G.R. No.

73287 May 18, 1987

INTERNATIONAL HARVESTER MACLEOD, INC., petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT & DIOSDADO L. JOSON, respondents.

This is a petition for review on certiorari of the decision favoring respondents on a previous case

Facts:

This is a petition for review on certiorari of the decision favoring respondents on a previous case.

Petitioner, International Harvester Macleod, Inc. (hereinafter referred to as IHMI) first employed Diosdado L. Joson
(herein private respondent) in July 1960 as assistant attorney in its Legal Department with a monthly salary of P300.00.
8 years later, plaintiff was promoted as Area Credit and Collection Manager with a correspondent increase in his salary.
Plaintiff was then promoted to Staff Assistant to the Credit and Collection Manager and his salary was increased to
P2,000.00 a month. Finally, private respondent was appointed in the Government Sales Department' of defendant
(petitioner herein) IHMI as Government Relations Officer with a monthly salary of P2,500.00.

However, on July 25, 1977, Eduard Lim Vice President of petitioner IHMI, called private respondent and informed him
that he was being transferred to the Fleet Account Sales Department as a Fleet Account Salesman with a salary of
P1,000.00 a month, without allowance but he was entitled to commissions. Plaintiff was taken completely by surprise at
his sudden demotion and he asked Eduard Lim the reason for such action taken against him by the company.
Management answered plaintiff stating that his position as Government Relations Officer had become redundant in view
of the appointment of the International Heavy Equipment Corporation (herein referred to as IHEC) as the Company's
Dealer with the Government. Subsequently, the petitioner IHMI handed private respondent a check for as his termination
pay (as plaintiff had refused to accept his transfer, and defendant IHMI had accordingly advised private respondent to
resign instead). Private respondent signed a voucher indicating that said check was in payment of his termination pay.

Private respondent, Diosdado L. Joson filed a complaint for damages for his illegal termination, against petitioner IHMI,
Richard Quinlan and Eduard Lim (Amended Record on Appeal, pp. 13-19).

Issue/s:

Whether or not the prerogative of the management of transferring said employee was made without abuse of
discretion and did not constitute illegal termination

Ruling:

Yes, the prerogative of the management of transferring said employee was made without abuse of
discretion and did not constitute illegal termination

Article 284 of the Labor Code reads:

Closure of establishment and reduction of personnel. — The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment
to prevent losses or 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 preserving a written notice on
the workers 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 on redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least his ond (l) month pay or to at
least one (1) month pay for every year of service, whichever is higher ...
There is no dispute that as claimed by petitioner, the sole function of its Government Sales Department of which private
respondent is the Government Relations Officer, a managerial position, was to take charge of sales of international trucks,
equipment and spare parts to the government of the Republic of the Philippines including government owmed or
controlled corporations; that such function, originally handled by the Asia Pacific Corporation as Special Government
Dealer, was taken over by International Heavy Equipment Corporation with bigger manpower and resources and that
eventually, the Government Sales Department was phased out and private respondent was offered a lesser position in the
fleet account sales with less salary and without allowance, although with commission, on the ground that his position hes
become redundant. Private respondent refused to transfer, which refusal resulted in the termination of his services
under the cumstances above described.

Well established is the rule that while it is true that to dismiss or lay off an employee is management's prerogative, it
must be done without abuse of discretion, for what is at stake is not only petitioner's position but also his means of
livelihood:

Equally without question is the fact that International Heavy Equipment Corporation can ably handle the functions in
question without the help of petitioner's Government Sales Department and of private respondent in particular and that
it would be more economical for petitioner company to transfer its government sales activities to IHEC than to hire the
services of the latter and at the same time maintain a department for the same purpose but only in certain isolated cases.

In an evident reiteration of the employer's right and prerogative to manage its affairs, the Court in a much later case
ruled:

An employer has a much wider discretion in terminating the employment relationship of managerial
personnel as compared to rank-and-file employees. However, such prerogative of management to
dismiss or lay-off an employee must be made without abuse of discretion, for what is at stake is not only
the private respondent's position but also his means of livelihood

Reverting to the case at bar, records fails to show that petitioner in demoting private respondent and later terminating
his services acted oppressively, unjustly or arbitrarily. The lower court observing that the phasing out of the department
in question was preceded by a bitter discussion between private respondent and his superiors, alluded to the latter as the
probable cause of the alleged illegal dismissal. But such is only a surmise, in the absence of any concrete evidence that the
reorganization being undertaken by petitioner company is for any other purpose than its declared objective — as a labor
and cost saving device.

Evidence on record fails to show bad faith on the part of the employer. On the contrary, it is manifest that from the outset,
it had been candid with private respondent, it is not disputed that before the final contract was signed by and between
IHMI and IHEC, the former conferred with private respondent informing him of the management decision and the
rationale behind it and although not required by law offered him a position in the fleet account sales which although
lesser in basic pay and without allowance, has more opportunities of fetching a bigger income in the form of
commissions. Obviously, what is being required of him is the exertion of more effort in exchange for a bigger "take home
pay." He refused and considered the demotion as a forced resignation. He cannot now be heard to complain in having
been phased out from his position which ceased to exist apart from the fact that he has been given his due under Article
284 of the Labor Code of one (1) month pay for every year of service plus the money equivalent of his unused sick and
vacation leave

Moreover, Time and again, this Office has sustained the view that it is management prerogative to transfer, demote,
discipline and even to dismiss an employee to protect its business, provided it is not tainted with unfair labor practice.

Thus, although well-settled is the nile that findings of fact of the trial court and the Court of Appeals WW not as a general
rule be disturbed by the Supreme Court, in the case at bar, where unfair labor practice is evidently absent, no plausible
reason could be found to support the conclusion of an illegal termination of services nor a legal basis to warrant what is
obviously an exorbitant award of damages.