Norkis Trading v. Genilo, February 11, 2008

Facts:
Respondent was initially hired by Petitioner Norkis as Norkis Installment Collector (NIC). Petitioner Albos is the Senior Vice-President of petitioner Norkis. Respondent held various positions in the company until he was appointed as Credit and Collection Manager of petitioner Norkis’s sister company. It was found out in a special audit that respondent forwarded the monthly collection reports of the NICs under his supervision without checking the veracity of the same. It appeared that the monthly collection highlights for six months were all overstated, particularly the account handled by NIC Dennis Cadag, who made it appear that the collection efficiency was higher than it actually was misleading the top management.
 
Respondent was then charged with negligence of basic duties and responsibilities resulting in loss of trust and confidence and laxity in directing and supervising his own subordinates.
Respondent admitted that he was negligent for failing to regularly check the report of each NIC under his supervision. He however denied being lax in supervising his subordinates, as he imposed discipline on them if the need arose.
 
Petitioner Norkis issued a memorandum placing respondent under 15 days suspension without pay, travel and transportation allowance, effective upon receipt thereof. Respondent filed a letter protesting his suspension and seeking a review of the penalty imposed. Another memorandum was issued to the respondent requiring him to report to the head office of petitioner Norkis in Mandaluyong City for a re-training or a possible new assignment without prejudice to his request for a reconsideration or an appeal of his suspension. He was then assigned to the Marketing Division directly reporting to petitioner Albos.
 
Respondent requested petitioner Albos that he be assigned as Sales Engineer or to any position commensurate with his qualifications. However, respondent was formally appointed as Marketing Assistant to petitioner Albos, which position respondent subsequently assumed. As such, respondent filed with the Labor Arbiter (LA) a complaint for illegal suspension, constructive dismissal, non-payment of allowance, vacation/sick leave, damages and attorney's fees against petitioners.
The LA rendered his decision dismissing the complaint for lack of merit. On appeal, the NLRC reversed the decision of the LA declaring that the transfer of Respondent resulted in his demotion in rank from Manager to a mere rank and file employee, which was tantamount to constructive dismissal and therefore illegal. Petitioner Norkis files its MR but was denied. The CA, likewise, dismissed their Petition and affirmed the resolution of the NLRC.

Issue:
Whether or not respondent's transfer from the position of Credit and Collection Manager to that of a Marketing Assistant amounts to a constructive dismissal.

Held:
Yes. Demotion involves a situation in which an employee is relegated to a subordinate or less important position constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary. In this case, while the transfer of respondent from Credit and Collection Manager to Marketing Assistant did not result in the reduction of his salary, there was a reduction in his duties and responsibilities which amounted to a demotion tantamount to a constructive dismissal as correctly held by the NLRC and the CA.
 
A comparison in the nature of work of these two positions shows a great difference. As Credit and Collection Manager, respondent was clothed with all the duties and responsibilities of a managerial employee. He could devise and implement action plans to meet his objectives and exercise independent judgment in resolving problem accounts. He had power and control over NICs, Branch Control Officers (BCOs) and Cashiers under his supervision, and he provided them training in the performance of their respective works. Further, he had the authority to ensure reserves in the NICs, BCOs and Cashiers in case of expansion, reassignment and/or termination. There is no doubt that said position of Credit and Collection Manager entails great duties and responsibilities and involves discretionary powers. In fact, even in petitioners’ pleadings, they repeatedly stated that the position involved a high degree of responsibility requiring trust and confidence as it relates closely to the financial interest of the company.
 
On the other hand, the work of a Marketing Assistant is clerical in nature, which does not involve the exercise of any discretion. Such job entails mere data gathering on vital marketing information relevant to petitioners' motorcycles and making reports to his direct supervisor. He is a mere staff member in the office of the Senior Vice-President for Marketing.
 
While petitioners claim that the position of a Marketing Assistant covers a wide area as compared with the position of Credit and Collection Manager, the latter is reposed with managerial duties in overseeing petitioners’ business in his assigned area, unlike the former in which he merely collates raw data. These two positions are not of the same level of authority.
There is constructive dismissal when an employee's functions, which were originally supervisory in nature, were reduced; and such reduction is not grounded on valid grounds such as genuine business necessity.