In Vicente A. Bernardo and Resurreccion Bernardo vs. Marcial O. Dimaya, the Supreme Court addressed the complexities of employee termination, balancing an employer’s right to discipline misconduct with an employee’s right to due process. The Court found that while Dimaya’s actions constituted misconduct and a just cause for termination existed, the employer failed to follow the required procedures for dismissal. This decision underscores the importance of adhering to proper legal protocols even when there is a valid reason for terminating an employee, ensuring fairness and protecting employee rights in the workplace. Consequently, the employer was held liable for nominal damages due to the procedural lapse.

Dishonest Acts or Dismissal? Balancing Misconduct and Employee Rights

The case revolves around Marcial Dimaya, an installer for Virex Enterprises, who was found to have committed several infractions during a job. These included installing a drain pipe not included in the request form, receiving additional payment from the client without reporting it, and failing to issue an official receipt. Following an investigation, Virex Enterprises fined Dimaya, who refused to pay and subsequently stopped reporting to work. Dimaya then filed a complaint for illegal dismissal, claiming he was terminated without due process.

The Labor Arbiter (LA) initially ruled in favor of Dimaya, finding that he was illegally dismissed due to the lack of a formal memorandum requiring him to explain his actions. The LA awarded backwages and separation pay. However, the National Labor Relations Commission (NLRC) dismissed the employer’s appeal due to the absence of a certificate of non-forum shopping. The Court of Appeals (CA) upheld the NLRC’s decision, emphasizing that the procedural lapse warranted the dismissal of the appeal.

The Supreme Court, however, took a different approach. Acknowledging the substantive issues raised by the employers, the Court decided to liberally apply the rules of procedure to prevent a potential miscarriage of justice. It emphasized that technical rules should not override the pursuit of a fair and objective resolution, citing the NLRC’s own rules which mandate the use of reasonable means to ascertain facts in the interest of due process. This decision to relax procedural rules underscores the judiciary’s commitment to ensuring equitable outcomes, particularly in labor disputes where the rights and livelihoods of employees are at stake.

The Court then delved into the merits of the case, scrutinizing Dimaya’s conduct and the employer’s actions. It acknowledged Dimaya’s admission of installing the drain pipe and receiving additional payment. The Court also considered that Dimaya was the team leader, making him responsible for the team’s actions. The Court noted that Dimaya’s failure to account for materials, combined with his subsequent refusal to comply with company policy and his attempt to shift blame, constituted misconduct and willful disobedience. According to Article 297 of the Labor Code, an employer may terminate employment for serious misconduct or willful disobedience. Specifically, Article 297 (formerly Article 282) of the Labor Code states:

ART. 297. [282] Termination by employer. – 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;

Building on this principle, the Supreme Court referenced Adamson University Faculty and Employees Union v. Adamson University, which defined misconduct as improper or wrong conduct, a transgression of established rules, implying wrongful intent. While Dimaya’s initial failure to account for the drain pipe might not have warranted dismissal, his subsequent refusal to comply with company policy and his attempt to blame his team members indicated a wrongful intent and willful disobedience, justifying his termination.

However, the Court also emphasized the importance of procedural due process in termination cases. The Court noted that Dimaya was not afforded the required two written notices and a hearing, as mandated by established jurisprudence. This procedural lapse, the Court clarified, did not invalidate the dismissal but warranted the payment of nominal damages to Dimaya. The Court referred to the landmark case of Agabon v. NLRC, setting the amount of nominal damages at P30,000.00 for failure to comply with the twin-notice requirement.

The Court also addressed the issue of holiday pay and service incentive leave, which the employers argued Dimaya was not entitled to as a field personnel. However, the Court found no evidence to support the claim that Dimaya’s actual hours of work could not be determined with reasonable certainty, a key factor in determining whether an employee is a field personnel. The Court affirmed the awards of holiday pay and service incentive leave to Dimaya. The Supreme Court in Auto Bus Transport Systems, Inc. v. Bautista clarified the definition of a “field personnel,” stating:

[I]t is necessary to stress that the definition of a “field personnel” is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employee’s performance is unsupervised by the employer… [W]hose actual hours of work in the field cannot be determined with reasonable certainty.

The final point of contention was the award of attorney’s fees. The Court, citing Stradcom Corporation v. Orpilla, ruled that since Dimaya was dismissed for a just cause (serious misconduct), the award of attorney’s fees was not warranted and should be deleted. This ruling aligns with the principle that attorney’s fees are generally awarded in cases where the employee was unjustly dismissed or the employer acted in bad faith.

FAQs

What was the key issue in this case?	The central issue was whether an employee’s dismissal was valid when there was a just cause for termination but the employer failed to comply with procedural due process requirements. The Court examined the balance between an employer’s right to discipline and an employee’s right to fair treatment.
What is considered “serious misconduct” in employment law?	Serious misconduct is defined as improper or wrong conduct that violates established rules, implies wrongful intent, and is connected to the employee’s work. The misconduct must be grave and aggravated, not merely trivial or unimportant, to warrant dismissal.
What are the two notices required for due process in termination?	The two notices are: (1) a written notice informing the employee of the specific acts or omissions for which the employer seeks dismissal, and (2) a written notice informing the employee of the employer’s decision to terminate employment. A hearing must also be conducted.
What are nominal damages, and why were they awarded in this case?	Nominal damages are a small sum awarded when a legal right is violated but no actual financial loss is proven. In this case, they were awarded because the employer failed to follow the procedural due process requirements when dismissing the employee, even though there was a valid cause for termination.
Who is considered a “field personnel” and why does it matter?	A “field personnel” is an employee who regularly performs duties away from the employer’s principal place of business and whose actual hours of work cannot be determined with reasonable certainty. Field personnel are often exempt from certain labor standards, such as overtime pay.
Why was the award of attorney’s fees deleted in this case?	The award of attorney’s fees was deleted because the employee was dismissed for a just cause (serious misconduct). Attorney’s fees are generally awarded in cases where the employee was unjustly dismissed or the employer acted in bad faith, which was not the situation in this case.
What is a certificate of non-forum shopping and why is it important?	A certificate of non-forum shopping is a document stating that the appealing party has not filed any similar case in other courts or tribunals. It is required to prevent parties from simultaneously pursuing the same case in multiple venues.
What was the final ruling of the Supreme Court in this case?	The Supreme Court reversed the Court of Appeals’ decision, finding that while there was a just cause for Dimaya’s dismissal, the employer failed to comply with procedural due process. The Court ordered the employer to pay Dimaya unpaid holiday pay, service incentive leave pay, 13th-month pay, salaries from June 30 to July 14, 2007, and nominal damages of P30,000.00, while deleting the awards of backwages, separation pay, and attorney’s fees.

The Bernardo vs. Dimaya case offers valuable insights into the balance between an employer’s right to manage their workforce and an employee’s right to due process and fair treatment. Employers must ensure they adhere to procedural requirements even when a just cause for termination exists, while employees are held accountable for their actions and adherence to company policies. Failing to meet either of these standards can lead to legal repercussions and undermine the employment relationship.

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: VICENTE A. BERNARDO AND RESURRECCION BERNARDO VS. MARCIAL O. DIMAYA, G.R. No. 195584, November 10, 2021