In Lucita S. Pardillo v. Dr. Evelyn Ducay Bandojo, the Supreme Court of the Philippines ruled that an employee’s dismissal was illegal due to the employer’s failure to prove just cause and to comply with procedural due process. The Court emphasized that even managerial employees are entitled to substantive and procedural due process before termination. This decision reinforces the importance of employers adhering to legal requirements when dismissing employees, regardless of their position, ensuring fairness and protecting employee rights against arbitrary termination.
Beyond Tardiness: When Can Loss of Confidence Justify Dismissal?
Lucita Pardillo, a Business Office Manager at E & R Hospital, was terminated by Dr. Evelyn Bandojo, the hospital’s owner, citing loss of confidence, habitual tardiness, and other offenses. Pardillo filed an illegal dismissal complaint, leading to conflicting decisions from the Labor Arbiter (LA), National Labor Relations Commission (NLRC), and Court of Appeals (CA). The Supreme Court (SC) ultimately sided with Pardillo, emphasizing the necessity of substantive and procedural due process in employee terminations, particularly highlighting the nuances involved when managerial employees are involved.
To determine the legality of a dismissal, both **substantive and procedural due process** must be observed. Substantive due process requires a just or authorized cause for termination, as outlined in Article 297 of the Labor Code.
Termination by Employer. — An employer may terminate an employment for any of the following causes:
Procedural due process, on the other hand, requires adherence to the two-notice rule. This includes providing the employee with a first notice detailing the grounds for termination and an opportunity to explain, followed by a second notice indicating the employer’s decision to dismiss.
One of the grounds cited for Pardillo’s dismissal was **loss of trust and confidence**, permitted under Article 297(c). This ground requires that the employee holds a position of trust and that there exists a willful act justifying the loss of trust, based on clearly established facts. The Supreme Court emphasized that while employers have the right to dismiss employees for loss of trust and confidence, the evidence must clearly and convincingly establish the basis for this loss. The breach must be willful, intentional, and without justifiable excuse, supported by substantial grounds, not merely the employer’s whims or suspicion. The act must be work-related and demonstrate the employee’s unsuitability for continued employment.
While the law and this Court recognize the right of an employer to dismiss an employee based on loss of trust and confidence, the evidence of the employer must clearly and convincingly establish the facts upon which the loss of trust and confidence in the employee is based.
The Court also distinguished between managerial and rank-and-file employees in applying this ground. For managerial employees, the mere existence of a basis for believing that they breached the employer’s trust suffices for dismissal, requiring only some basis for the loss of confidence. However, this leeway does not allow for arbitrary dismissals; a reasonable basis must still exist.
In this case, the SC found that Dr. Bandojo failed to provide substantial evidence of Pardillo’s alleged acts leading to loss of trust and confidence. The notice of termination included allegations, such as texting insults and threats, that were not previously addressed in the notice to explain (NTE). This omission violated Pardillo’s right to be informed of the charges against her. The Court also supported the NLRC’s findings regarding Pardillo’s tardiness, noting that her flexible work schedule, acknowledged by Dr. Bandojo, justified some instances of lateness. Other allegations, such as mishandling patient claims, were also sufficiently explained by Pardillo.
The Court underscored the importance of providing a proper NTE, which should contain specific causes for termination and allow the employee a reasonable opportunity to respond. This requirement was not met, as the initial memorandum regarding the time-card incident did not detail grounds for dismissal or direct Pardillo to submit a written explanation. Dr. Bandojo’s failure to comply with both substantive and procedural due process rendered Pardillo’s dismissal illegal.
As a result of the illegal dismissal, the Supreme Court affirmed the NLRC’s award of backwages and separation pay to Pardillo. Backwages compensate for earnings lost due to the unjust dismissal, while separation pay is granted when reinstatement is not feasible due to strained relations between the parties. These remedies aim to restore the employee to their previous position, as much as possible, and compensate for the injustice suffered.
The SC modified the NLRC’s decision by deleting the award of attorney’s fees, aligning with the principle that such fees are an exception rather than the rule, requiring factual, legal, or equitable justification. The Court also specified that the monetary award would accrue legal interest at 12% per annum from the date of illegal dismissal until June 30, 2013, and at 6% thereafter until full satisfaction, in accordance with prevailing jurisprudence. The case was remanded to the Labor Arbiter for proper computation and execution of the award.
FAQs
| What was the key issue in this case? | The key issue was whether Lucita Pardillo’s dismissal was legal, considering claims of loss of trust and confidence and habitual tardiness. The Supreme Court evaluated if the employer, Dr. Bandojo, complied with substantive and procedural due process requirements. |
| What is substantive due process in employment termination? | Substantive due process requires that there be a just or authorized cause for the termination of an employee. This means the employer must have valid grounds, such as serious misconduct or willful disobedience, as defined in the Labor Code. |
| What is procedural due process in employment termination? | Procedural due process requires the employer to follow a specific procedure before terminating an employee. This includes providing a written notice specifying the grounds for termination and giving the employee an opportunity to explain their side. |
| What is a Notice to Explain (NTE)? | A Notice to Explain (NTE) is a written notice given to an employee that details the grounds for potential termination. It provides the employee a reasonable opportunity to present their defense and explain their actions. |
| What does loss of trust and confidence mean as grounds for dismissal? | Loss of trust and confidence can be grounds for dismissal if the employee holds a position of trust and commits a willful act that justifies the loss of trust. This must be based on clearly established facts, not merely the employer’s suspicion. |
| How is the dismissal of a managerial employee different from a rank-and-file employee? | For managerial employees, the employer needs only some basis for believing that the employee breached their trust, while rank-and-file employees require proof of involvement in the alleged events. However, even managerial dismissals must have a reasonable basis. |
| What are backwages and separation pay? | Backwages are the compensation an employee should have earned from the time of illegal dismissal until reinstatement (or final judgment). Separation pay is granted when reinstatement is not feasible due to strained relations, typically calculated as one-month salary for each year of service. |
| Why was attorney’s fees not awarded in this case? | Attorney’s fees are an exception rather than the rule and require factual, legal, or equitable justification. Since no such justification was established, the Supreme Court deleted the award of attorney’s fees. |
The Pardillo v. Bandojo case underscores the importance of adhering to due process requirements in employment termination, particularly when invoking loss of trust and confidence. Employers must ensure that terminations are based on substantial evidence and that employees are afforded proper notice and opportunity to defend themselves. This ruling serves as a reminder of the legal protections afforded to employees, regardless of their position within the company.
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: LUCITA S. PARDILLO, PETITIONER, V. DR. EVELYN DUCAY BANDOJO, OWNER AND MEDICAL DIRECTOR OF E & R HOSPITAL, RESPONDENT., G.R. No. 224854, March 27, 2019
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