The Supreme Court, in this case, clarified the distinction between voluntary resignation and constructive dismissal. It emphasized that an employee who resigns must prove that their resignation was involuntary and a result of coercion or intimidation by the employer. This ruling protects employers’ prerogatives to make reasonable business decisions while ensuring employees are not forced to resign due to unbearable working conditions. The Court underscored that not every inconvenience or disadvantage suffered by an employee amounts to constructive dismissal, affirming the importance of substantial evidence in labor disputes.

The Case of the Disappearing Load: Did a Teacher Truly Resign, or Was She Pushed?

This case revolves around Leticia P. Perez, a long-time teacher at Diliman Preparatory School (the School). After two separate incidents – one involving missing magazine subscription payments and another concerning alleged cheating during an exam – Perez faced suspension. Upon returning from her suspension, instead of her usual Grade V teaching load, she was assigned to a “floating” position. Feeling demoted and with longer working hours, she resigned, citing personal reasons. Later, she claimed constructive dismissal and sought separation pay. The central legal question: Was Perez’s resignation voluntary, or was it effectively forced, entitling her to separation benefits?

The Labor Arbiter (LA) initially granted Perez separation pay, believing the School had a practice of granting it to resigning employees. However, the LA found no constructive dismissal. The National Labor Relations Commission (NLRC) modified this decision, siding with Perez on the constructive dismissal claim due to her being placed on floating status. The Court of Appeals (CA) affirmed the NLRC’s ruling, agreeing that Perez’s reassignment was a demotion constituting an additional penalty. Dissatisfied, the School elevated the case to the Supreme Court.

The Supreme Court began by clarifying the concept of “floating status”. It emphasized that under Article 286 of the Labor Code, floating status refers to a temporary layoff due to a bonafide suspension of business operations, not exceeding six months. An employee in such a status typically does not receive a salary. In Perez’s case, the Court noted that there was no suspension of business operations, and her salary and benefits remained the same, thus, she was not technically under a floating status as defined by law. The Court then addressed the core issue of constructive dismissal.

To establish constructive dismissal, an employee must show that the employer’s actions rendered continued employment impossible, unreasonable, or unlikely. This includes scenarios involving demotion, a decrease in pay, or other benefits. It essentially occurs when the employer creates an unbearable work environment, forcing the employee to resign. The Court highlighted the principle that resignation is inherently voluntary, and therefore, the employee bears the burden of proving that their resignation was, in fact, a case of constructive dismissal resulting from coercion or intimidation.

The Supreme Court disagreed with the CA’s assessment that Perez was constructively dismissed. The School explained that Perez was reassigned, not demoted, because the school year had already commenced when she was due to return from her suspension. As the School was responsible for manning classes with the correct number of teachers before the beginning of classes, it would not have been immediately possible to give her a regular teaching load. The court reiterated the employer’s prerogative to manage employees’ work assignments. The Court held that the right to security of tenure does not guarantee employees a vested right to their specific positions, preventing management from making necessary changes or transfers.

In this case, the School said that it would have given Perez a regular teaching load the following semester if she had not resigned. Her salary and benefits would have stayed the same despite the new assignment. The court thus stated that Perez had chosen to resign. With respect to Perez’s complaint about having to work longer hours as a substitute teacher, the School explained that the hours are simply a consequence of that position. Teachers with regular teaching loads also need time to prepare lesson plans, tests, and grading outside of regular school hours. Therefore, according to the School, simply working inside the classroom for shorter hours did not mean that teachers actually worked fewer hours.

The Court also addressed Perez’s claim for separation pay. Generally, an employee who voluntarily resigns is not entitled to separation pay unless it is stipulated in the employment contract, the collective bargaining agreement (CBA), or an established employer practice or policy. For a practice to be considered regular, the employee must provide substantial evidence that the benefit has been given over a long period of time consistently and deliberately. Perez presented an affidavit from a former co-worker who had resigned. However, the School’s separation benefits given to the co-worker did not indicate that this was the School’s regular practice or policy. The former co-worker was also given the option to resign in order to avoid termination, so this was different from Perez’s situation.

Therefore, the Supreme Court concluded that Perez was not entitled to separation pay since she voluntarily resigned from her position. There was also no evidence of an employment contract, or CBA that would allow her to collect separation pay. Finally, the Court addressed the School’s request for moral damages because Perez filed the lawsuit. The Court stated that the moral damages could not be automatically granted, and that there must be proof of the damages with respect to the defendant’s actions. For exemplary damages, there was nothing to base this on as it is supplemental to moral damages. Finally, with respect to attorney’s fees, the Court stated that Perez was not compelled by malice or bad faith in filing her complaint, and she truly believed she could get separation pay.

FAQs

What was the key issue in this case?	The key issue was whether Leticia Perez’s resignation from Diliman Preparatory School constituted a voluntary resignation or a constructive dismissal, entitling her to separation pay. The court needed to determine if the school’s actions created an unbearable work environment that forced her to resign.
What is constructive dismissal?	Constructive dismissal occurs when an employer’s actions make continued employment impossible, unreasonable, or unlikely for the employee. This can include demotion, reduction in pay, or creating an intolerable work environment that forces the employee to resign.
What is the significance of “floating status” in this case?	“Floating status” typically refers to a temporary layoff due to suspension of business operations. The Court clarified that Perez was not truly in floating status because the school’s operations continued, and her salary remained the same, differentiating it from the legal definition.
Who has the burden of proof in a constructive dismissal case?	The employee bears the burden of proving that their resignation was not voluntary but a result of coercion or intimidation by the employer. This means the employee must present evidence that the employer created intolerable working conditions.
Is an employee who resigns generally entitled to separation pay?	No, an employee who voluntarily resigns is generally not entitled to separation pay. Exceptions exist if it’s stipulated in the employment contract or CBA, or if the employer has an established practice or policy of providing it.
What must an employee prove to show an employer has a practice of granting separation pay?	The employee must provide substantial evidence that the employer has consistently and deliberately granted separation pay over a long period. A one-time occurrence does not establish a regular practice or policy.
Why were moral damages not awarded to the school?	Moral damages are not automatically granted and require proof of the existence of the factual basis of the damage and its causal relation to the defendant’s acts. The school failed to provide proof that Perez’s claim caused them damage.
What was the court’s final ruling in this case?	The Supreme Court ruled that Leticia Perez voluntarily resigned and was not constructively dismissed. As a result, she was not entitled to separation pay, reversing the Court of Appeals’ decision.

This case emphasizes the importance of clearly distinguishing between voluntary resignation and constructive dismissal. Employees who claim constructive dismissal must present solid evidence that their employer created an intolerable work environment that forced them to resign. Employers, on the other hand, must ensure that their actions are based on legitimate business reasons and do not create an environment that coerces employees into resigning.

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: ALICIA M.L. COSETENG AND DILIMAN PREPARATORY SCHOOL vs. LETICIA P. PEREZ, G.R. No. 185938, September 06, 2017