The Importance of Just Cause and Procedural Due Process in Employee Dismissals

American Express Transnational (Now American International Tours, Inc.) and Carlo Severino v. Menandro T. Borre, G.R. No. 228320, July 15, 2020

Imagine you’re a loyal employee, driving for the same company for years, when suddenly, you’re dismissed for refusing to perform a task you believe you were not properly instructed to do. This scenario played out in the Supreme Court case involving Menandro T. Borre, a driver/messenger for American Express Transnational. The central legal question was whether Borre’s dismissal was valid, and if so, whether he was entitled to separation pay. This case underscores the delicate balance between an employer’s right to terminate employment and the employee’s right to due process and fair treatment.

Legal Context: Understanding Just Cause and Separation Pay

In Philippine labor law, an employer may terminate an employee’s service for just cause, as outlined in Article 282 of the Labor Code (now Article 297). Just causes include serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud, and other similar grounds. For a dismissal to be valid, the employer must prove the existence of the just cause and that the employee was afforded due process, which includes a notice to explain and a hearing.

Separation pay, on the other hand, is typically awarded when an employee is dismissed due to reasons not attributable to their fault, such as redundancy or retrenchment, as provided under Articles 283 and 284 of the Labor Code. However, the Supreme Court has occasionally granted separation pay as a form of financial assistance based on equity and social justice, even when the dismissal was for just cause. This is not automatic and depends on exceptional circumstances.

The key provision in this case is Article 282(a) of the Labor Code, which states: “An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work.”

Case Breakdown: The Journey of Menandro T. Borre

Menandro T. Borre was hired by American Express Transnational as a probationary driver in 2005 and was regularized later that year. On March 9, 2013, Borre was scheduled to drive for the company’s Leisure Team but refused, despite confirming his availability. This incident, coupled with previous instances where Borre allegedly refused to drive due to leaving his license at home, led to his dismissal on May 15, 2013, for insubordination and negligence.

Borre filed a complaint for illegal dismissal, which was dismissed by the Labor Arbiter, a decision upheld by the National Labor Relations Commission (NLRC). The Court of Appeals (CA) affirmed the validity of the dismissal but awarded Borre separation pay as a form of financial assistance, citing his long years of service and the principle of social justice.

The Supreme Court, however, reversed the CA’s decision on the separation pay, stating: “The cause of the termination of his employment amounts to willful disobedience under Article 282(a) of the Labor Code. More importantly, his repeated refusal to perform the very job he was hired for manifests nothing but his utter disregard for his employment and his employer’s interest.”

The Court further emphasized: “To rule otherwise, would simply be to distort the meaning of social justice.” This ruling highlights the strict application of just cause provisions and the limited circumstances under which separation pay can be awarded.

Practical Implications: Navigating Dismissals and Separation Pay

This ruling reaffirms the importance of just cause and due process in employee dismissals. Employers must ensure they have substantial evidence and follow proper procedures to avoid claims of illegal dismissal. Employees, on the other hand, must understand that refusal to follow lawful orders can lead to valid termination without separation pay.

The decision also clarifies that separation pay as financial assistance is not a given, even in cases of long service, unless exceptional circumstances are present. This can affect how future cases are decided, emphasizing the need for a careful assessment of each situation.

Key Lessons:

• Employers must have substantial evidence of just cause and follow due process to legally dismiss an employee.
• Employees should comply with lawful orders to avoid being dismissed for willful disobedience.
• Separation pay as financial assistance is not automatic and depends on exceptional circumstances.

Frequently Asked Questions

What constitutes just cause for dismissal in the Philippines?

Just cause for dismissal includes serious misconduct, willful disobedience, gross and habitual neglect of duty, fraud, or other similar grounds as outlined in Article 282 of the Labor Code.

What is the process for dismissing an employee for just cause?

The process involves serving the employee a notice to explain, conducting an administrative hearing, and issuing a notice of termination if the just cause is proven.

Can an employee dismissed for just cause receive separation pay?

Typically, no. However, in exceptional circumstances, the court may award separation pay as financial assistance based on equity and social justice.

What are exceptional circumstances for granting separation pay?

Exceptional circumstances may include long years of service, no serious misconduct, and other factors that justify financial assistance as a measure of social justice.

How can employees protect themselves from unfair dismissal?

Employees should document their compliance with company policies, seek legal advice if faced with dismissal, and ensure they are given due process.

What should employers do to ensure valid dismissals?

Employers should document all instances of employee misconduct, follow due process, and consult legal counsel to ensure compliance with labor laws.

ASG Law specializes in labor and employment law. Contact us or email hello@asglawpartners.com to schedule a consultation.