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.
In October 1988, Twinstar Professional Protective Services, Inc. (Twinstar) employed Jose as a security guard and deployed him at the Las Haciendas in Tarlac City.
In January 2011, Jose sought help from a program to complain about the underpayment of his salaries. On January 24, 2011, Twinstar directed Jose to report to its office in Quezon City. Jose stated that upon reporting to the office the next day, Twinstar informed him that he was being placed on floating status. Jose also stated that his floating status lasted for over six (6) months.
The Office of the Labor Arbiter then ruled that Twinstar illegally dismissed Jose from employment, which prompted Twinstar to file an appeal.
The National Labor Relations Commission applied the rules liberally; allowed Twinstar to present evidence on appeal; granted the same; and reversed the decision of the Office of the Labor Arbiter.
The Commission found that Twinstar had just cause to dismiss Jose from employment because Jose went on unauthorized leave of absence and was unwilling to return to duty.
However, the Commission also found that Twinstar failed to observe the requirements of procedural due process in the termination of Jose’s employment. Despite such finding, the Commission did not direct Twinstar to paynominal damages because of the effects of the quitclaim executed by Jose on March 3, 2012.
The Court of Appeals ruled that the Commission did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in allowing Twinstar to present its evidence for the first time on appeal; in ruling that Jose was not illegally dismissed; and in considering his quitclaim as valid.
In upholding the validity of the quitclaim, the Court of Appeals ruled that the same erased the infirmities in the notice of termination, which consequently meant that it could not impute abuse of discretion upon the Commission in not awarding nominal damages.
The totality of circumstances led the Supreme Court to conclude that no constructive dismissal happened. Instead, the circumstances revealed Jose’s stubborn unwillingness to return to work despite being required by Twinstar to report for work multiple times within six (6) months from January 21, 2011.
Thus, the Court ruled that Twinstar had just cause to terminate Jose’s employment.
However, the Court also found that Twinstar failed to provide Jose with an ample chance to explain and be heard on the allegations against him. For the Court, this necessitated an award of nominal damages to the latter.
In this regard, the Court ruled that it was erroneous for the Commission and the Court of Appeals to not award nominal damages because of the existence of the quitclaim executed by Jose on March 3, 2012.
The Court reiterated the standards that must be observed in determining whether a waiver and quitclaim has been validly executed. Said the Court:
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction.
In the present case, while the Court considered the quitclaim valid for complying with all the requisites stated above, it stressed that the stipulations in such quitclaim must still be interpreted within the bounds of law and reason. A waiver/quitclaim is a contract by nature, and thus, following the rule that the law is deemed written into every contract, the stipulations therein must be interpreted with this in mind.
According to the Court, Jose’s statement in the quitclaim that he had “no more claim, right or action of whatsoever nature whether past, present or contingent against the said respondent and/or its officers” did not include the illegal dismissal case. This is because the legality of an employee’s dismissal is determined by law, and it is the Office of the Labor Arbiter that has the original and exclusive jurisdiction to determine such a case.
The Court added that while an employee may indeed accept his dismissal and agree to waive his claims or right to initiate or continue any action against his employer, both parties do not have the jurisdiction or authority to determine the legality of such termination; such question of law is still subject to the final determination of the competent labor tribunals and courts, as the case may be. It follows then that the award of nominal damages, which by its nature, arises from the determination of a violation of the employee’s rights in an illegal dismissal case, cannot be deemed to be covered by the quitclaim.
The Court stressed that nominal damages are 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.
The Court further stated that any quitclaim or agreement executed by the parties, as with all contracts, must not be contrary to law or public policy. It is apparent that the public policy in the stiffer imposition of nominal damages is to discourage the abhorrent practice of dismiss now, pay later.
The Court then explained that if it were to allow the quitclaim to cover nominal damages, this will promote, either advertently or inadvertently, the practice of dismiss now, pay later, which would obviously run afoul to the public policy behind the imposition of such nominal damages in the first place.
For the Court, regardless of the quitclaim, Jose was entitled to an award of P30,000.00 as nominal damages.
Further reading:
Dela Torre v. Twinstar Professional Protective Services, Inc., G.R. No. 222992, June 23, 2021.
Arlene started working as a Casual or Assistant Clinical Instructor for two semesters for the school year 1992-1993 in Holy Name University (HNU)’s College of Nursing while awaiting the results of her Nursing Board Examination.
In the second semester of school year 1994-1995, she worked at the Medical Ward as a full-time Clinical Instructor until the school year 1998-1999. During the second semester of that school year, she transferred to the Guidance Center where she worked as a Nursing Guidance Instructor. In the meantime, she was elected as Municipal Councilor of Carmen, Bohol. She took a leave of absence from HNU upon her reelection as Municipal Councilor for the period from 2001 up to 2004.
Sometime in the year 2004, Arlene rejoined HNU and was given a full-time load for the school year 2004-2005. For school years 2005-2006 and 2006-2007, Arlene signed contracts for term/semestral employment.
However, in a notice dated February 28, 2007, HNU informed Arlene that her contract of employment, which would have expired on March 31, 2007, will no longer be renewed.
Arlene filed a complaint for illegal dismissal against HNU. She argued that since she taught at HNU for more than six consecutive regular semesters, she already attained the status of a regular employee under the Manual of Regulations for Private School Teachers. She posited that she was not guilty of any infractions under the Labor Code of the Philippines or the Manual of Regulations for Private School Teachers. She concluded that she was illegally dismissed from employment as no valid or justifiable cause supported the same.
On the other hand, HNU stated that for the school years 1995-1996, 1996-1997 and 1997-1998, Arlene received letters of appointment for each semester, with definite dates of commencement and end of her employment. Thus, HNU asserted that when her probationary appointment for the period June 1, 1997 until March 31, 1998 expired, that it was not obliged to renew her contract. With regard to the school years 2004-2005, 2005-2006, and 2006-2007, HNU contended that Arlene remained as a probationary employee.
HNU stated that the completion of her probationary period did not automatically make her a permanent employee since she failed to satisfactorily comply with all the conditions of her probationary employment. HNU insisted that Arlene was not dismissed; rather, her contract of employment merely expired on March 31, 2007.
Did Arlene attain regular status?
The Supreme Court ruled in the negative.
The Court reiterated prevailing jurisprudence in that the Manual of Regulations for Private Schools, not the Labor Code of the Philippines, determines whether or not a faculty member in a private educational institution has attained a permanent or regular status. According to the Court, before a private school teacher acquires permanent status, he or she should satisfy the following requisites: 1) The teacher must have served full-time; 2) he/she must have rendered three consecutive years of service; and 3) such service must have been satisfactory.
In the present case, the Court found that Arlene failed to meet the required criteria to be considered as a permanent employee.
According to the Court, prevailing regulations require a minimum of one-year clinical practice experience to qualify as a faculty member in a college of nursing, and is therefore, required for one to be considered as a full-time faculty of such.
Although Arlene had rendered three consecutive years of satisfactory service, she never alleged to have performed clinical duties such as treating actual patients or assisting doctors in such treatment, nor did she present any substantial evidence to prove such. The Court stated that since Arlene failed to provide substantial evidence, much less clearly describe what kind of work she rendered as a clinical instructor, it could not consider Arlene’s work experience as “clinical practice.” For the Court, Arlene did not qualify as a full-time teacher at the College of Nursing of HNU.
Based on evidence, the Court declared Arlene to be a fixed-term employee of HNU.
The Court reiterated established jurisprudence that recognizes the validity of fixed-term employment contracts, as long as such contracts do not circumvent the employee’s right to security of tenure. According to the Court, the criteria under which fixed-term employment could not be said to be in circumvention of the law on security of tenure are the following:
The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or
It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter.
In the present case, the Court considered Arlene’s part-time status and ruled that even if no written fixed-term contract was presented, judicial notice can be made upon the fact that teachers’ employment contracts are for a specific semester or term.
The Court added that with respect to consent, the fixed-term contracts must be presumed to be knowingly and voluntarily entered into. It is a basic rule that “one who alleges defect or lack of valid consent to a contract by reason of fraud or undue influence must establish by full, clear and convincing evidence such specific acts that vitiated a party’s consent, otherwise, the latter’s presumed consent to the contract prevails.”
In the present case, Arlene merely alleged that she was a regular employee and that her being a contractual employee was just a lame reason given by HNU to terminate her without due process. The Court viewed such allegations as self-serving and unsubstantiated that failed to overturn the presumption mentioned earlier.
With regard to the second requisite, the Court found that Arlene was more or less on equal footing with HNU. According to the Court, Arlene was an honors graduate, an elected public official, and not a mere run-of-the-mill employee, who had the capability to be on equal footing in dealing with her employer when it came to her employment terms.
The Court concluded that Arlene was validly contracted for a fixed-term, the expiry of which occurred with her latest contract on March 31, 2007. Such effectively ended the employee-employer relationship she had with HNU. No dismissal, whether illegal or not, ever happened. The Court accordingly denied her claims.
Further reading:
Palgan v. Holy Name University, G.R. No. 219916, February 10, 2021.
Hazel was engaged by University of Saint Anthony as a credit and collection officer. Arlene was engaged as its accounting clerk. Jean was its classroom teacher. And Nancy was its accounting officer.
With regard to Hazel, University of Saint Anthony noticed several irregular and anomalous transactions its University’s Accounting Office by way of a cash shortage of more than One Million Pesos representing the net collection of book remittances. Another audit report revealed anomalous transactions in prior years where tellers accommodated encashments of checks not in the name of University of Saint Anthony. Hazel went on leave during the audit, but later tendered her resignation. Record showed that University of Saint Anthony filed a criminal case and an information was filed before the Regional Trial Court.
At around the same period, Arlene, Jean, and Nancy were found to have taken advantage of their positions in the Accounting Office by enrolling their children and relatives under the University’s group enrollment incentive program despite knowing that they were unqualified. Upon discovery of the fraudulent scheme, University of Saint Anthony immediately ordered an investigation and called a conference with Arlene, Jean and Nancy. During a conference, Arlene, Jean, and Nancy admitted that their children and relatives indeed benefitted from the unauthorized discounts. They were informed that their employment will be terminated on grounds of dishonesty amounting to malversation of school funds. Thereafter, Arlene, Jean, and Nancy tendered their resignation on December 22, 2007 (taking effect on January 2, 2008). Subsequently, University of Saint Anthony filed criminal cases Arlene, Jean, and Nancy.
Hazel, Arlene, Jean, and Nancy soon filed their respective complaints for illegal dismissal against University of Saint Anthony.
The Office of the Labor Arbiter declared their dismissal illegal and granted them the reliefs of reinstatement and backwages. On appeal, the National Labor Relations Commission reversed the decision of the Office of the Labor Arbiter because it found that the Hazel, Arlene, Jean and Nancy voluntarily resigned and opted for a voluntary exit before the effectivity of their supposed termination from employment. The Court of Appeals affirmed the Decision of the National Labor Relations Commission.
An issue raised before the Supreme Court was whether the resignations of Hazel, Arlene, Jean, and Nancy rendered their complaints for illegal dismissal without basis.
The Supreme Court ruled that Hazel, Arlene, Jean, and Nancy voluntarily resigned from employment.
Jurisprudence teaches that resignation is the formal pronouncement or relinquishment of a position or office. It is the voluntary act of an employee who is in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and he has then no other choice but to disassociate himself from employment. The intent to relinquish must concur with the overt act of relinquishment; hence, the acts of the employee before and after the alleged resignation must be considered in determining whether he in fact intended to terminate his employment. In illegal dismissal cases, it is a fundamental rule that when an employer interposes the defense of resignation, on him necessarily rests the burden to prove that the employee indeed voluntarily resigned. For resignation from employment to be valid, there must be an intent to relinquish the position together with the overt act of relinquishment. Resignation must be voluntary. In illegal dismissal cases, the employer, if defense of resignation is presented, must show that the employee indeed voluntarily resigned.
In the present case, the Court ruled that the fact of resignation by Hazel, Arlene, Jean, and Nancy was undisputed. It found that Hazel tendered her resignation on July 27, 2007, while Arlene, Jean, and Nancy tendered their resignation on December 22, 2007. Said resignations were found to have been approved by University of Saint Anthony.
According to the Court, University of Saint Anthony correctly argued that Hazel, Arlene, Jean, and Nancy had voluntarily tendered their resignation before filing their complaints for illegal dismissal. The Court noted that ruling of the National Labor Relations Commission that this event rendered their complaints for illegal dismissal without basis as the employment relationship was severed before the effectivity date of its termination. The Court also noted that notwithstanding such ruling, Hazel, Arlene, Jean, and Nancy, no longer contested the same but insisted that there they were illegally dismissed.
The Court considered the totality of circumstances, and ruled that University of Saint Anthony showed that Hazel, Arlene, Jean, and Nancy voluntarily resigned prior to the effectivity date of the termination of their employment. It was found that ongoing investigations were conducted relative to the irregular acts imputed to Hazel, Arlene, Jean, and Nancy thereby placing them in a difficult position. Although the Court acknowledged that wordings in resignations letters are not the sole test of voluntariness, the wording of the resignation letters of Hazel, Arlene, Jean, and Nancy, together with other circumstances found by the Court, showed the voluntariness of their resignations. The Court also emphasized that Hazel, Arlene, Jean, and Nancy neither contended nor presented countervailing evidence that their resignation was involuntary. The Court added the settled rule that there is nothing reprehensible or illegal when the employer grants the employee a chance to resign and save face rather than smear the latter’s employment record.
In view of the voluntary resignations of Hazel, Arlene, Jean, and Nancy prior to the termination of their employment, the Court concluded that their complaints for illegal dismissal had no basis.
Further reading:
Bance v. University of St. Anthony, G.R. No. 202724, February 3, 2021.
On February 12, 2014, the Department of Labor and Employment, through its Regional Director, issued Labor Standards Compliance Certificates to Del Monte Motor Works, Inc. (Del Monte Motor Works) for having complied with Department Order No. 118-12, other labor laws, rules and regulations.
For context, Department Order No. 118-12 was issued on January 13, 2012 by the Department of Labor and Employment, in the exercise of its rule-making power. The issuance provides for a fixed and performance compensation scheme in the computation of public utility bus driver’s or conductor’s wage. Its goal was to ensure public road transport safety by improving the working conditions, compensation and competence of bus drivers and conductors thereby eliminating their risk-taking behavior.
On July 28, 2014, a complaint for money claims was filed against Del Monte Land Transport Bus, Co., Inc. (Del Monte Land Transport) by its bus drivers and conductors before the Office of the Labor Arbiter.
They averred that since the start of their employment, they have yet to receive certain labor standards benefits and their daily salaries were below the prevailing daily minimum wage, in violation of Department Order No. 118-12.
Del Monte Land Transport contended that the salaries and benefits of its drivers and conductors were in accordance with law and that its Labor Standards Compliance Certificates established compliance with labor standards requirements. Furthermore, it raised the issue of jurisdiction. Specifically, it claimed that the Office of the Labor Arbiter had no jurisdiction to render judgment or award on the money claims since it was the Department of Labor and Employment which had jurisdiction under Article 128 of the Labor Code of the Philippines.
In asserting that the Office of the Labor Arbiter had jurisdiction, the drivers and conductors argued:
Their money claims fell within the cases covered by Article 217 of the Labor Code of the Philippines as it exceeded the aggregate amount of five thousand pesos. Hence, the authority to hear and decide said cases is vested on the Office of the Labor Arbiter, to the exclusion of all other courts or quasi-judicial bodies or tribunals;
No complaint was filed before the Department of Labor and Employment for the latter to exercise its jurisdiction over their claim.
Neither was there any inspection conducted at Del Monte Land Transport as the Labor Standards Compliance Certificates in question were issued for the alleged compliance of Del Monte Motor Works, a separate and distinct corporation.
In issuing the Labor Standards Compliance Certificates, the Department of Labor and Employment exercised its visitorial and compliance powers under Article 128 (b) and not its enforcement and adjudicatory powers under Article 129 of the Labor Code.
Did the Office of the Labor Arbiter have jurisdiction over the claims of the drivers and conductors?
The Supreme Court ruled in the negative. This was because Department Order No. 118-12 clearly conferred jurisdiction with the Regional Office the claims of the bus drivers and conductors.
The Court stressed that jurisdiction over the subject matter or authority to try a certain case is conferred by law and not by the whims, consent or acquiescence of the interested parties nor by the erroneous belief of the court or tribunal that it exists. It should be exercised precisely by the person in authority or body in whose hands it has been placed by the law; otherwise, acts of the court or tribunal shall be void and with no legal consequence.
In the present case, the Regional Director issued several Labor Standard Compliance Certificates dated February 12, 2014, certifying Del Monte Land Transport’s compliance with the law. Five months after or on July 28, 2014, the bus drivers and conductors filed a complaint before the Office of the Labor Arbiter for money claims and alleged a violation of the requirements of Department Order No. 118-12 in their Position Paper.
According to the Court, this fact should have prompted the Office of the Labor Arbiter to refer the case to the Department of Labor and Employment as it was evident that the money claims of the bus drivers and conductors were beyond its jurisdiction.
Furthermore, the Court noticed the categorical statement of the bus drivers and conductors that they would not have filed the instant case for money claims had there been real compliance of the mandate of Department Order No. 118-12. The Court stated that such statement only revealed that the claims were the offshoot of the Regional Officer’s issuance of the certificates of compliance.
For the Court, this constituted a challenge by the bus drivers and conductors on the certificates of compliance issued by the Regional Officer relative to the labor standard requirements under Department Order No. 118-12, which should have been lodged before the Department of Labor and Employment.
On the other hand, the Court did not accept the argument of the bus drivers and conductors that jurisdiction over their claims was vested with the Office of the Labor Arbiter given that the aggregate amount subject of this case exceeded five thousand pesos.
The Court stated that Article 128 of the Labor Code of the Philippines speaks of the jurisdiction of the Secretary of Labor and his representatives over labor standards violations based on findings made in the course of visitation and inspection of the business premises of an employer. The Court emphasized that the authority under Article 128 may be exercised by the Department of Labor and Employment regardless of the amount of the award claimed for provided there exists employer-employee relationship.
The Court noted certain views espousing the proposition that the mode and fora by which the action has been initiated should determine jurisdiction. However, the Court clarified that this had been settled in People’s Broadcasting Service v. Secretary of the Department of Labor and Employment1People’s Broadcasting Service v. Secretary of the Department of Labor and Employment, G.R. No. 179652 (Resolution), [March 6, 2012], 683 PHIL 509-526). which summed up the rules governing jurisdiction on labor standards claims, as follows:
If the claim involves labor standards benefits mandated by the Labor Code or other labor legislation regardless of the amount prayed for and provided that there is an existing employer-employee relationship, jurisdiction is with the Department of Labor and Employment regardless of whether the action was brought about by the filing of a complaint or not; and
If the claim involves labor standards benefits mandated by the Labor Code or other labor legislation regardless of the amount prayed for and there is no existing employer-employee relationship or the claim is coupled with a prayer for reinstatement, jurisdiction is with the Office of the Labor Arbiter/National Labor Relations Commission.
For the Court, the claims of the bus drivers and conductors were within the purview of the jurisdiction of the Department of Labor and Employment under Article 128 and the provisions of Department Order No. 118-12. The Court accordingly dismissed the complaint of the bus drivers and conductors for lack of jurisdiction.
Further reading:
Del Monte Land Transport Bus, Co. v. Armenta, G.R. No. 240144, February 3, 2021.
Leyte Lumber, a construction supply and hardware store, hired Fernando as a sales representative.
As a company policy, Leyte Lumber’s sales representatives were prohibited from getting items or stocks from the storage area by themselves. They were to course the orders through authorized checkers before the items are released. They were also prohibited from leaving their designated work areas without their superior’s consent. Moreover, they were required to submit their applications for leave days before the intended dates to allow the management ample time to approve the application and to adjust the workforce and their workload.
Fernando allegedly overstepped the boundaries of Leyte Lumber’s company policies. One day, when Fernando was on his way to the stock room to follow up on a customer’s urgent order when Leyte Lumber’s general manager stopped him. The next day, the general manager saw Fernando step out of the store to check the availability of a ball caster in the storage area.
Leyte Lumber’s general manager required Gososo to produce a letter of apology for the two incidents under pain of dismissal. Admitting fault, Fernando submitted a letter of apology stating that he was just doing his job for Leyte Lumber’s clients and that he never intended to neglect his duties or disobey the company policy. The general manager allegedly refused to accept the letter of apology and instructed Fernando to revise his to reflect the statements “I am not supposed to approach the checker” and “I promise again to ask permission from manager before I can go out.”
The next day, Fernando was shown a prepared document, which he refused to sign since the document contained admissions of offenses that he did not commit. Irked by Fernando’s refusal, the general manager informed him of his termination from work and even threw a pair of scissors at him.
The Court reiterated established principles in that in illegal dismissal cases, the employee must first establish by substantial evidence the fact of dismissal before the employer is charged with the burden of proving its legality.
In the present case, the Court found that Fernando failed to prove that he was dismissed in the first place. Specifically, the Court discovered that he simply alleged that on October 11, 2008, upon his refusal to sign a document prepared by Leyte Lumber’s general manager, the latter was angrily told him that he was terminated from work on that very day, and even threw sharp scissors that almost hit him. The Court stated that this barely measured up to the minimum evidential requirement from Fernando. This is because mere acts of hostility, however grave, committed by the employer towards the employee cannot on their lonesome be construed as an overt directive of dismissal from work.
The Court added that assuming that Fernando was truly dismissed from employment, he still failed to demonstrate that Leyte Lumber did it constructively. According to the Court, although Fernando alleged that he was forced to sign a prepared incriminatory letter and then fired when he refused to do so, no evidence supported such allegation. The Court said that bare allegations deserve no legal credit for being self-serving.
The Court further stated that even if these accusations were adequately corroborated, the general manager’s rebuke of Fernando, while overbearing and intimidating, was reasonably incited by the latter’s violations of Leyte Lumber’s company practices. For the Court the rebuke did not amount to unequivocal acts of discrimination, insensibility, or disdain as to render Fernando’s continued employment as unbearable.
The Court concluded that no working basis constrains it to declare Fernando as dismissed, whether legally, illegally, or constructively.
Did Fernando abandon his employment?
The Court ruled that Fernando did not abandon his employment.
The Court said that abandonment requires the concurrence of the following: (1) the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2) there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts. Abandonment is a matter of intention and cannot lightly be presumed from equivocal acts. Absence must be accompanied by overt acts pointing definitely to the fact that the employee simply does not want to work anymore. The burden of proof to show that there was unjustified refusal to go back to work rests on the employer.
In the present case, the Court found that Leyte Lumber failed to discharge this burden of proof of abandonment. It just surmised that Fernando had no intent to return to work when he allegedly went on an unapproved leave of absence on October 11, 2008, of which it was also the approving authority. No attendance sheet of any sort was submitted to substantiate its claim. Neither did it show that it denied Fernando’s application for leave.
The Court stressed that mere absence or simple failure to report for work is not abandonment, more so if the employee was able to lodge his complaint before the labor tribunals with haste. An immediate filing of a complaint for illegal dismissal, more so when it includes a prayer for reinstatement, is inconsistent with a charge of abandonment. The Court said that employees like Fernando who take steps to protest their alleged dismissal cannot be said to have abandoned their work.
Further reading:
Gososo v. Leyte Lumber Yard and Hardware, Inc., G.R. No. 205257, January 13, 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.
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.
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.
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.
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