In Exocet Security and Allied Services Corporation v. Serrano, the Supreme Court addressed whether a security guard was constructively dismissed after being placed on floating status and refusing a reassignment. The Court ruled that the security guard was not constructively dismissed because the employer offered him a suitable alternative assignment, which he declined based on personal preference. This decision clarifies that while security agencies must reassign guards within a reasonable time, guards cannot indefinitely refuse assignments that are equivalent in pay and rank simply due to personal preference. The ruling balances the security of tenure with the employer’s prerogative to manage its workforce, setting a precedent for similar cases in the security services industry.

When ‘VIP’ Expectations Clash with Available Security Roles

Exocet Security and Allied Services Corporation, a provider of security personnel, assigned Armando D. Serrano as a close-in security guard for JG Summit Holdings Inc. Serrano’s role involved protecting high-ranking corporate officers. After twelve years, Serrano was relieved from his post by JG Summit, leading to a period where Exocet could not immediately reassign him. Serrano then filed a complaint for illegal dismissal, claiming constructive dismissal due to the prolonged lack of assignment. The central legal question revolves around whether Exocet’s failure to provide Serrano with a VIP security assignment within six months constituted constructive dismissal, entitling him to separation pay and backwages.

The Labor Arbiter initially sided with Serrano, deeming the prolonged floating status as constructive dismissal and ordering Exocet to pay separation pay. The National Labor Relations Commission (NLRC) initially affirmed this decision but later removed the award for backwages, finding Serrano’s termination due to his refusal to accept reassignment. On appeal, the Court of Appeals (CA) reversed the NLRC’s decision, ruling in favor of Serrano and ordering Exocet to pay both separation pay and backwages. This prompted Exocet to elevate the case to the Supreme Court, questioning whether the appellate court erred in finding constructive dismissal.

The Supreme Court began its analysis by acknowledging the concept of “floating status” for security guards. While the Labor Code lacks specific provisions governing this situation, the Court referenced its prior rulings, treating it as a form of temporary retrenchment or lay-off. It is defined as:

that period of time when security guards are in between assignments or when they are made to wait after being relieved from a previous post until they are transferred to a new one.

The Court emphasized that employees on floating status do not typically receive salary or benefits because this situation arises from circumstances beyond the employer’s control, such as clients not renewing contracts. Nonetheless, the Court pointed out that the floating status cannot last indefinitely, citing Article 292 (previously Article 286) of the Labor Code:

ART. 292. When employment not deemed terminated. – The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.

The Court, applying this provision by analogy, has set a maximum of six months for a temporary lay-off. If the employee is not recalled after this period, they are deemed terminated.

The Department of Labor and Employment (DOLE) issued Department Order No. 14, Series of 2001 (DO 14-01), which further elaborates on this principle, stating that a lack of service assignment for six months is an authorized cause for termination, entitling the employee to separation pay. The guidelines specify that to validly terminate a security guard under these circumstances, the security agency must comply with Article 289 (previously Art. 283) of the Labor Code, requiring a written notice to both the employee and the DOLE one month before termination.

The Court emphasized that the burden of proving the unavailability of posts rests on the employer. However, the Court also underscored the management prerogative of security agencies to transfer guards when necessary, provided it is done in good faith. As the Court said in Megaforce Security and Allied Services, Inc. v. Lactao:

An employee has the right to security of tenure, but this does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where his service, as security guard, will be most beneficial to the client.

In Serrano’s case, the Court found that Exocet did not act in bad faith. Crucially, Exocet offered Serrano a position in general security service, which he declined because it was not the VIP detail he preferred. The Court noted that Serrano’s refusal to accept the assignment prevented Exocet from reassigning him within the six-month period, and he cannot hold the employer liable.

The Supreme Court concluded that Serrano’s actions constituted willful disobedience, a just cause for termination under Art.288 of the Labor Code. However, because Exocet did not act on that ground, the Court considered that right waived. The Court then directed Exocet to offer Serrano any available security assignment within 30 days. If Serrano refuses, he will be deemed to have abandoned his employment. If no assignment is available, Exocet must comply with DO 14-01 and Art. 289 of the Labor Code by providing written notice and separation pay.

This decision underscores the balance between protecting employee rights and recognizing employer prerogatives. While employees cannot be held in indefinite floating status, they also cannot unreasonably refuse equivalent job assignments based solely on personal preference. The ruling provides clarity for security agencies and guards regarding their rights and responsibilities in reassignment scenarios.

FAQs

What was the key issue in this case?	The key issue was whether Armando D. Serrano was constructively dismissed by Exocet Security after being placed on floating status and refusing a reassignment to general security service. The Supreme Court addressed whether the security agency’s actions constituted a breach of employment terms.
What is “floating status” for security guards?	Floating status refers to the period when security guards are between assignments, waiting to be transferred to a new post. During this time, they typically do not receive salary or benefits, as it is considered a temporary lay-off due to circumstances beyond the employer’s control.
How long can a security guard be on floating status?	The Supreme Court, by analogy to Article 292 of the Labor Code, has set a maximum of six months for a temporary lay-off or floating status. After this period, the employee should either be recalled for work or permanently retrenched.
What are the employer’s obligations during a security guard’s floating status?	The employer must prove that there are no available posts to which the security guard can be assigned. If no assignment is available after six months, the employer must comply with DOLE Department Order No. 14, Series of 2001, and Article 289 of the Labor Code.
What is constructive dismissal?	Constructive dismissal occurs when an employer’s act of clear discrimination, insensibility, or disdain becomes so unbearable on the employee’s part that it could foreclose any choice by him except to forego his continued employment. It essentially forces the employee to resign due to the intolerable working conditions.
Can a security guard refuse a reassignment?	While employees have a right to security of tenure, they cannot unreasonably refuse equivalent job assignments based solely on personal preference. The employer has the prerogative to transfer employees where their services will be most beneficial, provided there is no demotion in rank or diminution of benefits.
What is willful disobedience?	Willful disobedience refers to an employee’s deliberate and unjustified refusal to obey a lawful order of the employer in connection with their work. It is a just cause for termination under Article 288 of the Labor Code.
What are the requirements for a valid termination due to lack of assignment?	To validly terminate a security guard for lack of service assignment, the employer must serve a written notice on the security guard and the DOLE at least one month before the intended date of termination, as required by Article 289 of the Labor Code and DO 14-01.
What separation pay is a security guard entitled to if terminated due to lack of assignment?	If a security guard is terminated due to lack of service assignment after six months, they are entitled to separation pay equivalent to one-half month’s pay for every year of service, as provided in Section 6.5 of DOLE D.O. No. 14.

The Supreme Court’s decision in Exocet Security and Allied Services Corporation v. Serrano provides important guidelines for managing security personnel during periods of client contract changes. The ruling highlights the importance of clear communication, reasonable job offers, and compliance with labor regulations to ensure fair treatment of employees while respecting the operational needs of security agencies.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Exocet Security and Allied Services Corporation v. Armando D. Serrano, G.R. No. 198538, September 29, 2014