By Atty. Julius Gregory B. Delgado
ALMA LUGAWE VS. PACIFIC CEBU RESORT INTERNATIONAL, INC., G.R. NO. 236161 (JANUARY 25, 2023): RESTATEMENT ON THE PRINCIPLE CONSTRUCTIVE DISMISSAL VIS-À-VIS MANAGEMENT PREROGATIVE
Petitioner Alma Lugawe (“petitioner Lugawe”) was hired by respondent Pacific Cebu Resort International, Inc. (“respondent PCRI”) as an Accounting Clerk in March 9, 2000 and was later promoted as Human Resource Officer/Manager in January 1, 2007. Sometime in October of 2013, respondent PCRI underwent a takeover when Filipinas (Prefab Building) Systems, Inc. (“Filsystems”) bought out shares of the Japanese owners. Months prior to the takeover, a Memorandum of Agreement was executed between respondent PCRI and Filsystems whereby the latter agreed to maintain the continuity of the service records and regular employment status of the 104 regular employees of respondent PCRI and to pay each of their employees the benefits required under the law. On September 2, 2013, the regular employees held a General Assembly. This was followed by a Mediation Assistance and Intervention on September 6, 2013, where the parties had the opportunity to submit their proposals and concerns regarding the transition to new management.
Within just three (3) days after the new management took over on October 5, 2014, petitioner Lugawe alleged that the Compensation and Benefits functions were removed from her office and transferred these to the Finance Department which was headed by Christine Almaden (“Almaden”). These functions include: 1) tracking of employees’ leave credits; 2) time keeping; 3) reviewing and monitoring employees’ attendance records and schedules; 4) implementation of payroll and attendance policies; 5) payroll processing; 6) distribution of payslips; 7) preparation and processing of government-mandated benefits; and 8) handling of employees’ concerns.
Petitioner Lugawe asked her employers to reconsider the transfer of these functions, because their removal rendered her a mere lame duck HR Officer/Manager. Petitioner Lugawe claimed that she lost one of her two HR assistants to Finance. Petitioner Lugawe said that she was also deprived of her discretion in hiring. Petitioner Lugawe claimed also that she was denied access to employees’ records/reports and that she was required to report to and receive instructions from Almaden when she would previously report to the General Manager. Petitioner Lugawe would also claim that she also lost her function to supervise administration of Security Services which was transferred to Engineering Department and supervision of Company drivers which was transferred to the Finance Department and General Manager. Petitioner Lugawe alleged that even in respondent PRCI’s job post on Jobstreet.com dated January 6, 2014, “Compensation and Benefits” was one of the required skills for an HR Manager, hence, there was no intent to remove this function from the HR Department. Petitioner Lugawe also claimed that the Company did not act on her complaint against the Head of the Engineering Department for allegedly making accusations of her supposed anomalies relating to the Security Services Contract with Probe Security Agency. Petitioner Lugawe went on an extended sick leave and instead of returning to work on December 13, 2013, she filed a Complaint for constructive dismissal.
The Labor Arbiter ruled that she was constructive dismissed because the transfer of petitioner Lugawe’s functions amounted to a demotion and made her a lameduck HR Officer/Manager. The National Labor Relations Commission affirmed the ruling of the Labor Arbiter. The Court of Appeals reversed and set aside the ruling of the NLRC and held that petitioner Lugawe voluntarily resigned from her job.
Constructive dismissal is defined as quitting or cessation of work, because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay and other benefits. Aptly called a “dismissal in disguise,” it exists if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any other choice but leave. The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his employment/position under the circumstances. In constructive dismissal cases, before the legality or illegality of the dismissal can be determined, the employee must first discharge the burden to prove the fact of dismissal by substantial evidence.
Citing Galang vs. Boie Takeda Chemicals, Inc., 183934 (July 20, 2016), the Supreme Court held that petitioner Lugawe has the burden of proving she was dismissed by respondent PRCI considering that it is the latter’s allegation that she was not dismissed, but instead voluntarily abandoned her employment. The Court held that petitioner Lugawe failed to prove the fact of her dismissal. The Court was not convinced that petitioner Lugawe’s claim on the removal of her functions was tantamount to a demotion in rank proving constructive dismissal. The Supreme Court held that the management has a prerogative to transfer its employees based on its assessment and perception of its employees’ qualifications, aptitudes and competence and to reorganize areas of its business operations and organizational structure to the maximum benefit of the company. The Supreme Court likewise held that an employee’s right to security of tenure does not give him such as vested right in his position as would deprive the company its prerogative to change his assignment or transfer him where he or she will be most useful.
Notwithstanding that the management has prerogative to transfer its employees, the Supreme Court held that it must be exercised without grave abuse of discretion and must adhere to the basic elements of justice and fair play. Stated otherwise, the transfer must not be used as subterfuge by the employer to rid itself of an undesirable worker, such that the employer is able to demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to the employee, nor does it involve a demotion in rank or diminution of salaries, privileges, and other benefits. Failure on the part of the employer to discharge this burden of proof would result in a finding of the existence of constructive dismissal.
In this case, the Supreme Court held that “while Lugawe retained her title as HR Officer/Manager, the transfer of functions from her office may be treated as an employee transfer, as it resulted in changes to the business operations and organizational structure of PCRI and also changed the nature of Lugawe’s work. Further, the removal of payroll preparation, security guard supervision, and van driver’s supervision from Lugawe may also be characterized as a demotion, as the scope of her authority, duties, and responsibilities was diminished. Demotion occurs when an employee is relegated to a subordinate or less important position constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary.” However, the Court, citing Jarcia Machine Shop and Auto Supply vs. National Labor Relations Commission, G.R. No. 118045 (January 2, 1997), held that “management has the prerogative to effect demotions pursuant to legitimate business interests. The Court found that respondent PRCI was in good faith in transferring these functions from the HR Department to the other departments “to correct and streamline the previous management’s previous organization deficiencies.” Having discovered that petitioner Lugawe’s office handled overlapping functions, such as preparation of payroll and payment of salaries, respondent PCRI transferred these duties to more appropriate departments with the “goal of improving performance, introducing an internal checks and balance system, and increasing transparence in business operations.” Hence, with these valid business objectives, the Supreme Court held that the transfer of these functions was a valid exercise of management prerogative and that petitioner Lugawe was not constructively dismissed from her employment.