Dela Rosa vs. ABS-CBN Corporation

An employee hired under successive fixed-term contracts covering the same position with the same duties without interruption is a regular employee, and while dismissal for serious misconduct is valid where the misconduct is established, the employer's failure to serve an effective second notice of termination entitles the employee to nominal damages of P30,000 notwithstanding the validity of the dismissal.

Respondent ABS-CBN Corporation is a duly organized corporation engaged in television and radio broadcasting. Petitioner Augorio A. Dela Rosa was hired by respondent in 2002 as a video editor for its television broadcasting operations at an hourly rate of P230.00. He was allegedly rehired repeatedly and continuously for the same position under purported fixed-term contracts. The dispute arose from the intersection of petitioner's engagement under successive contracts and an incident of workplace misconduct that led to administrative proceedings and, ultimately, to the question of whether his dismissal was lawful.

In 2002, petitioner Augorio A. Dela Rosa was hired by respondent ABS-CBN Corporation as a video editor for its television broadcasting operations at an hourly rate of P230.00. He was allegedly rehired repeatedly and continuously for the same position under purported fixed-term contracts. Among his documented contracts were those covering ANC NEWS AM and ANC NEWS PM, which began on August 16, 2010 and were successively renewed: from February 16, 2011 to August 15, 2011; August 16, 2011 to August 15, 2012; August 16, 2012 to February 15, 2013; and February 16, 2013 to August 15, 2013. Other contracts intermittently spanned the years 2014 to 2015. Taken together, these engagements show that petitioner was under the employ of respondent for at least three years without interruption, performing the same position and duties throughout.

On August 22, 2013, petitioner reported for work and went to respondent's editing bay while intoxicated. While there, he tried to hug and kiss a female co-worker, then placed his hands inside her pants and touched her buttocks. The incident was witnessed by several employees, who stated that despite the resistance from and uneasiness of the co-worker, petitioner persistently teased and harassed her. On August 23, 2013, petitioner was given a show cause memorandum, to which he submitted an answer dated August 28, 2013, explaining that the incident was only accidental, as he had lost balance and fallen toward the co-worker. Administrative hearings were subsequently conducted on October 9, 2013, January 23, 2014, and March 3, 2014.

On September 1, 2015, respondent served a memorandum informing petitioner of management's decision to impose the penalty of dismissal for serious misconduct under Article 282(a) of the Labor Code. However, the memorandum stated that the penalty could no longer be effected, because petitioner's program contract dated August 16, 2013 had already expired on December 31, 2013, and his current program contract dated March 16, 2015 to September 15, 2015 no longer covered the incident. The decision was nonetheless made part of his employee records. Aggrieved, petitioner filed a complaint for illegal dismissal, underpayment of holiday pay, non-payment of salary/wages, 13th month pay, separation pay, and night shift differential, moral and exemplary damages, and attorney's fees.

The Labor Arbiter found petitioner to have been illegally dismissed, ruling that he was a regular employee and that dismissal due to "end of contract" was not a lawful cause. The NLRC affirmed with modification, deleting moral and exemplary damages, and holding that the fixed-term provision was unjustified. The Court of Appeals reversed the NLRC, finding petitioner a regular employee who was validly dismissed for just cause, with procedural due process having been observed. The factual findings material to the Supreme Court's analysis were that petitioner committed the acts of intoxication and sexual harassment as charged, and that the September 1, 2015 memorandum, while purporting to impose dismissal, expressly stated that the penalty could no longer be imposed due to contract expiration.

• Just Cause and Procedural Due Process: Petitioner argued that the Court of Appeals erred in ruling that he was legally dismissed for a just cause, contending that his dismissal was illegal.
• Nature of Employment: Petitioner's position, as reflected in the proceedings below, was that he was a regular employee entitled to security of tenure, having been continuously engaged by respondent for the same position over several years under successive contracts.

• Fixed-Term Employment: Respondent maintained that petitioner was engaged only for a fixed period — from March 16, 2015 until September 15, 2015 — and consequently, his employment automatically ceased on the end date.
• Just Cause for Dismissal: Respondent argued that even if petitioner's employment had not yet expired, he was dismissed for just cause, having been found guilty of serious misconduct in reporting for work while intoxicated and committing lascivious acts against a female co-worker.

• Employment Status: Whether petitioner was a fixed-term employee or a regular employee.
• Just Cause: Whether petitioner was validly dismissed for serious misconduct under Article 297(a) (formerly 282(a)) of the Labor Code.
• Procedural Due Process: Whether respondent observed the proper procedure in terminating petitioner's employment, particularly the requirement of a valid second notice of termination.

• Employment Status: Petitioner was a regular employee, not a fixed-term employee, having been continuously engaged for the same position with the same duties without interruption for at least three years, with the fixed terms imposed merely to prevent acquisition of tenurial security.
• Just Cause: Yes. Petitioner committed serious misconduct by reporting to work intoxicated and committing lascivious acts against a female co-worker, constituting a valid ground for dismissal under Article 297(a) of the Labor Code.
• Procedural Due Process: No. Respondent failed to serve a valid second notice of termination, as the September 1, 2015 memorandum expressly stated that the penalty of dismissal could no longer be imposed due to contract expiration, thereby violating petitioner's right to procedural due process.

• Employment Status: For a fixed-term employment contract to be valid, it must be shown that the fixed period was knowingly and voluntarily agreed upon by the parties dealing on more or less equal terms, with no moral dominance exercised by the employer. If the period was imposed to preclude acquisition of tenurial security, it must be struck down as contrary to law, morals, good customs, public order, and public policy. Applying these standards, the Court found that petitioner was continuously engaged by respondent through various contracts as a video editor for at least three years without interruption, with the same position and duties. The repeated engagement under a contract of hire is indicative of the necessity and desirability of the employee's work in the employer's business. The fixed terms were not shown to be mutually advantageous or reasonably necessary to respondent's business; rather, they were apparently imposed to prevent petitioner's acquisition of tenurial security. Accordingly, petitioner was correctly characterized as a regular employee.

• Just Cause: Misconduct is an improper or wrong conduct, a transgression of some established and definite rule of action, willful in character, implying wrongful intent and not mere error in judgment. To constitute a valid cause for dismissal, the misconduct must be of a grave and aggravated character. The records established that petitioner reported for work intoxicated, went to the editing bay containing expensive equipment, tried to hug and kiss a female co-worker, and placed his hands inside her pants and touched her buttocks. Multiple witnesses corroborated that despite the co-worker's resistance and uneasiness, petitioner persistently teased and harassed her, negating his claim of accident. These acts violated respondent's Code of Conduct, particularly policies on Offenses Against Persons and Offenses Against Conduct and Decorum, and adversely reflected on company ethics and morality. The intoxication posed a threat to company property and co-employees. The Court therefore agreed with the Court of Appeals that just cause existed.

• Procedural Due Process: The employer is required to furnish the employee with two written notices before termination: a first notice informing the employee of the particular acts or omissions for which dismissal is sought, and a second notice informing the employee of the employer's decision to dismiss. The second notice must indicate that all circumstances involving the charge have been considered and that grounds have been established to justify severance. In this case, while the September 1, 2015 memorandum informed petitioner of the decision to impose dismissal, it simultaneously stated that the penalty could no longer be effected because his contract had expired and his current contract no longer covered the incident. Because the dismissal was not actually effected through the memorandum, no valid second notice was served. Jurisprudence provides that where dismissal is for just cause but procedurally infirm, the lack of statutory due process does not nullify the dismissal or render it illegal, but the employer must indemnify the employee for the violation of statutory rights. The rationale is that the employer should not be compelled to continue employing a person guilty of misfeasance whose continued employment is patently inimical to the employer. Accordingly, the dismissal was upheld as valid, but respondent was ordered to pay P30,000 as nominal damages for the procedural violation.

• Fixed-Term Employment Doctrine — A fixed-term employment contract is valid only if the fixed period was knowingly and voluntarily agreed upon by the parties who dealt with each other on more or less equal terms, with no moral dominance exercised by the employer over the employee. If the period was imposed to preclude acquisition of tenurial security by the employee, it must be struck down as contrary to law, morals, good customs, public order, and public policy. The Court applied this doctrine to find that petitioner's successive fixed-term contracts were invalid because the terms were not mutually advantageous and were merely imposed to prevent acquisition of tenurial security, rendering him a regular employee.

• Regular Employment via Repeated Engagement — Repeated engagement under a contract of hire is indicative of the necessity and desirability of the employee's work in the employer's business. If an employee's contract has been continuously extended or renewed for the same position, with the same duties, without any interruption, the employee is a regular employee. The Court applied this principle to petitioner's at least three years of uninterrupted service as video editor.

• Serious Misconduct as Just Cause — Misconduct is an improper or wrong conduct, a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, implying wrongful intent and not mere error in judgment. To be a valid cause for dismissal, the misconduct must be of a grave and aggravated character and not merely trivial or unimportant. The Court found that petitioner's intoxication at work and sexual harassment of a co-worker constituted serious misconduct under Article 297(a) of the Labor Code.

• Twin-Notice Rule — The employer must furnish the employee with two written notices before termination: (1) a first notice informing the employee of the particular acts or omissions for which dismissal is sought; and (2) a second notice informing the employee of the decision to dismiss, which must indicate that all circumstances involving the charge have been considered and that grounds have been established to justify severance. The Court found that no valid second notice was served because the September 1, 2015 memorandum stated the penalty could no longer be imposed.

• Procedurally Infirm Dismissal for Just Cause — Where dismissal is for just cause but procedurally infirm, the lack of statutory due process does not nullify the dismissal or render it illegal, but the employer must indemnify the employee for the violation of statutory rights through nominal damages. The rationale is that the employer should not be compelled to continue employing a person guilty of misfeasance whose continued employment is patently inimical to the employer. The Court applied this doctrine by upholding the dismissal while awarding P30,000 in nominal damages.

• "if it is apparent that the period has been imposed to preclude acquisition of tenurial security by the employee, then such period must be struck down for being contrary to law, morals, good customs, public order, and public policy." — This passage states the controlling standard for invalidating fixed-term employment contracts, a formulation frequently cited in Philippine labor jurisprudence on security of tenure.

• "the repeated engagement under a contract of hire is indicative of the necessity and desirability of the employee's work in the employer's business; and if an employee's contract has been continuously extended or renewed for the same position, with the same duties, without any interruption, then such employee is a regular employee." — This defines the doctrinal test for regular employment based on repeated engagement, central to the Court's characterization of petitioner's status.

• "in cases where the dismissals are for a just cause but are procedurally infirm, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for violation of his statutory rights." — This articulates the established doctrine on procedurally infirm dismissals for just cause, distinguishing the validity of the dismissal from the employer's liability for procedural lapse.

• Dumpit-Murillo vs. Court of Appeals, 551 Phil. 725 (2007) — Cited for the standard that a fixed-term employment contract must be knowingly and voluntarily agreed upon by parties dealing on more or less equal terms with no moral dominance by the employer.
• Price vs. Innodata Phils. Inc., 588 Phil. 568 (2008) — Cited for the rule that if a fixed period is imposed to preclude acquisition of tenurial security, it must be struck down as contrary to law, morals, good customs, public order, and public policy; also cited on the requirement that fixed terms be mutually advantageous.
• Philips Semiconductors, Inc. vs. Fadriquela, 471 Phil. 355 (2004) — Followed for the principle that repeated engagement under a contract of hire indicates the necessity and desirability of the employee's work, and that continuous renewal for the same position and duties without interruption renders the employee regular.
• Maula vs. Ximex Delivery Express, Inc., 804 Phil. 365 (2017) — Cited for the definition of misconduct as a valid cause for dismissal and the requirement that it be of a grave and aggravated character.
• Sang-An vs. Equator Knights Detective and Security Agency, Inc., 703 Phil. 492 (2013) — Cited for the twin-notice requirement in termination of employment.
• Puncia vs. Toyota Shaw/Pasig, Inc., 788 Phil. 464 (2016) — Cited for the requisites of a valid second notice of termination.
• Abbott Laboratories, Philippines vs. Alcaraz, 714 Phil. 510 (2013) — Cited for the doctrine that procedurally infirm dismissals for just cause do not nullify the dismissal but require indemnification of the employee.
• Agabon vs. NLRC, 485 Phil. 248 (2004) — Cited for the rationale that an employer should not be compelled to continue employing a person guilty of misfeasance whose continued employment is patently inimical.
• Ortiz vs. DHL Philippines Corporation, 807 Phil. 626 (2017) — Cited as basis for the award of P30,000 nominal damages for violation of procedural due process.

• Article 297 (formerly 282), paragraph (a), Labor Code of the Philippines — Provides serious misconduct as a just cause for termination of employment. The Court applied this provision to petitioner's acts of reporting to work intoxicated and committing lascivious acts against a female co-worker, finding them to constitute serious misconduct warranting dismissal.
• Rule 45, Rules of Court — Governs the mode of review. The Court examined the Court of Appeals' decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC's decision.

Bersamin, C.J. (Chairperson), Jardeleza, Gesmundo, and Carandang, JJ., concurred.