Yushi Kondo vs. Toyota Boshoku (Phils.) Corporation

An employee claiming constructive dismissal bears the burden of proving by substantial evidence the fact of dismissal through clear, positive, and convincing evidence showing lack of voluntariness in the separation from employment; absent any overt or positive act by the employer proving dismissal, the employee's claim is self-serving and conjectural. Additionally, benefits granted as personal accommodations by a company officer without basis in written policy, contract, or established company practice may be withdrawn without constituting illegal diminution of benefits.

Yushi Kondo, a Japanese citizen, was hired by Toyota Boshoku Philippines Corporation (Toyota) on September 26, 2007 as Assistant General Manager for Marketing, Procurement and Accounting with a monthly salary of P90,000.00. He was verbally assured benefits including a service car with a local driver by Toyota's then-President Fuhimiko Ito. After three months, Kondo received a "perfect" performance evaluation, but his rating dropped to slightly above average two months later, coinciding with the discovery of alleged anomalies committed by Ito. Following a change in company presidency to Mamoru Matsunaga, Kondo was transferred to the Production Control, Technical Development and Special Project department as Assistant Manager on July 1, 2008, despite his objection that he lacked technical expertise for the position. On September 1, 2008, Toyota notified Kondo that his service car and driver would be withdrawn, and on October 13, 2008, the driver's services were terminated, prompting Kondo to file a complaint for constructive dismissal.

• Yushi Kondo was hired by Toyota Boshoku Philippines Corporation on September 26, 2007 as Assistant General Manager for Marketing, Procurement and Accounting with a monthly salary of P90,000.00, later increased to P100,000.00.
• He was granted benefits including a service car and local driver by former President Fuhimiko Ito through verbal agreement, along with a Caltex card for gasoline expenses.
• Toyota caused the issuance of Kondo's Alien Employment Permit (AEP) for his position.
• After five months of employment, Kondo received a lower performance rating, which coincided with the discovery of alleged anomalies committed by Ito.
• Kondo alleged that he was subsequently assigned the oldest company car, prevented from using other company vehicles, restricted from leaving the office by security personnel, and excluded from meetings.
• On July 1, 2008, Kondo was transferred to the Production Control, Technical Development and Special Project department as Assistant Manager under new President Mamoru Matsunaga, despite his objection that he lacked technical skills for the position.
• On September 1, 2008, Toyota notified Kondo that his service car and driver would be withdrawn, allegedly because these benefits were limited to one year and exclusive to Japanese expatriates rather than local hires.
• On October 13, 2008, Toyota terminated the services of Kondo's driver, prompting Kondo to consider himself constructively dismissed and file a labor complaint.
• Respondents denied constructive dismissal, claiming the benefits were temporary accommodations, the transfer was a valid exercise of management prerogative, and Kondo abandoned his employment by failing to report for work despite notices to return.

• Kondo argued that the withdrawal of his service car, driver, and Caltex card constituted illegal diminution of benefits and constructive dismissal, as these were essential to his employment and withdrawal made reporting for work impossible.
• He contended that his transfer to a technical department without adequate skills or experience was not a valid exercise of management prerogative but a scheme to force him to commit mistakes to justify termination.
• He maintained that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in reversing the Labor Arbiter's decision, and that the Court of Appeals erred in requiring specific allegations of "capriciousness" or "whimsicality" to establish grave abuse of discretion.
• He asserted that the phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" inherently includes capricious and whimsical judgment, making specific allegations redundant.
• He claimed that his prayer for reinstatement negated any finding of abandonment and demonstrated his continued intent to work.

• Respondents argued that the service car and driver were granted only for one year as temporary benefits to a fellow Japanese national unfamiliar with the Philippines, not as permanent entitlements or company practice.
• They maintained that the Caltex card was exclusively for Japanese expatriates, not local hires like Kondo, and that Kondo had allegedly abused the card for personal use.
• They asserted that Kondo's transfer was a valid exercise of management prerogative that did not involve demotion or diminution in pay, and that Kondo accepted the transfer without objection for three months before filing a complaint.
• They contended that Kondo voluntarily terminated his employment or abandoned his post by failing to report for work despite receiving notices to return, and that his refusal to work indicated lack of intention to continue employment.
• They argued that the Court of Appeals correctly dismissed the certiorari petition because Kondo raised mere errors of judgment rather than errors of jurisdiction or grave abuse of discretion.

• Procedural Issues:
  • Whether the Court of Appeals gravely abused its discretion in ruling that petitioner failed to allege capriciousness or whimsicality in the issuance of the NLRC's assailed decision.
  • Whether the Court of Appeals gravely abused its discretion in concluding that the petition for certiorari raised mere errors in judgment rather than errors of jurisdiction.
• Substantive Issues:
  • Whether petitioner was constructively dismissed from employment.
  • Whether the withdrawal of benefits (service car, driver, and Caltex card) constituted illegal diminution of benefits.
  • Whether the transfer to another department was a valid exercise of management prerogative or constituted constructive dismissal.
  • Whether petitioner abandoned his employment.

• Procedural:
  • The Supreme Court held that the petition was correctly filed under Rule 45 of the Rules of Court, but excused the erroneous allegation of grave abuse of discretion against the Court of Appeals.
  • The Court clarified that Rule 45 reviews errors of judgment, while Rule 65 (certiorari) is restricted to errors of jurisdiction and grave abuse of discretion, which must be shown through capricious, whimsical, arbitrary, or despotic exercise of judgment equivalent to lack of jurisdiction.
  • The Court found that the Court of Appeals correctly determined that the NLRC did not commit grave abuse of discretion, as the issues raised involved factual findings and evaluation of evidence within the NLRC's jurisdiction.
• Substantive:
  • The Court held that there was no constructive dismissal because Kondo failed to prove by substantial evidence that respondents committed any overt or positive act amounting to dismissal; his claim remained self-serving and conjectural.
  • The withdrawal of the service car, driver, and Caltex card did not constitute illegal diminution of benefits because these were granted as personal accommodations by the former president without basis in written policy, employment contract, or established company practice, and Kondo failed to prove that similarly situated employees enjoyed these benefits as a regular company practice.
  • The transfer to another department was a valid exercise of management prerogative as there was no demotion in rank or diminution in pay, and Kondo failed to demonstrate specific facts showing inability to perform the new functions or that the transfer was discriminatory or harassing.
  • The Court held that there was no abandonment because Kondo's prayer for reinstatement negated any clear intention to sever the employment relationship, though the NLRC erred in considering abandonment as an issue since it was not raised before the Labor Arbiter.
  • Moral damages, exemplary damages, and attorney's fees were properly denied as there was no showing of bad faith, fraud, or oppressive conduct by respondents, and no withholding of wages.

• Constructive Dismissal — Defined as cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, or when an offer involves demotion in rank and diminution in pay; requires lack of voluntariness in the employee's separation from employment. The Court applied this by requiring the employee to prove through clear, positive, and convincing evidence that the employer's acts made continued employment unbearable.
• Burden of Proof in Illegal Dismissal Cases — The employee bears the burden to prove by substantial evidence the fact of his dismissal from employment; absent any overt or positive act proving dismissal, the employee's claim is self-serving and of no probative value. The Court applied this to reject Kondo's claim because he failed to present substantial evidence of any positive act of dismissal by respondents.
• Diminution of Benefits — Requires: (1) grant or benefit founded on policy or ripened into practice over a long period; (2) consistent and deliberate practice; (3) not due to error in construction or application of doubtful or difficult question of law; and (4) unilateral diminution by employer. The Court applied this to rule that benefits granted merely as personal accommodations without company-wide application do not constitute established practice that cannot be withdrawn.
• Company Practice — To be considered regular company practice, the giving of the benefit must be shown by substantial evidence to be done over a long period of time, consistently and deliberately, with voluntary intent by the employer to grant the benefit. The burden of proving this rests on the employee. The Court applied this to place the burden on Kondo to prove the benefits were company practice, which he failed to discharge.
• Management Prerogative — Employers have the right to transfer employees from one area of operation to another, provided there is no demotion in rank or diminution of pay, benefits, and privileges. The Court applied this to uphold Kondo's transfer as valid since his rank and salary remained unchanged.
• Abandonment — Requires concurrence of: (a) failure to report for work or absence without valid or justifiable reason; and (b) clear intention to sever the employer-employee relationship manifested by overt acts. The Court applied this to find no abandonment due to Kondo's prayer for reinstatement, though it noted the procedural error of raising abandonment for the first time on appeal.

• "In this case, We reiterate that the employee bears the burden to prove by substantial evidence the fact of his dismissal from employment. Absent any showing of an overt or positive act proving that the employer had dismissed the employee, the latter's claim of illegal dismissal cannot be sustained as it would be self-serving, conjectural, and of no probative value."
• "Constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay. It also exists when continued employment has become so unbearable because of acts of clear discrimination, insensibility or disdain by the employer, that the employee has no choice but to resign. What is essential is that there is a lack of 'voluntariness in the employee's separation from employment.'"
• "To be considered as a regular company practice, it must be shown by substantial evidence that the giving of the benefit is done over a long period of time, and that it has been made consistently and deliberately. There must be an indubitable showing that the employer agreed to continue giving the benefit knowing fully well that the employees are not covered by any provision of the law or agreement requiring the grant thereof."
• "The difference between petitions filed under Rule 45 and Rule 65 of the Rules of Court is so fundamental that it is extremely lamentable that counsel still confounds one for the other and misapprehends their purpose."

• Cosue v. Ferritz Integrated Development Corporation — Cited for the principle that the employee bears the burden to prove by substantial evidence the fact of his dismissal from employment.
• Vergara, Jr. v. Coca-Cola Bottlers Philippines, Inc. — Cited for the four requisites of diminution of benefits and the definition of company practice as requiring substantial evidence of consistent, deliberate grant over a long period.
• Galang v. Boie Takeda Chemicals, Inc. — Cited for the definition of constructive dismissal and the requirement of lack of voluntariness in the employee's separation.
• Paredes v. Feed the Children Philippines, Inc. — Cited for the rule that the employee claiming constructive dismissal must prove with clear, positive and convincing evidence that his resignation was involuntary.
• Madrigal Transport, Inc. v. Lapanday Holdings Corporation — Cited for the distinction between errors of judgment (correctable by appeal) and errors of jurisdiction (correctable by certiorari).
• Guzman v. Guzman — Cited for the fundamental distinction between Rule 45 (errors of judgment) and Rule 65 (errors of jurisdiction/grave abuse of discretion).
• Tamblot Security & General Services, Inc. v. Item — Cited for the definition of abandonment requiring failure to report and clear intention to sever employment.
• Philippine National Oil Company-Energy Development Corporation v. Buenviaje — Cited for the rules on awarding moral damages, exemplary damages, and attorney's fees in labor cases.

• Article 41 of the Labor Code — Cited by the Labor Arbiter regarding prohibition against transfer of employment without prior approval of the Secretary of Labor, though the Supreme Court did not rely on this provision in its ruling.
• Rule 45 of the Rules of Court — Governs appeals by certiorari to the Supreme Court from decisions of the Court of Appeals, limited to questions of law and errors of judgment.
• Rule 65 of the Rules of Court — Governs the special civil action of certiorari, limited to correcting errors of jurisdiction and grave abuse of discretion amounting to lack or excess of jurisdiction.
• NLRC Rules of Procedure — Referenced regarding the award of damages not prayed for in the complaint.