Phil. Am Life & Gen Insurance Co. v.

Gramaje
G.R. No. 156963
November 11, 2004
Facts: This case concerns the Phil. Am Life Company exercising its management prerogative to reassign
the petitioner from Marketing of Group Life Division of the company to Legal Department. Prior to this,
some of the top executives of the company offered her to pay substantial amount in exchange for her to
vacate her position as marketing manager. When petitioner refused to vacate, she was ordered to transfer
to Legal Department as one of the company lawyers considering that she is a lawyer herself.
The Petitioner was also denied of her application for car loan privilege and other benefits as a
result of the actions of the management. Feeling aggrieved, the petitioner filed a complaint before labor
arbiter, the proper quasi-judicial body that hear complaints relating to employer-employee relationship.
She filed an illegal constructive dismissal against the company. The labor arbiter however, rendered a
decision against the complaint declaring she was not illegally dismissed since the management merely
exercised its management prerogative.
Gramaje appealed to NLRC where it affirmed in toto the decision of the Labor Arbiter. She then
further appealed to CA where the court reversed and set aside the decision of the lower courts offering the
company to pay the complainant in lieu of reinstatement, back-wages inclusive allowances and other
benefits.
The Company at this point filed certiorari before SC assigning as error declaring the transfer to
legal department is tantamount to constructive dismissal.
The SC was not persuaded by Phil Am life. SC said that, the right and privilege of te employer to
exercise management prerogative is recognizedbut, like other rights, there are limits thereto.
Constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer
has become so unbearable to the employee leaving him with no option but to forego his employment.
Issue: Was respondent constructively dismissed or was her transfer a legitimate exercise of
management prerogative?
Ruling: Respondents transfer was not legitimate exercise of management prerogative. it may be true that
in the transfer of respondent from Pensions Department to the Legal Department, there as no demotion in
rank nor diminution of the salaries, benefits and privileges; but this is not the only standard that must be
satisfied in order to substantiate the transfer. In the pursuit of its legitimate business interests,
management has the prerogative to transfer or assign employees from one office or area of operation to
another provided there is no demotion in rank or diminution in salary, benefits, and other privileges; and
the action is not motivated by discrimination, made in bad faith, or affected as a form of punishment or
demotion without sufficient cause. Bad faith and discrimination on the part of the petitioner are profusely
perceived from its actions. Discrimination is the failure to treat all persons equally when no reasonable
distinction can be found between those favored and those not favored Art. 248 of the Labor code. Bad
faith implies a conscious ad intentional design to do wrongful act for dishonest purpose or moral
ambiguity.
The Supreme Court affirmed the decision of Court of Appeals.