ARNULFO O. ENDICO VS QUANTUM DISTRIBUTION CENTER

ARNULFO O. ENDICO

VS

QUANTUM DISTRIBUTION CENTER
577 SCRA 299 (2009)

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.

Quantum Foods Center hired Arnulfo O. Endico (Endico) as Field Supervisor of Davao City. He was later on transferred in Cebu. Due to Endico’s achievements and contributions to Quantum Foods, he was promoted as Area Manager of Cebu. However, after fruitful years of employment, Quantum Foods was adversely affected by economic slowdown, which compelled it to streamline its operations through the reduction of the company’s contractual merchandisers to save on operation cost. Thereafter, for some misfortunate events, Endico was immediately relieved from service. Endico thereafter filed a complaint for constructive illegal dismissal.

The Labor Arbiter rendered a decision in Endico’s favor. Quantum Foods appealed to the National Labor Relations Commission (NLRC) which affirmed the Labor Arbiter’s decision with modification. Quantum Foods then filed a Petition for Certiorari before the Court of Appeals (CA) who ruled in favor of Quantum Foods. The Court of Appeals ruled that Quantum Foods had yet to decide on the administrative case when Endico immediately filed the complaint for constructive dismissal. The CA concluded that Endico filed the complaint in anticipation of what he perceived to be the final outcome of the administrative investigation. Hence, this petition.

ISSUE:
Whether or not Endico was constructively dismissed

HELD:
Jurisprudence recognizes the exercise of management prerogatives. Labor laws also discourage interference with an employer’s judgment in the conduct of its business. For this reason, the Court often declines to interfere in legitimate business decisions of employers. The law must protect not only the welfare of employees, but also the right of employers.

In the pursuit of its legitimate business interests, especially during adverse business conditions, 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, 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 enterprises 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.

In this case, the Court finds no reason to disturb the conclusion of the CA that there was no constructive dismissal. Reassignments made by management pending investigation of violations of company policies and procedures allegedly committed by an employee fall within the ambit of management prerogative. The decision of Quantum Foods to transfer Endico pending investigation was a valid exercise of management prerogative to discipline its employees. The transfer, while incidental to the charges against Endico, was not meant as a penalty, but rather as a preventive measure to avoid further loss of sales and the destruction of Quantum Foods’ image and goodwill. It was not designed to be the culmination of the then on-going administrative investigation against Endico.

Neither was there any demotion in rank or any diminution of Endico’s salary, privileges and other benefits. Endico was being transferred to the head office as area sales manager, the same position Endico held in Cebu. There was also no proof that the transfer involved a diminution of Endico’s salary, privileges and other benefits.

On the alleged inconvenience on Endico and his family because of the transfer from Cebu to the head office in Parañaque, the Court rules that the transfer is valid, there being no showing that there was bad faith on the part of Quantum Foods. Moreover, the Court finds that Quantum Foods, considering the declining sales and the loss of a major account in Cebu, was acting in the legitimate pursuit of what it considered its best interest in deciding to transfer Endico to the head office.