G.R. No. 86956 - Shoemart, Inc. vs. Court of Appeals

Del Villar was hired by Coca‑Cola Bottlers Philippines, Inc. on May 1, 1990 as Physical Distribution Fleet Manager with a job grade of S‑7, receiving a monthly salary of P50,000.00 plus a company car, gasoline allowance, annual foreign travel, and other benefits.
In 1992, as part of a company reorganization, he was promoted to Transportation Services Manager under the Business Logistic Directorate headed by Director Edgardo I. San Juan.

On January 4, 1996, while serving as Transportation Services Manager, Del Villar submitted a report to the Company President alleging a fraudulent overpricing scheme in the purchase of company trucks and implicating certain company officials, including San Juan and Jose L. Pineda, Jr.
Later in 1996, the Company reorganized the Business Logistic Directorate; functions related to Refrigeration were reassigned, and Del Villar’s post was renamed Transportation and Refrigeration Services Manager.
Following the reorganization, Mr. Nathaniel L. Evangelista was appointed as Corporate Transportation and Refrigeration Services Manager, reversing the positions of Del Villar and Pineda, who were then reassigned:

Pineda became Corporate Purchasing and Materials Control Manager.
Del Villar was demoted to serve as Pineda’s Staff Assistant, effective May 1, 1996.

On July 8, 1996, Del Villar received a memorandum from San Juan indicating his demotion:

He was designated as Staff Assistant to the Corporate Purchasing and Materials Control Manager with a job grade of NS‑VII.
The usual privileges and benefits of his former S‑7 position (company car, gasoline allowance, foreign travel, etc.) were withdrawn.
He was instructed to turn over the company car to Pineda by July 10, 1996.

Del Villar contended that the demotion and withdrawal of privileges were punitive measures intended to force his resignation.

On November 11, 1996, Del Villar filed a complaint with the NLRC’s Arbitration Branch alleging illegal demotion and forfeiture of company privileges, impleading high‑ranking Company officials.
The Company, opting to file a Motion to Dismiss (instead of a substantive position paper), argued that the transfer was a valid exercise of its management prerogative and that Del Villar had no vested right to his previous privileges.
On March 3, 1998, the Labor Arbiter ruled in favor of Del Villar:

Found that Del Villar’s complaint sufficiently presented a cause of action.
Held that the Company’s acts had been done in bad faith, particularly as Del Villar was singled out after exposing the alleged fraud.
Awarded moral damages, exemplary damages, and attorney’s fees, and ordered the return of Del Villar’s car or equivalent compensation.

The Company appealed the Labor Arbiter’s decision through the NLRC and later filed a Petition for Certiorari with the Court of Appeals (CA‑G.R. SP No. 53815).
On February 26, 1999, the NLRC reversed the Labor Arbiter’s decision on the ground that good faith should be presumed and that there was no evidence of retaliatory or penal actions by the Company.
Del Villar secured a Motion for Reconsideration which was denied on April 26, 1999.
In its Decision dated October 30, 2003, the Court of Appeals found that:

The Company’s reorganization was not communicated transparently.
The transfer and the associated reduction in benefits, along with assigning Del Villar to a subordinate post under an implored colleague, clearly amounted to a demotion.
The NLRC had committed grave abuse of discretion in reversing the Labor Arbiter’s finding.

The Court of Appeals reinstated the Labor Arbiter’s decision with a reduction in moral and exemplary damages to P500,000.00 each.

Del Villar filed a Motion for Partial Reconsideration on November 20, 2003, seeking backwages from the date of his separation (May 31, 1998).
The Company also moved for reconsideration, arguing that Del Villar’s petition for certiorari had been filed out of time.
In a Resolution dated March 29, 2004, the Court of Appeals denied the motions for reconsideration for lack of merit.
On review, the issue of timing was addressed in the context of amendments to the Rules of Court – particularly the retroactive application of Supreme Court Circular No. 56‑2000 which determined that the 60‑day filing period for a petition for certiorari should be computed from the notice of denial of the Motion for Reconsideration.

Whether Del Villar’s Petition for Certiorari, filed 60 days after receiving notice of the denial of his Motion for Reconsideration, was filed within the reglementary period under the amended Rule 65 (Supreme Court Circular No. 56‑2000) – despite the Company’s contention that it was filed late.

Whether the Company’s decision to transfer Del Villar from Transportation Services Manager to Staff Assistant constituted a valid exercise of its management prerogative.
Whether the absence of a reduction in salary negated the claim that the transfer was a demotion, despite the withdrawal of privileges and the change in job responsibilities.

Whether the transfer, with the consequent withdrawal of benefits and assignment to a subservient role under an officer implicated in the fraudulent allegations, amounted to constructive dismissal.
The extent to which the demotion and the resulting working conditions contributed to Del Villar’s claim of illegal dismissal.

Whether the NLRC and the Labor Arbiter correctly applied the concepts of management prerogative and good faith in their respective decisions.
Whether the evidence supported the view that the Company’s reorganization was used as a pretext to retaliate against Del Villar for his earlier disclosure of the alleged fraud.

Whether the Company provided adequate evidence to substantiate its claim that Del Villar’s position had become redundant.
Whether the Company complied with the procedural requirements (such as the required notice to the Department of Labor and Employment) under Article 283 of the Labor Code in terminating Del Villar’s employment.