Philippine Telegraph and Telephone Corporation vs. Laplana

An employee's refusal to accept a transfer effected by the employer in good faith, without demotion in rank or diminution of salary, benefits, or privileges, and in the legitimate pursuit of business interests, constitutes voluntary resignation where the employee explicitly requests termination of employment instead of accepting the reassignment. The employer's management prerogative to transfer personnel must be exercised without grave abuse of discretion, but absent any showing of bad faith, discrimination, or illicit motive, the employee's personal inconvenience cannot override the employer's sound business judgment.

Alicia Laplana was the cashier of the Baguio City Branch Office of the Philippine Telegraph and Telephone Corporation (PT&T). PT&T's treasurer, Mrs. Alicia A. Arogo, held authority over personnel movements and directed Laplana's reassignment. The dispute arose within the framework of the employer's inherent management prerogative to transfer employees in the pursuit of legitimate business interests, a prerogative long recognized in Philippine labor jurisprudence as subject to limitations against bad faith, discrimination, demotion without cause, and union-busting.

Alicia Laplana was the cashier of the Baguio City Branch Office of the Philippine Telegraph and Telephone Corporation (PT&T). Sometime in March 1984, PT&T's treasurer, Mrs. Alicia A. Arogo, directed Laplana to transfer to the company's branch office at Laoag City. Laplana refused the reassignment and proposed instead that qualified clerks in the Baguio Branch be trained for the purpose. In her letter to Mrs. Arogo dated March 27, 1984, she set out three reasons: she had established Baguio City as her permanent residence and working in Laoag would involve additional expenses for board, lodging, and fare; she would be away from her family, which might affect her efficiency; and having worked with her co-employees for more than six years, a new environment would require a long adjustment period affecting her job performance.

On April 12, 1984, Mrs. Arogo reiterated the directive in a written memorandum informing Laplana that effective April 16, 1984, she would be reassigned to the Laoag branch assuming the same position of branch cashier, and ordering her to turn over her accountabilities to Rose Caysido. Apparently, Laplana was not allowed to resume her work as cashier of the Baguio Branch when April 16 came. She wrote again to Mrs. Arogo advising that the directed transfer was unacceptable and reiterating the reasons given in her first letter. On April 30, 1984, Laplana received a telegram from Mrs. Arogo directing her to report to Manila on May 2, 1984 for a new job assignment, warning that failure to report would be considered abandonment of her job and might constrain the company to impose disciplinary action, and offering a cash advance for transportation.

On May 8, 1984, Laplana sent a telex message to Mrs. Arogo stating: "I LOVE WORKING FOR OUR COMPANY HOWEVER I AM SORRY I CANNOT ACCEPT YOUR JOB OFFER IN MANILA THANK YOU AND RETRENCH ME INSTEAD." She followed this with a letter on May 15, 1984, expatiating on her telex and reiterating her request to be retrenched, citing the high cost of living in Manila, the sacrifice of being away from her husband, and the potential effect on her health and efficiency. Termination of Laplana's employment on account of retrenchment followed. On May 19, 1984, PT&T issued an "Employee's Service Report" stating that her services were terminated due to retrenchment with corresponding termination pay effective May 16, 1984. On June 30, 1984, Mrs. Arogo sent a memorandum to the Baguio Branch Manager with the computation of separation and 13th month pay due to Laplana, a check for ₱2,512.50, and a quitclaim deed, instructing the manager to have the quitclaim signed before releasing the check. On July 4, 1984, Laplana signed the quitclaim and received the check.

On October 9, 1984, Laplana filed a complaint with the Labor Arbiters' Office at Baguio City through the CLAO against PT&T and Paraluman Bautista, Area Manager, alleging that when she insisted on her right to refuse transfer, the company terminated her services on May 16, 1984 on the alleged ground of retrenchment, but that in truth she was forced to be terminated and there was no ground for retrenchment. She claimed the transfer was arbitrary and without purpose but to harass and force her to resign. The defendants answered that Laplana was being transferred to Laoag City because of increase in sales due to additional installations of vodex line; that she was informed she would be given ten days relocation allowance and transportation expense; that the company was exercising management prerogatives in transferring her and there was no showing this was done arbitrarily or whimsically; that her services were terminated on her explicit declaration that she was willing to be retrenched rather than be assigned to Laoag or Manila; and that the company had been actually suffering losses, with several employees retrenched in June 1984 due to rising costs.

The Labor Arbiter ruled in Laplana's favor on March 28, 1985, finding the transfer to be a demotion and form of punishment without just cause, declaring the dismissal illegal, and ordering reinstatement with full backwages. The NLRC affirmed this judgment by resolution dated August 5, 1986. The Supreme Court, however, found that Laplana had to all intents and purposes resigned, having unequivocally asked to be dismissed and suggesting retrenchment as the reason, and that the employer acted in good faith in deciding to transfer her.

• Management Prerogative: Petitioner argued that it was exercising management prerogatives in transferring Laplana and that there was no showing this exercise was arbitrarily or whimsically done.
• Business Justification: Petitioner maintained that Laplana was being transferred to Laoag City because of increase in sales due to additional installations of vodex line, and that she was informed she would be given ten days relocation allowance and transportation expense from Baguio to Laoag City.
• Voluntary Termination: Petitioner argued that Laplana's services were terminated on her explicit declaration that she was willing to be retrenched rather than be assigned to Laoag City or Manila.
• Actual Losses: Petitioner contended that the company had been actually suffering losses, with several employees retrenched in June 1984 due to rising costs in wages, rentals, production supplies, and other operational costs.

• No Valid Ground for Retrenchment: Respondent alleged that when she insisted on her right to refuse transfer, the company terminated her services on the alleged ground of retrenchment, but there was no ground at all for retrenchment and she was forced to be terminated.
• Arbitrary Transfer: Respondent argued that the company's act of transferring her was not only without any valid ground but also arbitrary and without any purpose but to harass and force her to eventually resign.

• Lawfulness of Transfer: Whether the employer's transfer of Laplana from Baguio City to Laoag City, and subsequently to Manila, was a valid exercise of management prerogative.
• Legality of Termination: Whether the termination of Laplana's employment was legal and proper, or constituted illegal dismissal.
• NLRC Grave Abuse of Discretion: Whether the NLRC gravely abused its discretion in affirming the Labor Arbiter's ruling that Laplana was illegally dismissed.

• Lawfulness of Transfer: Yes. The transfer was a valid exercise of management prerogative, there being no showing of bad faith, discrimination, demotion, or illicit motive on the part of the employer; the transfer was made in the legitimate pursuit of the employer's best interests, with the employer even offering normal benefits attendant upon transfers.
• Legality of Termination: Yes. The termination was legal and proper, the employee having unequivocally requested retrenchment and accepted separation pay, which constituted, to all intents and purposes, a voluntary resignation.
• NLRC Grave Abuse of Discretion: Yes. The NLRC gravely abused its discretion in preferring the employee's wishes over the employer's sound business judgment where neither party acted in bad faith.

• Lawfulness of Transfer: The general principle governing an employer's prerogative to transfer employees acknowledges the inherent right of an employer to transfer or assign an employee in the pursuit of legitimate business interests, subject to the condition that it not be motivated by discrimination or bad faith, or effected as a form of punishment or demotion without sufficient cause. This principle is uniformly adhered to by the Court and supported by a consistent line of decisions. In Philippine Japan Active Carbon Corp. vs. NLRC, the Court held that an employee's right to security of tenure does not give him a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful, provided the transfer is not unreasonable, inconvenient, or prejudicial, and does not involve a demotion in rank or diminution of salaries, benefits, and other privileges. In this case, there was no showing whatever that the employer was transferring Laplana as a subterfuge to rid itself of an undesirable worker or to penalize her for union activities. The employer was not unmindful of Laplana's plea for reconsideration; in fact, in response to her plea not to be moved to Laoag, the employer opted to transfer her to Manila, the main office, offering normal transfer benefits. The transfer was thus made in good faith and in accordance with sound business judgment.

• Legality of Termination: The employee had, to all intents and purposes, resigned from her position. She unequivocally asked that she be considered dismissed, herself suggesting the reason — retrenchment. When so dismissed, she accepted separation pay. The telex message of May 8, 1984 explicitly stated "RETRENCH ME INSTEAD," and the letter of May 15, 1984 reiterated the request to be retrenched. The employer, on the other hand, had not been shown to be acting otherwise than in good faith and in the legitimate pursuit of what it considered its best interests. The solution proposed by the employee herself — voluntary termination of employment and delivery of corresponding separation pay — was the most equitable under the circumstances. The Court could not accept the proposition that when an employee opposes an employer's decision to transfer him, with no bad faith on either side, it is the employee's wishes that should prevail.

• NLRC Grave Abuse of Discretion: The NLRC gravely abused its discretion in adopting the proposition that the employee's wishes should prevail over the employer's sound business judgment where neither party acted in bad faith. The situation presented was one of an employer transferring an employee to another office in the exercise of sound business judgment and in accordance with pre-determined office policy and practice, and of the latter having what she believed to be legitimate reasons for declining, rooted in personal convenience and family difficulties. Under these circumstances, the employee's own proposed solution of voluntary termination and separation pay was the most equitable resolution.

• Management Prerogative to Transfer Employees — The employer has the inherent right to transfer or assign an employee in the pursuit of its legitimate business interests, subject to the condition that the transfer is not motivated by discrimination or bad faith, or effected as a form of punishment or demotion without sufficient cause. The transfer is valid when it is not unreasonable, nor inconvenient, nor prejudicial to the employee, and does not involve a demotion in rank or diminution of salaries, benefits, and other privileges. The managerial prerogative must be exercised without grave abuse of discretion and with regard to the basic elements of justice and fair play. It cannot be used as a subterfuge to rid the employer of an undesirable worker, nor to penalize an employee for union activities. In this case, the Court applied the doctrine by finding that PT&T's transfer of Laplana was made in good faith, without demotion or diminution of pay, and in the legitimate pursuit of business interests, and was therefore a valid exercise of management prerogative.

• Voluntary Resignation Through Request for Retrenchment — Where an employee, faced with a transfer effected in good faith by the employer, explicitly requests termination of employment (retrenchment) instead of accepting the reassignment, and subsequently accepts separation pay, the employee has to all intents and purposes resigned. The employee's own proposed solution of voluntary termination and separation pay is the most equitable resolution where neither party acted in bad faith. The Court applied this by holding that Laplana's telex and letter explicitly requesting retrenchment, coupled with her acceptance of separation pay and signing of a quitclaim, constituted voluntary resignation, rendering the termination legal.

• "The situation here presented is of an employer transferring an employee to another office in the exercise of what it took to be sound business judgment and in accordance with pre-determined and established office policy and practice, and of the latter having what was believed to be legitimate reasons for declining that transfer, rooted in considerations of personal convenience and difficulties for the family." — This passage articulates the ratio decidendi, framing the conflict as one between the employer's business judgment and the employee's personal convenience, and establishing that the latter cannot prevail absent bad faith by the employer.

• "Certainly, the Court cannot accept the proposition that when an employee opposes his employer's decision to transfer him to another work place, there being no bad faith or underhanded motives on the part of either party, it is the employee's wishes that should be made to prevail." — This is the canonical formulation of the holding, frequently cited in subsequent labor jurisprudence on management prerogative and employee transfer.

• "In this case, the employee (Laplana) had to all intents and purposes resigned from her position. She had unequivocally asked that she be considered dismissed, herself suggesting the reason therefor –– retrenchment. When so dismissed, she accepted separation pay." — This passage establishes the factual basis for the ruling on voluntary resignation, distinguishing the case from Dosch vs. NLRC where the employee's courteous refusal did not amount to insubordination.

• Helmut Dosch vs. NLRC and Northwest Airlines, Inc., G.R. No. 51182, July 5, 1983, 123 SCRA 296 — Distinguished. In Dosch, the Court found no disobedience or insubordination in the employee's courteous refusal to accept transfer to an overseas post, as the letter showed no hint of defiance. In the present case, however, the employee explicitly requested retrenchment and accepted separation pay, which the Court held constituted voluntary resignation. The Court also noted that a transfer to an overseas post cannot be likened to a transfer from one city to another within the country.

• Philippine Japan Active Carbon Corp. vs. NLRC, 171 SCRA 164 (March 8, 1989) — Followed. The Court cited its pronouncement that an employee's right to security of tenure does not give him a vested right in his position as would deprive the company of its prerogative to change his assignment, provided the transfer is not unreasonable, inconvenient, or prejudicial, and does not involve demotion or diminution of pay.

• Yuco Chemical Industries, Inc. vs. MOLE et al., 185 SCRA 727 (May 28, 1990) — Followed. The Court cited the re-statement of general principles on transfer, including that the managerial prerogative to transfer personnel must be exercised without grave abuse of discretion and cannot be used as a subterfuge to rid the employer of an undesirable worker or to penalize union activities.

Cruz, Gancayco, Griño-Aquino, and Medialdea, JJ., concurred.