Chateu Royale Sports and Country Club, Inc. vs. Rachelle G. Balba and Marinel N. Constante
G.R. No. 197492, January 18, 2017


Chateau Royale Sports and Country Club, Inc. (CRSPCI) hired Balba and Constante as Account Executives on probationary status. Balba and Constante were promoted to Account Managers.

As part of their duties as Account Managers, they 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 CRSPCI’ s business. However, they failed to comply with the directive. Accordingly; a notice to explain was served on them, to which they promptly responded.

The management served notices of administrative hearing on Balba and Constante. Thereupon, they sent a letter of said date asking for a postponement of the hearing. Their request was, however, denied and at the same time informed them that the CRSPCI’s Corporate Infractions Committee had found them to have committed acts of insubordination, and that they were being suspended for seven days.

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Balba and Constante filed a complaint for illegal suspension and non-payment of allowances and commissions. They amended their complaint to include constructive dismissal as one of their causes of action based on their information from the Chief Financial Officer of the CRSPCI 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.

Balba and Constante received the notice of transfer directing them to report to work at the Manila Office 2006. They responded by letter addressed to Human Resource Consultant of the CRSPCI, explaining their reasons for declining the order of transfer. Consequently, another request for incident report was served on them regarding their failure to comply with the directive to report at the Manila office.

Following Balba and Constante’s respective responses, the CRSPCI sent a notice imposing on them the sanction of written reprimand for their failure to abide by the order of transfer.

LA Ruling:

The Labor Arbiter rendered his decision declaring that Balba and Constante had been constructively dismissed.

He opined that Balba and Constante’ transfer to Manila would not only be physically and financially inconvenient, but would also deprive them of the psychological comfort that their families provided; that being the top sales performers in Nasugbu, they should not be punished with the transfer; and that their earnings would considerably diminish inasmuch as sales in Manila were not as lively as those in Nasugbu.

NLRC Ruling:

On appeal, the NLRC reversed the ruling of the Labor Arbiter, and dismissed the complaint for lack of merit.

The NLRC found that Balba and Constante had been informed through their respective letters of appointment of the possibility of transfer in the exigency of the service; that the transfer was justified due to the shortage of personnel at the Manila office; that the transfer of Balba and Constante, being bereft of improper motive, was a valid exercise of management prerogative; and that they could not as employees validly decline a lawful transfer order on the ground of parental obligations, additional expenses, and the anxiety of being away from his family.

Balba and Constante filed their motion for reconsideration, but the NLRC denied their motion.

CA Ruling:

The CA promulgated its decision granting Balba and Constante’ petition for certiorari, and setting aside the decision of the NLRC.

The CA ruled that the transfer of Balba and Constante from the office in Nasugbu, Batangas to the Manila office was not a legitimate exercise of management prerogative and constituted constructive dismissal; that the transfer to the Manila office was not crucial as to cause serious disruption in the operation of the business if Balba and Constante were not transferred thereat; that the directive failed to indicate that the transfer was merely temporary; that the directive did not mention the shortage of personnel that would necessitate such transfer; and that the transfer would be inconvenient and prejudicial to Balba and Constante.

The CA denied the CRSPCI’s motion for reconsideration.


Whether or not the transfer constitutes to constructive dismissal

SC Ruling:

The SC found the appeal meritorious.

In this case of constructive dismissal, the burden of proof lies in the CRSPCI as the employer to prove that the transfer of the employee from one area of operation to another was for a valid and legitimate ground, like genuine business necessity.

The SC was satisfied that the CRSPCI duly discharged its burden, and thus established that, contrary to the claim of Balba and Constante that they had been constructively dismissed, their transfer had been an exercise of the CRSPCI’s legitimate management prerogative.

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 CRSPCI, 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 Balba and Constante, 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.

The transfer could not be validly assailed as a form of constructive dismissal, for, as held in Benguet Electric Cooperative vs. Fianza, management had the prerogative to determine the place where the employee is best qualified to serve the interests of the business given the qualifications, training and performance of the affected employee.

Secondly, although Balba and Constante’ 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 CRSPCI rightly points out that the transfer would be without demotion in rank, or without diminution of benefits and salaries.

Make Transfer or Re-Assignment Valid

Instead, the transfer would open the way for their eventual career growth, with the corresponding increases in pay. It is noted that their prompt and repeated opposition to the transfer effectively stalled the possibility of any agreement between the parties regarding benefits or salary adjustments.

Thirdly, Balba and Constante did not show by substantial evidence that the CRSPCI 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 CRSPCI.

Lastly, Balba and Constante, 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.”

Having expressly consented to the foregoing, Balba and Constante had no basis for objecting to their transfer. According to Abbot Laboratories (Phils.), Inc. vs. National Labor Relations Commission, the employee who has consented to the company’s policy of hiring sales staff willing to be assigned anywhere in the Philippines as demanded by the employer’s business has no reason to disobey the transfer order of management.

Verily, the right of the employee to security of tenure does not give her a vested right to her position as to deprive management of its authority to transfer or re-assign her where she will be most useful.

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