of proof, the employee’s transfer is tantamount to unlawful constructive dismissal.
Since here, employer Reyes failed to so justify the transfer with valid and just
grounds, there was, as indeed, a constructive dismissal for which reinstatement without
loss of seniority rights, full back wages, inclusive of allowances and other benefits or their
monetary equivalent, computed from the time their compensation was withheld up to
the time of their actual reinstatement should be granted.