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Norkis Trading Co., Inc. vs.

Gnilo

Facts:
Melvin R. Gnilo (Gnilo) was an employee of 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 Gnilo 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 allowance,
vacation/sick leaves, damages and attorney’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 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. – YES

Held:
That even though it is the prerogative of management to transfer an employee 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 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 Collection 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.

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