Doctor vs. NII Enterprises

In illegal dismissal cases, the employee must first establish by substantial evidence the fact of dismissal from service before the burden shifts to the employer to prove that the termination was for a valid or authorized cause. Where the employee fails to prove actual dismissal, the complaint for illegal dismissal must be dismissed, but the employee may still be awarded separation pay in lieu of reinstatement when reinstatement is no longer possible and reasonable.

Respondent NII Enterprises is a sole proprietorship engaged in providing car air-conditioning services, owned by respondent Nilda C. Ignacio. Petitioners Maria Vilma G. Doctor and Jaime Lao, Jr. were regular employees of respondents—Doctor as a clerk since April 3, 1995, and Lao as an aircon technician since December 5, 1995. The case involves the security of tenure protection under Article 294 of the Labor Code, which mandates that regular employees shall not be terminated except for just or authorized causes, and the procedural and substantive requirements for lawful dismissal.

Petitioners Maria Vilma G. Doctor and Jaime Lao, Jr. were employed by respondent NII Enterprises, a sole proprietorship owned by respondent Nilda C. Ignacio, which was engaged in providing car air-conditioning services. Doctor worked as a clerk since April 3, 1995, and Lao as an aircon technician since December 5, 1995. On February 10, 2004, Ignacio and Doctor had a serious argument, which prompted Doctor to file a complaint for slander and threat against Ignacio at Barangay San Antonio, Makati City. Per the minutes of the barangay proceedings, Doctor complained that Ignacio pointed at her, cursed her, threatened to hit her with a telephone, made a dirty finger gesture at her, and accused her of things she did not do. When efforts to amicably resolve the dispute failed, the barangay issued a Certification to File Action dated February 20, 2004.

On February 24, 2004, Doctor filed a complaint for illegal dismissal against respondents before the NLRC, docketed as NLRC-NCR Case No. 00-02-02670-04. Lao, who accompanied Doctor at the barangay proceedings, joined the complaint as a party-complainant. In their Position Paper, petitioners alleged that they were arbitrarily and illegally dismissed on February 10, 2004, barred from reporting to their former positions without any valid reason, and denied the opportunity to be heard. They prayed for backwages, holiday pay, bonus pay, 13th/14th month pay, moral and exemplary damages, and attorney's fees.

Respondents countered that after the heated altercation, Doctor no longer reported for work, and Lao similarly absented himself without prior leave. Respondents denied that petitioners were ever told not to report for work, averring that petitioners abandoned their jobs. Respondents intimated that Doctor, who was then engaged to be married to Lao, filed the complaint in an attempt to mulct them for money to finance the forthcoming wedding.

The Labor Arbiter found that respondents failed to prove just and valid cause and observance of due process in petitioners' dismissal, and that the defense of abandonment was bereft of merit, noting that the timely filing of the complaint for illegal dismissal negated the defense of abandonment. The Labor Arbiter ordered payment of separation pay in lieu of reinstatement due to the strained relationship between the parties, awarding Doctor backwages of ₱80,000.00 and separation pay of ₱67,500.00, and Lao the same amounts, with all other claims dismissed for lack of merit.

On appeal, the NLRC partially granted respondents' appeal, modifying the award of separation pay to Lao to cover only eight years of service. Respondents then filed a Petition for Certiorari under Rule 65 before the Court of Appeals, which reversed the NLRC and dismissed the complaint for illegal dismissal. The appellate court stressed that while the employer has the burden in illegal dismissal cases of proving that the termination was for valid or authorized cause, the employee must first establish by substantial evidence the fact of dismissal from service, which petitioners failed to do. The Court of Appeals noted that petitioners admitted in their Comment that "both petitioners went on absence right after the argument," and that no actual dismissal ever happened—petitioners simply stopped working and immediately filed the illegal dismissal case.

• Failure to Mention the Altercation: Petitioners argued that their alleged failure to include in their pleadings before the NLRC the altercation incident between Doctor and Ignacio cannot be construed as a strategy to deter the Court's attention from the main issue, as whether the incident was alleged or not is of no consequence.
• Factual Findings of the Labor Arbiter and NLRC: Petitioners called attention to the fact that both the Labor Arbiter and the NLRC found that petitioners were actually dismissed when they were expressly told not to report for work on February 10, 2004 and prohibited from entering the premises of respondent NII Enterprises.
• Constructive Dismissal Taken Out of Context: Petitioners, without admitting that they were constructively dismissed, acknowledged that their case could also constitute constructive dismissal, and argued that the appellate court took their statements on constructive dismissal out of context and dismissed their complaint based thereon.
• No Abandonment: Petitioners maintained that they did not abandon their work, arguing that it is highly unbelievable that after working for respondents for a long time, they would simply stop working for no apparent reason, and that Doctor even attempted to settle her dispute with Ignacio at the barangay.
• Respondents' Apathy: Petitioners alleged that from February 10, 2004 to March 11, 2004, respondents did not issue any notice nor impose any disciplinary measure against petitioners for their continued absences, indicating that respondents were bent on terminating petitioners' employment without due process of law.
• Entitlement to Backwages and Separation Pay: Since they were illegally terminated, petitioners claimed they are entitled to backwages and separation pay, in lieu of reinstatement, as awarded by the Labor Arbiter and the NLRC.

• No Illegal Dismissal: Respondents asserted that there had been no illegal dismissal as petitioners were never issued notices of termination, and that Doctor did not report for work after her altercation with Ignacio, instead filing a complaint for threat and slander before the barangay.
• No Reason to Terminate Lao: Respondents argued that they had no reason to terminate Lao's services and that he simply joined the complaint even though he was not involved in the dispute between Ignacio and Doctor.
• No Entitlement to Separation Pay: Respondents contended that petitioners were not entitled to separation pay since they were not terminated from employment.
• Excessive Award: Assuming petitioners were illegally dismissed, respondents maintained that the Labor Arbiter's award of separation pay was excessive because such pay should be computed at only one-half month pay, not one month pay, for every year of service, and that Lao worked for only eight years, not nine.

• Fact of Dismissal: Whether the Court of Appeals erred in reversing the NLRC decision finding that petitioners were illegally dismissed, given that petitioners failed to establish by substantial evidence the fact of their dismissal from service.
• Constructive Dismissal: Whether petitioners were constructively dismissed from employment.
• Abandonment: Whether petitioners abandoned their work by failing to report for work after the altercation.

• Fact of Dismissal: No. Petitioners failed to discharge the burden of proving with substantial evidence that they were actually dismissed from work by respondents. Their bare allegation of dismissal, unsubstantiated by impartial and independent evidence, was insufficient to establish the fact of dismissal.
• Constructive Dismissal: No. Without petitioners alleging their demotion in rank, diminution in pay, or involuntary resignation due to unbearable working conditions caused by respondents as employers, there was no need to belabor the issue of constructive dismissal, and any discussion thereon would be merely speculative and/or academic.
• Abandonment: No. Petitioners cannot be deemed to have abandoned their work simply because they had been absent the days following February 10, 2004, as respondents failed to present proof of overt acts manifesting petitioners' clear intention to sever the employer-employee relationship, and the filing of a complaint for illegal dismissal is inconsistent with the charge of abandonment.

• Fact of Dismissal: The Court reiterated that in a petition for review on certiorari under Rule 45, its jurisdiction is generally limited to reviewing errors of law, and findings of fact of administrative agencies are generally accorded great respect and even finality. However, an exception exists when the factual findings of the quasi-judicial agencies conflict with those of the Court of Appeals, as in this case, prompting the Court to proceed with its own factual determination. The Court recognized the rule that in illegal dismissal cases, the employer bears the burden of proving that the termination was for a valid or authorized cause. However, before the employer must bear that burden, the employee must first establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to the legality or illegality thereof. Petitioners' general claims that they were barred by respondents from entering the work premises and that respondents did not heed their efforts to continue their employment lacked substantial details to be credible. The evidence to prove the fact of termination must be clear, positive, and convincing, and absent any showing of an overt or positive act proving that respondents had dismissed petitioners, the claim of illegal dismissal cannot be sustained as the same would be self-serving, conjectural, and of no probative value. The Court also noted that petitioners failed to explain why they completely failed to mention the heated argument in their pleadings before the Labor Arbiter, which sparked the entire controversy. Respondents' failure to take disciplinary action between February 10, 2004 and March 11, 2004 did not constitute clear, positive, and convincing evidence of dismissal, as respondents had no opportunity to commence disciplinary proceedings given that petitioners had instituted two successive complaints against them during that period.
• Constructive Dismissal: The Court defined constructive dismissal as a "dismissal in disguise" or "an act amounting to dismissal but made to appear as if it were not," which exists where there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, or where continued employment has become so unbearable because of acts of clear discrimination, insensibility, or disdain by the employer that the employee has no choice but to resign. What is essentially lacking in both definitions is the voluntariness in the employee's separation from employment. Since petitioners did not allege demotion in rank, diminution in pay, or involuntary resignation due to unbearable working conditions caused by respondents, the issue of constructive dismissal was deemed speculative and/or academic.
• Abandonment: The Court held that mere absence or failure to report for work is not tantamount to abandonment. For abandonment to exist, two requisites must be present: (1) the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2) there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts. The burden of proof to show unjustified refusal to go back to work rests on the employer. Respondents failed to present any proof of petitioners' overt acts manifesting a clear intention to terminate their employment. Additionally, petitioners' filing of a complaint for illegal dismissal is inconsistent with the charge of abandonment, for employees who take steps to protest their dismissal cannot, by logic, be said to have abandoned their work. Since the fact of dismissal had not been satisfactorily established, the burden of proving that the dismissal was legal did not shift to respondents. There being no dismissal and no abandonment, the appropriate course of action is to reinstate the employees but without the payment of backwages. However, citing Dee Jay's Inn and Cafe vs. Raneses, the Court recognized that when a considerable length of time had already passed rendering it impossible for the employee to return to work, the award of separation pay is proper. Given that more than ten years had passed since the controversy started on February 10, 2004, and respondents alleged that they already reduced their workforce and that petitioners had no more place in the business, reinstatement was rendered impossible and unreasonable. Respondents were therefore ordered to pay separation pay equivalent to one month salary for every year of service in lieu of reinstatement.

• Burden of Proof in Illegal Dismissal Cases — While the employer bears the burden of proving that the termination was for a valid or authorized cause, the employee must first establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to the legality or illegality thereof. The Court applied this doctrine in finding that petitioners failed to discharge their burden of proving actual dismissal, as their bare allegations were unsubstantiated by clear, positive, and convincing evidence.
• Substantial Evidence — Defined as "that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion." The Court applied this quantum of proof in labor cases, holding that petitioners' general claims of dismissal lacked substantial details to be credible and were self-serving, conjectural, and of no probative value.
• Constructive Dismissal — Defined as a "dismissal in disguise" or "an act amounting to dismissal but made to appear as if it were not," which exists where there is cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, or where continued employment has become so unbearable because of acts of clear discrimination, insensibility, or disdain by the employer that the employee has no choice but to resign. The Court held that what is essentially lacking in both definitions is the voluntariness in the employee's separation from employment, and that without allegations of demotion, diminution in pay, or involuntary resignation, the issue need not be belabored.
• Abandonment — For abandonment to exist, two requisites must be present: (1) the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2) there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts. The burden of proof to show unjustified refusal to go back to work rests on the employer. The Court applied this doctrine in holding that respondents failed to present proof of overt acts manifesting petitioners' clear intention to sever the employment relationship, and that the filing of a complaint for illegal dismissal is inconsistent with the charge of abandonment.
• Separation Pay in Lieu of Reinstatement — When a considerable length of time has passed rendering it impossible for the employee to return to work, the award of separation pay is proper. The Court applied this doctrine in ordering respondents to pay petitioners separation pay equivalent to one month salary for every year of service, given that more than ten years had passed since the controversy started and respondents had reduced their workforce.

• "Before the employer must bear the burden of proving that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to the legality or illegality thereof." — This passage articulates the controlling doctrine on the burden of proof in illegal dismissal cases, establishing the threshold requirement that the employee must first prove the fact of dismissal before the burden shifts to the employer.
• "Absent any showing of an overt or positive act proving that respondents had dismissed petitioners, the latter's claim of illegal dismissal cannot be sustained - as the same would be self-serving, conjectural, and of no probative value." — This passage states the standard for proving the fact of dismissal, requiring clear, positive, and convincing evidence of an overt or positive act of dismissal.
• "For abandonment to exist, the following requisites must be present: (1) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (2) that there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts." — This passage provides the canonical formulation of the requisites for abandonment, which is frequently cited in labor jurisprudence.
• "In a case where the employee was neither found to have been dismissed nor to have abandoned his/her work, the general course of action is for the Court to dismiss the complaint, direct the employee to return to work, and order the employer to accept the employee. However, the Court recognized in Nightowl that when a considerable length of time had already passed rendering it impossible for the employee to return to work, the award of separation pay is proper." — This passage, quoted from Dee Jay's Inn and Cafe v. Raneses, establishes the exception to the general rule that allows the award of separation pay in lieu of reinstatement when reinstatement is no longer possible and reasonable.

• Dee Jay's Inn and Cafe vs. Raneses, G.R. No. 191823, October 5, 2016 — Controlling precedent for the award of separation pay in lieu of reinstatement when a considerable length of time has passed rendering it impossible for the employee to return to work, citing Nightowl Watchman & Security Agency, Inc. vs. Lumahan.
• MZR Industries vs. Colambot, 716 Phil. 617 (2013) — Cited for the rule that the employee must first establish by substantial evidence the fact of dismissal before the employer bears the burden of proving the legality of dismissal, and that absent an overt or positive act proving dismissal, the claim cannot be sustained.
• Machica vs. Roosevelt Services Center, Inc., 523 Phil. 199 (2006) — Cited for the rule that the evidence to prove the fact of the employee's termination from employment must be clear, positive, and convincing.
• Samarca vs. Arc-Men Industries Inc., 459 Phil. 506 (2003) — Cited for the requisites of abandonment and the rule that mere absence or failure to report for work is not tantamount to abandonment, and that the filing of a complaint for illegal dismissal is inconsistent with the charge of abandonment.
• Exodus International Construction Corporation vs. Biscocho, 659 Phil. 142 (2011) — Cited for the rule that where there is no dismissal and no abandonment, the appropriate course of action is to reinstate the employee but without the payment of backwages.
• Galang vs. Boie Takeda Chemicals, Inc., G.R. No. 183934, July 20, 2016 — Cited for the definition of constructive dismissal as a "dismissal in disguise" or "an act amounting to dismissal but made to appear as if it were not."
• Lopez vs. Bodega City (Video-Disco Kitchen of the Philippines), 558 Phil. 666 (2007) — Cited for the basic rule of evidence that each party must prove his affirmative allegation, and that mere allegation is not evidence.
• Tenazas vs. R. Villegas Taxi Transport, 731 Phil. 217 (2014) — Cited for the rule that the burden of proof rests upon the party who asserts the affirmative of an issue.

• Article 294, Presidential Decree No. 442 (Labor Code of the Philippines), formerly Article 279 — Protects the employee's security of tenure by mandating that in cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by the Title. The Court applied this provision in analyzing whether petitioners were illegally dismissed.
• Section 5, Rule 133, Rules of Court — Defines substantial evidence as "that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion." The Court applied this quantum of proof in labor cases in determining whether petitioners established the fact of dismissal.

Chief Justice Maria Lourdes P.A. Sereno (Chairperson), Associate Justice Mariano C. Del Castillo, Associate Justice Francis H. Jardeleza, and Associate Justice Noel Gimenez Tijam concurred in the decision.

N/A — No dissenting opinions were noted in the provided case text.