Moreno vs. Chateau Royale Sports and Country Club, Inc.

An employee who fails to substantiate a claim of constructive dismissal with clear and convincing evidence is not entitled to backwages or monetary awards, but where the employer likewise fails to prove abandonment, the employee is entitled to reinstatement without payment of backwages, the employment relationship never having been actually severed.

Chateau Royale Sports and Country Club, Inc. is a corporation operating a resort hotel in Nasugbu, Batangas, with sister companies including Evercrest Golf Club and Resort, Inc., Gulod Resorts, Inc., and Lakeboat, Inc. On February 8, 2005, it hired petitioner Rhodora "Dolly" R. Moreno as Operations Manager on a probationary capacity with a monthly salary of ₱50,000.00 and additional benefits. Moreno's Letter of Appointment contained an express stipulation that no verbal agreements between her and the company affecting her employment would be binding unless reduced to writing and signed by both parties. The dispute arose from a series of management decisions including the hiring of a foreign General Manager over the group of companies, a reorganization affecting Moreno's place in the organizational structure, and the issuance of disciplinary memoranda against her.

Chateau Royale Sports and Country Club, Inc. operates a resort hotel in Nasugbu, Batangas. On February 8, 2005, it hired Rhodora "Dolly" R. Moreno as Operations Manager on a probationary basis with a monthly salary of ₱50,000.00 and additional benefits. Moreno's Letter of Appointment expressly stipulated that no verbal agreements between her and the company affecting her employment would be binding unless reduced to writing and signed by both parties.

On April 28, 2005, Moreno filed a notice of resignation due to a better job offer from the Office of Cynthia Villar. However, Chateau Royale's President Joel T. Go and Chairman Jose Go asked her to decline the offer in exchange for a promotion to General Manager with increased salary and benefits. Two weeks later, President Go verbally confirmed the adjustment of her position to GM and a salary increase to ₱110,000.00 per month. On July 8, 2005, Moreno recommended the regularization of several probationary employees in the Engineering Department, but President Go rejected the recommendation and ordered their transfer to a manpower agency without diminution in position or salary. Moreno questioned this directive as illegal, which allegedly drew President Go's ire. On August 4, 2005, Moreno received a Memorandum from the HRD Office confirming her regularization as Operations Manager effective August 8, 2005 — not as GM. She immediately called President Go, who said he would look into the matter.

On March 9, 2006, Chateau Royale hired Jan Michel Gautier, a French national, as the overall General Manager of Chateau Royale and its sister companies. Moreno met Gautier briefly but went on sick leave the following day until March 21, 2006 for treatment of hyperthyroidism. Upon her return on March 22, 2006, her accounting clerk introduced her to Rolando Basilio, the newly appointed Group HR Manager, and handed her an organizational chart allegedly used during a meeting while she was on sick leave — from which she was omitted. The next day, she learned that Gautier had set up his own office at the lobby premises. Basilio informed her that management had decided to hire a foreign management group and had lost trust and confidence in her, and that if she refused to resign, the legal department would take appropriate action. When Moreno asked what she had done wrong and sought to discuss the matter with President Go, the latter refused and ordered Basilio to deal with her. Later that day, Basilio handed Moreno a Memorandum directing her to explain why she should not be penalized for negligence and abuse of position, based on a security report that she had brought her husband to the hotel, allowed him to stay in her cabin, eat in her office, and smoke in the presence of employees, and that she had meddled in a security matter. Moreno felt disheartened and went home, filing the labor complaint the following day.

The Labor Arbiter found that Moreno was constructively dismissed, ruling that the penalty imposed was not commensurate with the offense, that there was no sufficient proof of breach of trust, and that Chateau Royale's acts of hiring Gautier, removing Moreno from the organizational chart, and issuing the memo through a subordinate were abusive. The NLRC reversed, holding that Moreno was not constructively dismissed and that her perception of being singled out was unsubstantiated. The CA affirmed the NLRC, finding that the hiring of Gautier was not discriminatory since Moreno was an Operations Manager with different functions, and that she utterly failed to substantiate her claim that she was GM.

• Claim of Promotion to GM: Petitioner averred that she was upgraded to GM by President Go as evidenced by his overt acts and manifestations, and that the hiring of Gautier subverted all orders and directions she gave to her staff, done in bad faith and in disregard of her position and capacity as GM.
• Organizational Chart: Petitioner sincerely believed the organizational chart shown to her was an official document because it was presented during a meeting while she was on sick leave, and Chateau Royale failed to deny this fact and is estopped.
• Strained Relations: Petitioner claimed she drew President Go's ire when she fought for the regularization of several employees in the Engineering Department, and that her relationships with President Go and Chairman Go were no longer smooth after the incident.
• Unbearable Working Environment: Petitioner argued that all the circumstances taken together — removal of authority over her staff, non-payment of benefits, demand for her resignation, issuance of a memorandum for preventive suspension, and Gautier's assumption of her position — established that the working environment became unbearable and forced her to leave.

• No Constructive Dismissal: Respondent countered that Moreno was never appointed GM but only Operations Manager, as evidenced by her Letter of Appointment and regularization letter, and that she failed to show proof of any binding agreement to appoint her as GM.
• Legitimate Management Prerogative: Respondent argued that the hiring of Gautier was a valid exercise of management prerogative to improve coordination among sister companies, and that Gautier's position and functions did not unduly affect Moreno's authority as Operations Manager.
• Unofficial Organizational Chart: Respondent maintained that the organizational chart allegedly shown to Moreno was not an official document, as it was not printed on Chateau Royale's letterhead and bore no signature or approval of any officer or director.
• Abandonment: Respondent asserted that despite the end of Moreno's preventive suspension, she failed to report for work, constituting abandonment, and that the Memo to Explain was based on factual security reports and was not concocted to harass her.
• No Basis for Monetary Claims: Respondent contended that the LA had no basis to grant monetary claims solely on Moreno's self-serving assertion that she was promoted to GM with a salary of ₱110,000.00 per month, which was unsubstantiated and contradicted by the evidence.

• Constructive Dismissal: Whether the CA committed reversible error in affirming the NLRC finding that Moreno was not constructively dismissed.

• Constructive Dismissal: No. The CA did not commit reversible error. Moreno failed to discharge the burden to prove constructive dismissal with clear and convincing evidence; the acts complained of pertained to legitimate exercises of management prerogative and were not shown to be acts of discrimination, insensibility, or bad faith so intense as to render continued employment unbearable.

• Constructive Dismissal: Constructive dismissal exists when continued employment is rendered impossible, unreasonable, or unlikely, or when there is a demotion in rank and/or diminution in pay, or when a clear discrimination, insensibility, or disdain by the employer becomes unbearable. At its core is the gratuitous, unjustified, or unwarranted nature of the employer's action, and any allegation of constructive dismissal must be contrasted with the validity of exercising management prerogative. The employee bears the burden to substantiate the claim with clear and convincing evidence; bare and self-serving allegations cannot be given credence.

  As to the hiring of Gautier, Moreno failed to prove she was GM or had any right to the position. Her Letter of Appointment and regularization letter both designated her as Operations Manager, and she admitted as much in her Affidavit. Even if President Go verbally promised the GM position, such was not legally binding because her Letter of Appointment expressly stipulated that no verbal agreements affecting her employment would be binding unless reduced to writing and signed by both parties. Moreover, over six months lapsed between the alleged promotion and Gautier's hiring, yet Moreno never sought formal confirmation — highly doubtful for one of the highest positions in the organization. Gautier's position and functions were also not incompatible with Moreno's: Gautier focused on a macro level to improve coordination among the group's sister companies, while Moreno remained focused on Chateau Royale's operations. Other similarly situated Operations Managers accepted the arrangement without issue, and Gautier did not intrude upon or disrupt Moreno's office.

  As to the organizational chart, it was not an official document — it bore no Chateau Royale letterhead, no signature or approval of any officer, and Moreno herself had no personal knowledge of how it was used. Her "sincere belief" that it was official cannot be given weight without corroborating evidence. As to the alleged strained relations with President Go, no evidence was presented to demonstrate specific acts of harassment or discrimination. The issuance of the Memo to Explain through Basilio was not an affront, as Basilio's functions as Group HR Manager covered all human resource matters of Chateau Royale and its sister companies. The Memo to Explain was issued in good faith pursuant to a security report enumerating company policy violations — bringing her husband to the hotel, allowing him to stay in her cabin and eat and smoke in her office, and meddling in security matters — which Moreno did not deny but merely claimed occurred during her leave. The proper response was to explain her side, not to file suit.

  Nevertheless, the Court rejected Chateau Royale's claim of abandonment. Abandonment requires (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship. Abandonment is incompatible with constructive dismissal. Moreno immediately filed the complaint and consistently prayed for reinstatement, negating any intention to abandon. Since there was neither illegal dismissal nor abandonment, the Court ordered reinstatement without backwages. Each party must bear their own economic loss, as the employment relationship was never actually severed.

• Constructive Dismissal — Constructive dismissal occurs when continued employment is rendered impossible, unreasonable, or unlikely; when there is a demotion in rank and/or diminution in pay; or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee. At its core is the gratuitous, unjustified, or unwarranted nature of the employer's action. The employee bears the burden to substantiate the claim with clear and convincing evidence; bare and self-serving allegations cannot be given credence. The Court applied this doctrine by examining each act complained of — the hiring of Gautier, the organizational chart, the strained relations, and the Memo to Explain — and finding none rose to the level of discrimination or insensibility so intense as to be unbearable, particularly as they pertained to legitimate exercises of management prerogative.

• Management Prerogative — The employer's right to conduct its regular business affairs, including hiring personnel, reorganizing employees, and implementing job evaluation programs, is a legitimate exercise of management prerogative that cannot be equated with constructive dismissal absent evidence of bad faith or malice. The Court relied on this principle to hold that the hiring of Gautier as overall GM of the group of companies and the issuance of the Memo to Explain based on a security report were valid management acts, not discriminatory actions calculated to force Moreno out.

• Abandonment of Employment — Abandonment is the deliberate and unjustified refusal of an employee to resume employment, requiring the concurrence of two elements: (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 employer bears the burden of proof. Abandonment is incompatible with constructive dismissal. The Court found no abandonment because Moreno immediately filed the complaint and consistently prayed for reinstatement, negating any intention to sever the relationship.

• Reinstatement Without Backwages Where Neither Dismissal Nor Abandonment Is Established — Where the employee was not illegally dismissed but the employer also failed to prove abandonment, the employee is entitled to reinstatement without payment of backwages, as the employment relationship was never actually severed. The Court cannot order "reinstatement" in the same sense as illegal dismissal cases; rather, it declares that the employee may go back to work and the employer must accept him. If reinstatement to the old position is no longer possible, each party bears their own economic loss.

• "At the core of constructive dismissal is 'the gratuitous, unjustified, or unwarranted nature of the employer's action. As it is a question of whether an employer acted fairly, it is inexorable that any allegation of constructive dismissal be contrasted with the validity of exercising management prerogative.'" — This passage defines the essential nature of constructive dismissal and its relationship to management prerogative, establishing the analytical framework the Court applied throughout the decision.

• "An act, to be considered as amounting to constructive dismissal, must be a display of utter discrimination or insensibility on the part of the employer so intense that it becomes unbearable for the employee to continue with his employment." — This formulation, quoted from Gemina, Jr. vs. Bankwise, Inc., articulates the threshold of intensity required for an employer's act to constitute constructive dismissal, distinguishing actionable discrimination from legitimate management decisions.

• "It is an inflexible rule that a party alleging a critical fact must support his allegation with substantial evidence, for any decision based on unsubstantiated allegation cannot stand without offending due process." — This statement, also from Gemina, underscores the evidentiary burden placed on employees claiming constructive dismissal and explains why Moreno's bare assertions failed.

• "Abandonment is incompatible with constructive dismissal." — This concise doctrinal statement resolves the interplay between an employer's defense of abandonment and an employee's claim of constructive dismissal, explaining why the Court ordered reinstatement despite denying the constructive dismissal claim.

• Gemina, Jr. vs. Bankwise, Inc., 720 Phil. 358 (2013) — Followed. The Court extensively quoted this decision for the propositions that constructive dismissal requires proof of utter discrimination or insensibility so intense as to be unbearable, that acts pertaining to legitimate management prerogatives cannot constitute constructive dismissal, and that the employee bears the burden of substantiating the claim with substantial evidence.

• Rodriguez vs. Sinitron Systems, Inc., G.R. No. 240254, July 24, 2019 — Followed. Cited for the proposition that an employee who fails to prove the factual basis of a constructive dismissal claim with substantial evidence cannot be deemed constructively dismissed, and for the rule that where there is no illegal dismissal, there can be no "reinstatement" in the traditional sense — rather, the Court declares the employee may go back to work because the employment relationship was never actually severed.

• St. Paul College, Pasig vs. Mancol, 824 Phil. 520 (2018) — Cited for the definition of constructive dismissal and the enumeration of exceptions to the rule that the Supreme Court is not a trier of facts in petitions under Rule 45.

• Cosue vs. Ferritz Integrated Development Corporation, 814 Phil. 77 (2017) — Cited for the rule that only questions of law are considered in Rule 45 petitions and that factual findings of quasi-judicial bodies are binding when supported by substantial evidence.

• Tan Brothers Corporation of Basilan City vs. Escudero, 713 Phil. 392 (2013) — Cited for the definition and elements of abandonment of employment.

• Borja vs. Minoza, 812 Phil. 133 (2017) — Cited for the principle that abandonment is incompatible with constructive dismissal, and for the rule that where reinstatement is no longer possible and neither abandonment nor termination occasioned the failure to work, each party bears their own economic loss.

• Article 279, Labor Code — Cited as the basis for the award of full backwages and other monetary claims to employees who have been unjustly dismissed. The Court held that because Moreno was not illegally dismissed, she was not entitled to backwages under this provision.

• Rule 45, Rules of Court — Governs petitions for review on certiorari before the Supreme Court, limiting review to questions of law. The Court noted the exception where factual findings of the CA and NLRC differ from those of the LA, permitting resolution of factual issues.

Perlas-Bernabe, S.A.J. (Chairperson), Hernando, Inting, and Rosario, JJ., concurred.