Myline Cordial

Elmer M. Mendoza vs Rural Bank of Lucban
G.R. No. 155421. July 7, 2004

FACTS: Respondent Rural Bank of Lucban reshuffled their employees to new assignments without changes in their compensation and other benefits. This transfer was made in pursuit of the bank’s policy to familiarize their employees with the various phases of bank operations and further strengthen the existing internal control system of all officers and employees. However, Elmer Mendoza, a Bank Appraiser was affected by the implementation of the policy as he was reshuffled to work as clerk assigned in the collection of Meralco payments. While he was on leave of absence, he filed a complaint for illegal dismissal, underpayment, separation pay and damages.

ISSUE: Whether or not Mendoza was constructively dismissed from his employment when the bank reshuffled the employees and his position was changed from appraiser to collection clerk?

RULING: The Court held that transfer of employees is one of management prerogatives and for this reason, courts often decline to interfere in legitimate business decisions of employers. Labor laws discourage interference in employers judgments concerning the conduct of their business. The law protects not only the welfare of employees, but also the right of employers.

The Court expained that in the pursuit of its legitimate business interest, management has the prerogative to 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. This privilege is inherent in the right of employers to control and manage their enterprise effectively. 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.

Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and general principles of fair play and justice.

NOTES:

What is the extent of management prerogative to transfer or re-assign workers?
The law protects both the welfare of employees and the prerogatives of management. Courts will not interfere with business judgments of employers, provided they do not violate the law, collective bargaining agreements, and general principles of fair play and justice. The transfer of personnel from one area of operation to another is inherently a managerial prerogative that shall be upheld if exercised in good faith — for the purpose of advancing business interests, not of defeating or circumventing the rights of employees.

Constructive dismissal, defined
It is an involuntary resignation resorted to when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.