Lugawe vs. Pacific Cebu Resort International, Inc.

An employer's realignment or transfer of an employee's functions to other departments, undertaken in good faith for legitimate business objectives such as streamlining operations and introducing internal checks and balances, constitutes a valid exercise of management prerogative and does not amount to constructive dismissal, provided the employee retains rank, salary, privileges, and benefits — and where the employee's allegations of discriminatory treatment are uncorroborated by substantial evidence, the employee's failure to report to work constitutes voluntary abandonment.

Alma C. Lugawe was hired by Pacific Cebu Resort International, Inc. (PCRI) as an Accounting Clerk on March 9, 2000 and was promoted to Human Resource (HR) Officer/Manager on January 1, 2007. In October 2013, PCRI underwent a corporate takeover when Filipinas (PREFAB BLDG) Systems Inc. (FILSYSTEMS) bought out the shares of the Japanese owners. Prior to the takeover, a Memorandum of Agreement was executed between PCRI and FILSYSTEMS whereby the latter agreed to maintain the continuity of service records and regular employment status of PCRI's 104 regular employees and to pay each employee the benefits required under law. A General Assembly and a Mediation Assistance and Intervention were conducted in September 2013 to address employee concerns regarding the transition to the new management.

Alma C. Lugawe was hired by Pacific Cebu Resort International, Inc. (PCRI) as an Accounting Clerk on March 9, 2000 and was promoted to Human Resource (HR) Officer/Manager on January 1, 2007. In October 2013, PCRI underwent a corporate takeover when FILSYSTEMS bought out the shares of the Japanese owners, with a Memorandum of Agreement providing for the continuity of service records and regular employment status of PCRI's 104 regular employees. Within three days after the new management took over on October 5, 2013, Lugawe claimed that PCRI removed Compensation and Benefits functions from her office and transferred them to the Finance Department headed by Christine Almaden. These functions included tracking of employees' leave credits, timekeeping, reviewing and monitoring of employees' attendance records and schedules, implementation of payroll and attendance policies, payroll processing, distribution of payslips, preparation and processing of government-mandated benefits, and handling of employees' concerns. Lugawe asked her employers to reconsider the transfer, arguing that the removal rendered her a mere office clerk, if not a "lame duck" HR Officer/Manager. She also lost one of her two HR assistants to the Finance Department and claimed she was deprived of discretion in hiring, denied access to employees' records, and required to report to Almaden instead of the General Manager. Additional functions were removed from her office, including administration of Security Services, transferred to the Engineering Department under Rey Belandres, and supervision over company drivers, transferred to the Finance Department and the General Manager.

Lugawe's grievances multiplied. She alleged that General Manager Eric Chung Mang Shum accused her of incompetence and "doing nothing," and that Shum bypassed her in coordinating a thanksgiving party for employees affected by typhoon Yolanda, instead coordinating with the Executive Housekeeper. She claimed Almaden attempted to remove her name from the list of authorized signatories for government-related transactions without prior notice. Lugawe also filed a Complaint for Discourtesy, Insult, Libel and Slander against Belandres, whom she accused of making false and malicious accusations regarding her involvement in supposed anomalies related to the Security Services Contract with Probe Security Agency, and alleged PCRI took no action on the complaint. On December 10, 2013, Lugawe fell ill and took sick leave but was required by Shum to report to the office the next day to attend to a leaking faucet in the HR Office comfort room, and she complied despite pointing out that the Engineering Department could handle the repair. Lugawe pointed to PCRI's job post on JobStreet.com dated January 6, 2014, which included "Compensation & Benefits" as a required skill for HR Manager, as evidence that PCRI intended to restore the removed functions once she vacated the position.

Lugawe's sick leave lasted until December 12, 2013. Instead of returning to work on December 13, 2013, she filed a Complaint for constructive dismissal with the NLRC, claiming separation pay in lieu of reinstatement, 13th month pay, and other allowances. She later submitted an Amended Complaint on January 16, 2014 claiming separation pay, moral damages, and attorney's fees. PCRI, which was unaware that Lugawe had filed a complaint, sent her a letter dated January 7, 2014 directing her to submit a written explanation regarding her unauthorized absences and a text message she sent to Finance Controller Sabbas Cheung stating she would no longer report for duty. Lugawe did not respond, and PCRI deemed her to have abandoned her job. PCRI maintained that Lugawe suffered neither a demotion in rank nor a diminution in pay, as she retained her position, salary, and benefits, and that the realignment of functions was a valid exercise of management prerogative to correct organizational deficiencies under the old management, introduce internal checks and balances, and increase transparency. PCRI also pointed out that it appointed Lugawe's former HR Assistant, Jeanette Apolinario, to assume the HR Officer/Manager position with its reduced functions, rather than hiring an outsider.

• Error of Law in Factual Reappraisal: Lugawe argued that the Court of Appeals committed an error of law when it evaluated and examined the evidence anew and substituted its own factual findings for those of the NLRC and the Labor Arbiter, despite both labor tribunals' uniform findings being fully supported by substantial evidence.
• Voluntary Resignation Finding Contrary to Evidence: Lugawe maintained that the Court of Appeals erred in ruling that she voluntarily resigned, asserting that contrary evidence established constructive dismissal.
• Improper Deletion of Monetary Award: Lugawe contended that the Court of Appeals erred in deleting her monetary award and ordering its return to PCRI.

• Estoppel for Failure to File Comment/Memorandum: PCRI contended that Lugawe's failure to file a comment to PCRI's petition in the CA and to submit a memorandum, despite the appellate court's directives, estopped her from questioning the assailed CA Decision and Resolution.
• No Constructive Dismissal — Valid Management Prerogative: PCRI argued that Lugawe was not constructively dismissed, as she retained both her position as HR Officer/Manager and the salary and benefits pertaining to that position, and that the realignment of functions was a valid exercise of management prerogative to achieve effective performance, monitoring, and internal control.
• Abandonment of Employment: PCRI maintained that Lugawe abandoned her work when she went on absence without leave after her approved sick leave expired on December 12, 2013, and that she failed to respond to the January 7, 2014 letter directing her to explain her unauthorized absences.
• No Discrimination or Disdainful Treatment: PCRI denied that Lugawe experienced any discrimination, insensibility, or disdain, characterizing the altercation between Lugawe and Belandres as a personal matter between co-employees that could not be attributed to PCRI.

• Constructive Dismissal: Whether Lugawe was constructively dismissed from employment.
• Management Prerogative: Whether the transfer of functions from Lugawe's office to other departments constituted a valid exercise of management prerogative or a demotion amounting to constructive dismissal.
• Burden of Proof: Whether Lugawe discharged the burden to prove the fact of dismissal by substantial evidence.
• Abandonment: Whether Lugawe voluntarily abandoned her employment when she failed to report to work after her sick leave expired.
• Estoppel: Whether Lugawe was estopped from questioning the CA's rulings due to her failure to file a comment and memorandum before the appellate court.
• CA's Factual Review Authority: Whether the Court of Appeals erred in reexamining the factual findings of the NLRC and the Labor Arbiter.

• Constructive Dismissal: No. Lugawe was not constructively dismissed, the transfer of functions being a valid exercise of management prerogative undertaken in good faith for legitimate business objectives, and her allegations of discriminatory treatment being self-serving and uncorroborated by substantial evidence.
• Management Prerogative: Valid exercise. The transfer of functions was done to streamline operations, introduce internal checks and balances, and increase transparency; Lugawe retained her rank, salary, privileges, and benefits, negating bad faith.
• Burden of Proof: Not discharged. Lugawe failed to proffer documentary or testimonial evidence sufficient to prove the alleged acts of discriminatory, insensible, and disdainful treatment by PCRI.
• Abandonment: Yes. Lugawe voluntarily abandoned her employment by failing to report to work without justification after her sick leave expired and by not responding to PCRI's directive to explain her unauthorized absences.
• Estoppel: No. Lugawe's failure to file a comment or memorandum was deemed a waiver only of her right to file those pleadings and to object to formal flaws, not a bar to her Petition for Review, she having demonstrated intent to assail the rulings by filing a Motion for Reconsideration with the CA.
• CA's Factual Review Authority: No error. The CA, in the exercise of its certiorari jurisdiction, has authority to review not only the legal conclusions but also the factual findings of the NLRC, and the conflicting findings between the labor tribunals and the CA justified the Court's reexamination of factual issues.

• Constructive Dismissal: Constructive dismissal is defined as quitting or cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as through a demotion in rank or diminution of pay and other benefits, or an act of clear discrimination, insensibility, or disdain by an employer that becomes so unbearable that the employee is foreclosed from any choice but to forego continued employment. The test is whether a reasonable person in the employee's position would have felt compelled to give up employment under the circumstances. Applying this test, the evidence on record was insufficient to establish constructive dismissal. The transfer of functions, while diminishing the scope of Lugawe's authority, was explained by PCRI as a good-faith effort to correct organizational deficiencies inherited from the old management, introduce internal checks and balances, and increase transparency. Because Lugawe retained her rank as HR Officer/Manager and suffered no diminution in salaries, privileges, or benefits, the transfer was not done in bad faith but in pursuit of legitimate business objectives. Lugawe's other allegations of discrimination, insensibility, and disdain were self-serving and uncorroborated by documentary or testimonial evidence; bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence.

• Management Prerogative: Management has the prerogative to transfer employees and reorganize business operations to the maximum benefit of the company. An employee's right to security of tenure does not give him a vested right in his position that would deprive the company of its prerogative to change his assignment. However, the prerogative must be exercised without grave abuse of discretion and must adhere to basic elements of justice and fair play; the transfer must not be a subterfuge to rid the company of an undesirable worker and must not be unreasonable, inconvenient, or prejudicial to the employee. While the removal of payroll preparation, security guard supervision, and van driver supervision diminished the scope of Lugawe's authority and could be characterized as a demotion, the Court in Jarcia Machine Shop and Auto Supply vs. NLRC recognized that management has the prerogative to effect demotions pursuant to legitimate business interests. PCRI's explanation — that Lugawe's office handled overlapping functions prone to abuse and manipulation — coupled with the absence of any diminution in rank or pay, demonstrated that the transfer was a valid exercise of management prerogative.

• Burden of Proof: In constructive dismissal cases, the employee has the burden to prove first the fact of dismissal by substantial evidence; only when dismissal is established does the burden shift to the employer to prove just or authorized cause. The logic is that if there is no dismissal, there can be no question as to its legality. Lugawe's primary evidence was the transfer of functions, which the Court found to be a valid management prerogative. Her other allegations — being accused of incompetence, the attempt to remove her from the list of authorized signatories, Shum's bypassing her for the thanksgiving party coordination — were uncorroborated. The JobStreet.com job post including "Compensation & Benefits" as a required skill did not prove bad faith, as payroll preparation was merely one aspect of Compensation & Benefits responsibilities. The Incident Report and email regarding Belandres, submitted "For information," did not constitute a formal complaint, belying Lugawe's claim that PCRI failed to act on her complaint. Lugawe thus failed to discharge her burden of proving the fact of dismissal.

• Abandonment: Abandonment is the deliberate and unjustified refusal of an employee to resume employment, constituting neglect of duty and a just cause for termination. Two elements must concur: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, the second being the more determinative factor. Although filing a complaint for constructive dismissal is generally inconsistent with abandonment, the act of filing does not foreclose the possibility, as all circumstances surrounding the termination must be considered. Lugawe's sick leave expired on December 12, 2013, and she stopped reporting to work on December 13, 2013. She sent a text message to Cheung stating she would no longer report for duty and did not respond to PCRI's January 7, 2014 letter directing her to explain her unauthorized absences. The LA and NLRC's assumption that PCRI sent the letter after learning of the complaint was unsupported by evidence and amounted to mere speculation. Lugawe's failure to respond, taken together with her absence and notices to co-workers that she would not return, pointed to abandonment.

• Estoppel: Lugawe's failure to file a comment on the petition for certiorari before the CA or to submit a memorandum was deemed a waiver only of her right to file those pleadings and her right to object to formal flaws of the petition. The right to appeal is a statutory privilege, neither a natural right nor a component of due process, and may be exercised only in the manner prescribed by law. The procedural standards for a Rule 45 petition enumerated in Kumar vs. People of the Philippines do not include a requirement that the petitioner should have filed a comment and/or memorandum in the court below. Lugawe demonstrated her intent to assail the questioned rulings by filing a Motion for Reconsideration with the CA on May 24, 2017. Accordingly, she was not estopped from questioning the CA's rulings.

• CA's Factual Review Authority: A petition for review under Rule 45 is limited to questions of law, as the Court is not a trier of facts. However, where the findings of the LA and NLRC conflict with those of the CA, the case falls under recognized exemptions, compelling the Court to reevaluate factual issues in the exercise of equity jurisdiction. In petitions under Rule 45 assailing a CA decision from an appeal under Rule 65, the Court must determine whether the CA correctly determined the presence or absence of grave abuse of discretion on the part of the NLRC. In labor disputes, grave abuse of discretion exists when the NLRC's findings and conclusions are not grounded on substantial evidence. The CA did not err in reviewing the factual findings of the NLRC, as established in Laya vs. Philippine Veterans Bank, which clarified that the CA, in the exercise of its certiorari jurisdiction, can review the factual findings or legal conclusions of the NLRC. The CA correctly found that the NLRC committed grave abuse of discretion in holding that Lugawe was constructively dismissed.

• Constructive Dismissal — Defined as quitting or cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as through a demotion in rank or diminution of pay and other benefits, or an act of clear discrimination, insensibility, or disdain by an employer that becomes so unbearable that the employee is foreclosed from any choice but to forego continued employment. The test is whether a reasonable person in the employee's position would have felt compelled to give up employment under the circumstances. The Court applied this doctrine and found that the circumstances did not compel Lugawe to resign, as the transfer of functions was a valid management prerogative and her allegations of discrimination were uncorroborated.

• Burden of Proof in Constructive Dismissal Cases — The employee has the burden to prove first the fact of dismissal by substantial evidence; only when dismissal is established does the burden shift to the employer to prove just or authorized cause. The logic is that if there is no dismissal, there can be no question as to its legality or illegality. The Court found that Lugawe failed to discharge this initial burden.

• Management Prerogative — Management has the prerogative to transfer employees and reorganize business operations to the maximum benefit of the company, based on its assessment of employees' qualifications, aptitudes, and competence. An employee's right to security of tenure does not give him a vested right in his position that would deprive the company of its prerogative to change his assignment. The prerogative must be exercised without grave abuse of discretion and must adhere to justice and fair play; the transfer must not be unreasonable, inconvenient, or prejudicial to the employee, nor involve a demotion in rank or diminution of salaries, privileges, and benefits. The Court recognized that management may also effect demotions pursuant to legitimate business interests, provided the employer proves valid and legitimate grounds such as genuine business necessity.

• Abandonment of Employment — The deliberate and unjustified refusal of an employee to resume employment, constituting neglect of duty and a just cause for termination. Two elements must concur: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element as the more determinative factor, manifested by some overt acts. The employer bears the burden of proving deliberate and unjustified refusal to resume employment. Filing a complaint for illegal or constructive dismissal is generally inconsistent with abandonment but does not foreclose the possibility; all circumstances must be considered.

• Grave Abuse of Discretion in Labor Cases — In labor disputes, grave abuse of discretion on the part of the NLRC exists when its findings and conclusions are not grounded on substantial evidence, defined as such amount of relevant evidence that a reasonable mind might accept as adequate to support a conclusion. The CA correctly found that the NLRC committed grave abuse of discretion in affirming the finding of constructive dismissal absent substantial evidence.

• "It is true that in constructive dismissal cases, the employer is charged with the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine business necessity. However, it is likewise true that in constructive dismissal cases, the employee has the burden to prove first the fact of dismissal by substantial evidence. Only then when the dismissal is established that the burden shifts to the employer to prove that the dismissal was for just and/or authorized cause. The logic is simple — if there is no dismissal, there can be no question as to its legality or illegality." — This passage articulates the sequential burden of proof in constructive dismissal cases, a doctrine frequently cited in labor jurisprudence.

• "An employee's right to security of tenure 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 he will be most useful." — This formulation of the limits of security of tenure against management prerogative is a canonical statement frequently relied upon in labor cases involving transfers and reorganization.

• "Bare allegations of constructive dismissal, when uncorroborated by the evidence on record, cannot be given credence." — This principle establishes the evidentiary standard required for constructive dismissal claims, emphasizing that self-serving assertions without documentary or testimonial corroboration are insufficient.

• "Although the filing of a complaint for illegal or constructive dismissal has repeatedly been held to be inconsistent with a charge of abandonment—especially when such complaint is accompanied with a prayer for reinstatement—the act of filing does not foreclose the possibility of abandonment, as this is not the sole indicator in determining the employee's intent." — This passage clarifies that filing a complaint for constructive dismissal does not automatically negate a finding of abandonment, and all surrounding circumstances must be considered.

• Galang vs. Boie Takeda Chemicals, Inc., 790 Phil. 582 (2016) — Followed. Established the sequential burden of proof in constructive dismissal cases: the employee must first prove the fact of dismissal by substantial evidence before the burden shifts to the employer.

• Jarcia Machine Shop and Auto Supply vs. National Labor Relations Commission, 334 Phil. 84 (1997) — Followed. Recognized that management has the prerogative to effect demotions pursuant to legitimate business interests, provided the employer proves valid and legitimate grounds.

• Laya vs. Philippine Veterans Bank, 823 Phil. 302 (2018) — Followed. Clarified that the CA, in the exercise of its certiorari jurisdiction, can review the factual findings or legal conclusions of the NLRC, overruling the contrary rule in Jamer.

• St. Martin Funeral Homes vs. NLRC — Cited as foundational authority establishing that the special civil action of certiorari is the mode of judicial review of NLRC decisions and that the CA is the appropriate forum.

• Kumar vs. People of the Philippines, G.R. No. 247661, June 15, 2020 — Followed. Enumerated the procedural standards required under Rule 45 for a petition for review on certiorari to be entertained, which do not include a requirement that the petitioner should have filed a comment and/or memorandum in the court below.

• Dimagan vs. Dacworks United, Incorporated, 677 Phil. 472 (2011) — Cited for the test of constructive dismissal: whether a reasonable person in the employee's position would have felt compelled to give up employment under the circumstances.

• Tan Brothers Corp. of Basilan City vs. Escudero, 713 Phil. 392 (2013) — Cited for the definition and elements of abandonment as a just cause for termination of employment.

• Article 282(b), Labor Code of the Philippines — Cited as the statutory basis for abandonment as a just cause for termination of employment, defining it as neglect of duty.

• Rule 45, Rules of Court — Governs the petition for review on certiorari filed by Lugawe; limits review to questions of law, with exceptions where conflicting findings of lower tribunals justify factual reexamination.

• Rule 65, Rules of Court — Governs the petition for certiorari filed by PCRI before the Court of Appeals assailing the NLRC decision; the Court's review is limited to determining whether the CA correctly found grave abuse of discretion by the NLRC.

Gesmundo, C.J. (Chairperson), Zalameda, and Marquez, JJ., concurred. Rosario, J., was on official leave.