Manager's Right: Know Your Right

Manager’s Guide - Philippine Jurisprudence on Illegal Dismissal

Managers are also employees. When they are subjected to unfair labor practices or denied of their basic rights, they can seek redress before the labor tribunals.

While Labor Laws are generally designed to protect the most vulnerable sectors of the working class that is the rank-and-file etc., it does not follow that managerial employees are without rights arising from labor laws.

Philippine Jurisprudence has promulgated number of cases on this regard.

The Supreme Court in the case of MARILYN T. SAGUM vs. INSTITUTE OF INTEGRATED ELECTRICAL ENGINEERS OF THE PHILIPPINES, INC. (GR No. 158759, May 26, 2005) ruled on the the Security of Tenure for all Regular Employees citing the following provisions:

Article 279 of the Labor Code provides the law on reinstatement, viz.:

Article 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

Corollarily, the Omnibus Rules Implementing the Labor Code state, viz.:

Section 2. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause as provided in the Labor Code or when authorized by existing laws.

Sec. 3. Reinstatement. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to backwages.

On Entitlement to Reinstatement vis a vis Payment of Separation Pay under the doctrine of "strained relations", the Supreme Court has also cited the Quijano v. Mercury Drug Corporation in the same case, stating that:

An illegally dismissed employee is entitled to reinstatement as a matter of right. Over the years, however, the case law developed that where reinstatement is not feasible, expedient or practical, as where reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. Some unscrupulous employers, however, have taken advantage of the overgrowth of this doctrine of "strained relations" by using it as a cover to get rid of its employees and thus defeat their right to job security.

To protect labor's security of tenure, we emphasize that the doctrine of "strained relations" should be strictly applied so as not to deprive an illegally dismissed employee of his right to reinstatement. Every labor dispute almost always results in "strained relations," and the phrase cannot be given an overarching interpretation, otherwise, an unjustly dismissed employee can never be reinstated.

In cases of Constructive Dismissal vis a vis rule on transfer of employees is a management prerogative and the right and responsibility to find the perfect balance between the skills and abilities of employees to the needs of the business of a company. The Supreme Court has reiterated in the case of JONATHAN V. MORALES vs. HARBOUR CENTRE PORT TERMINAL, INC. (GR No. 174208, January 25, 2012) that:

“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 or a diminution in pay" and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not, constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment. In cases of a transfer of an employee, the rule is settled that the employer is charged with the burden of proving that its conduct and action are for valid and legitimate grounds such as genuine business necessity and that the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of proof, the employee’s transfer shall be tantamount to unlawful constructive dismissal.”

The Supreme Court has further explained the Principle on Management prerogative stating that:

“… 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. By management prerogative is meant the right of an employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of workers. Although jurisprudence recognizes said management prerogative, it has been ruled that the exercise thereof, while ordinarily not interfered with, is not absolute and is subject to limitations imposed by law, collective bargaining agreement, and general principles of fair play and justice. 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. Indeed, having the right should not be confused with the manner in which that right is exercised.”

In the same case, the Supreme Court has also reiterated the principle of Abandonment of Employment vis a vis filing of a complaint for illegal dismissal stating that:

As a just and valid ground for dismissal, at any rate, abandonment requires the deliberate, unjustified refusal of the employee to resume his employment, without any intention of returning. Since an employee like Morales who takes steps to protest his dismissal cannot logically be said to have abandoned his work, it is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with abandonment of employment.

The Supreme Court has time and again reiterated that under Article 19 of the Civil Code, ‘’every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due and observe honesty and good faith.”

In another case, SAN MIGUEL PROPERTIES PHILIPPINES, INC. vs. GWENDELLYN ROSE S. GUCABAN (GR No. 153982, July 18, 2011), the Supreme Court ruled on the theory of ‘’constructive resignation’’. The Supreme Court stated that:

Resignation – the formal pronouncement or relinquishment of a position or office – is the voluntary act of an employee who is in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and he has then no other choice but to disassociate himself from employment. The intent to relinquish must concur with the overt act of relinquishment; hence, the acts of the employee before and after the alleged resignation must be considered in determining whether he in fact intended to terminate his employment. In illegal dismissal cases, fundamental is the rule that when an employer interposes the defense of resignation, on him necessarily rests the burden to prove that the employee indeed voluntarily resigned.

The above cases has manifested that members of the managerial staff, like the rank-and-file workers, are entitled to equal protection of the Labor Laws. Whereas, in the case of Morales, the Supreme Court declared that the demotion of a manager was tantamount to an illegal dismissal. In Gacuban case, the Supreme Court reiterated that Resignation is a voluntary act of an employee. The Supreme Court has further reiterated that management prerogative is not absolute and is subject to limitations imposed by law, collective bargaining agreement, and general principles of fair play and justice.

Sources

https://www.philstar.com/opinion/2012/09/24/852380/illegal-dismissal-managers-and-executives 

https://lawphil.net/judjuris/juri2011/jul2011/gr_153982_2011.html

https://lawphil.net/judjuris/juri2011/jul2011/gr_153982_2011.html

https://lawphil.net/judjuris/juri2012/jan2012/gr_174208_2012.html

https://lawphil.net/judjuris/juri2005/may2005/gr_158759_2005.html



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