G.R. No. 175170, 5 September 2012


MORESCO II, a rural electric cooperative, hired Cagalawan as a Disconnection Lineman on a probationary basis.

Cagalawan was appointed to the same post this time on a permanent basis. he was later designated as Acting Head of the disconnection crew in Area III sub-office of MORESCO II in Balingasag, Misamis Oriental. In a Memorandum, MORESCO II General Manager Amado B. Ke-e (Ke-e) transferred Cagalawan to Area I sub-office in Gingoog City, Misamis Oriental (Gingoog sub-office) as a member of the disconnection crew. Said memorandum stated that the transfer was done “in the exigency of the service.”

In a letter, Cagalawan assailed his transfer claiming he was effectively demoted from his position as head of the disconnection crew to a mere member thereof; and that his transfer is inconvenient and prejudicial to him as it would entail additional travel expenses to and from work. In a Memorandum, Ke-e explained that Cagalawan’s transfer was not a demotion since he was holding the position of Disconnection Head only by mere designation and not by appointment. Ke-e did not, however, state the basis of the transfer but instead advised Cagalawan to just comply with the order and not to question management s legitimate prerogative to reassign him.

Meanwhile and in view of Cagalawan s transfer, Ke-e issued an order recalling the former s previous designation as Acting Head of the disconnection crew of the Balingasag sub-office. Cagalawan eventually stopped reporting for work. He then filed a Complaint for constructive dismissal before the Arbitration branch of the NLRC against MORESCO II and its officers, Ke-e and Danilo Subrado (Subrado), in their capacities as General Manager and Board Chairman, respectively. He averred that Ke-e and Subrado should also be held personally liable for damages since the two were guilty of bad faith in effecting his transfer.


WON the general manager and board chairman are personally liable.


NO. Ke-e and Subrado, as corporate officers, could not be held personally liable for Cagalawan’s monetary awards.

“Bad faith does not simply connote bad judgment or negligence; it imputes a dishonest purpose or some moral obliquity and conscious doing of a wrong; a breach of sworn duty through some motive or intent or ill will; it partakes of the nature of fraud Here, although we agree with the Labor Arbiter that Ke-e acted in an arbitrary manner in effecting Cagalawan s transfer, the same, absent any showing of some dishonest or wrongful purpose, does not amount to bad faith.

Suffice it to say that bad faith must be established clearly and convincingly as the same is never presumed.

Similarly, no bad faith can be presumed from the fact that Subrado was the opponent of Cagalawan’’ s father-in-law in the election for directorship in the cooperative. Cagalawan’s claim that this was one of the reasons why he was transferred is a mere allegation without proof. Neither does Subrado ‘s alleged instruction to file a complaint against Cagalawan bolster the Iatter’s claim that the former had malicious intention against him. As the Chairman of the Board of Directors of MORESCO II, Subrado has the duty and obligation to act upon complaints of its clients. On the contrary, the Court finds that Subrado had no participation whatsoever in Cagalawan’s illegal dismissal; hence. the imputation of bad faith against him is untenable.

*Case Digest by Stephanie C. Castillo, JD-IV, Andres Bonifacio College, SY: 2019-2020