2017 Case Digest: Chateau Royale v. Balba


G.R. No. 197492, January 18, 2017


TOPIC: Constructive dismissal

PONENTE: Bersamin


          Petitioner Chateau Royale hired respondents as Account Executives. They were then promoted to Account Managers after almost a year. As part of their duties, respondents were instructed by the Director of Sales and Marketing to forward all proposals, event orders and contracts for an orderly and systematic bookings in the operation of the petitioner’ s business. However, they failed to comply with the directive. Accordingly, a notice to explain was served on them, to which they promptly responded.

    After investigation, respondents were found to have committed acts of insubordination, and that they were suspended for seven (7) days. However, said suspension order was lifted before its implementation.

          Respondents then filed a complaint for illegal suspension and non-payment of allowances and commissions. Respondents amended their complaint to include constructive dismissal based on their information from the Chief Financial Officer of the petitioner on the latter’s plan to transfer them to the Manila Office. The proposed transfer was prompted by the shortage of personnel at the Manila Office as a result of the resignation of three account managers and the director of sales and marketing. Despite attempts to convince them to accept the transfer to Manila, they declined because their families were living in Nasugbu, Batangas.

          LA found that respondents had been constructively dismissed. NLRC reversed the same and dismissed the complaint for lack of merit. CA granted the petition for certiorari and set aside NLRC’s decision.


          Whether or not the transfer of respondents constitutes constructive dismissal.


          The Supreme Court held that the petitioner was able to discharge its burden, and thus established that, contrary to the claim of the respondents that they had been constructively dismissed, their transfer had been an exercise of the petitioner’s legitimate management prerogative.

          First, the resignations of the account managers and the director of sales and marketing in the Manila office brought about the immediate need for their replacements with personnel having commensurate experiences and skills. With the positions held by the resigned sales personnel being undoubtedly crucial to the operations and business of the petitioner, the resignations gave rise to an urgent and genuine business necessity that fully warranted the transfer from the Nasugbu, Batangas office to the main office in Manila of the respondents, undoubtedly the best suited to perform the tasks assigned to the resigned employees because of their being themselves account managers who had recently attended seminars and trainings as such.

          Secondly, although the respondents’ transfer to Manila might be potentially inconvenient for them because it would entail additional expenses on their part aside from their being forced to be away from their families, it was neither unreasonable nor oppressive. The petitioner rightly points out that the transfer would be without demotion in rank, or without diminution of benefits and salaries. Instead, the transfer would open the way for their eventual career growth, with the corresponding increases in pay.

              Thirdly, the respondents did not show by substantial evidence that the petitioner was acting in bad faith or had ill-motive in ordering their transfer. In contrast, the urgency and genuine business necessity justifying the transfer negated bad faith on the part of the petitioner.

              Lastly, the respondents, by having voluntarily affixed their signatures on their respective letters of appointment, acceded to the terms and conditions of employment incorporated therein. One of the terms and conditions thus incorporated was the prerogative of management to transfer and re-assign its employees from one job to another “as it may deem necessary or advisable.”

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