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G.R. No.

156963 November 11, 2004

ANGELITA S. GRAMAJE, respondent.
Facts: Petitioner Philippine American Life and General Insurance Company is a corporation duly
organized and existing under Philippine laws. Private Respondent was the Assistant Vice President
and Head of the Pensions Department and in concurrent capacity as Trust Officer. Later on, she was
offered a new position by Cuisia (Chairman of the Board). However, respondent's marketing
manager and marketing officer were immediately transferred without replacements. Thus, he ran
the Pensions Department single-handedly with only one administrative assistant as her staff.
Sometime later, respondent availed of her housing and car benefits and applied for a car loan and
housing loan. Private respondent through Centeno and Sotelo, offered her P250,000.00 for her to
vacate her position by December 1998. But she declined the offer. Afterwhich, a memorandum was
issued instructing her to move to the Legal Department.

Issue/s: Whether or not respondent was constructively dismissed or was her transfer a legitimate
exercise of management prerogative?

Ruling/s: Respondent was constructively dismissed. In the pursuit of its legitimate business
interests, 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, made in bad faith, or
effected as a form of punishment or demotion without sufficient cause.

Discrimination is the unequal treatment of employees, which is proscribed as an unfair labor
practice by Art. 248(e) of the Labor Code. It is the failure to treat all persons equally when no
reasonable distinction can be found between those favored and those not favored. Bad faith has
been defined as a state of mind affirmatively operating with furtive design or with some motive of
self-interest or ill will or for an ulterior purpose. It implies a conscious and intentional design to do
a wrongful act for a dishonest purpose or moral obliquity.

In the case at bar, unknown to the respondent, petitioner had already advertised in the Manila
Bulletin for the former's replacement. Respondent was not even notified in advance of an
impending transfer. Also, the transfer of respondent to the Legal Department was unreasonable,
inconvenient and prejudicial to her. Petitioner must have known that respondent has no adequate
exposure in the field of litigation, and yet she was transferred to that Department. Discrimination
was also evident since the Pensions Department was practically run with no support from the
management. Respondents request for a car loan was also deferred saying that respondent's
employment status has been the subject of several discussions between the high ranking officers of
petitioner. Therefore, the Court ruled that there was constructive dismissal.

G.R. No. 145280 December 4, 2001

Facts: Petitioner St. Michael's Institute is an institute of learning located in Bacoor, Cavite with
petitioner Fr. Victorino as Director and petitioner Eugenia Blanco as the Principal. Respondents
were regular classroom teachers. Their services were abruptly terminated when each of them was
served a notice of termination of employment. The termination allegedly stemmed from a rally,
organized and participated in by faculty members, parents and some students of petitioner school,
was, among others, aimed at calling the attention of the school administration to certain grievances
relative to substandard school facilities and the economic demands of teachers and other
employees of St. Michael's Institute.

Because of their termination, respondents filed a complaint for illegal dismissal before the NLRC.

The Labor Arbiter found and declared that there was just cause for the dismissal of the
respondents' complaints since they were guilty of dereliction of duty and insubordination for failing
to exercise the very task that they are duty-bound to perform as teachers of petitioner school.

The Court of Appeals sustained the decision of the NLRC but further awarded backwages to

Issue/s: 1. Whether or not respondents were illegally dismissed.
2. Are respondents entitled to backwages?

Ruling/s: 1. Yes. An employer has a free reign and enjoys wide latitude of discretion to regulate all
aspects of employment. This is a management prerogative. The only criterion to guide the exercise
of its management prerogative is that the policies, rules and regulations on work-related activities
of the employees must always be fair and reasonable and the corresponding penalties, when
prescribed, commensurate to the offense involved and to the degree of the infraction.

In the instant case, the reason basically cited for the dismissal of respondents is serious misconduct
or wilful disobedience for dereliction of duty predicated on their absence for only one day of classes
for attending a public rally and denouncing the school authority. The magnitude of the infraction
must be weighed and equated with the penalty prescribed and must be commensurate thereto, in
view of the gravity of the penalty of dismissal or termination from the service.

The dismissal meted out on the respondents for dereliction of duty for one school day and
denouncing school authority, appears to be too harsh a penalty. It must be noted that the
respondents are being held liable for a first time offense. Thus, respondents were illegally

2. Yes. Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employee is
entitled to the twin reliefs of (a) either reinstatement or separation pay, if reinstatement is no
longer viable, and (b) backwages. Both are distinct reliefs given to alleviate the economic damage
suffered by an illegally dismissed employee and, thus, the award of one does not bar the other.
Substantive rights like the award of backwages resulting from illegal dismissal must not be
prejudiced by a rigid and technical application of the rules.

G.R. No. 162994 September 17, 2004

Facts: Petitioner Tecson was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as
medical representative. He signed a contract of employment which stipulates, among others, that he
agrees to study and abide by existing company rules; to disclose to management any existing or
future relationship by consanguinity or affinity with co-employees or employees of competing drug
companies and should management find that such relationship poses a possible conflict of interest,
to resign from the company.

Subsequently, Tecson entered into a romantic relationship with Bettsy, a branch coordinator of
rival company called Astra. This culminated into a marriage. Tecsons superiors informed him that
his marriage to Bettsy gave rise to a conflict of interest. He was transferred to another branch of the
company. He was then prohibited from promoting respondents products which were competing
with Astras products.

1. Whether the Court of Appeals erred in ruling that Glaxos policy against its employees marrying
employees from competitor companies is valid, and in not holding that said policy violates the equal
protection clause of the Constitution
2. Whether Tecson was constructively dismissed.

Ruling/s: 1. While our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights which are also entitled to respect and
enforcement in the interest of fair play.

Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products, it
has a genuine interest in ensuring that its employees avoid any activity, relationship or interest that
may conflict with their responsibilities to the company. Thus, it expects its employees to avoid
having personal or family interests in any competitor company which may influence their actions
and decisions and consequently deprive Glaxo of legitimate profits.

The challenged company policy does not violate the equal protection clause of the Constitution as
petitioners erroneously suggest. It is a settled principle that the commands of the equal protection
clause are addressed only to the state or those acting under color of its authority. Corollarily, the
equal protection clause erects no shield against merely private conduct, however, discriminatory or
wrongful. The only exception occurs when the state in any of its manifestations or actions has been
found to have become entwined or involved in the wrongful private conduct. Obviously, however,
the exception is not present in this case. Significantly, the company actually enforced the policy
after repeated requests to the employee to comply with the policy. Indeed, the application of the
policy was made in an impartial and even-handed manner, with due regard for the lot of the

What the company merely seeks to avoid is a conflict of interest between the employee and the
company that may arise out of such relationships.

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

2. No. Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in
rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee. None of these conditions are present in the instant case. The
record does not show that Tescon was demoted or unduly discriminated upon by reason of such
G.R. No. 182877 August 9, 2010

Facts: Respondent SCA Hygiene Products Corporation is a domestic corporation engaged in the
manufacture, sale and distribution of industrial paper, tissue and allied products. It has existing
Collective Bargaining Agreements (CBAs) with SCA Hygiene Products Corporation Monthly
Employees Union-FSM (Monthly Employees Union) and petitioner SCA Hygiene Products
Corporation Employees Association-FFW (Daily Employees Union), which represent the monthly
and daily paid rank-and-file employees, respectively. Both CBAs contain provisions that the
corporation will conduct a job evaluation on its employees when deemed necessary.

Eight job levels were adopted. Levels 1 and 2 consist of rank-and-file employees. As a result of the
job evaluation, the positions of 22 daily paid rank-and-file employees had been classified as Job
Grade Level 2 from Job Grade Level 1. Because of this, the unions claimed that the 22 daily paid
rank-and-file employees were entitled to conversion increase since Job Grade Level 2 positions are
meant for monthly paid rank-and-file employees and along with the conversion, said employees
were given additional job descriptions. They were also entitled to promotion increase since such is
the company practice everytime an employees rank is converted to a higher job grade level. The
unions added that the company violated their CBAs by refusing to implement the result of the job
evaluation considering that those converted from Job Grade Level 2 positions to Job Grade Level 3
positions were granted the benefits concomitant to their new positions. The contention of the
corporation is that there is no promotion for the 22 rank-and-file employees because they still
continue to remain rank-and-file and they still continue to occupy the same positions before the

Issue/s: 1) Were the 22 daily paid rank-and-file employees promoted after their positions have
been converted from Job Grade Level 1 to Job Grade Level 2?
2) If so, are they entitled to conversion increase equivalent to 10% of their current basic salary?

Ruling/s: 1. It is a well-settled rule that labor laws do not authorize interference with the
employer's judgment in the conduct of its business. The Labor Code and its implementing rules do
not vest managerial authority in the labor arbiters or in the different divisions of the National Labor
Relations Commission or in the courts. The hiring, firing, transfer, demotion, and promotion of
employees have been traditionally identified as a management prerogative subject to limitations
found in the law, a collective bargaining agreement, or in general principles of fair play and justice.

In the case at bar, petitioner has miserably failed to convince this Court that respondent acted in
bad faith in implementing the job evaluation program. There is no showing that it was intended to
circumvent the law and deprive the 22 daily paid rank-and-file employees of the benefits they are
supposed to receive.

The job evaluation program merely provided the procedure for the implementation of the job
evaluation and did not guarantee any adjustment in the salaries of the employees.

2. There was also no grant of any conversion or promotion increase to the 22 daily paid rank-and-
file employees since what transpired was only a promotion in nomenclature. Said employees
continued to occupy the same positions they were occupying prior to the job evaluation. Moreover,
their job titles remained the same and they were not given additional duties and responsibilities.
Likewise, a mere conversion from Job Grade Level 1 position to Job Grade Level 2 position does not,
of course, make a daily paid rank-and- filer a monthly paid one with a concomitant conversion and
promotion increase.
G.R. No. 173882 February 15, 2012
Julies Bakeshop and/or Edgar Reyes, Petitioners,
HENRY ARNAIZ, EDGAR NAPAL, and Jonathan Tolores, Respondents.

Facts: Reyes (petitioner) hired respondents as chief bakers in his three franchise branches of Julies
Bakeshop in Sibalom and San Jose, Antique. Respondents filed separate complaints against
petitioners for underpayment of wages, payment of premium pay for holiday and rest day, service
incentive leave pay, 13th month pay, cost of living allowance (COLA) and attorneys fees.
Subsequently, Reyes reassigned respondents as utility/security personnel tasked to clean the
outside vicinity of his bakeshops and to maintain peace and order in the area. Upon service of the
memo, respondents, however, refused to sign the same and likewise refused to perform their new
assignments by not reporting for work.

Issue/s: Was the transfer/reassignment of respondents to another position without diminution in
pay and other privileges tantamount to constructive dismissal?

Ruling/s: Yes. We have held that management is free to regulate, according to its own discretion
and judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay off of workers and discipline, dismissal
and recall of workers. The exercise of management prerogative, however, is not absolute as it must
be exercised in good faith and with due regard to the rights of labor.

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. We find that the threat
being alluded to by respondent Reyes that the petitioners might introduce harmful foreign
substances in baking bread is imaginary and not real. The petitioners were not even given an
opportunity to refute the reason for the transfer. Thus, the transfer/reassignment constitutes
constructive dismissal.

"[D]emotion involves a situation in which an employee is relegated to a subordinate or less important
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."When there is a demotion in
rank and/or a diminution in pay; when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee; or when continued employment is rendered impossible,
unreasonable or unlikely, the transfer of an employee may constitute constructive dismissal.

The transfer of respondents amounted to a demotion. Although there was no diminution in pay, there
was undoubtedly a demotion in titular rank. One cannot deny the disparity between the duties and
functions of a chief baker to that of a utility/security personnel tasked to clean and manage the
orderliness of the outside premises of the bakeshop. Respondents were even prohibited from entering
the bakeshop. The change in the nature of their work undeniably resulted to a demeaning and
humiliating work condition.