BISIG MANGGAGAWA SA TRYCO AND/OR FRANCISCO SIQUIG, AS UNION PRESIDENT, JOSELITO LARIÑO, VIVENCIO B. BARTE, SATURNINO EGERA AND SIMPLICIO AYA-AY, PETITIONERS, VS. NATIONAL LABOR …

Bisig Manggagawa sa Tryco versus National Labor Relations Commission

The Case

This is a labor case about four factory workers of a veterinary medicine manufacturer who were ordered to move from the company's Caloocan City office to its plant in San Rafael, Bulacan. The workers, through their union Bisig Manggagawa sa Tryco, cried constructive dismissal and unfair labor practice, insisting the transfer was a scheme to paralyze their union after collective bargaining negotiations failed. The company answered that the transfer was a valid exercise of management prerogative, prompted by a government reminder that production could only be done at the licensed Bulacan address. The case matters because it gathers in one decision the rules on management prerogative to transfer employees, the requisites of constructive dismissal, the elements of unfair labor practice, and the enforceability of a compressed workweek agreement waiving overtime pay.

Procedural History

In August 1997, the petitioners filed separate complaints for illegal dismissal, underpayment of wages, nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its president. On February 27, 1998, the Labor Arbiter dismissed the case for lack of merit, holding that the transfer would not paralyze the union because the complainants were not members of the negotiating panel and the transfer was made pursuant to the directive of the Department of Agriculture. The Labor Arbiter also denied the money claims.

On October 29, 1999, the National Labor Relations Commission affirmed the Labor Arbiter's decision, dismissing the case but directing the complainants to report to work at the San Rafael plant without backwages, and directing the respondents to accept them back to work. The Commission denied the motion for reconsideration on December 22, 1999.

The petitioners then filed a petition for certiorari with the Court of Appeals. On July 24, 2001, the Court of Appeals dismissed the petition, ruling that the transfer order was a management prerogative not amounting to constructive dismissal or unfair labor practice, and sustaining the enforceability of the memorandum of agreement, particularly the waiver of overtime pay. The Court of Appeals denied the motion for reconsideration on December 20, 2001. Dissatisfied, the petitioners filed this petition for review with the Supreme Court.

Facts

Tryco Pharma Corporation manufactures veterinary medicines, with its principal office in Caloocan City. The petitioners Joselito Lariño, Vivencio Barte, Saturnino Egera, and Simplicio Aya-ay were regular employees occupying the positions of helper, shipment helper, and factory workers, assigned to the Production Department, and were members of Bisig Manggagawa sa Tryco, the exclusive bargaining representative of the rank-and-file employees.

Tryco and the petitioners signed separate memoranda of agreement providing for a compressed workweek effective May 20, 1996, pursuant to Department Order Number 21 of the Department of Labor and Employment. Under the agreement, eight in the morning to six twelve in the evening, Monday to Friday, were the regular working hours, and the employee waived the right to claim overtime pay for work rendered after five in the afternoon until six twelve in the evening, since the compressed workweek was adopted in lieu of the regular workweek of forty-six hours. Work beyond six twelve in the evening entitled the employee to overtime pay. Tryco informed the Bureau of Working Conditions of the implementation.

In January 1997, the union and Tryco negotiated for the renewal of their collective bargaining agreement but failed to reach a new agreement. On March 26, 1997, the Bureau of Animal Industry of the Department of Agriculture sent Tryco a letter reminding it that its license to operate as a veterinary drug manufacturer was addressed to San Rafael, Bulacan, and that production should be done only at that address, not at the Caloocan City business office. Tryco then issued memoranda directing Aya-ay, and later Egera, Lariño, and Barte, to report to the plant site in Bulacan. The union opposed the transfer as unfair labor practice and declared a strike on May 26, 1997.

Issues

• Whether or not the transfer orders amounted to constructive dismissal of the individual petitioners.
• Whether or not the transfer orders constituted unfair labor practice.
• Whether or not the petitioners are entitled to their money claims, damages, litigation costs, and attorney's fees.

Applicable Provisions

The decision discusses the waiver of overtime pay sanctioned by Department Order Number 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek, which provides:

The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits abovecited that will accrue to the employees.

This provision bears on the case because it expressly authorizes the waiver of overtime premium pay in exchange for the benefits of a compressed workweek, which validates the memorandum of agreement between Tryco and the petitioners.

The decision also cites the conditions set by the Department of Labor and Employment under Department Order Number 21 to protect the interest of employees in the implementation of a compressed workweek scheme:

The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall not exceed their normal weekly hours of work prior to adoption of the compressed workweek arrangement;

There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits of the employees;

If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the adoption of the compressed workweek scheme, all such excess hours shall be considered overtime work and shall be compensated in accordance with the provisions of the Labor Code or applicable Collective Bargaining Agreement (CBA);

Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours a day may be devised by the parties to the agreement.

The effectivity and implementation of the new working time arrangement shall be by agreement of the parties.

These conditions bear on the case because the Court found that the memorandum of agreement complied with all of them, so the waiver of overtime pay is valid and binding.

On unfair labor practice, the Court explains the statutory frame by reference to Article 248(f) of the Labor Code of the Philippines, providing:

Unfair labor practice refers to acts that violate the workers' right to organize. With the exception of Article 248(f) of the Labor Code of the Philippines, the prohibited acts are related to the workers' right to self-organization and to the observance of a CBA.

This bears on the case because the transfer orders were not shown to interfere with the petitioners' right to organize, so no unfair labor practice was committed.

Ruling

On the first issue, the Court held that there was no constructive dismissal. Findings of fact of labor officials, especially when the Labor Arbiter, the National Labor Relations Commission, and the Court of Appeals are in absolute agreement, are accorded respect and even finality when supported by substantial evidence. The Court rejected as wild and reckless the imputation that the Bureau of Animal Industry conspired with the company, there being not an iota of proof. The Court ruled that Tryco's decision to transfer its production activities to San Rafael, Bulacan was within the scope of its inherent right to control and manage its enterprise effectively, and that this prerogative extends to the freedom to transfer and reassign employees according to the requirements of its business. The Court laid down the test:

When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal.

The employer bears the burden of proving that the transfer is for valid and legitimate grounds. Here, the transfer entailed no demotion and no diminution of salaries, benefits, and other privileges. The petitioners objected only on personal inconvenience, and the Court held that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal, and that objection grounded solely on personal inconvenience or hardship is not a valid reason to disobey an order of transfer. The Court distinguished the earlier case of Escobin, where the transfer from Basilan to Manila would have separated employees from their families and required living accommodations; the distance from Caloocan to San Rafael, Bulacan is not considerably great.

On the second issue, the Court held that there was no unfair labor practice. The mere transfer of members cannot paralyze a union, since the union was not deprived of their membership; only their work assignments moved to another location. More importantly, there was no showing that the transfer orders were motivated by an intention to interfere with the right to organize. Unfair labor practice refers to acts that violate the workers' right to organize, and without that element, acts, no matter how unfair, are not unfair labor practices.

On the third issue, the Court denied the money claims. The memorandum of agreement is enforceable and binding, because the waiver was made voluntarily, with full understanding, and for a credible and reasonable consideration. The Court held that where the agreement clearly states that the employee waives overtime pay in exchange for a five-day workweek, there is no room for interpretation and its terms should be implemented as written. The case of Pesala is not applicable because the employment contract there was silent on whether overtime pay was included in the fixed monthly salary, unlike the memorandum of agreement here.

Doctrine

Management prerogative includes the right to transfer and reassign employees from one area of operation to another to meet the requirements of the business, and such a transfer is generally not constitutive of constructive dismissal. The rule for a valid transfer is that it must not be unreasonable, inconvenient, or prejudicial to the employee, and it must not involve a demotion in rank or a diminution of salaries, benefits, and other privileges; the employer bears the burden of proving these valid and legitimate grounds. Mere incidental inconvenience, or objection grounded solely on personal inconvenience or hardship, is not sufficient to warrant a claim of constructive dismissal.

Unfair labor practice refers to acts that violate the workers' right to organize; with the exception of Article 248(f) of the Labor Code, the prohibited acts relate to the right to self-organization and to the observance of a collective bargaining agreement. Without that element, acts, no matter how unfair, are not unfair labor practices.

A waiver of overtime pay under a compressed workweek scheme is valid and binding where it is shown that the employee made the waiver voluntarily, with full understanding of what he was doing, and the consideration is credible and reasonable, and where the agreement complies with the conditions of Department Order Number 21. Where the agreement clearly states the waiver, there is no room for interpretation and its terms must be implemented as written.

Disposition

The petition was denied, and the Court of Appeals decision and resolution were affirmed; the company won, and the petitioners were directed to report to work at the San Rafael plant without backwages.

Remember This

Memorize the test: a transfer is valid, and not constructive dismissal, when it is not unreasonable, inconvenient, or prejudicial to the employee and involves no demotion in rank or diminution of salaries, benefits, and privileges, with the burden of proof on the employer. Examiners use this case for management prerogative, constructive dismissal, the elements of unfair labor practice, and the validity of a compressed workweek waiver of overtime pay.