Fernandez vs. Newfield Staff Solutions, Inc.

An employee's sworn assertion of termination that the employer fails to specifically deny in its pleadings before the labor tribunals constitutes an admission under the tacit admission rule, and the filing of a complaint for illegal dismissal with a prayer for reinstatement negates any finding of abandonment. The Court further held that an employment agreement requiring an employee to guarantee performance for six months, with liquidated damages for breach, is not a fixed-term contract but a probationary employment arrangement, especially where the agreement itself contemplates continued employment beyond the guaranteed period through loyalty bonuses and salary increases tied to longer tenure.

Newfield Staff Solutions, Inc. is a corporate employer engaged in staffing or recruitment services. Gilda C. Fernandez was hired as Recruitment Manager and Bernadette A. Beltran as probationary Recruitment Specialist, both under written employment agreements containing a "guaranteed period of engagement" of six months, a liquidated damages clause of ₱45,000 for breach, and a 45-day prior written notice requirement for voluntary termination after the guaranteed period. Arnold "Jay" Lopez, Jr. served as Newfield's General Manager. The dispute arose from the parties' conflicting accounts of what occurred during a meeting on October 17, 2008, when Lopez, Jr. called petitioners to his office.

Newfield Staff Solutions, Inc. hired Gilda C. Fernandez as Recruitment Manager starting September 30, 2008, with a monthly salary of ₱50,000 and an allowance of ₱6,000. Her employment agreement provided that she would receive a loyalty bonus of ₱60,000 and life insurance worth ₱500,000 upon reaching six months of employment. Newfield also hired Bernadette A. Beltran as probationary Recruitment Specialist starting October 7, 2008, with a monthly salary of ₱15,000 and an allowance of ₱2,000; her contract provided for a 10% salary and allowance increase upon reaching 12 months of employment. Both petitioners' agreements contained a guarantee to perform their tasks for six months, with liquidated damages of ₱45,000 for breach, and a requirement that any voluntary termination after the "guaranteed period of engagement" be preceded by 45 days' written notice and compliance with clearance procedures.

On October 17, 2008, respondent Arnold "Jay" Lopez, Jr., Newfield's General Manager, called petitioners to his office. According to petitioners' verified position paper, Lopez, Jr. terminated their employment on the ground of unsatisfactory performance, telling them "YOU'RE FIRED, x x x this is your last day and turn over the records to your successors." Petitioners were ordered to immediately turn over the records in their possession to their successors. Respondents, however, claimed in their verified joint position paper that petitioners simply stopped reporting for work — Fernandez after three weeks and Beltran after two weeks — and never communicated with respondents despite return-to-work letters, leading Newfield to declare them absent without official leave and to terminate their employment for breach of contract.

A week after the October 17 meeting, petitioners received return-to-work letters dated October 22, 2008, stating that they had not reported since October 20, 2008 without resigning, in violation of their employment agreements, and directing them to report and explain their failure to file resignation letters. Fernandez responded with a demand letter dated November 11, 2008, claiming unpaid salary of ₱36,400 for the period September 30 to October 17, 2008 and mobile phone expenses of ₱3,000 incurred for Newfield's business. She stated she had hired one team leader and 12 agents in three weeks but was still told her performance was unsatisfactory and was asked to file a resignation letter. Beltran sent a similar demand letter dated November 17, 2008, differing only in the unpaid salary claim of ₱7,206.80. Both threatened to sue absent a favorable response. On December 9, 2008, petitioners filed a complaint for illegal dismissal, nonpayment of salary and overtime pay, reimbursement of cell phone billing, moral and exemplary damages, and attorney's fees.

The Labor Arbiter found that petitioners were illegally dismissed, crediting their account that Lopez, Jr. fired them on October 17, 2008, and rejecting the claim of abandonment because the filing of the complaint demonstrated their desire to return to work. The NLRC affirmed but limited backwages to the six-month contract periods. The Court of Appeals reversed, ruling that petitioners abandoned their jobs after the October 17 meeting where they were merely advised of unsatisfactory performance, and that the meeting did not prove dismissal.

• Illegal Dismissal: Petitioners argued that for dismissal to be valid, there must be a just or authorized cause and due process must be observed, but respondents terminated their employment on October 17, 2008 when Lopez, Jr. fired them and ordered them to turn over records to their successors, without any written notice informing them of the cause for termination.
• Error of the Court of Appeals: Petitioners maintained that the CA grievously erred in dismissing their complaint for illegal dismissal and in reversing the findings of the NLRC and Labor Arbiter, which were contrary to law and settled rulings of the Supreme Court.

• No Termination Occurred: Respondents claimed that "no such incident took place" on October 17, 2008, asserting that Lopez, Jr. merely called petitioners' attention and advised them of their unsatisfactory work performance.
• Abandonment: Respondents argued that petitioners abandoned their jobs, pointing out that petitioners refused to comply with the return-to-work letters and instead demanded payment of their salaries and reimbursement of mobile phone expenses, indicating they no longer wished to continue working.
• Breach of Contract: Respondents maintained that petitioners signed fixed-term employment agreements guaranteeing six months of service and pre-terminated these agreements, opening themselves to liability for liquidated damages.

• Validity of Dismissal: Whether petitioners were illegally dismissed from employment, or whether they abandoned their jobs as ruled by the Court of Appeals.
• Nature of Employment Contract: Whether the employment agreements constituted fixed-term contracts or probationary employment arrangements.
• Abandonment: Whether the elements of abandonment were present given petitioners' failure to report for work and their filing of a complaint for illegal dismissal.
• Solidary Liability: Whether respondent Arnold "Jay" Lopez, Jr. may be held solidarily liable with Newfield Staff Solutions, Inc. for the judgment award.
• Binding Effect of NLRC Award: Whether the NLRC's limitation of backwages to six months is binding on petitioners who did not appeal that adjudication.

• Validity of Dismissal: Yes. Petitioners were illegally dismissed. Lopez, Jr. terminated their employment on October 17, 2008, and respondents' failure to specifically deny this claim in their pleadings before the Labor Arbiter and NLRC constituted a tacit admission of its truth.
• Nature of Employment Contract: No, the agreements were not fixed-term contracts. The "guaranteed period of engagement" was merely a guarantee of performance for six months with liquidated damages for breach, not a fixed duration of employment, as the agreements contemplated continued employment beyond six months through loyalty bonuses and salary increases tied to longer tenure.
• Abandonment: No. Both elements of abandonment were absent: petitioners' absence was due to their having been fired, and their filing of a complaint for illegal dismissal with a prayer for reinstatement demonstrated their clear intention to continue the employment relationship.
• Solidary Liability: No. Lopez, Jr. is not solidarily liable with Newfield because the Labor Arbiter and NLRC made no finding of malice or bad faith on his part in terminating petitioners, which is required to hold a corporate officer solidarily liable with the corporation in labor cases.
• Binding Effect of NLRC Award: Yes. The NLRC's limitation of backwages to six months is binding on petitioners, who did not appeal the NLRC decision and are therefore presumed to have accepted that adjudication, pursuant to the doctrine that a party who has not appealed cannot obtain affirmative relief beyond what was granted in the appealed decision.

• Validity of Dismissal: The Court reviewed the records and found that petitioners stated in their verified position paper that Lopez, Jr. fired them on October 17, 2008, told them it was their last day, and ordered them to turn over records to their successors. A review of respondents' verified position paper, reply to petitioners' position paper, and appeal memorandum filed before the NLRC revealed nothing denying what happened as stated under oath by petitioners. Respondents merely claimed that no evidence showed petitioners were forced not to report for work and that petitioners abandoned their jobs. This silence constitutes an admission that fortifies the truth of petitioners' narration, pursuant to Section 32, Rule 130 of the Rules of Court, which provides that an act or declaration made in the presence and within the hearing or observation of a party who does or says nothing when the act or declaration is such as naturally to call for action or comment if not true may be given in evidence against him. The Court seriously doubted respondents' belated denial in their comment before the Supreme Court that "no such incident took place," as this denial was never raised in their position paper, reply, or appeal memorandum. The affidavit of Josette Pasman, who stated that on October 21, 2008 she called Newfield's office and was surprised to find that Fernandez and Beltran were no longer employed, further corroborated petitioners' account.

• Nature of Employment Contract: The Court clarified that the employment agreements were not fixed-term contracts for six months. Fernandez's agreement provided for a loyalty bonus of ₱60,000 and life insurance worth ₱500,000 upon reaching six months of employment, and Beltran's agreement provided for a 10% salary and allowance increase upon reaching 12 months of employment. Petitioners merely guaranteed to perform their tasks for six months, with liquidated damages for breach, and the 45-day notice requirement applied only to termination after the guaranteed period. The NLRC and CA misread the guarantee as the fixed duration of employment. Petitioners were probationary employees, as respondents themselves admitted that Beltran was hired as a probationary Recruitment Specialist. A probationary employee may be terminated only for a just or authorized cause or for failure to qualify as a regular employee under reasonable standards prescribed by the employer.

• Abandonment: Abandonment is a form of neglect of duty and requires 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, the second being the more determinative factor. Neither element was present. First, petitioners were absent because Lopez, Jr. had fired them, so they could not be faulted for refusing to comply with return-to-work letters or accused of being AWOL or breaching their agreements. Second, petitioners' protest of their dismissal through demand letters and the filing of a complaint for illegal dismissal with a prayer for reinstatement demonstrated their desire to return to work, which is totally inconsistent with abandonment. The Court rejected the CA's inference that petitioners no longer wished to continue working merely because they sought payment of unpaid salaries, noting that their demand letters also stated they were told to resign despite their accomplishments and that they threatened to sue if they received no favorable response. The Court also noted the NLRC's observation that Fernandez earned ₱56,000 and Beltran ₱17,000 per month, making it implausible that they would voluntarily leave well-paying jobs and then fight to win them back unless they had been illegally dismissed.

• Solidary Liability: Under established jurisprudence, corporate directors and officers may be held solidarily liable with the corporation in labor cases only when they acted in bad faith or with malice in terminating employees. Bad faith imports dishonest purpose or some moral obliquity and conscious doing of wrong. The Labor Arbiter and NLRC made no finding that Lopez, Jr. acted maliciously or in bad faith in terminating petitioners. Absent such a finding, there is no basis to hold him solidarily liable, and payment of the judgment award is the direct accountability of Newfield alone.

• Binding Effect of NLRC Award: Under Article 279 of the Labor Code, an employee unjustly dismissed is entitled to reinstatement and full backwages from the time compensation was withheld up to actual reinstatement. However, the NLRC's award of backwages for only six months is binding on petitioners because they did not appeal the NLRC decision and resolution and are therefore presumed to have accepted that adjudication. This is in accord with the doctrine that a party who has not appealed cannot obtain from the appellate court any affirmative relief other than what was granted in the appealed decision. Similarly, the award of separation pay affirmed by the NLRC is binding on petitioners, who admitted that reinstatement is no longer possible.

• Tacit Admission (Silence as Admission) — Under Section 32, Rule 130 of the Rules of Court, an act or declaration made in the presence and within the hearing or observation of a party who does or says nothing when the act or declaration is such as naturally to call for action or comment if not true may be given in evidence against him. The Court applied this rule to hold that respondents' failure to specifically deny petitioners' sworn claim that Lopez, Jr. fired them on October 17, 2008 — in their position paper, reply, and appeal memorandum before the labor tribunals — constituted an admission fortifying the truth of petitioners' narration. The belated denial raised only in respondents' comment before the Supreme Court was given no weight.

• Elements of Abandonment — For abandonment to exist, two factors must be present: (1) the 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 as the more determinative factor, manifested by some overt acts. The filing of a complaint for illegal dismissal with a prayer for reinstatement is proof enough of one's desire to return to work and negates any suggestion of abandonment.

• Probationary Employment vs. Fixed-Term Employment — An employment agreement requiring an employee to guarantee performance for a specified period, with liquidated damages for breach, does not constitute a fixed-term contract where the agreement contemplates continued employment beyond that period through benefits tied to longer tenure (e.g., loyalty bonuses, salary increases). Such an arrangement is properly characterized as probationary employment, and the employee may be terminated only for just or authorized cause or for failure to qualify as a regular employee under reasonable standards.

• Solidary Liability of Corporate Officers in Labor Cases — Corporate directors and officers may be held solidarily liable with the corporation for termination of employees only when they acted in bad faith or with malice. Bad faith imports dishonest purpose or some moral obliquity and conscious doing of wrong; it partakes of the nature of fraud. Absent a finding of malice or bad faith by the labor tribunals, the judgment award is the direct accountability of the corporation alone.

• Binding Effect of Unappealed Adjudication — A party who has not appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the appealed decision. An NLRC modification limiting backwages is binding on the employee who did not appeal that adjudication, even if the limitation is less than what Article 279 of the Labor Code would otherwise entitle the employee to receive.

• "Respondents' silence constitutes an admission that fortifies the truth of petitioners's narration." — The Court applied the tacit admission rule under Section 32, Rule 130 of the Rules of Court to hold that respondents' failure to deny petitioners' sworn claim of termination in their pleadings before the labor tribunals constituted an admission, forming a key basis for the finding of illegal dismissal.

• "Petitioners' employment agreements are not fixed-term contracts for six months because Fernandez becomes entitled to a loyalty bonus of ₱60,000 and life insurance worth ₱500,000 upon reaching six months of employment with Newfield. Beltran will also receive a 10% salary and allowance increase upon reaching 12 months of employment with Newfield." — This passage articulates the ratio for distinguishing probationary employment from fixed-term contracts, clarifying that a guarantee period with liquidated damages does not equate to a fixed term where the agreement contemplates benefits tied to continued employment beyond the guaranteed period.

• "A charge of abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal. The filing thereof is proof enough of one's desire to return to work, thus negating any suggestion of abandonment." — This is the canonical formulation of the doctrine that filing an illegal dismissal complaint negates abandonment, frequently cited in subsequent labor jurisprudence.

• "It defies reason that they would leave their jobs and then fight odds to win them back. Human experience dictates that a worker will not just walk away from a good paying job and risk unemployment and damages as a result thereof UNLESS illegally dismissed." — Quoting the NLRC's observation, the Court adopted this commonsense reasoning as persuasive support for the finding that petitioners did not voluntarily abandon their employment, reinforcing the principle that the totality of circumstances must be evaluated in abandonment cases.

• Tegimenta Chemical Phils. vs. Oco, G.R. No. 175369, February 27, 2013 — Followed. The Court cited this case for the proposition that an employer's silence or failure to deny an employee's sworn claim of termination constitutes an admission fortifying the truth of the employee's narration, applying the tacit admission rule under Section 32, Rule 130 of the Rules of Court.

• Solas vs. Power & Telephone Supply Phils., Inc. — Cited within the Tegimenta Chemical discussion as an earlier application of the same silence-as-admission principle in labor cases.

• Robinsons Galleria/Robinsons Supermarket Corporation vs. Ranchez, G.R. No. 177937, January 19, 2011, 640 SCRA 135 — Followed. Cited for the rule that a probationary employee may be terminated for a just or authorized cause or when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer.

• Josan, JPS, Santiago Cargo Movers vs. Aduna, G.R. No. 190794, February 22, 2012, 666 SCRA 679 — Followed. Cited for the two-element test for abandonment: (1) failure to report for work or absence without valid or justifiable reason, and (2) a clear intention to sever the employer-employee relationship, the second being the more determinative factor; and for the doctrine that filing a complaint for illegal dismissal negates abandonment.

• Grandteq Industrial Steel Products, Inc. vs. Estrella, G.R. No. 192416, March 23, 2011, 646 SCRA 391 — Followed. Cited for the framework on solidary liability of corporate officers in labor cases, requiring evidence of malice or bad faith in terminating employees before an officer may be held solidarily liable with the corporation.

• MAM Realty Development Corporation vs. NLRC — Cited within the Grandteq discussion for the principle that obligations incurred by corporate directors, officers, and employees acting as corporate agents are the direct accountabilities of the corporation, and that solidary liability of corporate officers in labor disputes arises only in exceptional circumstances such as bad faith or malice in terminating employees.

• Filflex Industrial & Manufacturing Corp. vs. NLRC, G.R. No. 115395, February 12, 1998, 286 SCRA 245 — Followed. Cited for the doctrine that a party who has not appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the appealed decision, applied to hold the NLRC's six-month backwages limitation binding on petitioners.

• Maribago Bluewater Beach Resort, Inc. vs. Dual, G.R. No. 180660, July 20, 2010, 625 SCRA 147 — Cited for the exception to the rule that a Rule 45 petition must raise only questions of law, specifically when the findings of the Labor Arbiter, NLRC, and CA vary.

• Article 279, Labor Code (as amended) — Provides that an employee unjustly dismissed from work is entitled to reinstatement and full backwages from the time compensation was withheld up to the time of actual reinstatement. The Court noted this provision but held that the NLRC's limitation of backwages to six months was binding on petitioners who did not appeal that adjudication.

• Section 32, Rule 130, Rules of Court — Provides the tacit admission rule: an act or declaration made in the presence and within the hearing or observation of a party who does or says nothing when the act or declaration is such as naturally to call for action or comment if not true, and when proper and possible for him to do so, may be given in evidence against him. Applied to hold that respondents' silence on petitioners' claim of termination constituted an admission.

• Rule 45, Rules of Court — Governs petitions for review on certiorari, which must raise only questions of law, with the exception applied here that when the findings of the Labor Arbiter, NLRC, and CA vary, the Court may review questions of fact as well.

• Rule 65, 1997 Rules of Civil Procedure (as amended) — The procedural vehicle used by respondents to elevate the NLRC decision to the Court of Appeals via petition for certiorari.

Maria Lourdes P. A. Sereno (Chief Justice, Chairperson), Teresita J. Leonardo-De Castro, Lucas P. Bersamin, and Bienvenido L. Reyes concurred with the decision. No separate concurring opinions were noted.