Republic of the Philippines than P3,000.

00 a month and other benefits under the law and the existing
SUPREME COURT collective bargaining agreement between respondent and his labor union.2
Manila
In the course of his employment, petitioner was a consistent recipient of
THIRD DIVISION numerous citations3 for his performance. After receiving his latest award on
March 27, 2001, petitioner conveyed to respondent his intention of retiring
G.R. No. 166554 November 27, 2008 on October 31, 2001, after reaching thirty-one (31) years in
JULITO SAGALES, petitioner, service.4 Petitioner, however, was not allowed to retire with his honor
vs. intact.
RUSTAN’S COMMERCIAL CORPORATION, respondent. On June 18, 2001, Security Guard Waldo Magtangob, upon instructions from
DECISION Senior Guard Bonifacio Aranas, apprehended petitioner in the act of taking
out from Rustan’s Supermarket a plastic bag. Upon examination, it was
REYES, R.T., J.: discovered that the plastic bag contained 1.335 kilos of squid heads
worth P50.00. Petitioner was not able to show any receipt when
Labor is property, and as such merits protection. The right to make it
confronted. Thus, he was brought to the Security Office of respondent
available is next in importance to the rights of life and liberty. It lies to a
corporation for proper endorsement to the Makati Headquarters of the
large extent at the foundation of most other forms of property, and of all
Philippine National Police. Subsequently, petitioner was brought to the
solid individual and national prosperity.1
Makati Police Criminal Investigation Division where he was detained.
The exultation of labor by Mr. Justice Noah Haynes Swayne of the United Petitioner was later ordered released pending further investigation.5
States Supreme Court comes to the fore in this petition for review
Respondent alleged that prior to his detention, petitioner called up Agaton
on certiorari. The employee questions the propriety of his dismissal after he
Samson, Rustan’s Branch Manager, and apologized for the incident.
was caught stealing 1.335 kilos of squid heads worth P50.00. He invokes his
Petitioner even begged Samson that he would just pay for the squid heads.
almost thirty-one (31) years of untarnished service and the several awards
Samson replied that it is not within his power to forgive him.6
he received from the company to temper the penalty of dismissal meted on
him. On June 19, 2001, petitioner underwent inquest proceedings for qualified
theft before Assistant Prosecutor Amado Y. Pineda. Although petitioner
The Facts
admitted that he was in possession of the plastic bag containing the squid
Petitioner Julito Sagales was employed by respondent Rustan’s Commercial heads, he denied stealing them because he actually paid for them. As proof,
Corporation from October 1970 until July 26, 2001, when he was petitioner presented a receipt. The only fault he committed was his failure
terminated. At the time of his dismissal, he was occupying the position of to immediately show the purchase receipt when he was accosted because
Chief Cook at the Yum Yum Tree Coffee Shop located at Rustan’s he misplaced it when he changed his clothes. He also alleged that the squid
Supermarket in Ayala Avenue, Makati City. He was paid a basic monthly heads were already “scraps” as these were not intended for cooking.
salary of P9,880.00. He was also receiving service charge of not less Neither were the squid heads served to customers. He bought the squid
heads so that they could be eaten instead of being thrown away. If he
intended to steal from respondent, he could have stolen other valuable SO ORDERED.15
items instead of scrap.7
According to the Labor Arbiter, the nature of the responsibility of petitioner
Assistant Prosecutor Pineda believed the version of petitioner and “was not that of an ordinary employee.”16 It then went on to categorize
recommended the dismissal of the case for “lack of evidence.”8 The petitioner as a supervisor in “a position of responsibility where trust and
recommendation was approved upon review by City Prosecutor Feliciano confidence is inherently infused.”17 As such, it behooved him “to be more
Aspi.9 knowledgeable if not the most knowledgeable in company policies on
employee purchases of food scrap items in the kitchen.”18 Per the evidence
Notwithstanding the dismissal of the complaint, respondent, on June 25, presented by respondent, petitioner breached company policy which
2001, required petitioner to explain in writing within forty-eight (48) hours
justified his dismissal.
why he should not be terminated in view of the June 18, 2001 incident.
Respondent also placed petitioner under preventive suspension.10 Petitioner appealed to the National Labor Relations Commission
(NLRC).19 On April 10, 2003, the NLRC reversed20 the Labor Arbiter in the
On June 29, 2001, petitioner was informed that a formal investigation would following tenor:
be conducted by the Legal Department on July 6, 2001.11
WHEREFORE, the decision appealed from is hereby SET ASIDE and
Petitioner and his counsel attended the administrative investigation where complainant’s dismissal declared illegal. Further, respondent is hereby
he reiterated his defense before the inquest prosecutor. Also in attendance ordered to reinstate complainant to his former position without loss of
were Aranas and Magtangob, who testified on the circumstances seniority rights and other benefits and paid backwages computed from time
surrounding the apprehension of petitioner; Samson, the branch manager of dismissal up to the finality of this decision which as of this date amounts
to whom petitioner allegedly apologized for the incident; and Zenaida
to P269,854.16.
Castro, cashier, who testified that the squid heads were not paid.
All other claims are denied for want of basis.
Respondent did not find merit in the explanation of petitioner. Thus,
petitioner was dismissed from service on July 26, 2001.12 At that time, SO ORDERED.21
petitioner had been under preventive suspension for one (1) month.
The NLRC held that the position of complainant is not supervisory covered
Aggrieved, petitioner filed a complaint for illegal dismissal against by the trust and confidence rule.22 On the contrary, petitioner is a mere
respondent. He also prayed for unpaid salaries/wages, overtime pay, as well rank-and-file employee.23 The evidence is also wanting that petitioner
as moral and exemplary damages, attorney’s fees, and service charges.13 committed the crime charged.24 The NLRC did not believe that petitioner
would trade off almost thirty-one (31) years of service for P50.00 worth of
Labor Arbiter, NLRC, and CA Dispositions squid heads.25
On July 24, 2002, Labor Arbiter Felipe P. Pati dismissed14 the complaint. The NLRC further ruled that petitioner was illegally dismissed as respondent
IN VIEW OF THE FOREGOING, the complaint for illegal dismissal should be failed to establish a just cause for dismissal.26 However, the claim for
DISMISSED for lack of merit. damages was denied for lack of evidence.27
The motion for reconsideration28 having been denied,29 respondent brought THAT THE DOCTRINE OF TRUST AND CONFIDENCE APPLIES AGAINST THE
the matter to the Court of Appeals (CA) via a petition for certiorari under PETITIONER TO JUSTIFY HIS DISMISSAL FROM EMPLOYMENT FOR BEING
Rule 65 of the 1997 Rules on Civil Procedure.30 On July 12, 2004, the CA CONTRADICTORY TO THE EVIDENCE ON RECORD.40(Underscoring supplied)
rendered the assailed decision, 31 with the following fallo:
For a full resolution of the issues in the instant case, the following questions
WHEREFORE, the petition is GRANTED. The challenged resolutions of April should be answered: (1) Is the position of petitioner supervisory in nature
10, 2003 and July 31, 2003 of public respondent NLRC which is covered by the trust and confidence rule? (2) Is the evidence on
are REVERSED and SET ASIDE. The decision of the Labor Arbiter of July 24, record sufficient to conclude that petitioner committed the crime charged?
2002, dismissing private respondent’s complaint is REINSTATED. and (3) Assuming that the answer is in the affirmative, is the penalty of
dismissal proper?
SO ORDERED.32
Our Ruling
In reversing the NLRC, the CA opined that the position of petitioner was
supervisory in nature.33 The CA also held that the evidence presented by I. The position of petitioner is supervisory in nature which is covered by
respondent clearly established loss of trust and confidence on the trust and confidence rule.
petitioner.34 Lastly, the CA, although taking note of the long years of service
of petitioner and his numerous awards, refused to award separation pay in The nature of the job of an employee becomes relevant in termination of
his favor. According to the CA, “the award of separation pay cannot be employment by the employer because the rules on termination of
sustained under the social justice theory” because the instant case “involves managerial and supervisory employees are different from those on the
rank-and-file. Managerial employees are tasked to perform key and
theft of the employer’s property.”35
sensitive functions, and thus are bound by more exacting work ethics.41 As a
Petitioner filed a motion for reconsideration36 which was denied.37 Left with consequence, managerial employees are covered by the trust and
no other recourse, petitioner availed of the present remedy.38 confidence rule.42 The same holds true for supervisory employees occupying
positions of responsibility.43
Issues
There is no doubt that the position of petitioner as chief cook is supervisory
Petitioner in his Memorandum39 imputes to the CA the following errors, to in nature. A chief cook directs and participates in the preparation and
wit: serving of meals; determines timing and sequence of operations required to
I. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF meet serving times; and inspects galley and equipment for cleanliness and
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT CONCLUDED proper storage and preparation of food.44 Naturally, a chief cook falls under
THAT THE POSITION OF THE PETITIONER BEING AN ASSISTANT COOK AS A the definition of a supervisor, i.e., one who, in the interest of the employer,
SUPERVISORY POSITION FOR BEING CONTRADICTORY TO THE EVIDENCE ON effectively recommends managerial actions which would require the use of
RECORD. independent judgment and is not merely routinary or clerical.45

II. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF It has not escaped Our attention that petitioner changed his stance as far as
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT CONCLUDED his actual position is concerned. In his position paper, he alleged that at the
time of his dismissal, he was “Chief Cook.”46However, in his memorandum,
he now claimed that he was an “Asst. Cook.”47 The ploy is clearly aimed at be entitled to reinstatement without loss of seniority rights and other
giving the impression that petitioner is merely a rank-and-file employee. privileges and to his full backwages, inclusive of allowances, and to his other
The change in nomenclature does not, however, help petitioner, as he benefits or their monetary equivalent computed from the time his
would still be covered by the trust and confidence rule. InConcorde Hotel v. compensation was withheld from him up to the time of his actual
Court of Appeals,48 the Court categorically ruled: reinstatement.”55

Petitioner is correct insofar as it considered the nature of private Necessarily then, the employer bears the burden of proof to show the basis
respondent’s position as assistant cook a position of trust and of the termination of the employee.56
confidence. As assistant cook, private respondent is charged with the care
of food preparation in the hotel’s coffee shop. He is also responsible for the In the case at bar, respondent has discharged its onus of proving that
custody of food supplies and must see to it that there is sufficient stock in petitioner committed the crime charged. We quote with approval the
the hotel kitchen. He should not permit food or other materials to be taken observation of the CA in this regard:
out from the kitchen without the necessary order slip or authorization as On this matter, petitioner presents as evidence the verified statement of
these are properties of the hotel. Thus, the nature of private respondent’s security guard Aranas. Aranas positively saw the private in the act of
position as assistant cook places upon him the duty of care and custody of bringing out the purloined squid heads. Similarly, the statement of security
Concorde’s property.49 (Emphasis supplied) guard Magtangob attested to the commission by private respondent of the
Of course, the ruling assumes greater significance if petitioner is the chief offense charged. Further, the verified statement of Samson, store manager
cook. A chief cook naturally performs greater functions and has more of petitioner corporation who is in charge of all personnel, including
responsibilities than an assistant cook. In eo quod plus sit simper inest et employees of the Yum Yum Tree Coffee Shop of which private respondent
minimus. The greater always includes the less. Ang malawak ay laging was a former assistant cook, attested to the fact of private respondent
seeking apology for the commission of the act. Likewise, the statement of
sumasakop sa maliit.
Zenaida Castro (Castro), cashier of petitioner corporation’s supermarket,
II. The evidence on record is sufficient to conclude that petitioner Makati Branch, Ayala Center, Makati City, confirmed that indeed the 1.335
committed the crime charged. kilos of squid heads amounting to fifty pesos (P50.00)per kilo, had not been
paid for.57
Security of tenure is a paramount right of every employee that is held
sacred by the Constitution.50 The reason for this is that labor is deemed to The contention of petitioner that respondent merely imputed the crime
be “property”51 within the meaning of constitutional guarantees.52 Indeed, against him because he was set to retire is difficult, if not impossible, to
as it is the policy of the State to guarantee the right of every worker to believe. Worth noting is the fact that petitioner failed to impute any ill will
security of tenure as an act of social justice,53 such right should not be or motive on the part of the witnesses against him. As aptly observed by the
denied on mere speculation of any similar or unclear nebulous Labor Arbiter:
basis.54 Indeed, the right of every employee to security of tenure is all the
more secured by the Labor Code by providing that “the employer shall not It seems unbelievable to believe that the apprehending officers up to the
terminate the services of an employee except for a just cause or when Manager, Mr. Samson, were all telling a lie as what complainant wants to
authorized” by law. Otherwise, an employee who is illegally dismissed “shall portray when he alleged in his pleadings that he mentioned to the
apprehending officers [that] he has a receipt for [the squid heads] and that amount, leaving a balance of only P6,995.37 of the shortage. The bank
he never apologized. This is understandable on his part because argued that under its rules, the penalty for the infraction of the employee is
complainant wants no loophole in his version. And an easy way out is to dismissal. The Court disagreed and held that the penalty of dismissal is too
fabricate his allegations.58 harsh. The Court took note that it is the first infraction of the employee and
that he has rendered twenty-four (24) long years of service to the bank. In
We stress that the quantum of proof required for the application of the loss the words of Mme. Justice Consuelo Ynares-Santiago, “the dismissal
of trust and confidence rule is not proof beyond reasonable doubt. It is imposed on petitioner is unduly harsh and grossly disproportionate to the
sufficient that there must only be some basis for the loss of trust and infraction which led to the termination of his services. A lighter penalty
confidence or that there is reasonable ground to believe, if not to would have been more just, if not humane.”67
entertain the moral conviction, that the employee concerned is
responsible for the misconduct and that his participation in the So too did the Court pronounce in Felix v. National Labor Relations
misconduct rendered him absolutely unworthy of trust and confidence.59 Commission,68 Gutierrez v. Singer Sewing Machine Company,69 Associated
Labor Unions-TUCP v. National Labor Relations Commission,70 Dela Cruz v.
It is also of no moment that the criminal complaint for qualified theft National Labor Relations Commission,71 Philippine Long Distance Telephone
against petitioner was dismissed. It is well settled that the conviction of an Company v. Tolentino,72 Hongkong and Shanghai Banking Corporation v.
employee in a criminal case is not indispensable to the exercise of the National Labor Relations Commission,73 Permex, Inc. v. National Labor
employer’s disciplinary authority.60 Relations Commission,74 VH Manufacturing, Inc. v. National Labor Relations
III. The penalty of dismissal is too harsh under the circumstances. Commission,75 A’ Prime Security Services, Inc. v. National Labor Relations
Commission,76 and St. Michael’s Institute v. Santos.77
The free will of management to conduct its own business affairs to achieve
its purpose cannot be denied.61 The only condition is that the exercise of In the case at bar, petitioner deserves compassion more than
management prerogatives should not be done in bad faith62 or with abuse condemnation. At the end of the day, it is undisputed that: (1) petitioner
of discretion.63 Truly, while the employer has the inherent right to discipline, has worked for respondent for almost thirty-one (31) years; (2) his tireless
including that of dismissing its employees, this prerogative is subject to the and faithful service is attested by the numerous awards78 he has received
regulation by the State in the exercise of its police power.64 from respondent; (3) the incident on June 18, 2001 was his first offense in
his long years of service; (4) the value of the squid heads worth P50.00 is
In this regard, it is a hornbook doctrine that infractions committed by an negligible; (5) respondent practically did not lose anything as the squid
employee should merit only the corresponding penalty demanded by the heads were considered scrap goods and usually thrown away in the
circumstance. The penalty must be commensurate with the act, conduct or wastebasket; (6) the ignominy and shame undergone by petitioner in being
omission imputed to the employee and must be imposed in connection imprisoned, however momentary, is punishment in itself; and (7) petitioner
with the disciplinary authority of the employer.65 was preventively suspended for one month, which is already a
commensurate punishment for the infraction committed. Truly, petitioner
For example, in Farrol v. Court of Appeals,66 the employee, who was a
has more than paid his due.
district manager of a bank, incurred a shortage of P50,985.37. He was
dismissed although the funds were used to pay the retirement benefits of In any case, it would be useless to order the reinstatement of petitioner,
five employees of the bank. The employee was also able to return the considering that he would have been retired by now. Thus, in lieu of
reinstatement, it is but proper to award petitioner separation pay computed Republic of the Philippines
at one-month salary for every year of service, a fraction of at least six (6)
months considered as one whole year.79 In the computation of separation Supreme Court, Baguio City
pay, the period where backwages are awarded must be included.80 FIRST DIVISION
Word of caution. G.R. No. 188269*
We do not condone dishonesty. After all, honesty is the best policy. SUMIFRU (PHILIPPINES) CORPORATION (surviving entity in a merger with
However, punishment should be commensurate with the offense Davao Fruits Corporation and other Companies) … Petitioner
committed. The supreme penalty of dismissal is the death penalty to the
working man. Thus, care should be exercised by employers in imposing versus
dismissal to erring employees. The penalty of dismissal should be availed of
BERNABE BAYA … Respondent
as a last resort.
PRESENT: SERENO, C J, CHAIRPERSON; LEONARDO-DE CASTRO; DEL
Indeed, the immortal words of Mr. Justice (later Chief Justice) Enrique
CASTILLO; PERLAS-BERNABE AND CAGUIOA, JJ
Fernando ring true then as they do now: “where a penalty less punitive
would suffice, whatever missteps may be committed by labor ought not be Promulgated: APR 17, 2017
visited with a consequence so severe. It is not only because of the law’s
concern for the workingman. There is, in addition, his family to consider.
Unemployment brings untold hardships and sorrows on those dependent
DECISION
on the wage-earner.”81
PERLAS-BERNABE, J:
WHEREFORE, the appealed Decision of the Court of Appeals
is REVERSED and SET ASIDE. The Decision of the National Labor Relations Assailed in this petition for review on certiorari1 are the Decision2 dated
Commission is REINSTATED with the MODIFICATION that petitioner is May 14, 2008 and the Resolution3 dated May 20, 2009 of the Court of
granted separation pay and backwages in lieu of reinstatement. Appeals (CA) in CA-G.R. SP No. 85950, which set aside the Resolutions dated
March 10, 20044 and May 31, 20045 of the National Labor Relations
SO ORDERED.
Commission (NLRC) in NLRC CA NO. M-007670-2003 and, accordingly,
Ruben Reyes, J., p. reinstated the Decision6 dated June 30, 2003 of the Labor Arbiter (LA) in
NLRC Case No. RAB-11-09-1062-02 declaring respondent Bernabe Baya
Consuelo Ynares-Santiago, Ma. Alicia Austria-Martinez, Minita Chico- (Baya) to have been illegally/ constructively dismissed by AMS Farming
Nazario, Antonio Eduardo Nachura, JJ. concur. Corporation (AMSFC) and Davao Fruits Corporation (DFC), with modification
deleting the award of backwages, annual vacation leave pay, sick leave pay,
monthly housing subsidy, electric light subsidy, and exemplary damages,
and ordering AMSFC and DFC to pay Baya the amounts of P194,992.82 as
separation pay, P8,279.95 as 13th month pay, P50,000.00 as moral cooperative. A few days later, Baya received a letter stating that his
damages, and P25,327.28 as attorney’s fees. secondment with DFC has ended, thus, ordering his return to AMSFC.
However, upon Baya’s return to AMSFC on August 30, 2002, he was
The Facts informed that there were no supervisory positions available; thus, he was
The instant case stemmed from a complaint7 for, inter alia, illegal/ assigned to different rank-and-file positions instead. On September 20,
constructive dismissal filed by Baya against AMSFC and DFC before the 2002, Baya’s written request to be restored to a supervisory position was
NLRC.8 Baya alleged that he had been employed by AMSFC since February 5, denied, prompting him to file the instant complaint. On even date, the DAR
1985, and from then on, worked his way to a supervisory rank on went to the farms of AMSFC to effect the ARBs’ takeover of their awarded
September 1, 1997. As a supervisor, Baya joined the union of supervisors, lands.10 The following day, all the members of AMSKARBEMCO were no
and eventually, formed AMS Kapalong Agrarian Reform Beneficiaries longer allowed to work for AMSFC “as they have been replaced by newly-
Multipurpose Cooperative (AMSKARBEMCO), the basic agrarian reform hired contract workers”; on the other hand, the SAFFPAI members were still
organization of the regular employees of AMSFC. In June 1999, Baya was allowed to do so.11
reassigned to a series of supervisory positions in AMSFC’s sister company, In their defense, AMSFC and DFC maintained that they did not illegally/
DFC, where he also became a member of the latter’s supervisory union constructively dismiss Baya, considering that his termination from
while at the same time, remaining active at AMSKARBEMCO. Later on and employment was the direct result of the ARBs’ takeover of AMSFC’s banana
upon AMSKARBEMCO’s petition before the Department of Agrarian Reform plantation through the government’s agrarian reform program. They even
(DAR), some 220 hectares of AMSFC’s 513-hectare banana plantation were shifted the blame to Baya himself, arguing that he was the one who formed
covered by the Comprehensive Agrarian Reform Law. Eventually, said
AMSKARBEMCO and, eventually, caused the ARBs’ aforesaid takeover.12
portion was transferred to AMSFC’s regular employees as Agrarian Reform
Beneficiaries (ARBs), including Baya. Thereafter, the ARBs explored a The LA Ruling
possible agribusiness venture agreement with AMSFC, but the talks broke
down, prompting the Provincial Agrarian Reform Officer to terminate In a Decision13 dated June 30, 2003, the LA ruled in Baya’s favor and,
negotiations and, consequently, give AMSKARBEMCO freedom to enter into accordingly, ordered AMSFC and DFC to: (a) reinstate Baya to his former
similar agreement with other parties. In October 2001, the ARBs held a position as supervisor without loss of seniority rights, or should
referendum in order to choose as to which group between AMSKARBEMCO reinstatement be impossible, to pay him separation pay at the rate of 39.25
or SAFFPAI, an association of pro-company beneficiaries, they wanted to days of salary for every year of service as practiced by the company; and (b)
pay Baya backwages and other benefits, as well as moral damages,
belong. 280 went to AMSKARBEMCO while 85 joined SAFFPAI.9
exemplary damages, and attorney’s fees.14
When AMSFC learned that AMSKARBEMCO entered into an export
agreement with another company, it summoned AMSKARBEMCO officers, The LA found that since it was undisputed that Baya held supervisory
including Baya, to lash out at them and even threatened them that the positions in AMSFC and DFC, his demotion to various rank-and-file positions
ARBs’ takeover of the lands would not push through. Thereafter, Baya was without any justifiable reason upon his return to AMSFC constituted
again summoned, this time by a DFC manager, who told the former that he constructive dismissal. In this regard, the LA opined that the alleged lack of
would be putting himself in a “difficult situation” if he will not shift his supervisory positions in AMSFC was not a valid justification for Baya’s
loyalty to SAFFPAI; this notwithstanding, Baya politely refused to betray his demotion to rank-and-file, as AMSFC and DFC should not have caused
Baya’s return to AMSFC if there was indeed no available supervisory consisting of P194,992.82 as separation pay, P8,279.95 as 13th month pay,
position. Further, the LA did not lend credence to AMSFC and DFC’s P50,000.00 as moral damages, and P25,327.28 as attorney’s fees.24
contention that Baya’s termination was on account of the ARBs’ takeover of
the banana plantations, considering that: (a) the acts constituting It held that the NLRC gravely abused its discretion in dismissing Baya’s
constructive dismissal occurred when Baya returned to AMSFC on August complaint as the undisputed facts clearly establish constructive dismissal,
30, 2002, while the takeover was done only on September 20, 2002; and (b) based on the following considerations: (a) in spite of knowing that there
only members of AMSKARBEMCO were no longer allowed to work after the was no available supervisory position in AMSFC, the top management still
takeover, while members of SAFFPAI, the pro-company cooperative, were proceeded to order Baya’s return there to force him to accept rank-and file
retained.15 positions; (b) such “return to AMSFC” was done after Baya was harassed by
company managers into switching loyalties to the pro-company
Aggrieved, respondents appealed16 to the NLRC. cooperative, which was refused by Baya; (c) such acts of the top
management of AMSFC and DFC were in furtherance of their cooperative
The NLRC Ruling busting tactics as stated in the Joint Affidavits executed by AMSKARBEMCO
In a Resolution17 dated March 10, 2004, the NLRC reversed and set aside the members, which were not refuted by AMSFC and DFC; and (d) such acts
LA ruling except for the payment of 13th month pay which was affirmed constituting constructive dismissal were done even before the ARBs were
with modification, and entered a new one dismissing the case for lack of allowed to take over the lands awarded to them. Despite the fact of
merit.18 Contrary to the LA’s findings, the NLRC found that the termination constructive dismissal, the CA opted not to award backwages to Baya, as he
of Baya’s employment was not caused by illegal/ constructive dismissal, but was already awarded a portion of AMSFC’s banana plantation through the
by the cessation of AMSFC’s business operation or undertaking in large agrarian reform program. Thus, in the interest of justice and fair play, the
portions of its banana plantation due to the implementation of the agrarian CA only awarded him separation pay and 13th month pay, plus moral
reform program. Thus, the NLRC opined that Baya is not entitled to damages and attorney’s fees.25
separation pay as such cessation was not voluntary, but rather involuntary, Petitioner filed a motion for reconsideration,26 which was, however, denied
on the part of AMSFC as it was an act of the State, i.e., the agrarian reform
in a Resolution27 dated May 20, 2009.
program, that caused the same.19
Meanwhile and during the pendency of the CA proceedings, petitioner
Baya moved for reconsideration,20 which was, however, denied in a
Sumifru (Philippines) Corporation (Sumifru) acquired
Resolution21 dated May 31, 2004. Dissatisfied, he filed a petition DFC viamerger28 sometime in 2008. According to Sumifru, it only learned of
for certiorari22 before the Court of Appeals (CA). the pendency of the CA proceedings on June 15, 2009, or after the issuance
The CA Ruling of the CA’s Resolution dated May 20, 2009.29 Thus, Sumifru was the one
who filed the instant petition on behalf of DFC.30
In a Decision23 dated May 14, 2008, the CA set aside the NLRC ruling and
reinstated that of the LA with modification deleting the award of The Issue Before the Court
backwages, annual vacation leave pay, sick leave pay, monthly housing The issues for the Court’s resolution are whether or not: (a) the CA correctly
subsidy, electric light subsidy, and exemplary damages, and ordering AMSFC ruled that the NLRC gravely abused its discretion, and consequently, held
and DFC to solidarily pay Baya the aggregate amount of P278,600.05,
that AMSFC and DFC constructively dismissed Baya; (b) whether or not that the burden is on the employer to prove that the transfer or demotion
AMSFC and DFC are liable to Baya for separation pay, moral damages, and of an employee was a valid exercise of management prerogative and was
attorney’s fees; and (c) whether or not Sumifru should be held solidarily not a mere subterfuge to get rid of an employee; failing in which, the
liable with AMSFC’s for Baya’s monetary awards. employer will be found liable for constructive dismissal, viz.:

The Court’s Ruling In case of a constructive dismissal, the employer has the burden of proving
that the transfer and demotion of an employee are for valid and legitimate
The petition is without merit. grounds such as genuine business necessity. Particularly, for a transfer not
“To justify the grant of the extraordinary remedy of certiorari, the petitioner to be considered a constructive dismissal, the employer must be able to
must satisfactorily show that the court or quasi-judicial authority gravely show that such transfer is not unreasonable, inconvenient, or prejudicial to
abused the discretion conferred upon it. Grave abuse of discretion connotes the employee; nor does it involve a demotion in rank or a diminution of his
a capricious and whimsical exercise of judgment, done in a despotic manner salaries, privileges and other benefits. Failure of the employer to overcome
by reason of passion or personal hostility, the character of which being so this burden of proof, the employee’s demotion shall no doubt be
patent and gross as to amount to an evasion of positive duty or to a virtual tantamount to unlawful constructive dismissal.35
refusal to perform the duty enjoined by or to act at all in contemplation of
In this case, a judicious review of the records reveals that the top
law.”31 management of both AMSFC and DFC, which were sister companies at the
“In labor disputes, grave abuse of discretion may be ascribed to the NLRC time, were well-aware of the lack of supervisory positions in AMSFC. This
when, inter alia, its findings and conclusions are not supported by notwithstanding, they still proceeded to order Baya’s return therein, thus,
substantial evidence, or that amount of relevant evidence which a forcing him to accept rank-and-file positions. Notably, AMSFC and DFC failed
reasonable mind might accept as adequate to justify a conclusion.”32 to refute the allegation that Baya’s “end of secondment with DFC” only
occurred after: (a) he and the rest of AMSKARBEMCO officials and members
Guided by the foregoing considerations, the Court finds that the CA were subjected to harassment and cooperative busting tactics employed by
correctly ascribed grave abuse of discretion on the part of the NLRC in AMSFC and DFC; and (b) he refused to switch loyalties from AMSKARBEMCO
reversing the LA ruling, as the LA’s finding that Baya was constructively to SAFFPAI, the pro-company cooperative. In this relation, the Court cannot
dismissed from employment is supported by substantial evidence. lend credence to the contention that Baya’s termination was due to the
ARBs’ takeover of the banana plantation, because the said takeover only
“Constructive dismissal exists where there is cessation of work, because
occurred on September 20, 2002, while the acts constitutive of constructive
‘continued employment is rendered impossible, unreasonable or unlikely, as
dismissal were performed as early as August 30, 2002, when Baya returned
an offer involving a demotion in rank or a diminution in pay’ and other
to AMSFC. Thus, AMSFC and DFC are guilty of constructively dismissing
benefits. Aptly called a dismissal in disguise or an act amounting to dismissal
Baya.
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 However, in light of the underlying circumstances which led to Baya’s
becomes so unbearable on the part of the employee that it could foreclose constructive dismissal, it is clear that an atmosphere of animosity and
any choice by him except to forego his continued antagonism now exists between Baya on the one hand, and AMSFC and DFC
employment.”33 In Peckson v. Robinsons Supermarket Corp.,34 the Court held on the other, which therefore calls for the application of the doctrine of
strained relations. “Under the doctrine of strained relations, the payment of 3. The surviving or the consolidated corporation shall possess all the rights,
separation pay is considered an acceptable alternative to reinstatement privileges, immunities and powers and shall be subject to all the duties and
when the latter option is no longer desirable or viable. On one hand, such liabilities of a corporation organized under this Code;
payment liberates the employee from what could be a highly oppressive
work environment. On the other hand, it releases the employer from the 4. The surviving or the consolidated corporation shall thereupon and
grossly unpalatable obligation of maintaining in its employ a worker it could thereafter possess all the rights, privileges, immunities and franchises of
no longer trust.”36 Thus, it is more prudent that Baya be awarded separation each of the constituent corporations; and all property, real or personal, and
all receivables due on whatever account, including subscriptions to shares
pay, instead of being reinstated, as computed by the CA.
and other choses in action, and all and every other interest of, or belonging
Further, and as aptly pointed out by both the LA and the CA, the acts to, or due to each constituent corporation, shall be deemed transferred to
constitutive of Baya’s constructive dismissal are clearly tainted with bad and vested in such surviving or consolidated corporation without further act
faith as they were done to punish him for the actions of his cooperative, or deed; and
AMSKARBEMCO, and for not switching his loyalty to the pro-company
cooperative, SAFFPAI. This prompted Baya to litigate in order to protect his 5. The surviving or consolidated corporation shall be responsible and liable
interest and to recover what is properly due him. Hence, the award of moral for all the liabilities and obligations of each of the constituent corporations
damages and attorney’s fees are warranted. in the same manner as if such surviving or consolidated corporation had
itself incurred such liabilities or obligations; and any pending claim, action or
Finally, Sumifru’s contention that it should only be held liable for the period proceeding brought by or against any of such constituent corporations may
when Baya stayed with DFC as it only merged with the latter and not with be prosecuted by or against the surviving or consolidated corporation. The
AMSFC37 is untenable. Section 80 of the Corporation Code of the Philippines rights of creditors or liens upon the property of any of such constituent
clearly states that one of the effects of a merger is that the surviving corporations shall not be impaired by such merger or consolidation.
company shall inherit not only the assets, but also the liabilities of the
corporation it merged with, to wit: In this case, it is worthy to stress that both AMSFC and DFC are guilty of acts
constitutive of constructive dismissal performed against Baya. As such, they
Section 80. Effects of merger or consolidation. - The merger or consolidation should be deemed as solidarily liable for the monetary awards in favor of
shall have the following effects: Baya. Meanwhile, Sumifru, as the surviving entity in its merger with DFC,
must be held answerable for the latter’s liabilities, including its solidary
1. The constituent corporations shall become a single corporation which, in liability with AMSFC arising herein. Verily, jurisprudence states that “in the
case of merger, shall be the surviving corporation designated in the plan of merger of two existing corporations, one of the corporations survives and
merger; and, in case of consolidation, shall be the consolidated corporation
continues the business, while the other is dissolved and all its rights,
designated in the plan of consolidation; properties and liabilities are acquired by the surviving corporation,”38 as in
2. The separate existence of the constituent corporations shall cease, except this case.
that of the surviving or the consolidated corporation; WHEREFORE, the petition is DENIED. The Decision dated May 14, 2008 and
the Resolution dated May 20, 2009 of the Court of Appeals in CA-G.R. SP No.
85950 are hereby AFFIRMED. Accordingly, Sumifru (Philippines)
Corporation, as the surviving entity in its merger with Davao Fruits G.R. No. 197492, January 18, 2017

Corporation, shall be held answerable for the latter’s obligations as

CHATEAU ROYALE SPORTS AND COUNTRY CLUB,
indicated in this Decision. INC., Petitioner, v. RACHELLE G. BALBA AND MARINEL N.
CONSTANTE, Respondents.
SO ORDERED.
DECISION
ESTELA M. PERLAS-BERNABE
BERSAMIN, J.:
Associate Justice
The petitioner appeals the decision promulgated on January 10,
WE CONCUR: 2011,1 whereby the Court of Appeals (CA) annulled and set aside the
December 14, 2009 decision2 and February 26, 2010 resolution3 of the National
MARIA LOURDES P. A. SERENO Labor Relations Commission (NLRC) dismissing the respondents' complaint for
constructive dismissal.
Chief Justice
chan roble svirtuallaw lib rary

Chairperson Antecedents

TERESITA J. LEONARDO-DE CASTRO On August 28, 2004, the petitioner, a domestic corporation operating a resort
complex in Nasugbu, Batangas, hired the respondents as Account Executives
Associate Justice on probationary status.4 On June 28, 2005, the respondents were promoted to
Account Managers effective July 1, 2005, with the monthly salary rate of
MARIANO C. DEL CASTILLO P9,000.00 plus allowances totaling to P5,500.5 As part of their duties as
Account Managers, they were instructed by the Director of Sales and Marketing
Associate Justice to forward all proposals, event orders and contracts for an orderly and
systematic bookings in the operation of the petitioner's business. However,
ALFREDO BENJAMIN S. CAGUIOA they failed to comply with the directive. Accordingly, a notice to explain was
served on them,6 to which they promptly responded.7
Associate Justice
On October 4, 2005, the management served notices of administrative
CERTIFICATION hearing8 on the respondents. Thereupon, they sent a letter of said date asking
for a postponement of the hearing.9 Their request was, however, denied by the
letter dated October 7, 2005, and at the same time informed them that the
Pursuant to Section 13, Article VIII of the Constitution, I certify that the petitioner's Corporate Infractions Committee had found them to have
conclusions in the above Decision had been reached in consultation before committed acts of insubordination, and that they were being suspended for
seven days from October 10 to 17, 2005, inclusive.10
the case was assigned to the writer of the opinion of the Court’s Division.
The suspension order was lifted even before its implementation on October 10,
MARIA LOURDES P. A. SERENO 2005.11

Chief Justice On October 10, 2005, the respondents filed a complaint for illegal suspension
and non-payment of allowances and commissions.12

On December 1, 2005, the respondents amended their complaint to include

constructive dismissal as one of their causes of action based on their
information from the Chief Financial Officer of the petitioner on the latter's plan
to transfer them to the Manila Office.13 The proposed transfer was prompted by
the shortage of personnel at the Manila Office as a result of the resignation of
three account managers and the director of sales and marketing. Despite
attempts to convince them to accept the transfer to Manila, they declined
because their families were living in Nasugbu, Batangas. at the Manila office; that the transfer of the respondents, being bereft of
improper motive, was a valid exercise of management prerogative; and that
The respondents received the notice of transfer14 dated December 13, 2005 on they could not as employees validly decline a lawful transfer order on the
December 28, 200515directing them to report to work at the Manila Office ground of parental obligations, additional expenses, and the anxiety of being
effective January 9, 2006. They responded by letter addressed to Mr. Rowell away from his family.
David, the Human Resource Consultant of the petitioner,16 explaining their
reasons for declining the order of transfer. Consequently, another request for The respondents filed their motion for reconsideration,25 but the NLRC denied cralaw red

incident report17 was served on them regarding their failure to comply with the their motion on February 26, 2010.26 chanro blesvi rtua llawli bra ry

directive to report at the Manila office. Following respondents' respective

responses,18 the petitioner sent a notice imposing on them the sanction of Decision of the CA
written reprimand for their failure to abide by the order of transfer.19 chanrob lesvi rtua llawlib ra ry

On January 10, 2011, the CA promulgated its decision granting the

Ruling of the Labor Arbiter respondents' petition for certiorari, and setting aside the decision of the
NLRC, viz.:
chanRoble svirtual Lawlib ra ry

On February 14, 2008, Labor Arbiter Arthur L. Amansec rendered his decision WHEREFORE, premises considered, the assailed Decision dated December 14,
declaring that the respondents had been constructively dismissed, and 2009 and Resolution dated February 26, 2010 of the NLRC, Second Division in
disposing thusly:20 NLRC LAC No. 07-002551-08 (NLRC-RA8-IV Case No. 10-21558-058) (NLRC-
WHEREFORE, judgment is hereby made finding respondent Chateau Royale RAB-IV Case No. 02-22153-068) are hereby REVERSED and SET ASIDE.
Sports and Country Club, Inc. to have constructively dismissed the Private respondent Chateau Royale is hereby ordered
complainants Rachelle G. Balba and Marinel N. Constante from employment to REINSTATE petitioners Balba and Constante to their former positions
Concomitantly, the respondent company is hereby ordered to pay each without loss of seniority rights and other privileges, and to pay said petitioners
complainant one (1) year backwages plus a separation pay, computed at a full full BACKWAGESinclusive of allowances and other benefits from the time their
month's pay for every year of service. employment was severed up to the time of actual reinstatement.

The respondent company is also ordered to pay each complainant P50,000.00 SO ORDERED.27 ChanRoblesVi rtualaw lib rary

moral damages and P10,000.00 exemplary damages. The CA ruled that the transfer of the respondents from the office in Nasugbu,
Batangas to the Manila office was not a legitimate exercise of management
Ten (10%) attorney's fees are also awarded. prerogative and constituted constructive dismissal; that the transfer to the
Manila office was not crucial as to cause serious disruption in the operation of
Other claims arc dismissed for lack of merit. the business if the respondents were not transferred thereat; that the directive
failed to indicate that the transfer was merely temporary; that the directive did
SO ORDERED.21 ChanRoblesVi rtua lawlib rary
not mention the shortage of personnel that would necessitate such transfer;
Labor Arbiter Amansec opined that the respondents' transfer to Manila would and that the transfer would be inconvenient and prejudicial to the
not only be physically and financially inconvenient, but would also deprive respondents.28
them of the psychological comfort that their families provided; that being the
top sales performers in Nasugbu, they should not be punished with the On June 22, 2011,29 the CA denied the petitioner's motion for
transfer; and that their earnings would considerably diminish inasmuch as reconsideration. chan rob lesvi rtual lawlib rary

sales in Manila were not as lively as those in Nasugbu.22 chanroblesvi rtual lawlib rary

Issues
Ruling of the NLRC
Hence, this appeal by the petitioner via petition for review on certiorari,30 citing
On appeal,23 the NLRC reversed the ruling of the Labor Arbiter, and dismissed the following grounds:
the complaint for Jack of merit, to wit:
chanRoble svirtual Lawlib ra ry

chanRoble svirtual Lawlib ra ry A

WHEREFORE, the appeal of respondents Chateau Royale Sports and Country
Club, Inc. is Granted. Accordingly, the assailed February 14, 2008 decision is THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN CONCLUDING
Set-Aside dismissing the complaint for lack of merit THAT THE SHORTAGE OF PERSONNEL IN THE MANILA OFFICE IS A MERE
SUBTERFUGE RATHER THAN AN EXIGENCY IN THE BUSINESS THEREBY
SO ORDERED.24 ChanRoblesVi rtualaw lib rary
TREATING THE TRANSFER OF RESPONDENTS AS UNREASONABLE
The NLRC found that the respondents had been informed through their
respective letters of appointment of the possibility of transfer in the exigency B
of the service; that the transfer was justified due to the shortage of personnel
 burden, and thus established that, contrary to the claim of the respondents
THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN CONCLUDING that they had been constructively dismissed, their transfer had been an
THAT THE INTENDED TRANSFER OF THE RESPONDENTS FROM NASUGBU, exercise of the petitioner's legitimate management prerogative.
BATANGAS TO MANILA OFFICE CONSTITUTES CONSTRUCTIVE
DISMISSAL.31 ChanRoblesVi rtual awlib rary To start with, the resignations of the account managers and the director of
The petitioner argues that the resignations of the Account Managers and the sales and marketing in the Manila office brought about the immediate need for
Director of Sales and Marketing caused serious disruptions in the operations of their replacements with personnel having commensurate experiences and
the Manila office, thereby making the immediate transfer of the respondents skills. With the positions held by the resigned sales personnel being
crucial and indispensable; that through their respective letters of appointment, undoubtedly crucial to the operations and business of the petitioner, the
the possibility of their transfer to the Manila office had been made known to resignations gave rise to an urgent and genuine business necessity that fully
them even prior to their regularization; that if its intention had been to expel warranted the transfer from the Nasugbu, Batangas office to the main office in
them from the company, it would not have rehired them as regular employees Manila of the respondents, undoubtedly the best suited to perform the tasks
after the expiration of their probationary contract and even promoted them as assigned to the resigned employees because of their being themselves account
Account Managers; that there was no diminution of income and benefits as a managers who had recently attended seminars and trainings as such. The
result of the transfer; and that their immediate rejection of the transfer transfer could not be validly assailed as a form of constructive dismissal, for,
directive prevented the parties from negotiating for additional allowances as held in Benguet Electric Cooperative v. Fianza,36 management had the
beyond their regular salaries. prerogative to determine the place where the employee is best qualified to
serve the interests of the business given the qualifications, training and
The respondents counter that there was no valid cause for their transfer; that performance of the affected employee.
they were forced to transfer to the Manila office without consideration of the
proximity of the place and without improvements in the employment package; Secondly, although the respondents' transfer to Manila might be potentially
that the alleged shortage of personnel in the Manila office due to the inconvenient for them because it would entail additional expenses on their part
resignation of the account managers was merely used to conceal the aside from their being forced to be away from their families, it was neither
petitioner's illegal acts; and that notwithstanding their negative response upon unreasonable nor oppressive. The petitioner rightly points out that the transfer
being informed of their impending transfer to Manila by Chief Finance Officer would be without demotion in rank, or without diminution of benefits and
Marquez, the petitioner still issued the transfer order directing them to report salaries. Instead, the transfer would open the way for their eventual career
to the Manila office effective January 9, 2006. growth, with the corresponding increases in pay. It is noted that their prompt
and repeated opposition to the transfer effectively stalled the possibility of any
The sole issue for resolution is whether or not the respondents were agreement between the parties regarding benefits or salary adjustments.
constructively dismissed. c hanroblesv irt uallawl ibra ry

Thirdly, the respondents did not show by substantial evidence that the
Ruling of the Court petitioner was acting in bad faith or had ill-motive in ordering their transfer. In
contrast, the urgency and genuine business necessity justifying the transfer
We find merit in the appeal. negated bad faith on the part of the petitioner.

In the resolution of whether the transfer of the respondents from one area of Lastly, the respondents, by having voluntarily affixed their signatures on their
operation to another was valid, finding a balance between the scope and respective letters of appointment, acceded to the terms and conditions of
limitation of the exercise of management prerogative and the employees' right employment incorporated therein. One of the terms and conditions thus
to security of tenure is necessary.32 We have to weigh and consider, on the one incorporated was the prerogative of management to transfer and re-assign its
hand, that management has a wide discretion to regulate all aspects of employees from one job to another "as it may deem necessary or advisable,"
employment, including the transfer and re-assignment of employees according to wit:
chanRoble svirtual Lawlib ra ry

to the exigencies of the business;33 and, on the other, that the transfer The company reserves the right to transfer you to any assignment from one
constitutes constructive dismissal when it is unreasonable, inconvenient or job to another, or from one department/section to another, as it may deem
prejudicial to the employee, or involves a demotion in rank or diminution of necessary or advisable. ChanRoblesVirtualawl ibra ry

salaries, benefits and other privileges, or when the acts of discrimination, Having expressly consented to the foregoing, the respondents had no basis for
insensibility or disdain on the part of the employer become unbearable for the objecting to their transfer. According to Abbot Laboratories (Phils.), Inc. v.
employee, forcing him to forego her employment.34 National Labor Relations Commission,37 the employee who has consented to
the company's policy of hiring sales staff willing to be assigned anywhere in the
In this case of constructive dismissal, the burden of proof lies in the petitioner Philippines as demanded by the employer's business has no reason to disobey
as the employer to prove that the transfer of the employee from one area of the transfer order of management. Verily, the right of the employee to security
operation to another was for a valid and legitimate ground, like genuine of tenure does not give her a vested right to her position as to deprive
business necessity.35 We are satisfied that the petitioner duly discharged its management of its authority to transfer or re-assign her where she will be
most useful.38 G.R. No. 215047, November 23, 2016
In view of the foregoing, the NLRC properly appreciated the evidence and
merits of the case in reversing the decision of the Labor Arbiter. As such, the UNIVERSAL CANNING INC., MS. MA. LOURDES A. LOSARIA, PERSONNEL
CA gravely erred in declaring that the NLRC had gravely abused its discretion OFFICER, AND ENGR. ROGELIO A. DESOSA, PLANT
amounting to lack or excess of jurisdiction.
MANAGER, Petitioners, v. COURT OF APPEALS AND DANTE SAROSAL,
WHEREFORE, the Court REVERSES AND SETS ASIDE the decision of the FRANCISCO DUMAGAL, JR., NELSON E. FRANCISCO, ELMER C. SAROMINES
Court of Appeals promulgated on January 10, 2011; REINSTATES the decision
issued on December 14, 2009 by the National Labor Relations Commission; AND SAMUEL D. CORONEL, Respondents.
and ORDERS the respondents to pay the costs of suit.
DECISION
SO ORDERED. cralawlawlibra ry

Velasco, Jr., (Chairperson), Reyes, Jardeleza, and Caguioa,*JJ., concur. chanRoblesvirt ual Lawlib rary
PEREZ, J.:

For resolution by the Court is this instant Petition for Review

on Certiorari1 filed by petitioners Universal Canning Inc., Ma. Lourdes
Losaria and Engr. Rogelio A. Desosa, seeking to reverse and set aside the
Decision2 dated 13 December 2013 and the Resolution3 dated 9 September
2014 of the Court of Appeals in CA-G.R. SP. No. 03808-MIN. The assailed
decision and resolution reversed the ruling of the National Labor Relations
Commission (NLRC) in NLRC Case No. MAC-09-011031-2009 and declared
the dismissal of respondents Dante M. Sarosal, Francisco Dumagal. Jr.,
Nelson E. Francisco, Elmer C. Saromines and Samuel D. Coronel, as
[Link]

The Facts

Petitioner Universal Canning Inc. is a domestic corporation duly authorized

to engage in business by Philippine laws. Petitioners Ma. Lourdes A. Losaria
and Engr. Rogelio Desosa are respectively employed by the company as its
Personnel Officer and Plant Manager.4

Respondents Dante M. Sarosal, Francisco Dumagal. Jr., Nelson E. Francisco,

Elmer C. Saromines and Samuel D. Coronel were employed by petitioner
Universal Canning on various capacities with wages ranging from P240.00 to
P280.00 a day.5

On 21 January 2009, respondents were caught by petitioner company's

Purchasing Officer, Falconieri Almazan, playing cards at the company's Paper, respondents argued that their severance from employment is
premises during working hours. The incident was immediately reported by unlawful because of lack of sufficient basis for their termination. They
Almazan to the Personnel Officer, Ma. Lourdes Losaria, who immediately reiterated their position in their letter-explanation that they could not be
conducted an investigation to determine the names and of those who were considered guilty of gambling because there were no stakes involved and
involved in the gambling activities. On the same day, respondents were the activity took place during authorized noon break.
placed under preventive investigation pending further investigation by a
panel indicated in a memorandum addressed to and duly received by the For lack of merit, the Labor Arbiter dismissed the complaint in a
individuals concerned. Under the same memorandum, respondents were Decision9 dated 24 August 2009. The Labor Arbiter held that respondents
required by the petitioner to file their written explanation of the incident. were dismissed for just cause and after compliance with due process. The
Respondents complied with the directive.6 dispositive portion of the Decision reads:chanRoblesvirtualLawlibrary

In their letter-explanation dated 23 January 2009, respondents denied that WHEREFORE, the above-entitled case is hereby dismissed for lack of merit.
they were involved in gambling activities within the company's premises
during work hours. It was argued by the respondents that while indeed they SO ORDERED.10
were playing cards inside the company premises, it cannot be considered On appeal, the NLRC affirmed the dismissal of respondents' complaint. It
gambling as there was no money involved and that it took place during was declared by the Commission that "playing cards during office hours
noon break.7 whether for a stake or fun is considered a dishonest act of stealing company
time. The company's working hours could be used for more profitable
On 9 February 2009, the investigation was conducted where respondents activities since they are paid by the company." Setting aside the claim of
were questioned regarding their participation in the 21 January 2009 respondents that their length of service should be considered a mitigating
activities inside the company's premises. After the inquiry, the Investigating circumstance, the NLRC held that "the fact that [respondents] have been
Officer found that respondents were playing cards during working hours employed by the company for a long period of time could not work in their
which is considered an infraction of the company's rules and regulations.8 favor. Their attitude towards their work is smocked (sic) with disloyalty, lack
of concern and enthusiasm."11
On the basis of the Investigation Report, respondents were dismissed from
employment through a notice thereof dated 19 February 2016 which On Certiorari, the Court of Appeals reversed and set aside the NLRC Decision
enumerated the grounds: (1) taking part in a betting, gambling or any on the ground that it was rendered with grave abuse of discretion
unauthorized game of chance inside the company premises while on duty; amounting to lack or excess in jurisdiction. According to the appellate court,
and (2) for loss of trust and confidence. The termination of respondents was there exists no just cause to dismiss respondents from employment. As rank
reported by the petitioner to the Department of Labor of Employment and file employees, respondents could not be dismissed for lack of trust and
(DOLE) on 24 February 2009. confidence as they were not holding positions imbued with trust and
confidence.12 The Court of Appeals disposed in this
Aggrieved by the tum of events, respondents initiated an action for illegal wise:chanRoblesvirtualLawlibrary
dismissal, illegal suspension, payment of separation pay, rest day pay and
moral and exemplary damages before the Labor Arbiter. In their Position
THE FOREGOING CONSIDERED, the instant PETITION is thus GRANTED. The
NLRC's Resolution dated December 29, 2009 and June 29, 2010 are hereby The core issue here is whether the Court of Appeals erred in holding that
REVERSED AND SET ASIDE, and a new entered mandating UCI to: there is no just cause for dismissing respondents from employment.

1. Pay each [respondents] their respective full backwages, inclusive of The Court resolves to grant the petition.
allowances and other benefits required by law or their monetary
equivalent computed from the time they were actually dismissed It must be stressed at the onset that respondents were dismissed by
effective February 20, 2009 until the finality of this decision; and petitioners for two reasons: (1) for violation of company rules and
2. To reinstate [respondents] without loss of seniority rights and other regulations under Paragraph IV, Number 4 under Offenses Against Public
privileges, or if reinstatement is not possible, to pay each of the Morals;14 and (2) for loss of trust and confidence. While it is true that loss of
petitioners their respective separation pay equivalent to one month trust and confidence alone could not stand as a ground for dismissal in this
to every year of service, computed from the date of employment up case since respondents are rank and file employees who are not occupying
to the finality of the decision. A fraction of at least six (6) months positions of trust and confidence, such is not the only ground, relied by the
shall be considered one (1) whole year. Any fraction below six (6) company in terminating respondents' employment. Petitioner company also
months shall be paid pro rata. cited the infraction of company rules and regulations, in addition to loss and
trust of confidence. Infraction of the company rules and regulation which is
SO ORDERED. akin to serious misconduct is a just cause for termination of employment
recognized under Article 282 (a) of the Labor Code which states
In a Resolution13 dated 9 September 2014, the Court of Appeals refused to
that:chanRoblesvirtualLawlibrary
reconsider its earlier Decision.
ARTICLE 282. Termination by employer. An employer may terminate an
Petitioners are now before this Court via this instant Petition for Review employment for any of the following causes:
on Certiorari assailing the Courts of Appeals' Decision and Resolution on the
ground that:chanRoblesvirtualLawlibrary
(a) Serious misconduct or willful disobedience by the employee of the
The Issue lawful orders of his employer or representative in connection with his
work;

THE COURT OF APPEALS ERRED IN REVERSING AND SETTING ASIDE THE Misconduct is defined as an improper or wrong conduct. It is a transgression
NLRC DECISION WHICH IN TURN, AFFIRMED THE LABOR ARBITER'S of some established and definite rule of action, a forbidden act, a dereliction
DECISION DISMISSING RESPONDENTS' COMPLAINT FOR ILLEGAL DISMISSAL of duty, willful in character, and implies wrongful intent and not mere error
FOR LACK OF MERIT. in judgment. To constitute a valid cause for the dismissal within the text and
meaning of Article 282 of the Labor Code, the employee's misconduct must
The Court's Ruling
be serious, i.e., of such grave and aggravated character and not merely
trivial or unimportant. Additionally, the misconduct must be related to the
performance of the employee's duties showing him to be unfit to continue
working for the employer. Further, and equally important and required, the upheld the petitioners' position that there exists a valid ground for
act or conduct must have been performed with wrongful intent.15 dismissing the respondents. The NLRC even went further by saying that
respondents' length of service should not mitigate the consequence of their
Here, there is no question that respondents were caught in the act of acts as they owe the company loyalty and concern. Considering that there is
engaging in gambling activities inside the workplace during work hours, a substantial evidence at hand to support the ruling of the labor tribunals, the
fact duly established during the investigation conducted by the petitioner Court hereby adopts their findings.
company and adopted by the labor tribunals below. As a matter of fact,
respondents never controverted their participation in the gambling It is settled that this Court is not a trier of facts, and this applies with greater
activities, but instead raised the defense that it took place during noon force in labor cases.18Factual findings of administrative or quasi-judicial
break and that no stakes were involved; these claims even if were proven bodies, including labor tribunals, are accorded much respect by this Court as
true, will however not save the day for the respondents. The use of the they are specialized to rule on matters falling within their jurisdiction
company's time and premises for gambling activities is a grave offense especially when these are supported by substantial evidence.19
which warrants the penalty of dismissal for it amounts to theft of the
company's time and it is explicitly prohibited by the company rules on the WHEREFORE, premises considered, the petition is GRANTED. The assailed
ground that it is against public morals. Resolutions of the Court of Appeals are hereby REVERSED AND SET ASIDE.

Suffice it to state that an employee may be validly dismissed for violation of SO ORDERED.
a reasonable company rule or regulation adopted for the conduct of the
company's business. It is the recognized prerogative of the employer to Velasco, Jr., (Chairperson), Reyes, and Jardeleza, JJ., concur.
transfer and reassign employees according to the requirements of its Peralta, J., wellness leave.
business. For indeed, regulation of manpower by the company clearly falls
within the ambit of management prerogative. A valid exercise of
management prerogative is one which, among others, covers: work
assignment, working methods, time, supervision of workers, transfer of
employees, work supervision, and the discipline, dismissal and recall of
workers. Except as provided for, or limited by special laws, an employer is
free to regulate, according to his own discretion and judgment, all aspects
of employment.16 As a general proposition, an employer has free reign over
every aspect of its business, including the dismissal of his employees as long
as the exercise of its management prerogative is done reasonably, in good
faith, and in a manner not otherwise intended to defeat or circumvent the
rights of workers.17

Both the Labor Arbiter and the NLRC uniformly ruled that the complaint for
illegal dismissal filed by the respondents utterly lacks merit and, thus,
G.R. No. 195155, April 13, 2016 a. The transfer is approved by both the Participating Employer whose
service he is leaving and the new Participating Employer;
DIVINE WORD COLLEGE OF LAOAG, Petitioner, v. SHIRLEY B. MINA, AS
HEIR-SUBSTITUTE OF THE LATE DELFIN A. MINA, Respondent. b. The Retirement Board is notified of the transfer; and

DECISION c. The member is employed by another Participating Employer on the

next working day after his resignation.7
REYES, J.:
Mina was first employed in 1971 as a high school teacher, and later on a
Assailed in this petition for review1 under Rule 45 of the Rules of Court is the high school principal, at the Academy of St. Joseph (ASJ), a school run by the
Decision2 dated July 19, 2010 and Resolution3 dated January 13, 2011 of the SVD. On June 1, 1979, he transferred to DWCL and was accorded a
Court of Appeals (CA) in CA-G.R. SP No. 107749 declaring respondent Delfin permanent status after a year of probationary status.8 He was subsequently
A. Mina (Mina) to have been constructively dismissed by petitioner Divine transferred in 2002 to DWCL's college department as an Associate Professor
Word College of Laoag (DWCL) and awarding him backwages, damages and III. Thereafter, on June 1, 2003, Mina was assigned as the College Laboratory
attorney's fees. Custodian of the School of Nursing and was divested of his teaching load,
Antecedent Facts effective June 1, 2003 until May 31, 2004, subject to automatic termination
and without need for any further notification.9 He was the only one among
several teachers transferred to the college department who was divested of
DWCL is a non-stock educational institution offering catholic education to teaching load.10
the public. It is run by the Society of Divine Word (SVD), a congregation of
Catholic priests that maintains several other member educational In early June 2004, Mina was offered early retirement by Professor Noreen
institutions throughout the country.4 dela Rosa, Officer-in-Charge of DWCL's School of Nursing. He initially
declined the offer because of his family's dependence on him for support.
On July 1, 1969, the Society of Divine Word Educational Association (DWEA) He later received a Memorandum11 dated July 27, 2004 from the Office of
established a Retirement Plan to provide retirement benefits for qualified the Dean enumerating specific acts of gross or habitual negligence,
employees of DWEA's member institutions, offices and congregations.5 The insubordination, and reporting for work under the influence of alcohol. He
DWEA Retirement Plan6 contains a clause about the portability of benefits, answered the allegations against him;12 sensing, however, that it was
to wit: pointless to continue employment with DWCL, he requested that his
chanRoblesvirtualLawlibrary retirement date be adjusted to September 2004 to enable him to avail of
the 25-year benefits. He also requested for the inclusion of his eight years of
When a member who resigns or is separated from employment from one
service in ASJ, to make his total years of service to 33 years pursuant to the
Participating Employer and who is employed by another Participating
portability clause of the retirement plan, which was denied by DWCL.
Employer, the member will carry the credit he earned under his former
Instead, he was paid P275,513.10 as retirement pay.13 It was made to
Participating Employer to his new Employer and the length of service in
appear that his services were terminated by reason of redundancy to avoid
both will be taken into consideration in determining his total years of
any tax implications. Mina was also made to sign a deed of waiver and
continuous service on the following conditions:
quitclaim14 stating that he no longer has any claim against DWCL with
respect to any matter arising from his employment in the school.15 G.R. No. 214092, January 11, 2016

On September 21, 2004, he filed a case for illegal dismissal and recovery of ECHO 2000 COMMERCIAL CORPORATION, EDWARD N. ENRIQUEZ,
separation pay and other monetary claims.16 Pending resolution of his case, LEONORA K. BENEDICTO AND ATTY. GINA
WENCESLAO, Petitioners, v. OBRERO FILIPINO-ECHO 2000 CHAPTER-CLO,
Mina passed away on June 18, 2005.17
ARLO C. CORTES AND DAVE SOMIDO, Respondents.
Ruling of the Labor Arbiter
DECISION

On August 26, 2005, the Labor Arbiter (LA) rendered its Decision,18 ruling REYES, J.:
that the actuation of DWCL is not constitutive of constructive dismissal. The Before the Court is the petition for review on certiorari1 filed by Echo 2000
LA ratiocinated, however, that the computation of Mina's retirement pay Commercial Corporation (Echo) to assail the Decision2 rendered on
based on redundancy is illegal; hence, it was modified, and the number of September 24, 2013 and Resolution3 issued on March 28, 2014 by the Court
years he worked for ASJ was added to the years he worked for DWCL thus of Appeals (CA) in CA-G.R. SP No. 121393. The CA affirmed the
making his creditable number of years of service to 33 years. According to Decision4 dated April 15, 2011 of the National Labor Relations Commission's
the LA, his length of service in both institutions will be taken into (NLRC) Fifth Division, which declared that Arlo C. Cortes (Cortes) and Dave
consideration in determining his total years of continuous service since the Somido (Somido) (respondents) were illegally dismissed from employment
DWEA Retirement Plan has a provision on portability, which allows a by Echo. Edward N. Enriquez (Enriquez), Leonora K. Benedicto (Benedicto)
member to carry the earned credit for his number of years of service from and Atty. Gina Wenceslao (Atty. Wenceslao) used to be Echo's General
his former participating employer to his new employer. Moreover, the LA Manager, Operations and Human Resources Officer, and External Counsel,
held that there is no showing that Mina ceased to be a member of the plan respectively (Echo and the three officers are to be referred collectively as
when he left the ASJ as there was not a day that he was separated from any the petitioners). The CA and NLRC's rulings reversed the Decision5 of Labor
school that is the member of the plan. T Arbiter (LA) Renaldo O. Hernandez (Hernandez), who found the
respondents' termination from service as [Link]

Antecedents

Echo is a provider of warehousing management and delivery services.

King 8 Commercial Corporation (King 8), Echo's predecessor, initially

employed Cortes on September 17, 2002, and Somido, on October 12, 2004.
Echo thereafter absorbed the respondents as employees on April 1, 2005. In
2008, Somido was made a Warehouse Checker, while Cortes, a Forklift
Operator.6chanroblesvirtuallawlibrary
In January of 2009, the respondents and their co-workers formed Obrero goods to the delivery trucks to avoid late take-offs; (c) man delivery teams
Pilipino-Echo 2000 Commercial Chapter (Union). Cortes was elected as Vice- for the trucks; (d) check the operational and cleanliness conditions of the
President while Somido became an active member. The respondents trucks; (e) attend to delivery concerns of account specialists of their outlets;
claimed that the Union's President, Secretary and one of the board and (f) call the attention of other warehouse personnel and report the same
members were subsequently harassed, discriminated and eventually to the Human Resources Department regarding absences/tardiness,
terminated from employment by Echo.7chanroblesvirtuallawlibrary incomplete uniforms, appearances, refusal to accept delivery trips and
other matters affecting warehouse
In May of 2009, Echo received information about shortages in peso value productivity.12chanroblesvirtuallawlibrary
arising from the movement of products to and from its warehouse. After an
immediate audit, Echo suspected that there was a conspiracy among the Echo alleged that the respondents did not perform the new duties assigned
employees in the warehouse. Since an uninterrupted investigation was to them. Hence, they were each issued a memorandum, dated July 16,
necessary, Echo, in the exercise of its management prerogative, decided to 2009, requiring them to explain in writing their failure to abide with the new
re-assign the staff. The respondents were among those assignments.13chanroblesvirtuallawlibrary
affected.8chanroblesvirtuallawlibrary
On July 18, 2009, Echo clarified through a memo that the respondents were
On July 7, 2009, Enriquez issued a memorandum informing the respondents designated as "Delivery Coordinators" and not
of their transfer to the Delivery Section, which was within the premises of "Supervisors."14chanroblesvirtuallawlibrary
Echo's warehouse. The transfer would entail no change in ranks, status and
salaries.9chanroblesvirtuallawlibrary Thereafter, successive memoranda were issued by Echo to the respondents,
who refused to acknowledge receipt and comply with the directives therein.
On July 14, 2009, Somido wrote Echo a letter10 indicating his refusal to be The Memoranda15 dated July 20, 2009 suspended them without pay for five
promoted as a "Delivery Supervisor." He explained that he was already days for their alleged insubordination. The Memoranda16 dated August 8,
happy as a Warehouse Checker. Further, he was not ready to be a Delivery 2009 informed them of their termination from employment, effective
Supervisor since the position was sensitive and required more expertise and August 15, 2009, by reason of their repeated refusal to acknowledge receipt
training, which he did not have. of Echo's memoranda and flagrant defiance to assume the duties of Delivery
[Link]
Cortes similarly declined Echo's offer of promotion claiming that he was
contented in his post then as a Forklift Operator. He also alleged that he The Proceedings Before the LA
would be more productive as an employee if he remained in his post. He
also lacked prior supervisory experience.11chanroblesvirtuallawlibrary On August 17, 2009, the respondents filed before the NLRC a complaint
against Echo for unfair labor practice, illegal dismissal, illegal suspension,
On July 16, 2009, Enriquez, sans consent of the respondents, informed the illegal deductions and payment of money claims, damages and attorney's
latter of their assignments/designations, effective July 17, 2009, as Delivery fees.17 The respondents claimed that they were offered promotions, which
Supervisors with the following duties: (a) act as delivery dispatchers of were mere ploys to remove them as rank-and-file employees, and oust
booked and planned deliveries for the day; (b) ensure the early loading of
them as Union members.18chanroblesvirtuallawlibrary 2. the sum of P20,000.00 as moral damages[;]

The petitioners, on the other hand, insisted that the respondents were 3. the sum of P20,000.00 as exemplary damages; and ten [percent
merely transferred, and not promoted. Further, the respondents arrogantly (10%)] of the monetary award as attorney's fees.
refused to comply with Enriquez's directives. Their insubordination All other monetary claims are dismissed for lack of substantiation.
constituted just cause to terminate them from
employment.19chanroblesvirtuallawlibrary SO ORDERED.23chanroblesvirtuallawlibrary

On April 20, 2010, LA Hernandez dismissed the respondents' complaint for

reasons stated below: (a) the claims of union-busting, harassment and In sustaining the respondents' arguments, the NLRC explained that at the
discrimination were not supported by evidence;"20 (b) no promotions time of the former's dismissal, they had been employed' by Echo for several
occurred as the duties of the Delivery Supervisors/Coordinators were years since 2002 and 2004, respectively. There were no prior untoward
merely reportorial in nature and not indicative of any authority to hire, fire incidents. However, things changed when the Union was formed. When the
or change the status of other employees;21 and (c) Echo properly exercised two did not agree to be transferred, they were terminated for
its management prerogative to order the transfer, and this was done insubordination, a mere ploy to lend a semblance of legality to a pre-
without intended changes in the ranks, salaries, status or places of conceived management strategy.24chanroblesvirtuallawlibrary
assignment of the respondents.22chanRoblesvirtualLawlibrary
The NLRC denied the petitioners' motion for reconsideration.25cralawred
The Proceedings Before the NLRC
The Proceedings Before the CA The petitioners thereafter filed a Petition
for Certiorari26 In the herein assailed Decision dated September 24, 2013,
The respondents filed an appeal assailing LA Hernandez's ruling. The
dispositive portion of the NLRC's Decision dated April 15, 2011 is quoted the CA affirmed in toto the NLRC's ruling citing the following as grounds:
below: A transfer is a movement from one position to another which is of
WHEREFORE, premises considered, the appeal is GRANTED. The appealed equivalent rank, level or salary, without break in service. Promotion, on the
other hand, is the advancement from one position to another with an
decision of the [LA] dated April 20, 2010 is REVERSED and SET ASIDE and a
new one is entered declaring [the petitioners] guilty of unfair labor practice increase in duties and responsibilities as authorized by law, and usually
and illegal dismissal of the [respondents]. [The petitioners] are ordered to accompanied by an increase in salary.
immediately reinstate [the respondents] to their previous positions without
loss of seniority rights and other privileges/benefits and to pay [the xxx There is no doubt that said position of Delivery Supervisor/Coordinator
respondents] the following:ChanRoblesVirtualawlibrary entails great duties and responsibilities of overseeing ECHO's business and
involves discretionary powers, xxx What is important is the change in the
1. full backwages from the time of their dismissal up to their actual nature of work which resulted in an upgrade of their work condition and
reinstatement; increase of duties and responsibilities which constitute promotion and not a
mere transfer.
 (1) the respondents were illegally suspended and terminated, hence,
A transfer that results in promotion cannot be done without the employee's entitled to payment of their money claims, damages and attorney's
consent since there is no law that compels an employee to accept a fees;
promotion for the reason that a promotion is in the nature of a gift or
reward, which a person has a right to refuse. When [the respondents] (2) Echo and its officers are guilty of unfair labor practice; and
refused to accept their promotion as Delivery Supervisors/Coordinators, (3) Echo's officers, who are sued as nominal parties, should be held
they were exercising a right and they cannot be punished for it. He who uses liable to pay the respondents their money claims.29
his own legal right injures no one. Thus, [the respondents'] refusal to be
promoted was not a valid cause for their dismissal.
In support thereof, the petitioners claim that the respondents' refusal to
Anent the award of moral damages, exemplary damages and attorney's comply with the management's transfer order constitutes just cause to
fees, We agree with the NLRC that [the respondents] are entitled to the terminate the latter from employment. Echo also points out that before it
same. closed shop on July 6, 2011, the Union continued existing despite the
respondents' dismissal from service. Hence, there is no factual basis in the
xxxx NLRC and CA's ruling that the respondents' termination is intertwined with
union-busting.30chanroblesvirtuallawlibrary
x x x We agree with the NLRC that the dismissal of [the respondents] was
tainted with bad faith as they were dismissed by ECHO for refusing to The petitioners further argue that the respondents failed to establish by
accept their promotion as Delivery Supervisor[s]/Coordinator[s]. x x x The substantial evidence that Echo's officers, namely, Enriquez, Benedicto and
NLRC also found that ECHO'S act of transferring [the respondents] from Atty. Wenceslao, acted with malice. Thus, they cannot be held liable as
Forklift Operator and Warehouse Checker x x x to Delivery well.31chanroblesvirtuallawlibrary
Supervisors/Coordinators was aimed to remove them among the rank-and-
file employees which amounts to union interference. Without the Corollarily, the dismissal being valid, there is no ground to grant the
leadership of Cortes, as Vice-President, and Somido, as an active member, respondents' prayer for reinstatement and payment of money claims and
the union would be severely weakened, especially since most of its officers damages.32chanroblesvirtuallawlibrary
were already terminated by ECHO, x x x.27 (Citations omitted)
In their Comment,33 the respondents reiterate that their transfer/promotion
was conceived to pave the way for their eventual termination from
The petitioners filed a motion for reconsideration, which the CA denied employment. Moreover, even before the respondents could convey their
through the Resolution28 dated March 28, [Link] acceptance or refusal to the transfer/promotion, they were promptly
Issues replaced by newly-hired contractual [Link]

Ruling of the Court

Unperturbed, the petitioners are now before the Court raising the issues of
whether or not:
 employees, and the differences between transfer on one hand, and
The Court partially grants the instant petition. promotion, on the other, Coca-Cola Bottlers Philippines, Inc. v. Del Villar34 is
instructive, viz:
The first two issues, being interrelated, shall be discussed jointly.
[L]abor laws discourage interference in employers" judgment concerning
The offer of transfer is, in the conduct of their business.
legal contemplation, a
promotion, which the In the pursuit of its legitimate business interest, management has the
respondents validly refused. prerogative to transfer or assign employees from one office or area of
Such refusal cannot be the operation to another - provided there is no demotion in rank or diminution
basis for the respondents' of salary, benefits, and other privileges; and the action is not motivated by
dismissal from service. The discrimination, made in bad faith, or effected as a form of punishment or
finding of unfair labor demotion without sufficient cause. x x x.
practice and the award of
moral and exemplary x x x In the case of Blue Dairy Corporation v. National Labor Relations
damages do not however Commission, we described in more detail the limitations on the right of
follow solely by reason of the management to transfer employees:ChanRoblesVirtualawlibrary
dismissal.
x x x [l]t cannot be used as a subterfuge by the employer to rid himself of an
undesirable worker. In particular, the employer must be able to show that
the transfer is not unreasonable, inconvenient or prejudicial to the
Article 212(13) of the Labor Code distinguishes from each other as follows employee; nor does it involve a demotion in rank or a diminution of his
the concepts of managerial, supervisory and rank-and-file employees: salaries, privileges and other benefits, xxx.

"Managerial employee" is one who is vested with the powers or

xxxx
prerogatives to lay down and execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge, assign or discipline A transfer is a movement from one position to another which is of
employees. Supervisory employees are those who, in the interest of the equivalent rank, level or salary, without break in service. Promotion, on the
employer, effectively recommend such managerial actions if the exercise of other hand, is the advancement from one position to another with an
such authority is not merely routinary or clerical in nature but requires the increase in duties and responsibilities as authorized by law, and usually
use of independent judgment. All employees not falling within any of the accompanied by an increase in salary. Conversely, demotion involves a
above definitions are considered rank-and-file employees for purposes of situation where an employee is relegated to a subordinate or less important
this Book. (Italics ours) position constituting a reduction to a lower grade or rank, with a
corresponding decrease in duties and responsibilities, and usually
accompanied by a decrease in salary.35 (Citations omitted and emphasis and
As to the extent of management prerogative to transfer/promote
underscoring ours)
For promotion to occur, there must be an advancement from one position In the instant case, the right not to accept an offered promotion pertained
to another or an upward vertical movement of the employee's rank or to each of the respondents. However, they exhibited disrespectful behavior
position. Any increase in salary should only be considered incidental but by their repeated refusal to receive the memoranda issued by Echo and by
never determinative of whether or not a promotion is bestowed upon an their continued presence in their respective areas without any work
employee.36chanroblesvirtuallawlibrary output.40 The Court thus finds that although the respondents' dismissal from
service for just cause was unwarranted, there is likewise no basis for the
An employee is not bound to accept a promotion, which is in the nature of a award of moral and exemplary damages in their favor. Echo expectedly
gift or reward. Refusal to be promoted is a valid exercise of a right.37 Such imposed disciplinary penalties upon the respondents for the latter's
exercise cannot be considered in law as insubordination, or willful intransigence. Albeit the Court is not convinced of the character and extent
disobedience of a lawful order of the employer, hence, it cannot be the of the measures taken by Echo, bad faith cannot be inferred solely from the
basis of an employee's dismissal from service.38chanroblesvirtuallawlibrary said impositions.

In the case at bench, a Warehouse Checker and a Forklift Operator are rank- Anent the NLRC and CA's conclusion that Echo committed unfair labor
and-file employees. On the other hand, the job of a Delivery practice, the Court disagrees.
Supervisor/Coordinator requires the exercise of discretion and judgment
from time to time. Specifically, a Delivery Supervisor/Coordinator assigns Unfair labor practices violate the constitutional right of workers and
teams to man the trucks, oversees the loading of goods, checks the employees to self-organization, are inimical to the legitimate interests of
conditions of the trucks, coordinates with account specialists in the outlets both labor and management, including their right to bargain collectively and
regarding their delivery concerns, and supervises other personnel about otherwise deal with each other in an atmosphere of freedom and mutual
their performance in the warehouse. A Delivery Supervisor/Coordinator's respect, disrupt industrial peace and hinder the promotion of healthy and
duties and responsibilities are apparently not of the same weight as those of stable labor-management relations.41chanroblesvirtuallawlibrary
a Warehouse Checker or Forklift Operator. Hence, despite the fact that no
salary increases were effected, the assumption of the post of a Delivery The respondents allege that their transfer/promotion was intended to
Supervisor/Coordinator should be considered a promotion. The deprive the Union of leadership and membership. They claim that other
respondents' refusal to accept the same was therefore valid. officers were already dismissed. The foregoing, however, lacks
substantiation. Unfair labor practice is a serious charge, and the
Notwithstanding the illegality of the respondents' dismissal, the Court finds respondents failed to show that the petitioners conclusively interfered with,
no sufficient basis to award moral and exemplary damages. restrained, or coerced employees in the exercise of their right to self-
organization.
A dismissal may be contrary to law but by itself alone, it does not establish
bad faith to entitle the dismissed employee to moral damages. The award of Enriquez, Benedicto and Atty.
moral and exemplary damages cannot be justified solely upon the premise Wenceslao cannot be held
that the employer dismissed his employee without just or authorized personally liable for the
cause.39chanroblesvirtuallawlibrary
respondents' money claims. the respondents are entitled to
separation pay.

"In cases of illegal dismissal, the accepted doctrine is that separation pay is
Lambert Pawnbrokers and Jewelry Corporation, et al. v. available in lieu of reinstatement when the latter recourse is no longer
Binamira42 expounds on the liabilities of corporate officers to illegally practical or in the best interest of the parties."44chanroblesvirtuallawlibrary
dismissed employees. The Court declared:

As a general rule, only the employer-corporation, partnership or association The Court notes that the respondents were terminated from service on
or any other entity, and not its officers, which may be held liable for illegal August 15, 2009, or more than six years ago. Their reinstatement will not be
dismissal of employees or for other wrongful acts. This is as it should be practical and to the best interest of the parties. The Court thus finds more
because a corporation is a juridical entity with legal personality separate prudence in awarding separation pay to the respondents equivalent to one
and distinct from those acting for and in its behalf and, in general, from the (1) month pay for every year of service, with a fraction of at least six (6)
people comprising it. A corporation, as a juridical entity, may act only months considered as one (1) whole year, from the time of their illegal,
through its directors, officers and employees. Obligations incurred as a dismissal up to the finality of this Decision.
result of the directors' and officers' acts as corporate agents, are not their
personal liability but the direct responsibility of the corporation they An annual interest of six percent
represent. It is settled that in the absence of malice and bad faith, a (6%) is imposed on the monetary
stockholder or an officer of a corporation cannot be made personally liable award.
for corporate liabilities. They are only solidarity liable with the corporation
for the illegal ermination of services of employees if they acted with malice In accordance with Nacar v. Gallery Frames,45 the Court now imposes an
or bad faith. In Philippine American Life and General Insurance v. interest on the monetary awards at the rate of six percent (6%) per
Gramaje, bad faith is defined as a state of mind affirmatively operating with annum from the date of finality of this Decision until full payment.
furtive design or with some motive of self-interest or ill will or for ulterior
purpose. It implies a conscious and intentional design to do a wrongful act WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision and
for a dishonest purpose or moral obliquity.43 (Citations omitted and Resolution of the Court of Appeals in CA-G.R. SP No. 121393, dated
underlining ours) September 24, 2013 and March 28, 2014, respectively, are MODIFIED.

The petitioner, Echo 2000 Commercial Corporation, is hereby declared

In the instant petition, the respondents failed to specify and sufficiently guilty of illegal dismissal. In addition to the National Labor Relations
prove the alleged acts of Enriquez, Benedicto and Atty. Wenceslao from Commission's award of attorney's fees, Echo 2000 Commercial Corporation
which malice or bad faith can be concluded. Hence, there is no reason to is likewise ORDERED to pay the respondents, Arlo C. Cortes and Dave
invoke the exception to the general rule on non-liability of corporate Somido, the following:
officers.
(a) separation pay in lieu of actual reinstatement equivalent to one (1)
In lieu of actual reinstatement, month pay for every year of service, with a fraction of at least six (6) months
considered as one (1) whole year from the time of the dismissal up to the G.R. No. 194649, August 10, 2016
finality of this Decision;
SOLIMAN SECURITY SERVICES, INC. AND TERESITA L.
(b) full backwages from the time of the illegal dismissal up to the finality of SOLIMAN, Petitioners, v. IGMEDIO C. SARMIENTO, JOSE JUN CADA AND
this Decision; and ERVIN R. ROBIS, Respondents.

DECISION
(c) interest on all monetary awards at the rate of 6% per annum from the
finality of this Decision until full payment. PEREZ, J.:

This is a Petition for Review on Certiorari1 under Rule 45 of the Rules of

The amounts awarded as moral and exemplary damages by the National
Court, assailing the Decision2dated 27 August 2010 and the
Labor Relations Commission to Arlo C. Cortes and Dave Somido are however
Resolution3 dated 25 November 2010 of the Court of Appeals in CA-G.R. SP
deleted for lack of basis.
No. 110905, which affirmed the 2 June 2009 Decision4 of the National Labor
Relations Commission (NLRC) declaring respondents Igmedio C. Sarmiento
The case is REMANDED to the Labor Arbiter, who is hereby DIRECTED to
(Sarmiento), Jose Jun Cada (Cada), and Ervin R. Robis (Robis) to have been
COMPUTE the monetary benefits awarded in accordance with this Decision.
illegally dismissed from employment.
SO [Link] The Antecedent Facts

Velasco, Jr., (Chairperson), Peralta, Villarama, Jr., and Jardeleza, JJ.,

[Link] This case stemmed from a complaint filed by respondents against
petitioners Soliman Security Services, Inc. (the agency) and Teresita L.
Soliman (Teresita) for illegal dismissal; underpayment of salaries, overtime
pay and premium pay for holiday and rest day; damages; attorney's fees;
illegal deduction and non-payment of ECOLA.

Respondents were hired as security guards by petitioner Soliman Security

Services, Inc. and were assigned to Interphil Laboratories, working seven (7)
days a week for twelve (12) straight hours daily. Respondents alleged that
during their employment - from May 1997 until January 2007 for Robis and
from May 2003 until January 2007 for Sarmiento and Cada — they were
paid only P275.00 a day for eight (8) hours of work or P325.00 for twelve
(12) hours of work but were not paid ECOLA, night shift differentials, holiday
pay, as well as rest day premiums. For cash bond and mutual aid
contributions, the amounts of P400.00 and P100.00, respectively, were
deducted from their salaries per month. Respondents claimed that they
sought a discussion of the nonpayment of their benefits with petitioner parties submitted their respective position papers, the Executive Labor
Teresita Soliman but the latter refused to take heed and told them to tender Arbiter rendered a decision on 4 January 2008.14chanrobleslaw
their resignations instead. According to respondents, on 21 January 2007,
they received an order relieving them from their posts and since then, they Finding that respondents' failure to comply with the Memoranda amounted
were not given any assignments. to abandonment, the Labor Arbiter dismissed the complaint.15 The Labor
Arbiter concluded that there can be no dismissal to speak of, much less an
On the other hand, the agency's version of the story hinges on an alleged illegal dismissal. On appeal, the NLRC reversed the 4 January 2008 decision
placement of the respondents under a "floating status." The agency of the the Executive Labor Arbiter, ultimately finding respondents to have
admitted relieving the respondents from duty on 20 January 2007 but insists been illegally dismissed. The NLRC ruled that the letters directing
that the same was only done pursuant to its contract with client Interphil respondents to "clarify their intentions" were not in the nature of return-to-
Laboratories. To support this claim, petitioners presented a standing work orders, which may effectively interrupt their floating status. The NLRC
contract5 with Astrazeneca Pharmaceuticals, Interphil's predecessor-in- observed that the Memoranda received by respondents were but mere
interest. The contract contained stipulations pertaining to the client's policy afterthoughts devised after the case for illegal dismissal was filed. The NLRC
of replacing guards on duty every six (6) months without repeat assignment. also put the agency to task for failing to traverse the guards' averment that
The agency further posits that respondent guards were directed several there were other employee-guards who stayed with the same client beyond
times to report to the office for their new assignments but they failed to the six-month term imposed.
comply with such directives.
Aggrieved, the petitioners brought the case to the Court of Appeals, asking
A review of the records reveals the following timeline: (1) on 20 January the court to issue an extraordinary writ of certiorari to reverse the NLRC
2007, the agency sent respondents notices informing them that they were decision. Reiterating that the agency had no legitimate reasons for placing
being relieved from their current posts pursuant to a standing contract with respondents on prolonged floating status, the appellate court affirmed the
Interphil Laboratories6 with directives for respondents to report to the decision of the NLRC. The dispositive portion of the NLRC decision
office for their new assignments; (2) on 7 February 2007, the agency sent reads:ChanRoblesVirtualawlibrary
another letter addressed to Robis, directing him to report to the office for
his new assignment;7 (3) on 22 February 2007, the first complaint for illegal WHEREFORE, premises considered, the decision of the Executive Labor
dismissal was filed with the Labor Arbiter;8 (4) on 26 March 2007, a hearing Arbiter Fatima Jambaro-Franco dated 4 January 2008 is reversed and set
before the Executive Labor Arbiter was conducted, where petitioner aside and a new one is rendered ordering [petitioners] to pay [respondents]
agency's representative presented respondents an offer to return to the following:
work;9 (5) the agency sent respondents letters dated 2410 and 2611April
2007, directing them to clarify their intentions as they have not been chanRoblesvirtualLawlibrary1. Backwages from 21 January 2007 until finality
reporting to seek new assignments; (6) on 3 August 2007, respondents filed of this Decision;
a Supplemental Complaint,12 the purpose of which was to anticipate the
possibility that the agency might set up the defense of pre-maturity of filing 2. Separation pay equivalent to one-month salary for every year of service
of the constructive dismissal complaint; (7) respondents executed their from the date of employment as appearing in the complaint also up to
respective complaint affidavits on 8 August 2007;13 (8) and finally after the finality of this Decision; and cralawlawlibrary
 Constructive Dismissal
3. Salary differentials for the period not yet barred by prescription.
Though respondents were not per se dismissed on 20 January 2007 when
16
All other claims are dismissed for lack of merit. chanroblesvirtuallawlibrary they were ordered relieved from their posts, we find that they were
constructively dismissed when they were not given new assignments. As
Petitioners sought a reconsideration of the decision but the appellate court previously mentioned, placing security guards under floating status or
denied the same. Hence, this Petition for Review on Certiorari. temporary off-detail has been an established industry practice. It must be
Our Ruling emphasized, however, that they cannot be placed under floating status
indefinitely; thus, the Court has applied Article 29221 (formerly Article 286)
of the Labor Code by analogy to set the specific period of temporary off-
After a careful evaluation of the records of the case, this Court finds no detail to a maximum of six (6) months.22 It must also be clarified that such
reversible error in the NLRC decision as affirmed by the Court of Appeals. provision does not entitle agencies to retain security guards on floating
The petition is denied for lack of merit. status for a period of not more than six (6) months for whatever reason.
Placing employees on floating status requires the dire exigency of the
Placement on floating status as a management prerogative employer's bona fide suspension of operation. In security services, this
happens when there is a surplus of security guards over available
The Court is mindful of the fact that most contracts for services stipulate assignments as when the clients that do not renew their contracts with the
that the client may request the replacement of security guards assigned to security agency are more than those clients that do.23chanrobleslaw
it.17 Indeed, the employer has the right to transfer or assign its employees
from one area of operation to another, "provided there is no demotion in The crux of the controversy lies in the consequences of the lapse of a
rank or diminution of salary, benefits, and other privileges, and the transfer significant period of time without respondents having been reassigned.
is not motivated by discrimination or bad faith, or effected as a form of Petitioner agency faults the respondents for their repeated failure to
punishment or demotion without sufficient cause."18 During that period of comply with the directives to report to the office for their new assignments.
time when they are in between assignments or when they are made to wait To support its argument, petitioner agency submitted in evidence notices
for new assignments after being relieved from a previous post, guards are addressed to respondents, which read:ChanRoblesVirtualawlibrary
considered on temporary "off-detail" or under "floating status". It has long
been recognized by this Court that the industry practice of placing security You are directed to report to the undersigned to clarify your intentions as
guards on floating status does not constitute dismissal, as the assignments you have not been reporting to seek a new assignment after your relief
primarily depend on the contracts entered into by the agency with third from Interphil.
parties19 and the same is a valid exercise of management prerogative.
However, such practice must be exercised in good faith and courts must be To this date, we have not received any update from you neither did you
vigilant in assessing the different situations, especially considering that the update your government requirements x x x
security guard does not receive any salary or any financial assistance
provided by law when placed on floating status.20chanrobleslaw We are giving you up to May 10, 2007 to comply or we will be forced to
drop you from our roster and terminate your services for abandonment of
work and insubordination.
Lack of service agreement for a continuous period of 6 months as an
24
Consider this our final warning. (Emphasis ours) authorized cause for termination

As for respondents, they maintain that the offers of new assignments were It is significant to note that had the reason for such failure to reassign
mere empty promises. Respondents claim that they have been reporting to respondents been the lack of service agreements for a continuous period of
the office for new assignments only to be repeatedly turned down and six (6) months, petitioner agency could have exercised its right to terminate
ignored by petitioner's office personnel.25cralawredchanrobleslaw respondents for an authorized cause upon compliance with the procedural
requirements.
We rule that such notices were mere afterthoughts. The notices were
allegedly sent to respondents on 24 and 26 April 24 2007, a month after the On this score, Department Order No. 14, Series of 200126 (DO 14-01) of the
hearing before the Executive Labor Arbiter. By the time the notices were Department of Labor and Employment is instructive. Section 9.3 of the same
sent, a complaint for illegal dismissal with a prayer for reinstatement was
provides:ChanRoblesVirtualawlibrary
already filed. In fact, the agency, through its representative, already had the
chance to discuss new assignments during the hearing before the Labor 9.3 Reserved status - x x x
Arbiter. Instead of taking the opportunity to clarify during the hearing that
respondents were not dismissed but merely placed on floating status and xxxx
instead of specifying details about the available new assignments, the
agency merely gave out empty promises. No mention was made regarding If after a period of 6 months, the security agency/employer cannot provide
specific details of these pending new assignments. If respondent guards work or give assignment to the reserved security guard, the latter can be
indeed had new assignments awaiting them, as what the agency has been dismissed from service and shall be entitled to separation pay as described
insinuating since the day respondents were relieved from their posts, the in subsection 6.5
agency should have identified these assignments during the hearing instead
of asking respondents to report back to the office. The agency's statement xxxx
in the notices - that respondents have not clarified their intentions because
they have not reported to seek new assignments since they were relieved In relation thereto, Section 6.5 of DO 14-01 treats such lack of service
from their posts - is specious at best. As mentioned, before these notices assignment for a continuous period of six (6) months as an authorized cause
were sent out, a complaint was already filed and a hearing before the Labor for termination of employment entitling the security guard to separation
Arbiter had already been conducted. The complaint clarified the intention of pay, to wit:ChanRoblesVirtualawlibrary
respondents. Indeed, respondents' complaint for illegal dismissal with 6.5 Other Mandatory Benefits. In appropriate cases, security guards/similar
prayer for reinstatement is inconsistent with the agency's claim that personnel are entitled to the mandatory benefits as listed below, although
respondents did not report for reassignment despite the notices directing the same may not be included in the monthly cost distribution in the
them to do so. It is evident that the notices sent by the agency were mere contracts, except the required premiums form their coverage:
ostensible offers for new assignments. It was intended to cover the illegality
of the termination of respondents' employment. a. Maternity benefit as provided under SS Law;
 b. Separation pay if the termination of employment is for authorized
cause as provided by law and as enumerated below: As for the procedural aspect, employer agencies must be reminded that to
validly terminate a security guard for lack of service assignment for a
Half-Month Pay Per Year of Service, but in no case less than One Month Pay continuous period of six months, the agency must comply with the
if separation pay is due to: provisions of Article 289 (previously Art. 283) of the Labor Code,29 "which
1. Retrenchment or reduction of personnel effected by management mandates that a written notice should be served on the employee on
to prevent serious losses; temporary off-detail or floating status and to the DOLE one (1) month
before the intended date of termination."30 Sec. 9.2 of DO 14-01 provides
2. Closure or cessation of operation of an establishment not due to for a similar procedure, to wit:ChanRoblesVirtualawlibrary
serious losses or financial reverses;
9.2 Notice of Termination - In case of termination of employment due to
3. Illness or disease not curable within a period of 6 months and authorized causes provided in Article 283 and 284 of the Labor Code and in
continued employment is prohibited by law or prejudicial to the the succeeding subsection, the employer shall serve a written notice on the
employee's health or that of co-employees; security guard/personnel and the DOLE at least one (1) month before the
intended date thereof.
4. Lack of service assignment for a continuous period of 6
months. (Emphasis and underlining supplied) It cannot be denied that the placement of security guards on floating status
may be subject to abuse by agencies, considering that they are not obliged
xxxx
to pay the security guards while placed on floating status. Recognizing the
It bears stressing that the only time a prolonged floating status is considered jurisprudence elaborating on the application of DO 14-01, we now provide a
an authorized cause for dismissal is when the security agency experiences a summary as follows:
surplus of security guards brought about by lack of clients.27 We quote with
approval the pertinent portion of the NLRC's decision as affirmed by the chanRoblesvirtualLawlibraryThe floating status period, wherein the security
appellate court, to wit:ChanRoblesVirtualawlibrary guards are not paid, should not last longer than six (6) months as provided
by law. Before the lapse of six (6) months, the agency should have recalled
Being placed on floating status is only legitimate when guaranteed by bona the security guard for a new assignment. If the agency failed to do so due to
fide business exigencies. In security services, this happens when there is a the lack of service agreements for a continuous period of six (6) months, an
surplus of security guards over available assignments as when the clients authorized cause for dismissal as per DO 14-01, the security guard may be
that do not renew their contracts with the security agency are more than considered permanently retrenched and validly dismissed upon compliance
those clients that do x x x.28chanroblesvirtuallawlibrary with the procedural requirements laid down by the Department Order and
the Labor Code.31 It must be emphasized however, that in order for the
Otherwise stated, absent such justification, the placing of a security guard
dismissal to be valid and in order for the employer agency to free itself from
on floating status is tantamount to constructive dismissal. And, when the
any liability for illegal dismissal, the justification for the failure to reassign
floating status is justified, the lapse of a continuous period of six (6) months
should be the lack of service agreements for a continuous period of six (6)
results in an authorized cause for termination of employment, the security
months, aside from the other authorized causes provided by the Labor
guard being entitled, however, to separation pay.
Code. Corollarily, placing the security guard on floating status in bad faith, subsequently raised in their petition before the appellate court.
as when there is failure to reassign despite the existence of sufficient
service agreements will make the employer agency liable for illegal In the Court of Appeals, petitioners adopted a similar scheme. In their
dismissal. In such cases, there is no bona fide business exigency which calls Petition for Certiorari, they did not anymore dispute the NLRC's
for the temporary retrenchment or laying-off of the security guards. Lastly, determinations as to the monetary aspects. Instead, their arguments on the
if six (6) months have already lapsed and the employer agency failed to alleged issue of monetary awards were inserted in their Reply to Comment
either (a) reassign the security guard or (b) validly dismiss and give him/her pleading. The Court of Appeals correctly ruled that such scheme contradicts
the corresponding separation pay, the security guard may be considered to elementary due process as the arguments raised were not dealt with in the
have been constructively dismissed.32chanrobleslaw comment the Reply supposedly responds to.

On the finding that respondents are entitled to their money claims From the foregoing, it is quite obvious that the NLRC may not be faulted for
relying on the evidence presented before it when it made its computations
In its decision, the Court of Appeals discussed how the NLRC might have for underpayment. Neither may the appellate court be faulted for declaring
erred in its computations of the wages received by the private respondents. that the NLRC did not abuse its discretion. The task of resolving the issue on
However, despite such observation, the appellate court dismissed the monetary claims, purely factual, properly pertains to the NLRC as the quasi-
petition for certiorari, ultimately holding that the NLRC based its decision on judicial appellate body to which these documents were presented to review
all the evidence presented, with nary an abuse of the exercise of its the arbiter's ruling.33 The appellate court correctly ruled that the usual
discretion. The appellate court found that petitioners failed to discharge appeal in labor cases is exhausted after the NLRC has decided. Petitioner
their burden of showing at least an abuse of discretion on the part of the cannot fault the Court of Appeals in affirming the NLRC decision despite the
NLRC, when the latter found that the security guards were underpaid. alleged computational error as the special civil action of certiorari is a
Petitioners now fault the appellate court for affirming the NLRC decision remedy to correct errors of jurisdiction and not mere errors of judgment.
declaring them liable for private respondents' monetary claims. Consequently, an error of judgment that the court may commit in the
exercise of its jurisdiction is not correctable through the original civil action
Petitioners' contention is bereft of merit of certiorari.

In petitioners' Motion for Reconsideration of the NLRC decision, they The present petition is a Rule 45 petition reviewing a Rule 65 ruling of the
invested heavily in the argument about the validity of the dismissal, stating Court of Appeals. This Court's jurisdiction is thus limited to errors of law
only briefly in the penultimate paragraph their manifestation to reserve a which the appellate court might have committed in its Rule 65 ruling.34 In
purported right to submit additional evidence in a supplemental pleading, if essence, in ruling for legal correctness, "we have to view the CA's decision in
necessary to strengthen their arguments regarding the award of monetary the same context that the petition for certiorari it ruled upon was presented
claims. The Court of Appeals correctly ruled that such scheme subverts the to it; we have to examine the CA decision from the prism of whether it
reglementary periods established by law and more significantly, the NLRC correctly determined the presence or absence of grave abuse of discretion
would no longer have the opportunity to correct itself, assuming errors, in the NLRC decision before it, not on the basis of whether the NLRC
since the Motion for Reconsideration filed before it did not detail the decision on the merits of the case, was correct."35 After a meticulous review
computations regarding monetary benefits. Said computations were only of the facts of the case, the records, relevant laws and jurisprudence, we
rule that the Court of Appeals correctly determined that the NLRC did not
abuse its discretion when it held that respondents were constructively
dismissed and entitled to their monetary claims. REPUBLIC OF THE PHILIPPINES, G.R. No. 178021
represented by the CIVIL SERVICE
WHEREFORE, the petition is DENIED. The assailed 27 August 2010 Decision COMMISSION,
and 25 November 2010 Resolution of the Court of Appeals in CA-G.R. SP No. Petitioner, Present:
110905 are AFFIRMED. Accordingly, petitioners Soliman Security Services,
Inc. and Teresita L. Soliman are hereby ORDERED to pay respondents
Igmedio C. Sarmiento, Jose Jun Cada, and Ervin R. Robis, to wit: CORONA, C.J.,
1. Backwages from 21 January 2007 until finality of this decision; CARPIO,
2. Separation pay equivalent to one-month salary for every year of VELASCO, JR.,
service from the date of employment as appearing in the complaint
also up to finality of this decision; and cralawlawlibrary LEONARDO-DE CASTRO,

3. Salary differentials for the period not yet barred by prescription. BRION,

All other claims are dismissed for lack of merit. PERALTA,

BERSAMIN,
SO [Link] - versus -
DEL CASTILLO,
Velasco, Jr., (Chairperson), Peralta, Reyes, and Jardeleza, JJ., concur.
ABAD,

VILLARAMA, JR.,

PEREZ,

MENDOZA,

SERENO,

REYES, and

PERLAS-BERNABE, JJ.

MINERVA M.P. PACHEO,

Respondent. Pacheo was a Revenue Attorney IV, Assistant Chief of the Legal Division of
the Bureau of Internal Revenue (BIR) in Revenue Region No.
Promulgated: 7 (RR7), Quezon City.
January 25, 2012

On May 7, 2002, the BIR issued Revenue Travel Assignment

x --------------------------------------------------------------------------------------------------- Order (RTAO) No. 25-2002,[3] ordering the reassignment of Pacheo as
----x Assistant Chief, Legal Division from RR7 in Quezon City to RR4 in San
Fernando, Pampanga. The BIR cited exigencies of the revenue service as
basis for the issuance of the said RTAO.

DECISION

Pacheo questioned the reassignment through her Letter dated May 9,

2002[4] addressed to Rene G. Banez, then Commissioner of Internal
Revenue (CIR). She complained that the transfer would mean economic
MENDOZA, J.: dislocation since she would have to spend ₱200.00 on daily travel expenses
or approximately ₱4,000.00 a month. It would also mean physical burden on
her part as she would be compelled to wake up early in the morning for her
daily travel from Quezon City to San Fernando, Pampanga, and to return
home late at night from San Fernando, Pampanga to Quezon City. She was
Before this Court is a petition for review on certiorari under Rule 45 of the of the view that that her reassignment was merely intended to harass and
Rules of Court filed by petitioner Republic of the Philippines, represented by force her out of the BIR in the guise of exigencies of the revenue service. In
the Office of the Solicitor General (OSG), which assails the February 22, 2007 sum, she considered her transfer from Quezon City to Pampanga as
Decision[1]and the May 15, 2007 Resolution[2] of the Court of Appeals (CA) in amounting to a constructive dismissal.
CA-G.R. SP No. 93781. The CA reversed the November 21, 2005 Resolution
of the Civil Service Commission (CSC) declaring the re-assignment of
respondent Minerva M.P. Pacheos (Pacheo) not valid and ordering her Due to the then inaction of the BIR, Pacheo filed a complaint[5] dated May
reinstatement to her original station but without backwages under the 30, 2002, before the CSC- National Capital Region (CSC-NCR), praying for the
principle of no work, no pay. nullification of RTAO No. 25-2002. In its July 22, 2002 Order,[6] the CSC-NCR
treated Pacheos Complaint as an appeal and dismissed the same, without
prejudice, for failure to comply with Sections 73 and 74 of Rule V(b) of the
The Facts Uniform Rules on Administrative Cases in the Civil Service.[7]
In its Letter-reply[8] dated September 13, 2002, the BIR, through its Deputy In granting Pacheos appeal, the CSC explained:
Commissioner for Legal and Inspection Group, Edmundo P.
Guevara (Guevara), denied Pacheos protest for lack of merit. It contended
that her reassignment could not be considered constructive dismissal as she On the second issue, this Commission finds merit in appellants contention
maintained her position as Revenue Attorney IV and was designated as that her reassignment in not valid.
Assistant Chief of Legal Division. It emphasized that her appointment to the
position of Revenue Attorney IV was without a specific station.
Consequently, she could properly be reassigned from one organizational
Of pertinent application thereto is Rule III, Section 6 of CSC Memorandum
unit to another within the BIR. Lastly, she could not validly claim a vested
Circular No. 40, series of 1998, dated December 14, 1998, which provides:
right to any specific station, or a violation of her right to security of tenure.

Section 6. Other Personnel Movements. The following personnel

Not in conformity with the ruling of the BIR, Pacheo appealed her case
movements which will not require issuance of an appointment shall
before the CSC.
nevertheless require an office order by duly authorized official.

On November 21, 2005, the CSC issued Resolution No. 051697[9] granting
a. Reassignment Movement of an employee from one organizational unit to
Pacheos appeal, the dispositive portion of which reads:
another in the same department or agency which does not involve
reduction in rank, status or salary. If reassignment is done without consent
of the employee being reassigned it shall be allowed for a maximum period
WHEREFORE, the instant appeal of Minerva M.P. Pacheo is of one year. Reassignment is presumed to be regular and made in the
hereby GRANTED. The Bureau of Internal Revenue Revenue Travel interest of public service unless proven otherwise or it constitutes
Assignment Order No. 25-2002 dated May 7, 2002, on the reassignment of constructive dismissal.
Pacheo to the Legal Division Revenue Region No. 4 San Fernanado,
Pampanga, is hereby declared NOT VALID. ACCORDINGLY, Pacheo should
now be recalled to her original station. This Commission, however rules and
No assignment shall be undertaken if done indiscriminately or whimsically
so holds that the withholding by the BIR of Pacheos salary for the period she
because the law is not intended as a convenient shield for the appointing/
did not report to work is justified.
disciplining authority to harass or oppress a subordinate on the pretext of
advancing and promoting public interest.

The CSCRO No. III is directed to monitor the implementation of this

Resolution.
Reassignment of small salaried employee is not permissible if it causes
significant financial dislocation.
Although reassignment is a management prerogative, the same must be The facts established on record show that Pacheo belongs to the rank and
done in the exigency of the service without diminution in rank, status and file receiving an average monthly salary of Twenty Thousand Pesos
salary on the part of the officer or employee being temporarily reassigned. (₱20,000.00) under the salary standardization law and a monthly take home
Reassignment of small salaried employees, however is not allowed if it will pay of Fourteen Thousand Pesos (₱14,000.00). She has to spend around
cause significant financial dislocation to the employee reassigned. Four Thousand Pesos (₱4,000.00) a month for her transportation expenses
Otherwise the Commission will have to intervene. as a consequence of her reassignment, roughly twenty eight percent (28%)
of her monthly take home pay. Clearly, Pacheos salary shall be significantly
reduced as a result of her reassignment.
The primary purpose of emphasizing small salaried employees in the
foregoing rule is to protect the rank and file employees from possible abuse
by the management in the guise of transfer/reassignment. The Supreme
Court in Alzate v. Mabutas, (51 O.G. 2452) ruled:

x x x [T]he protection against invalid transfer is especially needed by lower

ranking employees. The Court emphasized this need when it ruled that
officials in the unclassified service, presidential appointees, men in the
government set up occupy positions in the higher echelon should be entitled
to security of tenure, unquestionable a lesser sol[ci]itude cannot be meant In ANORE, Ma. Theresa F., this Commission ruled:
for the little men, that great mass of Common underprivileged employees-
thousand there are of them in the lower bracket, who generally are without
connections and who pin their hopes of advancement on the merit system Anore, a lowly salaried employee, was reassigned to an isolated island 15
instituted by our civil service law. kilometers away from her original place of assignment. She has to travel by
boat with only one trip a day to report to her new place of assignment in an
office without any facilities, except its bare structure. Worst, the
In other words, in order to be embraced in the term small-salaried municipality did not provide her with transportation allowance. She was
employees, the latter must belong to the rank and file; and, his/her salary forced to be separated from her family, look for a boarding house where she
would be significantly reduced by virtue of the transfer/reassignment. Rank can stay while in the island and spend for her board and lodging. The
and file was categorized as those occupying the position of Division Chief circumstances surrounding Anores reassignment is exactly the kind of
and below, pursuant to CSC Resolution No. 1, series of 1991, dated January reassignment that is being frowned upon by law.
28, 1991.
This Commission, however, rules and so holds that the withholding by the constructively dismissed and ordering her immediate reinstatement with
BIR of her salaries is justified as she is not entitled thereto since she is full backwages and benefits.
deemed not to have performed any actual work in the government on the
principle of no work no pay.
SO ORDERED.[12]

Accordingly, Pacheo should now be reinstated to her original station In setting aside CSC Resolution Nos. 051697 and 060397, the CA held that:
without any right to claim back salary as she did not report to work either at
her new place of assignment or at her original station.[10] [Emphases in the
original] While this Court agrees that petitioners reassignment was not valid
considering that a diminution in salary is enough to invalidate such
reassignment, We cannot agree that the latter has not been constructively
Still not satisfied, Pacheo moved for reconsideration. She argued that the dismissed as a result thereof.
CSC erred in not finding that she was constructively dismissed and,
therefore, entitled to back salary.
It is well to remember that constructive dismissal does not always involve
forthright dismissal or diminution in rank, compensation, benefits and
privileges. For an act of clear discrimination, insensibility, or disdain by an
On March 7, 2006, the CSC issued Resolution No. 060397[11] denying
Pacheos motion for reconsideration. employer may become so unbearable on the part of the employee that it
could foreclose any choice by him except to forgo his continued
employment.

Undaunted, Pacheo sought recourse before the CA via a petition for review.

The management prerogative to transfer personnel must be exercised

without grave abuse of discretion and putting to mind the basic elements of
In its February 22, 2007 Decision, the CA reversed the CSC Resolution and justice and fair play. The employer must be able to show that the transfer is
ruled in favor of Pacheo, the fallo of which states: not unreasonable, inconvenient, or prejudicial to the employee.

WHEREFORE, the petition is GRANTED. Resolution nos. In this case, petitioners reassignment will result in the reduction of her
051697 and 060397 dated November 21, 2005 and March 7, 2006, salary, not to mention the physical burden that she would suffer in waking
respectively, of the Civil Service Commission are REVERSED and SET up early in the morning to travel daily from Quezon City to San Fernando,
ASIDE. A new judgment is hereby entered finding petitioner to have been Pampanga and in coming home late at night.
 Accordingly, Pacheo should now be reinstated to her original station
without any right to claim back salary as she did not report for work either
Clearly, the insensibility of the employer is deducible from the foregoing at her new place of assignment or at her original station.
circumstances and petitioner may have no other choice but to forego her
continued employment.

Pacheo, while belonging to the rank-and-file employees, is holding a

responsible position as an Assistant Division Chief, who could not just
Moreover, it would be inconsistent to hold that the reassignment was not
abandon her duties merely because she protested her re-assignment and
valid due to the significant reduction in petitioners salary and then rule that filed an appeal afterwards.
there is no constructive dismissal just because said reduction in salary will
not render petitioner penniless if she will report to her new place of
assignment. It must be noted that there is constructive dismissal when the
reassignment of an employee involves a diminution in pay.
We do not agree.

If there is no work performed by the employee there can be no wage or pay,

unless of course the laborer was able, willing and ready to work but was
Having determined that petitioner has been constructively dismissed as a illegally locked out, dismissed or suspended. The No work, no pay principle
result of her reassignment, We shall resolve whether or not she is entitled contemplates a no work situation where the employees voluntarily absent
to backwages. themselves.

In denying petitioners claim for backwages, the CSC held: In this case, petitioner was forced to forego her continued employment and
did not just abandon her duties. In fact, she lost no time in protesting her
reassignment as a form of constructive dismissal. It is settled that the filing
This Commission, however, rules and so holds that the withholding by the of a complaint for illegal dismissal is inconsistent with a charge of
BIR of her salaries is justified as she is not entitled thereto since she is abandonment. The filing of the complaint is proof enough of his desire to
deemed not to have performed any actual work in the government on the return to work, thus negating any suggestion of abandonment.
principle of no work no pay.

Neither do we agree with the OSG when it opined that:

No one in the Civil Service should be allowed to decide on whether she is Department Head also may, from time to time, in the interest of the service,
going to accept or not any work dictated upon by the exigency of the change the distribution among the several Bureaus and offices of his
service. One should consider that public office is a public trust and that the Department of the employees or subordinates authorized by law, such
act of respondent CIR enjoys the presumption of regularity. To uphold the cannot be undertaken when the transfer of the employee is with a view to
failure of respondent to heed the RTAO would result in chaos. Every his removal. Such cannot be done without the consent of the
employee would put his or her vested interest or personal opinion over and employee. And if the transfer is resorted to as a scheme to lure the
above the smooth functioning of the bureaucracy. employee away from his permanent position, such attitude is improper as it
would in effect result in a circumvention of the prohibition which safeguards
the tenure of office of those who are in the civil service. It is not without
reason that this Court made the following observation:

Security of tenure is a right of paramount value as recognized and

guaranteed under Sec. 3, Art. XIII of the 1987 Constitution. To permit circumvention of the constitutional prohibition in question by
allowing removal from office without lawful cause, in the form or guise of
transfers from one office to another, or from one province to another,
The State shall afford full protection to labor, xxx and promote full without the consent of the transferee, would blast the hopes of these young
employment and equality of employment opportunities for all. It shall civil service officials and career men and women, destroy their security and
guarantee the rights of all workers to xxx security of tenure xxx tenure of office and make for a subservient, discontented and inefficient
civil service force that sways with every political wind that blows and plays
up to whatever political party is in the saddle. That would be far from what
the framers of our Constitution contemplated and desired. Neither would
that be our concept of a free and efficient Government force, possessed of
Such constitutional right should not be denied on mere speculation of any self-respect and reasonable ambition.
similar unclear and nebulous basis.
Clearly, the principle of no work, no pay does not apply in this case. As held
In Garcia, et al. v. Lejano, et al., the Supreme Court rejected the OSGs in Neeland v. Villanueva, Jr:
opinion that when the transfer is motivated solely by the interest of the
service of such act cannot be considered violative of the Constitution, thus:
We also cannot deny back salaries and other economic benefits on the
ground that respondent Clerk of Court did not work. For the principle of no
We do not agree to this view. While temporary transfers or assignments work, no pay does not apply when the employee himself was forced out of
may be made of the personnel of a bureau or department without first job. Xxx Indeed, it is not always true that back salaries are paid only when
obtaining the consent of the employee concerned within the scope of work is done. Xxx For another, the poor employee could offer no work since
Section 79 (D) of the Administrative Code which party provides that The he was forced out of work. Thus, to always require complete exoneration or
performance of work would ultimately leave the dismissal uncompensated TO COMPLY WITH BIR RTAO No. 25-2002 WHICH IS IMMEDIATELY
no matter how grossly disproportionate the penalty was. Clearly, it does not EXECUTORY PURSUANT TO SECTION 24 (F) OF P.D. 807.
serve justice to simply restore the dismissed employee to his position and
deny him his claim for back salaries and other economic benefits on these
grounds. We would otherwise be serving justice in halves. WHETHER OR NOT RESPONDENT SUFFERED A DIMINUTION IN HER SALARY
IN RELATION TO SECTION 6, RULE III OF CSC MEMORANDUM CIRCULAR
No. 40, SERIES OF 1998, DATED DECEMBER 14, 1998, AS A RESULT OF THE
An illegally dismissed government employee who is later ordered reinstated ISSUANCE [OF] BIR RTAO No. 25-2002 ORDERING HER REASSIGNMENT
is entitled to back wages and other monetary benefits from the time of his FROM BIR RR No. 7 IN QUEZON CITY TO BIR RR No. 4 IN SAN FERNANDO,
illegal dismissal up to his reinstatement. This is only fair and sensible PAMPANGA.[14]
because an employee who is reinstated after having been illegally dismissed
is considered as not having left his office and should be given a comparable
compensation at the time of his reinstatement. In her Memorandum,[15] Pacheo asserts that RTAO No. 25-2002, on the
pretense of the exigencies of the revenue service, was solely meant to
harass her and force her to resign. As a result of her invalid reassignment,
When a government official or employee in the classified civil service had she was constructively dismissed and, therefore, entitled to her back
been illegally dismissed, and his reinstatement had later been ordered, for salaries and monetary benefits from the time of her illegal dismissal up to
all legal purposes he is considered as not having left his office, so that he is her reinstatement.
entitled to all the rights and privileges that accrue to him by virtue of the
office that he held.[13]
In its own Memorandum,[16] the CSC, through the OSG, argues that
constructive dismissal is not applicable in this case because it was Pacheo
The CSC moved for reconsideration but its motion was denied by the CA in herself who adamantly refused to report for work either in her original
its May 15, 2007 Resolution. station or new place of assignment in clear violation of Section 24 (f) of
Presidential Decree (PD) No. 807.[17] Citing jurisprudence,[18] the CSC avers
that the RTAO is immediately executory, unless otherwise ordered by the
Hence, this petition. CSC. Therefore, Pacheo should have first reported to her new place of
assignment and then appealed her case to the CSC if she indeed believed
THE ISSUES that there was no justification for her reassignment. Since Pacheo did not
report for work at all, she is not entitled to backwages following the
WHETHER OR NOT THE ASSAILED DECISION IS LEGALLY CORRECT IN
principle of no work, no pay.
DECLARING THAT RESPONDENT WAS CONSTRUCTIVELY DISMISED AND
ENTITLED TO BACK WAGES, NOTWITHSTANDING RESPONDENTS REFUSAL
THE COURTS RULING Significantly, Section 6, Rule III of CSC Memorandum Circular No. 40, series
of 1998, defines constructive dismissal as a situation when an employee
quits his work because of the agency heads unreasonable, humiliating, or
The petition fails to persuade. demeaning actuations which render continued work impossible. Hence, the
employee is deemed to have been illegally dismissed. This may occur
although there is no diminution or reduction of salary of the employee. It
may be a transfer from one position of dignity to a more servile or menial
It appears undisputed that the reassignment of Pacheo was not valid. In its
job.
memorandum, the OSG initially argues for the validity of RTAO No. 25-2002
authorizing Pacheos reassignment from Quezon City to San Fernando,
Pampanga. Later, however, it specifically prays for the reinstatement of CSC
Resolution Nos. 051697 and 060397, which categorically declared RTAO No. The CSC, through the OSG, contends that the deliberate refusal of Pacheo to
25-2002 as not valid. In seeking such relief, the OSG has effectively accepted report for work either in her original station in Quezon City or her new place
the finding of the CSC, as affirmed by the CA, that Pacheos reassignment of assignment in San Fernando, Pampanga negates her claim of constructive
was indeed invalid. Since the issue of Pacheos reassignment is already dismissal in the present case being in violation of Section 24 (f) of P.D. 807
settled, the Court finds it futile to pass upon the same at this point. [now Executive Order (EO) 292, Book V, Title 1, Subtitle A, Chapter 5,
Section 26 (6)].[20] It further argues that the subject RTAO was immediately
executory, unless otherwise ordered by the CSC. It was, therefore,
incumbent on Pacheo to have reported to her new place of assignment and
The question that remains to be resolved is whether or not Pacheos
then appealed her case to the CSC if she indeed believed that there was no
assignment constitutes constructive dismissal and, thus, entitling her to
justification for her reassignment.
reinstatement and backwages. Was Pacheo constructively dismissed by
reason of her reassignment?

The Court agrees with the CA on this point. Anent the first argument of CSC, the Court cannot sustain the proposition. It
was legally impossible for Pacheo to report to her original place of
assignment in Quezon City considering that the subject RTAO No. 25-2002
While a temporary transfer or assignment of personnel is permissible even also reassigned Amado Rey B. Pagarigan (Pagarigan) as Assistant Chief,
without the employee's prior consent, it cannot be done when the transfer Legal Division, from RR4, San Fernando, Pampanga to RR7, Quezon City, the
is a preliminary step toward his removal, or a scheme to lure him away from very same position Pacheo formerly held. The reassignment of Pagarigan to
his permanent position, or when it is designed to indirectly terminate his the same position palpably created an impediment to Pacheos return to her
service, or force his resignation. Such a transfer would in effect circumvent original station.
the provision which safeguards the tenure of office of those who are in the
Civil Service.[19]
The Court finds Itself unable to agree to CSCs argument that the subject
RTAO was immediately executory. The Court deems it necessary to
distinguish between a detail and reassignment, as they are governed by In the case at bench, the lateral movement of Pacheo as Assistant Chief,
different rules. Legal Division from Quezon City to San Fernando, Pampanga within
the same agency is undeniably a reassignment. The OSG posits that she
should have first reported to her new place of assignment and then
subsequently question her reassignment. It is clear, however, from E.O. 292,
A detail is defined and governed by Executive Order 292, Book V, Title 1, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (7) that there is no such
Subtitle A, Chapter 5, Section 26 (6), thus: duty to first report to the new place of assignment prior to questioning an
(6) Detail. A detail is the movement of an employee from one agency to alleged invalid reassignment imposed upon an employee. Pacheo was well
another without the issuance of an appointment and shall be allowed, only within her right not to report immediately to RR4, San Fernando, Pampanga,
for a limited period in the case of employees occupying professional, and to question her reassignment.
technical and scientific positions. If the employee believes that there is no Reassignments involving a reduction in rank, status or salary violate an
justification for the detail, he may appeal his case to the Commission. employees security of tenure, which is assured by the Constitution, the
Pending appeal, the decision to detail the employee shall be executory
Administrative Code of 1987, and the Omnibus Civil Service Rules and
unless otherwise ordered by the Commission. [Underscoring supplied] Regulations. Security of tenure covers not only employees removed without
cause, but also cases of unconsented transfers and reassignments, which
are tantamount to illegal/constructive removal.[21]
On the other hand, a reassignment is defined and governed by E.O. 292,
Book V, Title 1, Subtitle A, Chapter 5, Section 26 (7), thus:

(7) [Link] employee may be reassigned from one organizational The Court is not unaware that the BIR is authorized to assign or reassign
unit to another in the same agency; Provided, That such reassignment shall internal revenue officers and employees as the exigencies of service may
not involve a reduction in rank, status or salaries. [Underscoring supplied] require. This authority of the BIR, however, should be prudently exercised in
accordance with existing civil service rules.

Having ruled that Pacheo was constructively dismissed, is she entitled to

The principal distinctions between a detail and reassignment lie in the place reinstatement and back wages? The Court agrees with the CA that she is
where the employee is to be moved and in its effectivity pending appeal entitled to reinstatement, but finds Itself unable to sustain the ruling that
with the CSC. Based on the definition, a detail requires a movement from she is entitled to full back wages and benefits. It is a settled
one agency to another while a reassignment requires a movement within jurisprudence[22] that an illegally dismissed civil service employee is entitled
the same agency. Moreover, pending appeal with the CSC, an order to detail to back salaries but limited only to a maximum period of five (5) years, and
is immediately executory, whereas a reassignment order does not become not full back salaries from his illegal dismissal up to his reinstatement.
immediately effective.
WHEREFORE, the petition is DENIED. The assailed February 22,
2007 Decision and May 15, 2007 Resolution of the Court of Appeals, in CA-
G.R. SP No. 93781, are
hereby AFFIRMED with MODIFICATION that respondent Minerva
M.P. Pacheo is hereby ordered reinstated without loss of seniority rights but
is only entitled to the payment of back salaries corresponding to five (5)
years from the date of her invalid reassignment on May 7, 2002.

SO ORDERED.