The Supreme Court ruled in Tan Brothers Corporation v. Escudero that an employee who stops working due to unpaid wages and lack of work assignments has been constructively dismissed, not having abandoned their employment. This decision reinforces the principle that employers cannot evade their responsibilities by claiming abandonment when their own actions create intolerable working conditions. It underscores the importance of due process and fair treatment in employer-employee relations, protecting employees from unfair labor practices.

The Case of the Missing Typewriter: Was it Abandonment or a Forced Exit?

This case arose from a complaint filed by Edna Escudero against Tan Brothers Corporation for illegal dismissal, underpayment of wages, and other labor standard violations. Escudero had been employed as a bookkeeper since 1991. The central question was whether Escudero abandoned her employment, as claimed by Tan Brothers, or whether she was constructively dismissed due to the employer’s actions. Constructive dismissal occurs when an employer creates a hostile or unfavorable work environment that forces an employee to resign.

Tan Brothers argued that Escudero stopped reporting for work in July 2003, and that she took company property with her, indicating an intent to abandon her job. They presented payroll vouchers and a DOLE inspection report to support their claims. However, Escudero contended that starting in July 2003, her salary was not paid on time, and that after office renovations in 2004, she was no longer given work assignments. She argued that these actions forced her to stop working, leading to her illegal dismissal complaint.

The Labor Arbiter initially ruled in favor of Escudero, finding that Tan Brothers had constructively dismissed her. The National Labor Relations Commission (NLRC) affirmed this decision, emphasizing that the claim about the typewriter was a retaliatory afterthought. The Court of Appeals (CA) also sided with Escudero, stating that there was no clear intention to abandon her employment. The Supreme Court was then asked to review whether the CA erred in upholding the NLRC’s decision.

The Supreme Court began by reiterating the established principle that its review of CA decisions is generally limited to errors of law, not factual reevaluation. It emphasized that the factual findings of labor tribunals, especially when affirmed by the CA, are generally binding on the Court, provided they are supported by substantial evidence. In this case, the crucial issue was whether Escudero had truly abandoned her employment.

The Court defined abandonment as:

the deliberate and unjustified refusal of an employee to resume his employment. It constitutes neglect of duty and is a just cause for termination of employment under paragraph (b) of Article 282 of the Labor Code.

To legally establish abandonment, two key elements must be present: (1) failure to report for work without a valid reason, and (2) a clear intention to sever the employer-employee relationship. The second element, intention, is the more critical factor, requiring overt acts that demonstrate the employee’s desire to no longer work for the employer.

The Supreme Court stated that the employer bears the burden of proving that the employee deliberately and unjustifiably refused to resume employment, lacking any intention to return. This is a significant point, as it places the responsibility on the employer to provide concrete evidence of abandonment, rather than simply claiming it.

Tan Brothers argued that Escudero’s absence, combined with the alleged theft of the typewriter and company records, demonstrated her intent to abandon her job. The company also pointed out that Escudero’s complaint was filed more than a year after she stopped working. However, the Court found these arguments unconvincing.

While the filing of an illegal dismissal complaint is often seen as negating abandonment, the Court focused on the fact that Tan Brothers failed to provide sufficient evidence to support their claim that Escudero abandoned her employment in July 2003. The Court held that:

allegation is not evidence, the rule has always been to the effect that a party alleging a critical fact must support his allegation with substantial evidence which has been construed to mean such relevant evidence as a reasonable mind will accept as adequate to support a conclusion.

The Court highlighted that Escudero had continued to report for work despite the irregular payment of her salaries. Her eventual failure to continue working in May 2004, due to non-payment of wages, did not demonstrate an intent to abandon her employment. Furthermore, Tan Brothers never issued a notice directing Escudero to return to work. The Court pointed out that:

mere absence or failure to report for work, even after a notice to return work has been served, is not enough to amount to an abandonment of employment.

Regarding the alleged theft, the Court dismissed this claim because it was unsubstantiated and only reported after Escudero filed her complaint. The Court also emphasized the importance of the two-notice requirement for terminating an employee for just cause, which Tan Brothers failed to comply with.

The Court then addressed the issue of constructive dismissal. Constructive dismissal happens when continued employment becomes impossible or unreasonable due to actions by the employer, such as demotion, pay cuts, or unbearable working conditions. The test is whether a reasonable person in the employee’s position would feel compelled to resign. In Escudero’s case, the Court found that the deprivation of office space, lack of work assignments, and non-payment of salaries clearly constituted constructive dismissal.

The Supreme Court affirmed the CA’s decision, finding that Escudero was entitled to backwages and attorney’s fees, as provided under Article 279 of the Labor Code. The Court underscored that:

employees who have been illegally terminated from employment are entitled to the twin reliefs of reinstatement without loss of seniority rights and to the payment of full back wages corresponding to the period from their illegal dismissal up to actual reinstatement.

Because reinstatement was no longer practical, the Court upheld the award of separation pay in lieu of reinstatement.

FAQs

What was the key issue in this case?	The key issue was whether Edna Escudero abandoned her employment, as claimed by Tan Brothers, or whether she was constructively dismissed due to the employer’s actions, such as non-payment of wages and lack of work assignments.
What is constructive dismissal?	Constructive dismissal occurs when an employer creates a hostile or unfavorable work environment that forces an employee to resign, effectively terminating the employment relationship. It includes situations where continued employment becomes impossible or unreasonable.
What are the elements of abandonment of employment?	To legally establish abandonment, two elements must be present: (1) failure to report for work without a valid reason, and (2) a clear intention to sever the employer-employee relationship, demonstrated by overt acts.
Who has the burden of proof in cases of alleged abandonment?	The employer has the burden of proving that the employee deliberately and unjustifiably refused to resume employment, lacking any intention to return.
What is the significance of filing an illegal dismissal complaint?	While the filing of an illegal dismissal complaint can negate a claim of abandonment, the court emphasized the need for the employer to still prove the elements of abandonment. The act of filing the case is proof of not abandoning.
What is the two-notice rule?	The two-notice rule requires employers to provide two written notices to employees before termination: a notice stating the cause for termination and a notice of the decision to dismiss, ensuring due process.
What are the remedies for illegal dismissal?	Employees who are illegally dismissed are entitled to reinstatement without loss of seniority rights and full back wages from the time of dismissal until actual reinstatement, or separation pay if reinstatement is not feasible.
What evidence did Tan Brothers provide to support their claim of abandonment?	Tan Brothers provided payroll vouchers and a DOLE inspection report. They claimed Escudero stopped reporting to work in July 2003, allegedly took company records, and appropriated a company typewriter.

The Supreme Court’s decision in Tan Brothers v. Escudero serves as a crucial reminder of the importance of fair labor practices and the protection of employee rights. By affirming the principles of constructive dismissal and placing the burden of proof on employers in cases of alleged abandonment, the Court reinforces the necessity of providing a fair and reasonable work environment. This ruling protects employees from being unfairly penalized when their employers create intolerable working conditions.

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: Tan Brothers Corporation v. Edna R. Escudero, G.R. No. 188711, July 8, 2013