Facts:

The case involves Mercury Drug Corporation as the petitioner and Araceli Domingo as the respondent. Araceli Domingo began her employment with Mercury Drug Corporation on April 18, 1977, as a Sales Clerk Trainee at the Padilla Arcade branch in Greenhills, San Juan. She was promoted to a regular Sales Clerk on January 1, 1978, and later became a Pharmacy Assistant on February 1, 1982. By July 1, 1985, she was working as a Cashier at the Cubao-Romulo branch until her preventive suspension on June 10, 1992. On June 9, 1992, she was summoned to the main office by Mr. Angelito Dizon, the Assistant Vice-President for Chainstore Operations, where she was confronted by several supervisors and accused of leaking confidential information to her husband, Gene Domingo, who was then an Operations Manager at a competing drugstore. During this confrontation, Mr. Dizon made threatening remarks, suggesting that she should resign to avoid further issues. Following this, she was asked to sign a ...

Facts:

Employment History

• Araceli Domingo began working for Mercury Drug Corporation on 18 April 1977 as a Sales Clerk Trainee at the Padilla Arcade branch in Greenhills, San Juan.
• She became a regular Sales Clerk on 1 January 1978 and was promoted to Pharmacy Assistant at the Pasig-Rosario branch on 1 February 1982.
• On 1 July 1985, she was assigned as a Cashier at the Cubao-Romulo branch until her preventive suspension on 10 June 1992.

Incident Leading to Suspension

• On 9 June 1992, Domingo was summoned to the main office and confronted by supervisors Monette de la Cruz, Olivia Reotutar, and Artemio Tolilio, along with Senior Pharmacy Assistants Rico Marasigan and Eladio Sioson.
• She was accused of leaking confidential information to her husband, Gene Domingo, who was then the Operations Manager of Shoe Mart's drugstore business.
• During the confrontation, Assistant Vice-President Angelito Dizon verbally accused Domingo of being a traitor and suggested she resign.
• Domingo was placed on preventive suspension starting 10 June 1992, pending an investigation.

Investigation and Findings

• A Special Investigating Committee was formed to investigate the allegations.
• On 10 July 1992, Domingo and Sioson were informed they could resume receiving salaries, but their suspension remained in effect pending the investigation.
• The committee eventually found Domingo and Sioson innocent of the charges, and their suspension was lifted.

Transfer and Refusal

• After being cleared, Domingo was instructed to report to either the Divisoria or Baclaran branch, while Sioson was assigned to the Murphy branch.
• Domingo refused the transfer, claiming it was an attempt to inconvenience and harass her for filing a complaint against the company.
• In August 1994, she was ordered to report to the San Juan branch within ten days or face abandonment of her job.

Labor Arbiter’s Decision

• The Labor Arbiter ruled in favor of Domingo, declaring her suspension illegal and her subsequent transfer as constructive dismissal.
• The Arbiter ordered her reinstatement to her former position at the Cubao-Romulo branch with full backwages, benefits, and damages.

NLRC’s Decision

• The NLRC modified the Labor Arbiter’s decision, agreeing that the suspension was illegal but ruling that the transfer was justified due to company policy and potential animosity in the workplace.
• The NLRC deleted the awards for backwages, benefits, and damages.

Court of Appeals’ Decision

• The Court of Appeals reversed the NLRC’s decision, reinstating the Labor Arbiter’s ruling with modifications, including reduced damages.

Issue:

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Ruling:

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Ratio:

1. Management Prerogative vs. Security of Tenure: While employers have the right to transfer employees, this prerogative is not absolute and must be exercised in good faith. Transfers must not be unreasonable, inconvenient, or prejudicial to the employee.
2. Constructive Dismissal: The transfer of Domingo was deemed unreasonable and made in bad faith, as it was primarily motivated by the company’s desire to avoid workplace animosity rather than legitimate business needs.
3. Burden of Proof: The employer must prove that a transfer is for valid and legitimate grounds. Failure to do so renders the transfer tantamount to constructive dismissal.
4. Damages: While moral and exemplary damages may be awarded, the amounts must be reasonable and justified. The Court reduced the damages awarded by the Court of Appeals.
5. Reinstatement vs. Separation Pay: If reinstatement is no longer feasible due to the passage of time or other circumstances, separation pay is an appropriate remedy.