The Supreme Court held that security guards placed on floating status for more than six months after the termination of their security contract with a client are considered constructively dismissed. This ruling affirms the right of workers to security of tenure, ensuring they can only be dismissed for just or authorized causes, following due process. The decision clarifies the remedies available to illegally dismissed employees, including reinstatement, backwages, and separation pay, emphasizing that the award of one does not preclude the others.

Floating Status or Forced Exit: Protecting Security Guards’ Employment Rights

The case revolves around Venancio S. Reyes, Edgardo C. Dabbay, Walter A. Vigilia, Nemecio M. Calanno, Rogelio A. Supe, Jr., Roland R. Trinidad, and Aurelio A. Duldulao, who were employed as security guards by RP Guardians Security Agency, Inc. (respondent). Their employment was disrupted when the security contract between RP Guardians and Banco Filipino Savings and Mortgage Bank (Banco Filipino) ended. The security guards were then placed on floating status, awaiting new assignments. After an extended period without new postings, the guards filed a complaint for constructive dismissal, leading to a legal battle that reached the Supreme Court. The central legal question is whether the prolonged floating status constituted constructive dismissal and what remedies the employees were entitled to.

The Labor Arbiter (LA) initially ruled in favor of the security guards, awarding separation pay, backwages, refund of trust fund contributions, and damages. The National Labor Relations Commission (NLRC) affirmed the LA’s decision but removed the award for moral and exemplary damages. The Court of Appeals (CA) initially upheld the NLRC’s decision but later modified it, reducing the separation pay and trust fund refund, and deleting the backwages and attorney’s fees. This modification prompted the security guards to appeal to the Supreme Court, arguing that the CA erred in altering the NLRC’s original decision.

The Supreme Court emphasized the workers’ right to security of tenure, as guaranteed by the Constitution. The Court cited Article 13, Section 3 of the Constitution, which states:

“The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law.

The Court stated that employees can only be dismissed for just or authorized causes, with due process of law, in compliance with Article 277 of the Labor Code. The Court recognized that while temporary displacement is allowed when a client terminates a security agency’s contract, prolonging this status beyond a reasonable period can lead to constructive dismissal. The Court found that the prolonged floating status of the security guards, exceeding six months, constituted constructive dismissal, emphasizing that the respondent failed to provide them with new assignments within a reasonable time frame.

In this case, the Supreme Court reiterated the remedies available to an illegally dismissed employee, including reinstatement and backwages. The Court explained that reinstatement and backwages are distinct reliefs, with reinstatement restoring the employee to their previous position and backwages compensating for lost income. The Court cited the case of Aliling v. Feliciano, which reiterated the principles laid down in Golden Ace Builders v. Talde:

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to payment of backwages.

The Supreme Court differentiated the separation pay due to illegal dismissal from the separation pay provided under Section 6.5 (4) of Department Order No. 14 (DOLE D.O. No. 14). DOLE D.O. No. 14 applies to situations where termination is due to authorized causes such as retrenchment, closure of business, or prolonged lack of service assignments, entitling the employee to one-half month’s pay for every year of service. However, the Court emphasized that in cases of illegal dismissal, the employee is entitled to one month’s pay for every year of service.

The ruling clarifies that the termination of employment due to redundancy or retrenchment (authorized causes) differs significantly from illegal dismissal, where the employee is entitled to a more substantial separation pay. The court noted that since reinstatement was not possible due to the closure of the respondent’s business, the security guards were entitled to backwages and separation pay at the rate of one month for every year of service, in lieu of reinstatement. Additionally, the Court addressed the claim for attorney’s fees, affirming that the petitioners were entitled to attorney’s fees equivalent to ten percent (10%) of the monetary award, as they were compelled to file an action for the recovery of their lawful wages and benefits.

Lastly, regarding the refund of the trust fund contribution, the Court noted that the deducted amounts varied among the petitioners. Therefore, the computation of the refund was referred back to the Labor Arbiter for a detailed calculation. The Supreme Court reversed the Court of Appeals’ Amended Decision and reinstated the NLRC’s decision, emphasizing the importance of protecting workers’ rights against illegal dismissal.

FAQs

What was the key issue in this case?	The key issue was whether the prolonged floating status of security guards after the termination of a security contract constituted constructive dismissal, and what remedies they were entitled to.
What is constructive dismissal?	Constructive dismissal occurs when an employer’s actions make continued employment unbearable or impossible, forcing the employee to resign. In this case, the prolonged floating status was considered a form of constructive dismissal.
What is the floating status of a security guard?	Floating status refers to a temporary off-detail or displacement of a security guard, usually when a client’s contract ends and there is no immediate new post available.
How long can a security guard be on floating status?	A security guard’s floating status should not exceed six months. If it lasts longer, the employee may be considered constructively dismissed.
What are the remedies for illegal dismissal?	Remedies for illegal dismissal include reinstatement (if feasible), backwages (from the time of dismissal until reinstatement), and separation pay (if reinstatement is not possible).
How is separation pay calculated in cases of illegal dismissal?	In cases of illegal dismissal, separation pay is typically calculated as one month’s salary for every year of service.
What is the difference between separation pay for authorized causes and illegal dismissal?	Separation pay for authorized causes (e.g., retrenchment) is usually one-half month’s pay for every year of service, while for illegal dismissal, it is one month’s pay for every year of service.
Are illegally dismissed employees entitled to attorney’s fees?	Yes, employees who are forced to file a case to recover their lawful wages and benefits are typically entitled to attorney’s fees, often around 10% of the monetary award.
What does the Constitution say about the rights of workers?	The Constitution guarantees the rights of all workers to security of tenure, humane conditions of work, and a living wage, ensuring full protection to labor.

This case underscores the importance of security of tenure for employees in the Philippines, particularly those in the security services industry. The Supreme Court’s decision reinforces the principle that employers must adhere to due process and provide just or authorized causes for dismissal. Failure to do so can result in significant liabilities, including backwages, separation pay, and attorney’s fees, ensuring that workers are adequately compensated for the loss of their employment.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Reyes vs. RP Guardians, G.R. No. 193756, April 10, 2013