GIRLY G.

ICO, Petitioner,
vs.
SYSTEMS TECHNOLOGY INSTITUTE, INC., MONICO V. JACOB and PETER K.
FERNANDEZ, Respondents.
G.R. No. 185100
July 9, 2014
Facts:
-STI is an educational institution duly incorporated and organize and existing under the
Philippine laws, while Jacob and Fernandez are officers of STI the former being the
President and Chief Executive Officer (CEO) and the latter Senior Vice-President.
-Girly G. Ico on one hand degree holder with doctorate units earned was hired as Faculty
Member by STI College Makati a wholly-owned subsidiary of STI. She was later promoted
as Dean and later COO of STI-Makati.
-Sometime in July 2003 during the stint of Ico as COO of STI-Makati a plan of merger was
executed between STI and STI-Makati, whereby the latter will be absorbed to STI, which
was later approved by SEC. As a result STI College Makati ceased to exist, and STI-Makati
was placed under STIs Education Management Division.
-In a 2004 Memorandum. Petitioner was re-appointed as COO of STI-Makati, and
reporting directly to the Head thereof, herein respondent Fernandez.
-2 months after, another memorandum from STI HR Department was issued wherein the
COO position of the petitioner was to be abolished, and Ico was appointed as Compliance
Manager According to STI, the "organizational re-structuring" was undertaken "in order to
streamline operations. In the process, the positions of Chief Executive Officer and Chief
Operating Officer of STI Makati were abolished.
-Thereafter, Fernandez summons Ico accusing her of disobedience. An investigation then
was made and she was place under Preventive Suspension. Afterwards the investigating
committee found out that Ico committed grave abuse of authority, falsification, gross
dishonesty, maligning and causing intrigues, commission of acts tending to cast
negativity upon Fernandez person , and other charges, which resulted to her dismissal.
-Petitioner then file a case for Constructive illegal dismissal to Labor Arbiter She
contends that her transfer was illegal for it constituted a demotion because there was no
prior notice of her transfer, which places her in an embarrassing situation. Secondly, the
basis of her dismissal is without basis and that it was not proven by adequate evidence.
-On one hand respondent contend that the transfer of position is a result of the merger
which requires the abolition of Icos position as COO in order to streamline its operation
thus they are in good faith. It further argued that there was no demotion because the
position of COO and compliance manager is of the same rank.
-LABOR ARBITER: ruled that there was an illegally constructively and in bad faith
dismissal by respondents in Petioles legally acquired status as regular employee. It held
that petitioners transfer which STI claimed was the result of STIs restructuring was
irregular, because at the time of such transfer, the reorganization and restructuring of
STI-Makati had already been affected, and the 2004 Memorandum that was issued
confirms petitioners appointment as COO. Moreover, petitioner was appointed to the
position of Compliance Manager which did not actually exist for under STI Corporate
structure there are only two compliance manager which are already occupied. As a result
Ico was appointed to Compliance officer who in effect demoted her rank.
-NLRC: reversed Labor Arbiter Decision. It held that that any action taken by STI after the
merger can be reasonably concluded as one of the valid consequences thereof for the
regulation of manpower is a management prerogative enjoyed by STI, and it was free to
regulate according to its own discretion and judgment all aspects of petitioners
employment. In this light, and since no concrete evidence was presented by petitioner to

show that respondents acted with malice or bad faith, the NLRC held that it may not be
said that the abolition of the position of STI-Makati COO was done to unduly ease her out
of STI.
-CA; Upheld decision of NLRC
Issue: Whether or not the transfer of petitioner is a valid managerial prerogative and not
it does not result to a illegal constructive dismissal
Held:
The Supreme Court ruled in favor of the Petitioner due to the following reasons:
First the position of STI-Makati COO was actually never abolished. As a matter of
fact, soon after petitioner was removed from the position, Fernandez was appointed to
take her place as STI-Makati COO; his appointment was even publicly announced via an
official communication disseminated company-wide. Whatever the reason could be for
Fernandezs appointment as STI-Makati COO, the fact still remains that such position
continued to exist.
Second, petitioners appointment as Compliance Manager appears to be contrived
as well. At the time of petitioners appointment, there are only two Compliance Manager
Positions within STIs compliance department which were already filled up The only
positions within the department that were at the time vacant were those of Compliance
Officers, which are of lower rank. In other words, petitioner could not have been validly
appointed as Compliance Manager, a position within STI that was then very much
occupied; if ever, petitioner took the position of a mere Compliance Officer, the only
vacant position within the department.
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. Aptly called a dismissal in
disguise or an act amounting to dismissal but made to appear as if it were not,
constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility,
or disdain by an employer becomes so unbearable on the part of the employee that it
could foreclose any choice by him except to forego his continued employment.
In cases of a transfer of an employee, the rule is settled that the employer is
charged with the burden of proving that its conduct and action are for valid and
legitimate grounds such as genuine business necessity and that the transfer is not
unreasonable, inconvenient or prejudicial to the employee. If the employer cannot
overcome this burden of proof, the employees transfer shall be tantamount to unlawful
constructive dismissal.59
Thus, because STI failed to show that the transfer is unreasonable and it likewise
failed to prove that the transfer of petitioner for valid and legitimate grounds, the
transfer of petitioner can therefore be concluded as constructive dismissal and that it is
not valid managerial prerogative.