Photo from Unsplash
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
It is imperative to strike a balance between the employees’ tenurial security on the one hand, and the employer’s management prerogative, on the other. (Automatic Appliances, Inc., et al. v. Francia Deguidoy, G.R. No. 228088, December 04, 2019)
The 1987 Philippine Constitution provides:
“The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns of investments, and to expansion and growth.” (Section 3, Article XIII, 1987 Constitution)
Also, under the 1987 Constitution, employees have the right to security of tenure, among others. The right to security of tenure guarantees the right of employees to continue in their employment absent a just or authorized cause for termination.
On the other hand, employers have management prerogative. The right of an employer to regulate all aspects of employment, aptly called “management prerogative,” gives employers the freedom to regulate, according to their discretion and best judgment, all aspects of employment, including work assignment, working methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers. (St. Luke’s Medical Center, Inc. v. Maria Theresa Sanchez, G.R. No. 212054, March 11, 2015)
The Supreme Court ruled in the case of Asian Marine Transport Corporation, v. Allen Caseres, et al. (G.R. No. 212082, November 24, 2021) that:
“Management has a wide latitude to conduct its own affairs, so long as it exercises its management prerogative in good faith for the advancement of his interest and not to defeat or circumvent employee rights under the law or valid agreements. Its management prerogative must likewise not be used in a way that is unreasonable, inconvenient, or prejudicial to the employees involved.”
In the case of Automatic Appliances, Inc., et al. v. Francia Deguidoy (G.R. No. 228088, December 04, 2019), the Supreme Court held that it is imperative to strike a balance between the employees’ tenurial security on the one hand, and the employer’s management prerogative, on the other.
However, how do Courts strike a balance between the employer’s tenurial security and the employer’s management prerogative?
In the case of PJ Lhuillier, Inc. v. Hector Oreil Cimagala Camacho (G.R. No. 223073, February 22, 2017), the Supreme Court, citing the case of Imasen Philippine Manufacturing Corp. v. Alcon (G.R. No. 194884, October 22, 2014), recognized the contrast between security of tenure and management prerogative, to wit:
“The law and jurisprudence guarantee to every employee security of tenure. This textual and the ensuing jurisprudential commitment to the cause and welfare of the working class proceed from the social justice principles of the Constitution that the Court zealously implements out of its concern for those with less in life. Thus, the Court will not hesitate to strike down as invalid any employer act that attempts to undermine workers’ tenurial security. All these the State undertakes under Article 279 (now Article 293) of the Labor Code which bar an employer from terminating the services of an employee, except for just or authorized cause and upon observance of due process.
In protecting the rights of the workers, the law, however, does not authorize the oppression or self-destruction of the employer. The constitutional commitment to the policy of social justice cannot be understood to mean that every labor dispute shall automatically be decided in favor of labor. The constitutional and legal protection equally recognize the employer’s right and prerogative to manage its operation according to reasonable standards and norms of fair play.
Accordingly, except as limited by special law, an employer is free to regulate, according to his own judgment and discretion, 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, worker supervision, layoff of workers and the discipline, dismissal and recall of workers. As a general proposition, an employer has free reign over every aspect of its business, including the dismissal of his employees as long as the exercise of its management prerogative is done reasonably, in good faith, and in a manner not otherwise intended to defeat or circumvent the rights of workers.”
Jurisprudence tells us that labor laws are not one-sided. Although the law bends over backward to accommodate the needs of the working class, not every labor dispute shall be decided in favor of labor. This is the ruling of the Supreme Court in the case of peter Angelo Lagamayo v. Cullinan Group, Inc. (G.R. No. 227718, November 11, 2021) when it held that:
“Recognizing an employer’s exercise of its management prerogatives, even in constructive dismissal cases, the employee has the burden to prove first the fact of dismissal by substantial evidence. Bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence. However, once the employee establishes a case of constructive dismissal, the employer has the burden of proving that the exercise of management prerogative is for valid or legitimate grounds, such as genuine business necessity, and not a mere subterfuge to get rid of an employee.
xxx
Meanwhile, should the employer fail to prove the existence of a genuine business necessity, the employer will be found liable for constructive dismissal. An employee who has been constructively dismissed is entitled to reinstatement without loss of seniority rights, full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement. However, if the circumstances do not warrant reinstatement, say for instance, antagonism caused a severe strain in the relationship between the employee and the employer, a more equitable disposition would be an award of separation pay in addition to the employee’s full backwages, allowances and other benefits.
Juxtaposing the rules on termination by the employer under Article 297 (formerly Article 282) of the Labor Code against constructive dismissal, the Court opines that the principles underlying these concepts are diametrically opposing. The existence of just cause for termination under the Labor Code is anchored not only on the employer’s prerogative to discipline its employees, but also on its right to reasonable returns on investment, since the law authorizes neither the oppression nor the self-destruction of the employer in protecting the rights of the working class. Labor laws are not one-sided. Although the law bends over backwards to accommodate the needs of the working class, not every labor dispute shall be decided in favor of labor. Therefore, termination by the employer of the employee for just causes enumerated under the Labor Code is valid and legal.
On the contrary, when an employee is constructively terminated, the employer forces the employee to relinquish the position he or she held by unfair or unreasonable means, thereby blatantly disregarding the need to comply with the substantive and procedural due process requirements of the law to validly terminate an employee. Otherwise stated, in constructive dismissal, the employer circumvents the due process requirements of the law in terminating an employee which effectively undermine their security of tenure. For this reason, an act amounting to constructive dismissal is considered void because it inherently contravenes the law and the State’s policy of affording protection to labor.
Contemplating on these ruminations, the Court declares that the existence of just cause for termination presupposes that the employer actually terminates the erring employee under the grounds enumerated in Article 297 (formerly Article 282) of the Labor Code. Consequently, there is no just cause for constructive dismissal. If the employer proves that a legitimate ground exists for the termination of employment of an employee such as genuine business necessity in the conduct of its affairs, then its act will amount to a valid exercise of its management prerogatives. There is no illegal dismissal in such a case. If no valid ground exists for the termination of employment of an employee, then said employee would be illegally dismissed. An employee who is constructively dismissed is an illegally dismissed employee. This presupposes a finding that no just cause exists to justify his dismissal.” (Original emphasis and citations omitted.)
Related Article/s:
What is the Right to Security of Tenure?
Limitations on Management Prerogative
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
All rights reserved.