Case Digest: Nippon Housing Philippines v. Leynes

G.R. No. 177816 : August 3, 2011




Nippon Housing Philippines, Inc. (NPHI) hired respondent Maiah Angela Leyneson 26 March 2001 for the position of Property Manager.

On 6 February 2002, Leynes had a misunderstanding with Engr. Honesto Cantuba, the Building Engineer assigned at Bay Gardens Condominium Project (the Project), regarding the extension of the latter working hours. Aside from instructing the security guards to bar Engr. Cantuba from entry into the Project and to tell him to report to the NHPI main office in Makati, Leynes also sent a letter dated 8 February 2002 by telefax to Joel Reyes, NHPI HR Head, apprising the latter of Cantuba supposed insubordination and disrespectful conduct. With Engr. Cantuba submission of a reply in turn accusing Leynes of pride, conceit and poor managerial skills, Hiroshi Takada, NHPI VP, went on to issue the 12 February 2002 memorandum, attributing the incident to "simple personal differences" and directing Leynes to allow Engr. Cantuba to report back for work.

Disappointed with the foregoing management decision, Leynes submitted to a letter asking for an emergency leave of absence for the supposed purpose of coordinating with her lawyer regarding her resignation letter. While NHPI offered the Property Manager position to Engr. Carlos Jose on 13 February 2002 as a consequence Leynessignification of her intention to resign, it also appears that Leynes sent another letter to Reyes by telefax on the same day, expressing her intention to return to work on 15 February 2002 and to call off her planned resignation upon the advice of her lawyer. On 22 February 2002, Leynes was further served with a letter and memorandum relieving her from her position and directing her to report to NHPI main office while she was on floating status.

Aggrieved, Leynes lost no time in filing against NHPI and its above-named officers a complaint for illegal dismissal, unpaid salaries, benefits, damages and attorney fees before the NLRC. NHPI and its officers asserted that the management exercise of the prerogative to put an employee on floating status for a period not exceeding six months was justified in view of her threatened resignation from her position and BGCC request for her replacement.During the pendency of the case, however, Reyes eventually served the DOLE and Leynes with a notice terminating her services effective 22 August 2002, on the ground of redundancy or lack of a posting commensurate to her position at the Project.Leynes was offered by NHPI the sum ofP28,188.16 representing her unpaid wages, proportionate 13th month pay, tax refund and service incentive leave pay (SILP).

The LA found that NHPI act of putting Leynes on floating status was equivalent to termination from employment without just cause and compliance with the twin requirements of notice and hearing.

On appeal, the NLRC reversed the LA decision. Leynes elevated the case to the CA on a Rule 65 petition for certiorari and the CA reversed the NLRC decision.


Whether or not the CA erred in finding that Leynes was constructively dismissed when she was placed on floating status prior to her termination from employment on the ground of redundancy?


Although the CA correctly found that the record is bereft of any showing that Leynes was unacceptable to BGCC, the evidence the parties adduced a quo clearly indicates that petitioners were not in bad faith when they placed the former under floating status. Disgruntled by NHPI countermanding of her decision to bar Engr. Cantuba from the Project, Leynes twice signified her intention to resign from her position. In her application letter for an immediate emergency leave, Leynes also distinctly expressed her dissatisfaction over NHPI resolution of her dispute with Engr. Cantuba and announced her plan of coordinating with her lawyer regarding her resignation letter.

In view of the sensitive nature of Leynes position and the critical stage of the Project business development, NHPI was constrained to relay the situation to BGCC which, in turn, requested the immediate adoption of remedial measures from Takada, including the appointment of a new Property Manager for the Project. Upon BGCC recommendation, NHPI consequently hired Engr. Jose on 13 February 2002 as Leynes replacement. Far from being the indication of bad faith the CA construed the same to be, these factual antecedents suggest that NHPI immediate hiring of Engr. Jose as the new Property Manager for the Project was brought about by Leynesown rash announcement of her intention to resign from her position. Although she subsequently changed her mind and sent Reyes a letter by telefax on 13 February 2002 announcing the reconsideration of her planned resignation and her intention to return to work on 15 February 2002, Leynes evidently had only herself to blame for precipitately setting in motion the events which led to NHPI hiring of her own replacement.

The record, moreover, shows that NHPI simply placed her on floating status "until such time that another project could be secured" for her. Traditionally invoked by security agencies when guards are temporarily sidelined from duty while waiting to be transferred or assigned to a new post or client, Article 286 of the Labor Code has been applied to other industries when, as a consequence of the bona fide suspension of the operation of a business or undertaking, an employer is constrained to put employees on floating status for a period not exceeding six months.

Considering that even labor laws discourage intrusion in the employer's judgment concerning the conduct of their business, courts often decline to interfere in their legitimate business decisions,absent showing of illegality, bad faith or arbitrariness. Indeed, the right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them.The record shows that Leynes filed the complaint for actual illegal dismissal from which the case originated on 22 February 2002 or immediately upon being placed on floating status as a consequence of NHPI hiring of a new Property Manager for the Project. The rule is settled, however, that "off-detailing" is not equivalent to dismissal, so long as such status does not continue beyond a reasonable time and that it is only when such a "floating status" lasts for more than six months that the employee may be considered to have been constructively dismissed. A complaint for illegal dismissal filed prior to the lapse of said six-month and/or the actual dismissal of the employee is generally considered as prematurely filed.

Viewed in the light of the foregoing factual antecedents, the Court finds that the CA reversibly erred in holding petitioners liable for constructively dismissing Leynes from her employment. There is said to be constructive dismissal when an act of clear discrimination, insensitivity or disdain on the part of the employer has become so unbearable as to leave an employee with no choice but to forego continued employment. 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 and a diminution in pay. Stated otherwise, it is a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not.

With no other client aside from BGCC for the building management side of its business, the Court finds that NHPI was acting well within its prerogatives when it eventually terminated Leynesservices on the ground of redundancy. One of the recognized authorized causes for the termination of employment, redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise. A redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company or phasing out of service activity priorly undertaken by the business.It has been held that the exercise of business judgment to characterize an employee service as no longer necessary or sustainable is not subject to discretionary review where, as here, it is exercised there is no showing of violation of the law or arbitrariness or malice on the part of the employer.

Having been validly terminated on the ground of redundancy, Leynes is entitled to separation pay equivalent to one-month salary for every year of service but not to the backwages adjudicated in her favor by the Labor Arbiter.