CENTRAL AZUCARERA DE BAIS, INC. AND ANTONIO STEVEN L. CHAN, PETITIONERS, VS. JANET T. SIASON, RESPONDENT.

Central Azucarera de Bais versus Siason

The Case

This is a labor case about resignation and its counterfeit, constructive dismissal. Janet Siason, a long-serving Purchasing Officer of Central Azucarera de Bais, was asked by the company president, Antonio Steven Chan, to tender her immediate resignation after an audit uncovered irregularities in her purchases. She resigned, then sued for constructive dismissal. The case matters because it draws the dividing line between a resignation compelled by an employer, which is dismissal in disguise, and a resignation voluntarily chosen to escape an administrative investigation, which is not. It also settles who carries the burden of proof when an employer pleads resignation.

Procedural History

Siason filed a complaint for illegal dismissal, nonpayment of wages, separation pay, service incentive leave pay, retirement benefits, emergency cost of living allowance, with damages and attorney's fees, before the National Labor Relations Commission. The Labor Arbiter dismissed the complaint for lack of merit, finding that Siason voluntarily resigned, but nonetheless awarded her separation pay in the interest of equity and compassion. Both parties appealed to the National Labor Relations Commission. The Commission reversed the Labor Arbiter, held that Siason was constructively dismissed, and ordered the company and Chan to pay backwages, separation pay, and attorney's fees. The company's motion for reconsideration was denied. The company then went up to the Court of Appeals by petition for certiorari. The Court of Appeals affirmed the Commission, and denied reconsideration. The company and Chan then filed a petition for review on certiorari before the Supreme Court.

Facts

Siason was hired in July 1988 as a Purchasing Assistant and was eventually promoted to Purchasing Officer. On October 3, 2011, Chan confronted her over the delivery of a machine part by air freight instead of the previously approved sea freight. She explained that the delivery benefited the company, but Chan treated it as a big infraction of company rules. That same day, Siason received a letter signed by Chan stating that she had committed various purchasing policy violations over the past twelve months, and asking her to tender her immediate resignation rather than force his hand.

The next day, October 4, 2011, the company's legal officer sent Siason a follow-up letter regarding Chan's demand. Siason then wrote a resignation letter stating that she was resigning because Chan told her to do so. The company refused to accept it, so she drafted another resignation letter that was acceptable to the company. On November 14, 2011, she filed her complaint, claiming that Chan forced her to resign.

The company's defense was that Siason voluntarily resigned. Its accounting department had audited her purchases and found irregularities, including price quotations that she had increased without approval. Because of her long tenure and close relationship with Chan, she was given the option of resigning instead of facing an administrative investigation that would likely end in termination. The company also claimed that she shredded company documents and deleted files from her office computer to cover her misdeeds.

Issues

• Whether or not the Court of Appeals correctly affirmed the National Labor Relations Commission's finding that Siason was constructively dismissed by the company and Chan.
• Whether or not Siason, having voluntarily resigned, is entitled to separation pay.

Applicable Provisions

The decision does not quote a statute; it applies settled labor doctrine on resignation and constructive dismissal. The governing rule on burden of proof is stated by the Court as follows:

In illegal dismissal cases, it is a fundamental rule that when an employer interposes the defense of resignation, on him necessarily rests the burden to prove that the employee indeed voluntarily resigned.

This rule placed the burden on the company to show that Siason's resignation was voluntary, and it frames the entire analysis.

The Court defines constructive dismissal in these terms:

Constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay and other benefits.

The Court also warned that:

Bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence.

These definitions supply the test against which Siason's resignation must be measured.

Ruling

On the first issue, the Court ruled that the Court of Appeals erred. There was no constructive dismissal. A judicious review of the records showed that the company's accounting department had indeed audited Siason's purchases and found questionable discrepancies, consisting of different price quotations for identical items in purchase documents she herself prepared. Given her long tenure and close relationship with Chan, he sent her the October 3, 2011 letter asking her to resign rather than force his hand, which the Court construed as telling her to resign or face an administrative complaint. The legal officer's letter the next day merely confirmed whether she would resign or submit to an investigation. Siason chose to resign to save her employment record from trouble.

These facts showed that she was given the option to resign voluntarily instead of dealing with an investigation that might result in dismissal. The Court held that giving an employee a graceful exit is perfectly within the employer's discretion, since it is not uncommon that an employee is permitted to resign to avoid the humiliation of being terminated for just cause after the exposure of her malfeasance. There is nothing reprehensible or illegal when the employer grants the employee a chance to resign and save face rather than smear her employment record. The Court summed up the situation: while Siason may not have tendered her resignation wholeheartedly, circumstances of her own making did not give her any other option but to do so voluntarily.

On the second issue, because the resignation was voluntary, Siason was not entitled to separation pay in the absence of any agreement with the company providing for it. The Labor Arbiter's award of separation pay, made in the interest of equity and compassion, was therefore deleted.

Doctrine

First, in illegal dismissal cases, when the employer pleads resignation, the burden rests on the employer to prove that the employee voluntarily resigned. Second, resignation requires the intent to relinquish the position to concur with the overt act of relinquishment, and the employee's acts before and after the alleged resignation must be considered. Third, constructive dismissal exists where continued employment is rendered impossible, unreasonable, or unlikely, or where an act of clear discrimination, insensibility, or disdain by the employer becomes so unbearable that the employee has no choice but to forego continued employment. Fourth, an employer may lawfully offer an employee the option to resign to avoid an administrative investigation and possible termination for just cause; this is a graceful exit, not constructive dismissal. Fifth, a voluntarily resigning employee is not entitled to separation pay absent an agreement providing for it.

Disposition

The petition was granted; the Court of Appeals decision and resolution were reversed and set aside, the Labor Arbiter's decision was reinstated with the modification that the award of separation pay was deleted, and the company and Chan won.

Remember This

Memorize this line: giving an employee a graceful exit, the chance to resign and save face rather than face investigation and termination for just cause, is not constructive dismissal. Examiners use this case to test the burden of proof in resignation cases and to distinguish a forced resignation from a voluntary one made under the pressure of one's own misdeeds.