United Laboratories, Inc. v. Domingo

G.R. No. 186209 (September 21, 2011)

Facts:

United Laboratories, Inc. (Unilab) is a prominent corporation in the Philippines engaged in the manufacture and distribution of pharmaceutical products. The respondents, Jaime Domingo, Anonuevo Remigio, Rodolfo Marcelo, Raul Norico, and Eugenio Ozaraga, were employees of Unilab assigned to the Distribution Accounting Department (DAD), which serviced the accounting needs of Unilab's sixteen provincial depots.

In 2001, Unilab implemented a Physical Distribution Master Plan (PDMP) that consolidated its logistics activities into a single distribution center in Metro Manila, resulting in the closure of the provincial depots and the redundancy of the job functions of the employees working there. Affected employees were offered a separation package of two and a half months' pay for every year of service.

On January 7, 2002, the respondents requested separation or retirement under a similar package to that offered to the redundant employees, which they referred to as the "Bagong Sibol Program." Unilab denied this request, clarifying that the PDMP was a cost restructuring measure and that there was no such program as the Bagong Sibol Program. Instead, Unilab had an official early retirement program under its United Retirement Plan (URP).

In the first half of 2002, Unilab implemented a Shared Services Policy (SSP) that centralized all accounting functions under its Finance Division. The respondents were reassigned to this new structure. Subsequently, they filed complaints for constructive dismissal, nonpayment of separation pay, and damages against Unilab, claiming that their reassignment constituted constructive dismissal.

The Executive Labor Arbiter dismissed their complaints for lack of merit, but the National Labor Relations Commission (NLRC) affirmed this decision. The respondents then filed a petition for certiorari with the Court of Appeals (CA), which reversed the NLRC's ruling and found that the respondents had been constructively dismissed.

Legal Issues:

1. Whether the Court of Appeals erred in including Remigio as a petitioner despite his motion to withdraw and quitclaim.
2. Whether the CA's reversal of the NLRC's decision regarding constructive dismissal was arbitrary and unsupported by evidence.
3. Whether the CA's directive for Unilab to pay respondents separation pay equivalent to that of redundant employees had legal basis.
4. Whether the CA's ruling that respondents were entitled to both separation pay and retirement pay violated established jurisprudence.

Arguments:

Petitioner (Unilab):

• The CA erred in not dropping Remigio as a petitioner after he filed a motion to withdraw and executed a quitclaim.
• The CA's finding of constructive dismissal was arbitrary and contradicted the NLRC's and Labor Arbiter's conclusions, which were based on substantial evidence.
• The directive to pay respondents the same separation pay as redundant employees lacked legal basis, as the respondents were not declared redundant.
• The CA's ruling that respondents were entitled to both separation and retirement pay was contrary to the provisions of Unilab's retirement plan.

Respondents:

• The CA correctly found that the respondents were constructively dismissed due to the unreasonable conditions imposed by Unilab after the implementation of the PDMP and SSP.
• The respondents argued that they were similarly situated to the redundant employees and thus entitled to the same separation package.
• They contended that their reassignment to the Finance Division was a demotion and constituted constructive dismissal.

Court's Decision and Legal Reasoning:

The Supreme Court granted Unilab's petition, setting aside the CA's decision and reinstating the NLRC's ruling. The Court found that:

1. The CA mistakenly included Remigio as a petitioner despite his motion to withdraw and quitclaim, which was valid and should have been acknowledged.
2. The CA's conclusion of constructive dismissal was not supported by evidence, as the respondents remained employed during the proceedings and were not subjected to unbearable working conditions.
3. The Court emphasized that the PDMP and SSP were legitimate management prerogatives aimed at restructuring the company, and the respondents' positions were not rendered redundant.
4. The distinction between redundancy and retirement was clarified, noting that the respondents could not claim benefits from both categories simultaneously.

The Court reiterated that management has the prerogative to transfer and reassign employees according to business needs, and such actions do not constitute constructive dismissal unless they are done in bad faith or with oppressive intent.

Significant Legal Principles Established:

• Constructive dismissal occurs when an employee resigns due to unbearable working conditions imposed by the employer, effectively amounting to a dismissal without cause.
• Management prerogatives, including the right to reorganize and reassign employees, are recognized as long as they are exercised in good faith and for valid business reasons.
• Employees cannot mix and match benefits from different categories of employment termination (e.g., redundancy and retirement) as they are governed by distinct legal provisions.