Norkis Trading Co vs. Gnilo

Norkis Trading Co., Inc. vs. Gnilo Facts: Melvin R. Gnilo (Gnilo) was an employee of o f Norkis Trading Co, Inc. (Norkis) who had held various positions before he was eventually appointed as a Credit and Collection Manager wherein he was given travel and transportation allowance and a service car. A special audit team of Norkis found that the monthly collection reports forwarded by Gn ilo of the Norkis Installment Collectors(NIC) under his supervision were all overstated. Norkis then issued a Memorandum placing Gnilo under 15day suspension without pay, travel and transportation allowance. Subsequently, Norkis issued another Memorandum wherein Gnilo was assigned to the Marketing Division and reporting under Albos. Gnilo requested Albos to assign him as Sales Engineer or any position commensurate with his qualifications. However, Gnilo was formally appointed as Marketing Assistant . Gnilo filed a complaint for illegal suspension, constructive dismissal, non-payment of allowan ce, vacation/sick leaves, leaves, damages and attorney’s attorne y’s fees against Norkis with the Labor Arbiter. The Labor Arbiter (LA) dismissed the Complaint but upon appeal to the National Labor Relations Commission(NLRC) the NLRC reversed the decision of the LA finding that the transfer of Gnilo from the position of Credit and Collection Manager to Marketing Assistant resulted in his demotion in rank from Manager to a mere rank and file employee, which was tantamount to constructive dismissal and therefore illegal.  Norkis filed a Petition for Certiorari Certiorari with the CA but the CA affirmed the resolution of the  NLRC. Issue: Whether Gnilo’s transfer from the position ofCredit and Collection Manager to Marketing Assistant amounts to constructive dismissal. –  dismissal. – YES Held: That even though it is the prerogative of management to transfer an emplo yee from one office to another, it must not result in demotion in rank or diminution of his salary, benefits and other  privileges. A transfer is defined as a movement from one position to another which is of equivalent equivalen t rank, level or salary, without break in service. A 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. A 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.

In this case while the transfer of Gnilo from Credit and C ollection Manager to Marketing Assistant did not result in the reduction of his salary, there was a reduction in his duties and responsibilities which amounted to a demotion tantamount to a constructive dismissal. That a comparison of the two positions shows that a Credit and Collection Manager entails great duties and responsibilities and involves discretionary powers such as supervisory powers over NICs while a Marketing Assistant is clerical in nature and does not involve the exercise of discretionary powers  being a mere Staff Member to the office of the Senior Vice-President for Marketing. That there is constructive dismissal when an employee's functions, which were originally supervisory in nature, were reduced; and such reduction is not grounded on valid grounds such as genuine business necessity. Gnilo’s demotion in the nature of his functions coupled with Albos act of insensibility no doubt amounts to his constructive dismissal.