Labor Law Management Prerogatives Digests

G.R. No. 156963 November 11, 2004 THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE CO., petitioner, vs. 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. Respondent’s 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 ST. MICHAEL'S INSTITUTE, FR. NICANOR VICTORINO and EUGENIA BLANCO, petitioners, vs. CARMELITA A. SANTOS, FLORENCIO M. MAGCAMIT and ALBERT M. ROSARDA, respondents.

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 respondents. 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 dismissed. 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 DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners, vs. GLAXO WELLCOME PHILIPPINES, INC., Respondent.

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. Tecson’s 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 respondent’s products which were competing with Astra’s products. Issue/s: 1. Whether the Court of Appeals erred in ruling that Glaxo’s 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 employee. 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 transfer. G.R. No. 182877 August 9, 2010 SCA HYGIENE PRODUCTS CORPORATION EMPLOYEES ASSOCIATION-FFW, Petitioner, vs. SCA HYGIENE PRODUCTS CORPORATION, Respondent. 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 employee’s 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 evaluation. 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-andfile 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 Julie’s Bakeshop and/or Edgar Reyes, Petitioners, vs. HENRY ARNAIZ, EDGAR NAPAL,⃰ and Jonathan Tolores, Respondents. Facts: Reyes (petitioner) hired respondents as chief bakers in his three franchise branches of Julie’s 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 attorney’s 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.