Title
Zagala vs. Mikado Philippines Corp.
Case
G.R. No. 160863
Decision Date
Sep 27, 2006
Employees dismissed for excessive absences; SC ruled termination disproportionate, citing failure to follow progressive discipline, reinstating with backwages.
illegal termination
excessive absences
company rules

Case Summary (G.R. No. 160863)

Factual Background

In January 1998, Mikado reviewed the attendance records of petitioners for 1995, 1996, and 1997 and found that they exceeded the company’s allowable absenteeism of thirty (30) absences per year. Zagala incurred forty (40) absences in 1995, thirty-four and one-half (34.5) in 1996, and fifty-nine and one-half (59.5) in 1997. Angeles incurred thirty-two and one-half (32.5) absences in 1995, thirty-five (35) in 1996, and forty (40) in 1997. Before receiving a formal memorandum requesting explanations, petitioners voluntarily submitted letters to Mikado’s executive committee. Angeles explained that his absences in 1997 resulted from viral influenza, his daughter’s confinement in the hospital, the mental illness of their maid, and other family problems. Zagala likewise claimed that his ailments and family problems required his attention.

Mikado found these explanations unsatisfactory and terminated petitioners on March 1, 1998. The following day, Angeles and Zagala filed a complaint for illegal dismissal against Mikado and its officers.

Labor Arbiter Proceedings and Ruling

The Labor Arbiter rendered judgment on October 28, 1999, ordering respondents to reinstate petitioners to their former positions and to pay full backwages, including computations for 13th month pay and service incentive leave. In arriving at illegal dismissal, the LA held that petitioners had already received sanction for their absences in 1995 and 1996, through a memorandum with warning, and therefore could no longer be dismissed for the same cause. The LA also issued a writ of execution dated December 9, 1999, which respondents did not heed. Respondents appealed to the NLRC.

NLRC Proceedings and Affirmance

The NLRC affirmed the LA in a Resolution dated February 26, 2002. It ruled, in substance, that a “warning” could be treated as a penalty analogous to a reprimand and that the pertinent absences had been brought to management’s attention and approved. The NLRC also characterized the termination on absenteeism grounds as lacking moral soundness given the rigorous production work in manufacturing marine propellers and considering petitioners’ work record.

CA Proceedings under Rule 65 and Reversal

Respondents sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court, alleging grave abuse of discretion on the NLRC’s part in treating absenteeism as morally unsound and in applying the law and jurisprudence. While the CA case was pending, petitioners moved before the LA for recomputation and issuance of an alias writ of execution, which the LA granted on November 15, 2002. On November 25, 2002, the LA issued an alias writ of execution ordering the sheriffs of the NLRC to effect reinstatement and to collect P659,426.07, broken down into the monetary award of P118,754.12, accrued salaries of P534,638.03 covering October 30, 1999 to October 30, 2002, and execution fees of P6,033.92. A notice of garnishment dated December 9, 2002 was issued against Mikado’s account at RCBC, Rosario Branch.

On August 27, 2003, the CA reversed the NLRC. It held that Mikado was correct in contending that absenteeism is a valid ground for termination under Art. 282(c) of the Labor Code, considering gross and habitual neglect by the employee of duties. The CA also concluded that petitioners knew the company policy allowing only thirty absences, and that despite prior warnings for 1995 and 1996, petitioners still incurred absences in 1997 in violation of company rules. It further reasoned that previous offenses may be used to justify dismissal when the infractions relate to the subsequent offense warranting termination. The CA then lifted the writ of garnishment, with no pronouncement as to costs. Petitioners’ motion for reconsideration was denied on November 17, 2003.

Issues Raised by Petitioners

In their petition to the Supreme Court, petitioners argued that the CA erred in holding absenteeism as a just cause despite the NLRC’s “undisputed” finding that the absences were authorized or condoned by respondents. They further contended that the CA disregarded jurisprudence on the propriety of lesser penalties instead of termination, and that respondents failed to overcome the burden of proof required in dismissal cases. Petitioners also challenged the CA’s lifting of the garnishment, asserting that it contravened laws and Supreme Court decisions and that, at minimum, the garnishment should have remained effective up to the amount due during the period after the LA ruling and before reversal by the CA.

Arguments of Respondents

Respondents countered that petitioners violated company rules for the years 1995, 1996, and 1997, and that any “condoned or authorized” absences related only to 1995 and 1996. They maintained that petitioners’ explanations were personal problems. Respondents invoked Meralco v. National Labor Relations Commission to support the view that dismissal may be warranted based on the totality of the employee’s infractions, not on compartmentalization. They also argued that they did not fail to discharge their burden of proof and that petitioners were not entitled to backwages and other benefits because the termination was for a just cause.

Supreme Court’s Determination of Illegal Dismissal

The Supreme Court found in favor of petitioners and granted the petition. The Court emphasized the constitutional protection afforded to workers and stressed that an employee’s employment is property in a constitutional sense. It recognized an employer’s right to terminate for just or authorized cause, but only within the parameters of law, equity, and fair play, and with respect to the employee’s security of tenure. The Court reiterated that the employer must not act arbitrarily in disciplining employees, and that the burden of proving just cause rests on the employer. Failure to discharge this burden results in a finding that the dismissal is unjustified and therefore illegal. Accordingly, the Court held that respondents had to affirmatively show rationally adequate evidence that dismissal was for a justifiable cause and not rely on the bare fact of absences.

The Court addressed respondents’ sole basis for termination: petitioners’ absences in 1997 in excess of the allowed number, notwithstanding prior warnings for absences in 1996 and 1995. It held that termination was not a commensurate penalty. The Court ruled that there must be reasonable proportionality between the offense and the penalty, and that dismissal is the ultimate penalty. It reasoned that where a lesser, sufficient penalty would resolve the matter, severe consequences should not be imposed for labor infractions.

Application of the Proportional Penalty Standard and Company Discipline Rules

The Court acknowledged that even assuming petitioners’ absenteeism amounted to willful disobedience, the offense still did not warrant dismissal in the circumstances. It distinguished the precedent relied upon by respondents, Meralco, where the employee had been previously suspended seven times over twelve years and whose eventual termination was found justified. Unlike that case, the Court noted that petitioners worked with respondents for seven to eight years and that no other infraction had been attributed to them besides absences in 1995, 1996, and 1997.

The Court then relied on the company’s own disciplinary progression. It quoted the Attendance Guidelines dated February 8, 1994 on Leave without Pay, including the penalty table stated in Mikado’s Working Regulations for an unexcused leave without application (with penalties progressing from verbal warning to written warning, then suspension, and finally termination as the fifth offense). The Court held that respondents failed to show that the lesser penalties were imposed first before terminating petitioners.

The Court also relied on admissions and the record. Petitioners admitted that they received a memorandum with warning for absences in 1995 and 1996, which had become the basis for the LA’s decision. The Court further found that petitioner Zagala served a 3-day suspension from November 3 to 5, 1997 for his unexcused absences. Applying the progression by year as distinct offenses, the Court reasoned that respondents should have imposed: a verbal warning for 1995 absences, a written warning for 1996 absences, and a three-day suspension for 1997 absences. Since Zagala already served the three-day suspension in 1997, only Angeles remained to answer for the corresponding penalty.

In light of this analysis, the Court concluded that petitioners were illegally dismissed and that they were entitled to reinstatement without loss of seniority rights and with backwages co

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