Case Summary (G.R. No. 178382-83)
Procedural History
Basso filed a complaint for illegal dismissal in December 1996. The Labor Arbiter dismissed for want of jurisdiction in 1999, applying U.S. law under lex loci celebrationis and lex loci contractus. In November 2003, the NLRC vacated the Arbiter’s ruling on jurisdiction, found CMI failed to give due process notice, and awarded limited damages. Both parties sought certiorari before the Court of Appeals: in May 2006 it declared the dismissal illegal, ordered separation pay in lieu of reinstatement, and full backwages; motions for reconsideration followed. CMI then elevated the case to the Supreme Court.
Issues on Appeal
- Jurisdiction of the labor tribunals over foreign parties and the subject matter.
- Proper choice-of-law under conflict-of-laws principles.
- Scope of appellate review under Rule 65, Rules of Court, on factual findings.
- Validity of dismissal for loss of trust and confidence.
- Compliance with procedural due process in termination.
- Appropriate relief when reinstatement is impracticable.
Jurisdiction Analysis
Under the 1987 Constitution and Article 217 of the Labor Code, the Labor Arbiter and NLRC have exclusive original jurisdiction over termination disputes. CMI, by agreeing to service of summons and actively litigating, submitted to personal jurisdiction. The Philippine forums are convenient under the doctrine of forum non conveniens, given the parties’ Philippine presence and the locus of operative facts.
Choice-of-Law Determination
Applying private international law tests—domicile of the employee, seat of the employer, place of negotiation and performance, and forum interests—the Court held that Philippine law governs, notwithstanding contractual references to U.S. statutes. Termination-at-will provisions contravene Philippine public policy on labor protection under the 1987 Constitution and Labor Code.
Scope of Appellate Review
Although certiorari under Rule 65 ordinarily is confined to jurisdiction and grave abuse of discretion, the appellate courts may re-examine factual findings when NLRC conclusions contradict those of the Labor Arbiter and when necessary to prevent substantial injustice and ensure a just decision.
Merits: Loss of Trust and Confidence
For managerial employees, dismissal for loss of trust must rest on clearly established facts and genuine breach. CMI’s allegations—misuse of promotional tickets, advertising budget overruns, personal business distractions, and audit irregularities—were supported only by uncorroborated affidavits. Basso’s explanations and documentary evidence rebutted these claims. In cases of evidentiary doubt, the employee prevails.
Procedural Due Process
Article 282 of the Labor Code requires a “twin notice” procedure: (1) a first notice specifying charges and allowing the employee a reasonable period to respond; and (2) a written termination notice after hearing. CMI’s letters lacked detailed grounds and did not constitute valid twin notices, violating procedural due process.
Relief: Separation Pay and
...continue readingCase Syllabus (G.R. No. 178382-83)
Parties and Procedural Posture
- Continental Micronesia, Inc. (CMI), a United States-organized foreign corporation licensed in the Philippines, filed a Petition for Review on Certiorari under Rule 45.
- Respondent Joseph Basso, a U.S. citizen and resident of the Philippines at the time, brought an illegal dismissal complaint before the labor tribunals.
- The National Labor Relations Commission (NLRC) declared Basso’s dismissal illegal in its November 28, 2003 Decision, ordering payment of US$5,416 for failure to comply with due-notice requirements.
- The Court of Appeals set aside the NLRC and Labor Arbiter rulings in its May 23, 2006 Decision and June 19, 2007 Resolution, declaring the dismissal illegal, awarding separation pay and full backwages, and dismissing moral damages and attorney’s fees.
- CMI’s petition to the Supreme Court challenges jurisdiction, choice-of-law application, and factual findings on loss of trust and confidence.
Facts of Employment and Termination
- In 1990, Continental Airlines offered Basso the position of General Manager of its Manila branch; an employment contract dated February 1, 1991 was executed after his acceptance.
- On November 7, 1992, CMI took over Philippine operations; Basso retained his manager role.
- December 20, 1995 letter by CMI’s VP of Marketing offered Basso a six-month consultancy “as needed,” without monetary compensation but with insurance coverage, travel privileges, and a Php1,140,000 housing-lease advance.
- Basso’s January 11 and March 14, 1996 correspondence sought clarity on employment status; CMI replied that it was terminating his manager position effective January 31, 1996, offering severance in lieu of the housing advance.
- Basso filed an illegal dismissal complaint on December 19, 1996; CMI moved to dismiss for lack of jurisdiction, invoking lex loci contractus and lex loci celebrationis, which the Labor Arbiter initially granted.
Labor Arbiter’s Ruling (September 24, 1999)
- Held lack of jurisdiction: employment contract executed in the U.S., intended U.S. law to govern; no employer-branch relationship in the Philippines.
- Applied lex loci celebrationis and lex loci contractus doctrines, concluding Philippine laws and Labor Code were not intended.
- Ruled Basso’s termination was for valid cause—breach of trust and loss of confidence.
- Found CMI had voluntarily submitted to jurisdiction by presenting merits evidence and seeking relief.
NLRC’s Decision (November 28, 2003)
- Vacated and set aside the Labor Arbiter’s dismissal for lack of juris