G.R. No. 194884 - Imasen Philippine Manufacturing Corp. vs. Alcon

Petitioner Imasen Philippine Manufacturing Corporation, a domestic manufacturer of auto seat-recliners and slide-adjusters, employed respondents Ramonchito T. Alcon and Joann S. Papa as manual welders in 2001.
On October 5, 2002, during the second shift (8:00 PM–5:00 AM), security guard Cyrus A. Altiche patrolling the Press Area heard a running industrial fan. Following the noise to the “Tool and Die” section, he discovered the respondents engaging in sexual intercourse on the factory floor using a piece of carton as mattress. Altiche reported the incident to fellow guard Danilo S. Ogana, who upon inspection saw the respondents leaving and observed Alcon returning the carton to its storage. Altiche then submitted a handwritten report to Imasen’s Finance and Administration Manager.

Imasen issued inter-office memoranda on October 14 and October 22, 2002, directing the respondents to explain the incident and to appear at a formal administrative hearing held on October 30, 2002. At the hearing, Altiche and Ogana reiterated their accounts; the respondents denied the sexual act, claiming they were sleeping and that other employees were nearby.
Imasen terminated the respondents’ services by separate memoranda dated December 4, 2002, citing gross misconduct. The respondents filed an illegal dismissal complaint on December 5, 2002.
Labor Arbiter Enrico Angelo C. Portillo dismissed the complaint for lack of merit on December 10, 2004, finding just cause and due process. The NLRC, in a December 24, 2008 decision, affirmed the dismissal. The respondents’ motion for reconsideration before the NLRC was denied in a May 29, 2009 resolution.

The respondents filed a petition for certiorari with the Court of Appeals. In its June 9, 2010 decision (denied reconsideration December 22, 2010), the CA agreed the act occurred and due process was observed but held that it did not amount to “serious misconduct” warranting dismissal. It reduced the penalty to a three-month suspension, ordered reinstatement without loss of seniority, and awarded backwages from December 4, 2002 until actual reinstatement, less the three-month suspension.
Imasen filed a petition for review on certiorari before the Supreme Court, arguing that:

Sexual intercourse during work hours inside company premises is per se serious misconduct justifying dismissal.
The CA usurped management prerogative by reducing the penalty.
The backwages award was excessive and unjust.

The respondents, through their comment, supported the CA’s conclusion that the infraction lacked the elements of serious misconduct.

Whether engaging in sexual intercourse inside company premises during work hours constitutes serious misconduct under Article 282 (now Article 296) of the Labor Code, justifying the respondents’ dismissal.