Case Digest: Coca-Cola v. Del Villar

G.R. No. 163091: October 6, 2010




In 1992, as part of the reorganization of the Company, Del Villar became the Transportation Services Manager, under the Business Logistic Directorate, headed by Director Edgardo I. San Juan (San Juan). As Transportation Services Manager, Del Villar prepares the budget for the vehicles of the Company nationwide.

While serving as Transportation Services Manager, Del Villar submitted a Report to the Company President, Natale J. Di Cosmo (Di Cosmo), detailing an alleged fraudulent scheme undertaken by certain Company officials in conspiracy with local truck manufacturers, overpricing the trucks purchased by the Company by as much asP70,000.00 each. In the same Report, Del Villar implicated San Juan and Jose L. Pineda, Jr. (Pineda), among other Company officials, as part of the conspiracy.

After the Company embarked on a reorganization of the Business Logistic Directorate, was was then appointed as the Corporate Purchasing and Materials Control Manager, while Del Villar as Pinedas Staff Assistant.

Seven months after he submitted his report on the fraudulent scheme, Del Villar received a memorandum from San Juan, informing him of his designation as Staff Assistant to the Corporate Purchasing and Materials Control Manager. With this new assignment, Del Villar ceased to be entitled to the benefits accruing to an S-7 position under existing company rules and policies and he was ordered to turn over the vehicle assigned to him as Transportation Services Manager to Pineda.

Del Villar believed that he was demoted by the Company to force him to resign. Unable to endure any further the harassment, Del Villar filed with the Arbitration Branch of the NLRC on November 11, 1996 a complaint against the Company for illegal demotion and forfeiture of company privileges.

The Company filed a Motion to Dismiss, instead of a position paper, praying for the dismissal of Del Villars complaint on the ground that Del Villar had no cause of action.

The Labor Arbiter rendered a Decision in Del Villars favor. The Labor Arbiter held that the allegations in Del Villars complaint sufficiently presented a cause of action against the Company. The company appealed to the NLRC. Pending the appeal, Del Villar received a letter from the company, stating that his services are no longer needed by the company. Thereafter, the NLRC reversed the ruling of the LA. Unsatisfied, Del Villar brought his case before the Court of Appealsviaa Petition for Certiorari.

The appellate court ruled in favor of Del Villar. Petitioner filed a motion for reconsideration but the same was denied. Hence, this petition.
Whether or not Del Villar was demoted and the company acted in bad faith


In the pursuit of its legitimate business interest, 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 of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause.

In the case at bar, there is no dispute that Del Villar was transferred by the Company from the position of Transportation Services Manager to the position of Staff Assistant to the Corporate Purchasing and Materials Control Manager. The burden thus falls upon the Company to prove that Del Villars transfer was not tantamount to constructive dismissal. After a careful scrutiny of the records, we agree with the Labor Arbiter and the Court of Appeals that the Company failed to discharge this burden of proof.

The Company and its officials attempt to justify the transfer of Del Villar by alleging his unsatisfactory performance as Transportation Services Manager. The dismal performance evaluations of Del Villar were prepared by San Juan and Pineda after Del Villar already implicated his two superiors in his Report dated January 4, 1996 in an alleged fraudulent scheme against the Company. More importantly, we give weight to the following instances establishing that Del Villar was not merely transferred from the position of Transportation Services Manager to the position of Staff Assistant to the Corporate Purchasing and Materials Control Manager; he was evidently demoted.

A transfer is a movement from one position to another which is of equivalent rank, level or salary, without break in service. Promotion, on the other hand, is the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. Conversely, demotion involves a situation where 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.

Del Villars demotion is readily apparent in his new designation. Formerly, he was the Transportation Services Manager; then he was made a Staff Assistant a subordinate to another manager, particularly, the Corporate Purchasing and Materials Control Manager.

The two posts are not of the same weight in terms of duties and responsibilities. Del Villars position as Transportation Services Manager involved a high degree of responsibility, he being in charge of preparing the budget for all of the vehicles of the Company nationwide. As Staff Assistant of the Corporate Purchasing and Materials Control Manager, Del Villar contended that he was not assigned any meaningful work at all. The Company utterly failed to rebut Del Villars contention. It did not even present, at the very least, the job description of such a Staff Assistant.

While Del Villar's transfer did not result in the reduction of his salary, there was a diminution in his benefits. The Company admits that as Staff Assistant of the Corporate Purchasing and Materials Control Manager, Del Villar could no longer enjoy the use of a company car, gasoline allowance, and annual foreign travel, which Del Villar previously enjoyed as Transportation Services Manager.

It was not bad enough that Del Villar was demoted, but he was even placed by the Company under the control and supervision of Pineda as the latters Staff Assistant. To recall, Pineda was one of the Company officials who Del Villar accused of defrauding the Company in his Report.


Redundancy, for purposes of the Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise.

The wisdom or soundness of this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act. In other words, it is not enough for a company to merely declare that it has become overmanned. It must produce adequate proof of such redundancy to justify the dismissal of the affected employees.

In this case, other than its own bare and self-serving allegation that Del Villars position as Staff Assistant of Corporate Purchasing and Materials Control Manager had already become redundant, no other evidence was presented by the Company. Neither did the Company present proof that it had complied with the procedural requirement in Article 283 of prior notice to the Department of Labor and Employment (DOLE) of the termination of Del Villar's employment due to redundancy one month prior to May 31, 1998.

There being no authorized cause for the termination of Del Villar's employment, then he was illegally dismissed.

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