Best Wear Garments and/or Warren Pardilla vs. De Lemos and Ocubillo

A transfer of piece-rate workers to different operations, made pursuant to business necessity and without bad faith, discrimination, or diminution of rank or salary, is a valid exercise of management prerogative and does not amount to constructive dismissal merely because it reduces the workers’ piece-rate earnings. Backwages may be awarded only upon a finding of illegal dismissal; where there is no dismissal, the remedy is reinstatement without backwages.

Best Wear Garments is a sole proprietorship engaged in garments manufacturing as a sub-contractor, represented by General Manager Alex Sitosta. It employed respondents Cecile M. Ocubillo and Adelaida B. De Lemos as piece-rate sewers. The company’s operations depend on contracts with clients, whose specifications determine the type of sewing jobs available and the deployment of sewers. The dispute concerns the balance between the constitutional policy of protecting labor and the employer’s management prerogative to transfer employees.

Best Wear Garments, a sole proprietorship represented by General Manager Alex Sitosta, hired Cecile M. Ocubillo and Adelaida B. De Lemos as piece-rate sewers on October 27, 1993 and July 12, 1994, respectively. The company is engaged in garments manufacturing as a sub-contractor, and the work it performs depends on the specifications of its clients.

In August 2003, Sitosta transferred both respondents to other areas of operation. According to respondents, this amounted to constructive dismissal because it resulted in less earnings. De Lemos claimed that after two months in her new assignment she was able to adjust, but Sitosta again transferred her to a different operation where she could not earn as much as before because by-products required long periods to finish. She averred that the reason for her transfer was her refusal to render overtime work up to 7:00 p.m.; her request to be returned to her previous assignment was rejected; she was constrained not to report for work as Sitosta had become indifferent to her since the transfer; and her last salary was withheld.

Ocubillo alleged that her transfer was precipitated by excessive absences since 2001, which were due to her father’s illness until his death on November 9, 2003, and her own sickness. From September to October 2003, Sitosta assigned her to different machines whichever was available, and there were times she could not earn for a day because no machine was available. Sitosta also allegedly required her to render overtime work up to 7:00 p.m., which she refused because she was only paid up to 6:25 p.m.

Petitioners denied having terminated respondents and claimed they committed numerous absences without leave. Sometime in February 2004, De Lemos informed Sitosta that due to personal problem she intended to resign and demanded separation pay. In March 2004, Ocubillo likewise intimated her intention to resign and demanded separation pay. Sitosta explained that the company had no existing policy on granting separation pay and could not act on their request. De Lemos never reported back to work since March 2004, while Ocubillo failed to report for work from October 2004 to the present. Petitioners asserted that respondents are piece-rate workers and hence not paid according to the number of hours worked.

The complaints followed: De Lemos filed on May 20, 2004, and Ocubillo on June 10, 2004. The Labor Arbiter found that respondents neither resigned nor abandoned their jobs. The NLRC credited petitioners’ assertion that respondents continued to report for work until February 2004 for De Lemos and August 2004 for Ocubillo. The Court of Appeals found no valid and legitimate business reason for the transfer order.

• Constructive Dismissal: Petitioners argued that the Court of Appeals glaringly overlooked and clearly erred in its findings of fact and in applying the law on constructive dismissal.
• Denial of Termination: Petitioners denied having terminated respondents and claimed that respondents committed numerous absences without leave, and that De Lemos and Ocubillo informed Sitosta of their intention to resign and demanded separation pay.
• Management Prerogative: Petitioners maintained that the transfers were a valid exercise of management prerogative because respondents were piece-rate workers not paid by the number of hours worked, and the work to be performed depended on client contract specifications.
• Willingness to Reaccept: Petitioners asserted that they were willing to accept respondents back to work.

• Constructive Dismissal: Respondents alleged that in August 2003 Sitosta arbitrarily transferred them to other areas of operation, resulting in less earnings, which amounted to constructive dismissal.
• De Lemos’s Transfer: De Lemos claimed that her transfer was due to her refusal to render overtime work up to 7:00 p.m.; her request to be returned to her previous assignment was rejected; she was constrained not to report for work; and her last salary was withheld.
• Ocubillo’s Transfer: Ocubillo claimed that her transfer was precipitated by excessive absences due to her father’s illness and her own sickness; she was assigned to different machines, sometimes with no available machine, and was required to render overtime up to 7:00 p.m., which she refused because she was paid only up to 6:25 p.m.
• Illegal Dismissal Claims: Both respondents filed complaints for illegal dismissal with prayers for backwages and other accrued benefits, separation pay, service incentive leave pay, and attorney’s fees.

• Constructive Dismissal: Whether the Court of Appeals erred in reversing the NLRC and finding that respondents were constructively dismissed.
• Management Prerogative: Whether the transfer of piece-rate sewers to different operations was a valid exercise of management prerogative.
• Backwages and Separation Pay: Whether respondents are entitled to backwages and separation pay absent a finding of dismissal.
• Question of Fact: Whether the divergence between the factual findings of the NLRC and the Court of Appeals warranted review by the Supreme Court.

• Constructive Dismissal: No. The Court of Appeals erred in reversing the NLRC; respondents were not constructively dismissed.
• Management Prerogative: Yes. The transfer was a valid exercise of management prerogative, absent bad faith, ill motive, or discrimination.
• Backwages and Separation Pay: No. Backwages may be granted only upon a finding of illegal dismissal; absent dismissal, the remedy is reinstatement without backwages.
• Question of Fact: Yes. Review was warranted because the Court of Appeals’ findings were contrary to those of the NLRC, falling under a recognized exception to the rule limiting Rule 45 review to errors of law.

• Constructive Dismissal: The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. An employer may transfer or assign employees from one office or area of operation to another, 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. Blue Dairy Corporation vs. NLRC requires that the managerial prerogative to transfer personnel be exercised without grave abuse of discretion, bearing in mind the basic elements of justice and fair play; it cannot be used as a subterfuge to rid the employer of an undesirable worker. The employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee, and does not involve a demotion in rank or diminution of salaries, privileges, and other benefits. If the employer fails to overcome this burden, the transfer is tantamount to constructive dismissal. Here, respondents were piece-rate workers assigned to individual sewing machines; their earnings depended on the quality and quantity of finished products. A change in work assignments might affect output, but any resulting reduction in pay does not necessarily imply constructive dismissal. Workers under piece-rate employment have no fixed salaries; their compensation is computed on the basis of accomplished tasks. De Lemos admitted that some garments or by-products took a longer time to finish, so they could not earn as much as before. The type of sewing jobs available depended on the specifications made by petitioner company’s clients. Under these circumstances, the transfer was not unreasonable, inconvenient, or prejudicial. The deployment of sewers to work on different types of garments as dictated by business necessity was within the ambit of management prerogative, and absent bad faith, ill motive, or discrimination, courts should not interfere. The records were bereft of any showing of clear discrimination, insensibility, or disdain on the part of petitioners. It was unfair to charge petitioners with constructive dismissal simply because respondents insisted that their transfer was against their will. An objection to a transfer grounded solely on personal inconvenience or hardship is not a valid reason to disobey an order of transfer. Respondents’ eventual discontinuance of reporting for work was their personal decision, for which petitioners should not be held liable, particularly as petitioners did not dismiss them.
• Management Prerogative: The transfer was a valid exercise of management prerogative. Petitioner company is engaged in garments manufacturing as a sub-contractor; the kind of work it performs depends on its client contracts, which specify the work it has to perform, and the work to be performed by its employees depends on those work specifications. Thus, assigning complainants to different operations was pursuant to the requirements of its contracts. Since respondents were piece-rate workers, they were not paid according to the number of hours worked, and their earnings depended on their output. The Court of Appeals erred in finding no valid and legitimate business reason for the transfer. The transfer was not a subterfuge to rid the company of undesirable workers, and no bad faith, ill motive, or discrimination was shown.
• Backwages and Separation Pay: There was no evidence that respondents were dismissed from employment. Petitioners expressed willingness to accept them back to work. Because there was no termination of employment by the employer, the award of backwages cannot be sustained. Backwages may be granted only when there is a finding of illegal dismissal. In cases where there is no evidence of dismissal, the remedy is reinstatement but without backwages. The constitutional policy of providing full protection to labor is not intended to oppress or destroy management. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has rights which are entitled to respect and enforcement in the interest of simple fair play. Where management prerogative to transfer employees is validly exercised, courts will decline to interfere.
• Question of Fact: The main issue involved a question of fact. The jurisdiction of the Supreme Court in cases brought before it from the Court of Appeals via Rule 45 of the 1997 Rules of Civil Procedure is generally limited to reviewing errors of law; the Court is not a trier of facts, and the findings of fact of the Court of Appeals are conclusive and binding. However, there are recognized exceptions, including when there is a divergence between the findings of fact of the NLRC and that of the Court of Appeals. Because the Court of Appeals’ findings were contrary to those of the NLRC, the Court reviewed the records to determine which findings should be preferred as more conformable to evidentiary facts.

• Management Prerogative to Transfer — An employer may transfer or assign employees from one office or area of operation to another, 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. The transfer must not be unreasonable, inconvenient, or prejudicial to the employee. If the employer fails to overcome this burden, the transfer is tantamount to constructive dismissal. In this case, the transfer of piece-rate sewers to different operations was valid because it was dictated by client contract specifications and business necessity, and no bad faith, ill motive, or discrimination was shown.
• Constructive Dismissal — Constructive dismissal is a quitting because continued employment is rendered impossible, unreasonable, or unlikely; an offer involving a demotion in rank and diminution in pay; or an act of clear discrimination, insensibility, or disdain by an employer so unbearable that the employee has no option but to forego continued employment. The Court held that the respondents’ transfer did not amount to constructive dismissal because there was no demotion, no bad faith, and any reduction in piece-rate earnings was not necessarily prejudicial.
• Piece-Rate Employment — Workers under piece-rate employment have no fixed salaries; their compensation is computed on the basis of accomplished tasks. A change in work assignments that affects output and results in reduced earnings does not necessarily imply that the reduction in pay is tantamount to constructive dismissal. The Court applied this to hold that the respondents’ reduced earnings did not establish constructive dismissal.
• Backwages — Backwages may be granted only when there is a finding of illegal dismissal. Where there is no evidence of dismissal, the remedy is reinstatement but without backwages. Because no dismissal was established, the Court set aside the award of backwages and reinstated the NLRC’s directive for reinstatement without backwages.
• Security of Tenure — The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. The Court used this principle to reject the claim that the transfers violated security of tenure.
• Protection to Labor — The constitutional policy of providing full protection to labor is not intended to oppress or destroy management. While the Constitution is committed to social justice and protection of the working class, not every labor dispute is automatically decided in favor of labor; management also has rights entitled to respect and enforcement in the interest of simple fair play. The Court invoked this to uphold the employer’s valid exercise of management prerogative.

• "The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them." — This states the balance between security of tenure and management prerogative, which framed the Court’s rejection of the constructive dismissal claim.
• "Thus, an employer may transfer or assign employees from one office or area of operation to another, 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." — This is the controlling rule on valid transfers, applied to the piece-rate sewers’ reassignment.
• "That their work output might have been affected by the change in their specific work assignments does not necessarily imply that any resulting reduction in pay is tantamount to constructive dismissal." — This is the ratio decidendi for piece-rate workers, explaining why reduced earnings did not establish constructive dismissal.
• "In cases where there is no evidence of dismissal, the remedy is reinstatement but without backwages." — This states the backwages rule applied to deny the monetary award and reinstate the NLRC’s disposition.

• Blue Dairy Corporation vs. NLRC, G.R. No. 129843, September 14, 1999, 314 SCRA 401 — Cited for the rule that managerial prerogative to transfer must be exercised without grave abuse of discretion, bearing justice and fair play, and cannot be used as a subterfuge to rid the employer of an undesirable worker; if the employer fails to show the transfer is not unreasonable, inconvenient, or prejudicial, it is constructive dismissal.
• Mercury Drug Corporation vs. Domingo, G.R. No. 143998, April 29, 2005, 457 SCRA 578 — Cited for the rule that an objection to a transfer grounded solely on personal inconvenience or hardship is not a valid reason to disobey an order of transfer.
• Exodus International Construction Corporation vs. Biscocho, G.R. No. 166109, February 23, 2011, 644 SCRA 76 — Cited for the rule that in cases where there is no evidence of dismissal, the remedy is reinstatement but without backwages.
• Morales vs. Harbour Centre Port Terminal, Inc., G.R. No. 174208, January 25, 2012, 664 SCRA 110 — Cited for the rule that security of tenure does not give employees vested rights to their positions to the extent of depriving management of its prerogative to change assignments or transfer them.
• J.A.T. General Services vs. National Labor Relations Commission, G.R. No. 148340, January 26, 2004, 421 SCRA 78 — Cited for the rule that backwages may be granted only when there is a finding of illegal dismissal.

• Rule 45, 1997 Rules of Civil Procedure — The petition for review on certiorari was filed under Rule 45. The Court applied the rule that its jurisdiction in cases brought from the Court of Appeals via Rule 45 is generally limited to reviewing errors of law, but it reviewed the facts because the Court of Appeals’ findings diverged from those of the NLRC, a recognized exception.
• 1987 Constitution, Article VIII, Section 13 — Cited in the certification that the conclusions in the decision had been reached in consultation before the case was assigned to the writer of the opinion. It is a procedural certification requirement and does not bear on the labor issues.
• 1987 Constitution — Policy of Full Protection to Labor — The Court acknowledged the constitutional policy of providing full protection to labor but held it is not intended to oppress or destroy management, and that management rights are entitled to respect and enforcement in the interest of simple fair play. The text does not specify an article or section.

Teresita J. Leonardo-De Castro (Acting Chairperson), Lucas P. Bersamin, Jose Portugal Perez, and Bienvenido L. Reyes.