ZEL T. ZAFRA AND EDWIN B. ECARMA, PETITIONERS, VS. HON. COURT OF APPEALS, PHILIPPINE LONG DISTANCE TELEPHONE CO., INC., AUGUSTO COTELO, AND ERIBERTO MELLIZA, RESPONDENTS.

Zafra versus Philippine Long Distance Telephone Company

The Case

This is a labor case about two employees who were sent abroad for training, then transferred to Manila upon their return, and who resigned when their appeals against the transfer went unheeded. Zel Zafra and Edwin Ecarma sued the Philippine Long Distance Telephone Company, or PLDT, before a voluntary arbitrator, claiming constructive dismissal and unauthorized deductions from their final pay. The case matters because the Supreme Court draws a precise line between a valid exercise of management prerogative to transfer employees and a transfer so unreasonable, inconvenient, and prejudicial that it amounts to constructive dismissal, and because it teaches how a company practice, once ripened, binds the employer like a rule.

Procedural History

The employees filed a complaint for constructive dismissal and non-payment of benefits before the National Labor Relations Commission Regional Arbitration Branch in Cebu. The labor arbiter referred the complaint to the National Conciliation and Mediation Board, and the parties agreed to designate a voluntary arbitrator. The voluntary arbitrator declared the employees illegally dismissed by constructive discharge, ordered their reinstatement with full backwages, ordered the refund of the deductions from their final pay, and awarded moral and exemplary damages, litigation expenses, and attorney's fees. PLDT moved for reconsideration, which was denied.

PLDT then filed a special civil action for certiorari with the Court of Appeals, which treated it as a petition for review. The Court of Appeals reversed the voluntary arbitrator, except as to the refund of the deductions. The employees moved for reconsideration, which was denied. The employees then came to the Supreme Court on a petition for review on certiorari.

Facts

Zel Zafra was hired by PLDT in October 1984 as Operations Analyst II, and Edwin Ecarma was hired in September 1987 as Junior Operations Analyst I. Both were regular rank-and-file employees assigned to the Regional Operations and Maintenance Control Center of the Cebu Provincial Division, tasked with maintaining telephone exchanges in the Visayas and Mindanao.

In March 1995, the two were chosen for a training program in Germany in preparation for the ALCATEL 1000 S12 project, with the foreign supplier shouldering the cost of their training and travel. They left for Germany in April 1995 and stayed until July 1995. While they were abroad, a PLDT division manager asked the Cebu and Davao provincial managers whether any training participants were willing to transfer to the Sampaloc center in Manila. Upon their return, the employees were informed of the matter; they balked at the idea, but PLDT proceeded to transfer them to Sampaloc effective January 1996.

The employees went to Manila to air their grievance and seek help from their union, and they asked for a deferment of their reporting date. They eventually reported at Sampaloc in January 1996, while PLDT moved the effectivity of the transfer to March 1996. Their appeals proved fruitless, and in March 1996 they tendered their resignation letters. The cost of their training in Germany was then deducted from their final pay.

Issues

• Whether or not the Court of Appeals erred in treating the special civil action for certiorari filed by PLDT as a petition for review.
• Whether or not the Court of Appeals erred in its appreciation of the facts and in the decision it rendered.

Applicable Provisions

Section 5 of Rule 43 of the 1997 Rules of Civil Procedure provides:

Appeal shall be taken by filing a verified petition for review in seven (7) legible copies with the Court of Appeals, with proof of service of a copy thereof on the adverse party and on the court or agency a quo.

This governs the proper mode of appeal from the award of a voluntary arbitrator, which the employees invoked against PLDT's choice of remedy.

Section 5 of Rule 65 of the 1997 Rules of Civil Procedure provides:

When the petition filed relates to the acts or omissions of a judge, court, quasi-judicial agency, tribunal, corporation, board, officer or person, the petitioner shall join, as private respondent or respondents with such public respondent or respondents, the person or persons interested in sustaining the proceedings in the court.

This governs who must be impleaded in a special civil action for certiorari, which the employees invoked in arguing that PLDT's petition was defective.

Article 262-A of the Labor Code provides:

Unless the parties agree otherwise, it shall be mandatory for the Voluntary Arbitrator or panel of Voluntary Arbitrators to render an award or decision within twenty (20) calendar days from the date of the submission of the dispute to voluntary arbitration.

This governed the voluntary arbitrator's submission of the case for resolution after PLDT failed to appear at the scheduled hearings.

Ruling

On the first issue, the Court held that the Court of Appeals did not err. It is not the caption of the pleading but the allegations therein that determine the nature of the action. The petition before the Court of Appeals stated under the nature of the action that it was a petition for review on certiorari of the voluntary arbitrator's decision and order; the issue set forth was factual, namely whether there was sufficient evidence of constructive dismissal; and the petition was filed within the fifteen-day period to perfect an appeal and did not implead the voluntary arbitrator as a respondent. These indicated that the petition was indeed one for review. The Court also rejected the claim that the voluntary arbitrator was not furnished a copy, since a registry receipt of the copy sent to him was attached to the petition.

On the second issue, the Court ruled for the employees. Because the findings of fact of the Court of Appeals clashed with those of the voluntary arbitrator, the Court reviewed the records, and it was not convinced that the voluntary arbitrator erred. The employees' agreement in their application for employment to be transferred to any branch should not be taken in isolation but in conjunction with established company practice. The Court found that the standard operating procedure in PLDT was to inform personnel of the nature and location of their future assignments after training abroad, as shown by inter-office memoranda, one of which conceded that the personnel were not made aware prior to the start of training that they would be transferred to Manila. This practice had ripened into a company policy that could no longer be peremptorily withdrawn, discontinued, or eliminated by the employer.

The Court held that the transfer was not a valid exercise of management prerogative. Constructive dismissal does not always involve forthright dismissal or diminution in rank, compensation, benefits, and privileges, for an act of clear discrimination, insensibility, or disdain by an employer may become so unbearable that the employee has no choice but to forego continued employment. The Court stated the rule thus:

However, a transfer amounts to constructive dismissal when the transfer is unreasonable, inconvenient, or prejudicial to the employee, and involves a demotion in rank or diminution of salaries, benefits, and other privileges.

Here, the employees were unceremoniously transferred, requiring their families to relocate from Cebu to Manila, without the usual notice that should have been given even before their training abroad. The Court found the transfer unreasonable, inconvenient, and prejudicial, and in defiance of basic due process and fair play in employment relations.

Doctrine

First, the nature of an action is determined not by its caption but by the allegations in the pleading; a petition captioned as one for certiorari may be treated as a petition for review where its allegations, the issues raised, and its timely filing so indicate, consistent with Section 5 of Rule 43.

Second, while the transfer of an employee ordinarily lies within the ambit of management prerogative, a transfer amounts to constructive dismissal when it is unreasonable, inconvenient, or prejudicial to the employee, and involves a demotion in rank or diminution of salaries, benefits, and other privileges.

Third, constructive dismissal does not always involve forthright dismissal or diminution in rank, compensation, benefits, and privileges; an act of clear discrimination, insensibility, or disdain by an employer may become so unbearable that the employee has no choice but to forego continued employment.

Fourth, a company practice, such as informing personnel of the nature and location of their future assignments after training abroad, may ripen into a policy that can no longer be peremptorily withdrawn, discontinued, or eliminated by the employer, and fairness at the workplace and settled expectations among employees require that it be honored.

Disposition

The petition for review was granted; the decision of the Court of Appeals was reversed and set aside, and the decision of the voluntary arbitrator reinstated, with no pronouncement as to costs.

Remember This

Memorize the rule that a transfer, though a management prerogative, becomes constructive dismissal when it is unreasonable, inconvenient, or prejudicial to the employee and involves demotion or diminution of salaries, benefits, and privileges. Examiners use this case to test constructive dismissal arising from a forced transfer and the binding force of a company practice on the employer.