Facts:

The case revolves around AFI International Trading Corporation (AFI) and its employees Dennis G. Lorenzo and Cecilio S. Sorsan. AFI, a corporation involved in the buying and manufacturing of marine and seafood products, employed Dennis Lorenzo on April 12, 1991, and Cecilio Sorsan on February 6, 1992. Initially, both employees were paid on a monthly basis; however, starting March 1999, their payment was shifted to a piece-rate system based on the kilograms processed, with assurances from AFI that this change was temporary. On January 14, 2002, both respondents approached the Department of Labor and Employment (DOLE) to seek guidance on the implications of this new payment scheme on their employment. Upon AFI's management learning of this inquiry, general manager Celedonio Raymundo, Jr. ordered them to leave the premises on January 16, 2002, stating they could no longer work. Despite their attempts to return to work on January 19, 2002, they were again denied entry and inform

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Facts:

Parties and Employment Background

• Petitioner: AFI International Trading Corporation (Zamboanga Buying Station), a company engaged in buying and manufacturing marine and seafood products.
• Respondents:
• Dennis G. Lorenzo, hired as a processor on April 12, 1991.
• Cecilio S. Sorsan, hired on February 6, 1992.
• Both respondents were initially paid on a monthly basis.

Change in Payment Arrangement and Subsequent Developments

• In March 1999, AFI introduced a piece-rate or per-kilo basis of payment which was announced to be temporary.
• This payment arrangement continued for several years despite the initial assurance of its temporariness.
• On January 14, 2002, the respondents visited the Department of Labor and Employment (DOLE) to inquire about the effects of the new method of payment on their employment status.
• AFI learned of their visit to DOLE and soon after initiated actions that led to the respondents’ dismissal.

Dismissal of the Respondents

• On January 16, 2002, upon the respondents’ reporting for work, AFI’s general manager, Celedonio Raymundo, Jr., informed them that they could no longer work and ordered them to leave the premises.
• The respondents, still holding out hope of being allowed to resume work, returned three days later on January 19, 2002, but were again barred entry by Mr. Raymundo who declared that they had been terminated.
• Based on these actions, the respondents filed a complaint for illegal dismissal.

Petitioner’s Version and Denial of Wrongdoing

• AFI claimed that the respondents were dismissed for just cause and that due process was followed.
• The petitioner maintained that:
• The respondents had unauthorized absences beginning January 16, 2002, by not reporting for work as required.
• On January 21, 2002, a notice was sent requiring the respondents to explain their absences, which they failed to do.
• AFI thus argued that the respondents’ unauthorized absences constituted gross and habitual neglect of duty, thereby justifying their termination.

Proceedings Before the Labor Arbiter, NLRC, and Court of Appeals

• The Labor Arbiter rendered a decision on April 17, 2002, finding that:
• The dismissal was illegal since for abandonment to be valid, there must be both an intention to abandon and an overt act indicating no intent to resume work.
• The respondents’ return on January 19, 2002, negated the claim of abandonment.
• The notice sent on January 21, 2002, was only an afterthought and did not cure the defects in the procedure, rendering the dismissal illegal.
• On appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision by:
• Holding that the respondents’ five-day absence did not amount to gross and habitual neglect of duty.
• Concluding that there was no overt act of termination and that the respondents had voluntarily terminated their employment by praying for separation pay.
• The Court of Appeals, via certiorari (Decision rendered on January 27, 2006), set aside the NLRC resolution by ruling that:
• The dismissal was indeed illegal for lack of just cause as well as the failure to observe due process.
• Backwages and separation pay should be awarded in favor of the respondents.
• AFI filed a motion for reconsideration which was denied by the Court of Appeals on May 26, 2006.

Petitioner’s Argument on Appeal

• AFI argued that:
• The respondents failed to prove that they were illegally dismissed.
• The burden of proving the absence of just cause rested on the respondents.
• AFI attempted to change its theory by denying that the respondents were dismissed, claiming instead that there had been no overt act of termination.
• The Court found this turnaround to be an untenable position given that the petitioners had previously justified the dismissal on the ground of gross and habitual neglect of duty.

Issue:

Whether the evidence sufficiently established that the respondents were illegally dismissed.

• Was there a valid and overt act of termination by AFI?
• Did the respondents’ actions constitute abandonment or gross and habitual neglect of duty?

Whether AFI, as the employer, met its burden of proving that the dismissal was justified by just cause and following due process.

• Did AFI present clear and convincing evidence to justify the dismissal?
• Was the due process requirement adequately complied with before terminating the respondents?

Whether the procedural and substantive lapses in the dismissal process warrant the remedy of reinstatement or, alternatively, the award of separation pay and back wages.

• Should backwages and separation pay be granted in view of the illegal dismissal?
• What is the practical remedy if reinstatement proves impracticable?

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)