ECHO 2000 COMMERCIAL CORPORATION VS OBRERO FILIPINO-ECHO 2000 CHAPTER-CLO

Nature: Petition for Review on Certiorari; Complaint for ULP, Illegal Dismissal
Ponente: J. Reyes
Date: 11 January 2016

DOCTRINE: A transfer which results in the employee requiring to act with judgment and discretion is a
promotion, and the refusal to accept such promotion by the employee cannot be used as a basis for
termination.

Absent any malice and bad faith, an officer cannot be made personally liable for corporate liabilities.

FACTS:

Echo is a provider of warehousing management and delivery services. Its predecessor, King 8, initially employed
Cortes and Somido, both of whom were absorbed as employees of Echo. Cortes and Sumido formed Obrero
Pipipino-Echo 2000 Commercial Chapter, a labor union, with Cortes as VP and Sumido as an active member.

In May 2009, Echo received information about shortages in peso value arising from the movement of products to
and from its warehouse. Echo conducted an investigation and suspected a conspiracy among the employees in the
warehouse and decided, in the exercise of its management prerogative, to re-assign the staff including Cortes and
Sumido. The two were informed that they would be transferred to Delivery and it would not entail a change in rank,
status or salary. However, Sumido indicated his refusal stating that he was happy with his position and that the
Delivery Supervisor position required more expertise and training, which he did not have. Cortes also declined, as
he believed he would be more productive in his then current post, and that he lacked supervisory experience. They
were nonetheless reassigned.

However, the Sumido and Cortes did not perform the new duties and were required to explain in writing why they
did not abide by their new assignments. However, they refused to acknowledge receipt of the memoranda and to
comply with the directives, leading Echo to suspend them for 5 days for insubordination. They were later terminated
from employment for repeated refusal to acknowledge receipt of the memoranda and refusal to accept their new
positions. Sumido and Cortes filed a complaint for Unfair Labor Practice, Illegal Dismissal, Illegal Suspension,
Illegal Deductions and for Damages.

The LA dismissed the claims of Sumido and Cortes.

The NLRC reversed the LA finding ULP and ordering the payment of backwages and damages.

The CA affirmed the NLRC.

ISSUE: Was Echo justified in dismissing Cortes and Sumido?

RULING: No. The change in position was not a transfer but a promotion, which was refused.

The SC has previously ruled that management has the prerogative to transfer or assign employees from one office or
area of operation to another provided that there is no demotion in rank or diminution of salary, benefits and other
privileges, and that the action is not motivated by discrimination, made in bad faith, nor effected as a form of
punishment or demotion without sufficient cause. A transfer should be distinguished from a salary, which is the
advancement from one position to another with an increase in duties and responsibilities usually with an increase in
salary. An employee is not bound to accept a promotion, and cannot be the basis of dismissal from service.

The Court here notes that Cortes and Sumido were a Warehouse Checker and a Forklift Operator, which are rank-
and-file positions. On the other hand, Delivery Coordinator requires the exercise of discretion and judgment; even
though the change in position will not affect an increase in salary, it is still a promotion, so the refusal to accept the
same was valid.
However, the respondents are not deserving of moral and exemplary damages because they were not dismissed in
bad faith, and they acted with disrespectful behavior in their repeated refusal to receive the memoranda, and they
continued to work in their respective areas without any work output.

ISSUE: Can the corporate officers be held personally liable for the dismissal?

RULING: No. There was no bad faith in the acts of the officers.

Absent any malice and bad faith, an officer cannot be made personally liable for corporate liabilities. Respondents
failed to prove that bad faith attended the actions of the officers so they cannot be held liable.