Title
Gopio vs. Bautista
Case
G.R. No. 205953
Decision Date
Jun 6, 2018
Employee illegally dismissed for alleged incompetence; contract clause voided for violating due process. Awarded unexpired salaries, damages, and placement fee reimbursement.
illegal dismissal
due process
contractual provisions

Case Summary (G.R. No. 205953)

Factual Background

Bautista was engaged as a Project Manager for Shorncliffe (PNG) Limited through Job Asia. The written employment contract was for a fixed term of thirty-one months and recited a net monthly salary of P40,000.00, although Bautista alleged he was actually paid P115,850.00 per month. After nine months of deployment, Bautista was served a notice of termination on July 6, 2009, effective July 10, 2009, on grounds of unsatisfactory performance. He received pay for July 1 to 10, annual leave credits, and one month’s pay in lieu of notice, and was repatriated on July 11, 2009.

Administrative and Arbitral Proceedings

On July 27, 2009, Bautista filed a complaint with the arbitration branch of the NLRC against Job Asia, Gopio, and Shorncliffe for illegal dismissal and monetary claims. He sought salaries for the unexpired portion of his contract, employment benefits, sick and recreation leave pay, moral and exemplary damages, attorney’s fees, and reimbursement of his placement fee. Job Asia, Gopio, and Shorncliffe defended that the dismissal was for just cause due to unsatisfactory performance and submitted performance evaluations and declarations to support incompetence and poor work performance.

Labor Arbiter's Findings

The Labor Arbiter found the dismissal illegal. The Arbiter concluded that the performance evaluation relied upon by the employer was prepared after the dismissal and was therefore self-serving and not probative. The Arbiter also found that the procedural due process requirements were not observed because Bautista was not given the twin notices required by law. The Arbiter rejected the employer’s reliance on Article 4.3 of the contract, which allowed termination on “other grounds” with one-month pay in lieu of one month’s written notice, as contrary to the worker’s security of tenure and as part of a contract of adhesion. The Arbiter awarded salaries for the unexpired portion of the contract in the amount of P2,548,700.00, moral and exemplary damages of P300,000.00, and attorney’s fees of P254,870.00.

NLRC Ruling on Appeal

On appeal, the NLRC set aside the Labor Arbiter’s decision and dismissed the complaint for lack of merit, but awarded Bautista nominal indemnity of P40,000.00. The NLRC held that the parties were bound by the employment contract as approved by the POEA and that Article 4.3 validly permitted pre-termination upon payment of one month’s salary in lieu of notice. The NLRC also deemed the employer’s post-termination reports admissible to establish just cause and found no bad faith, thus denying awards for moral and exemplary damages and attorney’s fees.

Court of Appeals Decision

Bautista petitioned the CA, which on August 31, 2012 annulled the NLRC decision and reinstated the Labor Arbiter’s decision. The CA held that Article 4.3 violated the Labor Code and the employee’s right to security of tenure because it permitted termination without the twin notices and made the term “other grounds” unconstitutionally broad and susceptible to arbitrary dismissal. The CA also found that the employers failed to substantiate just cause, noting that declarations and evaluation reports were prepared after the termination and were therefore unreliable.

Issues Before the Supreme Court

The Supreme Court was called to decide principally whether Bautista was illegally dismissed and whether he was entitled to monetary claims arising from such dismissal, including the proper measure of indemnity under R.A. No. 8042 and the applicability of joint and several liability against the local recruitment agency.

Parties' Contentions on Review

Petitioner contended that the termination was for just cause due to Bautista’s substandard performance and that Article 4.3 of the employment contract legally permitted pre-termination upon payment of one month’s salary in lieu of notice. Petitioner further asserted that she should not be held jointly and severally liable with the foreign employer because she had no control over the foreign employer’s operations and no role in the dismissal. Respondent maintained that he was terminated without just cause and without due process, that the performance documents were prepared after his dismissal, and that he was entitled to full relief under R.A. No. 8042 including reimbursement of placement fees, indemnity for the unexpired term, damages, and attorney’s fees.

Supreme Court Ruling — Disposition

The Supreme Court denied the petition and upheld with modification the CA decision. The Court held that Bautista was illegally dismissed for lack of substantiated just cause and for failure to afford due process. The Court ordered petitioner to pay: reimbursement of placement fee with 12% per annum interest; P2,548,700.00 as salaries for the unexpired portion of the contract; moral damages of P150,000.00; exemplary damages of P150,000.00; and attorney’s fees equivalent to ten percent of the monetary award exclusive of damages and reimbursement of placement fee, amounting to P254,870.00. All monetary awards except the reimbursement of placement fee shall earn six percent per annum interest from finality of the judgment until fully paid.

Legal Basis and Reasoning on Substantive and Procedural Issues

The Court reaffirmed that the 1987 Constitution mandates protection of labor, including security of tenure, and that R.A. No. 8042 embodies the State policy of protecting migrant workers. The Court reiterated the settled rule that the employer bears the burden of proving just cause for dismissal and must adduce clear, accurate, consistent, and convincing evidence. The Court found that the performance evaluations and affidavits submitted by the employer were dated after the dismissal and therefore constituted self-serving afterthoughts insufficient to prove incompetence. On due process, the Court emphasized the twin-notice requirement under Article 292(b) of the Labor Code: written notice of the acts or omissions relied upon and a subsequent notice after hearing informing the employee of the decision to dismiss. The Court held that payment of one month’s salary in lieu of notice under Article 4.3 did not satisfy the due process requirement and that the contractual clause permitting termination on unspecified “other grounds” rendered the employee vulnerable to arbitrary dismissal and contravened security of tenure.

Application of R.A. No. 8042 and Precedent on Monetary Relief

Relying on Section 10 of R.A. No. 8042 and its prior decisions in Serrano v. Gallant Maritime Services, Inc. and Sameer Overseas Placement Agency, Inc. v. Cabiles, the Court confirmed that the proper measure of indemnity in illegal dismissal of overseas workers is salaries equivalent to the unexpired term of the contract. The Court declared unconstitutional the alternative formula that capped recovery to “three months for every year of the unexpired term, whichever is less,” as it had done in prior cases, and applied the full unexpired-term computation h

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