Roxas vs. Baliwag Transit, Inc.

An employee's filing of labor complaints against the employer does not constitute gross misconduct warranting dismissal where the complaints were filed with reasonable basis, and an employee's refusal to submit additional explanations after having already submitted an initial response does not amount to willful disobedience or insubordination. Additionally, a reduction in work assignment attributable to a government-mandated regulation that applies to all affected employees does not constitute constructive dismissal, as it is a valid exercise of management prerogative done in good faith.

Gerardo C. Roxas was employed as a bus driver by Baliwag Transit, Inc. (BTI) since March 24, 1998, paid on a commission basis. BTI's operations were subject to Land Transportation Franchising and Regulatory Board (LTFRB) Resolution No. 2013-01, which mandated the strict observance nationwide of a 15-year age limit for buses and mini-buses. Pursuant to this regulation, BTI phased out its old buses, affecting the work assignments of drivers and conductors assigned to those units. BTI's internal policies, codified in its "Alituntunin at Patakaran," required employees to work not less than 200 days per year, with violations potentially leading to loss of benefits or termination. A Collective Bargaining Agreement (CBA) likewise prescribed a three-week work duty for employees.

Gerardo C. Roxas had been employed as a bus driver by Baliwag Transit, Inc. (BTI) since March 24, 1998, and was paid on a commission basis. In 2012, the bus to which Roxas was assigned was phased out pursuant to LTFRB Resolution No. 2013-01, which mandated the removal from public roads of buses aged 15 years and above. As a consequence, Roxas became a reliever for BTI's remaining buses, and his work assignment was reduced from a regular three-week work duty per month to only two weeks per month. Feeling aggrieved by this change, Roxas filed a complaint on June 5, 2014 before the NLRC-NCR for constructive dismissal, non-payment of holiday pay, holiday premium, service incentive leave, 13th month pay, illegal suspension, moral and exemplary damages, and attorney's fees against BTI and its owner Joselito S. Tengco.

On July 2, 2014, the date set for hearing on the first complaint, Roxas received a call from a BTI conductor informing him of a duty assignment. He proceeded to BTI's terminal to inform the terminal master and dispatcher of the scheduled hearing and his inability to assume work that day, but was warned of abandonment if he did not ply his route. He received a notice to explain his absence on July 15, 2014, to which he responded by letter dated July 21, 2014, stating that he did not intend to abandon his work and that respondents were aware of the scheduled NLRC hearing. Roxas later learned that the first complaint was dismissed on October 15, 2014 due to improper venue. On February 16, 2015, he refiled the complaint before the Regional Arbitration Board (RAB) III in San Fernando, Pampanga, subsequently amending it to claim constructive dismissal on June 4, 2014.

According to Roxas, after the second complaint was filed, he received a notice from respondents charging him with indiscriminate filing of labor cases against the company without basis. Despite his clarification that the second complaint was merely a refiling of the first before the proper venue, respondents no longer gave him any work assignment. Roxas contended that the reduced two-week schedule violated BTI's own "Alituntunin at Patakaran," which required a minimum of 200 work days per year, as the reduced schedule translated to only 168 to 182 days annually. He likewise cited several incidents evidencing respondents' oppressive treatment: being given a trip duty on the day of his first complaint's hearing, being suspended from July 3 to August 1, 2014 before the notice to explain was issued, and being charged with insubordination for refusing to submit additional explanation for filing the labor cases.

Respondents, for their part, alleged that Roxas was a disgruntled employee whose baseless complaints tarnished the company's reputation. They denied that he was dismissed on June 4, 2014, pointing out that he was still given work assignments afterward and remained on the employee roster. They argued that his refusal to submit an explanation for his unfounded complaints and his calling of the investigating officer a liar constituted insubordination and serious misconduct, as well as abandonment. They likewise denied the claim for 13th month pay, asserting that Roxas was paid purely on commission basis, and contended that the reduced work scheme applied to all drivers and conductors and was in compliance with the government regulation.

On July 21, 2015, while the proceedings were pending, Roxas was issued a notice of termination from employment effective the same date, grounded on violation of company policies amounting to gross misconduct and gross neglect of duties, indiscriminate filing of cases, insubordination, and absence without official leave (AWOL). The Labor Arbiter found no constructive dismissal and upheld the termination; the NLRC affirmed in toto. The Court of Appeals likewise found no constructive dismissal and upheld the validity of the dismissal, but awarded P30,000.00 in nominal damages for procedural due process deficiencies in the termination notices.

• Constructive Dismissal: Petitioner argued that the Court of Appeals gravely abused its discretion in affirming the labor tribunals' finding that he was not constructively dismissed, contending that the reduction in his work assignment effectively diminished his pay and other benefits.
• Violation of Company Policy: Petitioner pointed out that the two-week work duty per month, totaling only 168 days per year, contravened BTI's own "Alituntunin at Patakaran," which required a minimum of 200 work days per year, with violations potentially constituting grounds for termination.
• Oppressive Treatment: Petitioner asserted that respondents treated him with disdain, as evidenced by being given a trip duty on the day of his hearing, being suspended before issuance of a notice to explain, and being charged with insubordination for refusing to submit additional explanation for filing labor cases.
• No Abandonment: Petitioner denied having abandoned his work, claiming that his repeated absences were due to respondents' oppressive treatment and that he was no longer given any trip duty after filing the second complaint.

• No Constructive Dismissal: Respondents argued that Roxas was not dismissed on June 4, 2014, as evidenced by his Assignment Card showing continued work assignments and his continued inclusion in the employee roster.
• Just Cause for Termination: Respondents contended that Roxas's refusal to submit an explanation for his unfounded complaints and his calling of the investigating officer a liar amounted to insubordination and serious misconduct, and that his failure to report for work constituted abandonment.
• Valid Management Prerogative: Respondents argued that the reduction in work assignment was in compliance with a government-imposed regulation and applied to all drivers and conductors, not singling out Roxas.
• Hearing Attendance Not Required: Respondents maintained that the scheduled hearing at the NLRC did not require Roxas's personal presence.
• Denial of Money Claims: Respondents denied the claim for 13th month pay on the ground that Roxas was paid purely on commission basis, and asserted that his other money claims were without factual and legal bases.

• Constructive Dismissal: Whether the reduction of Roxas's work assignment from three weeks to two weeks per month, resulting in diminished pay and benefits, constituted constructive dismissal.
• Validity of Termination: Whether Roxas's subsequent termination on July 21, 2015 for alleged gross misconduct, insubordination, and abandonment was supported by substantial evidence and valid under Article 297 of the Labor Code.
• Money Claims: Whether Roxas was entitled to 13th month pay, illegal deductions, moral and exemplary damages, and attorney's fees.

• Constructive Dismissal: No. The reduced work assignment was a valid exercise of management prerogative done in good faith to comply with LTFRB Resolution No. 2013-01, and applied to all affected drivers and conductors, not constituting clear discrimination, insensibility, or disdain.
• Validity of Termination: No. The employer failed to discharge its burden of proving by substantial evidence that the grounds for termination—gross misconduct, insubordination, and abandonment—were valid just causes under Article 297 of the Labor Code.
• Money Claims: Partially granted. The claim for 13th month pay was denied because Roxas was paid on purely commission basis, which is expressly exempted under the implementing rules of P.D. No. 851. Claims for illegal deductions and moral and exemplary damages were denied for lack of substantiation. Attorney's fees of 10% of the total monetary award were granted under Article 111 of the Labor Code and Article 2208 of the Civil Code.

• Constructive Dismissal: Constructive dismissal exists when an act of clear discrimination, insensibility, or disdain by the employer becomes so unbearable that the employee is foreclosed from any choice except to forego continued employment. While Roxas's reduced work assignment did result in diminution of pay and benefits, it was not an act of discrimination or disdain. The reduction was caused by the phase-out of BTI's old buses pursuant to LTFRB Resolution No. 2013-01, which mandated removal of public utility vehicles aged 15 years and above. BTI's decision to adjust work assignments was an exercise of management prerogative done in good faith to cope with the downsizing of its business operations. The Court emphasized that as long as the company's exercise of judgment is in good faith to advance its interest and not to circumvent employees' rights, it will be upheld. Furthermore, records showed that the reduced work scheme applied to all affected drivers and conductors, not only to Roxas, negating any claim of discrimination.

• Validity of Termination: The burden of proving that dismissal was for a just cause lies with the employer, who must present substantial evidence—not mere surmises or conjectures. Respondents terminated Roxas for three grounds, none of which was substantiated. First, as to gross misconduct: misconduct requires a transgression of an established rule, willful in character, implying wrongful intent. For it to be serious, it must be of grave and aggravated character, connected with the employee's work, and performed with wrongful intent. Roxas's filing of labor complaints was not shown to be impelled by ill motive; he had ample reason to file them because the reduced work scheme diminished his pay and apparently contravened BTI's own "Alituntunin at Patakaran" requiring a minimum of 200 work days per year. Second, as to insubordination: willful disobedience requires (a) the employee's conduct to be willful, characterized by a wrongful and perverse attitude, and (b) the order violated to be reasonable, lawful, made known to the employee, and pertaining to the duties he was engaged to discharge. Roxas had already submitted an initial letter of explanation for filing the complaints; his refusal to submit additional explanations was at most a waiver of his right to procedural due process, not willful disobedience. The subsequent orders to explain were mere reiterations of the charge to which he had already responded. His calling the investigating officer a liar was a natural reaction to the officer's assertion that he had failed to provide any explanation, and did not rise to the level of seriousness warranting dismissal. Third, as to abandonment: mere absence or failure to report for work is not tantamount to abandonment. The absence must be accompanied by overt acts unerringly pointing to the employee's refusal to work, and the burden of proof rests on the employer, which respondents failed to discharge.

• Money Claims: Roxas was not entitled to 13th month pay because Section 3(e) of the Rules and Regulations Implementing P.D. No. 851 expressly exempts employees paid on purely commission, boundary, or task basis. Roxas was paid on commission basis. The claim for illegal deductions was not substantiated. Moral and exemplary damages require proof of bad faith, fraud, or oppressive conduct by clear and convincing evidence; the law presumes good faith, and Roxas failed to establish that respondents were motivated by ill will or acted in a wanton, oppressive, or malevolent manner. However, attorney's fees of 10% of the total monetary award were warranted because Roxas was compelled to litigate to enforce his rights, pursuant to Article 111 of the Labor Code and Article 2208 of the Civil Code.

• Constructive Dismissal — Defined as quitting or cessation of work because continued employment is rendered impossible, unreasonable, or unlikely, as when there is a demotion in rank or diminution of pay and other benefits. It exists if an act of clear discrimination, insensibility, or disdain by the employer becomes so unbearable that the employee is foreclosed from any choice except to forego continued employment. The test is whether a reasonable person in the employee's position would have felt compelled to give up employment under the circumstances. The Court applied this test and found no constructive dismissal, because the reduction in work assignment was a good-faith exercise of management prerogative in compliance with a government regulation and applied uniformly to all affected employees.

• Management Prerogative — The employer's right to regulate all aspects of employment, including prescribing work assignments, working methods, transfers, supervision, lay-off, discipline, dismissal, and recall of workers. As long as the company's exercise of judgment is in good faith to advance its interest and not to circumvent employees' rights under the law or valid agreements, it will be upheld. The Court upheld BTI's reduction of work assignments as a valid management prerogative exercised to cope with the downsizing of operations caused by the government-mandated phase-out of old buses.

• Serious Misconduct — Involves the transgression of some established and definite rule or action, a forbidden act, a dereliction of duty, willful in character, implying wrongful intent and not mere error in judgment. For misconduct to be serious and a valid ground for dismissal, it must be (a) of grave and aggravated character, not merely trivial; (b) connected with the employee's work such that the latter has become unfit to continue working; and (c) performed with wrongful intent. The Court found that Roxas's filing of labor complaints was not impelled by ill motive and did not satisfy these requisites.

• Willful Disobedience / Insubordination — As a just cause for dismissal, requires the concurrence of two requisites: (a) the employee's assailed conduct must have been willful, characterized by a wrongful and perverse attitude; and (b) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge. Neither requisite was present, as Roxas had already submitted an initial explanation and the subsequent orders were mere reiterations of the same charge.

• Abandonment — Mere absence or failure to report for work is not tantamount to abandonment. The absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore, and the burden of proof to show unjustified refusal to go back to work rests on the employer. The Court found that respondents failed to discharge this burden.

• Burden of Proof in Illegal Dismissal Cases — The burden of proving that dismissal was for a just or authorized cause lies with the employer. The employer must present substantial evidence, defined as that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion, not based on mere surmises or conjectures. Failure to meet this burden results in the conclusion that the dismissal was unjustified and therefore illegal.

• "constructive dismissal is defined as quitting or cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay and other benefits. It exists if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment." — This passage provides the canonical definition of constructive dismissal as applied in the case, articulating the test of whether a reasonable person in the employee's position would feel compelled to give up employment.

• "[w]illful disobedience or insubordination, as a just cause for the dismissal of an employee, necessitates the concurrence of at least two (2) requisites, namely: (a) the employee's assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (b) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge." — This passage sets out the two-part test for willful disobedience, which the Court applied to find that Roxas's refusal to submit additional explanations did not constitute insubordination.

• "Settled is the rule that mere absence or failure to report for work is not tantamount to abandonment. The absence must be accompanied by overt acts unerringly pointing to the fact that the employee simply does not want to work anymore, and the burden of proof to show that there was unjustified refusal to go back to work rests on the employer" — This passage restates the doctrine on abandonment, distinguishing mere absence from true abandonment requiring overt acts evidencing intent to discontinue employment.

• Gan vs. Galderma Philippines, Inc., 701 Phil. 612 (2013) — Cited as the source of the definition of constructive dismissal adopted by the Court, providing the test of whether a reasonable person in the employee's position would feel compelled to give up employment.

• Moya vs. First Solid Rubber Industries, Inc., 718 Phil. 77 (2013) — Cited for the doctrine on management prerogative, recognizing the employer's right to regulate all aspects of employment, including work assignments, provided the exercise of judgment is in good faith and not to circumvent employees' rights.

• Ting Trucking vs. Makilan, 787 Phil. 651 (2016) — Cited for the elements of serious misconduct as a just cause for dismissal, requiring the misconduct to be of grave and aggravated character, connected with the employee's work, and performed with wrongful intent.

• Sta. Isabel vs. Perla Compañia De Seguros, Inc., 798 Phil. 165 (2016) — Cited for the two requisites of willful disobedience or insubordination as a just cause for termination.

• Doctor vs. NII Enterprises, G.R. No. 194001, Nov. 22, 2017, 846 SCRA 53 — Cited for the doctrine that mere absence or failure to report for work is not tantamount to abandonment.

• Maersk-Filipinas Crewing, Inc. vs. Avestruz, 754 Phil. 307 (2015) — Cited for the definition of substantial evidence as the quantum of proof required of the employer to justify dismissal, and for the rule that the burden of proving just cause lies with the employer.

• Article 294 (formerly Article 279), Labor Code — Provides that an employee unjustly dismissed from work is entitled to reinstatement without loss of seniority rights and other privileges, and to full backwages inclusive of allowances and other benefits or their monetary equivalent, computed from the time compensation was withheld up to actual reinstatement. Applied to award Roxas reinstatement and full backwages, or separation pay in lieu thereof if reinstatement is no longer viable.

• Article 297 (formerly Article 282), Labor Code — Enumerates the just causes for which an employer may terminate employment: (a) serious misconduct or willful disobedience, (b) gross and habitual neglect of duties, (c) fraud or willful breach of trust, (d) commission of a crime or offense against the employer or family, and (e) other causes analogous to the foregoing. Applied to test the validity of Roxas's termination, with the Court finding none of the enumerated causes sufficiently established.

• Section 3(e), Rules and Regulations Implementing Presidential Decree No. 851 — Exempts from 13th month pay coverage employees paid on purely commission, boundary, or task basis. Applied to deny Roxas's claim for 13th month pay, as he was paid on commission basis.

• Article 111, Labor Code, and Article 2208, Civil Code — Authorize the award of attorney's fees when the employee is compelled to litigate to enforce their rights. Applied to grant Roxas attorney's fees equivalent to 10% of the total monetary award.

• LTFRB Resolution No. 2013-01 — Mandates the strict observance nationwide of a 15-year age limit for buses and mini-buses, even on units with road worthiness and MVIS certificates. Served as the government regulation that justified BTI's phase-out of old buses and the consequent reduction in work assignments, negating the claim of constructive dismissal.

Justices A. Reyes, Jr., Hernando, Inting, and Delos Santos concurred in the decision.