Julie’s Bakeshop and/or Reyes vs Arnaiz, Napal and Tolores

FACTS

Reyes is an owner of a franchise branch of Julie’s Bakeshop. He hired respos as chief bakers. However, respos
filed complaint for underpayment against Reyes. Subsequently, Reyes issued a memo reassigning them as
utility/ security personnel but they refused to sign and perform the new assignments by not reporting to work.
They were called to explain but they did not accede.

ISSUE: W/n the act of petitioner in transferring respondents from chief bakers to utility/ security personnel is a
valid exercise of management prerog.

HELD: NO
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. The exercise of management prerogative, however, is not absolute as
it must be exercised in good faith and with due regard to the rights of labor.

Petitioners failed to satisfy the burden of proving that the transfer was based on just or valid ground.

No compelling reason to justify the transfer of respondents from chief bakers to utility/security personnel.
Respondents’ transfer was an act of retaliation on the part of petitioners due to the former’s filing of complaints
against them, and thus, was clearly made in bad faith.

The transfer was a demotion in rank, beyond doubt.

There is demotion when an employee is transferred from a position of dignity to a servile or menial job. When
there is a demotion in rank and/or a diminution in pay; when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee; or when continued employment is rendered impossible,
unreasonable or unlikely, the transfer of an employee may constitute constructive dismissal.

The transfer of respondents amounted to a demotion. The change in the nature of their work undeniably resulted
to a demeaning and humiliating work condition.

Managerial prerogative to transfer personnel must be exercised without grave abuse of discretion with justice and
fair play.
SMC & Abella vs NLRC, LA & Ibias

FACTS

Ibias was employed by SMC. According to the latter’s Policy, absences without permission or AWOPs, x x x are
subject to disciplinary action characterized by progressively increasing weight. It also punishes falsification of
company records or documents with discharge or termination for the first offense if the offender himself or
somebody else benefits from falsification or would have benefited if falsification is not found on time.

From the record, Ibias incurred repeated absences without permission even though he was already given notice
and warning that it will lead to disciplinary action. He was also alleged to have falsified his medical consultation
card by stating that he was granted sick leave when in truth, he was not.

SMC conducted an investigation and concluded that Ibias committed the offense of excessive AWOPs and
falsification of company record and accordingly, dismissed him.

Ibias filed a complaint for illegal dismissal.

LA- Ibias was illegally dismissed; NLRC affirmed but not for his reinstatement due to EE-ER strained relationship.
CA- affirmed, that dismissal is illegal because of SMC’s inconsistent implementation of its policies.

ISSUE: W/n the act of petitioner is a valid exercise of management prerog.

HELD: YES
As to Falsification, SMC was unable to prove, by substantial evidence, that it was respondent who made the
unauthorized medical card entries.

As to AWOPs, it appears from the record that Ibias reported for wor only for 2 days and for the Month of May, only
for 1 day.

Respondent cannot feign surprise nor ignorance of the earlier AWOPs he had incurred. He was given a warning;
he was informed that he already had six AWOPs for 1997 and also given notices to explain but he refused to
acknowledge. The fact that he was spared from suspension cannot be used as a reason to incur further AWOPs
and be absolved from the penalty therefor.

Respondents dismissal was well within the purview of SMCs management prerogative.

An employer has the prerogative to prescribe reasonable rules and regulations necessary for the proper conduct
of its business, to provide certain disciplinary measures in order to implement said rules and to assure that the
same would be complied with.[35] An employer enjoys a wide latitude of discretion in the promulgation of policies,
rules and regulations on work-related activities of the employees.

Appropriate disciplinary sanction is within the purview of management imposition. 

PANTRANCO vs NLRC and Ayento

FACTS

Petitioner is a GOCC w/o orig charter. Due to financial losses, it transferred its full ownership to NIDC which also
sold petitioner to NETI. In 1986, PCGG assumed control of PANTRANCO and thereafter lifted the sequestration
order to pave the way for the sale of the company back to the private sector through APT. APT turned over the
management to Dept of Transpo and Commu. At this time heavy losses were already incurred by the company. It
filed application with SEC for the creation of a management committee. After its grant, petitioner reclassified the
job of its employees in order to reduce manpower. Salary grades were then reclassified.

Petitioner’s employee, Ayento was greatly affected by the reclassification. Being the Head of the Registration
Section, he was reclassified as Technical Asst. and his former position was abolished. His salary grade were
reduced from 11- 9. He was also relieved from supervisory function, no field work nor entitiled for OT pay.

Ayento filed a complaint for unfair labor practice alleging demotion of position and diminution of salary and
benefits. Petitioner argued that there was no demotion but job-reclassification due to company’s financial
problems.

LA- ruled that Ayento was indeed demoted. NLRC affirmed. OSG- ruled for Ayento

ISSUE: W/n the act of petitioner in reorganizing and abolishing Ayento’s position is a valid exercise of
management prerog.

HELD: YES
The State affords the constitutional blanket of rendering protection to labor, but it must also protect the right of
employers to exercise what are clearly management prerogatives, so long as the exercise is without abuse of
discretion. 

Where there is nothing that would indicate that an employee's position was abolished to ease him out of
employment, the deletion of that position should be accepted as a valid exercise of management prerogative.
Absent any unfair or oppressive act against private respondent, the Court cannot and should not interfere with
management decisions validly undertaken by petitioner.

When an office or a position is abolished, all benefits accompanying the position also are removed. Thus, private
respondent cannot now complain that he no longer receives the entitlements or allowances of the abolished
position.

The reorganization and the abolition of private respondent's position was not in bad faith. Further we find no merit
regarding private respondent's contention that he was demoted because his Salary Grade went down 2 notches
from 11 to 9. The elimination of 4 levels in the Salary Grade Scheme was in line with the petitioner's cost-cutting
and reorganization.
Duncan Assoc and Tecson vs Glaxo 

FACTS

Tecson was working for Glaxo as medical representative. He signed a contract of employment and agreed with
its terms and conditions. One of which is to disclose to management any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing drug companies and should
management find that such relationship poses a possible conflict of interest, to resign from the company. If
there would be conflict of interest due to such relationship, management may cause the employee to
transfer to another dep’t in a non- counterchecking position or preparation for employment outside the
company after 6 mos.

Tecson was initially assigned to market Glaxo’s products in Camarines Sur- Camarines Norte sales area

Tecson entered into a relationship with Bettsy, Albay Brach Coordinator of Astra Pharmaceuticals, a
competitor of Glaxo. Tecson ignored the reminders of his District Manager and was later on informed that
his relationship with Bettsy gave rise to a conflict of interest. Consequently, Tecson was transferred to
Butuan City- Surigao City- Agusan del Sur sales area but still continued working in Camarines Sur-
Camarines Norte sales area.

NCMB declared Glaxo’s questioned policy as valid and affirmed its right to transfer Tecson to another sales
territory.

CA- affirmed. Glaxo’s valid exercise of management prerog.

Tecson argued that the policy is a violation of equal protection clause claiming that it restricts the
employees’ right to marry.

ISSUE: W/n the act of Glaxo in transferring Tecson due to his relationship with an employee of a competitor
company is a valid exercise of management prerog.

HELD: YES

Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other
confidential programs and information from competitors, especially so that it and Astra are rival companies
in the highly competitive pharmaceutical industry.

The prohibition against personal or marital relationships with employees of competitor companies
upon Glaxo’s employees is reasonable under the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to
protect its interests against the possibility that a competitor company will gain access to its secrets and
procedures.

The challenged company policy does not violate the equal protection clause of the Constitution. Commands
of the equal protection clause are addressed only to the state or those acting under color of its authority. Equal protection
clause erects no shield against merely private conduct, however, discriminatory or wrongful.

Tecson was aware of that restriction when he signed his employment contract and when he entered into a relationship with
Bettsy. Since he knowingly and voluntarily entered into a contract of employment with Glaxo, the stipulations therein have the
force of law between them and, thus, should be complied with in good faith."29 He is therefore estopped from questioning said
policy.

Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes
impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the employee.30 None of these conditions are present in the
instant case. The record does not show that Tescon was demoted or unduly discriminated upon by reason of such transfer.
FLOREN HOTEL and/or LIGAYA CHU, DELY LIM and JOSE CHUA LIM vs. NLRC, CALIMLIM, RICO,
ABALOS, BAUTISTA and LOPEZ

FACTS

Priv. respos Calimlim, Rico and Abalos were employees of Floren Hotel as room boys. Lim caught Bautista
sleeping half naked with air-conditioning on in one room and Calimlim and Rico drinking beer with air-
conditioning on in another room.

Lim gave Bautista a copy of a memo but the latter refused to accept. All of them were given notice of suspension
for 1 week but did not accept the same. Calimlim and Rico were then informed that they will now work on
probation as janitors.

The 3 priv respos filed separate complaints for illegal dismissal. (Constructive dismissal- Calimlim and Rico)

LA dismissed the complaints but ordered the hotel to pay priv respos and that Calimlin and Rico’s demotion and
reassignment were valid exercise of management prerog. NLRC reversed and ruled that Calimlim and Rico were
constructively dismissed when they were demoted to janitors and reclassified as probationary employees.

CA- for respos Calimlim and Rico

ISSUE: W/n the act of Floren Hotel in demoting and reclassifying the priv respos is a valid exercise of
management prerog.

HELD: NO
For the transfer of the employee to be considered a valid exercise of management prerogatives, the employer
must show that the transfer is not unreasonable, inconvenient or prejudicial to the employee; neither would it
involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to
discharge this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal, which has
been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely, as in
an offer involving a demotion in rank and diminution in pay.

Calimlim and Rico were being forced to accept alternate work periods in their new jobs as janitors, otherwise they
would be unemployed. Not only did their new schedule entail a diminution of wages, because they would only be
allowed to work every other week, the new schedule was also clearly for an undefined period.

SC fail to see how the temporary transfer of Calimlim and Rico could be a valid exercise of management
prerogatives. Even the employer’s right to demote an employee requires the observance of the twin-notice
requirement.

Decision

(1) to reinstate private respondents to their former positions without loss of seniority rights, with full backwages
and other benefits until they are actually reinstated or to pay their separation pay in addition to their backwages, if
reinstatement is no longer feasible; (2) to jointly and solidarily pay P2,589.00 to each of the private respondents
as proportionate 13th month pay and service incentive leave pay for the period January to June 1998, as
computed in the decision dated March 19, 1999, of the Labor Arbiter.