Carpio vs. Green Era Biotech Corp.

Mere absence from work, without more, will ordinarily fail to support a finding of abandonment of work, absent any overt act from the employee clearly showing that he or she intends to sever his or her employment. An employee terminated for unjustified absence is not entitled to backwages notwithstanding the illegality of the dismissal where the penalty of dismissal was too harsh but the employer acted in good faith.

Carpio was a worker deployed to Green Era Biotech, a manufacturing/production company, through Great Value Management, a manpower service provider registered with the Department of Labor and Employment. Great Value supplied manpower to Green Era Biotech pursuant to yearly service agreements, and Carpio was hired by Great Value on January 1, 2017, as a probationary Utility Helper. The employment relationship was governed by Great Value's employee handbook, Mga Alituntunin at Patakaran, which Carpio acknowledged receiving and agreed to follow. The case arose against the backdrop of the Labor Code's provisions on termination of employment, the constitutional guarantee of security of tenure, and DOLE Department Order No. 18-A, Series of 2011, which regulates contracting arrangements and prohibits labor-only contracting.

Carpio filed a complaint for illegal dismissal, underpayment of salaries/wages, non-payment of service incentive pay and 13th month pay, unfair labor practices, damages, and attorney's fees against Green Era Biotech, Li, Great Value, and Rile. Carpio claimed he started working with Green Era Biotech on April 26, 2015, as Production Utility, and was summarily and illegally dismissed on May 21, 2018, without any valid ground. He argued that he was a regular employee of Green Era Biotech and that Great Value was engaged in prohibited labor-only contracting.

Great Value and Rile explained that Great Value is a DOLE-registered service provider that has been supplying manpower to Green Era Biotech since 2016 pursuant to yearly service agreements. Carpio was hired by Great Value on January 1, 2017, as a probationary employee and deployed to Green Era Biotech as a Utility Helper for a fixed period of six months. They alleged that Carpio failed to report for work from April 27 to May 3, 2018, and when he reported on May 4, 2018, he was issued a Notice to Explain. Despite the notice, Carpio was again absent from May 11 to May 19, 2018, without permission, prompting Great Value to send a Notice of AWOL dated May 19, 2018. Great Value claimed Carpio was validly dismissed due to gross and habitual neglect of duty and serious misconduct, and that it complied with the twin notice requirement.

In his rejoinder, Carpio alleged he was forced to sign a resignation paper on December 6, 2016, under threat of removal, and was transferred to Great Value on January 3, 2017. He claimed he failed to report from April 27 to May 3, 2018, because he was sick, and that on May 10, 2018, he had a toothache and was allowed a half-day leave. He admitted he was not able to report from May 11 to 19, 2018, but claimed he asked permission from the Foreman and Pile, and was allowed leave by Assistant Supervisor Roderic Rasuena on May 19, 2018. On May 20, 2018, Carpio reported for work but was not allowed to enter the premises; on May 21, 2018, Pile told him the matter had been elevated to higher management. On May 28, 2018, Carpio received a text message from Pile stating he could no longer return to work because he was on AWOL.

The Labor Arbiter ruled that Carpio abandoned his work due to prolonged absences without the prior consent or knowledge of his employer, but found no proof that Carpio received the First Notice to Explain, thus failing procedural due process. The NLRC modified the decision, declaring Green Era Biotech and Great Value engaged in labor-only contracting based on: (1) Great Value failed to prove other clients; (2) failed to show tools and equipment utilized by Carpio; (3) service agreements were never presented; and (4) the Certificate of Approval of Increase of Capital Stock and Treasurer's Affidavit were issued in 2014 and could not prove substantial capital in 2017. The CA affirmed the validity of the dismissal, ruling that Carpio failed to prove prior notice or authorization for his absences.

• Illegal Dismissal: Carpio argued that he was summarily and illegally dismissed without any valid ground on May 21, 2018, and that his absences were justified by sickness and toothache for which he obtained permission from his supervisors.
• Regular Employment: Carpio maintained that he is a regular employee of Green Era Biotech, having worked there since April 26, 2015, and that his forced resignation and transfer to Great Value did not sever his employment relationship with Green Era Biotech.
• Labor-Only Contracting: Carpio argued that Great Value is engaged in prohibited labor-only contracting, and thus respondents should be held jointly and solidarily liable for his money claims.

• Valid Dismissal: Great Value and Rile argued that Carpio was validly dismissed due to gross and habitual neglect of duty and serious misconduct arising from his repeated unauthorized absences, and that they complied with the twin notice requirement of procedural due process.
• Legitimate Contractor: Great Value claimed it is a legitimate job contractor registered with the DOLE, with an existing service agreement with Green Era Biotech when Carpio was hired, and that Carpio was informed of company policies through the employee handbook.
• No Employer Liability: Green Era Biotech argued that Great Value is a legitimate labor contractor and Carpio's employer, and thus Green Era Biotech cannot be held liable for Carpio's alleged illegal dismissal.

• Abandonment of Work: Whether Carpio's unauthorized absences from May 11 to 19, 2018, constituted abandonment of work justifying his dismissal.
• Proportionality of Penalty: Whether Great Value's company policy prescribing dismissal for at least five consecutive days of unauthorized absence is too harsh and disproportionate to the offense committed.
• Backwages: Whether Carpio is entitled to backwages despite the illegality of his dismissal, considering his absences were unjustified and inexcusable.
• Procedural Due Process: Whether Great Value and Green Era Biotech failed to comply with the requirements of procedural due process in terminating Carpio's employment.
• Labor-Only Contracting: Whether Great Value is engaged in prohibited labor-only contracting, rendering it and Green Era Biotech solidarily liable.
• Liability of Corporate Officers: Whether Li and Rile, as corporate officers, are solidarily liable for the monetary awards in favor of Carpio.

• Abandonment of Work: No. Carpio did not abandon his work because the records are bereft of proof that he deliberately failed to report with the intent to discontinue his employment; his attempt to report for work and prompt filing of an illegal dismissal complaint negate the charge of abandonment.
• Proportionality of Penalty: No. Great Value's policy on absenteeism prescribing dismissal for at least five days of unexplained absences is too harsh and disproportionate, and the dismissal based on this policy was illegal.
• Backwages: No. Carpio is not entitled to backwages because his absences were still unjustified and inexcusable, and Great Value may be considered in good faith in terminating his employment on the basis of the company policy.
• Procedural Due Process: Yes. Great Value and Green Era Biotech failed to comply with procedural due process by denying Carpio a reasonable opportunity to explain and by failing to provide a proper written notice of termination, warranting nominal damages of ₱30,000.00.
• Labor-Only Contracting: Yes. Great Value is engaged in prohibited labor-only contracting, and Great Value and Green Era Biotech are solidarily liable for the monetary awards in favor of Carpio.
• Liability of Corporate Officers: No. Li and Rile are not solidarily liable for separation pay because there is no reason to disregard the separate personality of the corporations.

• Abandonment of Work: Abandonment requires two factors: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second factor being the more determinative, manifested by overt acts. The burden of proving abandonment falls on the employer. While Carpio's absences from May 11 to 19, 2018, were unauthorized and unjustified, the records are bereft of proof that he deliberately failed to report with intent to discontinue employment. Following his absences, Carpio attempted to report for work but was no longer allowed to do so, and he filed a case for illegal dismissal protesting his removal. The Court cited TEA-SPFL vs. National Labor Relations Commission, which held that abandonment is incompatible with the prompt filing of an illegal dismissal complaint, as it is illogical for an employee to abandon employment and thereafter file a complaint for illegal dismissal.

• Proportionality of Penalty: The onus probandi rests on the employer to prove that the dismissal was for a valid cause. While the power to dismiss is part of management prerogative, this power is limited by the constitutional protection of the working class. Citing Verizon Communications Philippines, Inc. vs. Margin, the Court ruled that there must be a reasonable proportionality between the offense and the penalty, and where a less punitive penalty would suffice, missteps by labor ought not to be visited with a consequence so severe. The Verizon case, which struck down a similar policy deeming five or more consecutive days of absence as tantamount to abandonment, was found "on all fours" with the present case. Great Value's similar policy of considering five days of unauthorized absences as a dismissible offense is disproportionate to the offense committed, rendering the dismissal illegal.

• Backwages: The normal consequence of illegal dismissal is reinstatement or full backwages, but the Court may withhold backwages where: (1) the dismissal of the employee would be too harsh a penalty, and (2) the employer was in good faith in terminating the employment. Both circumstances are present: dismissal was too harsh for Carpio's unjustified absences, but Great Value may be considered in good faith in terminating his employment on the basis of the company policy. Thus, Carpio is entitled only to reinstatement, or separation pay of one month pay for every year of service with a fraction of at least six months considered as one whole year, should reinstatement no longer be viable.

• Procedural Due Process: Procedural due process in labor cases requires two written notices: first, a notice apprising the employee of the specific acts or omissions on which the proposed dismissal is based, and second, a notice informing the employee of the employer's decision to terminate employment. Citing King of Kings Transport, Inc. vs. Mamac, the Court detailed the requirements: the first notice must contain specific grounds and a directive to submit a written explanation within a reasonable period of at least five calendar days; a hearing or conference must be conducted; and the second notice must state that all circumstances have been considered and grounds established. Here, although Carpio was issued a Notice to Explain, the records do not show he was afforded a proper hearing or genuine opportunity to be heard. The Notice of AWOL did not constitute the second notice required by law, as it merely advised that continued absences would be treated as serious misconduct and abandonment. Carpio was never formally notified of his termination; he was only informed via text message that he was on AWOL and could no longer return to work.

• Labor-Only Contracting: Labor-only contracting is defined under Article 106 of the Labor Code as an arrangement whereby a person who does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, supplies workers to an employer to perform activities directly related to the principal business. Section 6 of DOLE Department Order No. 18-A, Series of 2011, provides that labor-only contracting exists where the contractor does not have substantial capital or investments and the employees perform activities usually necessary or desirable to the operation of the principal, or where the contractor does not exercise the right to control over the performance of the work. A contractor's Certificate of Registration is not conclusive proof of legitimacy; it merely prevents the automatic presumption of labor-only contracting and gives rise to a disputable presumption of legitimacy. Here, Great Value's Certificate of Registration was issued only on June 28, 2017, after Carpio's hiring, and Great Value failed to establish substantial capital or investments in tools and equipment actually used by Carpio. These facts, together with Green Era Biotech being Great Value's sole client, lead to the inescapable conclusion that Great Value is a labor-only contractor. Under Section 27 of Department Order No. 18-A, the principal becomes jointly and severally liable with the contractor to the latter's employees.

• Liability of Corporate Officers: As a general rule, corporate officers should not be held solidarily liable with the corporation for separation pay, as a corporation is invested by law with a personality separate and distinct from those of the persons composing it. There being no reason to disregard the separate personality of Great Value and Green Era Biotech, Li and Rile should not be held solidarily liable for the monetary award in favor of Carpio.

• Abandonment of Work — Abandonment is the deliberate and unjustified refusal of an employee to resume employment, requiring two elements: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, with the second element being the more determinative factor manifested by overt acts. The burden of proving abandonment falls on the employer. The Court applied this doctrine in finding that Carpio's attempt to report for work and prompt filing of an illegal dismissal complaint negated any intent to sever his employment.

• Proportionality of Penalty in Dismissal — There must be a reasonable proportionality between the offense and the penalty imposed; dismissal, being the ultimate penalty, should not be imposed where a less punitive penalty would suffice. The Court applied this doctrine in ruling that Great Value's company policy deeming five days of unauthorized absence as a dismissible offense was too harsh and disproportionate, rendering the dismissal illegal.

• Withholding of Backwages — The Court may withhold backwages in illegal dismissal cases where: (1) the dismissal of the employee would be too harsh a penalty, and (2) the employer was in good faith in terminating the employment. The Court applied this doctrine in denying Carpio's backwages because his absences were unjustified and Great Value acted in good faith under its company policy.

• Labor-Only Contracting — Labor-only contracting exists where the contractor does not have substantial capital or investments in the form of tools, equipment, machineries, work premises, among others, and the employees recruited and placed perform activities usually necessary or desirable to the operation of the principal, or where the contractor does not exercise the right to control over the performance of the work. A contractor's Certificate of Registration is not conclusive proof of legitimacy but merely gives rise to a disputable presumption. The Court applied this doctrine in upholding the NLRC's finding that Great Value was a labor-only contractor, rendering it and Green Era Biotech solidarily liable.

• Twin Notice Requirement — Procedural due process in labor cases requires two written notices: first, a notice apprising the employee of the specific acts or omissions on which the proposed dismissal is based, and second, a notice informing the employee of the employer's decision to terminate employment, stating that all relevant circumstances have been considered and adequate grounds established. The Court applied this doctrine in finding that Great Value and Green Era Biotech failed to comply with procedural due process, warranting nominal damages.

• "Mere absence from work, without more, will ordinarily fail to support a finding of abandonment of work, absent any overt act from the employee clearly showing that he or she intends to sever his or her employment." — This opening statement articulates the core ratio decidendi on abandonment, establishing that absence alone cannot justify a finding of abandonment without proof of intent to sever the employment relationship.

• "The filing of the complaint for illegal dismissal by petitioners on July 26, 1989, or within six days from the alleged retrenchment, negates the charge of abandonment, for it is illogical for an employee to 'abandon' his employment and thereafter file a complaint for illegal dismissal." — Quoted from TEA-SPFL v. National Labor Relations Commission, this passage establishes the doctrine that prompt filing of an illegal dismissal complaint is incompatible with a finding of abandonment.

• "There must be a reasonable proportionality between the offense and the penalty. Dismissal, without doubt, is the ultimate penalty that can be meted to an employee. Hence, where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe." — Quoted from Verizon Communications Philippines, Inc. v. Margin, this passage articulates the proportionality principle that limits management prerogative in imposing the penalty of dismissal.

• "The employer's failure to comply with these procedural due process requirements warrants the imposition of nominal damages." — This passage states the consequence of failing to observe the twin notice and hearing requirements in terminating an employee, supporting the award of ₱30,000.00 in nominal damages.

• TEA-SPFL vs. National Labor Relations Commission, 338 Phil. 681 (1997) — Controlling precedent on abandonment, establishing the two-element test and the principle that prompt filing of an illegal dismissal complaint negates the charge of abandonment.
• Verizon Communications Philippines, Inc. vs. Margin, 885 Phil. 203 (2020) — Controlling precedent on the proportionality of penalties in dismissal cases, holding that company rules deeming five or more consecutive days of absence as tantamount to abandonment are too harsh and disproportionate.
• King of Kings Transport, Inc. vs. Mamac, 553 Phil. 108 (2007) — Controlling precedent on the procedural due process requirements in termination cases, detailing the implementation of the twin notice requirement and the conduct of hearings or conferences.
• Atienza vs. Saluta, 853 Phil. 661 (2019) — Cited for the definition of abandonment and the two factors required to prove it, with the second factor being the more determinative.
• JS Unitrade Merchandise, Inc. vs. Samson, Jr., 871 Phil. 717 (2020) — Cited for the principle that abandonment is incompatible with the prompt filing of an illegal dismissal complaint.
• Añonuevo vs. CBK Power Company, 934 Phil. 171 (2023) — Cited for the rule that a contractor's Certificate of Registration is not conclusive proof of legitimacy and that the burden rests on the entity claiming legitimate contractor status.
• Gimalay vs. Court of Appeals, 874 Phil. 627 (2020) — Cited for the formula for separation pay of one month pay for every year of service with a fraction of at least six months considered as one whole year.
• Ever Electrical Manufacturing, Inc., et al. vs. Samahang Manggagawa ng Ever Electrical/NAMAWU Local 224, 687 Phil. 529 (2012) — Cited for the general rule that corporate officers should not be held solidarily liable with the corporation for separation pay.

• Article 106, Labor Code — Defines labor-only contracting as an arrangement whereby a person who does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, supplies workers to an employer to perform activities directly related to the principal business. Applied to find Great Value engaged in prohibited labor-only contracting.
• Article 109, Labor Code — Provides that a finding of labor-only contracting renders the principal the direct employer of the employees of the contractor or subcontractor. Applied to hold Green Era Biotech solidarily liable with Great Value.
• Article 282 (now Article 297), Labor Code — Lists just causes for termination by the employer, including serious misconduct and willful disobedience. Referenced in the dissenting opinion as the basis for the respondents' claim of valid dismissal.
• Section 6, DOLE Department Order No. 18-A, Series of 2011 — Prohibits labor-only contracting and defines its elements: (a) the contractor does not have substantial capital or investments and the employees perform activities usually necessary or desirable to the operation of the principal, or (b) the contractor does not exercise the right to control over the performance of the work. Applied to determine that Great Value was a labor-only contractor.
• Section 27, DOLE Department Order No. 18-A, Series of 2011 — Provides that a finding of labor-only contracting renders the principal jointly and severally liable with the contractor to the latter's employees. Applied to hold Great Value and Green Era Biotech solidarily liable.

Caguioa (Chairperson), Inting, and Gaerlan, JJ., concurred.

• Dimaampao, J., dissenting — The dissent argued that Carpio's dismissal was valid for just causes of willful disobedience and serious misconduct, not abandonment. The dissent emphasized that Carpio committed two distinct instances of AWOL—16 calendar days of absence within roughly three weeks—without prior approved leave, and offered no contemporaneous medical certificate or documentary substantiation for his claimed sickness and toothache. The dissent found the company policy reasonable and lawful as it does not prohibit absences but only requires that absences exceeding five consecutive days be reported and authorized, targeting non-communication rather than illness or emergencies. The dissent cited Almogera, Jr. vs. A & L Fishpond & Hatchery, Inc. as substantially similar, where the Court upheld dismissal for AWOL grounded on a written leave/attendance policy. The dissent agreed with the finding of procedural due process violation warranting nominal damages but voted to DENY the petition.