Exocet Security and Allied Services Corporation vs. Serrano

A security guard's lapse into "floating status" beyond six months does not automatically amount to constructive dismissal where the guard's own refusal to accept a reasonable reassignment — one involving no demotion in rank or diminution in salary, pay, benefits, or privileges — caused the absence of a posting, and the security agency acted in good faith in offering available work.

Exocet Security and Allied Services Corporation is a security agency that supplies security personnel to clients or principals under service contracts, one of which was with JG Summit Holdings, Inc. Armando D. Serrano was one of its guards, detailed to JG Summit as close-in security for the corporation's officers, so that his posting depended entirely on the service contract between Exocet and that client. The Labor Code contains no provision governing the "floating status" or temporary "off-detail" of security guards, a gap filled by jurisprudence treating it as a form of temporary retrenchment or lay-off and by DOLE Department Order No. 14, Series of 2001, which fixes a six-month ceiling and the procedure for terminating a guard who cannot be given a new assignment.

Exocet Security and Allied Services Corporation is a security agency that provides security personnel to various clients or principals under service contracts. By virtue of its contract with JG Summit Holdings, Inc., Exocet assigned Armando D. Serrano on September 24, 1994 as "close-in" security personnel for one of JG Summit's corporate officers, Johnson Robert L. Go. After eight years, Serrano was reassigned as close-in security for Lance Gokongwei, and then for Lance's wife, Mary Joyce Gokongwei, receiving a monthly salary of ₱11,274.30.

On August 15, 2006, JG Summit relieved Serrano of his duties. Serrano reported back to Exocet, but for more than six months thereafter he was without any reassignment. On March 15, 2007, he filed a complaint for illegal dismissal against Exocet with the NLRC.

For its defense, Exocet denied dismissing Serrano and alleged that after August 15, 2006 he no longer reported for duty assignment as VIP security for JG Summit, and that in September 2006 he was demanding a VIP security detail with another client. Because Exocet had no clients in need of VIP security at that time, Serrano was temporarily assigned to general security service. Exocet maintained that Serrano declined the assignment on the ground that he was not used to being a regular security guard, and that he even refused to report for immediate duty because he had not been given a VIP security assignment.

The Labor Arbiter found that Serrano, while not actually dismissed, had been placed on a floating status for more than six months. The NLRC, for its part, found that Exocet had offered Serrano a position in general security service as early as September 2006, one month after his relief, because no clients required VIP security positions; that the new assignment involved no demotion in rank or diminution in salary, pay, or benefits; and that Serrano nevertheless declined because it was not the post that suited his preference, insisting on a VIP security detail and asking to be informed only if such a detail became available. The NLRC likewise noted that even during the meeting with the Labor Arbiter, Exocet offered a position in general security only to be rebuffed by Serrano, and that Serrano made no denial of these allegations.

• Absence of Dismissal: Petitioner Exocet denied dismissing Serrano, maintaining that after his relief from JG Summit on August 15, 2006 he simply no longer reported for duty assignment as VIP security for the client.
• Refusal of Reassignment: Petitioner maintained that when Serrano demanded a VIP security detail with another client in September 2006, it had no clients in need of VIP security and so temporarily assigned him to general security service, which he declined on the ground that he was not used to being a regular security guard, and that he refused to report for immediate duty precisely because no VIP assignment had been given.

• Constructive Dismissal: Respondent Serrano insisted that he was constructively dismissed and was therefore entitled to reinstatement without loss of seniority rights and to full backwages from the time of the alleged dismissal up to the finality of the decision.

• Constructive Dismissal: Whether Serrano was constructively dismissed by Exocet when he remained without a security assignment for more than six months after his relief from his post.

• Constructive Dismissal: No. The lapse of the six-month floating status period does not by itself constitute constructive dismissal where the guard's refusal of a reasonable reassignment offered in good faith, and not any act of the agency, caused the lack of a posting.

• Constructive Dismissal: The SC began from the settled characterization of "floating status" or temporary "off-detail" as a form of temporary retrenchment or lay-off — the period when security guards are in between assignments or are made to wait after being relieved from a previous post until transferred to a new one. It arises when the agency's clients do not renew their contracts so that available posts are fewer than the guards on the roster, or when a client requests replacement of a guard even without cause, leaving the replaced guard temporarily off-detail. Because the circumstance is generally outside the agency's control, a guard on floating status receives no salary or financial benefit, and the employer bears the burden of proving that there are no posts available to which the guard may be assigned. Since the Labor Code has no provision on temporary retrenchment or lay-off, the SC applied Art. 292 (previously Art. 286) by analogy to cap the period at six months: after six months the guard must be recalled to work or to a new assignment, or permanently retrenched in accordance with law, failing which the employer is liable for dismissal. The SC then applied DOLE Department Order No. 14, Series of 2001, Sec. 6.5 in relation to Sec. 9.3, which treats lack of service assignment for a continuous period of six months as an authorized cause for termination entitling the guard to separation pay of half month pay per year of service, but forbids placing a guard in a work pool after expiration of a service contract if there are other principals to whom he may be assigned, as a measure to constructively dismiss him, or as retaliation for filing complaints. Termination on that ground, the SC stressed, requires compliance with the "two-notice rule" under Art. 289 (previously Art. 283) — written notice on the guard and on the DOLE at least one month before the intended date of termination, as also required by Sec. 9.2 of DO 14-01. Turning to the facts, the SC found no bad faith on Exocet's part: as early as September 2006, one month after the relief, Exocet had already offered Serrano a position in general security service because no clients required VIP security, and the offer carried no demotion in rank or diminution in salary, pay, benefits, or privileges. Serrano declined because it was not the post that suited his preference, insisting on a VIP detail, and even rebuffed a similar offer made during the meeting with the Labor Arbiter. The SC held that a guard's right to security of tenure does not give him a vested right to his position as would deprive the agency of its prerogative to change his assignment or transfer him where his service would be most beneficial to the client, provided there is no demotion, diminution of salary and privileges, discrimination, bad faith, or punishment. It was therefore "manifestly unfair and unacceptable" to declare constructive dismissal on the mere lapse of six months without examining the peculiar circumstances that produced the guard's failure to assume another post, especially where his own refusal of a non-VIP detail was the reason he had no assignment within the period. The SC added that Serrano's refusal amounted to wilful disobedience to a lawful order of his employer under Art. 288 (previously Art. 282) of the Labor Code, a just cause for termination, but since Exocet did not take that ground against him, it was deemed to have waived it. Accordingly, the SC set aside the CA's ruling and directed Exocet to give Serrano a security assignment within thirty days from finality; if one is available, to notify him to report within ten days from notice, failing which he is deemed to have abandoned his employment and entitled to no backwages, separation pay, or similar benefits; and if no assignment is available within thirty days, to comply with DO 14-01 in relation to Art. 289 by serving written notice on Serrano and the DOLE one month before the intended termination and paying separation pay equivalent to half month pay for every year of actual service.

• Floating status / temporary "off-detail" — The period when security guards are in between assignments, or are made to wait after being relieved from a previous post until transferred to a new one. It is treated as a form of temporary retrenchment or lay-off, generally outside the employer's control, so the guard receives no salary or financial benefit; but because of the grim economic consequences to the employee, the employer bears the burden of proving that there are no posts available to which the guard may be assigned.
• Six-month rule on floating status — No Labor Code provision governs temporary lay-off, so Art. 292 (previously Art. 286) is applied by analogy to set the maximum period at six months. After six months the guard must be recalled to work or given a new assignment, or permanently retrenched following the requirements of law; failure to do so amounts to dismissal and makes the employer liable.
• Good-faith exception to the six-month rule — The lapse of six months is not automatically constructive dismissal. The SC examines the peculiar circumstances that caused the guard's failure to assume another post; where the agency in good faith offered a reasonable assignment within the period and the guard refused it because it did not match his preference, the lack of assignment is attributable to the guard and the agency is not liable.
• Management prerogative to transfer or reassign — An employer may transfer or assign employees from one office or area of operation to another, or in pursuit of its legitimate business interest, provided there is (a) no demotion in rank, (b) no diminution of salary, benefits, and other privileges, and (c) the transfer is not motivated by discrimination or bad faith, nor effected as punishment or demotion without sufficient cause. The guard's right to security of tenure does not give him a vested right to his position.
• Requisites for valid termination under DO 14-01 — To validly terminate a guard for lack of service assignment for a continuous six months under Secs. 6.5 and 9.3, the agency must comply with the two-notice rule under Art. 289 (previously Art. 283): written notice on the guard and on the DOLE at least one month before the intended date of termination, with separation pay of half month pay per year of service. A guard on reserved status who accepts employment with another agency before the end of the six-month period may not be given separation pay.
• Wilful disobedience as just cause; waiver — Refusal to accept a lawful, reasonable reassignment is wilful disobedience to a lawful order of the employer under Art. 288 (previously Art. 282), a just cause for termination. Where the employer does not invoke that ground, it is deemed to have waived its right to terminate on that basis.
• Protection to labor is not oppression of management — The constitutional policy of full protection to labor is not intended to oppress or destroy management, and the SC's commitment to the cause of labor does not prevent it from sustaining the employer when the employer is in the right.

• "After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal." — The canonical formulation of the six-month rule drawn from Sebuguero, applied by analogy from Art. 292 to cap the floating status of security guards.
• "Thus, it is manifestly unfair and unacceptable to immediately declare the mere lapse of the six-month period of floating status as a case of constructive dismissal, without looking into the peculiar circumstances that resulted in the security guard's failure to assume another post." — The ratio of the decision: the six-month rule is not mechanical, and the guard's own refusal of a reasonable post must be weighed.
• "the security guard's right to security of tenure does not give him a vested right to the position as would deprive the company of its prerogative to change the assignment of, or transfer the security guard to, a station where his services would be most beneficial to the client." — States the management-prerogative side of the balance that the SC used to defeat Serrano's constructive dismissal claim.
• "the constitutional policy of providing full protection to labor is not intended to oppress or destroy management, and the commitment of this Court to the cause of labor does not prevent Us from sustaining the employer when it is in the right, as in this case." — The SC's closing statement of policy, justifying the reversal of the CA in favor of the security agency.

• Pido vs. National Labor Relations Commission, G.R. No. 169812, February 23, 2007, 516 SCRA 609 — Controlling authority explaining why a guard on floating status receives no salary or financial benefit, and placing on the employer the burden of proving that there are no posts available for the guard.
• Sebuguero vs. NLRC, G.R. No. 115394, September 27, 1995, 248 SCRA 532 — Source of the rule that placement on floating status should not last more than six months, after which the employee must be recalled or is deemed terminated; applied by analogy to Art. 292.
• Reyes vs. RP Guardians Security Agency, Inc., G.R. No. 193756, April 10, 2013, 695 SCRA 620 — Followed for the application of DO 14-01 to security agencies, the distinction between the half-month separation pay under Sec. 6.5(4) and the one-month-per-year pay for illegal dismissal, and the need to comply with the two-notice rule.
• Nationwide Security and Allied Services Inc. vs. Valderama, G.R. No. 186614, February 23, 2011, 644 SCRA 299 — Followed for the rule that temporary off-detail does not constitute constructive dismissal so long as it does not continue beyond six months, and that the onus of proving the absence of an available post rests on the employer.
• Megaforce Security and Allied Services, Inc. vs. Lactao, G.R. No. 160940, July 21, 2008, 559 SCRA 110 — Followed for the recognition of the agency's prerogative to change assignments and for the principle that off-detailing is not equivalent to dismissal within a reasonable period.
• Salvaloza vs. NLRC, G.R. No. 182086, November 24, 2010, 636 SCRA 184 — Cited for the definition of floating status and for the rule allowing transfer or reassignment absent demotion, diminution of salary and privileges, bad faith, or punishment.
• Capili vs. NLRC, G.R. No. 117378, March 26, 1997, 270 SCRA 488 — Cited for the proposition that protection to labor is not intended to oppress or destroy management, the policy basis for sustaining the employer here.
• Philippine Industrial Security Agency Corporation vs. Dapiton, G.R. No. 127421, December 8, 1999, 320 SCRA 124 — Cited as one of the cases treating the floating status of security guards as a form of temporary retrenchment or lay-off.

• Art. 292 (previously Art. 286), Labor Code — Provides that a bona fide suspension of business operations for not more than six months does not terminate employment. Applied by analogy, in the absence of any provision on temporary lay-off, to fix six months as the maximum period a security guard may remain on floating status.
• Art. 289 (previously Art. 283), Labor Code — Requires service of written notice on the worker and on the DOLE at least one month before the intended date of retrenchment or closure, and fixes separation pay at one month pay or at least one-half month pay for every year of service, whichever is higher. Applied as the procedure Exocet must follow should no assignment be found for Serrano within thirty days from finality.
• Art. 288 (previously Art. 282), Labor Code — Lists wilful disobedience by the employee of the lawful orders of his employer in connection with his work as a just cause for termination. Applied to characterize Serrano's refusal of the general security assignment as wilful disobedience, a ground Exocet waived by not invoking it.
• DOLE Department Order No. 14, Series of 2001, Sec. 6.5 — Entitles a security guard to separation pay of half month pay per year of service where termination is due to lack of service assignment for a continuous period of six months; applied as the measure of Serrano's separation pay should no post be available.
• DOLE Department Order No. 14, Series of 2001, Sec. 9.2 — Requires written notice on the security guard and the DOLE at least one month before the intended date of termination for authorized causes; applied as a condition for any valid termination of Serrano.
• DOLE Department Order No. 14, Series of 2001, Sec. 9.3 — Governs "reserved status" or work pool due to lack of service assignments, prohibits placing a guard on reserved status where other principals are available, as a measure to constructively dismiss, or as retaliation for filing complaints, and allows dismissal with separation pay after six months if no work can be given; applied to define the limits of Exocet's floating-status arrangement with Serrano.
• Constitution, protection to labor — The SC invoked the constitutional policy of full protection to labor and the mandate to protect labor and the working people, but held that this policy is not intended to oppress or destroy management and does not bar relief to an employer acting in good faith.