JOVITA S. MANALO, PETITIONER, VS. ATENEO DE NAGA UNIVERSITY, FR. JOEL TABORA AND MR. EDWIN BERNAL, RESPONDENT.

Manalo versus Ateneo de Naga University

The Case

This is a labor case about constructive dismissal, and it is decided against the employee. Jovita Manalo, a permanent full-time faculty member of the Accountancy Department of Ateneo de Naga University, was transferred by the University President to teach Economics after a Grievance Committee found her guilty of offenses connected with her part-time work as manager of the campus cooperative. She refused to accept the transfer as legitimate, claimed it amounted to constructive dismissal, and sued the University, its President, and the Dean of the College of Commerce. The case matters because it draws the boundary of constructive dismissal: not every inconvenience, disruption, difficulty, or disadvantage an employee must endure will sustain that charge, and an educational institution may relieve a professional who violates the ethical standards of her profession from teaching that profession to its students.

Procedural History

Manalo filed her Complaint for constructive dismissal before the Labor Arbiter. Labor Arbiter Quiñones ruled in her favor, finding that she had been constructively dismissed, ordering her reinstatement to the Accountancy Department, the application of salary and benefit increases, and the payment of attorney's fees, while denying moral and exemplary damages. The National Labor Relations Commission Second Division affirmed the Labor Arbiter in full and later denied the University's Motion for Reconsideration.

The University then filed a Petition for Certiorari before the Court of Appeals. The Court of Appeals reversed and set aside the rulings of the Labor Arbiter and the National Labor Relations Commission and dismissed Manalo's Complaint, holding that there was ample factual basis for the transfer and that it fell within the University's prerogatives as an employer and as an educational institution. The Court of Appeals denied her Motion for Reconsideration.

Manalo came to the Supreme Court through a Petition for Review on Certiorari, insisting that the findings of the Labor Arbiter and the National Labor Relations Commission were conclusive and binding on the Court of Appeals, and that her transfer was constructive dismissal because it rested on acts imputed to her as Cooperative Manager and not as a faculty member.

Facts

Manalo was employed by Ateneo de Naga University on June 3, 1993, and was granted permanent status in 1996. She taught Auditing Theory, Auditing Practice, Financial Accounting, and Elementary Accounting in the Accountancy Department. She was also a part-time Manager of the Ateneo de Naga Multi-Purpose Cooperative before it was evicted from holding office inside the campus in 1999.

During her stint as Cooperative Manager, she came into conflict with Bernal, Dean of the College of Commerce, who charged her before the Cooperative's Board of Directors with various offenses in the management of the Cooperative. The Board dismissed her, but the General Assembly recalled that dismissal on November 30, 1999. On December 14, 1999, Bernal wrote to Fr. Tabora, the University President, recommending the termination of her employment on the grounds of serious business malpractice, palpable dishonesty, and questionable integrity.

Fr. Tabora constituted a Grievance Committee, which found Manalo guilty and recommended dismissal. The offenses included fraud in the issuance of official receipts, collection of cash without documented remittance to the cooperative, use of inappropriate forms of documents, sixteen instances of bouncing checks issued by the cooperative, fraud in the issuance of an official receipt, and unauthorized cash advances. As University President, Fr. Tabora had the final say; instead of dismissing her, he transferred her to teach Economics in the Department of Social Sciences of the College of Arts and Sciences. Alleging that the transfer constituted constructive dismissal, Manalo filed her Complaint on April 3, 2000.

Issues

• Whether or not the Court of Appeals erred in entertaining alternative findings to those made by the Labor Arbiter and the National Labor Relations Commission.
• Whether or not the shift in Manalo's teaching load from mainly Accountancy subjects to Economics subjects constituted constructive dismissal.

Applicable Provisions

The decision quotes no statutory provision in full, but it applies the settled definition of constructive dismissal and the rule on management prerogative. The Court states the definition of constructive dismissal as follows:

Constructive dismissal arises when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and or a diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.

This definition frames the second issue, because Manalo's transfer involved no demotion in rank and no diminution in pay.

On the employer's side, the Court quotes the employer's freedom to regulate all aspects of employment, subject only to the limitation of special laws:

Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of work.

This is the management prerogative against which every allegation of constructive dismissal must be measured.

Ruling

On the first issue, the Court held that the Court of Appeals did not err. Judicial review of National Labor Relations Commission decisions is through a special civil action for certiorari under Rule 65, confined to issues of jurisdiction or grave abuse of discretion. The Court of Appeals was therefore duty-bound to examine the records and determine whether grave abuse of discretion attended the Commission's ruling; it was not bound by the concurring findings below. A petition for review on certiorari under Rule 45, by contrast, is a continuation of the case and cannot go beyond the issues properly raised in the original action.

On the second issue, the Court held that there was no constructive dismissal. At the core of constructive dismissal is the gratuitous, unjustified, or unwarranted nature of the employer's action. The Court stressed that not every inconvenience, disruption, difficulty, or disadvantage an employee must endure results in a finding of constructive dismissal. Transferring employees, done fairly and in good faith, is a valid exercise of management prerogative and does not by itself sustain the charge. The Labor Arbiter and the Commission were grossly mistaken in divorcing Manalo's breach of the ethical standards binding accountancy professionals from her role as an educator of prospective accounting professionals. Her role made it imperative for her to impart her profession's values by her own example, and having failed in this, the University was well placed to prevent one it considered to have engaged in unethical and unprofessional behavior from continuing to teach its students.

Doctrine

Constructive dismissal requires that the employer's action be gratuitous, unjustified, or unwarranted; the test is whether the employer acted fairly in exercising a prerogative indisputably vested in it. Not every inconvenience, disruption, difficulty, or disadvantage endured by an employee amounts to constructive dismissal. A transfer of employees, when based on sound business judgment, unattended by demotion in rank or diminution in pay or bad faith, is a valid exercise of management prerogative. And when professionals and educators violate the ethical standards of the profession to which they belong and for which they train students, educational institutions employing them are justified in relieving them of their teaching posts and in taking other appropriate precautionary or punitive measures.

Disposition

The Supreme Court denied Manalo's Petition and sustained the Court of Appeals, so the University won and her Complaint was dismissed.

Remember This

Memorize the line: not every inconvenience, disruption, difficulty, or disadvantage that an employee must endure sustains a finding of constructive dismissal. Examiners use this case to test management prerogative in transfers and the special duty of educational institutions to protect the ethical standards of the professions they teach.