G.R. No.
192571 July 23, 2013 said contract was also signed by Abbott’s General Manager, petitioner
ABBOTT LABORATORIES, PHILIPPINES, CECILLE A. TERRIBLE, EDWIN D.
FEIST, MARIA OLIVIA T. YABUTMISA, TERESITA C. BERNARDO, AND
ALLAN G. ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the
Decision2 dated December 10,2009 and Resolution3dated June 9, 2010
of the Court of Appeals (CA) in CA-G.R. SP No. 101045 which
pronounced that the National Labor Relations Commission (NLRC) did
not gravely abuse its discretion when it ruled that respondent Pearlie
Ann F. Alcaraz (Alcaraz) was illegally dismissed from her employment.
The Facts
On June 27, 2004, petitioner Abbott Laboratories, Philippines (Abbott)
caused the publication in a major broadsheet newspaper of its need for
a Medical and Regulatory Affairs Manager (Regulatory Affairs Manager)
who would: (a) be responsible for drug safety surveillance operations,
staffing, and budget; (b) lead the development and implementation of
standard operating procedures/policies for drug safety surveillance and
vigilance; and (c) act as the primary interface with internal and external
customers regarding safety operations and queries.4 Alcaraz - who was
then a Regulatory Affairs and Information Manager at Aventis Pasteur
Philippines, Incorporated (another pharmaceutical company like
Abbott) – showed interest and submitted her application on October 4,
2004.5
On December 7, 2004, Abbott formally offered Alcaraz the
abovementioned position which was an item under the company’s
Hospira Affiliate Local Surveillance Unit (ALSU) department.6 In
Abbott’s offer sheet.7 it was stated that Alcaraz was to be employed on
a probationary basis.8 Later that day, she accepted the said offer and
received an electronic mail (e-mail) from Abbott’s Recruitment Officer,
petitioner Teresita C. Bernardo (Bernardo), confirming the same.
Attached to Bernardo’s e-mail were Abbott’s organizational chart and a
job description of Alcaraz’s work.9
On February 12, 2005, Alcaraz signed an employment contract which
stated, inter alia, that she was to be placed on probation for a period of
six (6) months beginning February 15, 2005 to August 14, 2005. The
on her duties and responsibilities as Regulatory Affairs Manager,
Edwin Feist (Feist):10 stating that: (a) she will handle the staff of Hospira ALSU and will
directly report to Almazar on matters regarding Hopira’s local
PROBATIONARY EMPLOYMENT operations, operational budget, and performance evaluation of the
Hospira ALSU Staff who are on probationary status; (b) she must
Dear Pearl, implement Abbott’s Code of Good Corporate Conduct (Code of
Conduct), office policies on human resources and finance, and ensure
After having successfully passed the pre-employment requirements, that Abbott will hire people who are fit in the organizational discipline;
you are hereby appointed as follows: (c) petitioner Kelly Walsh (Walsh), Manager of the Literature Drug
Surveillance Drug Safety of Hospira, will be her immediate supervisor;
Position Title : Regulatory Affairs Manager
(d) she should always coordinate with Abbott’s human resource
officers in the management and discipline of the staff; (e) Hospira ALSU
Department : Hospira
will spin off from Abbott in early 2006 and will be officially
The terms of your employment are: incorporated and known as Hospira, Philippines. In the interim, Hospira
ALSU operations will still be under Abbott’s management, excluding
Nature of Employment : Probationary the technical aspects of the operations which is under the control and
supervision of Walsh; and (f) the processing of information and/or raw
Effectivity : February 15, 2005 to August 14, 2005 material data subject of Hospira ALSU operations will be strictly
confined and controlled under the computer system and network
Basic Salary : P110,000.00/ month being maintained and operated from the United States. For this
purpose, all those involved in Hospira ALSU are required to use two
It is understood that you agree to abide by all existing policies, rules identification cards: one, to identify them as Abbott’s employees and
and regulations of the company, as well as those, which may be another, to identify them as Hospira employees.11
hereinafter promulgated.
On March 3, 2005, petitioner Maria Olivia T. Yabut-Misa (Misa),
Unless renewed, probationary appointment expires on the date Abbott’s Human Resources (HR) Director, sent Alcaraz an e-mail which
indicated subject to earlier termination by the Company for any contained an explanation of the procedure for evaluating the
justifiable reason. performance of probationary employees and further indicated that
Abbott had only one evaluation system for all of its employees. Alcaraz
If you agree to the terms and conditions of your employment, please was also given copies of Abbott’s Code of Conduct and Probationary
signify your conformity below and return a copy to HRD. Performance Standards and Evaluation (PPSE) and Performance
Excellence Orientation Modules (Performance Modules) which she had
Welcome to Abbott! to apply in line with her task of evaluating the Hospira ALSU staff.12
Very truly yours, Abbott’s PPSE procedure mandates that the job performance of a
probationary employee should be formally reviewed and discussed
Sgd.
with the employee at least twice: first on the third month and second
EDWIN D. FEIST
on the fifth month from the date of employment. The necessary
General Manager
Performance Improvement Plan should also be made during the third-
month review in case of a gap between the employee’s performance
CONFORME:
and the standards set. These performance standards should be
Sgd. discussed in detail with the employee within the first two (2) weeks on
the job. It was equally required that a signed copy of the PPSE form
PEARLIE ANN FERRER-ALCARAZ
must be submitted to Abbott’s Human Resources Department (HRD)
During Alcaraz’s pre-employment orientation, petitioner Allan G. and shall serve as documentation of the employee’s performance
Almazar (Almazar), Hospira’s Country Transition Manager, briefed her during his/her probationary period. This shall form the basis for
recommending the confirmation or termination of the probationary
employment.13
During the course of her employment, Alcaraz noticed that some of the
staff had disciplinary problems. Thus, she would reprimand them for
their unprofessional behavior such as non-observance of the dress
code, moonlighting, and disrespect of Abbott officers. However,
Alcaraz’s method of management was considered by Walsh to be "too
strict."14 Alcaraz approached Misa to discuss these concerns and was
told to "lie low" and let Walsh handle the matter. Misa even assured
her that Abbott’s HRD would support her in all her management
decisions.15
On April 12, 2005, Alcaraz received an e-mail from Misa requesting
immediate action on the staff’s performance evaluation as their
probationary periods were about to end. This Alcaraz eventually
submitted.16
On April 20, 2005, Alcaraz had a meeting with petitioner Cecille Terrible
(Terrible), Abbott’s former HR Director, to discuss certain issues
regarding staff performance standards. In the course thereof, Alcaraz
accidentally saw a printed copy of an e-mail sent by Walsh to some
staff members which essentially contained queries regarding the
former’s job performance. Alcaraz asked if Walsh’s action was the
normal process of evaluation. Terrible said that it was not.17
On May 16, 2005, Alcaraz was called to a meeting with Walsh and
Terrible where she was informed that she failed to meet the
regularization standards for the position of Regulatory Affairs
Manager.18 Thereafter, Walsh and Terrible requested Alcaraz to
tender her resignation, else they be forced to terminate her services.
She was also told that, regardless of her choice, she should no longer
report for work and was asked to surrender her office identification
cards. She requested to be given one week to decide on the same, but
to no avail.19
On May 17, 2005, Alcaraz told her administrative assistant, Claude
Gonzales (Gonzales), that she would be on leave for that day. However,
Gonzales told her that Walsh and Terrible already announced to the
whole Hospira ALSU staff that Alcaraz already resigned due to health
reasons.20
On May 23, 2005, Walsh, Almazar, and Bernardo personally handed to
Alcaraz a letter stating that her services had been terminated effective
May 19, 2005.21 The letter detailed the reasons for Alcaraz’s
termination – particularly, that Alcaraz: (a) did not manage her time
effectively; (b) failed to gain the trust of her staff and to build an
effective rapport with them; (c) failed to train her staff effectively; and Displeased with the LA’s ruling, Alcaraz filed an appeal with the
(d) was not able to obtain the knowledge and ability to make sound National Labor Relations Commission (NLRC).
judgments on case processing and article review which were necessary
for the proper performance of her duties.22 On May 27, 2005, Alcaraz The NLRC Ruling
received another copy of the said termination letter via registered
mail.23 On September 15, 2006, the NLRC rendered a Decision,34 annulling
and setting aside the LA’s ruling, the dispositive portion of which reads:
Alcaraz felt that she was unjustly terminated from her employment
and thus, filed a complaint for illegal dismissal and damages against WHEREFORE, the Decision of the Labor Arbiter dated 31 March 2006
Abbott and its officers, namely, Misa, Bernardo, Almazar, Walsh, [sic] is hereby reversed, annulled and set aside and judgment is hereby
Terrible, and Feist.24 She claimed that she should have already been rendered:
considered as a regular and not a probationary employee given
Abbott’s failure to inform her of the reasonable standards for her 1. Finding respondents Abbot [sic] and individual respondents to have
regularization upon her engagement as required under Article 29525 of committed illegal dismissal;
the Labor Code. In this relation, she contended that while her
2. Respondents are ordered to immediately reinstate complainant to
employment contract stated that she was to be engaged on a
her former position without loss of seniority rights immediately upon
probationary status, the same did not indicate the standards on which
receipt hereof;
her regularization would be based.26 She further averred that the
individual petitioners maliciously connived to illegally dismiss her
3. To jointly and severally pay complainant backwages computed from
when: (a) they threatened her with termination; (b) she was ordered
16 May 2005 until finality of this decision. As of the date hereof the
not to enter company premises even if she was still an employee
backwages is computed at
thereof; and (c) they publicly announced that she already resigned in
order to humiliate her.27
a. Backwages for 15 months PhP
On the contrary, petitioners maintained that Alcaraz was validly - 1,650,000.00
terminated from her probationary employment given her failure to
satisfy the prescribed standards for her regularization which were
b. 13th month pay - 110,000.00
made known to her at the time of her engagement.28
The LA Ruling
PhP
TOTAL
1,760,000.00
In a Decision dated March 30, 2006,29 the LA dismissed Alcaraz’s
complaint for lack of merit.
4. Respondents are ordered to pay complainant moral damages
The LA rejected Alcaraz’s argument that she was not informed of the of P50,000.00 and exemplary damages ofP50,000.00.
reasonable standards to qualify as a regular employee considering her
admissions that she was briefed by Almazar on her work during her 5. Respondents are also ordered to pay attorney’s fees of 10% of the
pre-employment orientation meeting30 and that she received copies total award.
of Abbott’s Code of Conduct and Performance Modules which were
used for evaluating all types of Abbott employees.31 As Alcaraz was 6. All other claims are dismissed for lack of merit.
unable to meet the standards set by Abbott as per her performance
evaluation, the LA ruled that the termination of her probationary SO ORDERED.35
employment was justified.32 Lastly, the LA found that there was no
The NLRC reversed the findings of the LA and ruled that there was no
evidence to conclude that Abbott’s officers and employees acted in
evidence showing that Alcaraz had been apprised of her probationary
bad faith in terminating Alcaraz’s employment.33
status and the requirements which she should have complied with in
order to be a regular employee.36 It held that Alcaraz’s receipt of her
job description and Abbott’s Code of Conduct and Performance
Modules was not equivalent to her being actually informed of the
performance standards upon which she should have been evaluated
on.37 It further observed that Abbott did not comply with its own
standard operating procedure in evaluating probationary
employees.38 The NLRC was also not convinced that Alcaraz was
terminated for a valid cause given that petitioners’ allegation of
Alcaraz’s "poor performance" remained unsubstantiated.39
Petitioners filed a motion for reconsideration which was denied by the
NLRC in a Resolution dated July 31, 2007.40
Aggrieved, petitioners filed with the CA a Petition for Certiorari with
Prayer for Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction, docketed as CA G.R. SP No. 101045 (First CA
Petition), alleging grave abuse of discretion on the part of NLRC when it
ruled that Alcaraz was illegally dismissed.41
Pending resolution of the First CA Petition, Alcaraz moved for the
execution of the NLRC’s Decision before the LA, which petitioners
strongly opposed. The LA denied the said motion in an Order dated July
8, 2008 which was, however, eventually reversed on appeal by the
NLRC.42 Due to the foregoing, petitioners filed another Petition for
Certiorari with the CA, docketed as CA G.R. SP No. 111318 (Second CA
Petition), assailing the propriety of the execution of the NLRC
decision.43
The CA Ruling
With regard to the First CA Petition, the CA, in a Decision44 dated
December 10, 2009, affirmed the ruling of the NLRC and held that the
latter did not commit any grave abuse of discretion in finding that
Alcaraz was illegally dismissed.
It observed that Alcaraz was not apprised at the start of her
employment of the reasonable standards under which she could
qualify as a regular employee.45 This was based on its examination of
the employment contract which showed that the same did not contain
any standard of performance or any stipulation that Alcaraz shall
undergo a performance evaluation before she could qualify as a regular
employee.46 It also found that Abbott was unable to prove that there
was any reasonable ground to terminate Alcaraz’s
employment.47 Abbott moved for the reconsideration of the
aforementioned ruling which was, however, denied by the CA in a
Resolution48 dated June 9, 2010.
The CA likewise denied the Second CA Petition in a Resolution dated
May 18, 2010 (May 18, 2010 Resolution) and ruled that the NLRC was
correct in upholding the execution of the NLRC Decision.49 Thus,
petitioners filed a motion for reconsideration.
While the petitioners’ motion for reconsideration of the CA’s May 18,
2010 Resolution was pending, Alcaraz again moved for the issuance of
a writ of execution before the LA. On June 7, 2010, petitioners received
the LA’s order granting Alcaraz’s motion for execution which they in
turn appealed to the NLRC – through a Memorandum of Appeal dated
June 16, 2010 (June 16, 2010 Memorandum of Appeal ) – on the
ground that the implementation of the LA’s order would render its
motion for reconsideration moot and academic.50
Meanwhile, petitioners’ motion for reconsideration of the CA’s May 18,
2010 Resolution in the Second CA Petition was denied via a Resolution
dated October 4, 2010.51 This attained finality on January 10, 2011 for
petitioners’ failure to timely appeal the same.52 Hence, as it stands,
only the issues in the First CA petition are left to be resolved.
Incidentally, in her Comment dated November 15, 2010, Alcaraz also
alleges that petitioners were guilty of forum shopping when they filed
the Second CA Petition pending the resolution of their motion for
reconsideration of the CA’s December 10, 2009 Decision i.e., the
decision in the First CA Petition.53 She also contends that petitioners
have not complied with the certification requirement under Section 5,
Rule 7 of the Rules of Court when they failed to disclose in the instant
petition the filing of the June 16, 2010 Memorandum of Appeal filed
before the NLRC.54
The Issues Before the Court
The following issues have been raised for the Court’s resolution: (a)
whether or not petitioners are guilty of forum shopping and have
violated the certification requirement under Section 5, Rule 7 of the
Rules of Court; (b) whether or not Alcaraz was sufficiently informed of
the reasonable standards to qualify her as a regular employee; (c)
whether or not Alcaraz was validly terminated from her employment;
and (d) whether or not the individual petitioners herein are liable.
The Court’s Ruling
A. Forum Shopping and
Violation of Section 5, Rule 7 Court58 by not disclosing the fact that it filed the June 16, 2010
of the Rules of Court.
At the outset, it is noteworthy to mention that the prohibition against
forum shopping is different from a violation of the certification
requirement under Section 5, Rule 7 of the Rules of Court. In Sps. Ong
v. CA,55 the Court explained that:
x x x The distinction between the prohibition against forum shopping
and the certification requirement should by now be too elementary to
be misunderstood. To reiterate, compliance with the certification
against forum shopping is separate from and independent of the
avoidance of the act of forum shopping itself. There is a difference in
the treatment between failure to comply with the certification
requirement and violation of the prohibition against forum shopping
not only in terms of imposable sanctions but also in the manner of
enforcing them. The former constitutes sufficient cause for the
dismissal without prejudice to the filing of the complaint or initiatory
pleading upon motion and after hearing, while the latter is a ground for
summary dismissal thereof and for direct contempt. x x x. 56
As to the first, forum shopping takes place when a litigant files multiple
suits involving the same parties, either simultaneously or successively,
to secure a favorable judgment. It exists where the elements of litis
pendentia are present, namely: (a) identity of parties, or at least such
parties who represent the same interests in both actions; (b) identity of
rights asserted and relief prayed for, the relief being founded on the
same facts; and (c) the identity with respect to the two preceding
particulars in the two (2) cases is such that any judgment that may be
rendered in the pending case, regardless of which party is successful,
would amount to res judicata in the other case.57
In this case, records show that, except for the element of identity of
parties, the elements of forum shopping do not exist. Evidently, the
First CA Petition was instituted to question the ruling of the NLRC that
Alcaraz was illegally dismissed. On the other hand, the Second CA
Petition pertains to the propriety of the enforcement of the judgment
award pending the resolution of the First CA Petition and the finality of
the decision in the labor dispute between Alcaraz and the petitioners.
Based on the foregoing, a judgment in the Second CA Petition will not
constitute res judicata insofar as the First CA Petition is concerned.
Thus, considering that the two petitions clearly cover different subject
matters and causes of action, there exists no forum shopping.
As to the second, Alcaraz further imputes that the petitioners violated
the certification requirement under Section 5, Rule 7 of the Rules of
Memorandum of Appeal before the NLRC in the instant petition.
In this regard, Section 5(b), Rule 7 of the Rules of Court requires that a
plaintiff who files a case should provide a complete statement of the
present status of any pending case if the latter involves the same issues
as the one that was filed. If there is no such similar pending case,
Section 5(a) of the same rule provides that the plaintiff is obliged to
declare under oath that to the best of his knowledge, no such other
action or claim is pending.
Records show that the issues raised in the instant petition and those in
the June 16, 2010 Memorandum of Appeal filed with the NLRC likewise
cover different subject matters and causes of action. In this case, the
validity of Alcaraz’s dismissal is at issue whereas in the said
Memorandum of Appeal, the propriety of the issuance of a writ of
execution was in question.
Thus, given the dissimilar issues, petitioners did not have to disclose in
the present petition the filing of their June 16, 2010 Memorandum of
Appeal with the NLRC. In any event, considering that the issue on the
propriety of the issuance of a writ of execution had been resolved in
the Second CA Petition – which in fact had already attained finality –
the matter of disclosing the June 16, 2010 Memorandum of Appeal is
now moot and academic.
Having settled the foregoing procedural matter, the Court now
proceeds to resolve the substantive issues.
B. Probationary employment;
grounds for termination.
A probationary employee, like a regular employee, enjoys security of
tenure. However, in cases of probationary employment, aside from just
or authorized causes of termination, an additional ground is provided
under Article 295 of the Labor Code, i.e., the probationary employee
may also be terminated for failure to qualify as a regular employee in
accordance with the reasonable standards made known by the
employer to the employee at the time of the engagement.59 Thus, the
services of an employee who has been engaged on probationary basis
may be terminated for any of the following: (a) a just or (b) an
authorized cause; and (c) when he fails to qualify as a regular employee
in accordance with reasonable standards prescribed by the
employer.60
Corollary thereto, Section 6(d), Rule I, Book VI of the Implementing
Rules of the Labor Code provides that if the employer fails to inform
the probationary employee of the reasonable standards upon which
the regularization would be based on at the time of the engagement,
then the said employee shall be deemed a regular employee, viz.:
(d) In all cases of probationary employment, the employer shall make
known to the employee the standards under which he will qualify as a
regular employee at the time of his engagement. Where no standards
are made known to the employee at that time, he shall be deemed a
regular employee.
In other words, the employer is made to comply with two (2)
requirements when dealing with a probationary employee: first, the
employer must communicate the regularization standards to the
probationary employee; and second, the employer must make such
communication at the time of the probationary employee’s
engagement. If the employer fails to comply with either, the employee
is deemed as a regular and not a probationary employee.
Keeping with these rules, an employer is deemed to have made known
the standards that would qualify a probationary employee to be a
regular employee when it has exerted reasonable efforts to apprise the
employee of what he is expected to do or accomplish during the trial
period of probation. This goes without saying that the employee is
sufficiently made aware of his probationary status as well as the length
of time of the probation.
The exception to the foregoing is when the job is self-descriptive in
nature, for instance, in the case of maids, cooks, drivers, or
messengers.61 Also, in Aberdeen Court, Inc. v. Agustin,62 it has been
held that the rule on notifying a probationary employee of the
standards of regularization should not be used to exculpate an
employee who acts in a manner contrary to basic knowledge and
common sense in regard to which there is no need to spell out a policy
or standard to be met. In the same light, an employee’s failure to
perform the duties and responsibilities which have been clearly made
known to him constitutes a justifiable basis for a probationary
employee’s non-regularization.
In this case, petitioners contend that Alcaraz was terminated because
she failed to qualify as a regular employee according to Abbott’s
standards which were made known to her at the time of her
engagement. Contrarily, Alcaraz claims that Abbott never apprised her
of these standards and thus, maintains that she is a regular and not a
mere probationary employee.
The Court finds petitioners’ assertions to be well-taken.
A punctilious examination of the records reveals that Abbott had
indeed complied with the above-stated requirements. This conclusion
is largely impelled by the fact that Abbott clearly conveyed to Alcaraz
her duties and responsibilities as Regulatory Affairs Manager prior to,
during the time of her engagement, and the incipient stages of her
employment. On this score, the Court finds it apt to detail not only the
incidents which point out to the efforts made by Abbott but also those
circumstances which would show that Alcaraz was well-apprised of her
employer’s expectations that would, in turn, determine her
regularization:
(a) On June 27, 2004, Abbott caused the publication in a major
broadsheet newspaper of its need for a Regulatory Affairs Manager,
indicating therein the job description for as well as the duties and
responsibilities attendant to the aforesaid position; this prompted
Alcaraz to submit her application to Abbott on October 4, 2004;
(b) In Abbott’s December 7, 2004 offer sheet, it was stated that Alcaraz
was to be employed on a probationary status;
(c) On February 12, 2005, Alcaraz signed an employment contract
which specifically stated, inter alia, that she was to be placed on
probation for a period of six (6) months beginning February 15, 2005 to
August 14, 2005;
(d) On the day Alcaraz accepted Abbott’s employment offer, Bernardo
sent her copies of Abbott’s organizational structure and her job
description through e-mail;
(e) Alcaraz was made to undergo a pre-employment orientation where
Almazar informed her that she had to implement Abbott’s Code of
Conduct and office policies on human resources and finance and that
she would be reporting directly to Walsh;
(f) Alcaraz was also required to undergo a training program as part of
her orientation;
(g) Alcaraz received copies of Abbott’s Code of Conduct and
Performance Modules from Misa who explained to her the procedure
for evaluating the performance of probationary employees; she was
further notified that Abbott had only one evaluation system for all of
its employees; and
(h) Moreover, Alcaraz had previously worked for another
pharmaceutical company and had admitted to have an "extensive
training and background" to acquire the necessary skills for her job.63
Considering the totality of the above-stated circumstances, it cannot,
therefore, be doubted that Alcaraz was well-aware that her
regularization would depend on her ability and capacity to fulfill the
requirements of her position as Regulatory Affairs Manager and that
her failure to perform such would give Abbott a valid cause to
terminate her probationary employment.
Verily, basic knowledge and common sense dictate that the adequate
performance of one’s duties is, by and of itself, an inherent and implied
standard for a probationary employee to be regularized; such is a
regularization standard which need not be literally spelled out or
mapped into technical indicators in every case. In this regard, it must
be observed that the assessment of adequate duty performance is in
the nature of a management prerogative which when reasonably
exercised – as Abbott did in this case – should be respected. This is
especially true of a managerial employee like Alcaraz who was tasked
with the vital responsibility of handling the personnel and important
matters of her department.
In fine, the Court rules that Alcaraz’s status as a probationary employee
and her consequent dismissal must stand. Consequently, in holding
that Alcaraz was illegally dismissed due to her status as a regular and
not a probationary employee, the Court finds that the NLRC committed
a grave abuse of discretion.
To elucidate, records show that the NLRC based its decision on the
premise that Alcaraz’s receipt of her job description and Abbott’s Code
of Conduct and Performance Modules was not equivalent to being
actually informed of the performance standards upon which she should
have been evaluated on.64 It, however, overlooked the legal
implication of the other attendant circumstances as detailed herein
which should have warranted a contrary finding that Alcaraz was
indeed a probationary and not a regular employee – more particularly
the fact that she was well-aware of her duties and responsibilities and
that her failure to adequately perform the same would lead to her non-
regularization and eventually, her termination.
Accordingly, by affirming the NLRC’s pronouncement which is tainted
with grave abuse of discretion, the CA committed a reversible error
which, perforce, necessitates the reversal of its decision.
C. Probationary employment;
termination procedure.
A different procedure is applied when terminating a probationary
employee; the usual two-notice rule does not govern.65 Section 2, Rule
I, Book VI of the Implementing Rules of the Labor Code states that "if
the termination is brought about by the x x x failure of an employee to
meet the standards of the employer in case of probationary
employment, it shall be sufficient that a written notice is served the
employee, within a reasonable time from the effective date of
termination."
As the records show, Alcaraz's dismissal was effected through a letter
dated May 19, 2005 which she received on May 23, 2005 and again on
May 27, 2005. Stated therein were the reasons for her termination,
i.e., that after proper evaluation, Abbott determined that she failed to
meet the reasonable standards for her regularization considering her
lack of time and people management and decision-making skills, which
are necessary in the performance of her functions as Regulatory Affairs
Manager.66 Undeniably, this written notice sufficiently meets the
criteria set forth above, thereby legitimizing the cause and manner of
Alcaraz’s dismissal as a probationary employee under the parameters
set by the Labor Code.67
D. Employer’s violation of
company policy and
procedure.
Nonetheless, despite the existence of a sufficient ground to terminate
Alcaraz’s employment and Abbott’s compliance with the Labor Code
termination procedure, it is readily apparent that Abbott breached its
contractual obligation to Alcaraz when it failed to abide by its own
procedure in evaluating the performance of a probationary employee.
Veritably, a company policy partakes of the nature of an implied
contract between the employer and employee. In Parts Depot, Inc. v.
Beiswenger,68 it has been held that:
Employer statements of policy . . . can give rise to contractual rights in
employees without evidence that the parties mutually agreed that the
policy statements would create contractual rights in the employee,
and, hence, although the statement of policy is signed by neither party,
can be unilaterally amended by the employer without notice to the
employee, and contains no reference to a specific employee, his job
description or compensation, and although no reference was made to
the policy statement in pre-employment interviews and the employee
does not learn of its existence until after his hiring. Toussaint, 292 N.W
.2d at 892. The principle is akin to estoppel. Once an employer
establishes an express personnel policy and the employee continues to
work while the policy remains in effect, the policy is deemed an
implied contract for so long as it remains in effect. If the employer
unilaterally changes the policy, the terms of the implied contract are
also thereby changed.1âwphi1 (Emphasis and underscoring supplied.)
Hence, given such nature, company personnel policies create an
obligation on the part of both the employee and the employer to abide
by the same.
Records show that Abbott’s PPSE procedure mandates, inter alia, that
the job performance of a probationary employee should be formally
reviewed and discussed with the employee at least twice: first on the
third month and second on the fifth month from the date of
employment. Abbott is also required to come up with a Performance
Improvement Plan during the third month review to bridge the gap
between the employee’s performance and the standards set, if
any.69 In addition, a signed copy of the PPSE form should be submitted
to Abbott’s HRD as the same would serve as basis for recommending
the confirmation or termination of the probationary employment.70
In this case, it is apparent that Abbott failed to follow the above-stated
procedure in evaluating Alcaraz. For one, there lies a hiatus of evidence
that a signed copy of Alcaraz’s PPSE form was submitted to the HRD. It
was not even shown that a PPSE form was completed to formally
assess her performance. Neither was the performance evaluation
discussed with her during the third and fifth months of her
employment. Nor did Abbott come up with the necessary Performance
Improvement Plan to properly gauge Alcaraz’s performance with the
set company standards.
While it is Abbott’s management prerogative to promulgate its own
company rules and even subsequently amend them, this right equally
demands that when it does create its own policies and thereafter
notify its employee of the same, it accords upon itself the obligation to
faithfully implement them. Indeed, a contrary interpretation would
entail a disharmonious relationship in the work place for the laborer
should never be mired by the uncertainty of flimsy rules in which the
latter’s labor rights and duties would, to some extent, depend.
In this light, while there lies due cause to terminate Alcaraz’s
probationary employment for her failure to meet the standards
required for her regularization, and while it must be further pointed
out that Abbott had satisfied its statutory duty to serve a written
notice of termination, the fact that it violated its own company
procedure renders the termination of Alcaraz’s employment
procedurally infirm, warranting the payment of nominal damages. A
further exposition is apropos.
Case law has settled that an employer who terminates an employee for
a valid cause but does so through invalid procedure is liable to pay the
latter nominal damages.
In Agabon v. NLRC (Agabon),71 the Court pronounced 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.72 Thus, in Agabon, the employer was ordered to pay
the employee nominal damages in the amount of P30,000.00.73
Proceeding from the same ratio, the Court modified Agabon in the case
of Jaka Food Processing Corporation v. Pacot (Jaka)74 where it created
a distinction between procedurally defective dismissals due to a just
cause, on one hand, and those due to an authorized cause, on the
other.
It was explained that if the dismissal is based on a just cause under
Article 282 of the Labor Code (now Article 296) but the employer failed
to comply with the notice requirement, the sanction to be imposed
upon him should be tempered because the dismissal process was, in
effect, initiated by an act imputable to the employee; if the dismissal is
based on an authorized cause under Article 283 (now Article 297) but
the employer failed to comply with the notice requirement, the
sanction should be stiffer because the dismissal process was initiated
by the employer’s exercise of his management prerogative.75 Hence,
in Jaka, where the employee was dismissed for an authorized cause of
retrenchment76 – as contradistinguished from the employee in
Agabon who was dismissed for a just cause of neglect of duty77 – the
Court ordered the employer to pay the employee nominal damages at
the higher amount of P50,000.00.
Evidently, the sanctions imposed in both Agabon and Jaka proceed
from the necessity to deter employers from future violations of the
statutory due process rights of employees.78 In similar regard, the
Court deems it proper to apply the same principle to the case at bar for
the reason that an employer’s contractual breach of its own company
procedure – albeit not statutory in source – has the parallel effect of
violating the laborer’s rights. Suffice it to state, the contract is the law
between the parties and thus, breaches of the same impel recompense
to vindicate a right that has been violated. Consequently, while the
Court is wont to uphold the dismissal of Alcaraz because a valid cause
exists, the payment of nominal damages on account of Abbott’s
contractual breach is warranted in accordance with Article 2221 of the
Civil Code.79
Anent the proper amount of damages to be awarded, the Court
observes that Alcaraz’s dismissal proceeded from her failure to comply
with the standards required for her regularization. As such, it is
undeniable that the dismissal process was, in effect, initiated by an act
imputable to the employee, akin to dismissals due to just causes under
Article 296 of the Labor Code. Therefore, the Court deems it
appropriate to fix the amount of nominal damages at the amount
of P30,000.00, consistent with its rulings in both Agabon and Jaka.
E. Liability of individual
petitioners as corporate
officers.
It is hornbook principle that personal liability of corporate directors,
trustees or officers attaches only when: (a) they assent to a patently
unlawful act of the corporation, or when they are guilty of bad faith or
gross negligence in directing its affairs, or when there is a conflict of
interest resulting in damages to the corporation, its stockholders or
other persons; (b) they consent to the issuance of watered down
stocks or when, having knowledge of such issuance, do not forthwith
file with the corporate secretary their written objection; (c) they agree
to hold themselves personally and solidarily liable with the
corporation; or (d) they are made by specific provision of law
personally answerable for their corporate action.80
In this case, Alcaraz alleges that the individual petitioners acted in bad
faith with regard to the supposed crude manner by which her
probationary employment was terminated and thus, should be held
liable together with Abbott. In the same vein, she further attributes the
loss of some of her remaining belongings to them.81
Alcaraz’s contention fails to persuade.
A judicious perusal of the records show that other than her unfounded
assertions on the matter, there is no evidence to support the fact that
the individual petitioners herein, in their capacity as Abbott’s officers
and employees, acted in bad faith or were motivated by ill will in
terminating
Alcaraz’s services. The fact that Alcaraz was made to resign and not
allowed to enter the workplace does not necessarily indicate bad faith
on Abbott’s part since a sufficient ground existed for the latter to
actually proceed with her termination. On the alleged loss of her
personal belongings, records are bereft of any showing that the same
could be attributed to Abbott or any of its officers. It is a well-settled
rule that bad faith cannot be presumed and he who alleges bad faith
has the onus of proving it. All told, since Alcaraz failed to prove any
malicious act on the part of Abbott or any of its officers, the Court finds
the award of moral or exemplary damages unwarranted.
WHEREFORE, the petition is GRANTED. The Decision dated December
10, 2009 and Resolution dated June 9, 2010 of the Court of Appeals in
CA-G.R. SP No. 101045 are hereby REVERSED and SET ASIDE.
Accordingly, the Decision dated March 30, 2006 of the Labor Arbiter is
REINSTATED with the MODIFICATION that petitioner Abbott
Laboratories, Philippines be ORDERED to pay respondent Pearlie Ann F.
Alcaraz nominal damages in the amount of P30,000.00 on account of
its breach of its own company procedure.
SO ORDERED.
G.R. No. 158693 November 17, 2004
JENNY M. AGABON and VIRGILIO C. AGABON, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), RIVIERA HOME
IMPROVEMENTS, INC. and VICENTE ANGELES, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review seeks to reverse the decision1 of the Court of
Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, modifying
the decision of National Labor Relations Commission (NLRC) in NLRC-
NCR Case No. 023442-00.
Private respondent Riviera Home Improvements, Inc. is engaged in the
business of selling and installing ornamental and construction
materials. It employed petitioners Virgilio Agabon and Jenny Agabon as
gypsum board and cornice installers on January 2, 19922 until February
23, 1999 when they were dismissed for abandonment of work.
Petitioners then filed a complaint for illegal dismissal and payment of
money claims3 and on December 28, 1999, the Labor Arbiter rendered
a decision declaring the dismissals illegal and ordered private
respondent to pay the monetary claims. The dispositive portion of the
decision states:
WHEREFORE, premises considered, We find the termination of the
complainants illegal. Accordingly, respondent is hereby ordered to pay
them their backwages up to November 29, 1999 in the sum of:
1. Jenny M. Agabon - P56, 231.93
2. Virgilio C. Agabon - 56, 231.93
and, in lieu of reinstatement to pay them their separation pay of one
(1) month for every year of service from date of hiring up to November
29, 1999.
Respondent is further ordered to pay the complainants their holiday
pay and service incentive leave pay for the years 1996, 1997 and 1998
as well as their premium pay for holidays and rest days and Virgilio
Agabon's 13th month pay differential amounting to TWO THOUSAND
ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of
ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY
EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE
HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY
EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per
attached computation of Julieta C. Nicolas, OIC, Research and
Computation Unit, NCR.
SO ORDERED.4
On appeal, the NLRC reversed the Labor Arbiter because it found that
the petitioners had abandoned their work, and were not entitled to
backwages and separation pay. The other money claims awarded by
the Labor Arbiter were also denied for lack of evidence.5
Upon denial of their motion for reconsideration, petitioners filed a
petition for certiorari with the Court of Appeals.
The Court of Appeals in turn ruled that the dismissal of the petitioners
was not illegal because they had abandoned their employment but
ordered the payment of money claims. The dispositive portion of the
decision reads:
WHEREFORE, the decision of the National Labor Relations Commission
is REVERSED only insofar as it dismissed petitioner's money claims.
Private respondents are ordered to pay petitioners holiday pay for four
(4) regular holidays in 1996, 1997, and 1998, as well as their service
incentive leave pay for said years, and to pay the balance of petitioner
Virgilio Agabon's 13th month pay for 1998 in the amount of P2,150.00.
SO ORDERED.6
Hence, this petition for review on the sole issue of whether petitioners
were illegally dismissed.7
Petitioners assert that they were dismissed because the private
respondent refused to give them assignments unless they agreed to
work on a "pakyaw" basis when they reported for duty on February 23,
1999. They did not agree on this arrangement because it would mean
losing benefits as Social Security System (SSS) members. Petitioners
also claim that private respondent did not comply with the twin
requirements of notice and hearing.8
Private respondent, on the other hand, maintained that petitioners
were not dismissed but had abandoned their work.9 In fact, private
respondent sent two letters to the last known addresses of the
petitioners advising them to report for work. Private respondent's
manager even talked to petitioner Virgilio Agabon by telephone
sometime in June 1999 to tell him about the new assignment at Pacific
Plaza Towers involving 40,000 square meters of cornice installation
work. However, petitioners did not report for work because they had
subcontracted to perform installation work for another company.
Petitioners also demanded for an increase in their wage to P280.00 per
day. When this was not granted, petitioners stopped reporting for
work and filed the illegal dismissal case.10
It is well-settled that findings of fact of quasi-judicial agencies like the
NLRC are accorded not only respect but even finality if the findings are
supported by substantial evidence. This is especially so when such
findings were affirmed by the Court of Appeals.11 However, if the
factual findings of the NLRC and the Labor Arbiter are conflicting, as in
this case, the reviewing court may delve into the records and examine
for itself the questioned findings.12
Accordingly, the Court of Appeals, after a careful review of the facts,
ruled that petitioners' dismissal was for a just cause. They had
abandoned their employment and were already working for another
employer.
To dismiss an employee, the law requires not only the existence of a
just and valid cause but also enjoins the employer to give the employee
the opportunity to be heard and to defend himself.13 Article 282 of the
Labor Code enumerates the just causes for termination by the
employer: (a) serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or the latter's
representative in connection with the employee's work; (b) gross and
habitual neglect by the employee of his duties; (c) fraud or willful
breach by the employee of the trust reposed in him by his employer or
his duly authorized representative; (d) commission of a crime or
offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative;
and (e) other causes analogous to the foregoing.
Abandonment is the deliberate and unjustified refusal of an employee
to resume his employment.14 It is a form of neglect of duty, hence, a
just cause for termination of employment by the employer.15 For a
valid finding of abandonment, these two factors should be present: (1)
the failure to report for work or absence without valid or justifiable
reason; and (2) a clear intention to sever employer-employee
relationship, with the second as the more determinative factor which is
manifested by overt acts from which it may be deduced that the
employees has no more intention to work. The intent to discontinue
the employment must be shown by clear proof that it was deliberate
and unjustified.16
In February 1999, petitioners were frequently absent having
subcontracted for an installation work for another company.
Subcontracting for another company clearly showed the intention to
sever the employer-employee relationship with private respondent.
This was not the first time they did this. In January 1996, they did not
report for work because they were working for another company.
Private respondent at that time warned petitioners that they would be
dismissed if this happened again. Petitioners disregarded the warning
and exhibited a clear intention to sever their employer-employee
relationship. The record of an employee is a relevant consideration in
determining the penalty that should be meted out to him.17
In Sandoval Shipyard v. Clave,18 we held that an employee who
deliberately absented from work without leave or permission from his
employer, for the purpose of looking for a job elsewhere, is considered
to have abandoned his job. We should apply that rule with more
reason here where petitioners were absent because they were already
working in another company.
The law imposes many obligations on the employer such as providing
just compensation to workers, observance of the procedural
requirements of notice and hearing in the termination of employment.
On the other hand, the law also recognizes the right of the employer to
expect from its workers not only good performance, adequate work
and diligence, but also good conduct19 and loyalty. The employer may
not be compelled to continue to employ such persons whose
continuance in the service will patently be inimical to his interests.20
After establishing that the terminations were for a just and valid cause,
we now determine if the procedures for dismissal were observed.
The procedure for terminating an employee is found in Book VI, Rule I,
Section 2(d) of the Omnibus Rules Implementing the Labor Code:
Standards of due process: requirements of notice. – In all cases of
termination of employment, the following standards of due process
shall be substantially observed:
I. For termination of employment based on just causes as defined in
Article 282 of the Code:
(a) A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side;
(b) A hearing or conference during which the employee concerned,
with the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut
the evidence presented against him; and
(c) A written notice of termination served on the employee indicating
that upon due consideration of all the circumstances, grounds have
been established to justify his termination.
In case of termination, the foregoing notices shall be served on the
employee's last known address.
Dismissals based on just causes contemplate acts or omissions
attributable to the employee while dismissals based on authorized
causes involve grounds under the Labor Code which allow the
employer to terminate employees. A termination for an authorized
cause requires payment of separation pay. When the termination of
employment is declared illegal, reinstatement and full backwages are
mandated under Article 279. If reinstatement is no longer possible
where the dismissal was unjust, separation pay may be granted.
Procedurally, (1) if the dismissal is based on a just cause under Article
282, the employer must give the employee two written notices and a
hearing or opportunity to be heard if requested by the employee
before terminating the employment: a notice specifying the grounds
for which dismissal is sought a hearing or an opportunity to be heard
and after hearing or opportunity to be heard, a notice of the decision
to dismiss; and (2) if the dismissal is based on authorized causes under
Articles 283 and 284, the employer must give the employee and the
Department of Labor and Employment written notices 30 days prior to
the effectivity of his separation.
From the foregoing rules four possible situations may be derived: (1)
the dismissal is for a just cause under Article 282 of the Labor Code, for
an authorized cause under Article 283, or for health reasons under
Article 284, and due process was observed; (2) the dismissal is without
just or authorized cause but due process was observed; (3) the
dismissal is without just or authorized cause and there was no due
process; and (4) the dismissal is for just or authorized cause but due
process was not observed.
In the first situation, the dismissal is undoubtedly valid and the
employer will not suffer any liability.
In the second and third situations where the dismissals are illegal,
Article 279 mandates that the employee is entitled to reinstatement
without loss of seniority rights and other privileges and full backwages,
inclusive of allowances, and other benefits or their monetary
equivalent computed from the time the compensation was not paid up
to the time of actual reinstatement.
In the fourth situation, the dismissal should be upheld. While the
procedural infirmity cannot be cured, it should not invalidate the
dismissal. However, the employer should be held liable for non-
compliance with the procedural requirements of due process.
The present case squarely falls under the fourth situation. The
dismissal should be upheld because it was established that the
petitioners abandoned their jobs to work for another company. Private
respondent, however, did not follow the notice requirements and
instead argued that sending notices to the last known addresses would
have been useless because they did not reside there anymore.
Unfortunately for the private respondent, this is not a valid excuse
because the law mandates the twin notice requirements to the
employee's last known address.21 Thus, it should be held liable for
non-compliance with the procedural requirements of due process.
A review and re-examination of the relevant legal principles is
appropriate and timely to clarify the various rulings on employment
termination in the light of Serrano v. National Labor Relations
Commission.22
Prior to 1989, the rule was that a dismissal or termination is illegal if
the employee was not given any notice. In the 1989 case of Wenphil
Corp. v. National Labor Relations Commission,23 we reversed this long-
standing rule and held that the dismissed employee, although not
given any notice and hearing, was not entitled to reinstatement and
backwages because the dismissal was for grave misconduct and
insubordination, a just ground for termination under Article 282. The
employee had a violent temper and caused trouble during office hours,
defying superiors who tried to pacify him. We concluded that
reinstating the employee and awarding backwages "may encourage
him to do even worse and will render a mockery of the rules of
discipline that employees are required to observe."24 We further held
that:
Under the circumstances, the dismissal of the private respondent for
just cause should be maintained. He has no right to return to his
former employment.
However, the petitioner must nevertheless be held to account for
failure to extend to private respondent his right to an investigation
before causing his dismissal. The rule is explicit as above discussed. The
dismissal of an employee must be for just or authorized cause and after
due process. Petitioner committed an infraction of the second
requirement. Thus, it must be imposed a sanction for its failure to give
a formal notice and conduct an investigation as required by law before
dismissing petitioner from employment. Considering the circumstances
of this case petitioner must indemnify the private respondent the
amount of P1,000.00. The measure of this award depends on the facts
of each case and the gravity of the omission committed by the
employer.25
The rule thus evolved: where the employer had a valid reason to
dismiss an employee but did not follow the due process requirement,
the dismissal may be upheld but the employer will be penalized to pay
an indemnity to the employee. This became known as the Wenphil or
Belated Due Process Rule.
On January 27, 2000, in Serrano, the rule on the extent of the sanction
was changed. We held that the violation by the employer of the notice
requirement in termination for just or authorized causes was not a
denial of due process that will nullify the termination. However, the
dismissal is ineffectual and the employer must pay full backwages from
the time of termination until it is judicially declared that the dismissal
was for a just or authorized cause.
The rationale for the re-examination of the Wenphil doctrine
in Serrano was the significant number of cases involving dismissals
without requisite notices. We concluded that the imposition of penalty
by way of damages for violation of the notice requirement was not
serving as a deterrent. Hence, we now required payment of full
backwages from the time of dismissal until the time the Court finds the
dismissal was for a just or authorized cause.
Serrano was confronting the practice of employers to "dismiss now and
pay later" by imposing full backwages.
We believe, however, that the ruling in Serrano did not consider the
full meaning of Article 279 of the Labor Code which states:
ART. 279. Security of Tenure. – In cases of regular employment, the
employer shall not terminate the services of an employee except for a
just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
This means that the termination is illegal only if it is not for any of the
justified or authorized causes provided by law. Payment of backwages
and other benefits, including reinstatement, is justified only if the
employee was unjustly dismissed.
The fact that the Serrano ruling can cause unfairness and injustice
which elicited strong dissent has prompted us to revisit the doctrine.
To be sure, the Due Process Clause in Article III, Section 1 of the
Constitution embodies a system of rights based on moral principles so
deeply imbedded in the traditions and feelings of our people as to be
deemed fundamental to a civilized society as conceived by our entire
history. Due process is that which comports with the deepest notions
of what is fair and right and just.26 It is a constitutional restraint on the
legislative as well as on the executive and judicial powers of the
government provided by the Bill of Rights.
Due process under the Labor Code, like Constitutional due process, has
two aspects: substantive, i.e., the valid and authorized causes of
employment termination under the Labor Code; and procedural, i.e.,
the manner of dismissal. Procedural due process requirements for
dismissal are found in the Implementing Rules of P.D. 442, as amended,
otherwise known as the Labor Code of the Philippines in Book VI, Rule
I, Sec. 2, as amended by Department Order Nos. 9 and 10.27 Breaches
of these due process requirements violate the Labor Code.
Therefore statutory due process should be differentiated from failure
to comply with constitutional due process.
Constitutional due process protects the individual from the
government and assures him of his rights in criminal, civil or
administrative proceedings; while statutory due process found in the
Labor Code and Implementing Rules protects employees from being
unjustly terminated without just cause after notice and hearing.
In Sebuguero v. National Labor Relations Commission,28 the dismissal
was for a just and valid cause but the employee was not accorded due
process. The dismissal was upheld by the Court but the employer was
sanctioned. The sanction should be in the nature of indemnification or
penalty, and depends on the facts of each case and the gravity of the
omission committed by the employer.
In Nath v. National Labor Relations Commission,29 it was ruled that
even if the employee was not given due process, the failure did not
operate to eradicate the just causes for dismissal. The dismissal being
for just cause,albeit without due process, did not entitle the employee
to reinstatement, backwages, damages and attorney's fees.
Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine
Services, Inc. v. National Labor Relations Commission,30 which opinion
he reiterated in Serrano, stated:
C. Where there is just cause for dismissal but due process has not been
properly observed by an employer, it would not be right to order either
the reinstatement of the dismissed employee or the payment of
backwages to him. In failing, however, to comply with the procedure
prescribed by law in terminating the services of the employee, the
employer must be deemed to have opted or, in any case, should be
made liable, for the payment of separation pay. It might be pointed out
that the notice to be given and the hearing to be conducted generally
constitute the two-part due process requirement of law to be accorded
to the employee by the employer. Nevertheless, peculiar
circumstances might obtain in certain situations where to undertake
the above steps would be no more than a useless formality and where,
accordingly, it would not be imprudent to apply the res ipsa
loquitur rule and award, in lieu of separation pay, nominal damages to
the employee. x x x.31
After carefully analyzing the consequences of the divergent doctrines
in the law on employment termination, we believe that in cases
involving dismissals for cause but without observance of the twin
requirements of notice and hearing, the better rule is to abandon the
Serrano doctrine and to follow Wenphil by holding that the dismissal
was for just cause but imposing sanctions on the employer. Such
sanctions, however, must be stiffer than that imposed in Wenphil. By
doing so, this Court would be able to achieve a fair result by dispensing
justice not just to employees, but to employers as well.
The unfairness of declaring illegal or ineffectual dismissals for valid or
authorized causes but not complying with statutory due process may
have far-reaching consequences.
This would encourage frivolous suits, where even the most notorious
violators of company policy are rewarded by invoking due process. This
also creates absurd situations where there is a just or authorized cause
for dismissal but a procedural infirmity invalidates the termination. Let
us take for example a case where the employee is caught stealing or
threatens the lives of his co-employees or has become a criminal, who
has fled and cannot be found, or where serious business losses
demand that operations be ceased in less than a month. Invalidating
the dismissal would not serve public interest. It could also discourage
investments that can generate employment in the local economy.
The constitutional policy to provide full protection to labor is not
meant to be a sword to oppress employers. The commitment of this
Court to the cause of labor does not prevent us from sustaining the
employer when it is in the right, as in this case.32 Certainly, an
employer should not be compelled to pay employees for work not
actually performed and in fact abandoned.
The employer should not be compelled to continue employing a person
who is admittedly guilty of misfeasance or malfeasance and whose
continued employment is patently inimical to the employer. The law
protecting the rights of the laborer authorizes neither oppression nor
self-destruction of the employer.33
It must be stressed that in the present case, the petitioners committed
a grave offense, i.e., abandonment, which, if the requirements of due
process were complied with, would undoubtedly result in a valid
dismissal.
An employee who is clearly guilty of conduct violative of Article 282
should not be protected by the Social Justice Clause of the
Constitution. Social justice, as the term suggests, should be used only
to correct an injustice. As the eminent Justice Jose P. Laurel observed,
social justice must be founded on the recognition of the necessity of
interdependence among diverse units of a society and of the
protection that should be equally and evenly extended to all groups as
a combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting the
health, comfort, and quiet of all persons, and of bringing about "the
greatest good to the greatest number."34
This is not to say that the Court was wrong when it ruled the way it did
in Wenphil, Serrano and related cases. Social justice is not based on
rigid formulas set in stone. It has to allow for changing times and
circumstances.
Justice Isagani Cruz strongly asserts the need to apply a balanced
approach to labor-management relations and dispense justice with an
even hand in every case:
We have repeatedly stressed that social justice – or any justice for that
matter – is for the deserving, whether he be a millionaire in his
mansion or a pauper in his hovel. It is true that, in case of reasonable
doubt, we are to tilt the balance in favor of the poor to whom the
Constitution fittingly extends its sympathy and compassion. But never
is it justified to give preference to the poor simply because they are
poor, or reject the rich simply because they are rich, for justice must
always be served for the poor and the rich alike, according to the
mandate of the law.35
Justice in every case should only be for the deserving party. It should
not be presumed that every case of illegal dismissal would
automatically be decided in favor of labor, as management has rights
that should be fully respected and enforced by this Court. As
interdependent and indispensable partners in nation-building, labor
and management need each other to foster productivity and economic
growth; hence, the need to weigh and balance the rights and welfare
of both the employee and employer.
Where the dismissal is for a just cause, as in the instant case, 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, as ruled in Reta v.
National Labor Relations Commission.36 The indemnity to be imposed
should be stiffer to discourage the abhorrent practice of "dismiss now,
pay later," which we sought to deter in the Serrano ruling. 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.37
As enunciated by this Court in Viernes v. National Labor Relations
Commissions,38 an employer is liable to pay indemnity in the form of
nominal damages to an employee who has been dismissed if, in
effecting such dismissal, the employer fails to comply with the
requirements of due process. The Court, after considering the
circumstances therein, fixed the indemnity at P2,590.50, which was
equivalent to the employee's one month salary. This indemnity is
intended not to penalize the employer but to vindicate or recognize
the employee's right to statutory due process which was violated by
the employer.39
The violation of the petitioners' right to statutory due process by the
private respondent warrants the payment of indemnity in the form of
nominal damages. The amount of such damages is addressed to the
sound discretion of the court, taking into account the relevant
circumstances.40 Considering the prevailing circumstances in the case
at bar, we deem it proper to fix it at P30,000.00. We believe this form
of damages would serve to deter employers from future violations of
the statutory due process rights of employees. At the very least, it
provides a vindication or recognition of this fundamental right granted
to the latter under the Labor Code and its Implementing Rules.
Private respondent claims that the Court of Appeals erred in holding
that it failed to pay petitioners' holiday pay, service incentive leave pay
and 13th month pay.
We are not persuaded.
We affirm the ruling of the appellate court on petitioners' money
claims. Private respondent is liable for petitioners' holiday pay, service
incentive leave pay and 13th month pay without deductions.
As a general rule, one who pleads payment has the burden of proving
it. Even where the employee must allege non-payment, the general
rule is that the burden rests on the employer to prove payment, rather
than on the employee to prove non-payment. The reason for the rule is
that the pertinent personnel files, payrolls, records, remittances and
other similar documents – which will show that overtime, differentials,
service incentive leave and other claims of workers have been paid –
are not in the possession of the worker but in the custody and absolute
control of the employer.41
In the case at bar, if private respondent indeed paid petitioners'
holiday pay and service incentive leave pay, it could have easily
presented documentary proofs of such monetary benefits to disprove
the claims of the petitioners. But it did not, except with respect to the
13th month pay wherein it presented cash vouchers showing payments
of the benefit in the years disputed.42 Allegations by private
respondent that it does not operate during holidays and that it allows
its employees 10 days leave with pay, other than being self-serving, do
not constitute proof of payment. Consequently, it failed to discharge
the onus probandi thereby making it liable for such claims to the
petitioners.
Anent the deduction of SSS loan and the value of the shoes from
petitioner Virgilio Agabon's 13th month pay, we find the same to be
unauthorized. The evident intention of Presidential Decree No. 851 is
to grant an additional income in the form of the 13th month pay to
employees not already receiving the same43 so as "to further protect
the level of real wages from the ravages of world-wide
inflation."44 Clearly, as additional income, the 13th month pay is
included in the definition of wage under Article 97(f) of the Labor Code,
to wit:
(f) "Wage" paid to any employee shall mean the remuneration or
earnings, however designated, capable of being expressed in terms of
money whether fixed or ascertained on a time, task, piece , or
commission basis, or other method of calculating the same, which is
payable by an employer to an employee under a written or unwritten
contract of employment for work done or to be done, or for services
rendered or to be rendered and includes the fair and reasonable value,
as determined by the Secretary of Labor, of board, lodging, or other
facilities customarily furnished by the employer to the employee…"
from which an employer is prohibited under Article 11345 of the same
Code from making any deductions without the employee's knowledge
and consent. In the instant case, private respondent failed to show that
the deduction of the SSS loan and the value of the shoes from
petitioner Virgilio Agabon's 13th month pay was authorized by the
latter. The lack of authority to deduct is further bolstered by the fact
that petitioner Virgilio Agabon included the same as one of his money
claims against private respondent.
The Court of Appeals properly reinstated the monetary claims awarded
by the Labor Arbiter ordering the private respondent to pay each of the
petitioners holiday pay for four regular holidays from 1996 to 1998, in
the amount of P6,520.00, service incentive leave pay for the same
period in the amount of P3,255.00 and the balance of Virgilio Agabon's
thirteenth month pay for 1998 in the amount of P2,150.00.
WHEREFORE, in view of the foregoing, the petition is DENIED. The
decision of the Court of Appeals dated January 23, 2003, in CA-G.R. SP
No. 63017, finding that petitioners' Jenny and Virgilio Agabon
abandoned their work, and ordering private respondent to pay each of
the petitioners holiday pay for four regular holidays from 1996 to 1998,
in the amount of P6,520.00, service incentive leave pay for the same
period in the amount of P3,255.00 and the balance of Virgilio Agabon's
thirteenth month pay for 1998 in the amount of P2,150.00
isAFFIRMED with the MODIFICATION that private respondent Riviera
Home Improvements, Inc. is furtherORDERED to pay each of the
petitioners the amount of P30,000.00 as nominal damages for non-
compliance with statutory due process.
No costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Sandoval-Gutierrez,
Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna,
Tinga, Chico-Nazario, and Garcia, JJ., concur.
SEPARATE OPINION
TINGA, J:
I concur in the result, the final disposition of the petition being correct.
There is no denying the importance of the Court's ruling today, which
should be considered as definitive as to the effect of the failure to
render the notice and hearing required under the Labor Code when an
employee is being dismissed for just causes, as defined under the same
law. The Court emphatically reaffirms the rule that dismissals for just
cause are not invalidated due to the failure of the employer to observe
the proper notice and hearing requirements under the Labor Code. At
the same time, The Decision likewise establishes that the Civil Code
provisions on damages serve as the proper framework for the
appropriate relief to the employee dismissed for just cause if the
notice-hearing requirement is not met. Serrano v. NLRC,1 insofar as it is
controlling in dismissals for unauthorized causes, is no longer the
controlling precedent. Any and all previous rulings and statements of
the Court inconsistent with these determinations are now
deemed inoperative.
My views on the questions raised in this petition are comprehensive, if
I may so in all modesty. I offer this opinion to discuss the reasoning
behind my conclusions, pertaining as they do to questions of
fundamental importance.
Prologue
The factual backdrop of the present Petition for Review is not novel.
Petitioners claim that they were illegally dismissed by the respondents,
who allege in turn that petitioners had actually abandoned their
employment. There is little difficulty in upholding the findings of the
NRLC and the Court of Appeals that petitioners are guilty of
abandonment, one of the just causes for termination under the Labor
Code. Yet, the records also show that the employer was remiss in not
giving the notice required by the Labor Code; hence, the resultant
controversy as to the legal effect of such failure vis-à-vis the warranted
dismissal.
Ostensibly, the matter has been settled by our decision in Serrano2,
wherein the Court ruled that the failure to properly observe the notice
requirement did not render the dismissal, whether for just or
authorized causes, null and void, for such violation was not a denial of
the constitutional right to due process, and that the measure of
appropriate damages in such cases ought to be the amount of wages
the employee should have received were it not for the termination of
his employment without prior notice.3 Still, the Court has, for good
reason, opted to reexamine the so-called Serrano doctrine through the
present petition
Antecedent Facts
Respondent Riviera Home Improvements, Inc (Riviera Home) is
engaged in the manufacture and installation of gypsum board and
cornice. In January of 1992, the Agabons were hired in January of 1992
as cornice installers by Riviera Home. According to their personnel file
with Riviera Home, the Agabon given address was 3RDS Tailoring, E.
Rodriguez Ave., Moonwalk Subdivision, P-II Parañaque City, Metro
Manila.4
It is not disputed that sometime around February 1999, the Agabons
stopped rendering services for Riviera Home. The Agabons allege that
beginning on 23 February 1999, they stopped receiving assignments
from Riviera Home.5 When they demanded an explanation, the
manager of Riviera Homes, Marivic Ventura, informed them that they
would be hired again, but on a "pakyaw" (piece-work) basis. When the
Agabons spurned this proposal, Riviera Homes refused to continue
their employment under the original terms and agreement.6 Taking
affront, the Agabons filed a complaint for illegal dismissal with the
National Labor Relations Commission ("NLRC").
Riviera Homes adverts to a different version of events leading to the
filing of the complaint for illegal dismissal. It alleged that in the early
quarter of 1999, the Agabons stopped reporting for work with Riviera.
Two separate letters dated 10 March 1999, were sent to the Agabons
at the address indicated in their personnel file. In these notices, the
Agabons were directed to report for work immediately.7 However,
these notices were returned unserved with the notation "RTS Moved."
Then, in June of 1999, Virgilio Agabon informed Riviera Homes by
telephone that he and Jenny Agabon were ready to return to work for
Riviera Homes, on the condition that their wages be first adjusted. On
18 June 1999, the Agabons went to Riviera Homes, and in a meeting
with management, requested a wage increase of up to Two Hundred
Eighty Pesos (P280.00) a day. When no affirmative response was
offered by Riviera Homes, the Agabons initiated the complaint before
the NLRC.8
In their Position Paper, the Agabons likewise alleged that they were
required to work even on holidays and rest days, but were never paid
the legal holiday pay or the premium pay for holiday or rest day. They
also asserted that they were denied Service Incentive Leave pay, and
that Virgilio Agabon was not given his thirteenth (13th) month pay for
the year 1998.9
After due deliberation, Labor Arbiter Daisy G. Cauton-Barcelona
rendered a Decision dated 28 December 1999, finding the termination
of the Agabons illegal, and ordering Riviera Homes to pay backwages in
the sum of Fifty Six Thousand Two Hundred Thirty One Pesos and
Ninety Three Centavos (P56,231.93) each. The Labor Arbiter likewise
ordered, in lieu of reinstatement, the payment of separation pay of
one (1) month pay for every year of service from date of hiring up to 29
November 1999, as well as the payment of holiday pay, service
incentive leave pay, and premium pay for holiday and restday, plus
thirteenth (13th) month differential to Virgilio Agabon.10
In so ruling, the Labor Arbiter declared that Riviera Homes was unable
to satisfactorily refute the Agabons' claim that they were no longer
given work to do after 23 February 1999 and that their rehiring was
only on "pakyaw" basis. The Labor Arbiter also held that Riviera Homes
failed to comply with the notice requirement, noting that Riviera
Homes well knew of the change of address of the Agabons, considering
that the identification cards it issued stated a different address from
that on the personnel file.11 The Labor Arbiter asserted the principle
that in all termination cases, strict compliance by the employer with
the demands of procedural and substantive due process is a
condition sine qua non for the same to be declared valid.12
On appeal, the NLRC Second Division set aside the Labor
Arbiter's Decision and ordered the dismissal of the complaint for lack
of merit.13 The NLRC held that the Agabons were not able to refute
the assertion that for the payroll period ending on 15 February 1999,
Virgilio and Jenny Agabon worked for only two and one-half (2½) and
three (3) days, respectively. It disputed the earlier finding that Riviera
Homes had known of the change in address, noting that the address
indicated in the
identification cards was not the Agabons, but that of the persons who
should be notified in case of emergency concerning the
employee.14 Thus, proper service of the notice was deemed to have
been accomplished. Further, the notices evinced good reason to
believe that the Agabons had not been dismissed, but had instead
abandoned their jobs by refusing to report for work.
In support of its conclusion that the Agabons had abandoned their
work, the NLRC also observed that the Agabons did not seek
reinstatement, but only separation pay. While the choice of relief was
premised by the Agabons on their purported strained relations with
Riviera Homes, the NLRC pointed out that such claim was amply belied
by the fact that the Agabons had actually sought a conference with
Riviera Homes in June of 1999. The NLRC likewise found that the failure
of the Labor Arbiter to justify the award of extraneous money claims,
such as holiday and service incentive leave pay, confirmed that there
was no proof to justify such claims.
A Petition for Certiorari was promptly filed with the Court of Appeals
by the Agabons, imputing grave abuse of discretion on the part of the
NLRC in dismissing their complaint for illegal dismissal. In
a Decision15 dated 23 January 2003, the Court of Appeals affirmed the
finding that the Agabons had abandoned their employment. It noted
that the two elements constituting abandonment had been
established, to wit: the failure to report for work or absence without
valid justifiable reason, and; a clear intention to sever the employer-
employee relationship. The intent to sever the employer-employee
relationship was buttressed by the Agabon's choice to seek not
reinstatement, but separation pay. The Court of Appeals likewise found
that the service of the notices were valid, as the Agabons did not notify
Riviera Homes of their change of address, and thus the failure to return
to work despite notice amounted to abandonment of work.
However, the Court of Appeals reversed the NLRC as regards the denial
of the claims for holiday pay, service incentive leave pay, and the
balance of Virgilio Agabon's thirteenth (13th) month pay. It ruled that
the failure to adduce proof in support thereof was not fatal and that
the burden of proving that such benefits had already been paid rested
on Riviera Homes.16 Given that Riviera Homes failed to present proof
of payment to the Agabons of their holiday pay and service incentive
leave pay for the years 1996, 1997 and 1998, the Court of Appeals
chose to believe that such benefits had not actually been received by
the employees. It also ruled that the apparent deductions made by
Riviera Homes on the thirteenth (13th) month pay of Virgilio Agabon
violated Section 10 of the Rules and Regulations Implementing
Presidential Decree No. 851.17 Accordingly, Riviera Homes was
ordered to pay the Agabons holiday for four (4) regular holidays in
1996, 1997 and 1998, as well as their service incentive leave pay for
said years, and the balance of Virgilio Agabon's thirteenth (13th) month
pay for 1998 in the amount of Two Thousand One Hundred Fifty Pesos
(P2,150.00).18
In their Petition for Review, the Agabons claim that they had been
illegally dismissed, reasserting their version of events, thus: (1) that
they had not been given new assignments since 23 February 1999; (2)
that they were told that they would only be re-hired on a "pakyaw"
basis, and; (3) that Riviera Homes had knowingly sent the notices to
their old address despite its knowledge of their change of address as
indicated in the identification cards.19Further, the Agabons note that
only one notice was sent to each of them, in violation of the rule that
the employer must furnish two written notices before termination —
the first to apprise the employee of the cause for which dismissal is
sought, and the second to notify the employee of the decision of
dismissal.20 The Agabons likewise maintain that they did not seek
reinstatement owing to the strained relations between them and
Riviera Homes.
The Agabons present to this Court only one issue, i.e.: whether or not
they were illegally dismissed from their employment.21 There are
several dimensions though to this issue which warrant full
consideration.
The Abandonment Dimension
Review of Factual Finding of Abandonment
As the Decision points out, abandonment is characterized by the failure
to report for work or absence without valid or justifiable reason, and a
clear intention to sever the employer-employee relationship. The
question of whether or not an employee has abandoned employment
is essentially a factual issue.22 The NLRC and the Court of Appeals,
both appropriate triers of fact, concluded that the Agabons had
actually abandoned their employment, thus there is little need for
deep inquiry into the correctness of this factual finding. There is no
doubt that the Agabons stopped reporting for work sometime in
February of 1999. And there is no evidence to support their assertion
that such absence was due to the deliberate failure of Riviera Homes to
give them work. There is also the fact, as noted by the NLRC and the
Court of Appeals, that the Agabons did not pray for reinstatement, but
only for separation
pay and money claims.23 This failure indicates their disinterest in
maintaining the employer-employee relationship and their unabated
avowed intent to sever it. Their excuse that strained relations between
them and Riviera Homes rendered reinstatement no longer feasible
was hardly given credence by the NLRC and the Court of Appeals.24
The contrary conclusion arrived at by the Labor Arbiter as regards
abandonment is of little bearing to the case. All that the Labor Arbiter
said on that point was that Riviera Homes was not able to refute the
Agabons' claim that they were terminated on 23 February 1999.25 The
Labor Arbiter did not explain why or how such finding was reachhy or
how such finding was reachhe Agabons was more credible than that of
Riviera Homes'. Being bereft of reasoning, the conclusion deserves
scant consideration.
Compliance with Notice Requirement
At the same time, both the NLRC and the Court of Appeals failed to
consider the apparent fact that the rules governing notice of
termination were not complied with by Riviera Homes. Section 2, Book
V, Rule XXIII of the Omnibus Rules Implementing the Labor Code
(Implementing Rules) specifically provides that for termination of
employment based on just causes as defined in Article 282, there must
be: (1) written notice served on the employee specifying the grounds
for termination and giving employee reasonable opportunity to explain
his/her side; (2) a hearing or conference wherein the employee, with
the assistance of counsel if so desired, is given opportunity to respond
to the charge, present his evidence or rebut evidence presented
against him/her; and (3) written notice of termination served on the
employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify termination.
At the same time, Section 2, Book V, Rule XXIII of the Implementing
Rules does not require strict compliance with the above procedure, but
only that the same be "substantially observed."
Riviera Homes maintains that the letters it sent on 10 March 1999 to
the Agabons sufficiently complied with the notice rule. These
identically worded letters noted that the Agabons had stopped working
without permission that they failed to return for work despite having
been repeatedly told to report to the office and resume their
employment.26 The letters ended with an invitation to the Agabons to
report back to the office and return to work.27
The apparent purpose of these letters was to advise the Agabons that
they were welcome to return back to work, and not to notify them of
the grounds of termination. Still, considering that only substantial
compliance with the notice requirement is required, I am prepared to
say that the letters sufficiently conform to the first notice required
under the Implementing Rules. The purpose of the first notice is to duly
inform the employee that a particular transgression is being considered
against him or her, and that an opportunity is being offered for him or
her to respond to the charges. The letters served the purpose of
informing the Agabons of the pending matters beclouding their
employment, and extending them the opportunity to clear the air.
Contrary to the Agabons' claim, the letter-notice was correctly sent to
the employee's last known address, in compliance with the
Implementing Rules. There is no dispute that these letters were not
actually received by the Agabons, as they had apparently moved out of
the address indicated therein. Still, the letters were sent to what
Riviera Homes knew to be the Agabons' last known address, as
indicated in their personnel file. The Agabons insist that Riviera Homes
had known of the change of address, offering as proof their company
IDs which purportedly print out their correct new address. Yet, as
pointed out by the NLRC and the Court of Appeals, the addresses
indicated in the IDs are not the Agabons, but that of the person who is
to be notified in case on emergency involve either or both of the
Agabons.
The actual violation of the notice requirement by Riviera Homes lies in
its failure to serve on the Agabons the second notice which should
inform them of termination. As the Decision notes, Riviera Homes'
argument that sending the second notice was useless due to the
change of address is inutile, since the Implementing Rules plainly
require that the notice of termination should be served at the
employee's last known address.
The importance of sending the notice of termination should not be
trivialized. The termination letter serves as indubitable proof of loss of
employment, and its receipt compels the employee to evaluate his or
her next options. Without such notice, the employee may be left
uncertain of his fate; thus, its service is mandated by the Implementing
Rules. Non-compliance with the notice rule, as evident in this case,
contravenes the Implementing Rules. But does the violation serve to
invalidate the Agabons' dismissal for just cause?
The So-Called Constitutional Law Dimension
Justices Puno and Panganiban opine that the Agabons should be
reinstated as a consequence of the violation of the notice requirement.
I respectfully disagree, for the reasons expounded below.
Constitutional Considerations
Of Due Process and the Notice-Hearing
Requirement in Labor Termination Cases
Justice Puno proposes that the failure to render due notice and hearing
prior to dismissal for just cause constitutes a violation of the
constitutional right to due process. This view, as acknowledged by
Justice Puno himself, runs contrary to the Court's pronouncement
in Serrano v. NLRC28 that the absence of due notice and hearing prior
to dismissal, if for just cause, violates statutory due process.
The ponencia of Justice Vicente V. Mendoza in Serrano provides this
cogent overview of the history of the doctrine:
Indeed, to contend that the notice requirement in the Labor Code is an
aspect of due process is to overlook the fact that Art. 283 had its origin
in Art. 302 of the Spanish Code of Commerce of 1882 which gave either
party to the employer-employee relationship the right to terminate
their relationship by giving notice to the other one month in advance.
In lieu of notice, an employee could be laid off by paying him
a mesadaequivalent to his salary for one month. This provision was
repealed by Art. 2270 of the Civil Code, which took effect on August 30,
1950. But on June 12, 1954, R.A. No. 1052, otherwise known as the
Termination Pay Law, was enacted reviving the mesada. On June 21,
1957, the law was amended by R.A. No. 1787 providing for the giving of
advance notice for every year of service.29
Under Section 1 of the Termination Pay Law, an employer could
dismiss an employee without just cause by serving written notice on
the employee at least one month in advance or one-half month for
every year of service of the employee, whichever was longer.30 Failure
to serve such written notice entitled the employee to compensation
equivalent to his salaries or wages corresponding to the required
period of notice from the date of termination of his employment.
However, there was no similar written notice requirement under the
Termination Pay Law if the dismissal of the employee was for just
cause. The Court, speaking through Justice JBL Reyes, ruled in Phil.
Refining Co. v. Garcia:31
[Republic] Act 1052, as amended by Republic Act 1787, impliedly
recognizes the right of the employer to dismiss his employees (hired
without definite period) whether for just case, as therein defined or
enumerated, or without it. If there be just cause, the employer is not
required to serve any notice of discharge nor to disburse termination
pay to the employee. xxx32
Clearly, the Court, prior to the enactment of the Labor Code, was ill-
receptive to the notion that termination for just cause without notice
or hearing violated the constitutional right to due process.
Nonetheless, the Court recognized an award of damages as the
appropriate remedy. In Galsim v. PNB,33 the Court held:
Of course, the employer's prerogative to dismiss employees hired
without a definite period may be with or without cause. But if the
manner in which such right is exercised is abusive, the employer stands
to answer to the dismissed employee for damages.34
The Termination Pay Law was among the repealed laws with the
enactment of the Labor Code in 1974. Significantly, the Labor Code, in
its inception, did not require notice or hearing before an employer
could terminate an employee for just cause. As Justice Mendoza
explained:
Where the termination of employment was for a just cause, no notice
was required to be given to the employee. It was only on September 4,
1981 that notice was required to be given even where the dismissal or
termination of an employee was for cause. This was made in the rules
issued by the then Minister of Labor and Employment to implement
B.P. Blg. 130 which amended the Labor Code. And it was still much
later when the notice requirement was embodied in the law with the
amendment of Art. 277(b) by R.A. No. 6715 on March 2, 1989.35
It cannot be denied though that the thinking that absence of notice or
hearing prior to termination constituted a constitutional violation has
gained a jurisprudential foothold with the Court. Justice Puno, in
his Dissenting Opinion, cites several cases in support of this theory,
beginning with Batangas Laguna Tayabas Bus Co. v. Court of
Appeals36 wherein we held that "the failure of petitioner to give the
private respondent the benefit of a hearing before he was dismissed
constitutes an infringement on his constitutional right to due process
of law.37
Still, this theory has been refuted, pellucidly and effectively to my
mind, by Justice Mendoza's disquisition inSerrano, thus:
xxx There are three reasons why, on the other hand, violation by the
employer of the notice requirement cannot be considered a denial of
due process resulting in the nullity of the employee's dismissal or
layoff.
The first is that the Due Process Clause of the Constitution is a
limitation on governmental powers. It does not apply to the exercise of
private power, such as the termination of employment under the Labor
Code. This is plain from the text of Art. III, §1 of the Constitution, viz.:
"No person shall be deprived of life, liberty, or property without due
process of law. . . ." The reason is simple: Only the State has authority
to take the life, liberty, or property of the individual. The purpose of
the Due Process Clause is to ensure that the exercise of this power is
consistent with what are considered civilized methods.
The second reason is that notice and hearing are required under the
Due Process Clause before the power of organized society are brought
to bear upon the individual. This is obviously not the case of
termination of employment under Art. 283. Here the employee is not
faced with an aspect of the adversary system. The purpose for
requiring a 30-day written notice before an employee is laid off is not
to afford him an opportunity to be heard on any charge against him,
for there is none. The purpose rather is to give him time to prepare for
the eventual loss of his job and the DOLE an opportunity to determine
whether economic causes do exist justifying the termination of his
employment.
xxx
The third reason why the notice requirement under Art. 283 can not be
considered a requirement of the Due Process Clause is that the
employer cannot really be expected to be entirely an impartial judge of
his own cause. This is also the case in termination of employment for a
just cause under Art. 282 (i.e., serious misconduct or willful
disobedience by the employee of the lawful orders of the employer,
gross and habitual neglect of duties, fraud or willful breach of trust of
the employer, commission of crime against the employer or the latter's
immediate family or duly authorized representatives, or other
analogous cases).38
The Court in the landmark case of People v. Marti39 clarified the
proper dimensions of the Bill of Rights.
That the Bill of Rights embodied in the Constitution is not meant to be
invoked against acts of private individuals finds support in the
deliberations of the Constitutional Commission. True, the liberties
guaranteed by the fundamental law of the land must always be subject
to protection. But protection against whom? Commissioner Bernas in
his sponsorship speech in the Bill of Rights answers the query which he
himself posed, as follows:
"First, the general reflections. The protection of fundamental liberties
in the essence of constitutional democracy. Protection against whom?
Protection against the state. The Bill of Rights governs the relationship
between the individual and the state. Its concern is not the relation
between individuals, between a private individual and other
individuals. What the Bill of Rights does is to declare some forbidden
zones in the private sphere inaccessible to any power holder."
(Sponsorship Speech of Commissioner Bernas; Record of the
Constitutional Commission, Vol. 1, p. 674; July 17,1986; Italics
supplied)40
I do not doubt that requiring notice and hearing prior to termination
for just cause is an admirable sentiment borne out of basic equity and
fairness. Still, it is not a constitutional requirement that can impose
itself on the relations of private persons and entities. Simply put, the
Bill of Rights affords protection against possible State oppression
against its citizens, but not against an unjust or repressive conduct by a
private party towards another.
Justice Puno characterizes the notion that constitutional due process
limits government action alone as "passé,"and adverts to nouvelle
vague theories which assert that private conduct may be restrained by
constitutional due process. His dissent alludes to the American
experience making references to the post-Civil War/pre-World War II
era when the US Supreme Court seemed overly solicitous to the rights
of big business over those of the workers.
Theories, no matter how entrancing, remain theoretical unless adopted
by legislation, or more controversially, by judicial opinion. There were a
few decisions of the US Supreme Court that, ostensibly, imposed on
private persons the values of the constitutional guarantees. However,
in deciding the cases, the American High Court found it necessary to
link the actors to adequate elements of the "State" since the
Fourteenth Amendment plainly begins with the words "No State
shall…"41
More crucially to the American experience, it had become necessary to
pass legislation in order to compel private persons to observe
constitutional values. While the equal protection clause was deemed
sufficient by the Warren Court to bar racial segregation in public
facilities, it necessitated enactment of the Civil Rights Acts of 1964 to
prohibit segregation as enforced by private persons within their
property. In this jurisdiction, I have trust in the statutory regime that
governs the correction of private wrongs. There are thousands of
statutes, some penal or regulatory in nature, that are the source of
actionable claims against private persons. There is even no stopping
the State, through the legislative cauldron, from compelling private
individuals, under pain of legal sanction, into observing the norms
ordained in the Bill of Rights.
Justice Panganiban's Separate Opinion asserts that corporate
behemoths and even individuals may now be sources of abuses and
threats to human rights and liberties.42 The concern is not unfounded,
but appropriate remedies exist within our statutes, and so resort to the
constitutional trump card is not necessary. Even if we were to engage
the premise, the proper juristic exercise should be to examine whether
an employer has taken the attributes of the State so that it could be
compelled by the Constitution to observe the proscriptions of the Bill
of Rights. But the strained analogy simply does not square since the
attributes of an employer are starkly incongruous with those of the
State. Employers plainly do not possess the awesome powers and the
tremendous resources which the State has at its command.
The differences between the State and employers are not merely
literal, but extend to their very essences. Unlike the State, the raison
d'etre of employers in business is to accumulate profits. Perhaps the
State and the employer are similarly capacitated to inflict injury or
discomfort on persons under their control, but the same power is also
possessed by a school principal, hospital administrator, or a religious
leader, among many others. Indeed, the scope and reach of authority
of an employer pales in comparison with that of the State. There is no
basis to conclude that an employer, or even the employer class, may be
deemed a de facto state and on that premise, compelled to observe
the Bill of Rights. There is simply no nexus in their functions, distaff as
they are, that renders it necessary to accord the same jurisprudential
treatment.
It may be so, as alluded in the dissent of Justice Puno, that a
conservative court system overly solicitous to the concerns of business
may consciously gut away at rights or privileges owing to the labor
sector. This certainly happened before in the United States in the early
part of the twentieth century, when the progressive labor legislation
such as that enacted during President Roosevelt's New Deal regime —
most of them addressing problems of labor — were struck down by an
arch-conservative Court.43 The preferred rationale then was to
enshrine within the constitutional order business prerogatives,
rendering them superior to the express legislative intent. Curiously,
following its judicial philosophy at the time the U. S. Supreme Court
made due process guarantee towards employers prevail over the
police power to defeat the cause of labor.44
Of course, this Court should not be insensate to the means and
methods by which the entrenched powerful class may maneuver the
socio-political system to ensure self-preservation. However, the
remedy to rightward judicial bias is not leftward judicial bias. The more
proper judicial attitude is to give due respect to legislative
prerogatives, regardless of the ideological sauce they are dipped in.
While the Bill of Rights maintains a position of primacy in the
constitutional hierarchy,45 it has scope and limitations that must be
respected and asserted by the Court, even though they may at times
serve somewhat bitter ends. The dissenting opinions are palpably
distressed at the effect of the Decision, which will undoubtedly
provoke those reflexively sympathetic to the labor class. But haphazard
legal theory cannot be used to justify the obverse result. The adoption
of the dissenting views would give rise to all sorts of absurd
constitutional claims. An excommunicated Catholic might demand
his/her reinstatement into the good graces of the Church and into
communion on the ground that excommunication was violative of the
constitutional right to due process. A celebrity contracted to endorse
Pepsi Cola might sue in court to void a stipulation that prevents
him/her from singing the praises of Coca Cola once in a while, on the
ground that such stipulation violates the constitutional right to free
speech. An employee might sue to prevent the employer from reading
outgoing e-mail sent through the company server using the company e-
mail address, on the ground that the constitutional right to privacy of
communication would be breached.
The above concerns do not in anyway serve to trivialize the interests of
labor. But we must avoid overarching declarations in order to justify an
end result beneficial to labor. I dread the doctrinal acceptance of the
notion that the Bill of Rights, on its own, affords protection and
sanctuary not just from the acts of State but also from the conduct of
private persons. Natural and juridical persons would hesitate to
interact for fear that a misstep could lead to their being charged in
court as a constitutional violator. Private institutions that thrive on
their exclusivity, such as churches or cliquish groups, could be forced to
renege on their traditional tenets, including vows of secrecy and the
like, if deemed by the Court as inconsistent with the Bill of Rights.
Indeed, that fundamental right of all private persons to be let alone
would be forever diminished because of a questionable notion that
contravenes with centuries of political thought.
It is not difficult to be enraptured by novel legal ideas. Their
characterization is susceptible to the same marketing traps that hook
consumers to new products. With the help of unique wrapping, a
catchy label, and testimonials from professed experts from exotic
lands, a malodorous idea may gain wide acceptance, even among those
self-possessed with their own heightened senses of perception. Yet
before we join the mad rush in order to proclaim a theory as "brilliant,"
a rigorous test must first be employed to determine whether it
complements or contradicts our own system of laws and juristic
thought. Without such analysis, we run the risk of abnegating the
doctrines we have fostered for decades and the protections they may
have implanted into our way of life.
Should the Court adopt the view that the Bill of Rights may be invoked
to invalidate actions by private entities against private individuals, the
Court would open the floodgates to, and the docket would be
swamped with, litigations of the scurrilous sort. Just as patriotism is the
last refuge of scoundrels, the broad constitutional claim is the final
resort of the desperate litigant.
Constitutional Protection of Labor
The provisions of the 1987 Constitution affirm the primacy of labor and
advocate a multi-faceted state policy that affords, among others, full
protection to labor. Section 18, Article II thereof provides:
The State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.
Further, Section 3, Article XIII states:
The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equal
employment opportunities for all.
It shall guarantee the rights of all workers to self-organization,
collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike in accordance with law. They
shall be entitled to security to tenure, humane conditions of work, and
a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production
and the right of enterprises to reasonable returns on investments, and
to expansion and growth.
The constitutional enshrinement of the guarantee of full protection of
labor is not novel to the 1987 Constitution. Section 6, Article XIV of the
1935 Constitution reads:
The State shall afford protection to labor, especially to working
women, and minors, and shall regulate the relations between the
landowner and tenant, and between labor and capital in industry and
in agriculture. The State may provide for compulsory arbitration.
Similarly, among the principles and state policies declared in the 1973
Constitution, is that provided in Section 9, Article II thereof:
The State shall afford full protection to labor, promote full employment
and equality in employment, ensure equal work opportunities
regardless of sex, race or creed, and regulate the relations between
workers and employers. The State shall assure the rights of workers to
self-organization, collective bargaining, security of tenure, and just and
humane conditions of work. The State may provide for compulsory
arbitration.
On the other hand, prior to the 1973 Constitution, the right to security
of tenure could only be found in legislative enactments and their
respective implementing rules and regulations. It was only in the 1973
Constitution that security of tenure was elevated as a constitutional
right. The development of the concept of security of tenure as a
constitutionally recognized right was discussed by this Court in BPI
Credit Corporation v. NLRC,46 to wit:
The enthronement of the worker's right to security or tenure in our
fundamental law was not achieved overnight. For all its liberality
towards labor, our 1935 Constitution did not elevate the right as a
constitutional right. For a long time, the worker's security of tenure
had only the protective mantle of statutes and their interpretative
rules and regulations. It was as uncertain protection that sometimes
yielded to the political permutations of the times. It took labor nearly
four decades of sweat and tears to persuade our people thru their
leaders, to exalt the worker's right to security of tenure as a sacrosanct
constitutional right. It was Article II, section 2 [9] of our 1973
Constitution that declared as a policy that the State shall assure the
right of worker's to security tenure. The 1987 Constitution is even
more solicitous of the welfare of labor. Section 3 of its Article XIII
mandates that the State shall afford full protection to labor and
declares that all workers shall be entitled to security of tenure. Among
the enunciated State policies are the
promotion of social justice and a just and dynamic social order. In
contrast, the prerogative of management to dismiss a worker, as an
aspect of property right, has never been endowed with a constitutional
status.
The unequivocal constitutional declaration that all workers shall be
entitled to security of tenure spurred our lawmakers to strengthen the
protective walls around this hard earned right. The right was protected
from undue infringement both by our substantive and procedural laws.
Thus, the causes for dismissing employees were more defined and
restricted; on the other hand, the procedure of termination was also
more clearly delineated. These substantive and procedural laws must
be strictly complied with before a worker can be dismissed from his
employment.47
It is quite apparent that the constitutional protection of labor was
entrenched more than eight decades ago, yet such did not prevent this
Court in the past from affirming dismissals for just cause without valid
notice. Nor was there any pretense made that this constitutional
maxim afforded a laborer a positive right against dismissal for just
cause on the ground of lack of valid prior notice. As demonstrated
earlier, it was only after the enactment of the Labor Code that the
doctrine relied upon by the dissenting opinions became en vogue. This
point highlights my position that the violation of the notice
requirement has statutory moorings, not constitutional.
It should be also noted that the 1987 Constitution also recognizes the
principle of shared responsibility between workers and employers, and
the right of enterprise to reasonable returns, expansion, and growth.
Whatever perceived imbalance there might have been under previous
incarnations of the provision have been obviated by Section 3, Article
XIII.
In the case of Manila Prince Hotel v. GSIS,48 we affirmed the
presumption that all constitutional provisions are self-executing. We
reasoned that to declare otherwise would result in the pernicious
situation wherein by mere inaction and disregard by the legislature,
constitutional mandates would be rendered ineffectual. Thus, we held:
As against constitutions of the past, modern constitutions have been
generally ed upon a different principle and have often become in effect
extensive codes of laws intended to operate directly upon the people
in a manner similar to that of statutory enactments, and the function
of constitutional conventions has evolved into one more like that of a
legislative body. Hence, unless it is expressly provided that a legislative
act is necessary to enforce a constitutional mandate, the presumption
now is that all provisions of the constitution are self-executing. If the
constitutional provisions are treated as requiring legislation instead of
self-executing, the legislature would have the power to ignore and
practically nullify the mandate of the fundamental law. This can be
cataclysmic. That is why the prevailing view is, as it has always been,
that —
. . . in case of doubt, the Constitution should be considered self-
executing rather than non-self-executing. . . . Unless the contrary is
clearly intended, the provisions of the Constitution should be
considered self-executing, as a contrary rule would give the legislature
discretion to determine when, or whether, they shall be effective.
These provisions would be subordinated to the will of the lawmaking
body, which could make them entirely meaningless by simply refusing
to pass the needed implementing statute.49
In further discussing self-executing provisions, this Court stated that:
In self-executing constitutional provisions, the legislature may still
enact legislation to facilitate the exercise of powers directly granted by
the constitution, further the operation of such a provision, prescribe a
practice to be used for its enforcement, provide a convenient remedy
for the protection of the rights secured or the determination thereof,
or place reasonable safeguards around the exercise of the right. The
mere fact that legislation may supplement and add to or prescribe a
penalty for the violation of a self-executing constitutional provision
does not render such a provision ineffective in the absence of such
legislation. The omission from a constitution of any express provision
for a remedy for enforcing a right or liability is not necessarily an
indication that it was not intended to be self-executing. The rule is that
a self-executing provision of the constitution does not necessarily
exhaust legislative power on the subject, but any legislation must be in
harmony with the constitution, further the exercise of constitutional
right and make it more available. Subsequent legislation however does
not necessarily mean that the subject constitutional provision is not, by
itself, fully enforceable.50
Thus, the constitutional mandates of protection to labor and security
of tenure may be deemed as self-executing in the sense that these are
automatically acknowledged and observed without need for any
enabling legislation. However, to declare that the constitutional
provisions are enough to guarantee the full exercise of the rights
embodied therein, and the realization of ideals therein expressed,
would be impractical, if not unrealistic. The espousal of such view
presents the dangerous tendency of being overbroad and exaggerated.
The guarantees of "full protection to labor" and "security of tenure",
when examined in isolation, are facially unqualified, and the broadest
interpretation possible suggests a blanket shield in favor of labor
against any form of removal regardless of circumstance. This
interpretation implies an unimpeachable right to continued
employment-a utopian notion, doubtless-but still hardly within the
contemplation of the framers. Subsequent legislation is still needed to
define the parameters of these guaranteed rights to ensure the
protection and promotion, not only the rights of the labor sector, but
of the employers' as well. Without specific and pertinent legislation,
judicial bodies will be at a loss, formulating their own conclusion to
approximate at least the aims of the Constitution.
Ultimately, therefore, Section 3 of Article XIII cannot, on its own, be a
source of a positive enforceable right to stave off the dismissal of an
employee for just cause owing to the failure to serve proper notice or
hearing. As manifested by several framers of the 1987 Constitution, the
provisions on social justice require legislative enactments for their
enforceability. This is reflected in the record of debates on the social
justice provisions of the Constitution:
MS. [FELICITAS S.] AQUINO: We appreciate the concern of the
Commissioner. But this Committee [on Social Justice] has actually
become the forum already of a lot of specific grievances and specific
demands, such that understandably, we may have been, at one time or
another, dangerously treading into the functions of legislation. Our
only plea to the Commission is to focus our perspective on the matter
of social justice and its rightful place in the Constitution. What we
envision here is a mandate specific enough that would give impetus for
statutory implementation. We would caution ourselves in terms of the
judicious exercise of self-censorship against treading into the functions
of legislation. (emphasis supplied)51
xxx
[FLORENZ D.] REGALADO: I notice that the 1935 Constitution had only
one section on social justice; the same is true with the 1973
Constitution. But they seem to have stood us in good stead; and I am a
little surprised why, despite that attempt at self-censorship, there are
certain provisions here which are properly for legislation.52
xxx
BISHOP [TEODORO S.] BACANI: [I] think the distinction that was given
during the presentation of the provisions on the Bill of Rights by
Commissioner Bernas is very apropos here. He spoke of self-executing
rights which belong properly to the Bill of Rights, and then he spoke of
a new body of rights which are more of claims and that these have
come about largely through the works of social philosophers and then
the teaching of the Popes. They focus on the common good and hence,
it is not as easy to pinpoint precisely these rights nor the situs of the
rights. And yet, they exist in relation to the common good.53
xxx
MS. [MINDA LUZ M.] QUESADA: I think the nitty-gritty of this kind of
collaboration will be left to legislation but the important thing now is
the conservation, utilization or maximization of the very limited
resources. xxx
[RICARDO J.] ROMULO: The other problem is that, by and large,
government services are inefficient. So, this is a problem all by itself.
On Section 19, where the report says that people's organizations as a
principal means of empowering the people to pursue and protect
through peaceful means…, I do not suppose that the Committee would
like to either preempt or exclude the legislature, because the concept
of a representative and democratic system really is that the legislature
is normally the principal means.
[EDMUNDO G.] GARCIA: That is correct. In fact, people cannot even
dream of influencing the composition or the membership of the
legislature, if they do not get organized. It is, in fact, a recognition of
the principle that unless a citizenry is organized and mobilized to
pursue its ends peacefully, then it cannot really participate
effectively.54
There is no pretense on the part of the framers that the provisions on
Social Justice, particularly Section 3 of Article XIII, are self-executory.
Still, considering the rule that provisions should be deemed self-
executing if enforceable without further legislative action, an
examination of Section 3 of Article XIII is warranted to determine
whether it is complete in itself as a definitive law, or if it needs future
legislation for completion and enforcement.55Particularly, we should
inquire whether or not the provision voids the dismissal of a laborer for
just cause if no valid notice or hearing is attendant.
Constitutional Commissioner Fr. Joaquin G. Bernas makes a significant
comment on Section 3, Article XIII of the 1987 Constitution:
The [cluster] of rights guaranteed in the second paragraph are the right
"to security of tenure, humane conditions of work, and a living wage."
Again, although these have been set apart by a period (.) from the next
sentence and are therefore not modified by the final phrase "as may be
provided by law," it is not the intention to place these beyond the
reach of valid laws. xxx (emphasis supplied)56
At present, the Labor Code is the primary mechanism to carry out the
Constitution's directives. This is clear from Article 357 under Chapter 1
thereof which essentially restates the policy on the protection of labor
as worded in the 1973 Constitution, which was in force at the time of
enactment of the Labor Code. It crystallizes the fundamental law's
policies on labor, defines the parameters of the rights granted to labor
such as the right to security of tenure, and prescribes the standards for
the enforcement of such rights in concrete terms. While not infallible,
the measures provided therein tend to ensure the achievement of the
constitutional aims.
The necessity for laws concretizing the constitutional principles on the
protection of labor is evident in the reliance placed upon such laws by
the Court in resolving the issue of the validity of a worker's dismissal. In
cases where that was the issue confronting the Court, it consistently
recognized the constitutional right to security of tenure and employed
the standards laid down by prevailing laws in determining whether
such right was violated.58 The Court's reference to laws other than the
Constitution in resolving the issue of dismissal is an implicit
acknowledgment that the right to security of tenure, while recognized
in the Constitution, cannot be implemented uniformly absent a law
prescribing concrete standards for its enforcement.
As discussed earlier, the validity of an employee's dismissal in previous
cases was examined by the Court in accordance with the standards laid
down by Congress in the Termination Pay Law, and subsequently, the
Labor Code and the amendments thereto. At present, the validity of an
employee's dismissal is weighed against the standards laid down in
Article 279, as well as Article 282 in relation to Article 277(b) of the
Labor Code, for a dismissal for just cause, and Article 283 for a
dismissal for an authorized cause.
The Effect of Statutory Violation
Of Notice and Hearing
There is no doubt that the dismissal of an employee even for just
cause, without prior notice or hearing, violates the Labor Code.
However, does such violation necessarily void the dismissal?
Before I proceed with my discussion on dismissals for just causes, a
brief comment regarding dismissals for authorized cause under Article
283 of the Labor Code. While the justiciable question
in Serrano pertained to a dismissal for unauthorized cause, the ruling
therein was crafted as definitive to dismissals for just cause. Happily,
the Decision today does not adopt the same unwise tack. It should be
recognized that dismissals for just cause and dismissals for authorized
cause are governed by different provisions, entail divergent requisites,
and animated by distinct rationales. The language of Article 283
expressly effects the termination for authorized cause to the service of
written notice on the workers and the Ministry of Labor at least one (1)
month before the intended date of termination. This constitutes an
eminent difference than dismissals for just cause, wherein the causal
relation between the notice and the dismissal is not expressly
stipulated. The circumstances distinguishing just and authorized causes
are too markedly different to be subjected to the same rules and
reasoning in interpretation.
Since the present petition is limited to a question arising from a
dismissal for just cause, there is no reason for making any
pronouncement regarding authorized causes. Such declaration would
be merely obiter, since they are neither the law of the case nor
dispositive of the present petition. When the question becomes
justiciable before this Court, we will be confronted with an appropriate
factual milieu on which we can render a more judicious disposition of
this admittedly important question.
B. Dismissal for Just Cause
There is no express provision in the Labor Code that voids a dismissal
for just cause on the ground that there was no notice or hearing. Under
Section 279, the employer is precluded from dismissing an employee
except for a just cause as provided in Section 282, or an authorized
cause under Sections 283 and 284. Based on reading Section 279 alone,
the existence of just cause by itself is sufficient to validate the
termination.
Just cause is defined by Article 282, which unlike Article 283, does not
condition the termination on the service of written notices. Still, the
dissenting opinions propound that even if there is just cause, a
termination may be invalidated due to the absence of notice or
hearing. This view is anchored mainly on constitutional moorings, the
basis of which I had argued against earlier. For determination now is
whether there is statutory basis under the Labor Code to void a
dismissal for just cause due to the absence of notice or hearing.
As pointed out by Justice Mendoza in Serrano, it was only in 1989 that
the Labor Code was amended to enshrine into statute the twin
requirements of notice and hearing.59 Such requirements are found in
Article 277 of the Labor Code, under the heading "Miscellaneous
Provisions." Prior to the amendment, the notice-hearing requirement
was found under the implementing rules issued by the then Minister of
Labor in 1981. The present-day implementing rules likewise mandate
that the standards of due process, including the requirement of written
notice and hearing, "be substantially observed."60
Indubitably, the failure to substantially comply with the standards of
due process, including the notice and hearing requirement, may give
rise to an actionable claim against the employer. Under Article 288,
penalties may arise from violations of any provision of the Labor Code.
The Secretary of Labor likewise enjoys broad powers to inquire into
existing relations between employers and employees. Systematic
violations by management of the statutory right to due process would
fall under the broad grant of power to the Secretary of Labor to
investigate under Article 273.
However, the remedy of reinstatement despite termination for just
cause is simply not authorized by the Labor Code. Neither the Labor
Code nor its implementing rules states that a termination for just cause
is voided because the requirement of notice and hearing was not
observed. This is not simply an inadvertent semantic failure, but a
conscious effort to protect the prerogatives of the employer to dismiss
an employee for just cause. Notably, despite the several
pronouncements by this Court in the past equating the notice-hearing
requirement in labor cases to a constitutional maxim, neither the
legislature nor the executive has adopted the same tack, even gutting
the protection to provide that substantial compliance with due process
suffices.
The Labor Code significantly eroded management prerogatives in the
hiring and firing of employees. Whereas employees could be dismissed
even without just cause under the Termination Pay Law61, the Labor
Code affords workers broad security of tenure. Still, the law recognizes
the right of the employer to terminate for just cause. The just causes
enumerated under the Labor Code ¾ serious misconduct or willful
disobedience, gross and habitual neglect, fraud or willful breach of
trust, commission of a crime by the employee against the employer,
and other analogous causes ¾ are characterized by the harmful
behavior of an employee against the business or the person of the
employer.
These just causes for termination are not negated by the absence of
notice or hearing. An employee who tries to kill the employer cannot
be magically absolved of trespasses just because the employer forgot
to serve due notice. Or a less extreme example, the gross and habitual
neglect of an employee will not be improved upon just because the
employer failed to conduct a hearing prior to termination.
In fact, the practical purpose of requiring notice and hearing is to
afford the employee the opportunity to dispute the contention that
there was just cause in the dismissal. Yet it must be understood – if a
dismissed employee is deprived of the right to notice and hearing, and
thus denied the opportunity to present countervailing evidence that
disputes the finding of just cause, reinstatement will be valid not
because the notice and hearing requirement was not observed, but
because there was no just cause in the dismissal. The opportunity to
dispute the finding of the just cause is readily available before the
Labor Arbiter, and the subsequent levels of appellate review. Again, as
held in Serrano:
Even in cases of dismissal under Art. 282, the purpose for the
requirement of notice and hearing is not to comply with the Due
Process Clause of the Constitution. The time for notice and hearing is at
the trial stage. Then that is the time we speak of notice and hearing as
the essence of procedural due process. Thus, compliance by the
employer with the notice requirement before he dismisses an
employee does not foreclose the right of the latter to question the
legality of his dismissal. As Art. 277(b) provides, "Any decision taken by
the employer shall be without prejudice to the right of the worker to
contest the validity or legality of his dismissal by filing a complaint with
the regional branch of the National Labor Relations Commission.62
The Labor Code presents no textually demonstrable commitment to
invalidate a dismissal for just cause due to the absence of notice or
hearing. This is not surprising, as such remedy will not restore the
employer or employee into equity. Absent a showing of integral
causation, the mutual infliction of wrongs does not negate either
injury, but instead enforces two independent rights of relief.
The Damages' Dimensions
Award for Damages Must Have Statutory Basis
The Court has grappled with the problem of what should be the proper
remedial relief of an employee dismissed with just cause, but not
afforded either notice or hearing. In a long line of cases, beginning
with Wenphil Corp. v. NLRC63 and up until Serrano in 2000, the Court
had deemed an indemnification award as sufficient to answer for the
violation by the employer against the employee. However, the doctrine
was modified in Serrano.
I disagree with Serrano insofar as it held that employees terminated for
just cause are to be paid backwages from the time employment was
terminated "until it is determined that the termination is for just cause
because the failure to hear him before he is dismissed renders the
termination of his employment without legal effect."64Article 279 of
the Labor Code clearly authorizes the payment of backwages only if an
employee is unjustly dismissed. A dismissal for just cause is obviously
antithetical to an unjust dismissal. An award for backwages is not
clearly warranted by the law.
The Impropriety of Award for Separation Pay
The formula of one month's pay for every year served does have
statutory basis. It is found though in the Labor Code though, not the
Civil Code. Even then, such computation is made for separation pay
under the Labor Code. But separation pay is not an appropriate as a
remedy in this case, or in any case wherein an employee is terminated
for just cause. As Justice Vitug noted in his separate opinion
in Serrano, an employee whose employment is terminated for a just
cause is not entitled to the payment of separation
benefits.65 Separation pay is traditionally a monetary award paid as an
alternative to reinstatement which can no longer be effected in view of
the long passage of time or because of the realities of the
situation.66 However, under Section 7, Rule 1, Book VI of the Omnibus
Rules Implementing the Labor Code, "[t]he separation from work of an
employee for a just cause does not entitle him to the termination pay
provided in the Code."67 Neither does the Labor Code itself provide
instances wherein separation pay is warranted for dismissals with just
cause. Separation pay is warranted only for dismissals for authorized
causes, as enumerated in Article 283 and 284 of the Labor Code.
The Impropriety of Equity Awards
Admittedly, the Court has in the past authorized the award of
separation pay for duly terminated employees as a measure of social
justice, provided that the employee is not guilty of serious misconduct
reflecting on moral character.68 This doctrine is inapplicable in this
case, as the Agabons are guilty of abandonment, which is the
deliberate and unjustified refusal of an employee to resume his
employment. Abandonment is tantamount to serious misconduct, as it
constitutes a willful breach of the employer-employee relationship
without cause.
The award of separation pay as a measure of social justice has no
statutory basis, but clearly emanates from the Court's so-called "equity
jurisdiction." The Court's equity jurisdiction as a basis for award, no
matter what form it may take, is likewise unwarranted in this case.
Easy resort to equity should be avoided, as it should yield to positive
rules which pre-empt and prevail over such persuasions.69 Abstract as
the concept is, it does not admit to definite and objective standards.
I consider the pronouncement regarding the proper monetary awards
in such cases as Wenphil Corp. v. NLRC,70Reta,71 and to a degree,
even Serrano as premised in part on equity. This decision is premised in
part due to the absence of cited statutory basis for these awards. In
these cases, the Court deemed an indemnity award proper without
exactly saying where in statute could such award be derived at.
Perhaps, equity or social justice can be invoked as basis for the award.
However, this sort of arbitrariness, indeterminacy and judicial
usurpation of legislative prerogatives is precisely the source of my
discontent. Social justice should be the aspiration of all that we do, yet
I think it the more mature attitude to consider that it ebbs and flows
within our statutes, rather than view it as an independent source of
funding.
Article 288 of the Labor Code as a Source of Liability
Another putative source of liability for failure to render the notice
requirement is Article 288 of the Labor Code, which states:
Article 288 states:
Penalties. — Except as otherwise provided in this Code, or unless the
acts complained of hinges on a question of interpretation or
implementation of ambiguous provisions of an existing collective
bargaining agreement, any violation of the provisions of this Code
declared to be unlawful or penal in nature shall be punished with a fine
of not less than One Thousand Pesos (P1,000.00) nor more than Ten
Thousand Pesos (P10,000.00), or imprisonment of not less than three
months nor more than three years, or both such fine and
imprisonment at the discretion of the court.
It is apparent from the provision that the penalty arises due to
contraventions of the provisions of the Labor Code. It is also clear that
the provision comes into play regardless of who the violator may be.
Either the employer or the employee may be penalized, or perhaps
even officials tasked with implementing the Labor Code.
However, it is apparent that Article 288 is a penal provision; hence, the
prescription for penalties such as fine and imprisonment. The Article is
also explicit that the imposition of fine or imprisonment is at the
"discretion of the court." Thus, the proceedings under the provision is
penal in character. The criminal case has to be instituted before the
proper courts, and the Labor Code violation subject thereof duly
proven in an adversarial proceeding. Hence, Article 288 cannot apply in
this case and serve as basis to impose a penalty on Riviera Homes.
I also maintain that under Article 288 the penalty should be paid to the
State, and not to the person or persons who may have suffered injury
as a result of the violation. A penalty is a sum of money which the law
requires to be paid by way of punishment for doing some act which is
prohibited or for not doing some act which is required to be done.72 A
penalty should be distinguished from damages which is the pecuniary
compensation or indemnity to a person who has suffered loss,
detriment, or injury, whether to his person, property, or rights, on
account of the unlawful act or omission or negligence of another.
Article 288 clearly serves as a punitive fine, rather than a compensatory
measure, since the provision penalizes an act that violates the Labor
Code even if such act does not cause actual injury to any private
person.
Independent of the employee's interests protected by the Labor Code
is the interest of the State in seeing to it that its regulatory laws are
complied with. Article 288 is intended to satiate the latter interest.
Nothing in the language of Article 288 indicates an intention to
compensate or remunerate a private person for injury he may have
sustained.
It should be noted though that in Serrano, the Court observed that
since the promulgation of Wenphil Corp. v. NLRC73 in 1989, "fines
imposed for violations of the notice requirement have varied
from P1,000.00 to P2,000.00 to P5,000.00
to P10,000.00."74 Interestingly, this range is the same range of the
penalties imposed by Article 288. These "fines" adverted to
in Serrano were paid to the dismissed employee. The use of the term
"fines," as well as the terminology employed a few other cases,75 may
have left an erroneous impression that the award implemented
beginning with Wenphil was based on Article 288 of the Labor Code.
Yet, an examination of Wenphilreveals that what the Court actually
awarded to the employee was an "indemnity", dependent on the facts
of each case and the gravity of the omission committed by the
employer. There is no mention in Wenphil of Article 288 of the Labor
Code, or indeed, of any statutory basis for the award.
The Proper Basis: Employer's Liability under the Civil Code
As earlier stated, Wenphil allowed the payment of indemnity to the
employee dismissed for just cause is dependent on the facts of each
case and the gravity of the omission committed by the employer.
However, I considered Wenphil flawed insofar as it is silent as to the
statutory basis for the indemnity award. This failure, to my mind,
renders it unwise for to reinstate the Wenphil rule, and foster the
impression that it is the judicial business to invent awards for damages
without clear statutory basis.
The proper legal basis for holding the employer liable for monetary
damages to the employee dismissed for just cause is the Civil Code. The
award of damages should be measured against the loss or injury
suffered by the employee by reason of the employer's violation or, in
case of nominal damages, the right vindicated by the award. This is the
proper paradigm authorized by our law, and designed to obtain the
fairest possible relief.
Under Section 217(4) of the Labor Code, the Labor Arbiter has
jurisdiction over claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations. It is thus the
duty of Labor Arbiters to adjudicate claims for damages, and they
should disabuse themselves of any inhibitions if it does appear that an
award for damages is warranted. As triers of facts in a specialized field,
they should attune themselves to the particular conditions or problems
attendant to employer-employee relationships, and thus be in the best
possible position as to the nature and amount of damages that may be
warranted in this case.
The damages referred under Section 217(4) of the Labor Code are
those available under the Civil Code. It is but proper that the Civil Code
serve as the basis for the indemnity, it being the law that regulates the
private relations of the members of civil society, determining their
respective rights and obligations with reference to persons, things, and
civil acts.76 No matter how impressed with the public interest the
relationship between a private employer and employee is, it still is
ultimately a relationship between private individuals. Notably, even
though the Labor Code could very well have provided set rules for
damages arising from the employer-employee relationship, referral
was instead made to the concept of damages as enumerated and
defined under the Civil Code.
Given the long controversy that has dogged this present issue
regarding dismissals for just cause, it is wise to lay down standards that
would guide the proper award of damages under the Civil Code in
cases wherein the employer failed to comply with statutory due
process in dismissals for just cause.
First. I believe that it can be maintained as a general rule, that failure to
comply with the statutory requirement of notice automatically gives
rise to nominal damages, at the very least, even if the dismissal was
sustained for just cause.
Nominal damages are adjudicated in order that a right of a plaintiff
which has been violated or invaded by another may be vindicated or
recognized without having to indemnify the plaintiff for any loss
suffered by him.77 Nominal damages may likewise be awarded in
every obligation arising from law, contracts, quasi-contracts, acts or
omissions punished by law, and quasi-delicts, or where any property
right has been invaded.
Clearly, the bare act of failing to observe the notice requirement gives
rise to nominal damages assessable against the employer and due the
employee. The Labor Code indubitably entitles the employee to notice
even if dismissal is for just cause, even if there is no apparent intent to
void such dismissals deficiently implemented. It has also been held that
one's employment, profession, trade, or calling is a "property right"
and the wrongful interference therewith gives rise to an actionable
wrong.78
In Better Buildings, Inc. v. NLRC,79 the Court ruled that the while the
termination therein was for just and valid cause, the manner of
termination was done in complete disregard of the necessary
procedural safeguards.80 The Court found nominal damages as the
proper form of award, as it was purposed to vindicate the right to
procedural due process violated by the employer.81 A similar holding
was maintained in Iran v. NLRC82 and Malaya Shipping v. NLRC.83 The
doctrine has express statutory basis, duly recognizes the existence of
the right to notice, and vindicates the violation of such right. It is
sound, logical, and should be adopted as a general rule.
The assessment of nominal damages is left to the discretion of the
court,84 or in labor cases, of the Labor Arbiter and the successive
appellate levels. The authority to nominate standards governing the
award of nominal damages has clearly been delegated to the judicial
branch, and it will serve good purpose for this Court to provide such
guidelines. Considering that the affected right is a property right, there
is justification in basing the amount of nominal damages on the
particular characteristics attaching to the claimant's employment.
Factors such as length of service, positions held, and received salary
may be considered to obtain the proper measure of nominal damages.
After all, the degree by which a property right should be vindicated is
affected by the estimable value of such right.
At the same time, it should be recognized that nominal damages are
not meant to be compensatory, and should not be computed through a
formula based on actual losses. Consequently, nominal damages
usually limited in pecuniary value.85 This fact should be impressed
upon the prospective claimant, especially one who is contemplating
seeking actual/compensatory damages.
Second. Actual or compensatory damages are not available as a matter
of right to an employee dismissed for just cause but denied statutory
due process. They must be based on clear factual and legal
bases,86 and correspond to such pecuniary loss suffered by the
employee as duly proven.87 Evidently, there is less degree of discretion
to award actual or compensatory damages.
I recognize some inherent difficulties in establishing actual damages in
cases for terminations validated for just cause. The dismissed
employee retains no right to continued employment from the moment
just cause for termination exists, and such time most likely would have
arrived even before the employer is liable to send the first notice. As a
result, an award of backwages disguised as actual damages would
almost never be justified if the employee was dismissed for just cause.
The possible exception would be if it can be proven the ground for just
cause came into being only after the dismissed employee had stopped
receiving wages from the employer.
Yet it is not impossible to establish a case for actual damages if
dismissal was for just cause. Particularly actionable, for example, is if
the notices are not served on the employee, thus hampering his/her
opportunities to obtain new employment. For as long as it can be
demonstrated that the failure of the employer to observe procedural
due process mandated by the Labor Code is the proximate cause of
pecuniary loss or injury to the dismissed employee, then actual or
compensatory damages may be awarded.
Third. If there is a finding of pecuniary loss arising from the employer
violation, but the amount cannot be proved with certainty, then
temperate or moderate damages are available under Article 2224 of
the Civil Code. Again, sufficient discretion is afforded to the adjudicator
as regards the proper award, and the award must be reasonable under
the circumstances.88 Temperate or nominal damages may yet prove to
be a plausible remedy, especially when common sense dictates that
pecuniary loss was suffered, but incapable of precise definition.
Fourth. Moral and exemplary damages may also be awarded in the
appropriate circumstances. As pointed out by the Decision, moral
damages are recoverable where the dismissal of the employee was
attended by bad faith, fraud, or was done in a manner contrary to
morals, good customs or public policy, or the employer committed an
act oppressive to labor.89 Exemplary damages may avail if the
dismissal was effected in a wanton, oppressive or malevolent manner.
Appropriate Award of Damages to the Agabons
The records indicate no proof exists to justify the award of actual or
compensatory damages, as it has not been established that the failure
to serve the second notice on the Agabons was the proximate cause to
any loss or injury. In fact, there is not even any showing that such
violation caused any sort of injury or discomfort to the Agabons. Nor
do they assert such causal relation. Thus, the only appropriate award of
damages is nominal damages. Considering the circumstances, I agree
that an award of Fifteen Thousand Pesos (P15,000.00) each for the
Agabons is sufficient.
All premises considered, I VOTE to:
(1) DENY the PETITION for lack of merit, and AFFIRM the Decision of
the Court of Appeals dated 23 January 2003, with the MODIFICATION
that in addition, Riviera Homes be
ORDERED to pay the petitioners the sum of Fifteen Thousand Pesos
(P15,000.00) each, as nominal damages.
(2) HOLD that henceforth, dismissals for just cause may not be
invalidated due to the failure to observe the due process requirements
under the Labor Code, and that the only indemnity award available to
the employee dismissed for just cause are damages under the Civil
Code as duly proven. Any and all previous rulings and statements of the
Court inconsistent with this holding are now deemed INOPERATIve.
[G.R. No. 151378. March 28, 2005]
JAKA FOOD PROCESSING CORPORATION, petitioner, vs. DARWIN
PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO,
RHOEL LESCANO and JONATHAN CAGABCAB, respondents.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this appeal by way of a petition
for review on certiorari under rule 45 of the Rules of Court are the
following issuances of the Court of Appeals in CA-G.R. SP. No. 59847, to
wit:
1. Decision dated 16 November 2001,[1] reversing and setting aside an
earlier decision of the National Labor Relations Commission (NLRC);
and
2. Resolution dated 8 January 2002,[2] denying petitioners motion for
reconsideration.
The material facts may be briefly stated, as follows:
Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon
Domingo, Rhoel Lescano and Jonathan Cagabcab were earlier hired by
petitioner JAKA Foods Processing Corporation (JAKA, for short) until
the latter terminated their employment on August 29, 1997 because
the corporation was in dire financial straits. It is not disputed, however,
that the termination was effected without JAKA complying with the
requirement under Article 283 of the Labor Code regarding the service
of a written notice upon the employees and the Department of Labor
and Employment at least one (1) month before the intended date of
termination.
In time, respondents separately filed with the regional Arbitration
Branch of the National Labor Relations Commission (NLRC) complaints
for illegal dismissal, underpayment of wages and nonpayment of
service incentive leave and 13th month pay against JAKA and its HRD
Manager, Rosana Castelo.
After due proceedings, the Labor Arbiter rendered a
decision[3] declaring the termination illegal and ordering JAKA and its
HRD Manager to reinstate respondents with full backwages, and
separation pay if reinstatement is not possible. More specifically the
decision dispositively reads:
WHEREFORE, judgment is hereby rendered declaring as illegal the
termination of complainants and ordering respondents to reinstate
them to their positions with full backwages which as of July 30, 1998
have already amounted to P339,768.00. Respondents are also ordered
to pay complainants the amount of P2,775.00 representing the unpaid
service incentive leave pay of Parohinog, Lescano and Cagabcab an the
amount of P19,239.96 as payment for 1997 13th month pay as alluded
in the above computation.
If complainants could not be reinstated, respondents are ordered to
pay them separation pay equivalent to one month salary for very (sic)
year of service.
SO ORDERED.
Therefrom, JAKA went on appeal to the NLRC, which, in a decision
dated August 30, 1999,[4] affirmed in toto that of the Labor Arbiter.
JAKA filed a motion for reconsideration. Acting thereon, the NLRC came
out with another decision dated January 28, 2000,[5] this time
modifying its earlier decision, thus:
WHEREFORE, premises considered, the instant motion for
reconsideration is hereby GRANTED and the challenged decision of this
Commission [dated] 30 August 1999 and the decision of the Labor
Arbiter xxx are hereby modified by reversing an setting aside the
awards of backwages, service incentive leave pay. Each of the
complainants-appellees shall be entitled to a separation pay equivalent
to one month. In addition, respondents-appellants is (sic) ordered to
pay each of the complainants-appellees the sum of P2,000.00 as
indemnification for its failure to observe due process in effecting the
retrenchment.
SO ORDERED.
Their motion for reconsideration having been denied by the NLRC in its
resolution of April 28, 2000,[6] respondents went to the Court of
Appeals via a petition for certiorari, thereat docketed as CA-G.R. SP No.
59847.
As stated at the outset hereof, the Court of Appeals, in a decision
dated November 16, 2000, applying the doctrine laid down by this
Court in Serrano vs. NLRC,[7]reversed and set aside the NLRCs decision
of January 28, 2000, thus:
WHEREFORE, the decision dated January 28, 2000 of the National
Labor Relations Commission is REVERSED and SET ASIDE and another
one entered ordering respondent JAKA Foods Processing Corporation
to pay petitioners separation pay equivalent to one (1) month salary,
the proportionate 13th month pay and, in addition, full backwages
from the time their employment was terminated on August 29, 1997
up to the time the Decision herein becomes final.
SO ORDERED.
This time, JAKA moved for a reconsideration but its motion was denied
by the appellate court in its resolution of January 8, 2002.
Hence, JAKAs present recourse, submitting, for our consideration, the
following issues:
I. WHETHER OR NOT THE COURT OF APPEALS CORRECTLY AWARDED
FULL BACKWAGES TO RESPONDENTS.
II. WHETHER OR NOT THE ASSAILED DECISION CORRECTLY AWARDED
SEPARATION PAY TO RESPONDENTS.
As we see it, there is only one question that requires
resolution, i.e. what are the legal implications of a situation where an
employee is dismissed for cause but such dismissal was effected
without the employers compliance with the notice requirement under
the Labor Code.
This, certainly, is not a case of first impression. In the very recent case
of Agabon vs. NLRC,[8] we had the opportunity to resolve a similar
question. Therein, we found that the employees committed a grave
offense, i.e., abandonment, which is a form of a neglect of duty which,
in turn, is one of the just causes enumerated under Article 282 of the
Labor Code. In said case, we upheld the validity of the dismissal despite
non-compliance with the notice requirement of the Labor Code.
However, we required the employer to pay the dismissed employees
the amount of P30,000.00, representing nominal damages for non-
compliance with statutory due process, thus:
Where the dismissal is for a just cause, as in the instant case, 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, as ruled in Reta vs.
National Labor Relations Commission. The indemnity to be imposed
should be stiffer to discourage the abhorrent practice of dismiss now,
pay later, which we sought to deter in the Serrano ruling. 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.
xxx xxx xxx
The violation of petitioners right to statutory due process by the
private respondent warrants the payment of indemnity in the form of
nominal damages. The amount of such damages is addressed to the
sound discretion of the court, taking into account the relevant
circumstances. Considering the prevailing circumstances in the case at
bar, we deem it proper to fix it at P30,000.00. We believe this form of
damages would serve to deter employers from future violations of the
statutory due process rights of employees. At the very least, it provides
a vindication or recognition of this fundamental right granted to the
latter under the Labor Code and its Implementing Rules, (Emphasis
supplied).
The difference between Agabon and the instant case is that in the
former, the dismissal was based on a just cause under Article 282 of
the Labor Code while in the present case, respondents were dismissed
due to retrenchment, which is one of the authorized causes under
Article 283 of the same Code.
At this point, we note that there are divergent implications of a
dismissal for just cause under Article 282, on one hand, and a dismissal
for authorized cause under Article 283, on the other.
A dismissal for just cause under Article 282 implies that the employee
concerned has committed, or is guilty of, some violation against the
employer, i.e. the employee has committed some serious misconduct,
is guilty of some fraud against the employer, or, as in Agabon, he has
neglected his duties. Thus, it can be said that the employee himself
initiated the dismissal process.
On another breath, a dismissal for an authorized cause under Article
283 does not necessarily imply delinquency or culpability on the part of
the employee. Instead, the dismissal process is initiated by the
employers exercise of his management prerogative, i.e. when the
employer opts to install labor saving devices, when he decides to cease
business operations or when, as in this case, he undertakes to
implement a retrenchment program.
The clear-cut distinction between a dismissal for just cause under
Article 282 and a dismissal for authorized cause under Article 283 is
further reinforced by the fact that in the first, payment of separation
pay, as a rule, is not required, while in the second, the law requires
payment of separation pay.[9]
For these reasons, there ought to be a difference in treatment when
the ground for dismissal is one of the just causes under Article 282, and
when based on one of the authorized causes under Article 283.
Accordingly, it is wise to hold that: (1) if the dismissal is based on a just
cause under Article 282 but the employer failed to comply with the
notice requirement, the sanction to be imposed upon him should
be tempered because the dismissal process was, in effect, initiated by
an act imputable to the employee; and (2) if the dismissal is based on
an authorized cause under Article 283 but the employer failed to
comply with the notice requirement, the sanction should
be stiffer because the dismissal process was initiated by the employers
exercise of his management prerogative.
The records before us reveal that, indeed, JAKA was suffering from
serious business losses at the time it terminated respondents
employment. As aptly found by the NLRC:
A careful study of the evidence presented by the respondent-appellant
corporation shows that the audited Financial Statement of the
corporation for the periods 1996, 1997 and 1998 were submitted by
the respondent-appellant corporation, The Statement of Income and
Deficit found in the Audited Financial Statement of the respondent-
appellant corporation clearly shows the following in 1996, the deficit of
the respondent-appellant corporation was P188,218,419.00 or 94.11%
of the stockholders [sic] equity which amounts to P200,000,000.00. In
1997 when the retrenchment program of respondent-appellant
corporation was undertaken, the deficit ballooned to P247,222,569.00
or 123.61% of the stockholders equity, thus a capital deficiency or
impairment of equity ensued. In 1998, the deficit grew to
P355,794,897.00 or 177% of the stockholders equity. From 1996 to
1997, the deficit grew by more that (sic) 31% while in 1998 the deficit
grew by more than 47%.
The Statement of Income and Deficit of the respondent-appellant new one entered upholding the legality of the dismissal but ordering
corporation to prove its alleged losses was prepared by an petitioner to pay each of the respondents the amount of P50,000.00,
independent auditor, SGV & Co. It convincingly showed that the representing nominal damages for non-compliance with statutory due
respondent-appellant corporation was in dire financial straits, which process.
the complainants-appellees failed to dispute. The losses incurred by
the respondent-appellant corporation are clearly substantial and SO ORDERED.
sufficiently proven with clear and satisfactory evidence. Losses
incurred were adequately shown with respondent-appellants audited
financial statement. Having established the loss incurred by the
respondent-appellant corporation, it necessarily necessarily (sic)
follows that the ground in support of retrenchment existed at the time
the complainants-appellees were terminated. We cannot therefore KING OF KINGS TRANSPORT, G.R. No. 166208
sustain the findings of the Labor Arbiter that the alleged losses of the
respondent-appellant was [sic] not well substantiated by substantial INC., CLAIRE DELA FUENTE,
proofs. It is therefore logical for the corporation to implement a
and MELISSA LIM, Present:
retrenchment program to prevent further losses.[10]
Petitioners,
Noteworthy it is, moreover, to state that herein respondents did not
assail the foregoing finding of the NLRC which, incidentally, was also
QUISUMBING, J., Chairperson,
affirmed by the Court of Appeals.
CARPIO,
It is, therefore, established that there was ground for respondents
dismissal, i.e., retrenchment, which is one of the authorized causes CARPIO MORALES,
enumerated under Article 283 of the Labor Code. Likewise, it is
established that JAKA failed to comply with the notice requirement - versus - TINGA, and
under the same Article. Considering the factual circumstances in the
instant case and the above ratiocination, we, therefore, deem it proper VELASCO, JR., JJ.
to fix the indemnity at P50,000.00.
Promulgated:
We likewise find the Court of Appeals to have been in error when it
ordered JAKA to pay respondents separation pay equivalent to one (1) SANTIAGO O. MAMAC,
month salary for every year of service. This is because in Reahs
Corporation vs. NLRC,[11] we made the following declaration: Respondent. June 29, 2007
The rule, therefore, is that in all cases of business closure or cessation x-----------------------------------------------------------------------------------------x
of operation or undertaking of the employer, the affected employee is
entitled to separation pay. This is consistent with the state policy of
treating labor as a primary social economic force, affording full
protection to its rights as well as its welfare. The exception is when the
closure of business or cessation of operations is due to serious business
DECISION
losses or financial reverses; duly proved, in which case, the right of
affected employees to separation pay is lost for obvious reasons. xxx.
(Emphasis supplied)
VELASCO, JR., J.:
WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed
decision and resolution of the Court of Appeals respectively dated
November 16, 2001 and January 8, 2002 are hereby SET ASIDE and a
Is a verbal appraisal of the charges against the employee a breach of
the procedural due process? This is the main issue to be resolved in
this plea for review under Rule 45 of the September 16,
2004 Decision[1] of the Court of Appeals (CA) in CA-GR SP No.
81961. Said judgment affirmed the dismissal of bus conductor Santiago
O. Mamac from petitioner King of Kings Transport, Inc. (KKTI), but
ordered the bus company to pay full backwages for violation of the
twin-notice requirement and 13th-month pay. Likewise assailed is
the December 2, 2004 CA Resolution[2] rejecting KKTIs Motion for
Reconsideration.
The Facts
Petitioner KKTI is a corporation engaged in public transportation and
managed by Claire Dela Fuente and Melissa Lim.
Respondent Mamac was hired as bus conductor of Don Mariano
Transit Corporation (DMTC) on April 29, 1999. The DMTC employees
including respondent formed the Damayan ng mga Manggagawa,
Tsuper at Conductor-Transport Workers Union and registered it with
the Department of Labor and Employment.Pending the holding of a
certification election in DMTC, petitioner KKTI was incorporated with
the Securities and Exchange Commission which acquired new buses.
Many DMTC employees were subsequently transferred to KKTI and
excluded from the election.
The KKTI employees later organized the Kaisahan ng mga Kawani
sa King of Kings (KKKK) which was registered with DOLE. Respondent
was elected KKKK president.
Respondent was required to accomplish a Conductors Trip Report and
submit it to the company after each trip. As a background, this report
indicates the ticket opening and closing for the particular day of
duty. After submission, the company audits the reports. Once an
irregularity is discovered, the company issues an Irregularity Report
against the employee, indicating the nature and details of the
irregularity. Thereafter, the concerned employee is asked to explain
the incident by making a written statement or counter-affidavit at the incentive leave and 13th-month pay because he was paid on
back of the same Irregularity Report. After considering the explanation commission or percentage basis.
of the employee, the company then makes a determination of whether
to accept the explanation or impose upon the employee a penalty for
committing an infraction. That decision shall be stated on said
Irregularity Report and will be furnished to the employee. On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes
rendered judgment dismissing respondents Complaint for lack of
merit.[6]
Upon audit of the October 28, 2001 Conductors Report of respondent,
KKTI noted an irregularity. It discovered that respondent declared
several sold tickets as returned tickets causing KKTI to lose an income Aggrieved, respondent appealed to the National Labor Relations
of eight hundred and ninety pesos. While no irregularity report was Commission (NLRC). On August 29, 2003, the NLRC rendered a
prepared on the October 28, 2001incident, KKTI nevertheless asked Decision, the dispositive portion of which reads:
respondent to explain the discrepancy. In his letter,[3] respondent said
that the erroneous declaration in his October 28, 2001 Trip Report was
unintentional. He explained that during that days trip, the windshield
WHEREFORE, the decision dated 16 September 2002 is MODIFIED in
of the bus assigned to them was smashed; and they had to cut short
that respondent King of Kings Transport Inc. is hereby ordered to
the trip in order to immediately report the matter to the police. As a
indemnify complainant in the amount of ten thousand pesos (P10,000)
result of the incident, he got confused in making the trip report.
for failure to comply with due process prior to termination.
On November 26, 2001, respondent received a letter[4] terminating his
The other findings are AFFIRMED.
employment effective November 29, 2001. The dismissal letter alleged
that theOctober 28, 2001 irregularity was an act of fraud against the
company. KKTI also cited as basis for respondents dismissal the other
offenses he allegedly committed since 1999.
SO ORDERED.[7]
On December 11, 2001, respondent filed a Complaint for illegal
dismissal, illegal deductions, nonpayment of 13th-month pay, service
incentive leave, and separation pay. He denied committing any Respondent moved for reconsideration but it was denied through
infraction and alleged that his dismissal was intended to bust union the November 14, 2003 Resolution[8] of the NLRC.
activities. Moreover, he claimed that his dismissal was effected without
due process.
Thereafter, respondent filed a Petition for Certiorari before the CA
urging the nullification of the NLRC Decision and Resolution.
In its April 3, 2002 Position Paper,[5] KKTI contended that respondent
was legally dismissed after his commission of a series of misconducts
and misdeeds. It claimed that respondent had violated the trust and
confidence reposed upon him by KKTI. Also, it averred that it had The Ruling of the Court of Appeals
observed due process in dismissing respondent and maintained that
respondent was not entitled to his money claims such as service
Affirming the NLRC, the CA held that there was just cause for
respondents dismissal. It ruled that respondents act in declaring sold
tickets as returned tickets x x x constituted fraud or acts of dishonesty
justifying his dismissal.[9]
Also, the appellate court sustained the finding that petitioners failed to
comply with the required procedural due process prior to respondents
termination. However, following the doctrine in Serrano v.
NLRC,[10] it modified the award of PhP 10,000 as indemnification by
awarding full backwages from the time respondents employment was
terminated until finality of the decision.
Moreover, the CA held that respondent is entitled to the 13th-month
pay benefit.
Hence, we have this petition.
The Issues
Petitioner raises the following assignment of errors for our
consideration:
Whether the Honorable Court of Appeals erred in awarding in favor of
the complainant/private respondent, full back wages, despite the
denial of his petition for certiorari.
Whether the Honorable Court of Appeals erred in ruling that KKTI did
not comply with the requirements of procedural due process before
dismissing the services of the complainant/private respondent.
Whether the Honorable Court of Appeals rendered an incorrect
decision in that [sic] it awarded in favor of the complaint/private
respondent, 13th month pay benefits contrary to PD 851.[11]
The Courts Ruling
The petition is partly meritorious.
The disposition of the first assigned error depends on whether
petitioner KKTI complied with the due process requirements in
terminating respondents employment; thus, it shall be discussed
secondly.
Non-compliance with the Due Process Requirements
Due process under the Labor Code involves two aspects: first,
substantivethe valid and authorized causes of termination of
employment under the Labor Code; and second, proceduralthe manner
of dismissal.[12] In the present case, the CA affirmed the findings of
the labor arbiter and the NLRC that the termination of employment of
respondent was based on a just cause. This ruling is not at issue in this
case. The question to be determined is whether the procedural
requirements were complied with.
Art. 277 of the Labor Code provides the manner of termination of
employment, thus:
Art. 277. Miscellaneous Provisions.x x x
(b) Subject to the constitutional right of workers to security of tenure
and their right to be protected against dismissal except for a just and
authorized cause without prejudice to the requirement of notice under
Article 283 of this Code, the employer shall furnish the worker whose
employment is sought to be terminated a written notice containing a
statement of the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires in accordance with
company rules and regulations promulgated pursuant to guidelines set
by the Department of Labor and Employment. Any decision taken by
the employer shall be without prejudice to the right of the worker to
contest the validity or legality of his dismissal by filing a complaint with
the regional branch of the National Labor Relations Commission. The
burden of proving that the termination was for a valid or authorized
cause shall rest on the employer.
Accordingly, the implementing rule of the aforesaid provision states:
SEC. 2. Standards of due process; requirements of notice.In all cases of
termination of employment, the following standards of due process
shall be substantially observed:
I. For termination of employment based on just causes as defined in
Article 282 of the Code:
(a) A written notice served on the employee specifying the ground
or grounds for termination, and giving said employee reasonable
opportunity within which to explain his side.
(b) A hearing or conference during which the employee concerned,
with the assistance of counsel if he so desires is given opportunity to
respond to the charge, present his evidence, or rebut the evidence
presented against him.
(c) A written notice of termination served on the employee,
indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination. [13]
In case of termination, the foregoing notices shall be served on the
employees last known address.[14]
To clarify, the following should be considered in terminating the
services of employees:
(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.[15] 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. 282 is being charged against the employees.
against the employees have been considered; and (2) grounds have
been established to justify the severance of their employment.
In the instant case, KKTI admits that it had failed to provide respondent
with a charge sheet.[16] However, it maintains that it had substantially
complied with the rules, claiming that respondent would not have
issued a written explanation had he not been informed of the charges
against him.[17]
We are not convinced.
First, respondent was not issued a written notice charging him of
committing an infraction. The law is clear on the matter. A verbal
appraisal of the charges against an employee does not comply with the
first notice requirement. In Pepsi Cola Bottling Co. v. NLRC,[18] the
Court held that consultations or conferences are not a substitute for
the actual observance of notice and hearing. Also, in Loadstar Shipping
Co., Inc. v. Mesano,[19] the Court, sanctioning theemployer for
disregarding the due process requirements, held that the employees
written explanation did not excuse the fact that there was a complete
absence of the first notice.
irregularity in his October 28, 2001Conductors Trip Report. He was
unaware that a dismissal proceeding was already being effected. Thus,
he was surprised to receive the November 26, 2001termination letter
indicating as grounds, not only his October 28, 2001 infraction, but also
his previous infractions.
Sanction for Non-compliance with Due Process Requirements
As stated earlier, after a finding that petitioners failed to comply with
the due process requirements, the CA awarded full backwages in favor
of respondent in accordance with the doctrine in Serrano v.
NLRC.[20] However, the doctrine in Serrano had already been
abandoned in Agabon v. NLRC by ruling that if the dismissal is done
without due process, the employer should indemnify the employee
with nominal damages.[21]
Thus, for non-compliance with the due process requirements in the
termination of respondents employment, petitioner KKTI is sanctioned
to pay respondent the amount of thirty thousand pesos (PhP 30,000)
as damages.

Thirteenth (13th)-Month Pay

(2) After serving the first notice, the employers should schedule and
conduct a hearing or conference wherein the employees will be given
the opportunity to: (1) explain and clarify their defenses to the charge
against them; (2) present evidence in support of their defenses; and (3)
rebut the evidence presented against them by the
management. During the hearing or conference, the employees are
given the chance to defend themselves personally, with the assistance
of a representative or counsel of their choice. Moreover, this
conference or hearing could be used by the parties as an opportunity
to come to an amicable settlement.
Second, even assuming that petitioner KKTI was able to furnish
respondent an Irregularity Report notifying him of his offense, such
would not comply with the requirements of the law. We observe from
the irregularity reports against respondent for his other offenses that Section 3 of the Rules Implementing Presidential Decree No.
such contained merely a general description of the charges against 851[22] provides the exceptions in the coverage of the payment of the
him. The reports did not even state a company rule or policy that the 13th-month benefit. The provision states:
employee had allegedly violated. Likewise, there is no mention of any
of the grounds for termination of employment under Art. 282 of the
Labor Code. Thus, KKTIs standard charge sheet is not sufficient notice
SEC. 3. Employers covered.The Decree shall apply to all employers
to the employee.
except to:

Third, no hearing was conducted. Regardless of respondents written

xxxx
(3) After determining that termination of employment is justified, the explanation, a hearing was still necessary in order for him to clarify and
employers shall serve the employees a written notice of present evidence in support of his defense. Moreover, respondent
termination indicating that: (1) all circumstances involving the charge made the letter merely to explain the circumstances relating to the
e) Employers of those who are paid on purely commission, boundary,
or task basis, and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the performance
thereof, except where the workers are paid on piece-rate basis in
which case the employer shall be covered by this issuance insofar as
such workers are concerned.
Petitioner KKTI maintains that respondent was paid on purely
commission basis; thus, the latter is not entitled to receive the 13th-
month pay benefit.However, applying the ruling in Philippine
Agricultural Commercial and Industrial Workers Union v. NLRC,[23] the
CA held that respondent is entitled to the said benefit.
It was erroneous for the CA to apply the case of Philippine Agricultural
Commercial and Industrial Workers Union. Notably in the said case, it
was established that the drivers and conductors praying for 13th-
month pay were not paid purely on commission. Instead, they were
receiving a commission in addition to a fixed or guaranteed wage or
salary. Thus, the Court held that bus drivers and conductors who are
paid a fixed or guaranteed minimum wage in case their commission be
less than the statutory minimum, and commissions only in case where
they are over and above the statutory minimum, are entitled to a 13th-
month pay equivalent to one-twelfth of their total earnings during the
calendar year.
On the other hand, in his Complaint,[24] respondent admitted that he
was paid on commission only. Moreover, this fact is supported by his
pay slips[25] which indicated the varying amount of commissions he
was receiving each trip. Thus, he was excluded from receiving the 13th-
month pay benefit.
WHEREFORE, the petition is PARTLY GRANTED and the September 16,
2004 Decision of the CA is MODIFIED by deleting the award of
backwages and 13th-month pay. Instead, petitioner KKTI is ordered to
indemnify respondent the amount of thirty thousand pesos (PhP
30,000) as nominal damages for failure to comply with the due process
requirements in terminating the employment of respondent.
No costs.
SO ORDERED.
Agabon vs. NLRC / Riviera Home - GR No. 158693 Case Digest
FACTS:
Petitioners were employed by Riviera Home as gypsum board and
cornice installers from January 1992 to February 23, 1999 when they
were dismissed for abandonment of work. Petitioners filed a complaint
for illegal dismissal and was decided in their favor by the Labor Arbiter.
Riviera appealed to the NLRC contending just cause for the dismissal
because of petitioner’s abandonment of work. NLRC ruled there was
just cause and petitioners were not entitled to backwages and
separation pay. The CA in turn ruled that the dismissal was not illegal
because they have abandoned their work but ordered the payment of
money claims.
ISSUE:
Whether or not petitioners were illegally dismissed.
RULING:
To dismiss an employee, the law required not only the existence of a
just and valid cause but also enjoins the employer to give the employee
the right to be heard and to defend himself. Abandonment is the
deliberate and unjustified refusal of an employee to resume his
employment. For a valid finding or abandonment, two factors are
considered: failure to report for work without a valid reason; and, a
clear intention to sever employer-employee relationship with the
second as the more determinative factor which is manifested by overt
acts from which it may be deduced that the employees has no more
intention to work.
Where the employer had a valid reason to dismiss an employee but did
not follow the due process requirement, the dismissal may be upheld
but the employer will be penalized to pay an indemnity to the
employee. This became known as the Wenphil Doctrine of the Belated
Due process Rule.
Art. 279 means that the termination is illegal if it is not for any of the
justifiable or authorized by law. Where the dismissal is for a just cause,
the lack of statutory due process should not nullify the dismissal but
the employer should indemnify the employee for the violation of his
statutory rights. The indemnity should be stiffer to discourage the
abhorrent practice of “dismiss now, pay later” which we sought to
deter in Serrano ruling. The violation of employees’ rights warrants the
payment of nominal damages.
JAKA Food Processing vs. Pacot - GR No. 151378 Case Digest
FACTS:
Respondents were hired by JAKA until their termination on August 29,
1997 because the Corporation was “in dire financial straits”. It was not
disputed that they were terminated without complying with the
requirement under Art. 283 of the Labor Code regarding the service of
notice upon the employees and DOLE at least one month before the
intended date of termination.
ISSUE:
Whether or not full backwages and separation pay be awarded to
respondents when employers effected termination without complying
with the twin notice rule.
RULING:
The dismissal of the respondents was for an authorized cause under
Article 283. A dismissal for authorized cause does not necessarily imply
delinquency or culpability on the part of the employee. Instead, the
dismissal process is initiated by the employer’s exercise of his
management prerogative, i.e. when the employer opts to install labor-
saving devices, when he decides to cease business operations or
when… he undertakes to implement a retrenchment program.
Accordingly, it is wise to hold that:
1) if the dismissal is based on a just cause but the employer failed to
comply with the notice requirement, the sanction to be imposed upon
him should be tempered because the dismissal was initiate by an act
imputable to the employee.
2) if the dismissal is based on an authorized cause but the employer
fails to comply with the notice requirement, the sanction should be
stiffer because the dismissal process was initiated by the employer’s
exercise of his management prerogative. Thus, dismissal was upheld
but ordered JAKA to pay each of the respondents the amount of PhP
50,000.00 representing nominal damages for non-compliance with
statutory due process.