Title
A.M. Oreta and Co., Inc. vs. National Labor Relations Commission
Case
G.R. No. 74004
Decision Date
Aug 10, 1989
A carpenter employed in Saudi Arabia was illegally dismissed after recovering from a work-related injury, leading to a Supreme Court ruling affirming his entitlement to unpaid wages, medical reimbursement, and attorney’s fees due to lack of due process and unjust termination.
illegal termination
just cause
due process
A

Case Summary (G.R. No. 74004)

Factual Background: Employment, Injury, and Termination

Grulla was engaged through ENDECO by petitioner A.M. Oreta & Company, Inc. as a carpenter assigned to ENDECO’s project in Jeddah. The contract expressly set the employment term at twelve months. After his injury on August 15, 1980, Grulla was confined at the New Jeddah Clinic and was discharged on August 27, 1980, with advice that he could resume normal duties after undergoing physical therapy for two weeks. On September 18, 1980, Grulla returned to the project manager and presented a medical certificate declaring him physically fit for work.

From that point, Grulla resumed employment until he received a notice of termination dated October 9, 1980. Later, in December 1981, Grulla filed a complaint alleging illegal dismissal and seeking recovery of medical benefits, unpaid wages for the unexpired portion of his contract, and reimbursement of medical expenses.

POEA Proceedings and Award

In the POEA case (BES Case No. 81-1371), Grulla sued petitioner A.M. Oreta & Company, Inc. and ENDECO, and the claim was entertained through the POEA’s jurisdiction over overseas employment disputes. The petitioners denied illegal dismissal and instead invoked the employment contract, alleging that termination could occur upon violation of the contractor’s rules and regulations. They also claimed that Grulla was dismissed because he allegedly failed to perform satisfactorily within a probationary period of three months.

On August 8, 1985, the POEA rendered a decision finding Grulla’s dismissal illegal and ordering payment of wages corresponding to the unexpired portion of the contract. The POEA found that Grulla was entitled to the award of US $3,700.00 (or its peso equivalent) representing salaries for the unexpired ten (10) months of the contract, plus P1,000.00 for reimbursement of medical expenses. The POEA also ordered payment of attorney’s fees equivalent to ten percent of the total award.

NLRC Appeal and Dismissal

Petitioner appealed to the NLRC. On January 17, 1986, the NLRC dismissed the appeal for lack of merit and affirmed the POEA decision in toto. After the NLRC affirmed the award, petitioner filed a petition for certiorari under Rule 65 on April 1, 1986, alleging that the NLRC committed grave abuse of discretion in affirming the POEA ruling. The Court issued a temporary restraining order on April 23, 1986, enjoining enforcement of the assailed resolution.

Issues Framed for Resolution

The Court addressed two core questions. First, it determined whether Grulla’s employment had been illegally terminated by petitioner. Second, it assessed whether Grulla was entitled to salaries corresponding to the unexpired portion of his employment contract.

The Parties’ Contentions

Petitioner maintained that Grulla was validly dismissed because he was allegedly still a probationary employee. It claimed that his dismissal was justified due to unsatisfactory performance during the probationary period. Petitioner’s legal theory rested on the alleged probationary character of the employment and the contractual and factual premise that Grulla failed to qualify.

Grulla, on the other hand, relied on the POEA findings that his dismissal was illegal and warranted payment of salaries for the remaining portion of the contract.

On the Alleged Probationary Status and Regularity of Employment

The Court rejected petitioner’s contention. It invoked Article 280 (formerly Article 281) of the Labor Code, which distinguishes regular and casual employment based on the nature of the work and the circumstances of engagement. It also cited the then Policy Instructions No. 12 of the Minister of Labor (now Secretary of Labor and Employment), emphasizing that regularity or casualness is determined not by the employment contract but by the nature of the job, particularly whether it is usually necessary or desirable to the employer’s main business.

The Court noted that petitioner admitted Grulla was employed as a carpenter for a twelve-month period before dismissal. It examined the employment contract and observed that although the period of employment was twelve months, the contract period was renewable subject to future agreement. The Court held that the contract showed Grulla was hired as a regular employee, not merely as a probationary employee.

Further, the Court discussed Article 281 (formerly Article 282) of the Labor Code on probationary employment. The Court stressed that where an employee is engaged on probation, the employer must make known to the employee, at the time of engagement, the standards by which the employee will qualify as a regular employee. The employment contract lacked any stipulation requiring Grulla to undergo probation for three months before becoming regular. The Court also found no evidence showing that Grulla was apprised of his alleged probationary status and the standards for qualification. In the absence of these requisites, the Court concluded that Grulla must be treated as a regular employee at the time of dismissal.

Security of Tenure and Limits on Dismissal

The Court held that as a regular employee, Grulla enjoyed security of tenure and could not be removed except for just and authorized causes under the Labor Code and under the employment contract. Even assuming, arguendo, that Grulla was probationary, the Court ruled that he could not be removed except for cause during the probationary period; probationary or temporary employees still enjoy security of tenure during their tenure or before expiration of their contract.

To clarify permissible grounds for dismissal, the Court referred to the just causes enumerated in Article 282 of the Labor Code. It held that petitioner’s alleged ground of unsatisfactory performance did not constitute one of the just causes under the Labor Code. The Court also found that the alleged ground was not among the contractual termination grounds under Article VII of the employment contract.

Lack of Proof and the Medical Certificate

The Court further found that petitioner failed to show the specific acts or omissions that constituted the allegedly unsatisfactory performance. It rejected petitioner’s theory attributing unsatisfactory performance to Grulla’s physical condition by pointing to the medical certificate: it stated positively that Grulla was already physically fit for work after he was released from the hospital. This evidence contradicted petitioner’s claim that Grulla was not capable of effectively performing his duties.

Due Process: Absence of Notice and Hearing

The Court also ruled that Grulla’s dismissal violated due process. It explained the constitutional requirement of notice and hearing in termination cases. Notice is intended to inform the employee of the employer’s intent to dismiss and the reason for the proposed dismissal. Hearing affords the employee an opportunity to answer the charges and defend himself before dismissal is effected. The Court held that these requirements could not be dispensed with without violating the constitutional due process guarantee, citing Century Textile Mills, Inc., et al. v. NLRC, et al., G.R. No. 77859, May 25, 1988.

The Court found that Grulla was not notified of the charges against him before he was dismissed, and that no hearing or investigation was conducted to give him an opportunity to respond. On these grounds, it held that the dismissal violated security of tenure and the contractual term that expressly provided a twelve-month period.

Entitlement to Salaries for the Unexpired Contract Term

Having found the dismissal illegal, the Court affirmed that Grulla was entitled to wages for the unexpired portion of his contract. It computed the entitlement as covering the ten (10) months remaining of the original twelve (12) month term. In support of this consequence, it cited Cuales v. NLRC, et al., No. L-57379, April 28, 1983, 121 SCRA 812.

The Court also treated as persuasive the concurrent findings of the POEA and the NLRC on the amount of the award—US $3,700.00 (or its Philippine currency equivalent) for the unexpired portion and P1,000.00 for reimbursement of medical expenses.

Deference to Labor Administrative Findings and Scope of Review

The Court reiterated the general principle that findings of administrative agen

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