Serrano vs. NLRC, G.R. No. 117040.

January 27, 2000

FACTS:

Petitioner Ruben Serrano was initially hired by private respondent Isetann

Department Store on October 4, 1984 as a security checker to apprehend
shoplifters and prevent pilferage of merchandise on contractual basis. He became a
regular employee of Isetann on April 4, 1985, and was appointed head of its
Security Checkers Section in 1988. In 1991, Isetann decided to phase out its entire
security section and engage the services of an independent security agency as a
cost-cutting measure. On October 11, 1991, Isetann wrote a memorandum to
petitioner terminating his services. The loss of his employment prompted petitioner
to file a complaint against Isetann before the Labor Arbiter for illegal dismissal,
illegal layoff, unfair labor practice, underpayment of wages and nonpayment of
salary and overtime pay. The Labor Arbiter found petitioner to have been illegally
dismissed and ordered Isetann to pay him the total judgment award of P79,959.12
aside from his reinstatement. On appeal, the NLRC, finding that the phase out by
Isetann of its security section and hiring of an independent security agency
constituted a legitimate business decision, overturned the ruling of the Labor
Arbiter.

ISSUE:

Whether or not the dismissal of petitioner Serrano was valid.

HELD:

YES. Petitioners contention has no merit. Art. 283 provides:

Closure of establishment and reduction of personnel. - The employer may also

terminate the employment of any employee due to the installation of labor-saving
devices, redundancy, retrenchment to prevent losses or the closing or cessation of
operations of the establishment or undertaking unless the closing is for the purpose
of circumventing the provisions of this Title

In De Ocampo v. National Labor Relations Commission, the Court held:

In contracting the services of Gemac Machineries, as part of the companys cost-

saving program, the services rendered by the mechanics became redundant
and superfluous, and therefore properly terminable. The company merely
exercised its business judgment or management prerogative.

In Asian Alcohol Corporation v. National Labor Relations Commission, the Court ruled
that an employers good faith in implementing a redundancy program is not
necessarily put in doubt by the availment of the services of an independent
contractor to replace the services of the terminated employees to promote
economy and efficiency.

Indeed, as pointed out in another case, the "[management of a company] cannot be

denied the faculty of promoting efficiency and attaining economy by a study of what
units are essential for its operation. To it belongs the ultimate determination of
whether services should be performed by its personnel or contracted to outside
agencies . . . [While there] should be mutual consultation, eventually deference is to
be paid to what management decides." Consequently, absent proof that
management acted in a malicious or arbitrary manner, the Court will not interfere
with the exercise of judgment by an employer.
In the case at bar, there is only the bare assertion of petitioner that, in abolishing
the security section, private respondents real purpose was to avoid payment to the
security checkers of the wage increases provided in the collective bargaining
agreement approved in 1990. Such an assertion is not a sufficient basis for
concluding that the termination of petitioners employment was not a bona
fide decision of management to obtain reasonable return from its investment, which
is a right guaranteed to employers under the Constitution. Indeed, that the phase-
out of the security section constituted a "legitimate business decision" is a factual
finding of an administrative agency which must be accorded respect and even
finality since nothing can be found in the record which fairly detracts from such
finding.

Accordingly, the termination of petitioners services was for an authorized

cause, i.e., redundancy. Hence, pursuant to Art. 283 of the Labor Code, petitioner
should be given separation pay at the rate of one month pay for every year of
service.

Leonardo v. NLRC, June 16, 2000, G.R. 125303

FACTS:

On August 11, 1981, Reynaldos Marketing Corporation employed petitioner Aurelio

Fuerte as muffler specialist with a daily wage of P45.00. Fuerte was appointed
supervisor in 1988 receiving an increased compensation of P122.00 augmented by
a weekly supervisors allowance of P600.00. In 1992, the company transferred
Fuerte to its Sucat plant due to his failure to meet his sales quota and had
withdrawn his supervisors allowance. It is the policy of the respondent company
that an employer who fails to meet his sales quota for three (3) consecutive
months, he is stripped of his supervisors designation and allowance. Fuerte
nevertheless protested his transfer and filed a complaint for illegal termination. The
Labor Arbiter rendered judgment in favor of petitioner. The NLRC however modified
the decision of the Labor Arbiter, ordering the reinstatement of Fuerte but without
backwages. Fuerte argues to have met his quota considering that he continued to
receive his allowance for more than three (3) months; and decries his transfer as
being violative of his security of tenure, the clear implication being that he was
constructively dismissed.

ISSUE:

Whether or not Fuerte was constructively dismissed.

HELD:

NO. An employer acts well within its rights in transferring an employee as it sees fit
provided that there is no demotion in rank or diminution in pay. The two
circumstances are deemed badges of bad faith, and thus constitutive of
constructive dismissal. In this regard, constructive dismissal is defined in the
following manner:

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.
Yet here, the transfer was undertaken beyond the parameters as aforesaid. The
instinctive conclusion would be that his transfer is actually a constructive dismissal,
but oddly, private respondent never denies that it was really demoting FUERTE for
cause. It should be borne in mind, however, that the right to demote an employee
also falls within the category of management prerogatives.

This arrangement appears to be an allowable exercise of company rights. An

employer is entitled to impose productivity standards for its workers, and in fact,
non-compliance may be visited with a penalty even more severe than demotion.

Thus, the practice of a company in laying off workers because they failed to make
the work quota has been recognized in this jurisdiction.

Failure to observe prescribed standards of work, or to fulfill reasonable work

assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas, either
by failing to complete the same within the allotted reasonable period, or by
producing unsatisfactory results. This management prerogative of requiring
standards may be availed of so long as they are exercised in good faith for the
advancement of the employers interest.

Neither can we say that FUERTEs actions are indicative of abandonment. To

constitute such a ground for dismissal, there must be (1) failure to report for work or
absence without valid or justifiable reason; and (2) a clear intention, as manifested
by some overt acts, to sever the employer-employee relationship. The filing of a
complaint for illegal dismissal, as in this case, is inconsistent with a charge of
abandonment

Accordingly, given that Fuerte may not be deemed to have abandoned his job, and
neither was he constructively dismissed by private respondent, the Commission did
not err in ordering his reinstatement but without backwages. In a case where the
employees failure to work was occasioned neither by his abandonment nor by a
termination, the burden of economic loss is not rightfully shifted to the employer;
each party must bear his own loss.