Sentinel Security v.

NLRC Doctrine: The transfer of an employee involves a lateral movement within the business or operation of the employer, without demotion in rank, diminution of benefits or, worse, suspension of employment even if temporary. The recall and transfer security guards require reassignment to another post and are not equivalent to their placement on "floating status." Off-detailing security guards for a reasonable period of six months is justified only in bona fide cases of suspension of operation, business or undertaking. Facts The complainants were employees of Sentinel [Security Agency, Inc., hereafter referred to as "the Agency"]. They were assigned to render guard duty at the premises of Philippine American Life Insurance Company at Jones Avenue, Cebu City. On December 16, 1993 Philippine American Life Insurance Company sent notice to all concerned that the Agency was again awarded the contract of security services together with a request to replace all the security guards in the company's offices at the cities of Cebu, Bacolod, Cagayan de Oro, Dipolog and Iligan. In compliance therewith the Agency issued on January 12, 1994, a Relief and Transfer Order replacing the complainants as guards of Philam and for them to be re-assigned to other clients effective January 16, 1994. As ordered, the complainants reported but were never given new assignments but instead they were told in the vernacular, "guiilisan mo kay mga tigulang naman mo" which when translated means, "you were replaced because you are already old." Precisely, the complainants lost no time but filed the subject illegal dismissal cases and prayed for payment of separation pay and other labor standard benefits. Philam and the Agency maintained there was no dismissal on the part of the complainants, constructive or otherwise, as they were protected by the contract of security services which allows the recall of security guards from their assigned posts at the will of either party. It also advanced that the complainants prematurely filed the subject cases without giving the Agency a chance to give them some assignments. On the part of the Client, it averred further that there was no employer-employee relationship between it and the complainants as the latter were merely assigned to its Cebu Branch under a job contract; that the Agency had its own separate corporate personality apart from that of Philam. Besides, it pointed out that the functions of the complainants in providing security services to Philams property were not necessary and desirable to the usual business or trade of Philam, as it could still operate and engage in its life insurance business without the security guards. In fine, Philam maintains that the complainants have no cause of action against it. NLRC held: the complainants were constructively dismissed, as "the recall of the complainants from their long time posts at the premises of the Philam without any good reason is a scheme to justify or camouflage illegal dismissal. The Issues 1) Sentinel was guilty of Illegal dismissal? 2) Is Philam solidarily liable (for 13th month pay and SIL) with Sentinel to the dismissed employees? ...

The Court's Ruling: The petition is partly meritorious. First Issue: Illegal Dismissal The relief and transfer did not per se cause the illegal dismissal The private respondents' transfer, according to Respondent Commission, was effected to circumvent the mandate of Republic Act 7641 (New Retirement Law), which by then had already taken effect, in view of the fact that the complainants had worked for both the Client and the Agency for 10 to 20 years and were nearing retirement age. With this premise, the NLRC concluded that the guards were illegally dismissed. The complainants add that the findings of the Commission match the remarks of the personnel manager of the Agency, Feliciano Marticion; that is, that they were being replaced because they were already old. We agree that the security guards were illegally dismissed, but not for the reasons given by the public respondent. The aforecited contentions of the NLRC are speculative and unsupported by the evidence on record. As the solicitor general said in his Manifestation in Lieu of Comment, the relief and transfer order was akin to placing private respondents on temporary "off-detail." Being sidelined temporarily is a standard stipulation in employment contracts, as the availability of assignment for security guards is primarily dependent on the contracts entered into by the agency with third parties. Most contracts for security services, as in this case, stipulate that the client may request the replacement of the guards assigned to it. In security agency parlance, being placed "off detail" or on "floating" status means "waiting to be posted." This circumstance is not equivalent to dismissal, so long as such status does not continue beyond a reasonable time. In the case at bar, the relief and transfer order per se did not sever the employment relationship between the complainants and the Agency. Thus, despite the fact that complainants were no longer assigned to the Philam, Article 287 of the Labor Code, as amended by RA 7641, still binds the Agency to provide them upon their reaching the retirement age of sixty to sixty-five years retirement pay or whatever else was established in the collective bargaining agreement or in any other applicable employment contract. On the other hand, Philam is not liable to the complainants for their retirement pay because of the absence of an employer-employee relationship between them. However, the Agency claims that the complainants, after being placed off-detail, abandoned their employ. The Court disagrees. Abandonment, as a just and valid cause for termination, requires a deliberate and unjustified refusal of an employee to resume his work, coupled with a clear absence of any intention of returning to his or her work. That complainants, did not pray for reinstatement is not sufficient proof of abandonment . A strong indication of the intention of complainants to resume work is their allegation that on several dates they reported to the Agency for reassignment, but were not given any. In fact, the contention of complainant is that the Agency constructively dismissed them. Abandonment has recently been ruled to be incompatible with constructive dismissal. We, thus, rule that complainants did not abandon their jobs. Illegally dismissed because the relief and transfer was not implemented legally We will now demonstrate why we believe complainants were illegally dismissed.

In several cases, the Court has recognized the prerogative of management to transfer an employee from one office to another within the same business establishment, as the exigency of the business my require, provided that the said transfer does nor result in a demotion in rank or a diminution in salary, benefits and other privileges of the employee; or is not unreasonable, inconvenient or prejudicial to the latter; or is not used as a subterfuge by the employer to rid himself of an undesirable worker. A transfer means a movement (1) from one position to another of equivalent rank, level or salary, without a break in the service; and (2) from one office to another within the same business establishment. It is distinguished from a promotion in the sense that it involves a lateral change as opposed to a scalar ascent. In this case, transfer of the complainants implied more than a relief from duty to give them time to rest a mere "changing of the guards. "Rather, their transfer connoted a reshuffling or exchange of their posts, or their reassignment to other posts, such that no security guard would be without an assignment. However, this legally recognized concept of transfer was not implemented. The Agency hired new security guards to replace the complainants, resulting in a lack of posts to which the complainants could have been reassigned. Thus, it refused to reassign Complainant Andoy when he reported for duty on February 2, 4 and 7, 1994; and merely told the other complainants on various dates from January 25 to 27, 1994 that they were already too old to be posted anywhere. The Agency now explains that since, under the law, the Agency is given a period of not more than six months to retain the complainants on floating status, the complaint for illegal dismissal is premature. This contention is incorrect. A floating status requires the dire exigency of the employer's bona fide suspension of operation, business or undertaking. In security services, this happens when the clients that do not renew their contracts with a security agency are more than those that do and the new ones that the agency gets. However, in the case at bar, the Agency was awarded a new contract by the Client. There was no surplus of security guards over available assignments. If there were, it was because the Agency hired new security guards. Thus, there was no suspension of operation, business or undertaking, bona fide or not, that would have justified placing the complainants off-detail and making them wait for a period of six months. If indeed they were merely transferred, there would have been no need to make them wait for six months. The only logical conclusion from the foregoing discussion is that the Agency illegally dismissed the complainants. Hence, as a necessary consequence, the complainants are entitled to reinstatement and back wages. However, reinstatement is no longer feasible in this case. The Agency cannot reassign them to the Client, as the former has recruited new security guards; the complainants, on the other hand, refuse to accept other assignment. Verily, complainants do not pray for reinstatement; in fact they refused to be reinstated. Such refusal is indicative of strained relations. Thus, separation pay is awarded in lieu of reinstatement. Second Issue: Philams Liability liable for SIL as an indirect employer The Client did not, as it could not, illegally dismiss the complainants. Thus, it should not be held liable for separation pay and back wages. But even if the Client is not responsible for the illegal dismissal of the complainants, it is jointly and severally liable with the Agency for the complainants' service incentive leave pay.

In Rosewood Processing, Inc. vs. National Labor Relations Commission, the Court explained that, notwithstanding the service contract between the client and the security agency, the two are solidarily liable for the proper wages prescribed by the Labor Code, pursuant to Articles 106, 107 and 109 thereof. 1 Under these provisions, the indirect employer, who is Philam in the case at bar, is jointly and severally liable with the contractor for the workers' wages, in the same manner and extent that it is liable to its direct employees. This liability of the Client covers the payment of the service incentive leave pay of the complainants during the time they were posted at the Cebu branch of the Client. As service had been rendered, the liability accrued, even if the complainants were eventually transferred or reassigned. The service incentive leave is expressly granted by these pertinent provisions of the Labor Code.2 Under the Implementing Rules and Regulations of the Labor Code, an unused service incentive leave is commutable to its money equivalent. The award of the thirteenth-month pay is deleted in view of the evidence presented by the Agency, proving that such claim has already been paid to the complainants.

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code.
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In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. . . . In such cases [labor-only contracting], the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Art. 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. Art. 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers.

Art. 95. Right to service incentive leave. (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.
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(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in establishments exempted from granting this benefit by the Secretary of Labor after considering the viability or financial condition of such establishment. (c) The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court [or] administrative action.