Case Summary (G.R. No. 175142)
Petitioner and Respondent Details
- Petitioners: National Service Corporation (NASECO) and Arturo L. Perez
- Respondents: The Honorable Third Division, National Labor Relations Commission (NLRC), Ministry of Labor and Employment, Manila, and Eugenia C. Credo
- Credo also filed a petition challenging the decision from the NLRC regarding claims denied in her favor.
Key Dates
- Employment Start: July 18, 1975
- Promotion to Chief of Property and Records: March 10, 1980
- Memorandum by Sisinio S. Lloren: October 11, 1983
- Meeting and Forced Leave: November 7, 1983 (forced leave effective November 8, 1983, for 15 days)
- Administrative Committee Deliberation: November 22, 1983
- Notice of Termination: Dated November 24, 1983; effective December 1, 1983
- Filing of Complaint: December 6, 1983
- Labor Arbiter Decision: May 9, 1984
- NLRC Decision: November 28, 1984
- NLRC Resolution Denying Reconsideration: January 16, 1985
- Supreme Court Decision: November 29, 1988
Applicable Law and Constitutional Basis
The case was decided after 1987; thus, the 1987 Philippine Constitution governs the legal analysis. Relevant provisions considered include:
- 1987 Constitution, Article II, Section 18 – Protection of labor
- Labor Code of the Philippines, particularly provisions relating to employee dismissal procedures (Rules XIV, Book V, Implementing Rules and Regulations)
- Civil Service Law and its applicability to government-owned or controlled corporations with original charters versus their subsidiaries
Background of the Dispute
Credo was administratively charged by NASECO for non-compliance with instructions regarding the Statement of Billings Adjustment and alleged disrespectful conduct toward her superior. She was placed on forced leave without complete due process and subsequently terminated following a committee recommendation. Credo contested her forced leave and dismissal before the Labor Arbiter and the National Labor Relations Commission.
Procedural Due Process Requirements for Dismissal
The law mandates that an employer seeking to dismiss an employee must issue two notices:
- A written notice specifying the acts or omissions constituting grounds for dismissal.
- A written notice of the decision to dismiss, stating the reasons therefor.
Additionally, the employee must be given a reasonable period to answer the charges and be afforded ample opportunity to be heard and defend herself before the dismissal decision is finalized.
Findings on Compliance with Procedural Due Process
The Court found that NASECO failed to strictly adhere to these requirements. Although Credo was given an opportunity to explain, the chance was perfunctory and insufficient to satisfy the constitutional and statutory mandate for due process. Specifically, the short interval between notice of charges and dismissal and the back-dating of the termination decision negated the meaningfulness of the hearing.
Substantive Grounds for Dismissal
The Court evaluated the acts constituting grounds for dismissal: non-compliance with instructions and misconduct such as discourtesy and insubordination. Upon examination,
- The conduct alleged (including “sarcasm” and discourtesy) was found not clearly or satisfactorily proven.
- Past incidents of alleged similar misconduct were unpunished or condoned by management.
- Credo’s job performance was rated satisfactory or very satisfactory, and she even received a salary adjustment. Consequently, the Court ruled that these grounds did not justify dismissal; a reprimand would have been appropriate.
Effect of Condonation of Past Misconduct
The employer's failure to discipline prior offenses was deemed condonation, which precludes reliance on such conduct as grounds for lawful dismissal later. This weakened NASECO's position that Credo's repeated misconduct justified termination.
Security of Tenure and Remedies
The decision emphasized the constitutional protection of security of tenure, which requires valid and lawful grounds for dismissal and procedural fairness. Because Credo’s dismissal lacked both, her rights were violated.
Remedies granted included:
- Reinstatement to her former or a substantially equivalent position.
- Award of three years’ backwages without deduction or qualification.
- Moral damages amounting to P5,000.00 for the lack of due process.
- Attorney’s fees of P5,000.00.
- If reinstatement is impossible due to supervening events, payment of separation pay equivalent to half a month’s salary for every year of service.
Jurisdictional Issue on Applicability of Civil Service Law
NASECO argued that as a government-owned or controlled corporation (GOCC), its employees were covered by the Civil Service Law, implying labor disputes fall outside the NLRC's jurisdiction.
The Court rejected this contention based on the 1987 Constitution, which covers government corporations with original charters under the civil service. Subsidiaries, such as NASECO, organized under the general corporation law, are not included in the civil service coverage; thereby, the NLRC retains jurisdiction over labor disputes involving such entities.
Constitutional Interpretation of Government-Owned or Controlled Corporations (GOCCs)
The Court discussed the evolution of constitutional provisions and clarifications made during the 1986 Constitutional Commission debates:
- The 1987 Constitution explicitly limits civil service coverage to government-owned/control corporations with original charters, excluding subsidiaries organized under the general corporation law.
- The Court expressed the intent to prevent circumvention of labor protections by creating subsidiary corporations shielded from labor regulations.
- This distinction restores the authority of the NLRC over employees of such subsidiaries and maintains their protection under the Labor Code.
Policy Considerations on Social Justice and Labor Protection
Drawing on the principle of social justice enshrined in the Constitution and jurisprudence, the Court stressed the importance of interpreting employment laws
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Case Syllabus (G.R. No. 175142)
Parties and Context of the Case
- Petitioners: National Service Corporation (NASECO), a domestic corporation providing security guards and related manpower services to Philippine National Bank (PNB) and agencies, and Arturo L. Perez, Acting General Manager of NASECO.
- Respondent: Eugenia C. Credo, former employee of NASECO.
- The controversy arises from NASECO’s administrative actions against Credo, culminating in her forced leave and termination purportedly for infractions and misconduct.
- Credo’s employment with NASECO started on July 18, 1975, with progressive promotions culminating in Chief of Property and Records by March 10, 1980.
Administrative Charges and Forced Leave Proceedings
- Prior to November 7, 1983, Credo was charged by Sisinio S. Lloren, NASECO’s Manager of Finance and Special Projects, for failing to comply with a memorandum regarding billing adjustment entries and for allegedly behaving disrespectfully during an explanation meeting.
- On November 7, 1983, Credo met with Arturo L. Perez and NASECO’s Committee on Personnel Affairs to answer these charges.
- Subsequently, Credo was placed on forced leave for 15 days effective November 8, 1983.
- Before the expiration of forced leave, on November 18, 1983, Credo filed a complaint with the Arbitration Branch, Ministry of Labor and Employment, alleging forced leave without due process.
Committee Deliberations and Termination Recommendation
- On November 22, 1983, while Credo was on forced leave, NASECO’s Committee on Personnel Affairs assessed past misconducts attributed to her.
- The Committee found Credo guilty of offenses under the company’s Code of Discipline: discourteous acts against clients, use of insulting language to superiors, and failure to comply with lawful orders.
- The Committee determined that Credo’s previous reprimands and infractions exhausted management’s tolerance, recommending termination with forfeiture of benefits.
Termination and Supplemental Complaint
- On December 1, 1983, Credo was called to Perez’s office, presented with formal charges previously found by the Committee, and asked to explain, but failed to do so satisfactorily.
- A Notice of Termination, dated November 24, 1983, became effective on December 1, 1983.
- On December 6, 1983, Credo filed a supplemental complaint charging illegal dismissal, citing lack of just cause and absence of opportunity to be heard.
Labor Arbiter and NLRC Decisions
- The labor arbiter, on May 9, 1984, dismissed Credo’s complaint but awarded her separation pay equivalent to half a month’s salary per year of service.
- Both parties appealed to the National Labor Relations Commission (NLRC).
- The NLRC, on November 28, 1984, reversed the labor arbiter by ordering NASECO to:
- Reinstate Credo to her former or substantially equivalent position,
- Pay six months’ backwages without loss of seniority rights,
- Dismissed Credo’s claims for attorney’s fees, moral damages, and exemplary damages.
- Motions for reconsideration by both parties were denied on January 16, 1985, prompting further legal recourse.
Petitioners’ Challenge and Credo’s Cross-Petition
- Petitioners contested the NLRC’s reinstatement order on grounds of grave abuse of discretion, arguing:
- Compliance with legal termination requirements was fulfilled,
- Credo’s infractions were proven or condoned,
- Termination was for valid cause.
- Credo petitioned to reverse the NLRC’s denial of attorney’s fees, moral and exemplary damages, and limit on backwages.
Legal Guidelines on Termination and Due Process Under Labor Laws
- The law mandates employers to:
- Provide written notice specifying grounds for dismissal,
- Afford the employee reasonable time and opportunity to answer allegations,
- Furnish written notice of the decision to dismiss with clear reasons.
- These guidelines embody the right to secu