illegal dismissal and personal liability of corporate officers

8/22/2019 Illegal Dismissal and Personal Liability of Corporate Officers

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Illegal dismissal and personal liability of corporate officers; law and

jurisprudence.

I wish to share to my readers the legal and jurisprudential parts of a recent reply

position paper in a labor case that our law office has prepared under my direct supervision,for legal research purposes.

REPLY POSITION PAPER

FOR THE COMPLAINANT

THE COMPLAINANT x x x, by counsel, respectfully states:

1. The two (2) basic issues in this case are whether X X X was illegally dismissed and whether the

respondents should be held jointly and severally liable for tort and damages.

X x x.

2. Please note that Article 281 of the Labor Code on probationary employment (applicable to X x

x) provides that the services of an employee who has been engaged on a probationary basis may

be terminated for ajust cause or when he fails to qualify as a regular employee in accordance

with reasonable standards made known by the employer to the employee at the time of hisengagement. It further provides that an employee who is allowed to work after a probationary

period shall be considered a regular employee. In the employment contract of X X X, hisprobation actually was 3 months. He had completed his first 3 months it without any negativeaction on the part of respondents. He was allowed to proceed to another renewable (2

ndphase) 3

months of probation. At this time, no formal performance evaluation was conducted. The

respondents simply dismissed him by reason of the above-mentioned two incidents.

3. Further, it must be noted Article 282 of the Labor Code (termination by employer) provides

that an employer may terminate an employment for:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer

or representative in connection with his 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 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


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(e) Other causes analogous to the foregoing.

To repeat: None of the foregoing grounds applies to X X X. His subject actuations

were not harmful, were without malicious intent to injure, harm, intimidate, orthreaten, or to commit sexual harassment or acts of lasciviousness or, in any manner, tocommit acts of disrespect towards his women colleagues.

4. At this point, it must be repeated, for emphasis, that X X X was not afforded the opportunity: to

hire a private lawyer (a basic human right to counsel) during the rush administrative hearing; to

confront the complainants and witnesses against him by way of cross examination; to study thedocuments, records, and evidence against him in the possession of the respondents; to secure

formal minutes and transcripts of the said hearing (there being none, it now appears); and at the

least, the fair time to prepare for his own defense. His human right to DUE PROCESS OF LAW

was violated. End result: A family man, with good moral character, good education and workexperience, and good name and honor has been rendered jobless, exposing his helpless wife and

young children to hunger, suffering, anxieties, mental pain, anguish, and public ridicule, all of

which deserve the imposition of MORAL and EXEMPLARY DAMAGES of P500, 000.o0 each

and ATTORNEYS FEES of 10% of recoverable amounts, plus COSTS OF SUIT andLITIGATION EXPENSES.

5. X X X reiterates the jurisprudence he had earlier cited in his Position Paper in support of hisarguments, to wit:

5.1. Marcial Gu-Miro v. Rolando C. Adorable, et. al., GR No. 160952, 20 August 2004, citing

Asuncion v. NLRC, GR No. 129329, 31 July 2001, 362 SCRA 56, and Dizon v. NLRC, GR No.79554, 14 December 1989, 180 SCRA 52).

5.2. Solidbank Corporation v. CA, et. al., GR No. 151026, August 25, 2003).

5.3. Felix v. NLRC, GR No. 148256, November 17, 2004 citing Pilipinas Bank v. NLRC, 215 SCRA750, 756 (1992), and Quezon Electric Cooperative v. NLRC, 172 SCRA 88, 97 (1989)).

5.4. Philippine Commercial Industrial Bank v. Cabrera, GR No. 160386, March 31, 2005.

5.5. Hacienda Bino et al v. Cuenca et al, GR No. 150478, April 15, 20055.6. PLDT vs. NLRC and Enrique Gabriel; G.R. No. 106947; February 11, 1999.

5.7. SOLVIC INDUSTRIAL CORP. and ANTONIO C. TAM, petitioners, vs. NATIONAL LABOR

RELATIONS COMMISSION and DIOSDADO LAUZ, respondents. [G.R. No. 125548.

September 25, 1998].5.8. Melody Paulino LopezV.NLRC, G.R. No. 125548, October 8,1999; Martinez, J.; and

5.9. CAINGAT vs. NLRC, et al, GR 154308, March 10, 2005

6. The Civil Code provides when a person may be held liable for DAMAGES arising from TORT,QUASI DELICT, ABUSE OF RIGHT, MALICIOUS PROSECUTION, and other unjust, unfair

and abusive acts that injure ones constitutional and statutory rights as a person, citizen, and

worker, to wit:

Art. 10. In case of doubt in the interpretation or application of laws, it is presumed that the

lawmaking body intended right and justice to prevail.


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Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act

with justice, give everyone his due, and observe honesty and good faith.

Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another

shall indemnify the latter for the same.

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to

morals, good customs or public policy shall compensate the latter for the damage.

Art. 22. Every person who through an act of performance by another, or any other means,

acquires or comes into possession of something at the expense of the latter without just or legal

ground, shall return the same to him.

Art. 23. Even when an act or event causing damage to another's property was not due to the fault

or negligence of the defendant, the latter shall be liable for indemnity if through the act or event

he was benefited.

Art. 24. In all contractual, property or other relations, when one of the parties is at a disadvantage

on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other

handicap, the courts must be vigilant for his protection.

Art. 32. Any public officer or employee, or any private individual, who directly or indirectly

obstructs, defeats, violates or in any manner impedes or impairs any of the following rights andliberties of another person shall be liable to the latter for damages:

X x x.

(6) The right against deprivation of property without due process of law;

X x x.

(8) The right to the equal protection of the laws;

X x x.

(16) The right of the accused to be heard by himself and counsel, to be informed of the nature

and cause of the accusation against him, to have a speedy and public trial, to meet the witnessesface to face, and to have compulsory process to secure the attendance of witness in his behalf;

(17) Freedom from being compelled to be a witness against one's self, or from being forced to

confess guilt, or from being induced by a promise of immunity or reward to make suchconfession, except when the person confessing becomes a State witness;

X x x.


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In any of the cases referred to in this article, whether or not the defendant's act or omission

constitutes a criminal offense, the aggrieved party has a right to commence an entirely separate

and distinct civil action for damages, and for other relief. Such civil action shall proceedindependently of any criminal prosecution (if the latter be instituted), and mat be proved by a

preponderance of evidence.

The indemnity shall include moral damages. Exemplary damages may also be adjudicated.

X x x.

Art. 2176. Whoever by act or omission causes damage to another, there being fault or

negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-

existing contractual relation between the parties, is called a quasi-delict and is governed by the

provisions of this Chapter. (1902a)

Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate

and distinct from the civil liability arising from negligence under the Penal Code. But theplaintiff cannot recover damages twice for the same act or omission of the defendant.

Art. 2178. The provisions of Articles 1172 to 1174 are also applicable to a quasi-delict. (n)

Art. 2179. When the plaintiff's own negligence was the immediate and proximate cause of his

injury, he cannot recover damages. But if his negligence was only contributory, the immediate

and proximate cause of the injury being the defendant's lack of due care, the plaintiff mayrecover damages, but the courts shall mitigate the damages to be awarded. (n)

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or

omissions, but also for those of persons for whom one is responsible.

X x x.

The owners and managers of an establishment or enterprise are likewise responsible for damages

caused by their employees in the service of the branches in which the latter are employed or on

the occasion of their functions.

Employers shall be liable for the damages caused by their employees and household helpers

acting within the scope of their assigned tasks, even though the former are not engaged in any

business or industry.

X x x.

The responsibility treated in this article shall cease when the persons herein mentioned prove thatthey observed all the diligence of a good father of a family to prevent damage.

Art. 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary.


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Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the

natural and probable consequences of the act or omission complained of. It is not necessary that

such damages have been foreseen or could have reasonably been foreseen by the defendant.

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than

judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons

or to incur expenses to protect his interest;

X x x.

(5) Where the defendant actedin gross and evident bad faith in refusing to satisfy the plaintiffsplainly valid, just and demandable claim;

X x x.

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen's compensation and employer's liability laws;

X x x.

(11) In any other case where the court deems it just and equitable that attorney's fees andexpenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.

Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety,besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.

Though incapable of pecuniary computation, moral damages may be recovered if they are the

proximate result of the defendant's wrongful act for omission.

Art. 2219. Moral damages may be recovered in the following and analogous cases:

X x x.

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

X x x.

Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the

court should find that, under the circumstances, such damages are justly due. The same ruleapplies to breaches of contract where the defendant acted fraudulently or in bad faith.

Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction forthe public good, in addition to the moral, temperate, liquidated or compensatory damages.


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Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross

negligence.

Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the

defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide

whether or not they should be adjudicated.

Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must

show that he is entitled to moral, temperate or compensatory damages before the court may

consider the question of whether or not exemplary damages should be awarded. In caseliquidated damages have been agreed upon, although no proof of loss is necessary in order that

such liquidated damages may be recovered, nevertheless, before the court may consider the

question of granting exemplary in addition to the liquidated damages, the plaintiff must showthat he would be entitled to moral, temperate or compensatory damages were it not for the

stipulation for liquidated damages.

7. ABUSE OF RIGHT as a legal doctrine was dissected in the case ofNIKKO HOTEL MANILAGARDEN, et al, vs. REYES, GR 154259, February 28, 2005, where, inter alia, Articles 19

and 21 of the Civil Code were invoked. Although the hotel was not held liable for damages, theCourt took the case as an opportunity to make an extensive discussion of the concept of ABUSE

OF RIGHT, which X X X hereby adopts in this case in support of his legal theory, thus:

X x x.

Article 19, known to contain what is commonly referred to as the principle of abuse of rights,[59]

is not a panacea for all human hurts and social grievances. Article 19 states:

Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act

with justice, give everyone his due, and observe honesty and good faith.

Elsewhere, we explained that when a right is exercised in a manner which does not conform

with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby

committed for which the wrongdoer must be responsible.[60]

The object of this article,therefore, is to set certain standards which must be observed not only in the exercise of ones

rights but also in the performance of ones duties.[61] These standards are the following: act with

justice, give everyone his due and observe honesty and good faith.[62]

Its antithesis, necessarily,

is any act evincing bad faith or intent to injure. Its elements are the following: (1) There is alegal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or

injuring another.[63]

When Article 19 is violated, an action for damages is proper under Articles

20 or 21 of the Civil Code. Article 20 pertains to damages arising from a violation oflaw[64]
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which does not obtain herein as Ms. Lim was perfectly within her right to ask Mr. Reyes to

leave. Article 21, on the other hand, states:

Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to

morals, good customs or public policy shall compensate the latter for the damage.

Article 21[65]

refers to acts contra bonus mores and has the following elements: (1) There is anact which is legal; (2) but which is contrary to morals, good custom, public order, or public

policy; and (3) it is done with intentto injure.[66]

A common theme runs through Articles 19 and 21,[67]

and that is, the act complained of must be

intentional.[68]

X x x.

Notes (laws and cases cited above):

[47] E.L. Pineda, Torts and Damages Annotated, p. 52 (2004 ed).[48] Garciano v. Court of Appeals, G.R. No. 96126, 10 August 1992, 212 SCRA 436, 440.[49] cf. Servicewide Specialists, Inc. v. Intermediate Appellate Court, G.R. No. 74553, 08 June 1989, 174

SCRA 80, 88.[50] Sangco, Torts and Damages Vol.1 , pp. 83-84.[51] Floro v. Llenado, G.R. No. 75723, 02 June 1995, 244 SCRA 713, 720.[58] Article 2180, Civil Code.[59] Globe-Mackay Cable and Radio Corp. v. Court of Appeals, G.R. No. 81262, 25 August 1989, 176 SCRA

779, 783.[60] Albenson Enterprises Corp. v. Court of Appeals, G.R. No. 88694, 11 January 1993, 217 SCRA 16, 25. [64] Art. 20. Every person who, contrary to law, willfully or negligently causes damage to another, shall

indemnify the latter for the same. See Globe Mackay,supra,note 61 at 784.[72] Art. 2234, Civil Code.

8. Respondents cited the case ofMERCURY DRUG CORPORATION vs. NATIONAL

LABOR RELATIONS COMMISSION, NLRC SHERIFF and CESAR E. LADISLA, G.R.

No. 75662 September 15, 1989, but it is not applicable in this case. In the said case, the private

respondent Cesar E. Ladisla was employed by petitioner Mercury Drug Corporation as a StockAnalyst at its Claro M. Recto Branch. He had been with the company for two years and nine

months. On August 15, 1977 he was apprehended by representatives of Mercury Drug while in

the act of pilfering company property consisting of three (3) bottles of Persantin and one (1)bottle of Valoron at 100 tablets per bottle with a total value of P272.00. He admitted his guilt

to the investigating representatives of petitioner company and executed a handwritten

admission. Said admission was repeated verbally at the police station before the arresting

officer as shown in the Booking Sheet and Arrest Report which was signed and authenticated byLadisla. On August 19, 1977, petitioner, while simultaneously placing private respondent on

preventive suspension, filed before the Department of Labor an application for the termination

of private respondent's employment on grounds of dishonesty and breach of trust. All of theforegoing facts do not apply in the present case. X X X was and is not being charged for

DISHONESTY, THEFT, BREACH OF TRUST AND CONFIDENCE and the like. He did

not make any CONFESSION of criminal guilt.
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9. Respondent cited the case ofMERALCO VS. NLRC, GR 78763, JULY 12, 1989, 175 SCRA

277.Again this case is not applicable to X X X. In the said case the facts were as follows: Private

respondent Signo was employed in petitioner company as supervisor-leadman since January1963 up to the time when his services were terminated on May 18, 1983. In 1981, a certain

Fernando de Lara filed an application with the petitioner company for electrical services at his

residence at Peafrancia Subdivision, Marcos Highway, Antipolo, Rizal. Private respondentSigno facilitated the processing of the said application as well as the required documentation forsaid application at the Municipality of Antipolo, Rizal. In consideration thereof, private

respondent received from Fernando de Lara the amount of P7,000.00. Signo thereafter filed the

application for electric services with the Power Sales Division of the company. It was establishedthat the area where the residence of de Lara was located is not yet within the serviceable point of

Meralco, because the place was beyond the 30-meter distance from the nearest existing Meralco

facilities. In order to expedite the electrical connections at de Lara's residence, certain employees

of the company, including respondent Signo, made it appear in the application that the sari-saristore at the corner of Marcos Highway, an entrance to the subdivision, is applicant de Lara's

establishment, which, in reality is not owned by the latter. As a result of this scheme, the

electrical connections to de Lara's residence were installed and made possible. However, due tothe fault of the Power Sales Division of petitioner company, Fernando de Lara was not billed for

more than a year. Petitioner company conducted an investigation of the matter and found

respondent Signo responsible for the said irregularities in the installation. Thus, the services of

the latter were terminated on May 18, 1983. On August 10 1983, respondent Signo filed acomplaint for illegal dismissal, unpaid wages, and separation pay.

In fact, MERALCO lost in the abovecited case. Applying the doctrine of

COMPASSIONATE JUSTICE IN LABOR AND SOCIAL LEGISLATION, the Court ruled in

favor of the worker who was unjustly dismissed. Thus:

X x x.

This Court has held time and again, in a number of decisions, that notwithstanding the existenceof a valid cause for dismissal, such as breach of trust by an employee, nevertheless, dismissal

should not be imposed, as it is too severe a penalty if the latter has been employed for a

considerable length of time in the service of his employer. (Itogon-Suyoc Mines, Inc. v. NLRC,et al., G.R. No. L- 54280, September 30,1982,117 SCRA 523; Meracap v. International

Ceramics Manufacturing Co., Inc., et al., G.R. Nos. L-48235-36, July 30,1979, 92 SCRA 412;

Sampang v. Inciong, G.R. No. 50992, June 19,1985,137 SCRA 56; De Leon v. NLRC, G.R. No.

L-52056, October 30,1980, 100 SCRA 691; Philippine Airlines, Inc. v. PALEA, G.R. No. L-24626, June 28, 1974, 57 SCRA 489).

In a similar case, this Court ruled:

As repeatedly been held by this Court, an employer cannot legally be compelled to continue with

the employment of a person who admittedly was guilty of breach of trust towards his employer

and whose continuance in the service of the latter is patently inimical to its interest. The law in


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protecting the rights of the laborers, authorized neither oppression nor self- destruction of the

employer.

However, taking into account private respondent's 'twenty-three (23) years of service which

undisputedly is unblemished by any previous derogatory record' as found by the respondent

Commission itself, and since he has been under preventive suspension during the pendency ofthis case, in the absence of a showing that the continued employment of private respondentwould result in petitioner's oppression or self-destruction, We are of the considered view that his

dismissal is a drastic punishment. ... .

xxx xxx xxx

The ends of social and compassionate justice would therefore be served if private respondent is

reinstated but without backwages in view of petitioner's obvious good faith. (Itogon- SuyocMines, Inc. v. NLRC, et al., 11 7 SCRA 528)

Further, in carrying out and interpreting the Labor Code's provisions and its implementing

regulations, the workingman's welfare should be the primordial and paramount consideration.This kind of interpretation gives meaning and substance to the liberal and compassionate spirit of

the law as provided for in Article 4 of the New Labor Code which states that "all doubts in the

implementation and interpretation of the provisions of the Labor Code including its

implementing rules and regulations shall be resolved in favor of labor" (Abella v. NLRC, G.R.No. 71812, July 30,1987,152 SCRA 140).

In view of the foregoing, reinstatement of respondent Signo is proper in the instant case, butwithout the award of backwages, considering the good faith of the employer in dismissing the

respondent.

X x x.

10. Respondents cited the case of ABBOTT LABORATORIES (PHILIPPINES), INC., and

JAIME C. VICTA vs. NATIONAL LABOR RELATIONS COMMISISON and ALBERT

BOBADILLA, G.R. No. 76959 October 12, 1987. Again the facts of the said case are not

applicable to X X X. It involved the legal issue of UNJUST TRANSFER of a worker which the

latter contested as being tantamount to a DEMOTION. In that case, complainant Bobadillastarted his employment with respondent company sometime in May 1982. After undergoing

training, in September, 1982, competent was designated professional medical representative

(PMR) and was assigned to cover the sales territory comprising of Sta. Cruz, Binondo and a part

of Quiapo and Divisoria, of the Metro Manila district. In connection with the respondentcompany's marketing and sales operations, it had been its policy and established practice of

undertaking employment movements and/or reassignments from one territorial area to another as

the exigencies of its operations require and to hire only applicant salesmen, including

professional medical representatives (PMRs) who were willing to take provincial assignments, atleast insofar as male applicants were concerned. Likewise, respondent company had made

reassignments or transfers of sales personnel which included PMRs from one territorial area of

responsibility to another on a more or less regular basis. In complainant's application foremployment with respondent company, he agreed to the following: 1) that if employed he win


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accept assignment in the provinces and/or cities anywhere in the Philippines; 2) he is willing and

can move into and live in the territory assigned to him; and (3) that should any answer or

statement in his application for employment be found false or incorrect, he will be subject toimmediate dismissal, if then employed. On 22 July 1983, respondent Victa called complainant to

his office and informed the latter that he was being transferred effective 1 August 1983 to the

newly opened Cagayan territory comprising the provinces of Cagayan, Nueva Vizcaya andIsabela. The transfer order was made formal in a memorandum dated 29 July 1983. Among thereasons given for complainant's selection as PMR for the Cagayan territory were: The territory

required a veteran and seasoned PMR who could operate immediately with minimum training

and supervision. Likewise, a PMR who can immediately exploit the vast business potential of thearea. In a letter dated 1 August 1983, which was received by Abbott on 4 August 1983,

competent, thru his lawyer, objected to the transfer on the grounds that it was not only a

demotion but also personal and punitive in nature without basis legally and factually. On 8

August 1983, Victa issued another inter-office correspondence to competent, giving the latter upto 15 August 1983 within which to comply with the transfer order, otherwise his would be

dropped from the payroll for having abandoned his job. When competent failed to report to his

new assignment, Abbott assigned thereat Fausto Antonio T. Tibi another PED PMR who waspriorly covering the provinces of Nueva Ecija and Tarlac. Meanwhile, complainant filed

applications for vacation leave from 2 to 9 August 1983, and then from 10 to 13 August 1983.

And on 18 August 1983, he filed the present complaint. After due consideration of the evidence

adduced by the parties, the Arbiter below ruled for the respondent on the ground that thecomplainant is guilty of gross insubordination.

11. Respondents cited the case ofFEDERICO NUEZ vs. NATIONAL LABOR RELATIONS

COMMISSION, LABOR ARBITER MANUEL ASUNCION, PHILIPPINE OVERSEAS

TELECOMMUNICATIONS CORPORATION (PHILCOMSAT), HONORIO

POBLADOR, RAMON NIETO, FRED AUJERO and ROMEO VALENCIA, G.R. No.

107574 December 28, 1994. Again this case is not applicable to X X X. In the said case,petitioner Nuez was a driver of private respondent PHILCOMSAT since 1 May 1970. On 25

November 1988 he was assigned to its station in Baras, Antipolo, Rizal, from seven-thirty in the

morning to three-thirty in the afternoon. At one-thirty that afternoon, Engr. Jeremias Sevilla, theofficer in charge and the highest ranking official of the station, asked Nuez to drive the

employees to the Makati head office to collect their profit shares. Nuez declined saying that he

had an important personal appointment right after office hours. At two-thirty that sameafternoon, he also declined a similar order given on the phone by his vehicle supervisor, Pedro

Sibal, reasoning that

"Ayaw kong magmaneho dahil may bibilhin ako sa Lagundi. Kung gusto mo yong 'loyalist' ang

magmaneho." In his memorandum of 28 November 1988, Station Manager Ramon Bisunarequired Nuez to explain within seventy-two hours why he should not be administratively dealt

with for disobeying an order of their most senior officer on 25 November 1988. In his written

reply dated 1 December 1988, Nuez mentioned a personal appointment in justification for his

refusal to render "overtime" service and that "ferrying employees . . . was not a kind ofemergency that . . . warrants (the) charge of disobedience." Taking into consideration the reports

of Engr. Sevilla and Supervisor Sibal as well as the letter of petitioner Nuez, AVP for Transport

and Maintenance Fredelino Aujero referred the matter to Vice President for AdministrationRamon V. Nieto for appropriate action and invited his attention to the Code of Disciplinary


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Action of the company providing that "refusal to obey any lawful order or instruction of a

superior is classified as insubordination, an extremely serious offense and its first infraction calls

for dismissal of the erring employee." The report of Aujero pointed out that Nuez could haveobeyed the directive and still have enough time to attend to his appointment because the order

was given him two hours before his tour of duty ended and, moreover, he was seen playing

billiards after office hours. Vice President Nieto then issued a memorandum to Nuez terminatinghis employment effective 26 December 1988 for insubordination. In his letter for reconsiderationdated 1 January 1989, Nuez explained to Vice President Nieto that after failing to get a ride to

Lagundi, he went with the company coaster at four-thirty in the afternoon and then proceeded to

TMC to play billiards when the person he wanted to see at Lagundi had already left. On 6 March1989, Nuez filed this suit for illegal dismissal, indemnity pay, moral and exemplary damages

and attorney's fees. On 29 January 1990, Labor Arbiter Manuel P. Asuncion dismissed the

complaint for lack of merit but awarded Nuez a "monetary consideration" in an amount

equivalent to his one-half month salary for every year of service. On appeal, the National LaborRelations Commission affirmed on 15 June 1992 the decision of the Labor Arbiter but limited

the financial assistance to Nuez in an amount equivalent to three months basic pay only.

12. As to the issue of PERSONAL LIABILITY for damages of CORPORATE OFFICERS in illegal

dismissal cases, although the case ofM+W ZANDER PHILIPPINES, INC. and ROLFWILTSCHEK vs. TRINIDAD M. ENRIQUEZ, G.R. No. 169173, June 5, 2009, which cited

the case ofEPG Construction Company, Inc., et al. v. Court of Appeals, et al., G.R. No. 103372,June 22, 1992 (also cited by respondents in their position paper, pp. 26, et, seq.), held that

the general manager of a corporation should not be made personally answerable for the payment

of an illegally dismissed employee's monetary claims arising from the dismissal because theemployer corporation has a separate and distinct personality from its officers who merely act as

its agents, it cited a clear EXCEPTION, that is, where the official "had acted maliciously or inbad faith," in which event he may be made personally liable for his own act. X X X submits

that, in this case, respondents acted on bad faith and with malice when they ABUSED theirright to discipline X X X; when they relied onflimsy grounds (NOT GROSS OR HABITUAL

OR SERIOUS OR GRAVE violations as provided by the Art. 282of the Labor Code) to

dismiss him; when they RUSHED, RAILROADED and MANIPULATED the soleadministrative hearing without informing X x x of his human right to counsel(while two

lawyers represented the respondent Company and its prosecuting corporate officers); when they

and their agents did not grant X x x the fair opportunity to confront the complainants andwitnesses against him; when they did not give him advance copies of the alleged complaints and

other documentary evidence against him before the administrative hearing (Note: The

respondents, thru their lawyer, gave copies of the 201 File and the Administrative Case Record

of X x x only when this case had been filed with the NLRC and only upon motion in open courtand reiterated in writing made by counsel for X x x); when X x x termination date was made

effective on the very day of receipt by him of the notice of dismissal (February 2, 2012); when

the president X X Xdid not sign the notice of dismissal, contrary to the companys code of

discipline/conduct; when X X Xand X X X did not attend the sole administrative hearing andthus had no personal knowledge of the facts and exhibits adduced in evidence during such

hearing and yet they signed and/or affirmed the notice of dismissal and rejected X X X appeal to

X x xas if they personally knew the entire case record and proceedings.


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RESPONDENTS must be made to pay for the MENTAL ANGUISH, EXTREME

ANXIETIES, SLEEPLESS NIGHTS, BESMIRCHED REPUTATION, AND PUBLIC

RIDICULE that X x x has suffered and continues to suffer by reason of the abusive act ofrespondents in unjustly dismissing him from the service, which act has jeopardized his ability to

financially support his two young children and his wife and to pay for his financial obligations to

his creditors. Yes, they may be prominent stockholders and well-paid officers of a hugecorporation as X x x Global City, Inc., occupying top positions in their own little kingdoms. Butthat does not give them the dictatorial right to patently and tortuously trample upon the rights of

X x x, a worker and a Filipino citizen whose rights are protected by the law or to endanger the

very physical subsistence and existence of his helpless family by unjustly dismissing him fromhis source of livelihood and income.

13. The case ofLLORENTE vs. SANDIGANBAYAN, ET AL., EN BANC, [G.R. No. 85464.

October 3, 1991] is applicable by analogy as to the issue of thepersonal liability of private andpublic officers for acts done in bad faith, with abuse of right, with graver abuse of discretion,

and the like.

Syllabus.

X x x.

CIVIL LAW; INDEPENDENT CIVIL ACTIONS; DAMAGES FOR ACTS DONE IN BAD FAITH;CASE AT BAR.The acts of the petitioner were legal (that is, pursuant to procedures), as

he insists in this petition, yet it does not follow, as we said, that his acts were done in good

faith. For emphasis, he had no valid reason to "go legal" all of a sudden with respect to Mr.Curio, since he had cleared three employees who, as the Sandiganbayan found, "were all

similarly circumstanced in that they all had pending obligations when, their clearances were filed

for consideration, warranting similar official action. The Court is convinced that the petitioner

had unjustly discriminated against Mr. Curio. It is no defense that the petitioner was

motivated by no ill-will (a grudge, according to the Sandiganbayan), since the facts speak

for themselves. It is no defense either that he was, after all, complying merely with legal

procedures since, as we indicated, he was not as strict with respect to the three retiring

other employees. There can be no other logical conclusion that he was acting unfairly, no more,

no less, to Mr. Curio. It is the essence ofArticle 19 of the Civil Code, under which the

petitioner was made to pay damages, together with Article 27,that the performance of duty be

done with justice and good faith. We believe that the petitioner is liable under Article 19.

The Court finds the award of P90,000.00 to be justified by Article 2202 of the Civil Code,

which holds the defendant liable for all "natural and probable" damages. Hermenegildo

Curio presented evidence that as a consequence of the petitioner's refusal to clear him, hefailed to land a job at the Philippine Cotton Authority and Philippine First Marketing Authority.

He also testified that a job in either office would have earned him a salary of P2,500.00 a month,

or P150,000.00 in five years. Deducting his probable expenses of reasonably about P1,000.00 a

month, or P60,000.00 in five years, the petitioner owes him a total of actual damages ofP90,000.00.

X x x.


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14. Further on the issue of personal liability of officers, by analogy, the case of The City of

Angeles, Hon. Antonio Abad Santos vs. CA, et al., G.R. No. 97882, Aug. 26, l996, citing

Rama vs. CA, 148 SCRA 498; San Luis vs. CA, 174 SCRA 258 , is applicable. In that case, adonation of a parcel of land to the City of Angeles, Pampanga was made for the sole purpose of

using it as the site of the Angeles City Sports Center except cockfighting. Instead, a Drug

Rehabilitation Center was constructed upon approval and orders of the mayor and the membersof the sangguniang panglunsod. In ordering the demolition of the Center and thereimbursement of the public funds spent for the construction of the Center, the Court held

that it must be borne by the officials of Angeles City who ordered and directed the

construction. It held that public officials are not immune from damages in their personal

capacities arising from acts done in bad faith. They are liable in their personal capacities

for whatever damages they may cause by their acts done with malice and in bad faith or

beyond the scope of their authority or jurisdiction.[citing Vidad vs. RTC Negros Oriental,

Branch 42, 227 SCRA 271, M.H. Wylie vs. Rarang, 209 SCEA 357; Orocio vs. COA, 213SCRA 109]. But such officials must be sued in their personal capacity. In this case the public

officials deliberately violated the law, and persisted in their violation, attempted to deceive the

courts by their pretended change in the use of the Center and making it a mockery of justice.The Court held that public officials were held liable personally for damages arising from their

illegal acts done in bad faith if said officials were sued both in their official and personalcapacities.

Thus held the Court, inter alia:

X x x.

This Court has time and again ruled that public officials are not immune from damages in their

personal capacities arising from acts done in bad faith. Otherwise stated, a public official maybe liable for whatever damage he may have caused by his act done with malice and in bad faith

or beyond the scope of his authority or jurisdiction. (See Vidal vs. RTC, Negros Oriental, 227

SCRA 271); Wylie vs. Rarang, 209 SCRA 357; Orocio vs. COA, 213 SCRA 109). In theinstant case, the public officials concerned deliberately violated the law and persisted in

their violations, going so far as attempting to deceive the courts by their pretended change of

purpose and usage for the center, and making a mockery of the judicial system." Indisputably,said public officials acted beyond the scope of their authority and jurisdiction and with evident

bad faith. However, as noted by the trial court, the petitioners mayor and members of the

Sangguniang Panlungsod of Angeles City were sued only in their official capacities, hence,

they could not be held personally liable without first giving them their day in court.Prevailing jurisprudence Roma vs. CA, 148 SCRA 496; San Luis cs. CA, 174 SCRA 258)

holding that public officials are personally liable for damages arising from illegal acts done in

bad faith are premised on said officials having been sued both in their official and personal

capacities.

After due consideration of the circumstances, we believe that the fairest and most equitable

solution is to have the City of Angeles, donee of the subject open space and, ostensibly, themain beneficiary of the construction and operation of the proposed drug rehabilitation center,


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undertake the demolition and removal of said center, and if feasible, recover the cost thereof

from the city officials concerned. (The City of Angeles vs. CA, et. al., G. R. No. 97882, Aug.

28, 1996).

R E L I E F

WHEREFORE, premises considered, it is respectfully prayed that therespondents, jointly and severally, be found guilty and liable for the ILLEGALDISMISSAL of the complainant, with the concomitant imposition of civil awards,penalties and damages against the said respondents, more specifically: BACKWAGEScomputed according to existing jurisprudence; SEPARATION PAY as provided byexisting jurisprudence, in lieu of restoration of the complainant to his former position,considering the strained relations between the parties at present by reason of thispending case; MORAL DAMAGES in the amount of P500,000.00; EXEMPLARYDAMAGES in the amount of P500,000.00; and ATTORNEYS FEES equivalent to 10%of recoverable damages, and COSTS OF SUIT and LITIGATION EXPENSES.

Further, it is respectfully prayed that, pendent lite, the unquestioned/admittedreceivable of the complainant from the respondent company, in the amount of P19,846.96, be released to him soonest for humanitarian reasons, considering the financialdifficulties that he and his family are now severely facing by reason of his abrupttermination from the service.

Finally, the complainant respectfully prays for such and other reliefs as may bedeemed just and equitable in the premises.

Las Pinas City, April 30, 2012.

LASERNA CUEVA-MERCADER

LAW OFFICES

Counsel for ComplainantUnit 15, Star Arcade, C.V. Star Ave.Philamlife Village, Las Pinas City 1743

Tel/Fax 8462539, 8725443

MANUEL J. LASERNA JR.Roll No. 33640, 4/27/85IBP Lifetime Member No. 1907IBP Leyte Chapter


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MCLE Exemption No. IV-1326, 2/3/11PTR No. 10288207, 1/18/12, Las Pinas

VERIFICATION

I, x x x., of legal age, married, Filipino, and with postal address at x x x , underoath, depose: that I am the complainant in the foregoing Reply Position Paper; that Icaused the preparation thereof; that I have read its contents; and that the same are trueand correct of my own direct, personal knowledge.

Quezon City, April 30, 2012.

X x x.Affiant

SUBSCRIBED and sworn to before me in Quezon City this 30th day of April 2012,affiant showing his Drivers License No. x x x expiring on x x x .

Administering Labor Arbiter

CC:

X x xLAW OFFICES(Atty. X x x)Counsel for Respondents---------------

(Personal DeliveryDuring the Hearing SetOn x x x at x x x)

ClientFile


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LABOR CASE: REDUNDANCY & ILLEGAL DISMISSALRepublic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. 156658 March 10, 2004

BONIFACIO ASUFRIN, JR., petitioner,

vs.

SAN MIGUEL CORPORATION and the COURT OF APPEALS, respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

Coca Cola Plant, then a department of respondent San Miguel Beer Corporation (SMC), hired petitioner

as a utility/miscellaneous worker in February 1972. On November 1, 1973, he became a regular

employee paid on daily basis as a Forklift Operator. On November 16, 1981, he became a monthly paid

employee promoted as Stock Clerk.

Sometime in 1984, the sales office and operations at the Sum-ag, Bacolod City Sales Office were

reorganized. Several positions were abolished including petitioners position as Stock Clerk. After

reviewing petitioners qualifications, he was designated warehouse checker at the Sum-ag Sales Office.

On April 1, 1996, respondent SMC implemented a new marketing system known as the "pre-selling

scheme" at the Sum-ag Beer Sales Office. As a consequence, all positions of route sales and warehouse

personnel were declared redundant. Respondent notified the DOLE Director of Region VI that 22

personnel of the Sales Department of the Negros Operations Center1 would be retired effective March

31, 1995.

Respondent SMC thereafter wrote a letter2 to petitioner informing him that, owing to the

implementation of the "pre-selling operations" scheme, all positions of route and warehouse personnel

will be declared redundant and the Sum-ag Sales Office will be closed effective April 30, 1996. Thus,from April 1, 1996 to May 15, 1996, petitioner reported to respondents Personnel Department at the

Sta. Fe Brewery, pursuant to a previous directive.

Thereafter, the employees of Sum-ag sales force were informed that they can avail of respondents early

retirement package pursuant to the retrenchment program, while those who will not avail of early

retirement would be redeployed or absorbed at the Brewery or other sales offices. Petitioner opted to
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remain and manifested to Acting Personnel Manager Salvador Abadesco his willingness to be assigned

to any job, considering that he had three children in college.3

Petitioner was surprised when he was informed by the Acting Personnel Manager that his name was

included in the list of employees who availed of the early retirement package. Petitioners request that

he be given an assignment in the company was ignored by the Acting Personnel Manager.

Petitioner thus filed a complaint for illegal dismissal with the NLRC, docketed as RAB Case No. 06-06-

10233-96. On December 27, 1996, the Labor Arbiter dismissed the complaint for lack of merit. Petitioner

appealed to the National Labor Relations Commission (NLRC) which set aside the Labor Arbiters

decision and ordered respondent SMC to reinstate petitioner to his former or equivalent position with

full backwages.4

Respondent filed a petition with the Court of Appeals which reversed the decision of the NLRC and

reinstated the judgment of the Labor Arbiter dismissing the complaint for illegal dismissal. Petitioners

motion for reconsideration5 was denied in a Resolution dated December 11, 2002.6

Hence, this petition for review assigning the following errors:

1. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS, WITH DUE RESPECT, COMMITTED GRAVE

ABUSE OF DISCRETION IN HOLDING THAT PETITIONER WAS "NOT SINGLED-OUT FOR TERMINATION, AS

MANY OTHERS WERE ALSO ADVERSELY AFFECTED."

2. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GROSS MISAPPREHENSION

OF FACT WHEN IT AFFIRMED THE FINDING OF THE LABOR ARBITER THAT THE POSITION OF PETITIONER

BECAME REDUNDANT AT THE SUM-AG SALES OFFICES.

3. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION WHEN IT HELD THAT THE DISMISSAL OF PETITIONER WAS VALID.

4. THE HONORABLE PUBLIC RESPONDENT COURT OF APPEALS ERRED IN DISMISSING THE ENTIRE RELIEFS

PRAYED FOR BY THE PETITIONER.

The primordial issue to be resolved is whether or not the dismissal of petitioner is based on a just and

authorized cause.

Factual findings of administrative bodies, being considered experts in their fields, are binding on this

Court. However, this is a general rule which holds true only when established exceptions do not obtain.

One of these exceptive circumstances is when the findings of the Labor Arbiter and the NLRC are

conflicting. Considering that the ruling of the Labor Arbiter was reversed by the NLRC whose judgment

was in turn overturned by the appellate court, it behooves us in the exercise of our equity jurisdiction to

determine which findings are more conformable to the evidentiary facts.7


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In the case at bar, petitioner was dismissed on the ground of redundancy, one of the authorized causes

for dismissal.8 In Dole Philippines, Inc. v. NLRC,9 citing the leading case of Wiltshire File Co., Inc. v.

NLRC,10 we explained the nature of redundancy as an authorized cause for dismissal thus:

. . . redundancy in an employers personnel force necessarily or even ordinarily refers to duplication of

work. That no other person was holding the same position that private respondent held prior to the

termination of his services, does not show that his position had not become redundant. Indeed, in any

well-organized business enterprise, it would be surprising to find duplication of work and two (2) or

more people doing the work of one person. We believe that redundancy, for purposes of the Labor

Code, exists where the services of an employee are in excess of what is reasonably demanded by the

actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous,

and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring

of workers, decreased volume of business, or dropping of a particular product line or service activity

previously manufactured or undertaken by the enterprise.

The determination that employees services are no longer necessary or sustainable and, therefore,

properly terminable is an exercise of business judgment of the employer. The wisdom or soundness of

this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is

no violation of law and no showing that it was prompted by an arbitrary or malicious act.11 In other

words, it is not enough for a company to merely declare that it has become overmanned. It must

produce adequate proof that such is the actual situation to justify the dismissal of the affected

employees for redundancy.12

Persuasive as the explanation proffered by respondent may be to justify the dismissal of petitioner, a

number of disturbing circumstances, however, leave us unconvinced.

First, of the 23 SMC employees assigned at the Sum-ag Sales Office/Warehouse, 9 accepted the offer of

SMC to avail of the early retirement whose separation benefits was computed at 250% of their regular

pay. The rest, including petitioner, did not accept the offer. Out of the remaining fourteen 14, only

petitioner clearly manifested, through several letters,13 his desire to be redeployed to the Sta. Fe

Brewery or any sales office and for any position not necessarily limited to that of a warehouse checker.

In short, he was even willing to accept a demotion just to continue his employment. Meanwhile, other

employees who did not even write a letter to SMC were redeployed to the Sta. Fe Brewery or absorbed

by other offices/outlets outside Bacolod City.14

Second, petitioner was in the payroll of the Sta. Fe Brewery and assigned to the Materials Section,

Logistics Department, although he was actually posted at the Sum-ag Warehouse.15 Thus, even

assuming that his position in the Sum-ag Warehouse became redundant, he should have been returned

to the Sta. Fe Brewery where he was actually assigned and where there were vacant positions to

accommodate him.


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Third, it appears that despite respondents allegation that it ceased and closed down its warehousing

operations at the Sum-ag Sales Office, actually it is still used for warehousing activities and as a transit

point where buyers and dealers get their stocks.16 Indeed, the Sum-ag Office is strategically situated on

the southern part of Bacolod City making it convenient for dealers from the southern towns of Negros

Occidental to get their stocks and deposit their empty bottles in the said warehouse, thereby

decongesting the business activities at the Sta. Fe Brewery.

Fourth, in selecting employees to be dismissed, a fair and reasonable criteria must be used, such as but

not limited to (a) less preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority.17 In

the case at bar, no criterion whatsoever was adopted by respondent in dismissing petitioner.

Furthermore, as correctly observed by the NLRC, respondent "has not shown how the cessation of

operations of the Sum-ag Sales Office contributed to the ways and means of improving effectiveness of

the organization with the end in view of efficiency and cutting distribution overhead and other related

costs. Respondent, thus, clearly resorted to sweeping generalization[s] in dismissing complainant."18

Indeed, petitioners predicament may have something to do with an incident where he incurred the ire

of an immediate superior in the Sales Logistics Unit for exposing certain irregularities committed by the

latter.19

In the earlier case of San Miguel Corporation v. NLRC,20 respondents reasons for terminating the

services of its employees in the very same Sum-ag Sales Office was rejected, to wit:

Even if private respondents were given the option to retire, be retrenched or dismissed, they were made

to understand that they had no choice but to leave the company. More bluntly stated, they were forced

to swallow the bitter pill of dismissal but afforded a chance to sweeten their separation from

employment. They either had to voluntarily retire, be retrenched with benefits or be dismissed without

receiving any benefit at all.

What was the true nature of petitioners offer to private respondents? It was in reality a Hobsons

choice.21 All that the private respondents were offered was a choice on the means or method of

terminating their services but never as to the status of their employment. In short, they were never

asked if they wanted to work for petitioner.

In the case at bar, petitioner is similarly situated. It bears stressing that whether it be by redundancy or

retrenchment or any of the other authorized causes, no employee may be dismissed without

observance of the fundamentals of good faith.

It is not difficult for employers to abolish positions in the guise of a cost-cutting measure and we should

not be easily swayed by such schemes which all too often reduce to near nothing what is left of the

rubble of rights of our exploited workers.22 Given the nature of petitioners job as a Warehouse

Checker, it is inconceivable that respondent could not accommodate his services considering that the

warehousing operations at Sum-ag Sales Office has not shut down.


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All told, to sustain the position taken by the appellate court would be to dilute the workingmans most

important right: his constitutional right to security of tenure. While respondent may have offered a

generous compensation package to those whose services were terminated upon the implementation of

the "pre-selling scheme," we find such an offer, in the face of the prevailing facts, anathema to the

underlying principles which give life to our labor statutes because it would be tantamount to likening an

employer-employee relationship to a salesman and a purchaser of a commodity. It is an archaic

abomination. To quote what has been aptly stated by former Governor General Leonard Wood in his

inaugural message before the 6th Philippine Legislature on October 27, 1922 "labor is neither a chattel

nor a commodity, but human and must be dealt with from the standpoint of human interest."23

As has been said: "We do not treat our workers as merchandise and their right to security of tenure

cannot be valued in precise peso-and-centavo terms. It is a right which cannot be allowed to be

devalued by the purchasing power of employers who are only too willing to bankroll the separation pay

of their illegally dismissed employees to get rid of them."24 This right will never be respected by the

employer if we merely honor it with a price tag. The policy of "dismiss now and pay later" favors

moneyed employers and is a mockery of the right of employees to social justice.25

WHEREFORE, in view of all the foregoing, the petition is GRANTED. The Decision of the Court of Appeals

in CA-G.R. SP No. 53521 dated April 10, 2002, and the Resolution dated December 11, 2002 denying

petitioners Motion for Reconsideration, are SET ASIDE. The decision of the National Labor Relations

Division dated February 20, 1998 is REINSTATED. Accordingly, petitioners dismissal is declared illegal,

and respondent is ordered to reinstate him to his former or equivalent position, with full backwages

computed from April 1, 1996 up to his actual reinstatement. Respondent is likewise ordered to pay

petitioner the sum equivalent to ten percent (10%) of his total monetary award as attorneys fees.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Carpio, and Azcuna, JJ., concur.

Panganiban, J., on official leave.

Footnotes

1 Record., p. 98.

2 Id., p. 104.

3 Rollo, p. 41.

4 Id., pp. 35-44.


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5 Id., p. 31.

6 Id., p. 44.

7 Progressive Development Corporation v. NLRC, 344 SCRA 512 [2000]; PAL v. NLRC, 328 SCRA 273

[2000]; Aklan Electric Cooperative, Inc. v. NLRC, 323 SCRA 258 [2000]; Samson v. NLRC, 330 SCRA 460

[2000].

8 Article 283, Labor Code.

9 417 Phil. 428 [2001].

10 G.R. No. 82249, 7 February 1991, 193 SCRA 665.

11 Wiltshire File Co., Inc. v. NLRCA, supra.

12 Golden Thread Knitting Industries, Inc. v. NLRC, 364 Phil. 216 [1999], citing Salonga v. NLRC, G.R. No.

118120, 23 February 1996, 254 SCRA 111; Guerrero v. NLRC, G.R. No. 119842, 30 August 1996, 261 SCRA

301; San Miguel Jeepney Service v. NLRC, G.R. No. 92772, 28 November 1996, 265 SCRA 35.

13 Record, pp. 324, 326, 501-502.

14 Id., p. 496.

15 Id., p. 130.

16 Id., p. 129.

17 Capital Wireless, Inc. v. Confesor, 332 Phil. 78 [1996], citing Asiaworld Publishing House, Inc. v. Ople,

G.R. No. 56398, 23 July 1987, 152 SCRA 219.

18 NLRC Decision, p. 7; Records, p. 41.

19 Rollo, pp. 39-41.

20 G.R. No. 107693, 23 July 1998, 293 SCRA 13 [1998].

21 Hobsons choice means no choice at all; a choice between accepting what is offered or having

nothing at all. It refers to the practice of Tobias Hobson, an English stable-owner in the 17th century, of

offering only the horse nearest the stable door.

22 Palmeria v. NLRC, G.R. Nos. 113290-91, 3 August 1995, 247 SCRA 57.


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23 Cited in Dissenting opinion, Puno J., Serrano v. NLRC, 323 SCRA 445, 519 [2000].

24 Palmeria v. NLRC, supra.

25 See note 23, p. 523.

Termination of Employment in the Philippines

Termination of Employment in the Philippines

Terminating an employee in the Philippines is taken VERY seriously and can be a complex

process, especially after the employee is regularized. The Philippine Constitution says, noinvoluntary servitude in any form shall exist except as punishment for a crime whereof the party

shall have been duly convicted. In view of the prohibition on involuntary servitude, an employeeis given the right to resign under art. 285 of the Labor Code. The provision recognizes two kindsof resignation - without cause and with cause. If the resignation is without cause, the employee is

required to give a 30-day advance written notice to the employer, to enable the employer to look

for a replacement to prevent work disruption. If the employee fails to give a written notice, he or

she runs the risk of incurring liability for damages. The same provision also indicates the justcauses for resignation (with cause)

Serious insult to the honor and person of the employee

Inhuman and unbearable treatment;

Crime committed against the person of the employee or any of the immediate members of the

employee's family; and

Other analogous causes.

In this second type of resignation, the employee need not serve a written notice. Forced

resignation is not allowed and is considered "constructive" dismissal - a dismissal in disguise.

Employee retirement is either voluntary or compulsory under art. 287 of the Labor Code.

Dismissal of an Employee in the Philippines

An equality of rights exists between employer and employee. While the employer cannot forcethe employee to work against his or her will, neither can the employee compel the employer to

continue giving him or her work if there is a lawful reason not to do so. Thus, the employer may

terminate the services of an employee for just or authorized causes after following the procedure

laid down by law, but the employer has the burden of proving the lawfulness of the employee'sdismissal in the proper forum.

Just causes are blameworthy acts on the part of the employee such as serious misconduct, willful

disobedience, gross and habitual neglect of duties, fraud or willful breach of trust, commission of

a crime and other analogous causes (art. 282, Labor Code).


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Authorized causes are of two types - business reasons and disease. The business reasons are

installation of labor-saving devices, redundancy, retrenchment and closure or cessation of

operation (art. 283, Labor Code). Before the employer can terminate employment on the groundof disease, he must obtain from a competent public health authority a certification that the

employee's disease is of such a nature and at such a stage that it can no longer be cured within a

period of six months even with medical attention (art. 284, Labor Code; Implementing Rules ofBook VI, Labor Code).

Those hired on a temporary basis, that is, for a "term" or "fixed period" are not regularemployees, but are "contractual employees." Consequently, there is no illegal dismissal when

their services are terminated by reason of the expiration of their contracts. Lack of notice of

termination is of no consequence, because a contract for employment for a definite period

terminates by its own term at the end of such period.

An Illegal Strike can be cause for Termination of Employment

Employment is not deemed terminated when there is a bona fide suspension of the operations ofa business or undertaking for a period not exceeding six months, or when the employee fulfills a

military or civic duty (art. 286, Labor Code). Under the Corporation Code (sec. 80), the

surviving or consolidated entity in a merger or consolidation automatically assumes all rights andobligations, assets and liabilities of the combining entities. This includes obligations or liabilities

under valid agreements, like labour contracts. The surviving or consolidated entity must,

therefore, recognize the security of tenure and length of service of the workers of the merging orconsolidating corporations. By the fact of merger or consolidation, a succession of employment

rights and obligations occurs.

Notice and prior procedural safeguards

As stated above, dismissals based on just causes contemplate acts or omissions attributable to the

employee while dismissals based on authorized causes involve grounds - business or health -allowing the employer to terminate. 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 art. 279 of the Labor Code. If reinstatement is no longer possiblewhere the dismissal was unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under art. 282 of the Labor Code, theemployer must give the employee two written notices and a hearing or opportunity to be heard

before terminating the employment, that is, a notice specifying the grounds for which dismissal

is sought 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 arts. 283 and 284 of the Labor Code, theemployer must give the employee and the Department of Labour and Employment written

notices 30 days prior to the effectivity of the separation.

Severance pay with Termination


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As already noted, separation pay is required to be paid to the employee when there is termination

of employment by the employer for an authorized cause, the amount of which depends on the

cause. If the termination is due to the installation of labour-saving devices or redundancy, theseparation pay is one month's pay for every year of service or one month pay, whichever is

higher (art. 283, Labor Code). If the termination is due to retrenchment to prevent losses, or

closure or cessation of operation of the establishment not due to serious business losses, or due todisease, the separation pay is one-half month's pay for every year of service or one month pay,whichever is higher (arts. 283 and 284, Labor Code). However, there is no requirement for

separation pay if the closure is due to serious business losses.

Avenues for redress

From the foregoing, four possible situations may be derived: (1) the dismissal is for a just cause

under art. 282 of the Labor Code, or for an authorized cause - business reason under art. 283 orhealth reason under art. 284 - and due process was observed; (2) the dismissal is without just or

authorized cause but due process was observed; (3) and there no process; (4) for a not observed.

In the first situation, the dismissal is undoubtedly valid and the employer will not incur any

liability, save for separation pay when the dismissal is for an authorized cause.

In the second and third situations, where the dismissals are illegal, art. 279 of the Labor Code

mandates that the employee is entitled to reinstatement without loss of seniority rights and otherprivileges 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 fornominal damages for non-compliance with the procedural requirements of due process. If thedismissal is for an authorized cause, the employee is also entitled to separation pay.

Compulsory arbitration of illegal dismissal cases is conducted by the Labour Arbiters of theNational Labour Relations Commission and their decisions are appealable to the Commission

(arts. 217 and 218, Labor Code).

In view of the stated preference for voluntary modes of settling labour disputes under art. 13 (3)

of the Constitution and art. 211of the Labor Code, voluntary arbitration of illegal dismissals is

recognized on the basis of mutual agreement between the parties (art. 262, Labor Code).

Compulsory arbitration is both the process of settlement of labour disputes by a government

agency which has the authority to investigate and issue an award binding on all the parties, aswell as a mode of arbitration where the parties are compelled to accept the resolution of their

dispute through arbitration by a third party.

While a voluntary arbitrator is not part of the labour department, he or she renders arbitration

services provided for under labour laws. Generally, the voluntary arbitrator is expected to decide


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only questions that are expressly delineated by the submission agreement. However, since

arbitration is the final resort for the adjudication of disputes, the arbitrator can assume that he or

she has the power to make a final settlement. Thus, assuming that the submission agreementempowers the arbitrator to decide whether an employee was discharged for just cause, the

arbitrator can reasonably assume that his or her powers extend beyond giving a mere yes-or-no

answer and include the authority to reinstate with or without back pay.

Difference between a Just and Authorized Cause of Termination

Just cause refers to a wrong doing committed by the employer or employee on the basis of whichthe aggrieved party may terminate the employer-employee relationship. Authorized cause refers

to a cause brought about by changing economic or business conditions of the employer.

Causes for Termination by the Employer

1. Serious misconduct;

2. Willful disobedience of employer's lawful orders connected with work;3. Gross and habitual neglect of duty;

4. Fraud or breach of trust;

5. Commission of a crime or offense against the employer, employer's family or representative;

and

6. Other analogous causes.

Just Causes for Termination by the Employee

1. Serious insult by the employer or his or her representative on the honor and person of the

employee;

2. Inhuman and unbearable treatment accorded the employee by the employer or his or herrepresentative;

3. Commission of a crime by the employer or his or her representative against the person of the

employee or any of the immediate members of his or her family; and

4. Other analogous causes.

Authorized Causes for Termination

1. Installation of labor-saving devices;

2. Redundancy;

3. Retrenchment to prevent losses;

4.

Closure or cessation of business; and

5. Disease not curable within six months as certified by competent public authority, and continued

employment of the employee is prejudicial to his or her health or to the health of his or her co-

employees.

Due Process in the Context of Termination of Employment


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Due process means the right of an employee to be notified of the reason for his or her dismissal

and, in case of just causes, to be provided the opportunity to defend himself or herself.

Components of Due Process in Termination Cases

In a termination for a just cause, due process involves the two-notice rule:

1. A notice of intent to dismiss specifying the ground for termination, and giving to said employee

reasonable opportunity within which to explain his or her side;

2. A hearing or conference where the employee is given opportunity to respond to the charge,

present evidence or rebut the evidence presented against him or her;

3. A notice of dismissal indicating that upon due consideration of all the circumstances, grounds

have been established to justify the termination.

In a termination for an authorized cause, due process means a written notice of dismissal to the

employee specifying the grounds given, at least 30 days before the date of termination. A copy ofthe notice shall be furnished the Regional Office of the Department of Labor and Employment of

the Philippines (DOLE).

An Employee may Question the Legality of his or her Dismissal

The legality of the dismissal may be questioned before the Labor Arbiter of the National LaborRelations Commission (NLRC) of the Philippines, through a complaint for illegal dismissal. In

establishments with a collective bargaining agreement (CBA), the dismissal may be questioned

through the grievance machinery established under the CBA. If the issue is not resolved at this

level, it will be submitted to voluntary arbitration.

Proving the Dismissal is Legal

In a case of illegal dismissal, the employer as the burden of proving that the dismissal is legal.

Grounds for an Employee to Question his or her Dismissal

An employee may question his or her dismissal based on substantive or procedural grounds. The

Substantive aspect pertains to the absence of a just or authorized cause supporting the dismissal.The Procedural aspect refers to the notice of termination or the opportunity to present an

explanation.

What are the rights afforded to an unjustly dismissed employee?

An employee who is dismissed without just cause is entitled to any or all of the following:

1. Reinstatement without loss of seniority rights, or separation pay if reinstatement is not possible;

2. Full backwages, inclusive of allowances and other benefits or their monetary equivalent from

the time compensation was withheld from him or her up to the time of reinstatement;


27/69

3. Damages and attorney's fees if the dismissal was done in bad faith.

Reinstatement

Reinstatement means restoration of the employee to the position from which he or she has been

unjustly removed.

Reinstatement without loss of seniority rights means that the employee, upon reinstatement,

should be treated in matters involving seniority and continuity of employment as though he or

she had not been dismissed from work.

When a Labor Arbiter rules for an illegal dismissal, reinstatement is immediately executory even

pending appeal.

Forms in which reinstatement be effected

Reinstatement may be actual or payroll in nature, at the option of the employer.

Full Backwages

Full backwages refer to all compensations, including allowances and other benefits with

monetary equivalent, that should have been earned by the employee but was not collected by himor her because of unjust dismissal. It includes all the amounts he or she could have earned

starting from the date of dismissal up to the time of reinstatement.

In cases of illegal dismissal, a dismissed employee who has found another job may still beentitled to collect full backwages from his or her former employer. Full backwages is a form of

penalty imposed by law on an employer who illegally dismisses his or her employee. The factthat the dismissed employee may already be employed and earning elsewhere does notextinguish the penalty.

The former position of the employee no longer exists at the time of reinstatement

In that case, the employee shall be given a substantially equivalent position in the same

establishment without loss of seniority rights and to backwages from the time compensation waswithheld up to the time of reinstatement.

Employee Benefits when the Establishment no longer exists

When an establishment no longer exisits at the time an order for reinstatement is made the

employee can claim benefits. The employee is entitled to a separation pay equivalent to at least

one-month pay or at least one month pay for every year of service whichever is higher, a fractionof at least six months shall be considered as one whole year. The period of service is deemed to

have lasted up to the time of closure of the establishment. He or she may also claim backwages

to cover the period between dismissal from work and the closure of the establishment.


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Separation Pay

In authorized cause terminations, separation pay is the amount given to an employee terminated

due to retrenchment, closure or cessation of business or incurable disease. The employee isentitled to receive the equivalent of one month pay or one-half month pay, whichever is higher,

for every year service.

In just cause terminations, separation pay is also the amount given to employees who have been

dismissed without just cause and could no longer be reinstated.

Reinstatement is not possible so that separation pay shall be given to an illegally

dismissed employee

1. When company operations have ceased;

2. When the employee's position or an equivalent thereof is no longer available;

3. When the illegal dismissal case has engendered strained relations between the parties, in cases

of just causes and usually when the position involved requires the trust and confidence of theemployer;

4. When a substantial amount of years have lapsed from the filing of the case to its finality.

Exception for an employee dismissed for just cause be entitled to separation pay

As a rule, no. But in instances where the just cause for dismissal is other than serious misconduct

or moral turpitude, the employee may be awarded Financial Assistance in the amount of one

month's pay as a form of compassionate justice.

Proof of Financial Losses is Necessary to Justify Retrenchment

Yes. Proof of actual or imminent financial losses that are substantive in character must be provento justify retrenchment.

illegal dismissal and personal liability of corporate officers

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