On September 15, 2008, the employer, a rent-a-car company, hired Reynaldo for the position of driver for transporting tourists to their destination.
Reynaldo was in the employ of the company for seven years. He had no derogatory record. However, on the night of February 12, 2015, Reynaldo was involved in misconduct for the first time in his career.
On such date, Reynaldo engaged in a heated argument with a co-employee, Felix. According to Reynaldo, he left the work premises after his shift, but he had to return to retrieve his personal belongings. Upon arrival at the work premises, Reynaldo chanced upon Felix, whom he claimed was staring sharply at him. Reynaldo stated that he accosted Felix and asked if there was a problem. Felix fired back and asked Reynaldo the same question. A heated argument with shoving then ensued. Another employee, Jose, broke up the melee and led Reynaldo away from Felix.
The employer company, however, countered that Reynaldo was drunk when he confronted Felix to the point of boxing and strangling the latter that the two of them had to be restrained by its security guards. It claimed that Reynaldo refused to be controlled, until Jose arrived, and led Reynaldo outside the garage.
After the submission of various written explanations, the employer company placed Reynaldo under preventive suspension and conducted an administrative hearing. The employer company later concluded that Reynaldo violated its Code of Discipline for fighting with a co-employee inside the work premises. Thus, Reynaldo was terminated from employment on March 20, 2015.
The Office of the Labor Arbiter found that Reynaldo was not illegally dismissed from employment because fighting with a co-employee within work premises was considered by the employer company as serious misconduct and a valid ground for termination of his employment.
The National Labor Relations Commission affirmed the ruling of the Office of the Labor Arbiter.
The Court of Appeals reversed the findings of the labor tribunals and found that Reynaldo was illegally dismissed from employment since what transpired between Reynaldo and Felix was a petty quarrel that merely involved shoving or slight pushing. The Court of Appeals found that, except for a minor scratch in Reynaldo’s knee, the incident did not cause bodily harm. It was also found that the said incident did not in any manner interfere with the work of fellow employees, or the operations of the business. For the Court of Appeals, the penalty of dismissal imposed upon Reynaldo was too harsh and not commensurate with the act he committed.
Thus, it declared the illegality of the dismissal of Reynaldo from employment and his entitlement to reinstatement and backwages.
The employer company elevated its case to the Supreme Court.
Was Reynaldo illegally dismissed from employment?
The Supreme Court ruled in the affirmative.
The Court found that Reynaldo did not commit serious misconduct to warrant his dismissal from employment.
Jurisprudence1Empas v. Mariwasa Siam Ceramics, Inc., G.R. No. 246176, December 7, 2021. dictates that misconduct is generally defined as a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.
Under Article 297 of the Labor Code of the Philippines, an employer may terminate the services of an employee on the ground of serious misconduct committed in connection with or relative to the performance of his duties.2Relevant portions of the Article states: Art. 297. Termination by Employer. — An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of lawful orders of his employer or representative in connection with his work; x x x
Jurisprudence3Empas v. Mariwasa Siam Ceramics, Inc., G.R. No. 246176, December 7, 2021. also teaches that in labor cases, misconduct, as a ground for dismissal, must be serious or of such grave and aggravated character and not merely trivial or unimportant. To justify termination on the ground of serious misconduct, the following requisites must concur:
the misconduct must be serious;
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
it must have been performed with wrongful intent.
In the present case, the Court found that none of the requisites for serious misconduct was present. It agreed with the finding of the Court of Appeals that only a petty quarrel involving shoving or slight pushing transpired between Reynaldo and Felix. According to the Supreme Court, the same was nipped in the bud by the intervention of Jose and the security guards on duty. The incident neither caused work stoppage nor posed a threat to the safety of the other employees. Furthermore, the employer company never established how Reynaldo’s misconduct had adversely affected its business, or how Reynaldo had become unfit to continue working for the company. For the Supreme Court, no just cause supported the termination of Reynaldo’s employment.
The Court cited Article 294 of the Labor Code of the Philippines, which states that illegally dismissed employees are entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of allowances, and to other benefits or their monetary equivalent from the time their compensation was withheld from them up to the time of their actual reinstatement. The Court stated that Reynaldo deserved no less.
Further reading:
G & S Transport Corp. v. Medina, G.R. No. 243768, September 5, 2022.
SRL International Manpower Agency (SRL) posted a job opening for its principal, Akkila Co. Ltd. UAE/Al Salmeen Trading Est. (Akkila), for a certain project in Qatar.
Pedro sent an application to Akkila, through SRL. In July 2010, SRL received word from Akkila that the latter was interested in hiring Pedro as Project Manager. Afterwards, SRL forwarded Pedro’s documents to Akkila for the processing of his employment visa.
Akkila soon furnished Pedro an “Offer of Employment” for a two (2) year engagement without the approval of the Philippine Overseas Employment Administration (POEA). Akkila and Pedro directly contacted each other and the latter was able to depart for the United Arab Emirates (UAE) on October 14, 2010 using a visit visa instead of an employment visa.
On March 24, 2011, Akkila asked Pedro to return to the Philippines with an instruction to apply for deployment anew under an employment visa and with the condition that he should return 10 days after its processing.
In April 2011, Pedro returned to the Philippines and started processing his next deployment under new “Contract of Employment,” with the assistance of SRL
Pedro underwent a medical examination with SRL’s accredited clinic, Seamed Medical Clinic (Seamed), to assess his fitness for work. However, Seamed found that Pedro had Uncontrolled Diabetes Mellitus Type II and declared him unfit for work. This finding was reflected in a Medical Certificate dated May 10, 2011.
SRL disclosed such finding to Akkila and informed the latter that if it was still interested, it should send a waiver indicating its willingness to hire Pedro notwithstanding his unfitness for work.
Akkila replied that it had a strict qualification not to hire an applicant who is not fit for work. Subsequently, in a letter dated May 22, 2011, Akkila informed Pedro that he cannot be hired due to medical reasons.
In the case of SRL International Manpower Agency v. Yarza, the Supreme Court resolved three issues:
First: Was the “Offer of Employment” furnished by Akkila to Pedro valid?
The Supreme Court stated that since employment contracts of Overseas Filipino Workers are perfected in the Philippines, and following the principle of lex loci contractus (the law of the place where the contract is made), such contracts are governed primarily by the Labor Code of the Philippines and its implementing rules and regulations.
The Court added that the laws generally apply even to employment contracts of Overseas Filipino Workers since the Constitution explicitly provides that the State shall afford full protection to labor, whether local or overseas. Thus, even if a Filipino is employed abroad, he or she is entitled to security of tenure, among other constitutional rights. Security of tenure remains even if employees, particularly the Overseas Filipino Workers, work in a different jurisdiction.
Furthermore, the Court also stated that under the Labor Code of the Philippines, employers hiring Overseas Filipino Workers may only do so through entities authorized by the Secretary of the Department of Labor and Employment. The Court continued that unless the employment contract of an Overseas Filipino Worker is processed through the POEA, the same does not bind the concerned Overseas Filipino Worker because if the contract is not reviewed by the POEA, certainly the State has no means of determining the suitability of foreign laws to our overseas workers.
In the present case, the Court found that the “Offer of Employment” was perfected when Pedro agreed to the same while he was still in the Philippines.
However, the Court found that the “Offer of Employment” ran contrary to the Constitution and the law and was not approved by the POEA. Specifically, the Court found that the “Offer of Employment”, although stating that the rules and regulations found in UAE’s labor laws should apply, contained stipulations contrary to the policies of the Philippines concerning labor contracts and security of tenure.
With these findings, the Court declared the “Offer of Employment” invalid.
Second: Did an employer-employee relationship exist between Akkila and Pedro.
The Court ruled in the affirmative. Notwithstanding the invalidity of the “Offer of Employment,” the Court ruled that an employer-employee relationship existed between Akkila and Pedro.
According to the Court, absent a valid employment contract, the following elements of the four fold test should be considered:
selection and engagement of the employee;
payment of wages;
power of dismissal; and
the employer’s power to control the employee’s conduct.
The Court reiterated that the most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. However, the power of control refers merely to the existence of the power, and not to the actual exercise thereof. No particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. However, a finding that such relationship exists must still rest on some substantial evidence.
In the present case, the Court found:
For the first element, Akkila, through the participation of SRL, selected and engaged the services of Pedro, precisely because he was deployed through a visit visa under Akkila’s instruction and endorsement.
For the second element, Akkila did not deny that it paid Pedro’s wages with the “Offer of Employment” as reference.
Regarding the third element, Akkila had the power to dismiss Pedro. In fact, it did so when it issued the termination letter dated May 22, 2011.
Lastly, on the fourth element, Akkila had control over Pedro’s work conduct, which included the means and methods he would employ to produce the results required by the company.
In addition, the Court took into consideration the fact that Akkila did not show proof that it took no part in directing Pedro’s job output. In particular, Akkila did not appeal the finding of employer-employee relationship before the Court of Appeals. Hence, the Court bound Akkila by such conclusion.
Third: Was Pedro illegally dismissed from employment?
With the existence of the employer-employee relationship, the Court ruled that Akkila should accord Pedro due process, both substantial and procedural, before terminating his employment.
The Court stated that to comply with substantive due process, Pedro can only be dismissed for a just or authorized cause, the absence of which renders his dismissal illegal.
In the present case, it was found that Akkila dismissed the services of Pedro on the ground of disease, under Article 299 [284] of the Labor Code of the Philippines. The said provision essentially provides that “an employer would be authorized to terminate the services of an employee found to be suffering from any disease if the employee’s continued employment is prohibited by law or is prejudicial to his health or to the health of his fellow employees.”
The Court further stated that to be considered valid, the dismissal on the ground of disease must satisfy two requisites:
the employee suffers from a disease which cannot be cured within six months and his/her continued employment is prohibited by law or prejudicial to his/her health or to the health of his/her co-employees, and
a certification to that effect must be issued by a competent public health authority.
In the present case, record showed Akkila’s decision to inform Pedro that he could not be hired due to medical reasons. However, the Court found that Akkila failed to present any certification from a competent public health authority citing that Pedro’s disease not could be cured within six months, or that his employment was prejudicial to his health or that of his co-employees. Said the Court, absent this certification, Akkila failed to comply with Article 299 [284] of the Labor Code of the Philippines as well as applicable regulations. For the Court, Pedro’s dismissal was not based on a valid cause.
Furthermore, the Court found that Akkila did not accord Pedro procedural due process. Record showed that Akkila unilaterally dismissed him by simply issuing a letter dated May 22, 2011. Additionally, Akkila sent this termination letter after it already issued a “new” Contract of Employment dated April 15, 2011 to him. Clearly, Akkila, after discovering that Pedro was deemed unfit for work due to diabetes, sought to immediately sever ties with him.
The Court accordingly ruled that Pedro was illegally dismissed from employment.
On the relief granted, the Court stated that even with the invalid “Offer of Employment”, the existence of an employer-employee relationship between Akkila and Pedro, as well as the illegality of his dismissal, entitled him to claim for the payment of his salaries for the unexpired portion of his contract.
In this regard, the Court also found it proper to award moral and exemplary damages under prevailing jurisprudence which allows the migrant worker to claim such damages in connection with the employment contract or as provided by law. Moreover, the Court awarded Pedro attorney’s fees at the rate of ten percent (10%) under Article 2208 of the Civil Code of the Philippines.
The employer, a business process outsourcing (BPO) company, hired Mario as one of its technical support representatives and assigned him to handle a client account.
On October 30, 2009, the employer informed Mario that he would be transferred to a different client account upon successfully passing the training, assessment and examination and that his refusal to take the examinations would result in the termination of his services on the ground of redundancy.
Mario refused to undergo training and take the examinations under the belief that he was entitled to security of tenure.
Thereafter, Mario received a memorandum informing him that those who declined to comply with the transfer directive were no longer required to log in their system since their respective team leaders will take care of their attendance instead until the redundancy offer is finalized.
On November 17, 2009, Mario received a notice dated November 16, 2009 informing him of his dismissal due to redundancy effective December 16, 2009.
Through his counsel, Mario sent a demand letter to his employer asserting that no redundancy in the company occurred considering that it was continuously hiring other technical support representatives. Mario further asserted that as a regular employee, he should no longer be required to take another examination to prove his qualifications.
On January 7, 2010, Mario filed a complaint for illegal dismissal against the employer before the arbitration branch of the National Labor Relations Commission in Bacolod City.
The employer argued that the decrease in volume of calls for the account to which Mario was originally assigned led to an excess number of technical support representatives working on the same. It stated that instead of immediately dismissing its employees, it offered to transfer Mario and other technical support representatives to another account, using the following criteria:
first call resolution scores for the last three preceding months; and
existence of remediation cases.
The employer pointed out that using the foregoing criteria, Mario was one of the “bottom performers.” It then explained that transferring the said employees to another client account was without any demotion in rank or diminution in pay as long as they successfully passed the standard product training and assessment. It added that undergoing training and assessment were necessary due to the differences between the two client accounts. It posited that it was forced to dismiss Mario on the ground of redundancy since he refused to transfer and go through the training and examination. Finally, it claimed it sent a notice of termination to the Department of Labor and Employment (DOLE).
The Office of the Labor and the National Labor Relations Commission ruled that the dismissal of Mario from employment on the ground of redundancy was valid.
The Court of Appeals ruled that Mario was illegally dismissed from employment in view of the employer’s failure to show that his position was redundant.
The employer went to the Supreme Court.
Was Mario validly dismissed on the ground of redundancy?
The Supreme Court ruled in the negative.
The Court stated that in termination cases, the employer bears the burden of proving that the employee’s dismissal was for a valid and authorized cause. Consequently, an employer’s failure to prove that the dismissal was valid renders the dismissal illegal.
Here, the Court ruled that Mario was illegally dismissed from employment since the employer’s evidence was found to be insufficient to support a claim of valid redundancy.
The Court reiterated established principles by stating that redundancy exists when an employee’s services are in excess of what is reasonably demanded by the actual requirements of the business. To successfully invoke a valid dismissal due to redundancy, there must be:
a written notice served on both the employees and the DOLE at least one month prior to the intended date of termination of employment;
payment of separation pay equivalent to at least one month pay for every year of service;
good faith in abolishing the redundant positions; and
fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.
Moreover, the company must provide substantial proof that the services of the employees are in excess of what is required of the company.
The Court noted the employer’s assertion that its business was slowing down and that it would require fewer representatives beginning November 2009. The Court also looked into the following documents submitted by the employer to support its claim of redundancy:
Affidavit of the human capital delivery site manager;
Mario’s Employment Contract;
FCR scores of the technical support representatives considered to be bottom performers;
FAQs for Transition Plans;
Attendance sheet for meeting with representatives dated October 30, 2009;
Transfer Agreement;
Recruitment Flowchart;
Comparison of the duties of representatives assigned to the different clients;
Notice of Termination addressed to Mario; and
Termination Report to DOLE.
However, the Court was not convinced of the alleged decline in the employer’s business and the expected decrease in volume of calls. This was because other than the bare assertions of the human capital delivery site manager, the Court found no other evidence proving the business slow down or the alleged low volume of calls. According to the Court, the affidavit of the human capital delivery site manager did not substantiate the claim of slow down or decreased call volume and is mainly self-serving. The Court explained that the employer should have presented any document proving the decline in volume of calls for the past months, or affidavits of client officers who determined that business was slowing down and the basis thereof. Although other documents were submitted, the Court found that these hardly proved the fact of redundancy.
The Court was also not convinced of the employer’s claim of good faith when Mario was offered a transfer. Under jurisprudence, for a transfer not to be considered a constructive dismissal, the employer must be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Failure of the employer to overcome this burden of proof, the employee’s demotion shall no doubt be tantamount to unlawful constructive dismissal.
In the present case, the Transfer Agreement was found to be prejudicial to him. According to the Court, by requiring Mario to pass additional trainings and examination as a condition to retain his employment under the pain of dismissal, the employer disregarded his right to security of tenure. For the Court, the employer’s failure to prove redundancy, coupled with the imposition of a prejudicial condition to retain employment, rendered the offer of transfer invalid.
Having been illegally dismissed from employment, Mario was awarded separation pay and backwages.
Further reading:
Teletech Customer Care Management Philippines, Inc. v. Gerona, Jr., G.R. No. 219166, November 10, 2021.
Freddie alleged that in April 2012, he was hired by Helenar Construction as painter and made to work in its various products.
Freddie narrated that on October 24, 2014, Helenar Construction’s foreman required him to sign a labor contract for a period of 3 months with a clause stating that his employment would be renewable depending on the evaluation of such company’s site engineer and foreman. Believing that the contract would violate his security of tenure, Freddie refused to sign the contract. On November 7, 2014, Helenar Construction’s project-in-charge, barred him from entering the construction site.
On November 9, 2014, Freddie filed a complaint claiming that he was Helenar Construction’s regular employee who was illegally dismissed from employment.
Helenar Construction countered that Freddie is not its regular employee. It explained that Freddie was hired by its subcontractor as a painter for projects. Helenar Construction pointed out that in the construction industry, subcontractors are hired for the flooring, ceiling, painting, electrical and other related services. It likewise claimed that Freddie unjustifiably stopped reporting for work after refusing to sign the labor contract it prepared.
The Office of the Labor Arbiter declared Freddie as a regular employee of Helenar Construction and ruled that he was illegally dismissed from service.
Helenar Construction appealed to the National Labor Relations Commission, which reversed the Office of the Labor Arbiter’s findings. According to the Commission, no employment relationship existed between Freddie and Helenar Construction. Applying the four-fold tests, the Commission ruled that the subcontractor was Freddie’s true employer, based on the following findings: First, the unsigned contract bore the name of the subcontractor and identified him as the employer. Second, through cash vouchers, it was revealed that the subcontractor paid Freddie’s weekly wages. Third, the contract showed that the subcontractor reserved the right to dismiss his painters if they have violated the terms of the labor contract. Finally, Helenar Construction hired subcontractors for specific works such as painting.
Freddie elevated the case to the Court of Appeals, which, however, affirmed the judgment of the Commission.
Freddie thus filed his petition before the Supreme Court and maintained that he was a regular employee of Helenar Construction and that he was illegally dismissed from employment.
Was Freddie a regular employee of Helenar Construction?
The Supreme Court ruled that Freddie was a regular employee of Helenar Construction.
The Court discussed that what determines regular employment is not the employment contract, written or otherwise, but the nature of the job. The applicable test is the reasonable connection between the particular activity performed by the employee, in relation to the usual business of the employer. The standard supplied by Article 295 of the Labor Code of the Philippines is whether the work undertaken is necessary or desirable in the usual business or trade of the employer. This can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business is pursued in the usual course.
In the present case, the Court found that Helenar Construction was principally engaged in the construction business and that Freddie, as a painter, was tasked with preparing, sanding and painting various construction works. The Court mentioned that the nature of Freddie’s job inarguably required him to perform activities which were deemed necessary in Helenar Construction’s usual business and that Freddie’s continuous rehiring to different construction projects from April 2012 until his dismissal in November 2014 attested to the desirability of his services.
The Court added that at any rate, Helenar Construction, as well as the supposed subcontractor, did not comply with the requirements of the law with respect to the hiring of project employees. The Court reiterated that the principal test in determining project-based employment is whether a person is assigned to carry out a specific project or undertaking, the duration and scope of which was specified at, and made known to him, at the time of his engagement. It is crucial that the worker was informed of his status as a project employee at the time of hiring and that the period of his employment must be knowingly and voluntarily agreed upon by the parties, without any force, duress, or improper pressure vitiating consent.
In the present case, the Court found no substantial evidence proving that Freddie was adequately informed of his status as a project employee at least at the time of his engagement. There was also no showing that Freddie was fully apprised of the duration and scope of the projects.
While the Court noted the reliance on the provisions of the unsigned labor contract to characterize Freddie as a project employee, the Court viewed the labor contract as an afterthought designed to deny Freddie the benefits of a regular employee, particularly, his security of tenure. The Court stressed that a worker shall be presumed a regular employee absent clear agreement showing that he was properly informed of the nature of his employment. For the Court, the Office of the Labor Arbiter correctly held that Freddie was a regular employee of Helenar Construction.
As a regular employee, said the Court, Freddie may be dismissed subject to both substantive and procedural limitations.
Was the termination of Freddie’s employment valid?
The Court expounded that the dismissal must be for a just or authorized cause provided in the Labor Code of the Philippines, and the employee must be accorded procedural due process, basic of which is the opportunity to be heard and to defend himself. The Court reiterated that in termination disputes, the burden of proof is always on the employer to prove that the dismissal was for a valid cause, failure to do so would necessarily mean that the dismissal is not justified. Likewise, evidence must be clear, convincing and free from any inference that the prerogative to dismiss an employee was abused and unjustly used by the employer to further any vindictive end.
In the present case, the Court found that Helenar Construction failed to establish a valid cause for dismissing Freddie since there was no proof that Freddie unjustifiably stopped reporting for work. The Court gathered that Freddie refused to sign the belated labor contract that Helenar Construction prepared. This irked the foreman and engineer of Helenar Construction and resulted in Freddie being barred from the construction site. The Court similarly found that Freddie’s dismissal from employment was attended with procedural infirmity as there was no administrative investigation conducted. Neither were there prior notices served upon Freddie.
The Court thus affirmed the Office of the Labor Arbiter’s ruling of Freddie’s illegal dismissal.
Further reading:
Laurente v. Helenar Construction, G.R. No. 243812, 07 July 2021.
In 1990, Cathay Pacific Airways Limited (Cathay) hired Salvacion as cabin crew. On May 19, 2007, Cathay received a report that Salvacion and other crew members were caught in possession of goods, specifically bottled water and magazines, after alighting from the aircraft.
After receiving a written explanation from Salvacion, Cathay terminated her services effective immediately for committing serious misconduct by removing company property without authorization. According to Cathay, it could no longer repose its trust and confidence on Salvacion considering the seriousness of her violation.
Was Salvacion validly dismissed on the ground of loss of trust and confidence?
No. The Supreme Court ruled that Salvacion was illegally dismissed from employment.
The Court explained that Salvacion’s termination was not commensurate to the infraction committed.
There is loss of trust and confidence when an employee fraudulently and willfully committed acts or omission in breach of the trust reposed in her/him by the employer. Two requisites must be complied with to justify this ground for termination. First, the employee must be holding a position of trust, and second, the employer shall sufficiently establish the employee’s act that would justify loss of trust and confidence. The act must be characterized as real wherein the facts that brought about such act were clearly established, and that the employee committed the same without any justifiable reason.
Cathay has complied with the two aforementioned requisites for loss of trust and confidence.
The Court declared that Salvacion’s position was imbued with trust and confidence.
The Court then found that the nature of Salvacion’s duties and obligations required the highest degree of trust and confidence because she had in her control properties of Cathay. In this regard, the Court held that Salvacion’s position was imbued with trust and confidence. According to the Court, she had in her custody and control company properties which are of significant value, and she also had the responsibility of informing the In-flight Service Manager whether there was defective or missing equipment. Moreover, she had oversight over two to four cabin crew members assigned in her section of the aircraft and rated their performance for promotion purposes. She had been entrusted with the custody and control of valuable company properties in the normal and routine exercise of her duties.
Likewise, the Court ruled that the airline clearly demonstrated that Salvacion committed an infraction of company policy that breached its trust and confidence on her. Said the Court, pilferage of company property is an act characterized by fraud or dishonesty which may be meted with summary dismissal as specifically provided in Cathay’s Disciplinary & Grievance Policy,
The Court stated that Cathay attached a confirmation from the bottled water brand that the batch number of the Evian water confiscated from Salvacion belonged to the batch of bottled water that was exclusively shipped to Cathay. This certainly established that the bottle of water confiscated from her was Cathay’s property. Admittedly, Salvacion transgressed Cathay’s Disciplinary and Grievance Policy by taking out the bottle of water without authorization.
The Court stressed that Salvacion’s infraction was clearly a case of misconduct considering that it is “a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.” It evidently eroded Cathay’s trust and confidence in her.
However, the Court also considered that this was Salvacion’s first infraction in her 17 years of service in the airline which involved a mere bottle of water.
Thus, although Cathay had laid down penalties for violation of its policies, the Court cautioned that all surrounding circumstances must be considered and the penalty must be commensurate to the violation committed by an employee. Termination of the services of an employee should be the employer’s last resort especially when other disciplinary actions may be imposed, considering the employee’s long years of service in the company, devoting time, effort and invaluable service in line with the employer’s goals and mission, as in Salvacion’s case.
In the present case, the Court found that during Salvacion’s span of employment, she did not commit any infraction or was ever sanctioned except in the incident subject of the present controversy. In this regard, the Court stated that to impose a penalty as grave as dismissal for a first offense and considering the value of the property allegedly taken would be too harsh under the circumstances. The Court accordingly concluded that Salvacion was illegally dismissed from service.
Further reading:
Lamadrid v. Cathay Pacific Airways Limited, G.R. No. 200658, June 23, 2021.
Jerome was hired by respondent ELPI in 1998 as a Professional Sales Representative. After several promotions, he was retrenched in 2003. He was rehired in 2005 and held the position of Sales and Marketing Services Manager in 2011.
On November 4, 2011, ELPI issued a Show-Cause Letter, charging Jerome with violation of company rules and breach of trust and confidence. ELPI claims that on May 14, 2008, or more than three years back, Jerome simulated the purchase of four tires from a certain tire supplier and claimed reimbursement for the cost. He was placed under preventive suspension for 30 days. ELPI did not reveal the source of the damning information against Jerome.
Jerome submitted his explanation and questioned ELPI’s failure to identify the source of the damaging information.
In response, ELPI attached a copy of the official receipt, sales invoice, and car repairs request relating to the tire supplier.
Jerome then submitted a certification dated December 7, 2011 issued by Lilia, proprietor of the tire supplier, stating that she issued the official receipt under the name of ELPI for the purchase of four tires.
During the formal investigation, ELPI confronted Jerome with a notarized certification dated December 17, 2011 from Arnulfo, the husband of Lilia, stating that Jerome did not purchase tires from her. However, record showed that Arnulfo issued another statement dated December 20, 2011 acknowledging that he lacked knowledge of the sale and that his wife was the one who issued the official receipt.
On December 21, 2011, Jerome was issued a Notice of Termination, prompting him to file a Complaint for illegal dismissal against ELPI.
When ELPI filed its position paper, it presented two affidavits. First was the affidavit of Timothy dated December 18, 2011. Timothy narrated that Jerome directed him to obtain a receipt for the purchase of tires. Timothy further narrated that he obtained the receipt from the tire supplier and gave it to Jerome who, in turn, used it to obtain reimbursement. The second was the affidavit of Sojit dated December 19, 2011, who narrated that sometime in 2009, Timothy told him of Jerome’s directive to produce a receipt, of Jerome’s anger should Timothy fail to do so, and of Timothy’s fear during the conversation.
The Office of the Labor Arbiter declared the dismissal of Jerome valid. The NLRC, however, ruled that Jerome was illegally dismissed from employment. The Court of Appeals’ ruling was that Jerome was validly dismissed.
Was Jerome illegally dismissed from employment?
The Supreme Court reiterated the settled rule that the employer has the right to terminate the services of an employee for a just or authorized cause.1Mayon Hotel & Restaurant v. Adana, G.R. No. 157634, [May 16, 2005], 497 PHIL 892-932 The dismissal of employees must, however, be made within the parameters of law and pursuant to the tenets of fair play. “[I]n termination disputes, the burden of proof is always on the employer to prove that the dismissal was for a just or authorized cause. Where there is no showing of a clear, valid and legal cause for termination of employment, the law considers the case a matter of illegal dismissal.”
Here, the Court remarked that during the administrative proceedings, ELPI had in its possession the official receipt, the sales invoice, the repairs request, Lilia’s statement, and the two contradicting statements of Arnulfo, as basis for its decision that Jerome committed dishonesty.
However, the Supreme Court ruled that Jerome was illegally dismissed from employment because of ELPI’s failure to prove by substantial evidence the presence of a just cause for terminating Jerome’s employment. Specifically, ELPI had failed to show through substantial evidence that Jerome simulated the tire purchase transaction.
Re: the official receipt, sales invoice, repairs request and Lilia’s certification
The Court found that the official receipt, sales invoice, repairs request and Lilia’s certification only revealed the genuine transaction conducted by Jerome.
The Court presumed the official receipt to be regular and in accordance with the ordinary course of business.2Section 3 (p) and (q), Rule 131, of the Rules of Court.
Although noting the doubt expressed by the Court of Appeals on Jerome’s transaction because he presented an old receipt, the Supreme Court, nonetheless, stated that an old official receipt did not lead to Jerome’s guilt, especially in the face of Lilia’s undisputed certification to having herself issued the receipt for the purchase of four tires. According to the Court, that Lilia used an old receipt did not mean that the purchase of the tires did not happen.
With regard to the repairs request, the Court found that it was approved by ELPI through its Human Resource Department (HRD) Manager, who had the duty to first ascertain that repairs were actually conducted on the car.
For the Court, the said pieces of evidence contained no indication that Jerome simulated the sale and that no anomaly characterized Jerome’s claim for reimbursement.
Re: Arnulfo’s statements
The Court added that the evidence that would have contradicted Lilia’s statement was Arnulfo’s first statement. However, given the inconsistencies in Arnulfo’s two statements, the fact that Lilia sold tires to ELPI over which Jerome claimed reimbursements remained undisputed at the time of the administrative proceedings conducted by ELPI.
Re: the affidavits of Timothy and Sojit
The Court considered the affidavits unreliable given the circumstances under which they were executed.
According to the Court, since the affidavits and their contents were only made known to Jerome when ELPI submitted its Position Paper, the presentation of the same was an attempt to validate Jerome’s termination post facto. These new allegations contained in the affidavits, the Court said, were not available at the time ELPI conducted the administrative hearing. It could therefore not have been its basis for dismissing Jerome.
The Court even stated that even if it were to consider these affidavits, it would find it unusual for ELPI to not have initiated administrative proceedings against Timothy. The Court added that ELPI had not even explained why it took Timothy more than three years to inform ELPI of such simulated sale.
Re: additional findings
Other matters on record led the Court to doubt the validity of Jerome’s dismissal.
First, despite the fact that Jerome’s tire transaction was readily verifiable, ELPI did not explain why it still initiated administrative proceedings against Jerome three years after his request for reimbursement was made and approved by ELPI’s HRD Manager. The Court pointed out that Timothy and the HRD Manager were not even directed to explain their participation in the purported simulation and approval of the reimbursement, respectively.
Second, ELPI was the one who introduced as evidence the statement of Arnulfo that Jerome did not purchase any tires from the tire supplier, only for Arnulfo to issue a statement of recantation later.
And third, on May 9, 2018, Jerome filed with the Court a Manifestation with Motion to Admit Attached Affidavit of Recantation. Jerome informed the Court that Sojit communicated to him the severance of the latter’s connection with ELPI. Sojit likewise disclosed that he was pressured to sign his purported affidavit dated December 19, 2011, under threats of including him in the investigation and dismissal should he refuse. Hence, on April 4, 2018, Sojit executed an Affidavit of Recantation, denying the events narrated in his affidavit dated December 19, 2011.
Conclusion:
The Court concluded that ELPI failed to show a clear, valid and legal cause to dismiss Jerome. According to the Court, the pieces of evidence ELPI presented were riddled with inconsistencies and unexplained material facts that leave much to be desired. Jerome’s dismissal was accordingly declared illegal.
Further reading:
Bautista v. Eli Lilly Philippines, Inc., G.R. No. 235865, February 3, 2021.
On September 1, 2002, the employer hospital hired Antonina as a staff midwife. During her employment, the employer hospital also allowed her to study nursing simultaneously.
Antonina alleged that on June 23, 2007, she requested permission to go on leave without pay from June 29, 2007 to September 15, 2007 as she needed to work as an affiliate, in compliance with a school requirement. The employer hospital approved the request on the same day and she was also included in the Schedule of Duty for the period September 16 to 30, 2007.
Antonina stated that on September 19, 2007, the president of the employer hospital berated her for having been away from work for a long time. The next day, a supervisor relayed to Antonina the president’s instructions for her not to report for work anymore.
The employer hospital denied dismissing Antonina. It claimed that the latter simply failed to report for work after June 28, 2007 for unspecified reasons.
The Office of the Labor Arbiter ruled that Antonina was illegally dismissed from her job based on the following findings:
Antonina’s leave of absence was supported by a leave form and approval by the employer hospital.
Antonina was also found to have reported for work after September 15, 2007 and was included in the Schedule of Duty from September 16 to 30, 2007.
Antonina’s assertion that she was ordered not to report for work was credible.
Antonina filed her complaint for illegal dismissal within a reasonable period inconsistent with the employer hospital’s claim of abandonment.
Finally, Antonina was not accorded procedural due process in her dismissal from employment.
The Office of the Labor Arbiter awarded Antonina full backwages, as well as separation pay, in lieu of reinstatement, because of strained relations between Antonina and the employer hospital.
The National Labor Relations Commission affirmed the ruling of the Office of the Labor Arbiter.
However, the Commission considered Antonina’s rejection of an alleged offer of reinstatement by the employer hospital during a hearing held on January 16, 2008. Thus, the Commission modified the computation of her backwages and separation pay by limiting it to the period of September 19, 2007 until January 16, 2008.
The Court of Appeals reinstated the Decision of the Office of the Labor Arbiter. It found that the employer hospital’s offer of reinstatement was not supported by evidence and thus should not have been automatically factored in by the National Labor Relations Commission as a basis for modifying the reckoning point of the awards of backwages and separation pay.
The Court of Appeals clarified that even if the alleged offer was made, the award of backwages and separation pay should be computed from the time Antonina’s compensation was withheld from her until the time of her actual reinstatement, and not only up to the time the offer of reinstatement was made, in accordance with Article 294 of the Labor Code of the Philippines. According to the Court of Appeals, a mere order for reinstatement issued by the Office of the Labor Arbiter is different from the actual restoration of an employee to his or her previous position.
The Court of Appeals stated that in case of reinstatement, backwages and other monetary awards shall continue beyond the issuance of the Office of the Labor Arbiter’s ruling until such time the said reinstatement is actually complied with.
The Court of Appeals further stated that if reinstatement is no longer feasible, backwages and separation pay must be computed up to the finality of the decision. Until actual receipt by the employee of the award of separation pay, the employer-employee relationship subsists and entitles the illegally dismissed employee to an award of backwages, and other benefits from the time of his or her actual dismissal until finality of the decision of the Office of the Labor Arbiter.
The employer hospital elevated its case to the Supreme Court.
How should the awards of Antonina be computed?
The Supreme Court reiterated the settled rule that “[t]he twin reliefs that should be given to an illegally dismissed employee are full backwages and reinstatement. Backwages restore the lost income of an employee and is computed from the time compensation was withheld up to actual reinstatement. Anent reinstatement, only when it is not viable is separation pay given.”1Peak Ventures Corp. v. Heirs of Villareal, G.R. No. 184618, November 19, 2014.
The Supreme Court then mentioned Session Delights Ice Cream and Fast Foods v. Court of Appeals,2G.R. No. 172149, February 8, 2010. where it held that a decision in a case involving illegal dismissal consists essentially of two components:
The first is that part of the decision that cannot now be disputed because it has been confirmed with finality. This is the finding of the illegality of the dismissal, as well as the awards of separation pay, in lieu of reinstatement, and backwages.
The second part is the computation of the awards made.
In the present case, the Supreme Court recognized that the illegality of Antonina’s dismissal from employment had already been settled in a ruling of the Court of Appeals in a separate case. Antonina was declared entitled to the reliefs of backwages and separation pay.
Thus, the Supreme Court focused on the issue on the computation of Antonina’s backwages and separation pay.
In this regard, the Court referred to Bani Rural Bank, Inc. v. De Guzman3Bani Rural Bank, Inc. v. De Guzman, G.R. No. 170904, November 13, 2013. in explaining the basis for the computation of backwages and separation pay. Said the Court:
The computation of backwages depends on the final awards adjudged as a consequence of illegal dismissal, in that:
First, when reinstatement is ordered, the general concept under Article [294] of the Labor Code, as amended, computes the backwages from the time of dismissal until the employee’s reinstatement. The computation of backwages (and similar benefits considered part of the backwages) can even continue beyond the decision of the [Office of the Labor Arbiter] or [National Labor Relations Commission] and ends only when the employee is actually reinstated.
Second, when separation pay is ordered in lieu of reinstatement (in the event that this aspect of the case is disputed) or reinstatement is waived by the employee (in the event that the payment of separation pay, in lieu, is not disputed), backwages is computed from the time of dismissal until the finality of the decision ordering separation pay.
Third, when separation pay is ordered after the finality of the decision ordering the reinstatement by reason of a supervening event that makes the award of reinstatement no longer possible, backwages is computed from the time of dismissal until the finality of the decision ordering separation pay.
The Court said that the above computation of backwages, when separation pay is ordered, has been its consistent ruling.
According to the Court, the finality of the decision becomes the reckoning point because in allowing separation pay, the final decision effectively declares that the employment relationship ended so that backwages and separation pay are to be computed up to that point.
The Court determined that the second scenario squarely applies in the present case since the order of separation pay was decreed in lieu of reinstatement.
Hence, the Court said, the employer-employee relationship of the employer hospital and Antonina would only be completely terminated upon the finality of the decision which ordered the payment of backwages and separation pay. It follows that the computation of Antonina’s backwages must be from the time of her illegal dismissal from employment on September 19, 2007 until the finality of the decision ordering the payment thereof. As for her separation pay, it should be computed at one month pay for every year of service reckoned from September 2, 2002 until the finality of the decision in her favor.
The Court affirmed the ruling of the Court of Appeals which reinstated the Decision of the Office of the Labor Arbiter.
Further reading:
Angono Medics Hospital, Inc. v. Agabin, G.R. No. 202542, December 9, 2020.
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.
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.
In this case, the Supreme Court noted the illegal dismissal case filed by Moreno, Francisco and Elmo against Lepanto Consolidated Mining Company.
The record showed that the Office of the Labor Arbiter dismissed the complaint for lack of merit.
In its Decision dated August 30, 2002, the National Labor Relations Commission reversed the Office of the Labor Arbiter’s Decision and declared Moreno, Francisco, and Elmo to have been illegally dismissed from employment. The Commission awarded them separation pay and backwages.
The Court of Appeals (in CA-G.R. SP No. 75860) affirmed the Decision of the National Labor Relations Commission through its Decision dated November 7, 2003.
The Supreme Court (in G.R. No. 163210) likewise affirmed the same. The Decision of the Supreme Court became final and executory on November 25, 2008.
Following the finality of the Supreme Court Decision, the Office of the Labor Arbiter issued the corresponding writ of execution in the total amount of P897,412.95 covering the backwages and separation pay of Moreno, Francisco, and Elmo. Furthermore, the Office of the Labor Arbiter granted their motion praying the recomputation of this award, through an Order dated May 27, 2009, which increased the award to P2,602,856.21.
Lepanto moved to quash the writ of execution, insisting that the computation should be reckoned from the date of dismissal up until the National Labor Relations Commission rendered its Decision dated August 30, 2002.
Moreno, Francisco and Elmo soon moved for another recomputation of the monetary award to include the salary increases allegedly granted them per the Collective Bargaining Agreement (CBA) between Lepanto and its employees.
In its Order dated September 2, 2009, the Office of the Labor Arbiter recalled his Order dated May 27, 2009 and further recomputed the award of backwages and separation pay to include the incremental salary increases pursuant to the CBA but only until November 7, 2003, the date when the Court of Appeals issued its Decision in CA-G.R. SP No. 75860.
Moreno, Francisco, and Elmo assailed the Order and asserted that the cut-off date for the computation of the award was November 25, 2008 when the Supreme Court’s Decision became final and executory.
Lepanto likewise assailed the Order and asserted that the cut-off date for the computation of the award was November 7, 2003, or the date of the Decision of the Court of Appeals.
In its Decision dated October 30, 2009, National Labor Relations Commission directed the Labor Arbiter to compute the backwages and separation pay of Moreno, Francisco, and Elmo from the date they were illegally dismissed up to the finality of the Supreme Court’s Decision on November 25, 2008, including therein the mandated CBA salary increases.
The Court of Appeals nullified the Decision of the National Labor Relations Commission and ordered the reinstatement of the Commission’s earlier Decision dated August 30, 2002, as well as the relevant Writ of Execution dated March 16, 2009. For the Court of Appeals, the computation of the National Labor Relations Commission in its earlier Decision became final and executory after the lapse of ten (10) days from the parties’ receipt thereof. The Court of Appeals added that the finality of this computation was not affected by the subsequent proceedings held before it and the Supreme Court and that the delayed enforcement of the Decision of the National Labor Relations Commission dated August 30, 2002 was not only attributable to Lepanto but also to Moreno, Francisco, and Elmo, who themselves appealed the case up to the Supreme Court.
Moreno, Francisco, and Elmo thus elevated their case to the Supreme Court, asserting that the computation of their backwages and separation pay should be reckoned from the date they were illegally terminated until the finality of Supreme Court’s Decision in G.R. No. 163210 on November 25, 2008. They further asserted that the computation should include the salary increases granted under the CBA.
What is the correct formula for computing the award of separation pay and backwages to Moreno, Francisco, and Elmo?
Should these include salary increases granted by the CBA?
The Supreme Court ruled that the award of separation pay and backwages for illegally dismissed employees should be computed from the time they were illegally dismissed until the finality of the decision ordering payment of their separation pay, in lieu of reinstatement.
As to what exactly these awards ought to include, the Court categorized its previous rulings as follows:
The first category delves into the inclusion or non-inclusion in the award of salary increases and benefits, which are contingent on the fulfillment of certain conditions, such as merit increases based on performance, the company’s fiscal position, or management’s benevolent initiative. According to the Court, the ruling in these cases denied the inclusion of contingent salary increases in the computation of backwages for being mere expectancies.
On the other hand, the second category delves into guaranteed salary increases and benefits, which are granted by law, standard company policy, or CBA.
However, the Court noted that those cases falling in the second category had opposing dispositions.
Acknowledging its contradicting rulings in the award of backwages or separation pay owing to illegally dismissed employees and the consequent instability they have caused to labor law jurisprudence, the Court laid down the following rule to settle the matter:
The award of backwages and/or separation pay due to illegally dismissed employees shall include all salary increases and benefits granted under the law and other government issuances, Collective Bargaining Agreements, employment contracts, established company policies and practices, and analogous sources which the employees would have been entitled to had they not been illegally dismissed. On the other hand, salary increases and other benefits which are contingent or dependent on variables such as an employee’s merit increase based on performance or longevity or the company’s financial status shall not be included in the award.
On this point, the Court noted that Article 294 of the Labor Code of the Philippines grants illegally dismissed employees the right to full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time their compensation was withheld up to the time of their actual reinstatement.
Furthermore, the Court equally noted that there is no provision in the Labor Code of the Philippines which mandates the exclusion of salary increases and benefits accruing to the dismissed employee.
In this regard, the Court explained that the overarching purpose of the reliefs granted by law to illegally dismissed employees is to make the latter whole again. For the Court, it should ensure that illegally dismissed employees are whole again by awarding them the benefits to which they would have been entitled if not for the illegal termination of their employment.
The Court stated that the ruling that the employees’ illegal dismissal literally allowed time to stand still for them because of their loss of employment and the resulting uncertainties from such an unfortunate event, does not sanction additionally punishing them for an act they have not been responsible for. The Court stressed that they, in fact, must be accorded justice and relief.
The Court thus ordered Lepanto to pay Moreno, Francisco, and Elmo backwages and separation pay based on their salary rates at the time of their termination, inclusive of guaranteed salary increases and other benefits and bonuses which they were entitled to receive under the law and other government issuances, collective bargaining agreements, employment contracts, established company policies and practices, and analogous sources had they not been illegally dismissed.
The award was computed from September 22, 2000, when they were illegally dismissed, up to November 25, 2008, when the Supreme Court’s Decision dated August 13, 2008 became final and executory.
The Court added that the award shall exclude salary increases and other benefits or bonuses which are contingent or dependent on variables such as an employee’s merit increase based on performance or longevity or the company’s financial status.
Further reading:
Dumapis v. Lepanto Consolidated Mining Co., G.R. No. 204060, 15 September 2020.