The Supreme Court’s decision in NDC Tagum Foundation, Inc. v. Sumakote underscores the critical importance of procedural due process in employment termination cases. Even when a just cause for dismissal exists, employers must provide employees with a fair opportunity to be heard. This means that employees must be given a chance to respond to accusations against them, present evidence, and defend themselves before a decision is made. Failure to comply with these procedural requirements, as highlighted in this case, can result in the employer being held liable for nominal damages, even if the dismissal itself was justified. This ruling reaffirms the employee’s right to be heard and ensures fairness in the termination process.

The Case of the Moonlighting Dean: Did NDC Tagum Foundation Afford Due Process?

This case revolves around Evelyn B. Sumakote, a nursing instructor and dean at NDC Tagum Foundation, who was dismissed for alleged dishonesty, serious misconduct, and gross neglect of duty due to her involvement with another university and a review center. The central legal question is whether NDC Tagum Foundation followed the correct procedure in terminating her employment, specifically regarding the opportunity for Sumakote to be heard and defend herself against the accusations.

The facts reveal that Sumakote was employed as a full-time nursing instructor and later became the dean of the College of Nursing at NDC Tagum Foundation. Simultaneously, she operated a nursing review and caregiver training center. Her involvement with the University of Mindanao (UM), where she served as a consultant and was considered for a deanship position, raised concerns for NDC Tagum Foundation. The foundation viewed her actions as a conflict of interest and an act of disloyalty. The foundation sent Sumakote a letter expressing these concerns and requested that she declare her intentions regarding her position at NDC Tagum Foundation.

After Sumakote declined the appointment at UM, NDC Tagum Foundation sent another letter requiring her to explain why she should not be dismissed for neglect of duty due to her moonlighting activities and poor work attendance. Sumakote responded, denying the charges. Subsequently, she was placed on preventive suspension and then notified of her dismissal. The Labor Arbiter initially ruled her dismissal illegal, but the National Labor Relations Commission (NLRC) reversed this decision, finding just cause for dismissal. The Court of Appeals (CA) affirmed the NLRC’s finding of just cause but awarded nominal damages to Sumakote, holding that she was not given a sufficient opportunity to be heard.

The Supreme Court, in analyzing the case, reiterated the importance of both substantive and procedural due process in termination cases. Substantive due process concerns the legality of the act of dismissal, while procedural due process concerns the legality of the manner of dismissal. The Court acknowledged that Sumakote was terminated for a just cause under Article 282 of the Labor Code. However, the critical issue was whether the procedural due process requirements for a valid dismissal were met. The Court referred to Book VI, Rule I, Section 2 of the Omnibus Rules Implementing the Labor Code, which outlines the standards of due process that must be observed in termination cases.

According to the Omnibus Rules Implementing the Labor Code, in cases of termination of employment based on just causes, the following standards of due process shall be substantially observed:

SECTION 2. Security of tenure – (a) In cases of regular employment, the employer shall not terminate the service of an employee except for just or authorized causes as provided by law, and subject to the requirements of due process.

x x x x

(d) In all cases of termination of employment, the following standards of due process shall be substantially observed:

For termination of employment based on just causes as defined in Article 282 of the Labor Code:

(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.

(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

The Supreme Court, citing King of Kings Transport v. Mamac, further elaborated on these requirements, emphasizing that the first written notice should contain specific causes for termination and give the employee a reasonable opportunity to submit a written explanation. This opportunity should include assistance from management to enable the employee to prepare their defense. The notice should provide a detailed narration of the facts and circumstances supporting the charges and specify any violated company rules or grounds under Article 282.

Furthermore, the employer should schedule and conduct a hearing or conference where the employee can explain their defenses, present evidence, and rebut the employer’s evidence, with the assistance of counsel if desired. Finally, after determining that termination is justified, the employer must serve a written notice of termination indicating that all circumstances have been considered and grounds have been established to justify the severance of employment.

The Court found that while NDC Tagum Foundation sent several letters to Sumakote, these letters did not satisfy the procedural due process requirements. The initial letter did not request an explanation but rather implied that the foundation had already decided to replace her. While the subsequent letters sought an explanation, the foundation failed to conduct a hearing or conference where Sumakote could have presented her defense. Instead, she was immediately placed on preventive suspension and then dismissed. The alleged opportunities for her to explain her side through the letters were deemed insufficient to meet the minimum standard of an opportunity to be heard.

The Court emphasized that a full adversarial hearing is not required, but a fair and reasonable opportunity for the employee to explain the controversy is essential. The absence of a hearing or conference constituted a breach of procedural due process. Consequently, the Supreme Court affirmed the Court of Appeals’ decision, awarding nominal damages to Sumakote for the employer’s failure to comply with the procedural due process requirements. Furthermore, the Court imposed a legal interest rate of 6% per annum on the nominal damages from the finality of the decision until full payment. This case reinforces the importance of employers adhering to procedural due process requirements in termination cases, even when a just cause for dismissal exists.

FAQs

What was the key issue in this case?	The key issue was whether NDC Tagum Foundation followed procedural due process requirements when dismissing Evelyn Sumakote, specifically regarding her opportunity to be heard.
What is procedural due process in employment termination?	Procedural due process refers to the legal requirement that employers must follow specific procedures when terminating an employee, including providing notice and an opportunity to be heard.
What are the minimum requirements for procedural due process?	The minimum requirements include a written notice specifying the grounds for termination, an opportunity for the employee to explain their side, and a written notice of termination.
What constitutes a sufficient opportunity to be heard?	A sufficient opportunity to be heard involves a fair and reasonable chance for the employee to defend themselves against the reasons cited for their dismissal, often through a hearing or conference.
What happens if an employer fails to comply with procedural due process?	If an employer fails to comply with procedural due process, they may be liable for nominal damages, even if the dismissal was for a just cause.
What is the significance of the King of Kings Transport v. Mamac case?	The King of Kings Transport v. Mamac case clarifies and elaborates on the procedural due process requirements in termination cases, providing a detailed framework for employers to follow.
What was the outcome of the NDC Tagum Foundation v. Sumakote case?	The Supreme Court affirmed the Court of Appeals’ decision, awarding nominal damages to Sumakote because NDC Tagum Foundation did not provide her with a sufficient opportunity to be heard before her dismissal.
What is the legal interest rate imposed on the nominal damages in this case?	The Court imposed a legal interest rate of 6% per annum on the nominal damages from the finality of the decision until full payment.

In conclusion, NDC Tagum Foundation, Inc. v. Sumakote serves as a reminder to employers about the importance of adhering to procedural due process requirements in termination cases. While a just cause for dismissal is essential, providing employees with a fair opportunity to be heard is equally critical. Failure to do so can result in legal consequences, even if the dismissal itself was justified.

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: NDC TAGUM FOUNDATION, INC. vs. EVELYN B. SUMAKOTE, G.R. No. 190644, June 13, 2016