Title
Alicia M.L. Coseteng and Diliman Preparatory School vs. Leticia P. Perez
Case
G.R. No. 185938
Decision Date
Sep 6, 2017
Teacher claimed constructive dismissal after reassignment and suspension; SC ruled resignation was voluntary, no constructive dismissal or separation pay due.
constructive dismissal
employment
resignation

Case Summary (G.R. No. 185938)

Factual Background

Perez was hired by Diliman Preparatory School as an elementary teacher and for many years held a regular Grade III advisory class. In 1994 she was reassigned to Grade V with hours from 7:30 a.m. to 12:30 noon. In August 1994 students reported nonreceipt of a subscribed educational magazine whose payments Perez had collected. The School’s procedure required teachers to remit such collections to the head librarian. An investigating committee found that Perez admitted failing to remit payments and initially agreed to return the fees.

Investigation and Suspensions

A follow-up showed that only five of twenty students had been refunded by February 1995, and the remainder were refunded piecemeal upon School direction. The investigating committee considered a case for misappropriation but, in light of Perez’s long service, reduced the finding to negligence and recommended suspension without pay for ten working days. Perez was suspended from April 10 to 25, 1995. Separately, a cheating incident on January 26, 1995 involving a Grade V examination proctored by Perez led to a second investigation. Perez admitted involvement and the committee found negligence, recommending suspension effective May 26 to June 11, 1995 with one week commutation.

Resignation and Subsequent Claims

Perez served the second suspension but did not report back to work. On June 14, 1995 she faxed a handwritten resignation letter stating that she would assist her veteran father going to the United States. She received amounts due under the Private Education Retirement Annuity. Perez did not litigate immediately; she filed a Complaint for payment of separation benefits with the Labor Arbiter on June 15, 1998, later amending to include claims for constructive dismissal and damages. She asserted that she resigned because she faced reassignment to a longer working day as a “floating teacher,” with non-teaching tasks, and maintained that her stated reason for leaving the country was a pretext to avoid antagonizing the School.

The Parties’ Contentions

Perez argued that her resignation was involuntary and constituted constructive dismissal, entitling her to separation pay after twenty-three years of service, and offered an affidavit of a co-teacher, Teresita Limochin, to show that the School had granted separation pay to resigning employees. The petitioners contended that Perez’s cause of action had prescribed under Article 291, that her resignation was a voluntary act, that her reassignment was not a demotion but a legitimate temporary need, that salary and benefits remained unchanged, and that the School’s alleged grant of separation pay to Limochin was financial assistance, not an established practice. The petitioners counterclaimed for moral and exemplary damages and attorney’s fees.

Labor Arbiter Proceedings

The Labor Arbiter found that the School had a practice of giving separation pay to employees who resigned and awarded Perez separation pay and attorney’s fees, but simultaneously held that Perez resigned voluntarily and was not constructively dismissed. The LA dismissed Perez’s claims for constructive dismissal and damages and denied the petitioners’ counterclaims.

NLRC Proceedings

On partial appeal the NLRC modified the Labor Arbiter’s ruling by finding that Perez had been constructively dismissed because she was placed on floating status, but it dismissed the complaint against Alicia M.L. Coseteng personally and deleted the award of attorney’s fees. The NLRC denied the petitioners’ motion for reconsideration.

Court of Appeals Proceedings

The CA dismissed the petition for certiorari and held that Perez’s cause of action had not prescribed because “an employee has four years within which to institute an action for illegal dismissal.” The CA affirmed that Perez was constructively dismissed, treated her reassignment as a demotion amounting to an additional penalty for infractions, and reinstated the Labor Arbiter’s award of attorney’s fees. The CA denied reconsideration.

Issues Presented to the Supreme Court

The petitioners raised principally that Perez’s action had prescribed; that she failed to prove involuntariness of her resignation; that she was neither demoted nor placed on floating status; that there was no evidence of an established School practice of granting separation pay; and that the petitioners were entitled to moral and exemplary damages and attorney’s fees because Perez instituted a coercive, unmeritorious action.

Supreme Court’s Legal Analysis

The Court noted that Rule 45 review is limited to questions of law and that factual findings of labor tribunals and the CA are generally final unless a palpable and demonstrable mistake appears. The Court examined whether the CA and labor tribunals committed such a mistake and reviewed the factual record on whether Perez actually reported back to work after suspension and whether her resignation was voluntary. The Court explained the legal meaning of floating status with reference to Article 286 and cited authorities establishing that floating status involves a bona fide suspension of business operations not exceeding six months, and that an employee on floating status does not receive salary or statutory benefits.

Constructive Dismissal Analysis

The Court applied the burden rule that an employee who resigns must prove that the resignation was involuntary and a product of coercion, citing Gan v. Galderma Philippines, Inc. The Court summarized the elements of constructive dismissal as cessation of work because continued employment is rendered impossible or unreasonable by demotion in rank, diminution in pay or benefits, or acts of discrimination, insensibility or disdain that make continued employment unbearable. The Court found that Perez never reported back to work after serving her suspension and that she voluntarily tendered her resignation. The School satisfactorily explained that the school year had begun and that reassignments were necessary to avoid disruption of students’ instruction. Perez’s salary and benefits would have remained the same and the School represented that she would have been given regular load in the next semester had she not resigned. The Court held that temporary reassignment and the longer hours incident to substitute duties did not constitute demotion or intolerable conditions amounting to constructive dismissal.

Separation Pay Analysis

The Court reiterated the general rule that an employee who voluntarily resigns is not entitled to separation pay unless such entitlement is stipulated in the employment contract, collective bargaining agreement, or sanctioned by an established employer practice. The Court explained that to prove a regular company practice the employee must show consistent and deliberate grant of the benefit over a long period. The Court scrutinized Limochin’s affidavit and concluded that it evidenced an isolated act o

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