In the Philippines, employers can terminate an employee found to have a disease if their continued employment is legally prohibited or prejudicial to their health or that of their coworkers. The Supreme Court clarified in Deoferio v. Intel that while an employer has the right to terminate employment for authorized causes such as disease, they must still comply with procedural due process, specifically providing the employee with two written notices. This case underscores the importance of balancing an employer’s prerogative with an employee’s right to fair treatment under the Labor Code.

When Schizophrenia Impacts Employment: Intel’s Dismissal and the Due Process Dilemma

Marlo A. Deoferio challenged his dismissal from Intel Technology Philippines, Inc., arguing that he was illegally terminated after being diagnosed with schizophrenia. Intel maintained that his condition made him unfit for work and potentially harmful to his colleagues, relying on a psychiatric report indicating his illness was not curable within six months. The core legal question revolved around whether Intel followed the correct procedures in terminating Deoferio’s employment due to his medical condition, and whether the ‘twin-notice’ requirement applied in cases of termination due to disease.

The Supreme Court, in analyzing the case, affirmed that Intel had a valid reason to dismiss Deoferio based on his medical condition. The Court emphasized that employers have the right to terminate employees for authorized causes, provided they adhere to both substantive and procedural due process. Substantive due process requires that the termination be based on just or authorized causes, while procedural due process ensures the dismissal is carried out in accordance with the Labor Code and its Implementing Rules and Regulations (IRR). In cases of termination due to disease, which falls under Article 284 (now Article 298) of the Labor Code, specific elements must be present:

• The employee suffers from a disease.
• Continued employment is either prohibited by law or prejudicial to the employee’s or coworkers’ health.
• A competent public health authority certifies the disease is incurable within six months, even with proper treatment.

The Court highlighted the importance of the third element, the medical certificate, stating that it is not merely a procedural formality but a substantive requirement. Without this certificate, there is no authorized cause for dismissal, rendering the termination illegal.

“The certification from a competent public health authority is precisely the substantial evidence required by law to prove the existence of the disease itself, its non-curability within a period of six months even with proper medical treatment, and the prejudice that it would cause to the health of the sick employee and to those of his co-employees.”

In Deoferio’s case, the psychiatric report served as substantial evidence supporting Intel’s decision.

Building on this principle, the Court addressed the procedural aspect of the termination, clarifying that the twin-notice requirement applies even in cases of dismissal due to disease. This requirement mandates that the employer must furnish the employee with two written notices: first, a notice informing the employee of the grounds for the proposed dismissal, and second, a notice informing the employee of the dismissal itself, issued after the employee has been given a reasonable opportunity to respond. This requirement stems from Section 2, Rule 1, Book VI of the IRR, which expressly states that procedural due process should be afforded in all cases of dismissals. The Court noted that the Court of Appeals erred in not finding that the NLRC gravely abused its discretion when it ruled that the twin-notice requirement does not apply to Article 284 of the Labor Code.

Because Intel failed to comply with the twin-notice requirement, the Supreme Court found a violation of Deoferio’s right to statutory procedural due process. As a result, Deoferio was awarded nominal damages amounting to P30,000.00. The Court considered several factors in determining the amount of nominal damages, including Intel’s compliance with Article 284 of the Labor Code and Section 8, Rule 1, Book 6 of the IRR, the offsetting of Deoferio’s separation pay with his car loan, and the financial and medical assistance provided by Intel to Deoferio. The decision also clarified that Mike Wentling, as a corporate officer, could not be held personally liable for the nominal damages, as he acted in good faith and relied on the psychiatric report when carrying out the dismissal.

Furthermore, the Court dismissed Deoferio’s claim for salary differential due to prescription, as it was filed more than three years after the cause of action accrued, violating Article 291 (now Article 305) of the Labor Code. The claims for backwages, separation pay, moral and exemplary damages, and attorney’s fees were also rejected because the dismissal was for an authorized cause, and Intel acted in good faith. This part of the ruling underscores the importance of timely filing claims in labor disputes.

In summary, the Deoferio v. Intel case provides essential guidance on terminations due to illness, emphasizing the need for employers to follow both substantive and procedural requirements. While employers have the right to terminate employees for authorized causes, they must ensure compliance with the twin-notice rule and provide substantial evidence, such as a medical certificate, to justify the dismissal. This approach balances the employer’s prerogative with the employee’s right to due process and fair treatment.

FAQs

What was the key issue in this case?	The key issue was whether Intel validly dismissed Marlo Deoferio due to schizophrenia, and whether the twin-notice requirement applied in cases of termination due to disease. The court also addressed the matter on the claims of salary differential, backwages, separation pay, moral and exemplary damages, as well as attorney’s fees.
What is the twin-notice requirement?	The twin-notice requirement mandates that employers provide two written notices to employees before termination: one informing them of the grounds for dismissal, and another informing them of the dismissal itself after a reasonable opportunity to respond. This ensures procedural due process.
What constitutes an authorized cause for dismissal due to disease?	An authorized cause for dismissal due to disease requires that the employee suffers from a disease, their continued employment is prejudicial to their health or that of coworkers, and a competent public health authority certifies the disease is incurable within six months.
What is the significance of the medical certificate in this case?	The medical certificate serves as substantial evidence proving the existence, non-curability, and potential harm of the employee’s disease, making it a critical substantive requirement for a valid dismissal. Without such certificate, there can be no authorized cause for the employee’s dismissal.
What are nominal damages, and why were they awarded in this case?	Nominal damages are awarded when there is a violation of rights, even if no actual loss is proven. In this case, nominal damages were awarded because Intel violated Deoferio’s right to procedural due process by failing to comply with the twin-notice requirement.
Why was Mike Wentling not held personally liable in this case?	Mike Wentling was not held personally liable because he acted in his capacity as a corporate officer and relied in good faith on the medical report in carrying out the dismissal. The corporation has a separate legal personality from its officers.
What is the prescriptive period for filing money claims under the Labor Code?	Under Article 291 (now Article 305) of the Labor Code, all money claims arising from employer-employee relations must be filed within three years from the time the cause of action accrued.
Can an employer offset an employee’s separation pay with outstanding debts?	Yes, an employer can offset an employee’s separation pay with outstanding debts, such as a car loan, provided there is a legal basis for such compensation under the Civil Code and Labor Code.

The Deoferio v. Intel decision reinforces the importance of adhering to due process in employment terminations, especially those related to an employee’s health. Employers must balance their right to manage their workforce with the employee’s right to fair treatment, ensuring all procedural and substantive requirements are met to avoid legal repercussions. This case serves as a guide for navigating the complex landscape of employment law in the Philippines.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: MARLO A. DEOFERIO vs. INTEL TECHNOLOGY PHILIPPINES, INC., G.R. No. 202996, June 18, 2014