Norkis Trading vs Melvin Gnilo

June 19, 2011

Labor Standards – Constructive Dismissal – Invalid Practice of Management Rights

Gnilo was the Credit and Collection Manager of Norkis Trading and is in charge of the Albay and Catanduanes branches of the company. In 2000, Gnilo was found to be submitting overstated reports about his area of management which misled the management into believing that Gnilo was doing a good job. He was subsequently transferred from his position to being the marketing assistant of the company’s senior VP Albos. Gnilo took the position under protest. He sued Norkis until the case reached the NLRC. The NLRC ruled that the transfer is actually a constructive dismissal. Norkis assailed the decision of the NLRC alleging that Gnilo’s previous and current position in the company is of equal rank.

ISSUE: Whether or not the transfer of Gnilo from being a Collections Manager to a Marketing Assistant constitutes constructive dismissal.

HELD: Yes.  While the transfer of respondent 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 as correctly held by the NLRC. As Credit and Collection Manager, Gnilo was clothed with all the duties and responsibilities of a managerial employee. On the other hand, the work of a Marketing Assistant is clerical in nature, which does not involve the exercise of any discretion. Such job entails mere data gathering on vital marketing informations relevant to Gnilo’s motorcycles and making reports to his direct supervisor. He became a mere staff member in the office of the Senior Vice-President for Marketing.


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