Bitoy Javier vs. Fly Ace Corporation

PETITIONER Bitoy Javier alleged that he was an employee of respondent Fly Ace Corp., performing various tasks at its warehouse such as cleaning and arranging the canned items before their delivery to certain locations, except in instances when he would be ordered to accompany the company’s delivery vehicles as pahinante. To support his claim, Javier adduced no other evidence except an affidavit executed by one Bengie Valenzuela, who only attested that he would frequently see Javier at the workplace where he was also hired as stevedore. Does Javier’s evidence suffice to establish employer-employee relationship between Fly Ace and him?

Ruling: No.

Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk and cheese. It is, therefore, incumbent upon the Court to determine whether the party on whom the burden to prove lies was able to hurdle the same. “No particular form of evidence is required to prove the existence of such employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Hence, while no particular form of evidence is required, a finding that such relationship exists must still rest on some substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as well as its qualitative aspects.” Although substantial evidence is not a function of quantity but rather of quality, the x x x circumstances of the instant case demand that something more should have been proffered. Had there been other proofs of employment, such as x x x inclusion in petitioner’s payroll, or a clear exercise of control, the Court would have affirmed the finding of employer-employee relationship.”

In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such claim by the requisite quantum of evidence. “Whoever claims entitlement to the benefits provided by law should establish his or her right thereto x x x.”

In this case, the labor arbiter and the Court of Appeals (CA) both concluded that Javier failed to establish his employment with Fly Ace. All that Javier presented were his self-serving statements purportedly showing his activities as an employee of Fly Ace. He failed to pass the substantiality requirement to support his claim. Hence, the Court sees no reason to depart from the findings of the CA.

While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work in the company premises during weekdays arranging and cleaning grocery items for delivery to clients, no other proof was submitted. The lone affidavit executed by one Bengie Valenzuela was unsuccessful in strengthening Javier’s cause. All Valenzuela attested to was that he would frequently see Javier at the workplace where the latter was also hired as stevedore. Tthe Court cannot ignore the inescapable conclusion that Javier’s mere presence at the workplace falls short in proving employment therein. The affidavit could have bolstered Javier’s claim of being tasked to clean grocery items when there were no scheduled delivery trips, but no information was offered simply because the witness had no personal knowledge of Javier’s employment status. The Court cannot accept Javier’s statements, hook, line and sinker. (Bitoy Javier vs. Fly Ace Corp./Flordelyn Castillo, G.R. No. 192558, Feb. 15, 2012).

Chavez v. NLRC448 SCRA 478

Facts

Petitioner Pedro Chavez was hired as truck driver of Private Respondent Supreme Packaging, Inc. Chavez requested to avail himself of the benefits that a regular employees were receiving but his request was denied Chavez filed before NLRC a complaint for regularization. Later on he was dismissed by SPI He later on filed an amended complaint for illegal dismissal

Issue1. W/N there existed an employer-employee relationship between SPI and Chavez?2. W/N Chavez is an independent contractor?

Held1. Yes, there existed an employer-employee relationship between SPI and Chavez

Applying four-fold test, all elements are present1. selection and engagement of the employee - it was SPI who engaged the services of Chavez without intervention of third party2. payment of wages - that petitioner was paid on per trip basis is not significant, this is merely a method of computing compensation and not a basis for determining the existence or absence of er-ee relationship3. power of dismissal - power to dismiss was inherent in the fact that they engaged the services of Chavez as driver

4. power to control employee's conduct - an employee is subject to employer's power to control the means and method by which the work is to be performed while an independent contractor is free from control and supervision of employer

* Manifestation of Power of Control of SPI to Chavez

1.truck was owned by SPI2.express instruction in the method of delivery3.instruction on parking of delivery truck4.instruction on when and where Chavez would perform his task by issuing to him gate passes and routing slips

2. Chavez is not an Independent Contractor

* Proof that Chavez is not an Independent Contractor

1.Chavez did not own the truck2.SPI did not have substantial capitalization or investment3.Delivery was exclusively done for SPI for 10years

* Er-Ee Relationship cannot be negated by expressly repudiating it in contract and providing therein that the employee is an independent contractor. Indeed the employment status of the person is defined and prescribed by law and not by what parties say it should be.

Lopez vs. Bodega City [G.R. No. 155731. Sept 3, 2007]

Facts: Under a concessionaire agreement, Lopez was the "lady keeper" of Bodega City tasked with manning its ladies' comfort room. Yap (owner of Bodega) alleged that Lopez have acted in a hostile manner against a lady customer after the customer informed the management that Lopez was sleeping while on duty. Yap later informed Lopez of the termination of the concessionaire agreement between them. Lopez sued for illegal dismissal.

Issue: Was Lopez an employee of Bodega City?

Held:

Payment of wages She presented a petty cash voucher showing that she received an allowance for five (5) days. However, this solitary petty cash voucher did not prove that she had been receiving salary from respondents or that she had been respondents' employee for 10 years. If she was really an employee of respondents for that length of time, she should have been able to present salary vouchers or pay slips and not just a single petty cash voucher. Also, she could have easily shown other pieces of evidence such as a contract of employment, SSS or Medicare forms, or certificates of withholding tax on compensation income; or she could have presented witnesses to prove her contention that she was an employee of respondents. But she failed to do so.

Control It is true that petitioner was required to follow rules and regulations prescribing appropriate conduct while within the premises of Bodega City. However, this was imposed upon petitioner as part of the terms and conditions in the concessionaire agreement embodied in a 1992 letter of Yap addressed to petitioner. The concessionaire agreement merely stated that petitioner shall maintain the cleanliness of the ladies' comfort room and observe courtesy guidelines that would help her obtain the results they wanted to achieve. There is nothing in the agreement which specifies the methods by which petitioner should achieve these results. Respondents did not indicate the manner in which she should go about in maintaining the cleanliness of the ladies' comfort room.

Fact that she did not sign document does not negate existence of agreement; estoppel applies While she did not affix her signature to the letter – the document evidencing the subject concessionaire agreement, the fact that she performed the tasks indicated in the said agreement for a period of three years without any complaint or question only goes to show that she has given her implied acceptance of or consent to the said agreement.

The principle of estoppel in pais applies wherein -- by one's acts, representations or admissions, or silence when one ought to speak out -- intentionally or through culpable negligence, induces another to believe certain facts to exist and to rightfully rely and act on such belief, so as to be prejudiced if the former is permitted to deny the existence of those facts.

ID card alone not sufficient proof of employment

It is true that the words "EMPLOYEE'S NAME" appear printed below petitioner's name. However, she failed to dispute respondents' evidence that other "contractors" of Bodega City were also issued the same ID cards for the purpose of enabling them to enter the premises of Bodega City.

Coca Cola Bottlers (Phils.) vs. Climaco[GR. No. 146881,Feb. 5, 2007]

Facts:

Coca-Cola hired Dr. Climaco by virtue of a Retainer Agreement with a compensation fixed at P3,000.00 per month. Dr. Climacomay charge professional fee for hospital services rendered in line with his specialization. He is to observe clinic hours at the company premises from Monday to Saturday at least two (2) hours each day unless such schedule is otherwise changed by the company as the situation so warrants, subject to the labor Code provisions on Occupational Safety and Health Standards as the Company may determine. It was also expressly stated in the contract that no employer-employee relationship shall exist between the retainer and the company. The doctor also agrees to perform the duties and obligations enumerated in the Comprehensive Medical Plan. After the expiration of the 1-year retainer agreement, respondent continued to perform his functions as a company doctor to Coca-Cola until he received a letter from the latter concluding their retainership agreement effective 30 days from receipt thereof. In turn, he filed a complaint before the NLRC, seeking recognition as a regular employee and prayed for the payment of all benefits of a regular employee.

Issue:

Whether or not Dr. Climaco was Coca-Cola’s employee

Held: The circumstances of this case show that no employer-employee relationship exists between the parties because the company lacked the power of control over the performance by respondent of his duties. The company in providing a Comprehensive Medical Plan, merely issued guidelines in order to ensue that the end result was achieved, but did not control the means and methods by which respondent performed his assigned tasks. The company lacks the power of control that the contract provides that the respondent shall be directly responsible to the employee concerned and their dependents for any injury, harm or damage caused through professional negligence, incompetence, or other valid causes of action.

The schedule of work and the requirement to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement. The Retainership Agreement granted to both parties the power to terminate their relationship upon giving a 30-day notice. Hence, Petitioner Company did not wield the sole power of dismissal or termination. There is nothing wrong with the employment of respondent as a retained physician of petitioner company and upholds the validity of the retainership agreement which clearly states that no employer-employee relationship existed between the parties.

FRANCISCO vs. NLRC [GR. No.170087 Aug. 31, 2006]

Facts:

Angelina Francisco has held several positions in Kasei Corporation, to wit: (1) Accountant and Corporate Secretary; (2) Liaison Officer to the City of Makati; (3) Corporate Secretary; and (4)Acting Manager.

She performed the work of Acting Manager for five years but later she was replaced by Liza R. Fuentes as Manager. Then, Kasei Corporation reduced her salary and was not paid her mid-year bonus allegedly because the company was not earning well. She made repeated follow-ups with the company cashier but she was advised that the company was not earning well. Ultimately, she did not report for work and filed an action for constructive dismissal before the labor arbiter.

Issue:

Was Francisco an employee of Kasei Corporation?

Held:

In certain cases where the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. There are instances when, aside from the employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished, economic realities of the employment relations help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employer’s power to control the employee with respect to the means and methods by which the work is

to be accomplished; and

(2) the underlying economic realities of the activity or relationship.

This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on; and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latter’s employment.

Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, such as:

1. the extent to which the services performed are an integral part of the employer’s business; 2. the extent of the worker’s investment in equipment and facilities; 3. the nature and degree of control exercised by the employer; 4. the worker’s opportunity for profit and loss;

5. the amount of initiative, skill, judgment or foresight required for the success of the claimed independent enterprise; 6. the permanency and duration of the relationship between the worker and the employer; and 7. the degree of dependency of the worker upon the employer for his continued employment in that line of business.

The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji Kamura, the corporation’s Technical Consultant. She reported for work regularly and served in various capacities, with substantially the same job functions, that is, rendering accounting and tax services to the company and performing functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of engagement.

There can be no other conclusion that she is an employee of respondent Kasei Corporation. She was selected and engaged by the company for compensation, and is economically dependent upon respondent for her continued employment in that line of business. Her main job function involved accounting and tax services rendered to the corporation on a regular basis over an indefinite period of engagement. The corporation hired and engaged her for compensation, with the power to dismiss for cause. More importantly, the corporation had the power to control her with the means and methods by which the work is to be accomplished.

Orozco v CAAugust 13, 2008 J. Nachura

Subject Area: employer-employee relationship, control test, economic reality test

Facts: Orozco was a columnist of PDI whose column was discontinued. She is now suing for illegal dismissal as an employee.

Issue: (In the first place) WON a columnist is an employee of the newspaper.

Decision: No.

Ratio: Control Test - The main determinant of the ee-er relationship is whether the rules set by the er  are meant to control not just the results of the work but also the means and methods to e used by the hired party in order to achieve the results. Petitioner was engaged as a columnist for her talent, skill, experience, and unique viewpoint as a feminist advocate. How she utilized all these in writing her column was not subject to dictation. Any rules imposed on her as to length of articles, timeof submission, etc. are merely general guidelines dictated by the nature of the newspaper business itself.

Economic Reality Test – This is especially appropriate when there is no written agreement, as in  this case. The benchmark is the economic dependence of the worker on the employee. Petitioner’s main occupation is not as columnist but as women’s rights advocate and she also contributes articles to other publications.

PEOPLE’s BROADCASTING (BOMBO RADYO PHILS., INC.) v. SEC OF DOLE

The Department of Labor and Employment is fully empowered to make a determination as to the existence of an employer-employee relationship in the exercise of its visitorial and enforcement power.

Jandeleon Juezan (respondent) filed a complaint against People¶s Broadcasting Service, Inc. (BomboRadyo Phils., Inc) (petitioner) for illegal deduction, non-payment of service incentive leave, 13 th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth. After the conduct of summary investigations, the DOLE Regional Director held that Juezan was an employee of Bombo Radyo, and was therefore entitled to his money claims. Bombo Radyo Radyo appealed the decision, but the DOLE dismissed the same. The CA affirmed such dismissal.

When the matter reached the SC, the CA decision was reversed and set aside. The court found that there was no ER-EE relationship between Bombo Radyo and Juezan. It was held that while the DOLE may make a determination of the existence of the ER-EE relationship, this function could not be co-extensive with the visitorial and enforcement power provided in Art.128(b) of the Labor Code. The NLRC was held to be the primary agency in determining the existence of an ER-EE relationship.

Form this decision; PAO filed a motion for clarification of decision (with Leave of Court). The PAO sought to clarify as to when the visitorial and enforcement power of the DOLE can be considered as co-extensive with the power to determine the existence of an ER-EE relationship. The Court treated the motion for clarification as a second motion for reconsideration, granting said motion and reinstating the petition.

ISSUE:

Whether or not the DOLE has the power to determine the existence of ER-EE relationship in its exercise of its visitorial and its enforcement power.?

HELD:

No limitation in the law was placed upon the power of the DOLE to determine the existence of the ER-EE relationship. No procedure was laid down where the DOLE would only make a preliminary finding, that the power was primarily held by the NLRX. The law did not say that the DOLE would first seek the NLRC’s determination of the existence of an ER-EE relationship, or that should the existence of the ER-EE relationship be disputed, the DOLE would refer the matter to the NLRC. The DOLE must have the power to determine whether or not an ER-EE relationship exists, and from there to decide whether or not to issue compliance orders in accordance with ART.128b.

The determination of the existence of an ER-EE relationship by the DOLE must be respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730 would be rendered nugatory if the alleged ER could, by the simple expedient of disputing the Er-Ee relationship, force the referral of the matter to the NLRC. The court issued the declaration that at least a prima facie showing of the absence of an Er-Ee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does successfully refute the existence of an Er-Ee relationship.

MANAGEMENT PREROGATIVESan Miguel Corporation vs NLRC

SAN MIGUEL CORPORATION VS. NLRCGR. NO. 99266 MARCH 2, 1999PURISIMA, J.:

FACTS 1.In July 1990, San Miguel Corporation, alleging the need to streamline its operations due to financial losses, shut down some of its plants and declared 55 positions as redundant, listed as follows: seventeen (17)  employees in the Business Logistics Division ("BLD"), seventeen (17) in the Ayala Operations Center (AOC), and eighteen (18) in the Magnolia-Manila Buying Station ("Magnolia-MBS").2.Consequently, the private respondent union filed several grievance cases for the said retrenched employees, praying for the redeployment of the said employees to the other divisions of the company.3.Grievance proceedings were conducted. However, most of the employees were redeployed, while others accepted early retirement. As a result only 17 employees remained when the parties proceeded to the third level (Step 3) of the grievanceprocedure.4.In a meeting on October 26, 1990, petitioner informed private respondent union that if by October 30, 1990, the remaining 17 employees could not yet be redeployed; their services would be terminated on November 2, 1990. The said meeting adjourned when Mr. Daniel S. L. Borbon II, a representative of the union, declared that there was nothing more to discuss in view of the deadlock.

ISSUE1.Whether or not San Miguel Corporation exercised a management prerogative.2.Whether or not San Miguel Corporation violated the Collective Bargaining Agreement.

HELD1.YES. Abolition of departments or positions in the company is one of the recognized management prerogatives. Noteworthy is the fact that the private respondent does not question the validity of the business move of petitioner. In the absence of proof that the act of petitioner was ill-motivated, it is presumed that petitioner San Miguel Corporation acted in good faith. In fact, petitioner acceded to the demands of the private respondent union by redeploying most of the employees involved; such that from an original 17 excess employees in BLD, 15 were successfully redeployed. In AOC, out of the 17 original excess, 15 were redeployed. In the Magnolia – Manila Buying Station, out of 18 employees, 6 were redeployed and only 12 were terminated.

2.NO, alleged violation of the CBA, is chargeable against the private respondent union. In abandoning the grievance proceedings and stubbornly refusing to avail of the remedies under the CBA, private respondent violated the mandatory provisions of the collective bargaining agreement. Collective Bargaining Deadlock is defined as "the situation between the

labor and the management of the company where there is failure in the collective bargaining negotiations resulting in a stalemate" This situation, is non-existent in the present case since there is a Board assigned on the third level (Step 3), of the grievance machinery to resolve the conflicting views of the parties. Instead of asking the Conciliation Board composed of five representatives each from the company and the union, to decide the conflict, private respondent union declared a deadlock, and thereafter, filed a notice of strike. The main purpose of the parties in adopting a procedure in the settlement of their disputes is to prevent a strike. This procedure must be followed in its entirety if it is to achieve its objective. x x x strikes held in violation of the terms contained in the collective bargaining agreement are illegal, specially when they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved.

Jimmy Areno, Jr. vs.  Sky Cable PCC –Baguio G.R. No. 180302, February 5, 2010

Facts:  

Petitioner was an employee of Respondent Sky Cable.  Pursuant to a complaint filed by a co-worker against the Petitioner, Respondent Sky Cable conducted an administrative investigation to determine the truth on the matter.  Both parties were notified and given the opportunity to be heard.  After the proper investigation, the panel found the allegations to be true, and by virtue of the Company’s Code of Discipline, the Petitioner was suspended for three days.   Despite the order of suspension, however, the Petitioner continued to report for work.  When the matter was brought to the attention of the Respondent, the latter issued a 1st Notice of Termination, requiring the Petitioner to explain why he should not be terminated for insubordination.  Unsatisfied by Petitioner’s explanation, Respondent terminated the Petitioner, giving notice therefor.  Aggrieved, petitioner filed a case for illegal dismissal.  The Labor Arbiter, NLRC and eventually the CA all agreed that the dismissal was valid. Unsatisfied, Petitioner filed the present petition for Certiorari.

Issue: Is the petition meritorious? 

Ruling: 

No. The decision to suspend petitioner was rendered after investigation and a finding by respondent that petitioner has indeed made malicious statements against a co-employee. It is axiomatic that appropriate disciplinary sanction is within the purview of management imposition. What should not be overlooked is the prerogative of an employer company to prescribe reasonable rules and regulations necessary for the proper conduct of its business and to provide certain disciplinary measures in order to implement said rules to assure that the same would be complied with. Respondent then acted within its rights as an employer when it decided to exercise its management prerogative to impose disciplinary measure on its erring employee.  The suspension and subsequent termination were therefore valid.

NATHANIEL N. DONGON, PETITIONER, vs.RAPID MOVERS AND FORWARDERS CO., INC., AND/OR NICANOR E. JAO, JR., RESPONDENTS.

D E C I S I O N

BERSAMIN, J.:

The prerogative of the employer to dismiss an employee on the ground of willful disobedience to company policies must be exercised in good faith and with due regard to the rights of labor.

The Case

By petition for review on certiorari, petitioner appeals the adverse decision promulgated on October 24, 2003,1whereby the Court of Appeals (CA) set aside the decision dated June 17, 2002 of the National Labor Relations Commission (NLRC) in his favor.2 The NLRC had thereby reversed the ruling dated September 10, 2001 of the Labor Arbiter dismissing his complaint for illegal dismissal.3

Antecedents

The following background facts of this case are stated in the CA’s assailed decision, viz:

From the records, it appears that petitioner Rapid is engaged in the hauling and trucking business while private respondent Nathaniel T. Dongon is a former truck helper leadman.

Private respondent’s area of assignment is the Tanduay Otis Warehouse where he has a job of facilitating the loading and unloading [of the] petitioner’s trucks. On 23 April 2001, private respondent and his driver, Vicente Villaruz, were in the vicinity of Tanduay as they tried to get some goods to be distributed to their clients.

Tanduay’s security guard called the attention of private respondent as to the fact that Mr. Villaruz’[s] was not wearing an Identification Card (I.D. Card). Private respondent, then, assured the guard that he will secure a special permission from the management to warrant the orderly release of goods.

Instead of complying with his compromise, private respondent lent his I.D. Card to Villaruz; and by reason of such misrepresentation , private respondent and Mr. Villaruz got a clearance from Tanduay for the release of the goods. However, the security guard, who saw the misrepresentation committed by private respondent and Mr. Villaruz, accosted them and reported the matter to the management of Tanduay.

On 23 May 2001, after conducting an administrative investigation, private respondent was dismissed from the petitioning Company.

On 01 June 2001, private respondent filed a Complaint for Illegal Dismissal. x x x4

In his decision, the Labor Arbiter dismissed the complaint, and ruled that respondent Rapid Movers and Forwarders Co., Inc. (Rapid Movers) rightly exercised its prerogative to dismiss petitioner, considering that: (1) he had admitted lending his company ID to driver Vicente Villaruz; (2) his act had constituted mental dishonesty and deceit amounting to breach of trust; (3) Rapid Movers’ relationship with Tanduay had been jeopardized by his act; and (4) he had been banned from all the warehouses of Tanduay as a result, leaving Rapid Movers with no available job for him.5

On appeal, however, the NLRC reversed the Labor Arbiter, and held that Rapid Movers had not discharged its burden to prove the validity of petitioner’s dismissal from his employment. It opined that Rapid Movers did not suffer any pecuniary damage from his act; and that his dismissal was a penalty disproportionate to the act of petitioner complained of. It awarded him backwages and separation pay in lieu of reinstatement, to wit:

WHEREFORE, the decision appealed from is REVERSED and SET ASIDE and a new one ENTERED ordering the payment of his backwages from April 25, 2001 up to the finality of this decision and in lieu of reinstatement, he should be paid his separation pay from date of hire on May 2, 1994 up to the finality hereof.

SO ORDERED.6

Rapid Movers brought a petition for certiorari in the CA, averring grave abuse of discretion on the part of the NLRC, to wit:

I.

x x x IN STRIKING DOWN THE DISMISSAL OF THE PRIVATE RESPONDENT [AS] ILLEGAL ALLEGEDLY FOR BEING GROSSLY DISPROPORTIONATE TO THE OFFENSE COMMITTED IN THAT NEITHER THE PETITIONERS NOR ITS CLIENT TANDUAY SUFFERED ANY PECUNIARY DAMAGE THEREFROM THEREBY IMPLYING THAT FOR A DISHONEST ACT/MISCONDUCT TO BE A GROUND FOR DISMISSAL OF AN EMPLOYEE, THE SAME MUST AT LEAST HAVE RESULTED IN PECUNIARY DAMAGE TO THE EMPLOYER;

II.

x x x IN EXPRESSING RESERVATION ON THE GUILT OF THE PRIVATE RESPONDENT IN THE LIGHT OF ITS PERCEIVED CONFLICTING DATES OF THE LETTER OF TANDUAY TO RAPID MOVERS (JANUARY 25, 2001) AND THE OCCURRENCE OF THE INCIDENT ON APRIL 25, 2001 WHEN SAID CONFLICT OF DATES CONSIDERING THE EVIDENCE ON RECORD, WAS MORE APPARENT THAN REAL.7

Ruling of the CA

On October 24, 2003, the CA promulgated its assailed decision reinstating the decision of the Labor Arbiter, and upholding the right of Rapid Movers to discipline its workers, holding thusly:

There is no dispute that the private respondent lent his I.D. Card to another employee who used the same in entering the compound of the petitioner customer, Tanduay. Considering that this amounts to dishonesty and is provided for in the petitioning Company’s Manual of Discipline, its imposition is but proper and appropriate.

It is basic in any enterprise that an employee has the obligation of following the rules and regulations of its employer. More basic further is the elementary obligation of an employee to be honest and truthful in his work. It should be noted that honesty is one of the foremost criteria of an employer when hiring a prospective employee. Thus, we see employers

requiring an NBI clearance or police clearance before formally accepting an applicant as their employee. Such rules and regulations are necessary for the efficient operation of the business.

Employees who violate such rules and regulations are liable for the penalties and sanctions so provided, e.g., the Company’s Manual of Discipline (as in this case) and the Labor Code.

The argument of the respondent commission that no pecuniary damage was sustained is off-tangent with the facts of the case. The act of lending an ID is an act of dishonesty to which no pecuniary estimate can be ascribed for the simple reason that no monetary equation is involved. What is involved is plain and simple adherence to truth and violation of the rules. The act of uttering or the making of a falsehood does not need any pecuniary estimate for the act to gestate to one punishable under the labor laws. In this case, the illegal use of the I.D. Card while it may appear to be initially trivial is of crucial relevance to the petitioner’s customer, Tanduay, which deals with drivers and leadmen withdrawing goods and merchandise from its warehouse. For those with criminal intentions can use another’s ID to asport goods and merchandise.

Hence, while it can be conceded that there is no pecuniary damage involved, the fact remains that the offense does not only constitute dishonesty but also willful disobedience to the lawful order of the Company, e.g., to observe at all time the terms and conditions of the Manual of Discipline. Article 282 of the Labor Code provides:

"Termination by Employer – An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

x x x." (Emphasis, supplied)

The constitutional protection afforded to labor does not condone wrongdoings by the employee; and an employer’s power to discipline its workers is inherent to it. As honesty is always the best policy, the Court is convinced that the ruling of the Labor Arbiter is more in accord with the spirit of the Labor Code. "The Constitutional policy of providing full protection to labor is not intended to oppress or destroy management (Capili vs. NLRC, 270 SCRA 488[1997]." Also, in Atlas Fertilizer Corporation vs. NLRC, 273 SCRA 549 [1997], the Highest Magistrate declared that "The law, in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the employer."

WHEREFORE, premises considered, the Petition is GRANTED. The assailed 17 June 2002 Decision of respondent Commission in NLRC CA-029937-01 is hereby SET ASIDE and the 10 September 2001 Decision of Labor Arbiter Vicente R. Layawen is ordered REINSTATED. No costs.

SO ORDERED.8

Petitioner moved for a reconsideration, but the CA denied his motion on March 22, 2004.9

Undaunted, the petitioner is now on appeal.

Issue

Petitioner still asserts the illegality of his dismissal, and denies being guilty of willful disobedience. He contends that:

THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN SUSTAINING THE DECISION DATED 10 SEPTEMBER 2001 OF LABOR ARBITER VICENTE R. LAYAWEN WHERE THE LATTER RULED THAT BY LENDING HIS ID TO VILLARUZ, PETITIONER (COMPLAINANT) COMMITTED MISREPRESENTATION AND DECEIT CONSTITUTING MENTAL DISHONESTY WHICH CANNOT BE DISCARDED AS INSIGNIFICANT OR TRIVIAL.10

Petitioner argues that his dismissal was discriminatory because Villaruz was retained in his employment as driver; and that the CA gravely abused its discretion in disregarding his showing that he did not violate Rapid Movers’ rules and regulations but simply performed his work in line with the duties entrusted to him, and in not appreciating his good faith and lack of any intention to willfully disobey the company’s rules.

In its comment,11 Rapid Movers prays that the petition for certiorari be dismissed for being an improper remedy and apparently resorted to as a substitute for a lost appeal; and insists that the CA did not commit grave abuse of discretion.1âwphi1

In his reply,12 petitioner submits that his dismissal was a penalty too harsh and disproportionate to his supposed violation; and that his dismissal was inappropriate due to the violation being his first infraction that was even committed in good faith and without malice.

Based on the parties’ foregoing submissions, the issues to be resolved are, firstly: Was the petition improper and dismissible?; and, secondly: If the petition could prosper, was the dismissal of petitioner on the ground of willful disobedience to the company regulation lawful?

Ruling

The petition has merit.

1.

Petition should not be dismissed

In St. Martin Funeral Home v. National Labor Relations Commission,13 the Court has clarified that parties seeking the review of decisions of the NLRC should file a petition for certiorari in the CA on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the NLRC. Thereafter, the remedy of the aggrieved party from the CA decision is an appeal via petition for review on certiorari.14

The petition filed here is self-styled as a petition for review on certiorari, but Rapid Movers points out that the petition was really one for certiorari under Rule 65 of the Rules of Court due to its basis being the commission by the CA of a grave abuse of its discretion and because the petition was filed beyond the reglementary period of appeal under Rule 45. Hence, Rapid Movers insists that the Court should dismiss the petition because certiorari under Rule 65 could not be a substitute of a lost appeal under Rule 45.

Ordinarily, an original action for certiorari will not prosper if the remedy of appeal is available, for an appeal by petition for review on certiorari under Rule 45 of the Rules of Court and an original action for certiorari under Rule 65 of the Rules of Court are mutually exclusive, not alternative nor successive, remedies.15 On several occasions, however, the Court has treated a petition for certiorari as a petition for review on certiorari when: (a) the petition has been filed within the 15-day reglementary period;16 (b) public welfare and the advancement of public policy dictate such treatment; (c) the broader interests of justice require such treatment; (d) the writs issued were null and void; or (e) the questioned decision or order amounts to an oppressive exercise of judicial authority.17

The Court deems it proper to allow due course to the petition as one for certiorari under Rule 65 in the broader interest of substantial justice, particularly because the NLRC’s appellate adjudication was set aside by the CA, and in order to put at rest the doubt that the CA, in so doing, exercised its judicial authority oppressively. Whether the petition was proper or not should be of less importance than whether the CA gravely erred in undoing and setting aside the determination of the NLRC as a reviewing forum vis-à-vis the Labor Arbiter. We note in this regard that the NLRC had declared the dismissal of petitioner to be harsh and not commensurate to the infraction committed. Given the spirit and intention underlying our labor laws of resolving a doubtful situation in favor of the working man, we will have to review the judgment of the CA to ascertain whether the NLRC had really committed grave abuse of its discretion. This will settle the doubts on the propriety of terminating petitioner, and at the same time ensure that justice is served to the parties.18

2.

Petitioner was not guilty of willful disobedience; hence, his dismissal was illegal

Petitioner maintains that willful disobedience could not be a ground for his dismissal because he had acted in good faith and with the sole intention of facilitating deliveries for Rapid Movers when he allowed Villaruz to use his company ID.

Willful disobedience to the lawful orders of an employer is one of the valid grounds to terminate an employee under Article 296 (formerly Article 282) of the Labor Code.19 For willful disobedience to be a ground, it is required that: (a) the conduct of the employee must be willful or intentional; and (b) the order the employee violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties that he had been engaged to discharge.20 Willfulness must be attended by a wrongful and perverse mental attitude rendering the employee’s act inconsistent with proper subordination.21 In any case, the conduct of the employee that is a valid ground for dismissal under the Labor Code constitutes harmful behavior against the business interest or person of his employer. 22 It is implied that in every act of willful disobedience, the erring employee obtains undue advantage detrimental to the business interest of the employer.

Under the foregoing standards, the disobedience attributed to petitioner could not be justly characterized as willful within the contemplation of Article 296 of the Labor Code. He neither benefitted from it, nor thereby prejudiced the business interest of Rapid Movers. His explanation that his deed had been intended to benefit Rapid Movers was credible. There could be no wrong or perversity on his part that warranted the termination of his employment based on willful disobedience.

Rapid Movers argues, however, that the strict implementation of company rules and regulations should be accorded respect as a valid exercise of its management prerogative. It posits that it had the prerogative to terminate petitioner for violating its following company rules and regulations, to wit:

(a) "Pagpayag sa paggamit ng iba o paggamit ng maling rekord ng kumpanya kaugnay sa operations, maintenance or materyales o trabaho" (Additional Rules and Regulations No. 2); and

(b) "Pagkutsaba sa pagplano o pagpulong sa ibang tao upang labagin ang anumang alituntunin ng kumpanya" (Article 5.28).23

We cannot sustain the argument of Rapid Movers.

It is true that an employer is given a wide latitude of discretion in managing its own affairs. The broad discretion includes the implementation of company rules and regulations and the imposition of disciplinary measures on its employees. But the exercise of a management prerogative like this is not limitless, but hemmed in by good faith and a due consideration of the rights of the worker.24 In this light, the management prerogative will be upheld for as long as it is not wielded as an implement to circumvent the laws and oppress labor.25

To us, dismissal should only be a last resort, a penalty to be meted only after all the relevant circumstances have been appreciated and evaluated with the goal of ensuring that the ground for dismissal was not only serious but true. The cause of termination, to be lawful, must be a serious and grave malfeasance to justify the deprivation of a means of livelihood. This requirement is in keeping with the spirit of our Constitution and laws to lean over backwards in favor of the working class, and with the mandate that every doubt must be resolved in their favor.26

Although we recognize the inherent right of the employer to discipline its employees, we should still ensure that the employer exercises the prerogative to discipline humanely and considerately, and that the sanction imposed is commensurate to the offense involved and to the degree of the infraction. The discipline exacted by the employer should further consider the employee’s length of service and the number of infractions during his employment. 27The employer should never forget that always at stake in disciplining its employee are not only his position but also his livelihood, 28 and that he may also have a family entirely dependent on his earnings.29

Considering that petitioner’s motive in lending his company ID to Villaruz was to benefit Rapid Movers as their employer by facilitating the loading of goods at the Tanduay Otis Warehouse for distribution to Rapid Movers’ clients, and considering also that petitioner had rendered seven long unblemished years of service to Rapid Movers, his dismissal was plainly unwarranted. The NLRC’s reversal of the decision of the Labor Arbiter by holding that penalty too harsh and disproportionate to the wrong attributed to him was legally and factually justified, not arbitrary or whimsical. Consequently, for the CA to pronounce that the NLRC had thereby gravely abused its discretion was not only erroneous but was itself a grave abuse of discretion amounting to lack of jurisdiction for not being in conformity with the pertinent laws and jurisprudence. We have held that a conclusion or finding derived from erroneous considerations is not a mere error of judgment but one tainted with grave abuse of discretion.30

WHEREFORE, the Court GRANTS the petition; REVERSES and SETS ASIDE the decision promulgated by the Court of Appeals on October 24, 2003; REINSTATES the decision of the National Labor Relations Commission rendered on June 17, 2002; and ORDERS respondents to pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMINAssociate Justice

Pantoja vs. Sca Hygiene ProductsG.R. 163554,    April 23, 2010

Facts: Respondent, a corporation engaged in the manufacture, sale and distribution of industrial paper and tissue products, employed petitioner as a utility man on March 15, 1987. In a Notice of Transfer, respondent informed petitioner of its reorganization plan and offered him a position at Paper Mill No. 5 under the same terms and conditions of employment in anticipation of the eventual closure and permanent shutdown of Paper Mill No. 4 effective May 5, 1999.  The closure and concomitant reorganization is in line with respondent’s decision to streamline and phase out the company’s industrial paper manufacturing operations due to financial difficulties brought about by the low volume of sales and orders for industrial paper products. 

However, petitioner rejected respondent’s offer for his transfer. Thus, a notice of termination of employment was sent to petitioner as his position was declared redundant by the closure of Paper Mill No. 4.  He then received his separation pay and thereafter executed a release and quitclaim in favor of respondent. On June 20, 2000, petitioner filed a complaint for illegal dismissal against respondent assailing his termination as without any valid cause.

 On March 23, 2001, the   Labor Arbiter   rendered   a   Decision dismissing petitioner’s complaint for lack of merit.  Upon appeal by petitioner, the NLRC reversed the Labor Arbiter’s Decision by finding petitioner’s separation from employment illegal.  The CA reversed the NLRC’s Decision and reinstated the Labor Arbiter’s Decision dismissing the compliant.  It ruled that there was no illegal dismissal as the act of petitioner in rejecting the transfer and accepting the separation pay constitutes a valid basis for the separation from employment.  

Issue:

Is the respondent guilty of illegal dismissal?

Ruling:

No. Respondent’s right of management prerogative was exercised in good faith. Respondent presented evidence of the low volume of sales and orders for the production of industrial paper in 1999 which inevitably resulted to the company’s decision to streamline its operations. This fact was corroborated by respondent’s VP-Tissue Manufacturing Director and was not disputed by petitioner. Exercising its management prerogative and sound business judgment, respondent decided to cut down on operational costs by shutting down one of its paper mill.  In this case, the abolishment of Paper Mill No. 4 was undoubtedly a business judgment arrived at in the face of the low demand for the production of industrial paper at the time.  Despite an apparent reason to implement a retrenchment program as a cost-cutting measure, respondent, however, did not outrightly dismiss the workers affected by the closure of Paper Mill No. 4 but gave them an option to be transferred to posts of equal rank and pay. This is an indication of good faith on respondent’s part as it exhausted other possible measures other than retrenchment.  Besides, the employer’s prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means have been tried and found wanting. Giving the workers an option to be transferred without any diminution in rank and pay specifically belie petitioner’s allegation that the alleged streamlining scheme was implemented as a ploy to ease out employees, thus, the absence of bad faith. Apparently, respondent implemented its streamlining or reorganization plan with good faith, not in an arbitrary manner and without prejudicing the tenurial rights of its employees.

YMBONG VS ABS_CBN

ON JAN. 1, 1996, respondent ABS-CBN Head Office in Manila issued Policy No. HR-ER-016 requiring that an employee who intends to run for any public office must file a letter of resignation.

On March 25, 1998, Dante Luzon, who was then the Cebu assistant station manager, issued a memorandum informing the petitioner, Ernesto G. Ymbong, that per company policy, any employee/talent who wants to run for any position in the then coming election will have to file a leave of absence.Petitioner Ymbong claims that pursuant to the March 25, 1998 memorandum, he informed Luzon that he would take a leave of absence from March 8, 1998 to May 18, 1998 since he was running for councilor of Lapu-Lapu City.

When he lost in his bid, he tried to come back to respondent ABS-CBN but was turned down because of company policy. Thus, he filed a complaint for illegal dismissal contending that the ground relied upon by respondents is not among the just and authorized causes provided in the Labor Code. Does this contention find merit?

Ruling: No.

The Supreme Court has consistently held that so long as a company’s management prerogatives are exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, the Court will uphold them.

In the instant case, ABS-CBN validly justified the implementation of Policy No. HR-ER-016. It is well within its rights to ensure that it maintains its objectivity and credibility and frees itself from any appearance of impartiality so that the confidence of the viewing and listening public in it will not be in any way eroded.

Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.

It is worth noting that such exercise of management prerogative has earned a stamp of approval from no less than our Congress itself when on Feb. 12, 2001, it enacted Republic Act No. 9006, otherwise known as the “Fair Election Act.” (Ernesto G. Ymbong vs. ABS-CBN Broadcasting Corp., et. al., G.R. No. 184885, March 7, 2012).

ALBERT O. TINIO vs Court of Appeals, SMART Co.

This petition for review on certiorari seeks to annul and set aside the Decision and Resolution of the Court of Appeals dated October 25, 2005 and March 2, 2006, respectively, in CA-G.R. SP No. 90677 which reversed and set aside the Decision of the National Labor Relations Commission (NLRC) dated July 30, 2004, and its Resolution dated April 20, 2005, for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction. The appellate court reinstated the Decision of the Labor Arbiter dated December 9, 20035 which dismissed petitioner’s complaint for lack of merit.

On December 1, 2002, Smart Communications, Inc. (SMART) employed petitioner Albert O. Tinio as its General Manager for Visayas/Mindanao (VISMIN) Sales and Operations based in Cebu. On May 2003, private respondent Alex O. Caeg, Group Head, Sales and Distribution of SMART, under the supervision of co-respondent Anastacio Martirez, informed petitioner of his new assignment as Sales Manager for Corporate Sales in SMART’s Head Office in Makati City, effective June 1, 2003.

However, petitioner deferred action on his assignment until he had been apprised of the duties and responsibilities of his new position and the terms and conditions of his relocation. Financial assistance shall be provided for his physical transfer to Manila. Petitioner reported to SMART’s Head Office in Makati and discussed with Ann Margaret V. Santiago, HRD Group Head, his job description, functions, responsibilities, salary and benefits, as well as options for relocation/transfer of his family to Manila.

Petitioner did not report for work. He instead filed a complaint for constructive dismissal with claims for moral and exemplary damages and attorney’s fees against SMART and private respondents Caeg and Martirez.

The Labor Arbiter rendered judgment finding that petitioner was not constructively or illegally dismissed; hence, the complaint was ordered dismissed. But the Labor Arbiter awarded financial assistance to petitioner in the amount of P235,400.00.10

On appeal, the NLRC reversed the Labor Arbiter’s decision and declared that petitioner was illegally dismissed, awarded him full backwages, including the corresponding 13th month pay, moral and exemplary damages, as well as attorney’s fees. Private respondents’ motion for reconsideration was denied. The Court of Appeals reversed and set aside the Decision of the NLRC and reinstated the Decision of the Labor Arbiter dismissing the complaint for lack of merit. Motion for reconsideration was denied.

ISSUE:1. Whether or not private respondents’ act of transferring petitioner to its Head Office in Makati was a valid exercise of management prerogative.

2.Whether or not the petitioner was constructively dismissed

Yes. Smart validly exercised their management prerogative. Court has consistently recognized and upheld the prerogative of management to transfer an employee from one office to another within the business establishment, provided there is no demotion in rank or a diminution of salary, benefits and other privileges. As a rule, the Court will not interfere with an employer’s prerogative to regulate all aspects of employment which include among others, work assignment, working methods and place and manner of work.

The doctrine is well-settled that it is the employer’s prerogative, based on its assessment and perception of its employees’ qualifications, aptitudes and competence, to move them around in the various areas of its business operations in order to ascertain where they will function with maximum benefit to the company. This is a privilege inherent in the employer’s right to control and manage his enterprise effectively. The freedom of management to conduct its business operations to achieve its purpose cannot be denied. When his transfer is not unreasonable, or inconvenient, or prejudicial to him, and it does not involve a demotion in rank or a diminution of his salaries, benefits and other privileges, the employee may not complain that it amounts to a constructive dismissal.

The employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges, and other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution of pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer has become so unbearable to the employee leaving him with no option but to forego his continued employment.

Transfer from Cebu to Makati does not represent a demotion in rank or diminution of salaries, benefits and other privileges. It was a lateral transfer with the same salaries, benefits and privileges. The title of Corporate Sales Manager, as correctly pointed out by the appellate court, is not derogatory to the petitioner considering that he will still receive the same benefits and salary he received as Senior Manager

We find that petitioner was not demoted since his transfer from Cebu to Makati was being implemented due to a valid corporate reorganization to streamline management operations. The act of management in reorganizing as well as

transferring its employees to achieve its stated objectives is a legitimate exercise of their management prerogatives, barring any showing of bad faith which is absent in the instant case. Despite the change of petitioner’s title from "Senior Manager" to "Corporate Sales Manager," he still enjoyed the same rank and salary. By the very nature of their employment, sales executives are expected to travel. They should anticipate re-assignment according to the demands of the employer’s business. In the instant case, petitioner premised his deliberate and unjustified refusal to return to work on the belief that he had been constructively dismissed, despite attempts by SMART to accommodate his demands. Petitioner’s deliberate and unjustified refusal to resume his employment, a form of neglect of duty, despite attempts by the company to hear out his grievances, constitutes abandonment. Petitioner’s failure to report for work, or absence without valid or justifiable reason, coupled with a clear intention to sever employer-employee relationship, leads us to no other conclusion than that he abandoned his work. As such, the award of financial assistance in the amount of P235,400 given by the Labor Arbiter and affirmed by the appellate court must be deleted for lack of basis.

Petition is DENIED. MODIFICATION that the award of financial assistance be DELETED for lack of basis.Employee dismissal; constructive dismissal. In constructive dismissal cases, the employer has the burden of proving that the transfer of an employee is for just or valid ground, such as genuine business necessity. The employer must demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to the employee and that the transfer does not involve a demotion in rank or a diminution in salary and other benefits. “If the employer fails to overcome this burden of proof, the employee’s transfer is tantamount to unlawful constructive dismissal.” [Merck Sharp and Dohme (Philippines) v. Robles, G.R. No. 176506, November 25, 2009] Petitioners failed to satisfy the burden of proving that the transfer was based on just or valid ground. Petitioners’ bare assertions of imminent threat from the respondents are mere accusations which are not substantiated by any proof. The Supreme Court agreed with the Court of Appeals in ruling that the transfer of respondents amounted to a demotion.

It is a well-entrenched rule that findings of facts of the NLRC, affirming those of the Labor Arbiter, are accorded respect and due consideration when supported by substantial evidence. The Supreme Court, however, found that the doctrine of great respect and finality has no application to the case at bar. The Labor Arbiter dismissed Arnaiz, et al.’s complaints on mere technicality. The NLRC, upon appeal, then came up with three divergent rulings. At first, it remanded the case to the Labor Arbiter. However, in a subsequent resolution, it decided to resolve the case on the merits by ruling that Arnaiz, et al. were constructively dismissed. But later on, it again reversed itself in its third and final resolution of the case and ruled in favor of Julie’s bakeshop. Therefore, contrary to Reyes’s claim, the NLRC did not, on any occasion, affirm any factual findings of the Labor Arbiter. The Court of Appeals is thus correct in reviewing the entire records of the case to determine which findings of the NLRC is sound and in accordance with law. Besides, the Court of Appeals may still resolve factual issues by express mandate of the law despite the respect given to administrative findings of fact.

ENDICO vs QUANTUM DISTRIBUTION CENTER Case DigestARNULFO O. ENDICO v. QUANTUM DISTRIBUTION CENTER

577 SCRA 299 (2009)

FACTS: Quantum Foods Center hired Arnulfo O. Endico (Endico) as Field Supervisor of Davao City. He was later on transferred in Cebu. Due to Endico’s achievements and contributions to Quantum Foods, he was promoted as Area Manager of Cebu. However, after fruitful years of employment, Quantum Foods was adversely affected by economic slowdown, which compelled it to streamline its operations through the reduction of the company’s contractual merchandisers to save on operation cost. Thereafter, for some misfortunate events, Endico was immediately relieved from service. Endico thereafter filed a complaint for constructive illegal dismissal. 

The Labor Arbiter rendered a decision in Endico’s favor. Quantum Foods appealed to the National Labor Relations Commission (NLRC) which affirmed the Labor Arbiter’s decision with modification. Quantum Foods then filed a Petition for Certiorari before the Court of Appeals (CA) who ruled in favor of Quantum Foods. The Court of Appeals ruled that Quantum Foods had yet to decide on the administrative case when Endico immediately filed the complaint for constructive dismissal. The CA concluded that Endico filed the complaint in anticipation of what he perceived to be the final outcome of the administrative investigation. Hence, this petition. 

ISSUE: Whether or not Endico was constructively dismissed 

HELD: Jurisprudence recognizes the exercise of management prerogatives. Labor laws also discourage interference with an employer’s judgment in the conduct of its business. For this reason, the Court often declines to interfere in legitimate business decisions of employers. The law must protect not only the welfare of employees, but also the right of employers. 

In the pursuit of its legitimate business interests, especially during adverse business conditions, management has the prerogative to transfer or assign employees from one office or area of operation to another – provided there is no demotion in rank or diminution of salary, benefits and other privileges and the action is not motivated by discrimination, bad faith, or effected as a form of punishment or demotion without sufficient cause. This privilege is inherent in the right of employers to control and manage their enterprises effectively. The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. 

Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and general principles of fair play and justice. 

In this case, the Court finds no reason to disturb the conclusion of the CA that there was no constructive dismissal. Reassignments made by management pending investigation of violations of company policies and procedures allegedly committed by an employee fall within the ambit of management prerogative. The decision of Quantum Foods to transfer Endico pending investigation was a valid exercise of management prerogative to discipline its employees. The transfer, while incidental to the charges against Endico, was not meant as a penalty, but rather as a preventive measure to avoid further loss of sales and the destruction of Quantum Foods’ image and goodwill. It was not designed to be the culmination of the then on-going administrative investigation against Endico. 

Neither was there any demotion in rank or any diminution of Endico’s salary, privileges and other benefits. Endico was being transferred to the head office as area sales manager, the same position 

Endico held in Cebu. There was also no proof that the transfer involved a diminution of Endico’s salary, privileges and other benefits. 

On the alleged inconvenience on Endico and his family because of the transfer from Cebu to the head office in Parañaque, the Court rules that the transfer is valid, there being no showing that there was bad faith on the part of Quantum Foods. Moreover, the Court finds that Quantum Foods, considering the declining sales and the loss of a major account in Cebu, was acting in the legitimate pursuit of what it considered its best interest in deciding to transfer Endico to the head office.

Julie’s Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al.,

Employee dismissal; constructive dismissal.  In constructive dismissal cases, the employer has the burden of proving that the transfer of an employee is for just or valid ground, such as genuine business necessity.   The employer must demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to the employee and that the transfer does not involve a demotion in rank or a diminution in salary and other benefits.  “If the employer fails to overcome this burden of proof, the employee’s transfer is tantamount to unlawful constructive dismissal.” [Merck Sharp and Dohme (Philippines) v. Robles, G.R. No. 176506, November 25, 2009] Petitioners failed to satisfy the burden of proving that the transfer was based on just or valid ground. Petitioners’ bare assertions of imminent threat from the respondents are mere accusations which are not substantiated by any proof. The Supreme Court agreed with the Court of Appeals in ruling that the transfer of respondents amounted to a demotion.

NLRC; factual findings. It is a well-entrenched rule that findings of facts of the NLRC, affirming those of the Labor Arbiter, are accorded respect and due consideration when supported by substantial evidence. The Supreme Court, however, found that the doctrine of great respect and finality has no application to the case at bar. The Labor Arbiter dismissed Arnaiz, et al.’s complaints on mere technicality. The NLRC, upon appeal, then came up with three divergent rulings. At first, it remanded the case to the Labor Arbiter. However, in a subsequent resolution, it decided to resolve the case on the merits by ruling that Arnaiz, et al. were constructively dismissed. But later on, it again reversed itself in its third and final resolution of the case and ruled in favor of Julie’s bakeshop. Therefore, contrary to Reyes’s claim, the NLRC did not, on any occasion, affirm any factual findings of the Labor Arbiter. The Court of Appeals is thus correct in reviewing the entire records of the case to determine which findings of the NLRC is sound and in accordance with law. Besides, the Court of Appeals may still resolve factual issues by express mandate of the law despite the respect given to administrative findings of fact. Julie’s Bakeshop and/or Edgar Reyes vs. Henry Arnaiz, et al., G.R. No. 173882, February 15, 2012.

Rivera vs. Solidbank[G.R. No. 163269. April 19, 2006]

Facts:Rivera applied for retirement under the Special Retirement Program. Solidbank approved the application and Rivera was entitled to receive the net amount of P 963,619.28. He signed an undated Release, Waiver and Quitclaim, which was notarized on March 1, 1995. Rivera acknowledged receipt of the net proceeds of his separation and retirement benefits and promised that "[he] would not, at any time, in any manner whatsoever, directly or indirectly engage in any unlawful activity prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary companies, their stockholders, officers, directors, agents or employees, and their successors-in-interest and will not disclose any information concerning the business of Solidbank, its manner or operation, its plans, processes, or data of any kind.”

However in 1995 Solidbank discovered that Equitable Bank employed Rivera as Manager of its Credit Investigation and Appraisal Division of its Consumers’ Banking Group. Solidbank then informed Rivera that he had violated the Undertaking and demanded the return of all the monetary benefits he received. When Rivera refused to return the amount demanded within the given period, Solidbank filed a complaint for recovery of sum of money.

Issue:whether the employment ban incorporated in the Undertaking which petitioner executed upon his retirement is unreasonable, oppressive, hence, contrary to public policy

Held:

In determining whether the contract is reasonable or not, the trial court should consider the following factors:(a) whether the covenant protects a legitimate business interest of the employer;(b) whether the covenant creates an undue burden on the employee;(c) whether the covenant is injurious to the public welfare;(d) whether the time and territorial limitations contained in the covenant are reasonable; and(e) whether the restraint is reasonable from the standpoint of public policy.

At first glance, the post-retirement competitive employment ban is unreasonable because it has no geographical limits; respondent is barred from accepting any kind of employment in any competitive bank within the proscribed period. Although the period of one year may appear reasonable, the matter of whether the restriction is reasonable or unreasonable cannot be ascertained with finality solely from the terms and conditions of the Undertaking, or even in tandem with the Release, Waiver and Quitclaim.

However, a distinction must be made between restrictive covenants barring an employee to accept a post-employment competitive employment (restraint on trade) and restraints on post-retirement competitive employment in pension and retirement plans. A restriction in the contract which does not preclude the employee from engaging in competitive activity, but simply provides for the loss of rights or privileges if he does so is not in restraint of trade.

The strong weight of authority is that forfeitures for engaging in subsequent competitive employment included in pension and retirement plans are valid even though unrestricted in time or geography. The reasoning behind this conclusion is that the forfeiture, unlike the restraint included in the employment contract, is not a prohibition on the employee’s engaging in competitive work but is merely a denial of the right to participate in the retirement plan if he does so engage.

A post-retirement competitive employment restriction is designed to protect the employer against competition by former employees who may retire and obtain retirement or pension benefits and, at the same time, engage in competitive employment.

Moreover, the Undertaking and the Release, Waiver and Quitclaim do not provide for the automatic forfeiture of the benefits petitioner received under the SRP upon his breach of said deeds. Thus, the post-retirement competitive employment ban incorporated in the Undertaking of respondent does not, on its face, appear to be unreasonable. The terms of the Undertaking merely states that any breach by petitioner of his promise would entitle respondent to a cause of action for protection in the courts of law.