G.R. No. 176717 - Cobarrubias vs. Saint Louis University, Inc.

Case Summary (G.R. No. 176717)

Factual Background

Petitioner was hired in 1982 as a faculty member at respondent. On May 23, 2003, respondent informed petitioner through a letter that she had failed to meet the required minimum evaluation rating for faculty members during the five-year period from school year 1998 until 2003. Respondent accordingly stated that petitioner would be placed on forced leave during the first semester of school year 2003–2004, and that while on forced leave, all benefits due her would be suspended pursuant to Section 7.7 of the existing CBA. The notice also required petitioner to inform in writing, “before the lapse of thirty (30) days prior to the end of the First Semester . . . or on or before 12 September 2003,” of her readiness and availability to teach during the second semester.

Section 7.7 of the CBA provided, for teaching employees in college who fail the yearly evaluation, that teaching employees who were retained for three cumulative years in five years would be placed on forced leave for one regular semester, during which period all benefits due them would be suspended, while those who obtained evaluation ratings below 80 for three cumulative years in five years would be terminated. Respondent’s Handbook and Evaluation Manual tied retention in rank and faculty evaluation to faculty rank and to compliance with required ratings.

Petitioner’s evaluation record for the five-year period preceding the notice showed that in 1998–1999, her overall rating was eighty-five point five zero, below the required minimum of eighty-six, and she was retained as Asst. Professor III+; for 1999–2000, she also retained as Asst. Professor III+; for 2000–2001, she passed but obtained the maximum rank; for 2001–2002, she passed but obtained the maximum rank; and for 2002–2003, she was retained as Associate Professor I-2 with the overall rating of eighty-five against a required minimum of eighty-seven, while her faculty rank had been adjusted upon passing the bar examination. When the first semester of school year 2003–2004 began, petitioner attempted to report for work but was not given any teaching load because she was on forced leave.

Filing of the Illegal Dismissal Complaint and Events Surrounding Forced Leave

On June 5, 2003, petitioner filed a complaint for illegal dismissal, praying for reinstatement, backwages, moral and exemplary damages, attorney’s fees, and payment of service incentive leave before the Regional Arbitration Branch, Cordillera Administrative Region of the NLRC. The Executive Labor Arbiter later referred the case to the National Conciliation and Mediation Board for lack of jurisdiction by order dated January 19, 2005.

During the second semester period, respondent issued further letters to petitioner. On October 13, 2003, respondent’s Personnel Officer advised petitioner that a twenty-four-unit load had been prepared for the second semester of school year 2003–2004, starting on November 3, 2003, and stated that despite the May 23, 2003 letter, respondent had not received any communication from petitioner. Respondent thus required petitioner to signify in writing her intention to resume teaching duties “on or before the end of October 2003,” failing which her teaching load would be assigned to other faculty.

On November 8, 2003, respondent reiterated that despite its efforts petitioner failed to report for work and urged her to come, stating that respondent would “give [her] up till Nov. 10, 2003,” otherwise it would assign her load to other teachers. The letter referred to her forced leave as being finished and asked her to come to continue teaching for the second semester. On November 12, 2003, respondent demanded written explanation within forty-eight hours why petitioner should not be deemed to have abandoned her work, and on November 28, 2003, respondent gave her an opportunity to report for work within five days from receipt and to explain in writing within the same period why she should not be terminated due to abandonment. Petitioner did not respond to respondent’s letters. On December 6, 2003, respondent dismissed petitioner for abandonment by letter.

Issues Raised and the Voluntary Arbitrator’s Ruling

Before the Voluntary Arbitrator, the issues included: (one) the legality of dismissal of petitioner due to abandonment; (two) the validity of forced leave imposed for one semester; and (three) whether due process was observed. The Voluntary Arbitrator, in a decision dated July 11, 2005, declared the forced-leave clause under Article 7, Section 7, paragraph (a) of the CBA to be void. The Arbitrator reasoned that a CBA clause that contravened policy or was prejudicial to the persons to whom the evaluation manual referred could not stand, and that respondent’s Evaluation Manual reflected the University’s educational policy for faculty ranking and promotion. The Arbitrator held that the CBA could not impose a penal provision beyond what the University’s educational policy manifested. The Arbitrator concluded that respondent’s interpretation added an undue penalty of forced leave for one regular semester and suspension of benefits, amounting to unreasonable restraint and hardship by depriving petitioner of her livelihood and benefits during that semester.

The Voluntary Arbitrator further found lack of due process because there was no showing that the twin requirements of notice and hearing were complied with. On abandonment, the Arbitrator held that petitioner’s failure to report for work, despite repeated notices, did not constitute abandonment because abandonment required clear proof of a deliberate and unjustified intent to sever the employer-employee relationship, and such intent was lacking. Relying on Samarca v. Arc-men Industries, Inc., the Arbitrator ordered petitioner’s reinstatement, backwages from the time withheld until actual reinstatement, moral damages of P50,000.00, exemplary damages of P25,000.00, and attorney’s fees equivalent to ten percent of the total awarded amount.

Court of Appeals Review and Ruling

On respondent’s Petition for Review, the Court of Appeals, by decision dated May 23, 2006, reversed the Voluntary Arbitrator. The appellate court ruled that the Arbitrator had breached the bounds of authority by nullifying Section 7.7 of the CBA. It emphasized that a Voluntary Arbitrator’s authority in labor disputes is confined to the proper interpretation and implementation of the CBA, citing Art. 261 of the Labor Code on the Voluntary Arbitrator’s jurisdiction over unresolved grievances arising from the interpretation or implementation of the CBA and personnel policies.

The Court of Appeals also held that even assuming the Arbitrator could nullify a CBA provision, the forced-leave clause was not contrary to law. It cited Pena v. National Labor Relations Commission, which recognized a school’s prerogative to maintain high standards for teachers, and to dismiss those who failed to attain reasonable work goals. The appellate court further addressed abandonment. Contrary to the Voluntary Arbitrator, it found that petitioner had abandoned her job by failing to report despite several notices, and it rejected the pendency of petitioner’s illegal dismissal case as a valid excuse.

Regarding due process and the ratings that led to forced leave, the Court of Appeals held that petitioner had been afforded ample opportunity to contest the ratings, noting that respondent informed faculty members of their ratings after every evaluation period and invited them to examine their grades and discuss them with their evaluators, which it treated as sufficient compliance with due process, again citing Pena. The appellate court then addressed the forced-leave clause by noting interpretive doubt, particularly the reckoning of the five-year period in “three (3) cumulative years in five (5) years.” Resolving the doubt in petitioner’s favor, it held that the suspension was illegal. It characterized the forced leave as having exclusive contractual origin within the CBA and reasoned that, because doubts were engendered by the CBA as to the reckoning period, judicial partiality to workers on occasions of doubt in labor agreements supported treating the suspension as illegal.

On damages, the Court of Appeals deleted the Voluntary Arbitrator’s awards of moral and exemplary damages, holding that respondent’s dismissal or suspension was attended with good faith, and thus moral damages were not warranted. The appellate court likewise set aside exemplary damages. It then considered that this was petitioner’s first offense, her service lasting twenty years, and it awarded her separation pay following Philippine Long Distance Telephone Co. v. NLRC, applying the equitable principle that separation pay may be justified for valid but not iniquitous causes such as failure to comply with work standards. It accordingly declared the Voluntary Arbitrator’s decision void, ordered respondent to pay petitioner all salaries and benefits due for the duration of the six-month forced leave, and ordered separation pay of one month salary for every year of service. Petitioner’s motion for reconsideration was denied on January 26, 2007.

Arguments on Certiorari in the Supreme Court

Petitioner filed a Petition for Review on Certiorari faulting the Court of Appeals on two fronts: first, the appellate court’s holding that she abandoned her work even despite the pendency of the illegal dismissal case she had filed against respondent; and second, the denial of damages awarded by the Voluntary Arbitrator. Petitioner argued that she did not intend to sever the employer-employee relationship and that her actions negated abandonment.

Supreme Court’s Disposition and Reasoning

The Supreme Court denied the petition. It held that abandonment was not refuted by petitioner’s contentions. The Court found that respondent repeatedly notified petitioner in writing, on five occasions, to resume teaching for the second semester of school year 2003–2004

Case Syllabus (G.R. No. 176717)

Parties and Procedural Posture

Evangeline C. Cobarrubias filed the case as petitioner against Saint Louis University, Inc. as respondent.
The dispute arose from a faculty member’s placement on forced leave under a Collective Bargaining Agreement (CBA) and her subsequent dismissal for abandonment.
Petitioner initially filed a complaint for illegal dismissal with prayer for reinstatement, backwages, moral and exemplary damages, attorney’s fees, and payment of service incentive leave before the Regional Arbitration Branch, Cordillera Administrative Region of the National Labor Relations Commission.
The Executive Labor Arbiter referred the case to the National Conciliation and Mediation Board for lack of jurisdiction.
A Voluntary Arbitrator later decided the case on the issues of the legality of abandonment dismissal, the validity of forced leave, and whether due process was observed.
The Voluntary Arbitrator declared the forced-leave clause in the CBA void and ordered reinstatement with monetary and damages awards.
The Court of Appeals reversed, ruling that the Voluntary Arbitrator exceeded authority by nullifying the CBA clause and that the due process and abandonment issues were decided differently from the Voluntary Arbitrator.
Petitioner then filed a Petition for Review on Certiorari, and the Court denied the petition.

Key Factual Allegations

In 1982, petitioner was hired as a faculty member in Baguio City by Saint Louis University, Inc.
By letter of May 23, 2003, the respondent’s President informed petitioner that she had failed to meet the required minimum evaluation rating for the five-year period beginning school year 1998 until 2003, and that she would be placed on forced leave during the first semester of school year 2003-2004.
The same letter stated that during forced leave, all benefits due petitioner would be suspended under Section 7.7 of the existing CBA.
The letter also required petitioner to inform in writing her readiness and availability to teach for the second semester before a specified deadline of 12 September 2003.
Under the CBA’s Section 7.7, teaching employees retained for three cumulative years within five years after failing yearly evaluation were to be placed on forced leave for one regular semester with suspension of benefits.
The respondent’s handbook and evaluation practices were described as rating faculty based on rank and retaining them in rank if required ratings were not obtained.
Petitioner’s performance record for the five-year period showed that she was retained, passed but adjusted, and later retained Associate Professor status based on evaluation outcomes.
Before the first semester of school year 2003-2004 began, petitioner attempted to report for work but was not given teaching load due to forced leave.
On June 5, 2003, petitioner filed a complaint for illegal dismissal tied to her forced leave, and she prayed for reinstatement and related reliefs.
In October 2003, respondent advised petitioner that a teaching load for the second semester starting November 3, 2003 had been prepared but that respondent had not received any communication from her.
Respondent required petitioner to signify in writing her intention to resume teaching on or before the end of October 2003, warning that the teaching load would be assigned to other faculty.
Respondent then issued additional written notices in November 2003, urging petitioner to report, giving deadlines to return, and warning that respondent would assign her load to other teachers if she failed to report.
Respondent further requested petitioner to explain in writing within 48 hours why she should not be deemed to have abandoned her work, and it later gave a final opportunity to report and explain within five days.
Petitioner never responded to respondent’s letters, and respondent dismissed her by letter dated December 6, 2003, for abandonment.

Issues Presented for Resolution

The Voluntary Arbitrator and the appellate tribunals addressed whether respondent legally dismissed petitioner for abandonment.
The tribunals also addressed whether the respondent’s imposition of forced leave for one semester under the CBA was valid.
The tribunals finally addressed whether respondent observed due process, focusing on the presence or absence of the twin requirements of notice and hearing.
The Court of Appeals considered, among others, how to interpret the CBA phrase “three (3) cumulative years in five (5) years”, including what “five years” should reckon from.

Statutory and Contractual Framework

The CBA governed the relationship and provided specific rules for teaching employees who fail evaluation ratings.
Section 7.7 of the CBA provided forced leave for teaching employees retained for three cumulative years in five years after failing yearly evaluation, with benefits suspended, and it provided termination for those obtaining evaluation ratings below 80 for three cumulative years in five years.
The controversy involved the interaction between the CBA forced-leave provision and the respondent’s Faculty Promotion guidelines and Evaluation Manual on ranking and promotion.
Article 261 of the Labor Code was invoked to define the jurisdiction of a Voluntary Arbitrator, limiting it to unresolved grievances arising from interpretation or implementation of the CBA and interpretation or enforcement of company personnel policies.
The dispute required harmonizing contractual discipline with constitutional mandates cited by the Court of Appeals, including the idea that education and teacher quality are mandated by the Constitution.
The pro