A situation like this hinges on whether or not there was constructive dismissal.

Constructive dismissal is an involuntary resignation by the employee due to the harsh, hostile, and unfavorable conditions set by the employer and which arises when a clear discrimination, insensibility, or disdain by an employer exists and has become unbearable to the employee.

Constructive dismissal exists where there is a 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.^[1]

This means that there is constructive dismissal when an employee, without either due process or valid cause, is being transferred to a lower position from that which he currently holds.

In this situation, the employer must be able to prove that there was no constructive dismissal.

But the employer has a resignation letter signed by the employee.

Not necessarily. The employer should not rely on the mere fact of a resignation letter. The Supreme Court has ruled that a resignation letter alone does not suffice in these circumstances.

The fact of filing a resignation letter alone does not shift the burden of proving that the employee’s dismissal was for a just and valid cause from the employer to the employee. In Mora v. Avesco, we ruled that should the employer interpose the defense of resignation, it is still incumbent upon the employer to prove that the employee voluntarily resigned.^[2]

Should an employer interpose the defense of resignation in an illegal dismissal case, it is incumbent on the employer to prove not only the overt act of resignation but also the employee’s willing intent to resign, that is, that the act was voluntary.^[3]

Let’s say that the resignation letter signed by the employee also thanks the employer for the opportunity of having worked at the company. The resignation letter reads:

Dear Sir,

It is with much reluctance and regret that I must ask to be released from my position of Sales Engineer at Avesco Marketing. For the past seven years, I cannot forget how much this company has meant to me.

With this regard, I’m tendering my resignation effective April 25, 2003. Please extend to Mr. Jimmy Tang my appreciation of his kindness during the time I served.

Is this proof positive that he resigned voluntarily?

Again, not necessarily. The totality of the circumstances will be taken into account.

Polite language in a resignation letter is to be expected in view of its possible professional repercussions in the future. But that an employee was being civil and professional in a resignation letter does not preclude that he was not coerced in the circumstances.

The Supreme Court has rejected mere reliance on the language of a resignation letter in a situation like this:

… While resignation letters containing words of gratitude may indicate that the employees were not coerced into resignation, this fact alone is not conclusive proof that they intelligently, freely and voluntarily resigned. To rule that resignation letters couched in terms of gratitude are, by themselves, conclusive proof that the employees intended to relinquish their posts would open the floodgates to possible abuse. In order to withstand the test of validity, resignations must be made voluntarily and with the intention of relinquishing the office, coupled with an act of relinquishment. Therefore, in order to determine whether the employees truly intended to resign from their respective posts, we cannot merely rely on the tenor of the resignation letters but must take into consideration the totality of circumstances in each particular case.^[4]

Constructive dismissal includes situations where the employee submitted a courtesy resignation letter because it was demanded of him even when he did not wish to leave his post. These situations are akin to that in ICT Marketing Services, Inc. vs. Sales where the Supreme Court ruled that:

[P]etitioner immediately filed a complaint for illegal dismissal. Resignation, it has been held, is inconsistent with the filing of a complaint. Thus, private respondent corporation’s mere assertion that petitioner voluntarily resigned without offering convincing evidence to prove it, is not sufficient to discharge the burden of proving such an assertion. It is worthy to note that the fact of filing a resignation letter alone does not shift the burden of proof and it is still incumbent upon the employer to prove that the employee voluntarily resigned.

Therefore, we believe and so hold that petitioner was constructively dismissed from employment. Constructive dismissal exists when the resignation on the part of the employee was involuntary due to the harsh, hostile and unfavorable conditions set by the employer. The test for constructive dismissal is whether a reasonable person in the employee’s position would feel compelled to give up his employment under the prevailing circumstances. With the decision of the private respondent corporation to transfer and to thereafter placed [sic] her on floating status, petitioner felt that she was being discriminated and this perception compelled her to resign. It is clear from her resignation letter that the petitioner felt oppressed by the situation created by the private respondent corporation, and this forced her to surrender her position.^[5]

The text of the resignation letter can, in fact, offer other clues which show that the resignation was effectively imposed by the employer on the employee.

For example, if the resignation letter itself alludes to circumstances supportive of the claim of constructive dismissal, this can be held against the employer.

Whether or not there was due process within the employer’s disciplinary system can also be an important indicator. This is because ordinary considerations of fairness are very telling indicators of whether or not management prerogatives were validly exercised.

This leads us to ask certain questions.

For example, was the employee afforded the right to address the issues which are the cause for the demotion?

Due process should be followed. If, without due process, an employee is removed from his position and offered only a transfer to a lower ranked position, this does indicate constructive dismissal.^[6]

Arbitrariness or unfairness by the employer can show that there was not resignation, but constructive dismissal. There is no abandonment of employment nor a resignation in the real sense, but instead constructive dismissal, defined as an involuntary resignation resorted to when — under these circumstances — continued employment is rendered impossible, unreasonable or unlikely.^[7]

There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any choice by him except to forego his continued employment. It 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.^[8]

The law respects that there are managerial prerogatives to transfer an employee from one office to another within the business establishment, but these prerogatives are subject to clear limitations provided by law. Such prerogatives do not allow a demotion in rank or diminution of salary, benefits and other privileges, and the action must not be motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause.

The employer bears the burden of showing that the transfer is not unreasonable, inconvenient or prejudicial to the employee; and does not involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to overcome this burden of proof, the employee’s transfer shall be tantamount to constructive dismissal.

Constructive dismissal is defined as quitting because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee, leaving him with no option but to forego his continued employment.

A transfer is defined as 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 in which 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.^[9]

Removing an employee from his position should be supported by valid reasons and follow due process or else it will be questioned for violating labor law. Documentation of these reasons and following due process are important in order for an employer to overcome claims of constructive dismissal.

To avoid these charges, it is important that the employer have clear disciplinary processes in place. It is equally important that these processes be followed.

 

Atty. Francesco C. Britanico

References

[1] SME Bank, Inc. vs. De Guzman, G.R. No. 184517, October 8, 2013.
[2] Peñaflor vs. Outdoor Clothing Manufacturing Corporation, G.R. No. 177114 , April 13, 2010 citing Mora vs. Avesco, G.R. No. 177414, November 14, 2008, 571 SCRA 226.
[3] Mora vs. Avesco, supra.
[4] SME Bank, Inc. vs. De Guzman, G.R. No. 184517, October 8, 2013.
[5] ICT Marketing Services, Inc. vs. Sales, G.R. 202090, September 9, 2015.
[6] McMer Corporation, Inc. vs. NLRC, G.R. No. 193421, June 4, 2014.
[7] Francisco vs. NLRC, G.R. No. 170087, August 31, 2006 citing Globe Telecom, Inc. v. Florendo-Flores, 438 Phil. 756 (2002).
[8] Dreamland Hotel Resort vs. Johnson, G.R. No. 191455, March 12, 2014.
[9] Norkis Trading Co. Inc. vs. Gnilo, G.R. No. 159730, February 11, 2008.