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Petitioner Intec Cebu Inc. (Intec) hired respondents as production workers. Respondents alleged that their working days were reduced from 6 to 2-4 days. Intec apparently explained that reduction in working days was due to lack of job orders. However, respondents discovered that Intec hired around 188 contractual employees tasked to perform tasks which respondents were regularly doing. Private respondents claimed that they were effectively terminated from employment as shown in the Establishment Termination Report6 submitted to the Department of Labor and Employment (DOLE). Two (2) days later, respondents filed a complaint for illegal dismissal.
The Labor Arbiter, Jermelina Pasignajen Ay-ad declared that respondents were illegally dismissed and adjudged Intec and its officials liable for payment of separation pay and backwages. The NLRC set aside the Decision of the Labor Arbiter. The Court of Appeals reversed the NLRC and reinstated the Decision of the Labor Arbiter
Whether the respondents were dismissed either actually or constructively.
Yes. Intec committed illegal reduction of work hours. Constructive dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or diminution in pay or both; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.13
Intec’s unilateral and arbitrary reduction of the work day scheme had significantly greatly reduced respondents’ salaries thereby rendering it liable for constructive dismissal.