Paulino Ungos III

Lawyer | Law Professor | Author

Tag: nominal damages

  • Employee Quitclaims vis-à-vis Nominal Damages

    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.

    This was why he filed a complaint for illegal dismissal against Twinstar.

    Twinstar failed to file a position paper.

    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 pay nominal 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.

  • Judicious Admission of Evidence on Appeal

    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.

  • I Didn’t Report for Work Because You Failed to Answer My Query

    In 2002, respondent company GRRI hired Neren as a part-time employee in its resort, LLB Resort and Spa. She became a regular employee on 1 February 2003, and was eventually promoted as head of the Housekeeping Department in 2005 and as head of the Front Desk Department in 2008.

    Sometime in 2013, Neren was charged with and found guilty of violating company policies, i.e., abuse of authority, when she rejected walk-in guests without management approval, and threat to person in authority, when she threatened the assistant resort manager with physical harm. Neren was meted the penalty of seven days suspension without pay, subject to the agreement that Neren would be under strict performance monitoring and that any further violation which would warrant suspension would be elevated to immediate dismissal. After serving her suspension, Neren resumed her task.

    In March 2014, GRRI implemented a reorganization in LLB Resort and Spa and issued a Notice to Transfer to Neren. Through the Notice to Transfer, she was informed of the reorganization within LLB Resort and Spa and was advised that she would be laterally transferred from the Reception Department to the Storage Department without diminution in rank and benefits.

    However, Neren refused to sign the Notice to Transfer and remained at the reception area for two days before reporting to her new station on 4 March 2014. Neren also sent an e-mail addressed to GRRI on 9 March 2014 asking questions regarding her transfer.

    On 10 March 2014, a Memorandum was issued to Neren directing her to explain within 24 hours from notice why she should not be penalized for insubordination for her repeated failure to sign the Notice to Transfer. In her handwritten letter dated 11 March 2014, Neren explained that she refused to sign the Notice to Transfer pending answers to the questions she sent to GRRI via e-mail.

    GRRI also issued Neren a Notice of Preventive Suspension on 14 March 2014 placing her under preventive suspension until 21 March 2014 pending resolution of the charge against her.

    Neren, however, failed to report back to work after the lapse of the period of her preventive suspension on 22 March 2014 until 26 March 2014. Thus, on 26 March 2014, GRRI’s Human Resource (HR) department issued Neren another Memorandum directing her to report to the HR department within 24 hours and to explain her absences without leave.

    Upon reporting thereat, Neren was handed a Termination Notice dated 21 March 2014 advising her that GRRI found her guilty of:

    • “inhuman and unbearable treatment to person in authority; abuse of authority; serious misconduct — insubordination by not accepting her memorandum of re-assignment by the Executive Committee; and
    • gross and habitual neglect of duties — AWOL”

    Can Neren’s employment be terminated on the ground of insubordination for her failure to sign the Notice to Transfer?

    No.

    In an illegal dismissal case, the onus probandi rests on the employer to prove that the employee’s dismissal was for a valid cause. A valid dismissal requires compliance with both substantive and procedural due process — that is, the dismissal must be for any of the just or authorized causes enumerated in Article 297 1Formerly Article 282. and Article 298 2Formerly Article 283., respectively, of the Labor Code of the Philippines, and only after notice and hearing3Under paragraph (b) of Article 292 (formerly Article 277) of the Labor Code of the Philippines..

    Insubordination or willful disobedience requires the concurrence of the following requisites: (1) the employee’s assailed conduct must have been willful or intentional, the willfulness being characterized by a “wrongful and perverse attitude”; and (2) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.4Gold City Integrated Port Services v. National Labor Relations Commission, G.R. No. 86000, September 21, 1990, 267 PHIL 863-875.

    The Supreme Court ruled that both requirements were not present in this case.

    The Court found that as stated by Neren in her handwritten explanation, she withheld her signature on the Notice to Transfer because she was awaiting answers to the questions she raised to GRRI via e-mail. She could not be forced to affix her signature thereon if she did not really fully understand the reasons behind and the consequences of her transfer. While her action was willful and intentional, it was nonetheless far from being “wrongful and perverse.” The Court added, respondents failed to prove that there was indeed an order or company procedure requiring a transferee’s written conformity prior to the implementation of the transfer, and that such order or procedure was made known to Neren.

    Given the foregoing, there was no basis to dismiss Neren on the ground of insubordination for her mere failure to sign the Notice to Transfer.

    Was there cause to terminate Neren’s employment on the ground of gross and habitual neglect for her absences without leave from 22 to 26 March 2014?

    No, because the Court found that Neren’s four-day absence without leave could not be characterized as gross and habitual neglect of her duties.

    Jurisprudence5National Bookstore, Inc. v. Court of Appeals, G.R. No. 146741, February 27, 2002, 428 PHIL 235-249 and Cavite Apparel, Inc. v. Marquez, G.R. No. 172044, February 6, 2013, 703 PHIL 46-58. provides that in order to constitute a valid cause for dismissal, the neglect of duties must be both gross and habitual. Gross negligence has been defined as “the want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.” On the other hand, habitual neglect “imparts repeated failure to perform one’s duties for a period of time, depending on the circumstances.” A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee.

    Since the above-mentioned grounds failed to justify Neren’s dismissal from employment, should such dismissal be declared illegal?

    No, because the Court, nonetheless, found that Neren’s absences from 22 to 26 March 2014 were still without justification. Therefore, while there may be no basis to dismiss her on the grounds of insubordination and gross and habitual neglect, Neren was still guilty of having committed a violation. For the Court, the principle on totality of infractions may thus be considered in determining the imposable sanction for her current infraction.

    Under jurisprudence6Merin v. National Labor Relations Commission, G.R. No. 171790, October 17, 2008, 590 PHIL 596-604., the totality of infractions or the number of violations committed during the period of employment shall be considered in determining the penalty to be imposed upon an erring employee.

    The Court said that the offenses committed by Neren should not be taken singly and separately. Fitness for continued employment cannot be compartmentalized into tight little cubicles of aspects of character, conduct and ability separate and independent of each other. While it may be true that Neren was penalized for his previous infractions, this did not and should not mean that her employment record would be wiped clean of her infractions. After all, the record of an employee is a relevant consideration in determining the penalty that should be meted out since an employee’s past misconduct and present behavior must be taken together in determining the proper imposable penalty. Despite the sanctions imposed upon Neren, she continued to commit misconduct and exhibit undesirable behavior on board. Indeed, the employer could not be compelled to retain a misbehaving employee, or one who was guilty of acts inimical to its interests. It had the right to dismiss such an employee if only as a measure of self-protection.

    In the present case, Neren alleged that she did not report back to work after serving her preventive suspension because GRRI did not reply to her query as to when she needed to report. However, the Court ruled that this reasoning did not justify her absences. The Notice of Preventive Suspension served on her clearly stated that the period of her preventive suspension was from 14 to 21 March 2014. Thus, she was expected to report back to work on her next working day. The Court noted that GRRI had already previously warned Neren that the penalty for her next infraction would be elevated to dismissal. For the Court, the dismissal of Neren, on the basis of the principle of totality of infractions, was justified.

    What consequence does this new finding have insofar as procedural due process is concerned?

    The Court ruled that Neren’s dismissal could be said to suffer from procedural lapses.

    Jurisprudence7King of Kings Transport, Inc. v. Mamac, G.R. No. 166208, June 29, 2007, 553 PHIL 108-119. has delineated the requirements of procedural due process for termination of employment, viz.:

    (1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. [297] is being charged against the employees.

    In the present case, GRRI failed to observe the foregoing requirements, as follows:

    • While the Termination Notice cited four grounds for Neren’s dismissal, the Memorandum dated 10 March 2014 only charged Neren with insubordination for her refusal to sign the Notice to Transfer.
    • Neren was only given 24 hours to submit an explanation.
    • No administrative hearing was held, or even scheduled.
    • The Termination Notice already cited Neren’s absences without leave as ground for her dismissal even before she was even given any opportunity to be heard.

    The Court ruled that Neren should be awarded nominal damages.

    Further reading:

    • Villanueva v. Ganco Resort and Recreation, Inc., G.R. No. 227175, January 8, 2020.