Case Summary (G.R. No. 191281)
Procedural History
Respondents filed separate illegal dismissal complaints before the Labor Arbiter alleging constructive dismissal by reason of transfers that reduced their earnings. The Labor Arbiter found constructive (illegal) dismissal and awarded separation pay and backwages. The NLRC reversed, dismissing the complaints and directing the employees to return to work without backwages. The Court of Appeals granted certiorari and reinstated the Labor Arbiter’s decision (with a modification excluding service incentive leave pay). The petition before the Supreme Court followed, contesting the CA’s reversal of the NLRC.
Facts as Found in the Record
Respondents were sewing operators paid on a piece-rate basis. In August 2003 both were reassigned to different operations allegedly resulting in reduced earnings: De Lemos attributed the transfer to her refusal to render overtime until 7:00 p.m.; she also alleged withholding of her last salary and inability to earn in the new assignment because certain by-products take longer to finish. Ocubillo attributed her transfer to excessive absences caused by her father’s prolonged illness and her own health problems; she alleged assignment to different machines “whichever is available” and occasions when no machine was available. Petitioners denied dismissal, asserted transfers were within management prerogative tied to client specifications, claimed respondents intimated resignations in early 2004 and sought separation pay, and maintained that respondents’ absences were grounds for disciplinary action.
Petitioners’ and Respondents’ Positions
Respondents: Transfers were unreasonable and produced diminution of earnings amounting to constructive dismissal; they asked for backwages, separation pay and other benefits. Petitioners: Transfers were valid exercises of management prerogative driven by business necessity and client requirements; respondents either resigned or abandoned employment and thus were not illegally dismissed; as piece-rate workers, earnings vary with output and a reduction in earnings does not ipso facto establish constructive dismissal.
Labor Arbiter Ruling
The Labor Arbiter found in favor of respondents, concluding they were constructively and illegally dismissed. The Arbiter emphasized that respondents did not resign or abandon their jobs, resolved ambiguities in favor of the workers, and held that employer prerogatives must not be used to effect dismissal by other means. The Arbiter ordered separation pay (one month per year of service, with fractions of six months treated as a year) and backwages; other claims were dismissed.
NLRC Ruling and Rationale for Reversal
The NLRC reversed the Labor Arbiter. It characterized respondents’ allegations of demotion/diminution as vague and unsupported by evidence quantifying earnings before and after transfer. The NLRC credited petitioners’ explanation that transfers were necessitated by client specifications and business requirements and were a valid exercise of management prerogative. The Commission further observed that respondents continued to report for work for months after the alleged transfers and that respondents had intimated resignation and sought separation pay—facts consistent with lack of dismissal. Consequently it ordered respondents to return to work without backwages.
Court of Appeals Ruling and Rationale for Reinstatement
The Court of Appeals granted certiorari, found no legitimate business reason for the transfers that reduced respondents’ earnings, and concluded that the transfers were unreasonable, inconvenient and prejudicial—tantamount to constructive dismissal. The CA also concluded that respondents’ absences did not establish abandonment, invoking the rule that an employee who promptly protests a layoff cannot logically be said to have abandoned employment. The CA therefore reinstated the Labor Arbiter decision (excluding service incentive leave pay from the award).
Issue on Review and Standard of Review
The central issue before the Supreme Court was whether respondents were constructively dismissed when reassigned to different sewing operations that allegedly reduced their earnings, and whether the CA or NLRC findings were more consistent with the record. Because the CA’s findings conflicted with those of the NLRC, the Court invoked the exception to the general rule deferring to factual findings, permitting an independent review of the evidence to determine which agency’s factual conclusion was more conformable to the record.
Legal Standard for Constructive Dismissal and Management Prerogative
The Court reiterated settled law: management may transfer or assign employees within its prerogative so long as there is no demotion in rank, diminution of salary or benefits, discriminatory or bad-faith motive, or use of transfer as a subterfuge to rid the employer of an undesirable worker. A transfer becomes constructive dismissal only if it is unreasonable, inconvenient or prejudicial to the employee, involves demotion or diminished compensation, or reflects discrimination or insensibility so intolerable as to force the employee to quit. The managerial prerogative must be exercised without grave abuse of discretion and with observance of justice and fair play.
Application to Piece-Rate Employment and Earnings Variations
The Court emphasized that piece-rate workers have no fixed salaries; compensation depends on quantity and quality of output. Thus a reduction in earnings following reassignment does not automatically establish constructive dismissal. The record contained respondent De Lemos’s admission that some garments/by-products took longer to finish, affecting earnings, and the company’s explanation that jobs depended on client specifications. The Court found no competent evidence of bad faith, discrimination, or that the transfers were outside ordinary business necessity. It held that mere personal inconvenience or hardship arising from reassignment is not a valid ground t
...continue readingCase Syllabus (G.R. No. 191281)
Case Citation and Court
- Supreme Court of the Philippines, First Division.
- G.R. No. 191281, Decision penned December 05, 2012; reported at 700 Phil. 471; 109 O.G. No. 37, 6220 (September 16, 2013).
- Opinion authored by Associate Justice Villarama, Jr., with Justices Leonardo-De Castro (Acting Chairperson), Bersamin, Perez, and Reyes concurring. (Designated additional member per Special Order No. 1385 dated December 4, 2012.)
Nature of the Case and Relief Sought
- Petition for review on certiorari under Rule 45 of the Rules of Court.
- Petitioners (Best Wear Garments and/or Warren Pardilla) seek reversal of the Court of Appeals (CA) Decision dated February 24, 2009 and Resolution dated February 10, 2010 in CA-G.R. SP No. 102002.
- Respondents (Adelaida B. De Lemos and Cecile M. Ocubillo) sought relief from alleged illegal/constructive dismissal, claiming entitlement to backwages, separation pay, service incentive leave pay, and attorney’s fees.
Parties and Employment Background
- Petitioners: Best Wear Garments, a sole proprietorship represented by its General Manager Alex Sitosta.
- Respondents: Cecile M. Ocubillo and Adelaida B. De Lemos, both hired as sewers on piece-rate basis: De Lemos on July 12, 1994 and Ocubillo on October 27, 1993.
- Nature of employment: piece-rate sewing work for a garments-manufacturing sub-contractor; compensation dependent on output per assigned work/machine and client specifications.
Factual Allegations by Respondents
- Both respondents alleged being arbitrarily transferred in August 2003 to other areas/operations of the petitioner’s garment company, resulting in reduced earnings.
- De Lemos:
- Alleged initial adjustment after first transfer but later transferred to a different operation where by-products required a long period to finish, producing less earnings.
- Alleged the transfer was motivated by her refusal to render overtime work up to 7:00 p.m.
- Requested return to previous assignment; request was allegedly rejected.
- Claimed she was constrained not to report for work because Sitosta became indifferent after transfer.
- Alleged her last salary was withheld by the company.
- Ocubillo:
- Alleged transfer precipitated by alleged excessive absences since 2001 due to her father’s prolonged illness (died November 9, 2003) and her own poor health.
- Alleged assignment from September to October 2003 to different machines “whichever is available,” sometimes preventing earnings when no machine was available.
- Alleged Sitosta required overtime until 7:00 p.m., which she refused because she was paid only up to 6:25 p.m.
Petitioners’ (Employer) Factual Assertions and Defense
- Denied having terminated respondents; alleged respondents committed numerous absences without leave (AWOL).
- Claimed De Lemos informed Sitosta in February 2004 of an intention to resign and demanded separation pay; Ocubillo similarly intimated resignation in March 2004 and demanded separation pay.
- Stated company had no policy of granting separation pay and could not grant respondents’ demands.
- Stated De Lemos never reported back since March 2004; Ocubillo failed to report from October 2004 to present (as of pleadings).
- Argued respondents are piece-rate workers and not paid by hours, thus refusal to render overtime is not a valid ground to claim constructive dismissal because compensation was based on output.
Procedural History — Labor Arbiter
- Labor Arbiter Arden S. Anni rendered Decision dated September 5, 2005.
- Labor Arbiter’s holdings:
- Declared that complainants (respondents) were constructively, and therefore illegally, dismissed from employment.
- Ordered each complainant to be paid separation pay equivalent to one-month salary for every year of service (fraction of at least six months counted as one year).
- Ordered payment of backwages computed from time of dismissal up to finality of the decision; parties directed to submit computations for approval.
- Dismissed all other claims for lack of merit.
- Labor Arbiter’s rationale:
- Respondents neither resigned nor abandoned their jobs; ambiguities surrounding their dismissal resolved in favor of the workers.
- AWOL prerogative should have been exercised before dismissal was effected; it would be illogical to resign and then file illegal dismissal complaints.
Procedural History — National Labor Relations Commission (NLRC)
- Petitioners appealed to the NLRC which reversed the Labor Arbiter’s decision (Decision dated August 28, 2007) and dismissed respondents’ complaints.
- NLRC findings and reasoning:
- Found no basis for constructive dismissal: alleged demotion was vague and complainants failed to state specific comparative earnings before and after transfer to establish diminution.
- Emphasized respondents were paid on a piece-rate basis; earnings depended on their output.
- Found credible respondents’ (employer’s) assertion that transfers were a valid exercise of management prerogative and were pursuant to client work specifications in subcontracting business.
- Noted respondents continued to report for work until February 2004 (De Lemos) and August 2004 (Ocubillo), supporting the employer’s claim that complainants were not dismissed in August 2003.
- Observed concurrent dates: filing of complaints in May and June 2004 jibe with employer’s assertion that respondents intimated intention to resign in February/March 2004 and demanded separation pay.
- Directed complainants to report back to work without backwages and for the company to accept them under same terms and conditions.
Procedural History — Court of Appeals (CA)
- Respondents filed for certiorari before the CA alleging grave abuse of discretion by the NLRC.
- CA Decision dated February 24, 2009:
- Granted the petition for certiorari, reversed the NLRC, and reinstated the Labor Arbiter’s Decision with the modification that service incentive leave pay be excluded from the computation of the monetary award.
- CA reasoning:
- Found no valid and legitimate business reason for the transfer order that entailed reduction of respondents’ earnings.
- Determined respondents’ pl