Diminution in Rank or Diminution of Responsibilities

Diminution in Rank or Diminution of Responsibilities

Diminution is usually associated with benefits. However, in a Supreme Court (SC) decision, the concept of diminution in rank or diminution of responsibilities was established.

In the case of Isabela-I Electric Coop, Inc. vs. Del Rosario (July 17, 2019, G.R. No. 226369), the SC discussed diminution in rank of employee whose position was changed from Internal Audit Manager to Area Manager.

Although the employee’s position bears the appellation “manager,” the responsibilities he used to discharge as manager in his former position had been significantly reduced.

The position of Management Auditor encompasses a more vast expanse in the Cooperative than the position of Area Manager/Head. Thus, the former position entails more responsibilities and requires a certain qualification that must be complied with as compared to the latter position.

Based on the position description, an Internal Audit Manager must be a Certified Public Accountant (CPA) with at least 5 years experience in auditing procedures and a holder of a master’s degree in Management or Business Administration.

On the other hand, such requirements are not mentioned in the position of Area Manager as seen in private respondent’s appointment. Thus, a non-CPA or a non-holder of a master’s degree can hold the position of Area Manager. Moreover, the Management Auditor covers the different financial aspects of the Cooperative while the Area Manager position given to private respondent is limited to collection and operation. There is a palpable diminution of responsibilities.

Without question, as an Area Head his responsibilities are limited to a specific area, in contrast to his previous position where the coverage of his responsibilities involves the entire financial transaction of the Cooperative.

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Interestingly also, the position of Area Head, where he was appointed, does not match his qualification(s) as a licensed CPA since the responsibilities attached to it consist of supervision and implementation of activities on house connection, collection, disconnection, apprehension, maintenance and operations and consumer services in his area. Visibly, the Complainant was not only demoted but placed in a position where he cannot advance and exercise his full potential and qualification.

So, what is in a name? Although respondent retained the appellation “manager,” his new rank was in fact a demotion from his former position.

More, the employer has consistently admitted that the employee is the only licensed CPA among its employees. In addition, he holds a Master’s Degree in Business Administration. The employer also concedes that the employee has been working for the company as auditor continuously for fifteen (15) years before the reorganization.

The employee has all the qualifications to continue holding the position of Management Internal Auditor, which after the reorganization, was not abolished. For no apparent reason, the company opted to appoint, even in an acting capacity, a non-CPA as Management Internal Auditor. In fine, it arbitrarily, sans any rhyme or reason peremptorily removed the employee from his post as Management Internal Auditor in the guise of a supposed reorganization and exercise of management prerogative.

The company next claims that the “totality of circumstances rule” as enunciated in Tinio v. Court of Appeals shows that the employee did not actually suffer diminution.

The SC held that the employer’s argument fails. In Tinio, the Court sustained the management’s decision to transfer Tinio to another position and area of assignment because the transfer could actually be considered a promotion. For Tinio’s transfer from the Cebu office to the Makati office entailed greater responsibilities because it would involve corporate accounts of top establishments in Makati which are significantly greater in value than the individual accounts in Visayas and Mindanao. The Court held that the transfer was even beneficial and advantageous since Tinio was being assigned the corporate accounts of the choice clients of SMART. More, the position was of the same level as Senior Manager since the skills and competencies required involved handling the accounts of top corporate clients being among the largest corporations in the country.

The situation in Tinio is not the case here. In this case, the employee’s new position entailed less responsibilities and less qualifications than those pertaining to his former position. In essence, the totality of the circumstances actually obtaining here leads to no other conclusion than that respondent was in fact demoted.

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