Seventh Fleet Security Services, Inc. vs. Loque

A security guard on floating status for more than six months is constructively dismissed when the employer never deploys him to a specific client; a general return-to-work order does not suffice.

Seventh Fleet is a security services agency that deployed Loque as a security guard to its client Second Midland. The dispute requires determining the legal effect of a security guard’s temporary off-detail or floating status, a situation not specifically governed by the Labor Code but treated by jurisprudence as a form of temporary retrenchment or lay-off under Article 301.

In May 2006, Seventh Fleet Security Services, Inc. hired Rodolfo B. Loque as a security guard and assigned him to its client Second Midland Offices Condominium Corp. Loque alleged that after he filed a complaint for underpayment of wages and other money claims against Seventh Fleet and its President, Medy Lastica, in September 2013, he was treated with hostility. Seventh Fleet denied the hostility and asserted that Loque was treated with kindness as if there was no ongoing labor dispute.

Seventh Fleet received a report from the security guards assigned at Second Midland about an incident in the late evening of November 7, 2013. According to the guards, Loque, who was then no longer on duty, went out of Second Midland and rode a motorbike with Ferdinand Manaois, a security guard from a different agency; Loque returned around midnight, used the backdoor to enter, got a key from the drawer of the guard’s table, and opened the basement gate so Manaois could enter without passing through the guards on duty. Loque and Manaois stayed in the building overnight. The guards did not confront Loque to avoid an argument but wrote a report to Seventh Fleet. Seventh Fleet required Loque to explain why he returned to Second Midland with his companion and stayed beyond his duty hours, knowing that neither Seventh Fleet’s Code of Disciplinary Rules and Regulations nor Second Midland authorized it. Loque explained that due to inclement weather he asked Engr. Nicolas Dayalo, Jr., the building administrator of Second Midland, if he could stay overnight, and that he offered to help the other guards in case of emergency or flooding. To avoid getting involved in the issue between Seventh Fleet and Loque, Engr. Dayalo requested that Loque be replaced. Upon the recommendation of Renato Morelos, Seventh Fleet’s Operation Manager, Loque was suspended for 10 days starting December 26, 2013.

Loque alleged that on December 25, 2013, he was suddenly relieved from his post upon the request of Second Midland, and that the next day he received an order suspending him for 10 days. After the suspension, on January 7, 2014, Loque reported for work but was informed that he was placed on “floating status” and was advised to wait for a call from Seventh Fleet. On May 16, 2014, a Friday, Loque received a letter from Seventh Fleet directing him to report to its office within 48 hours from receipt. Loque went to Seventh Fleet’s office on May 19, 2014, a Monday, but was not allowed to enter and was made to wait outside; before leaving, he handed a letter to security guard Dario Amores, Jr. informing Seventh Fleet that he was ready to report for duty that day. Seventh Fleet wrote a second letter dated May 28, 2014, which Loque alleged was meant to make it appear that he failed to report despite the return-to-work order. In a letter dated July 11, 2014, Loque inquired about the status of his employment and stressed that he was refused return to work even though he obeyed the order. Seventh Fleet, for its part, alleged that it sent Loque a letter dated May 14, 2014 directing him to report for posting, that Loque did not comply, and that it sent another letter dated May 28, 2014 reiterating the instruction, but still received no word from Loque.

On July 28, 2014, Loque filed a complaint for constructive dismissal and payment of separation pay and full backwages. He argued that because he was placed on floating status from January 7, 2014 to July 28, 2014, or more than six months, he was deemed constructively dismissed. Seventh Fleet denied constructive dismissal, refuted the allegation of hostility, and maintained that Loque failed to report for work despite its directives.

The Labor Arbiter found that Loque was not given any work assignment after his 10-day suspension, from January 7, 2014 until he filed the complaint on July 28, 2014, and that he was repeatedly refused entry to Seventh Fleet’s office and ignored whenever he attempted to report for duty; it also found no clear intention on Loque’s part to sever the employment relationship. The NLRC, on the other hand, gave credence to the sworn statement of Amores, the security guard stationed at the gate of the village where Seventh Fleet’s office is located, who narrated that Loque did not proceed to Seventh Fleet’s office but only left a copy of his letter with him at the village guardhouse, and held that Loque’s inquiry on the status of his employment could not be construed as evidence that he was not allowed to report for duty for six months. The CA found no cogent reason to disturb the finding that Loque went to the office of Seventh Fleet.

• Constructive Dismissal: Seventh Fleet argued that Loque was not constructively dismissed and that placing him on floating status was a valid exercise of its management prerogative.
• Return-to-Work Directives: Seventh Fleet asserted that it sent Loque letters dated May 14, 2014 and May 28, 2014 directing him to report for posting, and faulted him for not complying and for giving no word.
• Hostility: Seventh Fleet refuted Loque’s allegation that he was treated with hostility after filing the underpayment complaint and asserted that he was treated with kindness as if there was no ongoing labor dispute.
• Attorney’s Fees: Seventh Fleet argued that the lack of bad faith on its part negated the award of attorney’s fees.

• Constructive Dismissal: Loque argued that his placement on floating status for more than six months, from January 7, 2014 to July 28, 2014, amounted to constructive dismissal.
• Refusal to Allow Return: Loque maintained that he obeyed the return-to-work order, went to Seventh Fleet’s office on May 19, 2014 and July 11, 2014, but was barred from entering and was constrained to leave or send letters.
• Hostility: Loque alleged that he was treated with hostility after he filed a complaint for underpayment of wages and other money claims in September 2013.

• Constructive Dismissal and Money Claims: Whether Loque was constructively dismissed from employment and, thus, entitled to his money claims.

• Constructive Dismissal and Money Claims: Yes. Loque was constructively dismissed because he remained on floating status for more than six months without being deployed to a specific client; the May 14 and May 28, 2014 letters were general return-to-work orders. He is entitled to backwages, separation pay in lieu of reinstatement, and attorney’s fees.

• Constructive Dismissal and Money Claims: The SC noted that a Rule 45 petition is limited to questions of law, and in labor cases to whether the CA correctly determined grave abuse of discretion by the NLRC. It agreed with the CA that the NLRC committed grave abuse of discretion. In security services, floating status or temporary off-detail may occur when there are no available posts due to non-renewal of client contracts or a client’s request for replacement. Although the Labor Code has no specific provision on floating status, the SC applies Article 301 (formerly Article 286) by analogy, treating it as a form of temporary retrenchment or lay-off. Placement on floating status must not exceed six months; otherwise, the employee may be considered constructively dismissed. The burden of proving that there are no posts available rests on the employer. However, the mere lapse of six months does not automatically result in constructive dismissal; the peculiar circumstances of the employee’s failure to assume another post must still be inquired into. It was undisputed that Loque was on floating status from January 7, 2014; when he filed the complaint on July 28, 2014, he had been on floating status for six months and 21 days. Seventh Fleet claimed it sent letters dated May 14 and May 28, 2014, while Loque claimed he went to its office on May 19 and July 11, 2014 but was barred. The SC believed Loque: Seventh Fleet offered only bare denials and did not show that he was not barred from entering its premises; it did not dispute the July 11, 2014 letter but merely said it was “crafted” in preparation for the complaint, and it did not respond to or refute its contents. CA factual findings are generally binding, and the SC found no cogent reason to disturb the finding that Loque went to Seventh Fleet’s office. Even if Loque received the letters, they were general return-to-work orders. Jurisprudence requires not only that the employee be recalled to the agency’s office, but that the employee be deployed to a specific client before the lapse of six months. In Ibon vs. Genghis Khan Security Services, citing Tatel vs. JLFP Investigation Security Agency, Inc. and distinguishing Exocet Security and Allied Services vs. Serrano, the SC held that a general return-to-work order does not suffice; in Exocet, there was no constructive dismissal because the security guard refused a specific reassignment to another client. Here, the letters did not indicate reassignment to another client, and Seventh Fleet never attempted to redeploy Loque to a definite assignment or security detail. Thus, Loque was constructively dismissed. Abandonment is incompatible with constructive dismissal. Abandonment requires a deliberate and unjustified refusal to resume work, coupled with a clear absence of intention to return, with the second element as the more determinative factor and manifested by overt acts. There was no showing that Loque intended to sever employment: he reported for work after his suspension, sent the May 19 and July 11, 2014 letters, filed the complaint shortly after the lapse of his six-month floating status, and had been in service since 2006, or for eight years before his dismissal in 2014. As illegally dismissed, Loque is entitled to full backwages and reinstatement; if reinstatement is not viable, separation pay may be awarded in lieu. Since Loque no longer asked for reinstatement, the SC treated this as an indicia of strained relations making reinstatement inappropriate, so backwages and separation pay in lieu of reinstatement are proper, but they must be recomputed until the finality of the decision. Attorney’s fees are proper; lack of bad faith does not necessarily negate the award, and Tangga-an vs. Philippine Transmarine Carriers, Inc. upheld attorney’s fees for an illegally dismissed employee impelled to litigate. Legal interest at 6% per annum is imposed on the total monetary award from finality until full payment.

• Floating status / temporary off-detail — In security services, floating status may occur when there are no available posts to which the employee may be assigned, due to non-renewal of contracts with existing clients or a client’s request for replacement of guards. Although the Labor Code has no specific provision, the SC applies Article 301 (formerly Article 286) by analogy and treats floating status as a form of temporary retrenchment or lay-off. Placement must not exceed six months; otherwise, the employee may be considered constructively dismissed. The employer bears the burden of proving that there are no posts available. Mere lapse of six months does not automatically result in constructive dismissal; the peculiar circumstances of the employee’s failure to assume another post must still be inquired into.
• Specific-client deployment rule — An employer must assign the security guard to another posting within six months from his last deployment; otherwise, he is considered constructively dismissed. The security guard must be assigned to a specific or particular client. A general return-to-work order does not suffice. Applied to Loque, the May 14 and May 28, 2014 letters did not name any specific client or indicate reassignment, so constructive dismissal was established.
• Abandonment — Abandonment as a just cause for termination requires (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor and manifested by overt acts. Abandonment is incompatible with constructive dismissal. Loque’s report after suspension, his May 19 and July 11, 2014 letters, his immediate filing of the complaint after the six-month floating status, and his eight years of service negated any intention to abandon his work.
• Reliefs for illegal dismissal — An illegally dismissed employee is entitled to full backwages and reinstatement. If reinstatement is not viable, separation pay may be awarded in lieu. Backwages and separation pay must be computed until the finality of the decision ordering separation pay. Attorney’s fees may be awarded despite the absence of bad faith where the employee was illegally dismissed and impelled to litigate.

• "Conformably with the above provision, the placement of an employee on "floating status" must not exceed six months. Otherwise, the employee may be considered constructively dismissed." — The SC states the six-month limit on floating status and its consequence of constructive dismissal.
• "However, the mere lapse of six months in "floating status" should not automatically result to constructive dismissal. The peculiar circumstances of the employee's failure to assume another post must still be inquired upon." — The SC qualifies the six-month rule by requiring inquiry into why the employee failed to assume another post.
• "Such general return to work orders will not absolve Seventh Fleet since jurisprudence requires not only that the employee be recalled to the agency's office, but that the employee be deployed to a specific client before the lapse of six months." — The SC explains why the return-to-work letters did not defeat Loque’s constructive dismissal claim.
• "Abandonment, as a just cause for termination, requires "a deliberate and unjustified refusal of an employee to resume his work, coupled with a clear absence of any intention of returning to his or her work."" — The SC defines abandonment before holding that Loque did not abandon his employment.

• Ibon vs. Genghis Khan Security Services, 811 Phil. 250 (2017) — Controlling precedent; required deployment to a specific client within six months and held that a general return-to-work order does not suffice.
• Exocet Security and Allied Services vs. Serrano, 744 Phil. 403 (2014) — Distinguished; no constructive dismissal where the security guard refused a specific reassignment to another client.
• Tatel vs. JLFP Investigation Security Agency, Inc., 755 Phil. 171 (2015) — Cited in Ibon; a return-to-work order without another detail or assignment did not prevent constructive dismissal.
• Salvaloza vs. NLRC, 650 Phil. 543 (2010) — Cited for the definition of floating status or temporary off-detail in security services.
• Superior Maintenance Services, Inc. vs. Bermeo, G.R. No. 203185, December 5, 2018 — Cited for treating floating status as a form of temporary retrenchment or lay-off by analogy to Article 301.
• Nationwide Security and Allied Services, Inc. vs. Valderama, 659 Phil. 362 (2011) — Cited for the rule that the burden of proving no available posts rests on the employer.
• Tangga-an vs. Philippine Transmarine Carriers, Inc., 706 Phil. 339 (2013) — Cited to uphold attorney’s fees despite lack of bad faith where the employee was illegally dismissed and impelled to litigate.
• Bani Rural Bank, Inc. vs. De Guzman, 721 Phil. 84 (2013) — Cited for the computation of backwages and separation pay until the finality of the decision ordering separation pay.

• Article 301 (formerly Article 286), Labor Code — Provides that the bona fide suspension of the operation of a business or undertaking for a period not exceeding six months does not terminate employment. The SC applied this provision by analogy to floating status, holding that placement beyond six months may constitute constructive dismissal.
• Rule 45, Rules of Court — Governs a petition for review on certiorari, which is limited to questions of law. In labor cases, the SC reviews whether the CA correctly determined the presence or absence of grave abuse of discretion by the NLRC. The SC applied this in denying Seventh Fleet’s petition.