Ledesma VS.
NLRC was told by petitioner that he did not
Doctrines:
1. There is a constructive dismissal
when the reassignment of an employee
involves a demotion in rank or
discrimination in pay.
2. Demotion of private respondent is
tantamount to a constructive dismissal
because
Facts:
Private respondent Orlando Ondon was
employed as a security guard by
petitioner company at its hacienda
Teresa situated in Negros Occidental
under the management of petitioner
Arturo Ledesma.
The hacienda is covered by the
Comprehensive Agrariran Reform
Program (CARP), a team from the
Department of Agrarian Reform visited
the hacienda and conducted a meeting
to explain to the workers their options
under the said law:
1. Actual Land Distribution or
2. Stock Distribution
After the said meeting, private
respondent campaigned for actual land
distribution while the petitioner
campaigned for the stock distribution.
Due to this, private respondent was
prevented from reporting for work and
want private respondent to in the
hacienda anymore since private
respondent’s loyalty was with the
workers and not with the petitioner.
Private respondent filed a complaint of
illegal dismissal.
Labor Arbiter ruling - ruled that private
respondent was not dismissed but was
merely given a new assignment and that
his act of refusing to report for work in
his new assignment constituted
abandonment
Further, the change of private
respondent’s assignment from security
guard to laborer was justified as
respondent’s breach the trust and
confidence of his employer by
maintaining a stand contrary to that of
the management.
NLRC Ruling – reversed the decision of
the labor arbiter and found that private
respondent was illegally dismissed. The
transfer of private respondent from the
position of security guard to the position
of a laborer was a demotion.
Further the private respondent’s refusal
to accept the transfer did not amount to
abandonment of work for he
immediately filed his complaint for illegal
dismissal.
ISSUE: Whether or not private
respondent was
illegally/constructively dismissed?
HELD: Yes, in the case at bar, the
demotion of private respondent is
tantamount to a constructive dismissal.
One does not need to stretch his
imagination to distinguish the work of a
security guard and that of a common
agricultural laborer in a sugar plantation.

Likewise, there was a diminution of

salary, for a security guard is paid on a
monthly basis while a laborer in the
sugar plantation is paid either on daily or
piece work basis.

Lastly, laborers do not work year round

but only when needed and off – season
months, they are not required to work at
all.
The Philippine American Life and
General Insurance Co., VS. Gramaje
Doctrines
1. Discrimination is the unequal
treatment of employees, which is
proscribed as an unfair labor practice by
Article 248(e) of the Labor Code.
Discrimination is the failure to treat all
persons equally when no reasonable
distinction can be found between those
favoured and those not favoured.
2. Bad faith is 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.
3. Constructive dismissal has been
defined as a quitting because of
continued employment is rendered
impossible, unreasonable or unlikely; as
an offer involving a demotion in rank and
diminution in pay.
4. Constructive dismissal exists when an
act of clear discrimination, insensibility
or disdain by an employer has become
unbearable to the employee leaving him
with no option but to forego with his
continued employment.
5. Managerial prerogatives, however,
are subject to limitations provided by
CBA, general principles of fair play and
justice.
6. the managerial prerogative to transfer
personnel must be exercised without
grave abuse of discretion bearing in
mind the basic elements of justice and
fair play. the employer must be able to
show that the transfer is not
unreasonable, inconvenient or
prejudicial to the employee; nor does it
involve a demotion in rank or a
diminution of his salaries, privileges and
other benefits
Facts
In 1997: Atty. Angelita Gramaje was
employed by Philamlife as Assistant VP,
heading the Pensions Department.
In 1998: The management staff of the
Pensions Dept were transferred to another
division, leaving her to run the Pensions
Department single-handedly with only one
assistant.
The Chair of Philamlife, Cuisa, suddenly
offered Gramaje 250,000 as severance fee
asking her to leave her position.
 He explained in a meeting that in
offering her the severance fee, he
is in fact sparing her the
hardships that she will undergo in
the legal department which she
will be transferred to.
Cuisa issued a memorandum instructing
Gramaje to transfer to the legal department.
 Gramaje protested the sudden
unexplained transfer and
 stressed that the was hired
because of her marketing,
finance and fund management
skills, not her legal skills.
 She also said that her department
was performing very well,
surpassing its P15m target hitting
almost 20m.
While on Gramaje was on sick leave, she
found out that Cuisa had appointed
someone else as head of the Pensions
department, and that her whole department
was physically transferred to another
building.
Hence, Gramaje filed the instance case for
illegal constructive dismissal.
 LA: No illegal dismissal.
 NLRC: Upheld LA.
 CA: Found constructive
dismissal.
Issue: W/N transferring Gramaje was
constructively dismissed?
Held: Yes, It may be true that in the
transfer of respondent from the
Pensions Department to the Legal
Department, there was no demotion in
rank nor diminution of the salaries,
benefits and privileges. But this is not
the only standard that must be satisfied
in order to substantiate the transfer.
Management has the prerogative to
transfer or assign employees, 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.
In the case at bar, bad faith and
discrimination on the part of petitioner
are profusely perceived from its actions.
As early as 23 August 1998, Philam life
had already advertised in the Manila
Bulletin for a replacement.
Cuisa in a memorandum announced the
appointment of Gramaje’s replacement
during the time that respondent was still
on official sick leave.
Gramaje’s transfer to the Legal
Department was unreasonable,
inconvenient and prejudicial to
her. Cuisa must have known that
Gramaje has no adequate exposure in
the field of litigation, and yet she was
transferred to the Legal Department
which would have placed her in a very
inopportune position because she would
be heading a team of lawyers who are
far more experienced than she was. It
was a poor business decision and it is
unlikely that the officers of petitioner
would have made such a decision,
except to inconvenience or prejudice
respondent. Thus, under the
circumstances, the decision to transfer
was unreasonable.
There was discrimination since Gramaje
was made to single handedly run the
entire pensions department.
She formally rejected the offer of
250,000 separation pay, but Philam life
never commented or replied to her
rejection letter.

Constructive dismissal exists when an

act of clear discrimination, insensibility
or disdain by an employer has become
so unbearable to the employee leaving
him with no option but to forego with his
continued employment.

 The circumstances which

prevailed in the working
environment of the respondent
clearly demonstrate this.

 The transfer of respondent from

the Pensions Department to the
Legal Department was not a
legitimate exercise of
management prerogative on the
part of petitioner. Before the order
to transfer was made,
discrimination, bad faith, and
disdain towards respondent were
already displayed by petitioner.
Lucky Textile Mills VS. NLRC
Doctrines: “Floating Status”
1. It is settled that when the bonafide
suspension of operation of a business or
undertaking exceeds 6 months, then the
worker’s employment shall be deemed
terminated.
In the case at bar, Nolasco’s “floating
status” could not last for an
unreasonable period. As it was
established that he did not abandon his
work, his dismissal without cause,
without prior notice and hearing, was
illegal.
Facts:
Nolasco was employed for 17 years as
property custodian of Eastern Textile
Mills, Inc. (EASTEX) a domestic
corporation engaged in textile, receiving
a monthly allowance of 320 pesos.
EASTEX went on a “temporary
shutdown” and in the process, laid off
some of its employees. Thereafter, the
company suffered reverses and could
not pay its indebtedness of 5 million
dollars to its banks and because of this
reverses by virtue of a writ of attachment
issued by the RTC of Manila, the
company’s asset were attached.
Nolasco was ordered to stop working,
the reason given being “temporary
shutdown”
EASTEX held a special meeting of its
stockholders, during which a resolution
was passed authorizing “the formation of
a new corporation” this rehabilitation
plan was approved.
The Securities and Exchange
Commission issued a registration
number for the new corporation named
Lucky Textile Mills, Inc. (LUCKY).
EASTEX completely ceased operation.
LUCKY agreed to “operate the former
business” utilizing the assets of
EASTEX. At the assumption of
operations, Nolasco was not hired by
LUCKY.
Nolasco filed a case to the NLRC
against both corporation (EASTEX AND
LUCKY) alleging that since resumption
of the normal operation of the
corporation he was not given any notice
to report back for duty, which amounted
to his termination without cause.
Issue: Whether or not Nolasco was
illegaly dismissed?
Held: Yes, More than 6 months had
elapsed from the time private
respondent Nolasco was asked to stop
working as property custodian. Having
worked faithfully for EASTEX for 17
years without any derogatory record, he
waited patiently for an advice to return to
work. When no notice reached him,
putting him on a prolonged floating
status, he was constrained to file the
complaint for illegal dismissal in the
DOLE.
Applying Article 279 of the Labor Code,
Nolasco, as a regular employee who
enjoyed security of tenure, cannot be
dismissed except for cause. Moreover,
there was no due process in terminating
his employment, there was not notice
and hearing.

It is settled that when the bonafide

suspension of operation of a business or
undertaking exceeds 6 months, then the
worker’s employment shall be deemed
terminated.

In the case at bar, Nolasco’s “floating

status” could not last for an
unreasonable period. As it was
established that he did not abandon his
work, his dismissal without cause,
without prior notice and hearing, was
illegal.