SC: Threats forcing resignation constitute illegal dismissal

The Supreme Court (SC) has ruled that threatening an employee with criminal prosecution to force a resignation constitutes constructive dismissal and is illegal.

In a 16-page decision penned by Associate Justice Ramon Paul Hernando, the SC First Division found Tri-J Marketing Inc. guilty of constructively dismissing Niño Rio Gabrillo, a team leader with more than 20 years of service.

The ruling reversed a Court of Appeals decision that found Gabrillo had abandoned his job after an audit revealed inventory discrepancies.

Employers may offer resignation as an option during an investigation, the SC said, but the decision must be entirely voluntary.

Management repeatedly pressured Gabrillo to sign a pre-drafted resignation letter under threat of criminal charges, while presenting separation pay as an “act of mercy.”

Constructive dismissal occurs when an employer makes continued employment impossible, unreasonable or unlikely, leaving the worker no real choice but to resign.

By threatening Gabrillo with criminal charges and barring him from the workplace on 11 February 2019, the company undermined its claim that he resigned voluntarily. The court called it a “dismissal in disguise.”

It rejected Tri-J’s defenses of job abandonment and loss of trust. Dismissal for breach of trust under Article 297 of the Labor Code requires substantial evidence, and “mere suspicion, speculation, or unsubstantiated accusations are insufficient,” the court said.

The court also found the company’s investigation defective. The notice to explain stated the allegations only in general terms, and management pushed Gabrillo to resign instead of completing the disciplinary process.

With reinstatement no longer feasible, the court ordered Tri-J to pay full back wages, separation pay of one month’s salary for every year of service, P30,000 each in moral and exemplary damages, and attorney’s fees of 10 percent of the total award, plus 6 percent annual legal interest.