Gil was hired as a booking salesman for Household Goods Patrons, Inc. (Household Goods) in July 2007. His duties and responsibilities included taking customer orders, collecting payments, and inspecting equipment.
From May 2012 to August 2013, Gil faced several disciplinary proceedings due to unaccounted amounts, low sales outputs, unremitted collections, poor performance ratings for failing to meet sales targets, and late remittance of sales proceeds.
Gil stated that on August 29, 2013, a Household Goods officer directed him to report to her office. Gil stated that he was told to resign because he was responsible for the company’s poor performance. Gil denied the accusation, claiming that he had previously been named Salesman of the Year. This enraged the officer of Household Goods, who ordered Gil to leave her office.
Gil went on to say that the following day, an HR Supervisor of Household Goods asked for his resignation letter and presented him with a calculation of his final pay. Gil stated that, while he objected to the request, his efforts were futile, and he was ordered to surrender all documents and property.
Household Goods, on the other hand, asserted that Gil was not fired. According to Household Goods, its officer did speak with Gil about his poor performance and unremitted collections, which it viewed as instances of theft and thus valid grounds for his immediate termination. Household Goods claimed to have taken into account Gil’s previous good sales performance as well as the stigma of being fired from his job. As a result, it offered Gil the option of simply resigning and not filing a criminal charge against him for the unremitted amounts. Gil never returned to work after this conversation, according to Household Goods.
Was Gil illegally dismissed from employment?
The Supreme Court ruled in the negative. According to the Court, there was no proof that Gil was dismissed from employment.
The Court reiterated the settled rule that in illegal dismissal cases, before the employer must bear the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to its legality or illegality.1Rodriguez v. Sintron Systems, Inc., G.R. No. 240254, July 24, 2019
The Court also stated that since an allegation is not evidence, it is elementary that a party alleging a critical fact must support his allegation with substantial evidence. Bare allegations of dismissal, when uncorroborated by the evidence on record, cannot be given credence. Moreover, the evidence to prove the fact of dismissal must be clear, positive and convincing.
In the present case, the Court found that other than his allegation, Gil failed to present any proof that he was dismissed from employment. He failed to present any proof of dismissal or that he was prohibited from returning to work.
The Court also found that, on the other hand, Household Goods was able to show that Gil was not dismissed from work. According to the Court, with his poor performance, Gil was only given the option to resign instead of being dismissed.
The Court recognized the fact that giving such an option may be done at the discretion of the employer. According to the Court, a decision to give a graceful exit to an employee rather than to file an action for redress is perfectly within the discretion of an employer. It is not uncommon that an employee is permitted to resign to save face after the exposure of his/her malfeasance.
In the present case, the Court found that Household Goods’ act of providing Gil the option to gracefully exit considering his prior good sales performance and out of compassion did not constitute dismissal, legal or illegal. The Court added that although Gil did not resign and take the separation pay offered to him, neither did Household Goods initiate disciplinary proceedings to terminate his employment.
Could Gil be directed to report back to work?
The Court discussed that generally, when there is no dismissal, the employee should go back to his work and the employer must then accept him because the employment relationship between them was never actually severed.
Here, considering that Household Goods had from the outset offered to pay separation pay to Gil, and which even Gil himself did not dispute, and that more than seven years had passed since Gil reported for work on September 1, 2013, the Court deemed it just to award separation pay (equivalent to one month salary for every year of service, computed up to the time he stopped working, or until September 1, 2013) in lieu of the directive for him to return to work and for Household Goods to accept him.
Further reading:
Jarabelo v. Household Goods Patrons, Inc., G.R. No. 223163, December 2, 2020.
The employer owned a restaurant and employed Efren and Jeramil as cooks.
Efren claimed that on December 25, 2011 he rendered only a half day work without prior authorization. Jeramil, in turn, claimed that he did not report for work.
Efren and Jeramil claimed that because of their attendance on December 25, their employer dismissed them from employment. They averred that when they tried to report for work, their chief cook told them that their employment was already terminated.
The employer denied dismissing Efren and Jeramil from work. She argued that Efren and Jeramil violated a December 22, 2011 memorandum which disallowed absences on December 25, 26, 31 and January 1 unless justified. The employer added that Efren and Jeramil failed to report for work on December 25, 2011, and returned the following day merely to get their share in the accrued tips, after which they went on absence without leave (AWOL) for the rest of the Christmas season.
The employer argued that Efren and Jeramil went on AWOL and abandoned their employment after they got wind of her decision to impose disciplinary action against them for their unauthorized absence on December 25, 2011. She claimed that even before any disciplinary action could be imposed on Efren and Jeramil, the latter already filed a complaint for illegal dismissal on January 2, 2012.
The Office of the Labor Arbiter found that Efren and Jeramil were illegally dismissed from employment. According to the said Office, the employer failed to prove that Efren and Jeramil indeed went on AWOL and that they received a copy of the December 22, 2011 memorandum. The said Office added that since it was Christmas day, Efren and Jeramil had all the reason not to report for work. Finally, the Office of the Labor Arbiter stated that in any case, the absence of Efren and Jeramil on December 25, 2011 should not have warranted their dismissal from employment. Efren and Jeramil were awarded separation pay and backwages.
The National Labor Relations Commission found that Efren and Jeramil were unable to establish that they were dismissed from employment. The Commission also found that Efren and Jeramil went to the restaurant and received their share on tips on December 26, 2011, then they continued to be absent for the rest of the Christmas season. The Commission held that since Efren and Jeramil failed to prove that their employment was terminated, the complaint for illegal dismissal could not be sustained. Thus, the Commission deleted the awards of separation pay and backwages to Efren and Jeramil.
The Court of Appeals affirmed the ruling of the Commission.
Were Efren and Jeramil illegally dismissed from employment?
The Supreme Court ruled in the negative.
The Court reiterated established principles as follows:
In cases of illegal dismissal, the employer bears the burden to prove that the termination was for a valid or authorized cause. But before the employer must bear the burden of proving that the dismissal was legal, it is well-settled that the employees must first establish by substantial evidence that indeed they were dismissed. If there is no dismissal, then there can be no question as to the legality or illegality thereof.1Claudia’s Kitchen, Inc. v. Tanguin, G.R. No. 221096, June 28, 2017.
In the present case, the Court found no substantial evidence establishing the fact that Efren and Jeramil were dismissed from employment. According to the Court, Efren and Jeramil merely alleged that the chief cook of the employer informed them of their dismissal from employment and that they were barred from entering the restaurant, without offering any evidence to prove the same. The Court added that Efren and Jeramil failed to provide any document, notice of termination or even any letter or correspondence regarding their termination. Said the Court, aside from their bare allegations, they did not present any proof which would at least indicate that they were in fact dismissed.
The Court instead found that through their timecards, Efren and Jeramil failed to report on December 25, 2011. Through the sign-up sheets, it was shown that they went back to their workplace on the following day merely to get their share in the tips. And through their admission, Efren and Jeramil confirmed that they continued to be on AWOL during “the Christmas season of 2011.
The Court thus upheld the ruling of the National Labor Relations Commission, as affirmed by the Court of Appeals, that no illegal dismissal occurred in this case. Said the Court: “Without substantial evidence that Efren and Jeramil were indeed dismissed, it is futile to determine the legality or illegality of their supposed dismissal.”2Villola v. United Philippine Lines, Inc., G.R. No. 230047, October 9, 2019.
The Court clarified that the employer was not correct in insisting on Efren and Jeramil’s abandonment of employment. The Court stated that abandonment is a matter of intention and cannot lightly be presumed from certain equivocal acts.3Pu-od v. Ablaze Builders, Inc., G.R. No. 230791, November 20, 2017. The employer must prove that first, the employee failed to report for work for an unjustifiable reason, and second, the overt acts showing the employee’s clear intention to sever their ties with their employer.4Pu-od v. Ablaze Builders, Inc., G.R. No. 230791, November 20, 2017.
In the present case, the Court did not find proof that the absence of Efren and Jeramil was due to unjustifiable reasons, or that they clearly intended to terminate their employment. The Court stressed that Efren and Jeramil’s act of pre-empting their disciplinary action was insufficient, since “the operative act is still the employees’ ultimate act of putting an end to their employment.”5Pu-od v. Ablaze Builders, Inc., G.R. No. 230791, November 20, 2017.
The Court mentioned that “in cases where there is both an absence of illegal dismissal on the part of the employer and an absence of abandonment on the part of the employees, the remedy is reinstatement but without backwages.”6Pu-od v. Ablaze Builders, Inc., G.R. No. 230791, November 20, 2017. However, the Court added that since Efren and Jeramil did not pray for such relief, “each party must bear [their] own loss,” placing them on equal footing.7Pu-od v. Ablaze Builders, Inc., G.R. No. 230791, November 20, 2017. For the Court the deletion of the award of separation pay was proper.
Further reading:
Santos, Jr. v. King Chef, G.R. No. 211073, November 25, 2020.
Sheila was a sales clerk at Marivin’s Boutique and Merchandise outlet in La Union.
Sheila claimed that on February 6, 2007, she was summarily dismissed from employment without just cause and due process. Hence, she filed a complaint for illegal dismissal against Marivin.
Marivin denied illegally dismissing Sheila. She contended that despite infractions amounting to breach of trust and confidence, Sheila was never terminated from the service and had instead abandoned her work.
The Office of the Executive Labor Arbiter declared that Sheila was illegally dismissed from employment and that she did not abandon her work since she even reported for work on February 6, 2007 despite the fact that her notice of termination was already posted in the premises of the outlet. Said Office also found that Sheila was not accorded procedural due process, as Marivin did not conduct any notice or investigation and did not allow her to explain her side. Thus, the Office of the Executive Labor Arbiter awarded Sheila backwages and separation pay.
Marivin appealed to the National Labor Relations Commission and mentioned the following infractions committed by Sheila:
Failure to issue receipts for payments made by the clients of the boutique;
Listing of certain fully-paid customers as having uncollected payments;
Borrowing of money from business clients and offsetting her loan against the receivables of the business from said clients;
Failure to reflect in the inventory a total of 3,945 items amounting to P396,728.00;
Failure to remit cash paid by customers totalling P62,875.00; and
Failure to explain missing items amounting to P224,699.00.
Marivin added that Sheila simply left the key to the outlet and never came back.
Marivin stated that she initiated a complaint with the local police authorities wherein Sheila was invited to explain. Sheila appeared but failed to identify the customers whom she reported to have availed of items on credit.
Marivin contended that there was no illegal dismissal to speak of. Marivin argued that there was sufficient evidence that Sheila committed serious misconduct resulting in loss of trust and confidence. According to Marivin, the Office of the Executive Labor Arbiter failed to appreciate affidavits of customers, Sheila’s promissory note, and inventory ledgers duly signed by Sheila, which all established her serious misconduct warranting her dismissal from employment on the ground of loss of trust and confidence.
The National Labor Relations Commission dismissed Marivin’s appeal for lack of merit.
The Commission pointed out that it could not entertain Marivin’s allegations that Sheila committed acts of serious misconduct since Marivin was not allowed to change her theory on appeal, i.e., from abandonment of work to a valid dismissal.
The Commission noted that no inventory ledgers allegedly signed by Sheila were presented for the Office of the Executive Labor Arbiter’s consideration. Also, the Commission found no proof that Sheila was responsible for the missing stocks.
The Commission also noted discrepancies between the alleged amount lost as presented by Marivin. It even found that Sheila was on leave during the period when Marivin supposedly incurred losses, which cast doubt on the veracity of the audit report.
In addition, the Commission noticed that the copies of order receipts allegedly issued by Sheila to fictitious persons did not bear her signature while some bore only her printed name.
Finally, the Commission disregarded the itemized list of lost stocks with the first page bearing Sheila’s signature because it was belatedly submitted only in Marivin’s motion for reconsideration.
The Court of Appeals ruled that Marivin did not change her theory on appeal and that the allegation of “loss of trust and confidence” as a ground for Sheila’s termination was raised as an issue before the Office of the Executive Labor Arbiter.
The Court of Appeals found that in Marivin’s Position Paper, the theory of “loss of trust and confidence” was alluded to when Marivin presented the inventory conducted by the bookkeeper showing that various stocks were missing under Sheila’s custody. The Court of Appeals further found that Marivin did not confine her arguments to “abandonment” and that she emphasized Sheila’s violation of business policies.
Moreover, the Court of Appeals held that the National Labor Relations Commission is not precluded from receiving evidence on appeal as technical rules of evidence are not binding in labor cases. Thus, the Court of Appeals stated that even if the evidence was not submitted before the Office of the Executive Labor Arbiter, due introduction of evidence before the Commission should merit its admission in keeping with fairness and equity.
The Court of Appeals then ruled that there was just cause for Sheila’s dismissal, i.e., loss of trust and confidence. It noted that Marivin established by substantial evidence the following infractions committed by Sheila:
appropriation for her personal use daily sales amounting to P6,025.00;
losing various stocks under her care; and
issuing items to fictitious customers.
The Court of Appeals explained that as a sales clerk, Sheila occupied a position of trust and confidence since she was tasked to handle the stocks/inventory and funds of the business.
Nonetheless, the Court of Appeals highlighted the failure of Marivin to notify Sheila of her infractions and give her a chance to explain. Sheila was awarded nominal damages in the amount of P30,000.00.
Incidentally, record showed that Sheila died during the pendency of the case and was substituted by her parents, Florentino R. Maynes, Sr. and Shirley M. Maynes (Spouses Maynes) when the case reached the Supreme Court.
Was Sheila validly dismissed from employment?
The Supreme Court ruled in the affirmative.
The Court began by recognizing that the validity of Sheila’s dismissal from employment entailed a determination of whether Marivin’s evidence submitted before the National Labor Relations Commission should be considered.
The Court highlighted the well-settled rule that the National Labor Relations Commission is not precluded from receiving evidence, even for the first time on appeal, because technical rules of procedure are not binding in labor cases. The Court stated that labor officials are mandated by the Labor Code of the Philippines to use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process. The Court added that even if the evidence was not submitted to the Office of the Labor Arbiter, the fact that it was duly introduced on appeal to the National Labor Relations Commission is enough basis for the latter to be more judicious in admitting the same, instead of falling back on the mere technicality that said evidence can no longer be considered on appeal. Certainly, the Court said, the first course of action would be more consistent with equity and the basic notions of fairness.
Here, the Court held that Marivin could present evidence during the proceedings before the National Labor Relations Commission. It clarified that Sheila was likewise allowed to present controverting evidence thereto. However, the Court found that Sheila did not do so.
The Court stressed that the pieces of documentary evidence submitted by Marivin before the National Labor Relations Commission are material to establish her contention that Sheila committed infractions which led to the loss of trust and confidence reposed upon her. The Court specifically considered the signatures or handwritten notations of Sheila in certain documents as relevant since these rebutted Sheila’s denial. In fine, the Court stated that justice and equity calls for the admission and appreciation of such evidence.
The Supreme Court then agreed with the pronouncement of the Court of Appeals that Marivin did not change her theory on appeal. The Supreme Court found that in her Position Paper, Marivin already put forth the argument of breach of trust being a ground for Sheila’s dismissal from employment and was able to attach affidavits and copies of the inventory in order to substantiate her claim of loss of trust and confidence. Although the Court noticed that Marivin was unable to adequately discuss the reasons for the loss of trust and confidence, the fact remained that she argued her position before the Office of the Executive Labor Arbiter and elaborated the same on appeal with the National Labor Relations Commission by appending additional relevant documents.
With regard to employment termination, the Supreme Court mentioned the settled rule that two requisites must concur to constitute a valid dismissal from employment:
the dismissal must be for any of the causes expressed in Article 297 of the Labor Code of the Philippines; and
the employee must be given an opportunity to be heard and to defend himself.
On valid causes for dismissal, the Court centered on Article 297 (c) of the Labor Code of the Philippines, which refers to “fraud or willful breach by the employee of the trust reposed in [him/her] by [his/her] employer” or simply termed as “loss of trust and confidence.”
According to the Court, the requisites for dismissal on the ground of loss of trust and confidence are:
the employee concerned must be holding a position of trust and confidence; and
there must be an act that would justify the loss of trust and confidence.
In addition to these requisites, such loss of trust relates to the employee’s performance of duties.
In the present case, the Court found that the position of Sheila was clearly imbued with trust and confidence in that she was tasked to:
perform overall supervision and control of the outlet including receipt of different items from the main office of the business;
safekeep and remit daily sales of the business;
prepare inventory;
record items released on credit and issue receipts for payments made;
give items on account or credit to recognized local dealers; and
exercise discretion on the quantity and manner of payment of items released on credit to local dealers or retailers.
On the other hand, the Court found that Marivin submitted certain documents:
a “Stocks Lost List” which bore Sheila’s signature and indicated that certain stocks were lost while Sheila was the sales clerk managing the outlet;
a list signed by Shiela relating to lost payments or products (totalling P88,423.00) which she could not locate or explain; and
inventory/ledgers and order slips which contained fictitious or non-existent customers.
The Court noted that Sheila neither offered any justification for the uncovered anomalies nor denied the authenticity of her signature in a promissory note wherein she acknowledged taking cash for certain sales and losing stocks.
The Court reiterated that Article 297 of the Labor Code of the Philippines lists loss of trust and confidence in an employee, who is entrusted with fiducial matters, or with the custody, handling, or care and protection of the employer’s property, as a just cause for an employee’s dismissal. The right to terminate employment based on just and authorized causes stems from a similarly protected constitutional guarantee to employers of reasonable return on investments.
Based on the circumstances, the Court concluded that Marivin dismissed Sheila with just cause.
However, the Court discovered that Sheila was denied procedural due process.
The Court explained that procedural due process consists of the twin requirements of notice and hearing. The employer must furnish the employee with two (2) written notices before the termination of employment can be effected:
the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and
the second informs the employee of the employer’s decision to dismiss him.
In the present case, the Court found no evidence that Sheila was given any notice to explain or the opportunity to be heard before her dismissal. On the other hand, the Court found that Sheila only learned about her dismissal from service when notices stating her termination from work were posted in the premises of the outlet.
The Court accordingly affirmed the award of nominal damages in Sheila’s favor.
The Court clarified that where the dismissal is for a just cause, the lack of statutory due process should not nullify the dismissal, or render it illegal or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of “dismiss now, pay later.” The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.
Further reading:
Spouses Maynes v. Oreiro, G.R. No. 206109, November 25, 2020.
Noel alleged that on January 2, 2013, he was hired as Assistant Vice President for Mining Services by Delta Earthmoving to take charge of the company’s human resources department and to perform other administrative functions. In June 2013, the company assigned him to work as Officer-in-Charge of the Oceana Gold Philippines, Inc. — Didipio Gold Project to assist in the operations while his immediate supervisor, Ian, was on roster break.
Noel claimed that on December 29, 2013, Ian instructed him to pack his things and to not report back to work since his employment was already terminated. On January 6, 2014, Noel confirmed from Ed, who was Delta Earthmoving’s Executive Vice President and Chief Operating Officer, the termination of his employment.
Noel stated that he was also asked to tender his resignation, but he refused. Instead, he filed the present complaint.
Delta Earthmoving maintained that Noel was validly dismissed due to poor performance, resulting in loss of trust and confidence.
To prove the just cause for the dismissal, Delta Earthmoving pointed to the Performance Evaluation and various memoranda indicating gross neglect of duty and inefficiency on the part of Noel, as follows:
neglecting instructions from his superiors, such as truck hauling and volume studies;
failing to improve KM 20 to serve as employees’ accommodation;
failing to submit 2013 mine operations budget;
delaying the submission of cost reports and billings, which delayed collection; and
failing to perform his duties despite constant reminders.
Delta Earthmoving stated that Noel refused to receive the performance evaluation as he insisted on having performed his job well.
Aside from the presence of just cause, Delta Earthmoving also claimed to have complied with the requirements of procedural due process in terminating Noel’s employment.
The Office of the Labor Arbiter found that Noel was illegally dismissed, and it held Delta Earthmoving liable for payment of the awards.
Delta Earthmoving filed an appeal with an urgent motion to reduce appeal bond before the National Labor Relations Commission.
The Commission issued a Resolution, granting the prayer for reduction of appeal bond after considering Delta Earthmoving’s posting of a bond equivalent to ten percent (10%) of the monetary award to be reasonable and finding the grounds raised in the appeal to be meritorious.
On the main issue of illegal dismissal, the Commission held in the same Resolution that Noel was validly dismissed by reason of loss of trust and confidence. According to the Commission, Delta Earthmoving received reports of Noel’s failure to perform various tasks, and this led to the issuance of six memoranda relative to his work assignments. Delta Earthmoving conducted a performance evaluation, which Noel failed. While Noel denied these allegations, he did not present any proof that he turned in the required reports, or that he completed the assigned tasks.
On the procedural aspect of Noel’s dismissal from employment, the Commission ruled that Noel was afforded due process as his adamant refusal to submit a written explanation should not be taken against Delta Earthmoving.
Noel elevated the matter on certiorari to the Court of Appeals.
In its Decision, the Court of Appeals upheld the Commission’s judgment of Noel’s valid dismissal. Noel sought reconsideration but this too was denied.
Noel filed his petition before the Supreme Court
He claimed that Delta Earthmoving’s appeal should not have been given due course as there was no meritorious ground to justify the reduction of the appeal bond.
As for his dismissal, Noel insisted that the alleged loss of trust and confidence was not proven since he was not even apprised of his superiors’ alleged dissatisfaction with his performance. Noel added that he was not given copies of the memoranda and the Performance Management Form and was therefore deprived of the opportunity to submit his explanation.
Noel also pointed out that Hansen, his immediate superior, informed him of the good job he did on the mining site. In this regard, Noel contended that the Commission and the Court of Appeals failed to recognize that Hansen, who closely worked with him on-site, was in a better position to evaluate his work performance than his other superiors who were stationed in the Delta Earthmoving main office.
On the procedural aspect, Noel alleged that his termination was aggravated by Delta Earthmoving’s failure to give the required notices. Noel mentioned that Hansen asked him to leave the company premises after the Christmas break and told him to stop reporting for work upon instruction of Delta Earthmoving’s management. Noel stated that Ed also tried to convince him to execute a letter of resignation in exchange for payment of one month’s salary.
Was the Commission correct in giving due course to the appeal?
The Supreme Court ruled in the affirmative.
The Court cited Article 229 of the Labor Code of the Philippines which governs appeals in labor cases. The law provides that decisions, awards, or orders of the Office of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from.
The Court added that Section 4 (b), Rule VI of the 2011 NLRC Rules of Procedure, as amended, highlights the indispensable nature of the posting of a bond in appeals from the Office of the Labor Arbiter to the National Labor Relations Commission. Such rule states that a mere notice of appeal without complying with the other requisites aforestated shall not stop the running of the period for perfecting an appeal.
The Court explained that the posting by the employer of a cash or surety bond is mandatory to assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the dismissal of the employer’s appeal. The requirement was designed to discourage employers from using an appeal to delay, or even evade, their obligation to satisfy their employees’ just and lawful claims.
In the present case, the Court found that Delta Earthmoving’s appeal was accompanied by a motion to reduce appeal bond, and by an amount equivalent to ten percent (10%) of the judgment award, which was posted as appeal bond.
The Court stressed that in order to stop the running of the period to perfect an appeal, a motion to reduce bond must comply with two conditions:
the motion to reduce bond shall be based on meritorious grounds; and
a reasonable amount of bond in relation to the monetary award is posted by the appellant.
Regarding “meritorious ground” the Court expounded that the same takes into account the respective rights of the parties and the attending circumstances and could pertain to either the appellant’s lack of financial capability to pay the full amount of the bond, the merits of the main appeal, the absence of an employer-employee relationship, prescription of claims, and other similarly valid issues that are raised in the appeal.
In the present case, the Court found that the Commission made a preliminary determination that Delta Earthmoving had a valid claim as there was no illegal dismissal to justify the award.
For the Supreme Court, the Commission did not err in giving due course to the appeal. Thus, the Supreme Court did not fault the Court of Appeals in sustaining the Commission’s approval of the motion to reduce the appeal bond, considering that the determination of the presence of a “meritorious ground” is a matter fully within the Commission’s discretion.
Was the dismissal of Noel from employment valid?
The Supreme Court ruled that Noel was illegally dismissed from employment.
The Court stated that Article 297 (c) of the Labor Code of the Philippines allows an employer to terminate an employment for willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.
The Court explained that an employer cannot be compelled to retain an employee who is guilty of acts inimical to its interests, particularly one who has committed willful breach of trust under Article 297 (c). This is premised on the fact that an employee concerned holds a position where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. However, to justify a valid dismissal based on loss of trust and confidence, the concurrence of two (2) conditions must be satisfied:
the employee concerned must be holding a position of trust and confidence; and
there must be an act that would justify the loss of trust and confidence.
The Court found that the first requisite was present in that the parties admitted that Noel was a managerial employee, thus held a position of trust and confidence. The Court noted that a great deal of Delta Earthmoving’s business relied on the competence of Noel.
As regards the second requisite, the Court discussed that in terminating managerial employees based on loss of trust and confidence, proof beyond reasonable doubt is not required. The mere existence of a basis for believing that such employee has breached the trust of his employer is enough. This degree of proof differs from that of a rank-and-file employee which requires proof of involvement in the alleged events, and that mere uncorroborated assertions by the employer will be insufficient. Despite the less stringent degree of proof involving managerial employees, jurisprudence is firm that loss of trust and confidence as a ground for dismissal has never been intended to afford an occasion for abuse due to its subjective nature. It must be genuine, not a mere afterthought intended to justify an earlier action taken in bad faith.
In the present case, the Court doubted the evaluation conducted on Noel’s performance based on the following findings:
The date of evaluation and period covered were not indicated;
Gaddi, the person who conducted the evaluation, was not competent to conduct the same since he was not Noel’s immediate supervisor;
No copy of the evaluation was given to Noel. If Noel really refused to receive the same, Delta Earthmoving should have sent a copy of the same to Noel by registered mail.
For the Court, the Performance Evaluation was a mere afterthought to justify Noel’s termination from employment due to alleged poor performance.
On the other hand, the Court found that Ian’s email to Noel was telling in that Noel was commended for all the good work he had done at Didipio Gold Project.
At the same time, the Court discredited Delta Earthmoving’s memoranda which directed Noel to explain in writing certain acts of negligence because there was no showing that the same were served on Noel. The Court viewed the memoranda as concoctions on the part of the employer to strengthen its position against Noel. The Court emphasized that Delta Earthmoving should have instead submitted records revealing Noel’s dismal work performance. There being no showing of poor performance, gross negligence and inefficiency on Noel’s part, no basis supported the alleged loss of trust and confidence upon him.
The Court pointed out that loss of trust and confidence, as a ground for dismissal, may not be invoked arbitrarily. Managerial employees could not simply be dismissed on account of their position.
Moreover, the Court observed that Delta Earthmoving failed to comply with the requirements of procedural due process in the termination of Noel’s employment since the fact of his termination was only relayed to him by his immediate supervisor in the mining site, upon instructions received from Delta Earthmoving’s main office. Noel’s email correspondence with his supervisor even shows that he had to go to Delta Earthmoving’s office in Quezon City to verify for himself if his employment was indeed terminated.
Noel’s dismissal was thus declared illegal as he was denied his right to substantive and procedural due process.
The Court reminded employers that the misdeed attributed to the employee must be a genuine and serious breach of the established expectations required by the exigencies of the position regardless of its designation, and not a mere distaste, apathy, or petty misunderstanding. What is at stake are the employee’s reputation, good name, and source of livelihood, at the very least. Employment and tenure cannot be bargained away for the convenience of attaching blame and holding one accountable when no such accountability exists.
Further reading:
Manrique v. Delta Earthmoving, Inc., G.R. No. 229429, November 9, 2020.
SECTION 12. Suspension of relationship. – The employer-employee relationship shall be deemed suspended in case of suspension of operation of the business or undertaking of the employer for a period not exceeding six (6) months, unless the suspension is for the purpose of defeating the rights of the employees under the Code, and in case of mandatory fulfillment by the employee of a military or civic duty. The payment of wages of the employee as well as the grant of other benefits and privileges while he is on suspended employment or on a military or civic duty shall be subject to existing laws and decrees and to the applicable individual or collective bargaining agreement and voluntary employer practice or policy.
In case of declaration of war, pandemic and similar national emergencies, the employer and the employees, through the union, if any, or with the assistance of the Department of Labor and Employment, shall meet in good faith for the purpose of extending the suspension of employment for a period not exceeding six (6) months: Provided, that the employer shall report to the Department of Labor and Employment, through the Regional Offices, the extension of suspension of employment ten (10) days prior to the effectivity thereof subject to inspection; Provided, however, that the employees shall not lose employment if they find alternative employment during the extended suspension of employment except in cases of written, unequivocal and voluntary resignation; Provided further, that should retrenchment be necessary before or after the expiration of the extension of suspension of employment, the affected employee shall be entitled to separation pay as prescribed by the Labor Code, company policies or collective bargaining agreement, whichever is higher; Provided, finally, that the retrenched employees shall have priority in the re-hiring if they indicate their desire to resume their work not later than one (1) month from the resumption of operations.
This notwithstanding, by mutual agreement of the employer and the employees, through the union, if any, or with the assistance of the Department of Labor and Employment, employees may be recalled to work or retrenched subject to the requirement of notice and separation pay, anytime before the expiration of the extension of suspension of employment.
The extension of suspension of employment shall not affect the right of the employees to separation pay. The first six (6) months of suspension of employment shall be included in the computation of the employees’ separation pay.
Lea Jane and Stephanie alleged that they were hired on March 3, 2008 and April 5, 2008, respectively, by CyberOne Proprietary Limited Company (CyberOne AU), an Australian company, as part-time home-based remote Customer Service Representatives. They state that they became full time and permanent employees of CyberOne AU and were eventually promoted as its supervisors.
Lea Jane and Stephanie narrated the following events:
Sometime in October 2009, Maciej, the Chief Executive Officer (CEO) of CyberOne AU, asked them, together with a certain Benjamin, to become dummy directors and/or incorporators of CyberOne PH. When Lea Jane and Stephanie agreed, they were promoted as Managers and were given increases in their salaries. The salary increases were made to appear as paid for by CyberOne PH.
However, in the payroll for November 16 to 30, 2010, Maciej reduced the salaries of Lea Jane and Stephanie from P50,000.00 to P36,000.00, of which P26,000.00 was paid by CyberOne AU while the remaining P10,000.00 was paid by CyberOne PH. Aside from the decrease in their salaries, Lea Jane and Stephanie were only given P20,000.00 each as 13th month pay for the year 2010.
Sometime in March 2011, Maciej made Lea Jane and Stephanie choose one from three options:
to take an indefinite furlough and be placed in a manpower pool to be recalled in case there is an available position;
to stay with CyberOne AU but with an entry level position as home-based Customer Service Representative; or
Lea Jane and Stephanie mentioned that they were constrained to pick the first option in order to save their jobs. In April 2011, Lea Jane and Stephanie received P13,000.00 each as their last salary.
Hence, Lea Jane and Stephanie filed a case against CyberOne PH and CyberOne AU for illegal dismissal. They likewise claimed for non-payment or underpayment of their salaries and 13th month pay; moral and exemplary damages; and attorney’s fees.
On the other hand, CyberOne PH denied the existence of an employer-employee relationship between it and Lea Jane and Stephanie. CyberOne PH insisted that Lea Jane and Stephanie were its incorporators or directors and not its regular employees. It also claimed that Lea Jane and Stephanie were employees of CyberOne AU, over which the Office of the Labor Arbiter had no jurisdiction because it is a foreign corporation not doing business in the Philippines.
The Office of the Labor Arbiter held that Lea Jane and Stephanie were not employees of CyberOne PH as the latter did not exercise control over them. Said Office did not find evidence showing that CyberOne PH and CyberOne AU were one and the same entity, thus it upheld the presumption that the companies had personalities separate and distinct from one another. The Office of the Labor Arbiter ruled that Lea Jane and Stephanie were merely shareholders or directors of CyberOne PH and not its regular employees. Finally, the Office of the Labor Arbiter found that since CyberOne AU was a foreign corporation not doing business in the Philippines, then it had no jurisdiction over it. Hence, the Office of the Labor Arbiter dismissed the complaint of Lea Jane and Stephanie.
The National Labor Relations Commission reversed and set aside the ruling of the Office of the Labor Arbiter.
The Commission ruled that Lea Jane and Stephanie were employees of CyberOne AU and CyberOne PH since their role as nominal shareholders of CyberOne PH did not preclude them from being employees of CyberOne PH. Moreover, the Commission noted that CyberOne PH paid Lea Jane and Stephanie their monthly salary and allowance, but such company was unable to present any proof that Lea Jane and Stephanie were paid their director’s fee. The Commission also noted that CyberOne AU previously paid the salaries of Lea Jane and Stephanie including allowances.
In addition, the Commission noted that the Furlough Notifications issued by CyberOne AU to Lea Jane and Stephanie were, in fact, notices of dismissal. Lea Jane and Stephanie were informed that CyberOne AU was unable to provide them with work but that it may engage their services again in the future. The Commission declared that Lea Jane and Stephanie were dismissed from employment without valid cause and due process.
Lastly, due to its perceived participation of CyberOne AU in the management, supervision or control of CyberOne PH, the Commission ruled that CyberOne AU was doing business in the Philippines. Thus, the Commission applied the doctrine of piercing the corporate veil.
The Court of Appeals reversed the findings of the National Labor Relations Commission and ruled that no employer-employee relationship existed between Lea Jane and Stephanie, on the one hand, and CyberOne PH, on the other.
The Court of Appeals then held that the National Labor Relations Commission misapplied the doctrine of piercing the corporate veil and concluded that CyberOne AU and CyberOne PH were two distinct and separate entities.
Lea Jane and Stephanie elevated their case to the Supreme Court.
Were Lea Jane and Stephanie employees of CyberOne PH and CyberOne AU?
The Supreme Court ruled that Lea Jane and Stephanie were employees of CyberOne AU, and not of CyberOne PH.
First, record showed that Lea Jane and Stephanie were hired as home-based Customer Service Representatives of CyberOne AU, a corporation organized and existing under the laws of Australia and that they were notified by CyberOne AU of their dismissal through Furlough Notifications.
Second, although the Court found that jurisdiction was acquired over CyberOne PH for having been validly served with summons, jurisdiction over CyberOne AU, a foreign corporation, was not acquired as there was no valid service of summons to it in accordance with the Rules of Court and there was no showing that it voluntarily appeared in court. For the Supreme Court, no judgment could be issued against CyberOne AU, if any, and such judgment would only bind CyberOne PH.
And third, the Court found no reason to apply the doctrine of piercing the corporate veil.
Jurisprudence teaches that the doctrine of piercing the corporate veil applies only in three basic instances, namely:
when the separate distinct corporate personality defeats public convenience, as when the corporate fiction is used as a vehicle for the evasion of an existing obligation;
in fraud cases, or when the corporate entity is used to justify a wrong, protect a fraud, or defend a crime; or
is used in alter ego cases, i.e., where a corporation is essentially a farce, since it is a mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.
In the present case, CyberOne AU was not shown to have conducted business in the Philippines through its local subsidiary CyberOne PH. Neither was CyberOne AU shown to have appointed and authorized CyberOne PH to act in its behalf in the Philippines. The Court thus classified CyberOne AU instead as a non-resident corporation not doing business in the Philippines.
Moreover, the Court noticed Lea Jane and Stephanie’s failure to prove that CyberOne AU, acting as the Managing Director of both corporations, had absolute control over CyberOne PH. The Court added that even granting that CyberOne AU exercised a certain degree of control over the finances, policies and practices of CyberOne PH, such control did not necessarily warrant piercing the veil of corporate fiction since there was not a single proof that CyberOne PH was formed to defraud Lea Jane and Stephanie or that CyberOne PH was guilty of bad faith or fraud.
Significantly, the Court did not find any evidence proving that CyberOne PH was organized for the purpose of defeating public convenience or evading an existing obligation. The Court stated that Lea Jane and Stephanie even failed to allege any fraudulent acts committed by CyberOne PH in order to justify a wrong, protect a fraud, or defend a crime. The Court also stated that the mere fact that CyberOne PH’s major stockholder was CyberOne AU did not prove that CyberOne PH was organized and controlled and its affairs conducted in a manner that made it merely an instrumentality, agency, conduit or adjunct of CyberOne AU.
The Court emphasized that in order to disregard the separate corporate personality of a corporation, the wrongdoing must be clearly and convincingly established.
As mentioned, the Court declared that Lea Jane and Stephanie were not employees of CyberOne PH.
The Court used the four-fold test in determining the existence of an employer-employee relationship. It stated that the test involves an inquiry into:
the selection and engagement of the employee;
the payment of wages;
the power of dismissal; and
the employer’s power to control the employee with respect to the means and method by which the work is to be accomplished.
In the present case, the Court noted the allegation of Lea Jane and Stephanie that they were requested by CyberOne AU to become stockholders and directors of CyberOne PH and that they were hired as employees of CyberOne PH as shown by their pay slips. However, the Court ruled that other than the pay slips, no other evidence was submitted to prove their employment by CyberOne PH. Lea Jane and Stephanie failed to present any evidence, such as employment contracts or job offers, that they rendered services to CyberOne PH as employees thereof.
As to the power of dismissal, the Court found that Lea Jane and Stephanie submitted letters of resignation as directors of CyberOne PH and not as employees thereof. Said the Court, this fact negated their contention that they were dismissed by CyberOne PH as its employees.
Lastly, the Court found no evidence that CyberOne PH exercised the power of control over Lea Jane and Stephanie on the manner by which they performed their work. The Court highlighted that Lea Jane and Stephanie merely relied on their allegations without specifying the terms of their employment, as well as their functions and duties as employees of CyberOne PH.
Were Lea Jane and Stephanie illegally dismissed from employment?
The Court ruled in the negative. As record established the fact that Lea Jane and Stephanie were not employees of CyberOne PH, the Court found no need to delve into the issues of illegal dismissal and entitlement to their claims. The Court concluded that there was no dismissal to speak of.
Further reading:
Gesolgon v. CyberOne PH., Inc., G.R. No. 210741, October 14, 2020.
Maria Antoniette alleged that she was hired by Thanaya Al-Yaqoot Medical Specialist through its agent, Fil-Expat Placement Agency, to work as an orthodontist specialist in the Kingdom of Saudi Arabia.
Maria Antoniette narrated that in May 2016, her employer asked her to sign a document written in Arabic and wanted her to agree that only half of the stipulated salary would be declared to the Kingdom of Saudi Arabia (KSA) government for insurance purposes. She claimed to have expressed hesitation, but she eventually signed the document using a different signature.
Maria Antoniette stated that the employer then repeatedly forced her to execute a new employment contract. When she refused, the employer subjected her to varied forms of harassment in that she was given additional duties. Her employer also threatened to deduct 10,000 Saudi Riyal from her salary and force her out of her accommodation. Furthermore, her employer attempted to make sexual advances on her, and showed no concern when she suffered a severe allergic reaction to latex surgical gloves.
The employer denied that Maria Antoniette was maltreated. It pointed out that Maria Antoniette was visited by the Philippine Overseas Labor Office Local Hire together with the employer’s representative. They observed that Maria Antoniette had no swollen hands, bleeding blisters, and evidence of additional duties or sexual abuse. The employer added that it did not receive any complaint from Maria Antoniette. Although Maria Antoniette mentioned an incident when she was shouted at, the employer explained that it was normal for Arab people to talk in a loud voice.
The employer also denied that it committed contract substitution. Although it admitted that Maria Antoniette was asked to sign a new employment contract, this was only due to Maria Antoniette’s refusal to provide a copy of her contract and diploma, which must be submitted to the KSA Ministry of Health.
The employer also stated that Maria Antoniette was not threatened with a salary deduction. Instead, it merely explained to her that it would be fined should it fail to submit a copy of the contracts to the government.
Finally, the employer retorted that Maria Antoniette’s case could hardly be construed as one of constructive dismissal since she could decide to discontinue her contract. That no dismissal occurred could also be gleaned from its request for her to stay for two more months until her replacement arrives.
The Office of the Labor Arbiter declared the employer guilty of breach of contract and constructive dismissal.
This constrained the employer to appeal the Office of the Labor Arbiter’s Decision to the National Labor Relations Commission.
The Commission reversed the Office of the Labor Arbiter’s Decision and ruled that there was no breach of contract and constructive dismissal. According to the Commission, no contract substitution happened since the employer never intended to prejudice Maria Antoniette in the execution of a new employment contract. The Commission also ruled that since the execution of the new contract was for the purpose of complying with a foreign law requirement of devising a uniform contract for the protection of the worker and the employer, there could be no contract substitution. Furthermore, the Commission ruled out constructive dismissal because if found no evidence that Maria Antoniette’s continued employment was rendered impossible, unreasonable, or unlikely.
Aggrieved, Maria Antoniette elevated the case to the Court of Appeals.
The Court of Appeals reinstated the Decision of the Office of the Labor Arbiter because there was substantial evidence that the employer attempted to force Maria Antoniette into signing a new employment contract. The Court of Appeals stressed that the employer’s attempt to commit contract substitution should be punished to avoid repetition. The Court of Appeals also held that Maria Antoniette was compelled to seek repatriation because her employment became intolerable as she suffered verbal and psychological abuses after she refused to sign the new contract.
The employer assailed the Decision of the Court of Appeals before the Supreme Court.
Did the employer commit contract substitution?
The Supreme Court ruled in the affirmative.
The Court stated that substitution or alteration of employment contracts is listed as a prohibited practice under Article 34 (i) of the Labor Code of the Philippines. The Court further stated that to substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment is considered an act of illegal recruitment under Section 6 (i) of the Migrant Workers and Overseas Filipinos Act of 1995.
In the present case, the Supreme Court noted the admission of the employer that it attempted to make Maria Antoniette sign a new contract.
However, the Supreme Court doubted the claim of the employer that it had no intention of prejudicing Maria Antoniette relative to the supposed second contract.
This was because the employer failed to prove the specific foreign law which required a separate employment contract apart from the Philippine Overseas Employment Administration (POEA)-approved Standard Employment Contract.
In addition, the Supreme Court found it illogical to require Maria Antoniette to sign a second contract for purposes of uniformity if it would only restate the contents of the POEA-approved employment contract, which incidentally, already included an Arabic translation of the agreed terms and conditions between the employee and the employer. The Supreme Court continued that assuming Maria Antoniette failed to provide the employer a copy of the POEA-approved employment contract, the employer could just easily request a copy of the same from its agent.
The Supreme Court also noted the employer’s contention that because Maria Antoniette did not sign another document, there was no second contract, and hence, no contract substitution happened.
The Supreme Court rejected such contention because under prevailing jurisprudence, a refusal of the Overseas Filipino Worker to sign another employment contract does not absolve the employer from liability and the mere intention to commit contract substitution should not be left unpunished.
Was Maria Antoniette constructively dismissed from employment?
The Supreme Court likewise ruled in the affirmative.
The Supreme Court discussed that the law recognizes situations wherein the employee must leave his or her work to protect one’s rights from the coercive acts of the employer. The employee is considered to have been illegally terminated because he or she is forced to relinquish the job due to the employer’s unfair or unreasonable treatment. The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to give up his position under the circumstances.
In the present case, the Supreme Court found that despite the seeming benevolence of the employer in providing housing accommodation and other benefits to its employees, evidence, nonetheless, showed that Maria Antoniette was singled out and verbally intimidated after she refused to sign the second employment contract. Record revealed the following facts, which impelled Marie Antoniette to seek assistance from the Philippine Embassy and Consulate Officials in Saudi Arabia, as well as from the media:
Her employer told her that “she will see hell” if she reports her situation to the Philippine embassy;
Her employer threatened to reduce her salary for her refusal to sign the new contract;
She was constantly harassed and pressured into signing the new employment contract even in the middle of work;
She was humiliated in front of her co-workers and her employer’s relatives and friends; and
Her employer showed no concern over her severe allergic reaction to latex surgical gloves.
Moreover, the Supreme Court criticized the employer’s assertion of Marie Antoniette being overly sensitive. The Court viewed such assertion to be absurd if not downright insulting. According to the Court, Overseas Filipino Workers, especially medical professionals working abroad, could discern a loud voice from abusive language.
Taken together, the Supreme Court considered the foregoing circumstances as sufficient indications of the employer’s bad faith, hostility, and disdain toward Maria Antoniette. The Court stressed that while there was no formal termination of her services, she was left without any option except to quit her job. Maria Antoniette’s continued employment was rendered unlikely and unbearable, amounting to constructive dismissal.
Further reading:
Fil-Expat Placement Agency, Inc. v. Lee, G.R. No. 250439, September 22, 2020.
The employer here was unorganized and had no exclusive bargaining agent. A labor union soon filed a petition for certification election before the regional office of the Department of Labor and Employment. The employer opposed the petition asserting that the members of the said union were employees of their contractor. The petition was still granted despite the opposition and certification elections were conducted.
The employer then filed a protest with the Med-Arbiter, which then granted the same. In justifying the grant of the protest, the Med-Arbiter found that the contractor was legitimate and accordingly the employer of the challenged voters during the certification elections. The Med-Arbiter thus declared the relevant votes cast invalid for the purpose of certifying the labor union as exclusive bargaining agent to the employer.
The Department of Labor and Employment reversed the order of the Med-Arbiter and found that the contractor was a labor-only contractor. It ruled that the challenged votes should be considered.
The Court of Appeals reversed the decision of the Department of Labor and Employment, as the contractor was considered as legitimate. According to the Court of Appeals, the employer had presented substantial evidence that the contractor was legitimate. Specifically, it presented a Certificate of Registration issued by the Department of Labor and Employment, which declared the legitimacy of the contractor. Furthermore, it found that the contractor had substantial capitalization. Also the contractor had other clients from various industries. For the Court of Appeals, the fact that the contractor had other clients negated the conclusion that it is a labor-only contractor.
Should the contractor be considered as a labor-only contractor?
The Supreme Court ruled in the affirmative.
The Court stated that although a contractor possesses badges of legitimate contracting by having substantial capitalization and catering to other clients, the Court stressed that such situation does not automatically convert a labor-only contractor to a legitimate contractor because in the issue of labor-only contracting, the totality of the facts and the surrounding circumstances of the case must still be considered.
In the present case, the Court found that the employer entered into a Memorandum of Agreement with contractor even before the latter was issued a Certificate of Registration by the Department of Labor and Employment. The contractor had supplied manpower to various clients even without the stamp of imprimatur from the Department of Labor and Employment.
Furthermore, although the contractor complied with capitalization requirements, there was a showing that the said contractor exercised control over the employee’s work performance and output. According to the Court, proof of substantial capital does not make an entity immune to a finding of labor-only contracting when there is showing that control over the employees resides in the principal and not in the contractor.
The Court accordingly declared that since the contractor was a labor-only contractor, this created an employer-employee relationship between the employer as a principal, and workers whose votes were invalidated as its alleged employees.
Further reading:
Manila Cordage Company-Employees Labor Union-Organized Labor Union in Line Industries and Agriculture v. Manila Cordage Co., G.R. Nos. 242495-96, September 16, 2020.
Wilfredo alleged that he was engaged as a bus driver by the employer bus company since August 5, 2005.
Wilfredo narrated that on May 31, 2015, a representative from the head office of the employer bus company instructed him to alight from his assigned bus and no longer allowed him to continue his supposed trip that day. When Wilfredo reported for work the next day, he was advised not to come to work in the meantime. He was told that the employer bus company will just send him an e-mail as to when he will be given a bus assignment.
Since the employer bus company failed to file its position paper during the proceedings, the Office of the Labor Arbiter deemed Wilfredo’s allegations to be admitted. The Office of the Labor Arbiter declared Wilfredo to be illegally dismissed from employment and ordered the employer bus company to pay Wilfredo separation pay and backwages, among other awards.
In its appeal to the National Labor Relations Commission, the employer bus company averred that it filed its position paper with respect to the claim of Wilfredo and mailed the same to the Office of the Labor Arbiter.
The Commission admitted the position paper of the employer bus company and ruled that just cause attended the dismissal of Wilfredo from employment. The Commission found that Wilfredo was involved in several reckless driving incidents that constituted misconduct.
Wilfredo’s petition before the Court of Appeals was dismissed for lack of merit. The Court of Appeals found that there was valid ground to dismiss Wilfredo from employment and that the employer bus company complied with the procedural requirements of due process in such dismissal.
Wilfredo elevated his case before the Supreme Court. Wilfredo insisted that the employer bus company failed to substantiate his alleged cumulative infractions of company rules for reckless driving that warranted his dismissal. Wilfredo further mentioned that the employer bus company failed to afford him procedural due process since he was not given a notice to explain, there was no hearing or conference to afford him an opportunity to present evidence to support his claim, and he did not receive a notice of termination.
Was Wilfredo validly dismissed from employment?
The Supreme Court ruled that Wilfredo was validly dismissed from employment.
The Court discussed that dismissal from employment has two facets: first, the legality of the act of dismissal, which constitutes substantive due process; and second, the legality of the manner of dismissal, which constitutes procedural due process. The burden of proof rests upon the employer to show that the disciplinary action was made for lawful cause or that the termination of employment was valid. In administrative and quasi-judicial proceedings, the quantum of evidence required is substantial evidence or “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Thus, unsubstantiated suspicions, accusations, and conclusions of the employer do not provide legal justification for dismissing the employee.
With regard to the substantive aspect, the Court found that the employer bus company terminated Wilfredo’s employment on the ground of serious misconduct. The Court stated that for serious misconduct to be a just cause for dismissal, the concurrence of the following elements is required: (a) the misconduct must be serious; (b) it must relate to the performance of the employee’s duties showing that the employee has become unfit to continue working for the employer; and (c) it must have been performed with wrongful intent.
In the present case, the Court found that the employer bus company presented sufficient evidence to prove that Wilfredo committed numerous infractions of company rules and regulations since he started working with the employer bus company. According to the Court, the infractions can be traced as far back as 2002 up to the time he was rehired in 2008 when he admitted to hitting a concrete mixer truck in Baliuag, Bulacan. The Court added that in the year 2009, the side mirror of Wilfredo’s assigned bus was destroyed while he was trying to overtake another bus; and in 2013, he had an altercation with an inspector of the employer bus company for which he was meted a penalty of suspension. The Court continued that the last infraction was in March 2015 when he figured in a vehicular accident that caused injuries to his passengers.
For the Court, the repeated and numerous infractions committed by Wilfredo in driving the passenger bus assigned to him cannot be considered minor. The Court took judicial notice of the gross negligence and the appalling disregard of the physical safety and property of others so commonly exhibited today by the drivers of passenger buses. Taking into account the nature of Wilfredo’s job, the Court determined Wilfredo’s infractions to be numerous to be ignored or treated lightly that the same may already be subsumed as serious misconduct. The Court accordingly held that Wilfredo was validly dismissed from employment on the ground of serious misconduct.
With regard to requirements of procedural due process, the Court found that the employer bus company failed to comply with the same. The Court expounded that the following should be considered in terminating the services of employees:
The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period of at least five (5) calendar days from receipt of the notice.
After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to explain and clarify their defenses to the charge against them; present evidence in support of their defenses; and rebut the evidence presented against them by the management.
After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: all circumstances involving the charge against the employees have been considered; and grounds have been established to justify the severance of their employment.
In the present case, the Court found that the employer bus company was unable to send Wilfredo a first written notice containing the specific causes or grounds for termination against him. Although Wilfredo submitted a lengthy explanation letter dated June 3, 2015 explaining his side on the incident that transpired two months back, the Court stressed that such explanation did not excuse the fact that there was a complete absence of the first notice. The Court thus sanctioned the employer bus company for disregarding due process requirements.
According to the Court, where the dismissal is for a just cause, as in this case, the lack of statutory due process will not nullify the dismissal, or render it illegal or ineffectual. The employer will not be required to pay the employee backwages. However, the employer should indemnify the employee for the violation of his statutory right in the form of nominal damages in the amount of Thirty Thousand Pesos (Php30,000.00) in accordance with prevailing jurisprudence.
Further reading:
Mariano v. G.V. Florida Transport, G.R. No. 240882, 16 September 2020.
Laurence alleged that on September 3, 2007, he was hired by Verizon Communications Philippines, Inc. (Verizon) as network engineer.
Laurence narrated that sometime in January 2012, his doctor diagnosed him with pulmonary tuberculosis and pneumonia for which he was recommended to isolate and rest for 60 days.
Laurence informed his manager of his medical condition, and did not report for work from February 3, 2012 to recuperate from his illness. He went to Guimaras Island to quarantine himself and avoid the spread of his disease.
On March 14, 2012, Laurence received a notice to explain. When he called his manager to ask why he was being made to explain, the latter answered that the employer already terminated his employment on March 12, 2012.
Two weeks later, Laurence received a letter of termination from his employer, prompting him to file a complaint for illegal dismissal and damages against the latter.
In his case, Laurence claimed to have been illegally dismissed and entitled to his money claims. He asserted that there was no just or authorized cause for his dismissal and that the employer failed to observe the requirements of due process. Laurence also claimed that he did not abandon his work since he was able to notify the employer of his illness and the need for medical treatment on isolation. According to Laurence, his absence is justified due to his sickness that needed a long rest and quarantine period to prevent the spread of the disease to his co-workers.
For its part, the employer acknowledged that on February 3, 2012, Laurence notified his manager through text message on his absence. However, the employer pointed out that Laurence did not indicate the duration of his leave and no longer answered its manager’s phone calls. After more than a month of not hearing from Laurence, the employer sent its nurse, who was able to check on Laurence and serve him a notice requiring him to explain his unauthorized absence and why he should not be considered to have abandoned his work. It was only on March 14, 2012 that Laurence called his manager regarding the notice and explained that he had no cellphone reception in the place where he was. On the same day, Laurence sent an email in which he admitted his mistake, apologized for his unauthorized absence, and sought reconsideration of his dismissal. In view of Laurence’s admission, the employer terminated his employment on March 28, 2012.
The employer further averred that Laurence was aware of its policies on attendance and absences. Nonetheless, he failed to notify the employer of the duration of his leave. The notice he gave to his manager was not enough because he did not mention the length of his absence and did not submit a medical certificate or medical test results. For the employer, his 38-day absence, as well as his admission, warranted his termination from employment.
In its Decision dated February 11, 2013, the Office of the Labor Arbiter dismissed the complaint for lack of merit.
According to the Office of the Labor Arbiter, Laurence, a Network Engineer whose presence was always expected by the employer in the worksite, went on prolonged absence without official leave for 38 consecutive days, without informing his manager or the employer about it and without even offering any reasonable explanation for his failure to inform the employer of his prolonged absences. For the Office of the Labor Arbiter, the employer cannot be faulted in applying its rule on unauthorized absences for 5 consecutive days, which carried a penalty of dismissal from employment.
Aggrieved, Laurence appealed before the National Labor Relations Commission, pointing out that his prolonged absence was due to health reasons and he did not intend to abandon his work. Laurence thus insisted on his stand that no valid cause attended his dismissal from employment.
The National Labor Relations Commission reversed the Office of the Labor Arbiter’s ruling and upheld Laurence’s stand that the employer failed to show just cause in terminating his employment. The Commission explained that the rules of the employer only mandates its employees to notify their manager 4 hours before taking a sick leave and to submit his/her medical certificate upon return. The Commission found that Laurence was able to notify his immediate manager through text message about his sickness and his leave on February 3, 2012. Since the Commission did not consider the absences of Laurence as unauthorized, his dismissal from employment was declared illegal.
The employer filed a petition for certiorari before the Court of Appeals, but the latter upheld the Decision of the National Labor Relations Commission. The Court of Appeals added that the length of his absence is justified considering that pulmonary tuberculosis and pneumonia are commonly considered to be serious infectious diseases.
The employer elevated its case to the Supreme Court and asserted that Laurence was validly dismissed because of his deliberate violation of the employer’s rules on unauthorized absences and excessive absenteeism. The employer stated that it validly exercised its management prerogative in applying its rules. Finally, it granted Laurence ample opportunity to be heard.
Was Laurence validly dismissed from employment?
The Supreme Court ruled in the negative, because Laurence was not found to have violated the employer’s rules on authorized and unauthorized absences.
The Court reiterated prevailing principles in that the employer in an illegal dismissal case has the burden of proving that an employee’s dismissal from service was for a just or authorized cause. Otherwise, the employer’s failure shall result in a finding that the dismissal is unjustified.
Record showed that the employer dismissed Laurence because of his alleged violation of its rules. Under such rules, the absence of an employee may be authorized or unauthorized. An authorized absence, due to sickness, requires that the employee send his manager notice 4 hours before his shift, with a reasonable description of his illness, and the submission of the employee’s proof of illness on his return date. On the other hand, the employee’s absence becomes unauthorized if the employee fails to notify his/her immediate superior, or if the employee fails to submit a medical certificate on his/her return date.
However, the Supreme Court found that on February 3, 2012, Laurence sent his manager a text message, informing the latter that he will be absent because he was sick with pulmonary tuberculosis, a contagious disease, and was advised to take medication. It was also found that the manager did not deny having received this message from Laurence.
The Supreme Court thus stated that the information given by Laurence was sufficient to properly apprise the employer of his condition. Furthermore, Laurence’s failure to submit proof of illness while he was on sick leave and to indicate a return date did not render his absence unauthorized. The Court added that Laurence was no longer given the opportunity to submit his medical certificate and other documents to prove his illness.
With regard to the employer’s policy on excessive absenteeism, which prescribes dismissal as penalty, the Court ruled that the same was harsh.
The Court mentioned that the Constitution looks with compassion on the working class and is intent on protecting their rights. A worker’s employment is property in a constitutional sense, and he/she cannot be deprived thereof without due process and unless the deprivation is commensurate to his/her acts and degree of moral depravity. While the right of an employer to terminate the services of an employee for a just or authorized cause is recognized, the dismissal must be made within the parameters of law and pursuant to the tenets of equity and fair play. An employer’s power to discipline his employees must not be exercised in an arbitrary manner as to erode the constitutional guarantee of security of tenure.
The Court continued that although the power to dismiss employees is a formal prerogative of the employer, such power is not without limitations. The employer is bound to exercise caution in terminating the services of his employees and dismissals must not be arbitrary and capricious. Due process must be observed and employers should respect and protect the rights of their employees. To effect a valid dismissal, the law requires not only that there be just and valid cause; it must also be supported by evidence. There must be a reasonable proportionality between the offense and the penalty. Even when there exist some rules agreed upon between the employer and employee on the subject of dismissal, the same cannot preclude the State from inquiring on whether their rigid application would work too harshly on the employee. Dismissal, without doubt, is the ultimate penalty that can be meted to an employee. Hence, where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe. The Court stressed that it will not hesitate to disregard a penalty that is manifestly disproportionate to the infraction committed.
In the present case, the Court noted that since the employer raised Laurence’s violation of its rules, it is incumbent upon the employer to prove that Laurence clearly, voluntarily and intentionally committed the infraction. However, the Court found that Laurence’s absence from work was due to sickness and that he gave proper notification of his absence, which reason should have been given kind consideration by the employer. The Court remarked that an employee cannot anticipate when an illness may happen, thus, he may not be able to give prior notice or seek prior approval of his absence, but could only do so after the occurrence of the incident.
The Court added that even assuming that Laurence was found to have deliberately violated the employer’s rules, the penalty of dismissal imposed upon him was too harsh and disproportionate to the wrongdoing committed. In this regard, the Court maintained that it is not bound by the employer’s rules, as well as the employer’s findings of violation and dismissal. It is settled that the law serves to equalize the unequal. The labor force is a special class that is constitutionally protected because of the inequality between capital and labor. This constitutional protection presupposes that the labor force is weak. However, the level of protection to labor should vary from case to case; otherwise, the State might appear to be too paternalistic in affording protection to labor.
The Court also found that Laurence was not accorded procedural due process.
The Court stated that to effect a valid dismissal on the ground of just cause, the employer is bound to observe procedural due process. Procedural due process consists of the twin requirements of notice and hearing. The employer must furnish the employee with 2 written notices before the termination of employment can be implemented:
the first apprises the employee of the particular acts or omission for which his dismissal is sought; and
the second informs the employee of the employer’s decision to dismiss him.
In the present case, the Court found that the notices issued by the employer failed to observe the standards set forth in case law. The Court said that while the employer ostensibly afforded Laurence the opportunity to refute the charge of AWOL and abandonment against him, the employer deprived him of due process when he was not given ample time to prepare his defense and later on, when his explanation was not given consideration on the ground that it was submitted beyond the 48-hour period.
What reliefs were granted to Laurence?
In view of the finding of illegal dismissal, the Court upheld the grant of separation pay, but it deleted the award of backwages.
With regard to reinstatement, the Court discussed that usually, reinstatement without loss of seniority rights and other privileges and full backwages are granted to illegally dismissed employees.
However, if actual reinstatement is no longer possible, the employee becomes entitled to separation pay in lieu of reinstatement. Based on jurisprudence, reinstatement is not feasible:
in cases where the dismissed employee’s position is no longer available
the continued relationship between the employer and the employee is no longer viable due to the strained relations between them; and
when the dismissed employee opted not to be reinstated, or the payment of separation benefits would be for the best interest of the parties involved.
In these instances, said the Court, separation pay is the alternative remedy to reinstatement in addition to the award of backwages. The payment of separation pay and reinstatement are exclusive remedies. Stated differently, the payment of separation pay replaces the legal consequences of reinstatement to an employee who was illegally dismissed.
In the present case, the Court upheld the grant of separation pay in favor of Laurence since it was consistently found that he opted to receive separation pay instead of reinstatement.
On the other hand, with regard to backwages, the Court elaborated that in labor cases, the Court is tasked with the delicate act of balancing the employee’s right to security of tenure against the employer’s right to freely exercise its management prerogatives. Even though it is basic in labor law that an illegally dismissed employee is entitled to reinstatement, or separation pay if reinstatement is not viable, and payment of full backwages, in some instances, the Court has carved out exceptions where the reinstatement of an employee was ordered without an award of backwages. This is on account of: (1) the fact that dismissal of the employee would be too harsh of a penalty; and (2) that the employer was in good faith in terminating the employment.
The Court held that the employer is excused from paying backwages to Laurence because it considered the penalty of dismissal to be harsh. Although Laurence did not violate the employer’s rules on authorized and unauthorized absences since he was able to notify his immediate manager of his absence on February 3, 2012 because of his sickness, the Court found that he cannot be deemed entirely faultless. Aside from the text message he sent, he did nothing else to comply with the employer’s rules. He did not inform the employer that he would leave his residence nor leave any information on how he may be reached. On the other hand, his manager exerted efforts to contact Laurence, albeit to no avail. For such reasons, the Court held that no basis supported an award of backwages. Such award of backwages was thus deleted.
Further reading:
Verizon Communications Philippines, Inc. v. Margin, G.R. No. 216599, September 16, 2020.