G.R. No. 154072 December 3, 2002
ALFREDO S. PAGUIO, petitioner, vs. PHILIPPINE LONG DISTANCE TELEPHONE CO., INC., ENRIQUE D. PEREZ, RICARDO P. ZARATE, ISABELO FERIDO, and RODOLFO R. SANTOS, respondents.

FACTS

Petitioner Alfredo S. Paguio was the Head of PLDT’s Garnet Exchange. He repeatedly sent memoranda to his superior, respondent Rodolfo R. Santos, criticizing the company’s performance assessment program for being unfair, particularly for not accounting for the disparity between old and new facilities. Despite his criticisms, his exchange performed well. In January 1997, respondent Santos reassigned petitioner to a position in the Office of the GMM East Center Head for Special Assignments. Petitioner protested, requesting a formal hearing and filing a complaint against Santos for grave abuse of discretion. Respondents Ferido and Perez affirmed the transfer, stating it was based on Santos’s conclusion that petitioner was “not a team player” and was not a disciplinary action requiring investigation. Petitioner filed a complaint for illegal demotion. The Labor Arbiter dismissed the complaint, upholding the transfer as a management prerogative. The NLRC reversed, finding the transfer illegal as it was based on unjust grounds and resulted in a diminution of benefits by placing him in a functionless position with no opportunity for promotion or salary increases. The NLRC ordered his reinstatement and payment of a salary increase award. The Court of Appeals affirmed the illegality of the transfer and the order for reinstatement to an equivalent position but deleted the award for salary increases, finding no basis for it. Petitioner sought review of the deletion of the monetary award.

ISSUE

Whether the Court of Appeals erred in deleting the award of salary increases to the petitioner.

RULING

The Supreme Court affirmed the decision of the Court of Appeals with modification. It held that the petitioner’s transfer was illegal as it was not justified by the circumstances and was done in bad faith, constituting constructive dismissal. The Court agreed with the deletion of the award for salary increases starting January 1997, as such increases were based on performance and accomplishments, and no presumption existed that petitioner would have continued to perform outstandingly. However, the Court awarded moral damages (P50,000.00) and exemplary damages (P20,000.00) due to the bad faith exhibited by the respondents in effecting the illegal transfer, and attorney’s fees equivalent to 10% of the total award. Respondents were ordered to reinstate petitioner to an equivalent position of Senior Manager.