Dela Torre vs. Twinstar Professional Protective Services, Inc.

A valid quitclaim cannot bar an award of nominal damages arising from an employer’s violation of the two-notice rule in a just-cause termination, because the legality of dismissal is a matter for the Labor Arbiter’s original and exclusive jurisdiction and nominal damages vindicate procedural due process as a matter of law and public policy.

Jose R. Dela Torre was employed by Twinstar Professional Protective Services, Inc. as a security guard beginning October 1988 and was deployed at Las Haciendas in Tarlac City at a daily wage of P240.00. Twinstar is a professional protective services corporation, and the employment relationship is governed by the Labor Code, including its just-cause and procedural due process requirements for termination and the Labor Arbiter’s original and exclusive jurisdiction over illegal dismissal cases.

In October 1988, Jose R. Dela Torre was employed as a security guard by Twinstar Professional Protective Services, Inc. He was deployed at Las Haciendas in Tarlac City and was paid a daily wage of P240.00. Sometime in January 2011, Dela Torre sought assistance from the program of a certain Mr. Tulfo to complain about the underpayment of his salaries. On January 24, 2011, Commander Cesario Guhilde directed him to report to Twinstar’s office in Quezon City. Upon reporting to the office the next day, he was informed by Twinstar’s administrative officer that he was being placed on floating status.

Dela Torre alleged that he was on floating status for more than six months, which prompted him to file a complaint for illegal dismissal and underpayment/non-payment of certain salaries and benefits on August 23, 2011. On October 18, 2011, the complaint was amended to limit his cause of action to illegal dismissal and non-payment of separation pay. Despite receipt of summons for mandatory conferences on various dates, Twinstar failed to appear, and the Labor Arbiter required the parties to submit their respective position papers on the mandatory conference scheduled December 5, 2011. Because Twinstar again failed to attend and Dela Torre was not ready to submit his position paper, submission was reset to January 11, 2012 and later to January 30, 2012. On January 30, 2012, only Dela Torre appeared and submitted his position paper.

Twinstar admitted that it hired Dela Torre as a security guard and that his latest assignment was at Las Haciendas Luisitas in Tarlac City, during which he went on absence without leave on or about January 21, 2011. Twinstar claimed that it sent several notices for him to report for duty: an Order to Report for Duty dated June 3, 2011; a 2nd Notice to Report for Work dated June 9, 2011; and a Last & Final Order to Report for Duty dated June 22, 2011. A duty officer also sent text messages and tried to call him, and a company letter on June 8, 2011 was refused. Twinstar alleged that Dela Torre manifested his unwillingness to go on duty and, after he did not report for reassignment despite the opportunities given, terminated his employment on July 19, 2011. Dela Torre then filed a second complaint for illegal dismissal and money claims, but during the October 18, 2011 hearing he declined Twinstar’s offer of reassignment and opted to be paid separation pay instead. Twinstar blamed the negligence of its previous counsels for its failure to submit its position paper and documentary evidence before the Labor Arbiter, and alleged that Dela Torre had already filed an earlier labor complaint with the DOLE-NCR and executed a Deed of Quitclaim and Release on March 3, 2012, which was not established before the Labor Arbiter due to that negligence.

The Labor Arbiter found that Dela Torre was constructively dismissed. The NLRC and the Court of Appeals, however, found that no constructive dismissal took place, that Dela Torre went on absence without leave, that Twinstar sent him notices to report and offered reassignment, and that Dela Torre declined the assignment. They also found that Twinstar failed to observe due process in terminating him, and the Court of Appeals found the March 3, 2012 Quitclaim valid.

• Admission of Evidence on Appeal: Petitioner argued that the Court of Appeals gravely erred in affirming the NLRC when it admitted and gave credence to Twinstar’s evidence submitted for the first time on appeal.
• Constructive Dismissal: Petitioner maintained that he was constructively dismissed because he was placed on floating status for more than six months without a new assignment, and he claimed that he did not understand the Labor Arbiter’s question and the Minutes of the October 18, 2011 hearing because they were in English.
• Nominal Damages and Quitclaim: Petitioner argued that the Court of Appeals erred in affirming the NLRC’s denial of nominal damages on the basis of the alleged quitclaim.

• No Constructive Dismissal / Just Cause: Twinstar countered that Dela Torre went on absence without leave on or about January 21, 2011, and that it sent him an Order to Report for Duty dated June 3, 2011, a 2nd Notice to Report for Work dated June 9, 2011, and a Last & Final Order to Report for Duty dated June 22, 2011; it also contacted him by calls and text messages, but he refused a company letter on June 8, 2011 and manifested unwillingness to report. Thus, it terminated him on July 19, 2011 for refusing reassignment.
• Admission of Evidence on Appeal: Twinstar attributed its failure to submit its position paper and documentary evidence before the Labor Arbiter to the negligence of its previous counsels, and sought liberality for the presentation of its evidence on appeal.
• Quitclaim: Twinstar invoked the Deed of Quitclaim and Release executed on March 3, 2012, which Dela Torre allegedly executed after an earlier labor complaint with the DOLE-NCR, to bar his claims and the award of nominal damages.

• Admission of Evidence on Appeal: Whether the Court of Appeals gravely erred in affirming the NLRC when it admitted and gave credence to Twinstar’s evidence submitted for the first time on appeal.
• Illegal Dismissal: Whether the Court of Appeals gravely erred in finding that Jose was not illegally dismissed.
• Nominal Damages and Quitclaim: Whether the Court of Appeals erred in affirming the NLRC when it denied the award of nominal damages by reason of the alleged quitclaim.

• Admission of Evidence on Appeal: No. The NLRC acted within its discretion; labor procedure may be relaxed, and technical rules of evidence are not binding in labor cases.
• Illegal Dismissal: No. No constructive dismissal occurred; Dela Torre failed to prove unbearable conditions and refused reassignment despite repeated notices, giving just cause under Article 297, although Twinstar violated the two-notice rule.
• Nominal Damages and Quitclaim: Yes. The quitclaim was valid but did not bar nominal damages; the violation of procedural due process entitled Dela Torre to P30,000.00 nominal damages.

• Admission of Evidence on Appeal: The Court relied on Millenium Erectors Corporation vs. Magallanes, which held that labor rules of procedure should not be applied rigidly and technically because they are tools to facilitate justice. The Labor Arbiter and the NLRC are mandated to use every reasonable means to ascertain the facts speedily and objectively, without regard to technicalities, and the NLRC is not precluded from receiving evidence on appeal because technical rules of evidence are not binding in labor cases. The NLRC acted within its lawful authority and did not act arbitrarily or capriciously. Twinstar had failed to submit any evidence before the Labor Arbiter, preventing an informed decision, and although the negligence of Twinstar and its previous counsels generally does not excuse non-submission, the NLRC had prudent discretion to admit the evidence considering its relevance and veracity and the primacy of substantive justice.

• Illegal Dismissal: Constructive dismissal exists when an employer’s act of clear discrimination, insensibility, or disdain becomes so unbearable that the employee has no choice but to resign, or where there is involuntary resignation due to harsh, hostile, and unfavorable conditions; the standard is whether a reasonable person in the employee’s position would have felt compelled to give up employment. Not every inconvenience, disruption, difficulty, or disadvantage sustains constructive dismissal. Dela Torre failed to prove constructive dismissal; he presented only self-serving allegations that he was on floating status for more than six months. Twinstar established that he went on absence without leave on January 21, 2011, sent him notices dated June 3, June 9, and June 22, 2011, contacted him by calls and text messages, and that he refused a company letter on June 8, 2011. Dela Torre himself admitted declining the assignment offered on October 18, 2011, and his claim that he did not understand English was not credible because his bio-data stated that he could speak and write English. The totality of circumstances showed no constructive dismissal but rather his unwillingness to return to work, and Twinstar had just cause under Article 297. Nevertheless, Twinstar violated procedural due process. Under the two-notice rule in King of Kings Transport vs. Mamac, the first written notice must specify the grounds and give the employee a reasonable opportunity, at least five calendar days under the Omnibus Rules, to submit a written explanation; a hearing or conference must be conducted; and a written notice of termination must be served after determining that termination is justified. Twinstar terminated Dela Torre on July 19, 2011 without giving him ample chance to explain and be heard, violating the two-notice rule. Nominal damages were therefore warranted under Sy vs. Neat, Inc.

• Nominal Damages and Quitclaim: The NLRC and the Court of Appeals erred in denying nominal damages based on the Quitclaim. Under Aujero vs. Philippine Communications Satellite Corporation, not all waivers and quitclaims are invalid; if voluntarily entered into and representing a reasonable settlement, they bind the parties and may not be disowned merely by a change of mind. Only clear proof that the waiver was wangled from an unsuspecting or gullible person, or that the settlement terms are unconscionable, allows annulment. Here, the Quitclaim was voluntarily entered into and the amount was a reasonable settlement. However, a quitclaim is a contract, and the law is deemed written into every contract; its stipulations must be interpreted within the bounds of law and reason. Dela Torre’s statement that he had “no more claim, right or action of whatsoever nature whether past, present or contingent against the said respondent and/or its officers” could not include the illegal dismissal case because the legality of dismissal is determined by law and the Labor Arbiter has original and exclusive jurisdiction under Article 217 of the Labor Code. Parties cannot determine whether termination is legal; that question remains for the competent labor tribunals and courts. Nominal damages, which arise from the determination of whether the employee’s rights were violated in an illegal dismissal case, cannot be covered by the Quitclaim. Public policy in the stiffer imposition of nominal damages discourages the practice of “dismiss now, pay later,” and allowing the Quitclaim to cover nominal damages would promote that practice. Thus, regardless of the Quitclaim, Dela Torre was entitled to P30,000.00 nominal damages.

• Relaxation of procedural rules in labor cases — In labor cases, rules of procedure are not applied rigidly or technically; they are tools to facilitate justice. The Labor Arbiter and the NLRC are mandated to use every reasonable means to ascertain facts speedily and objectively, and the NLRC is not precluded from receiving evidence on appeal because technical rules of evidence are not binding. The Court applied this to uphold the NLRC’s admission of Twinstar’s evidence first presented on appeal, absent arbitrariness and in light of substantive justice.

• Constructive dismissal — Constructive dismissal exists when an employer’s clear discrimination, insensibility, or disdain becomes so unbearable that the employee has no choice but to resign; it requires involuntary resignation due to harsh, hostile, and unfavorable conditions, measured by whether a reasonable person in the employee’s position would feel compelled to give up employment. Not every inconvenience, disruption, difficulty, or disadvantage sustains it. The Court found none because Dela Torre failed to prove floating status and refused reassignment despite repeated notices.

• Two-notice rule — For termination for just causes under Article 297 (formerly 282) of the Labor Code, the employer must comply with the two-notice rule: (1) a first written notice specifying the grounds and giving the employee a reasonable opportunity, at least five calendar days under the Omnibus Rules, to submit a written explanation; (2) a hearing or conference where the employee may explain, present evidence, and rebut; and (3) a written notice of termination after determining that termination is justified. The Court found Twinstar violated this rule despite just cause, warranting nominal damages.

• Validity and limits of quitclaims/waivers — Not all waivers and quitclaims are invalid; if voluntarily entered into and representing a reasonable settlement, they bind the parties and may not be disowned merely by a change of mind. Only clear proof that the waiver was wangled from an unsuspecting or gullible person, or that the settlement terms are unconscionable, allows annulment. However, as contracts, they are read with the law deemed written into them and cannot contravene law or public policy. The Court upheld the quitclaim as voluntary and reasonable but held it could not cover the illegal dismissal case or nominal damages.

• Nominal damages for violation of procedural due process — Nominal damages are adjudicated to vindicate or recognize a right that has been violated or invaded, not to indemnify for loss. Where an employee is dismissed for just cause but deprived of notice and hearing, nominal damages are proper, and the amount may be stiffer to discourage “dismiss now, pay later.” The Court awarded P30,000.00.

• Labor Arbiter’s jurisdiction over illegal dismissal — Under Article 217 of the Labor Code, the Labor Arbiter has original and exclusive jurisdiction to determine the legality of an employee’s dismissal. Parties cannot by contract or quitclaim determine whether termination is legal; that question remains for the competent labor tribunals and courts. The Court used this to hold that the quitclaim did not bar the illegal dismissal case or nominal damages.

• "In labor cases, rules of procedure should not be applied in a very rigid and technical sense. They are merely tools designed to facilitate the attainment of justice, and where their strict application would result in the frustration rather than promotion of substantial justice, technicalities must be avoided." — This passage states the rationale for relaxing labor procedure and supports the NLRC’s admission of Twinstar’s evidence first presented on appeal.

• "There is constructive dismissal when an employer's act of clear discrimination, insensibility or disdain becomes so unbearable on the part of the employee so as to foreclose any choice on his part except to resign from such employment. It exists where there is involuntary resignation because of the harsh, hostile and unfavorable conditions set by the employer." — This passage defines constructive dismissal and supplies the standard the Court applied in rejecting Dela Torre’s claim.

• "Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind." — This passage states the test for validity of quitclaims, which the Court used to uphold the Quitclaim while limiting its effect.

• "Nominal damages are 'adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.'" — This passage defines nominal damages and explains why they were awarded despite the absence of illegal dismissal and despite the Quitclaim.

• Millenium Erectors Corporation vs. Magallanes, 649 Phil. 199 (2010) — Cited for the rule that labor rules of procedure may be relaxed and that technicalities must not frustrate substantial justice; used to uphold the NLRC’s admission of evidence on appeal.
• Wallem Maritime Services, Inc. vs. Pedrajas, 741 Phil. 67, 76 (2014) — Cited for the mandate of the Labor Arbiter and NLRC to use every reasonable means to ascertain facts speedily and objectively without regard to technicalities.
• Princess Joy Placement and General Services, Inc. vs. German A. Binalla, 735 Phil. 270, 280-281 (2014) — Cited for the rule that the NLRC is not precluded from receiving evidence on appeal because technical rules of evidence are not binding in labor cases.
• Philippine Span Asia Carriers Corporation vs. Pelayo, 826 Phil. 776 (2018) — Cited for the standards of constructive dismissal, including the reasonable-person test and the rule that not every inconvenience sustains constructive dismissal.
• King of Kings Transport vs. Mamac, 553 Phil. 108 (2007) — Cited for the two-notice rule and the requirements of the first notice, hearing or conference, and written notice of termination.
• Sy vs. Neat, Inc., 821 Phil. 751 (2017) — Cited for the award of nominal damages where an employee is terminated for just cause but deprived of procedural due process.
• Aujero vs. Philippine Communications Satellite Corporation, 679 Phil. 463 (2012) — Cited for the standards governing the validity of waivers and quitclaims.
• Goodrich Manufacturing Corporation vs. Ativo, 625 Phil. 102 (2010) — Cited in Aujero for the rule that only waivers wangled from an unsuspecting or gullible person, or with unconscionable terms, may be annulled.
• Heirs of San Miguel vs. Court of Appeals, 416 Phil. 943, 954 (2001) — Cited for the rule that the law is deemed written into every contract, requiring quitclaim stipulations to be interpreted within the bounds of law and reason.

• Article 297 (formerly Article 282), Labor Code — Provides the just causes for termination, including insubordination or willful disobedience. Twinstar found Dela Torre guilty of this just cause for refusing to report to work and accept reassignment, but the Court held that procedural due process still had to be observed.
• Article 217, Labor Code — Vests the Labor Arbiter with original and exclusive jurisdiction to determine illegal dismissal cases. The Court used this provision to hold that the quitclaim could not include or determine the legality of dismissal or bar nominal damages.
• Omnibus Rules — Cited in King of Kings Transport vs. Mamac for the requirement that “reasonable opportunity” under the first notice means at least five calendar days from receipt to allow the employee to prepare a defense. The Court applied this in finding that Twinstar violated the two-notice rule.

Inting, J.; Delos Santos, J.; and J. Lopez, J., concurred. Leonen, J., was on wellness leave.