Wuerth Philippines, Inc. vs. Ynson

An employer may validly dismiss a managerial employee for gross dereliction of duties under Article 282(e) of the Labor Code where the employee, after being cleared by his doctors to return to work, repeatedly fails to report for work or attend the employer's scheduled investigations without any valid justification. The employer's failure to secure the medical certification required by Article 284 of the Labor Code does not preclude dismissal where the ground actually established is gross dereliction of duties.

Wuerth Philippines, Inc., a subsidiary of Wuerth Germany, and Rodante Ynson were in an employer-employee relationship, with Ynson holding the managerial position of National Sales Manager for Automotive. The dispute turns on the interplay between the employer's management prerogative to dismiss a managerial employee for gross dereliction of duties and the statutory requirement under Article 284 of the Labor Code, as implemented by Section 8, Rule I, Book VI of the Omnibus Rules, that termination on the ground of disease be supported by a certification from a competent public health authority.

Wuerth Philippines, Inc., a subsidiary of Wuerth Germany, hired Rodante Ynson on August 15, 2001 as its National Sales Manager (NSM) for Automotive. As NSM, Ynson was required to travel to different parts of the country to supervise the sales activities of the company's sales managers, make a schedule of activities geared towards increasing the sales of the company's products, and submit the schedule to Marlon Ricanor, the company's Chief Executive Officer.

In an electronic mail dated January 4, 2003 sent to Ricanor, Ynson furnished the former with a copy of his sales targets for the year 2003 and coverage plan for the month of January 2003, and indicated that he intended to be on leave from January 23 to 24, 2003. However, Ynson was not able to follow the coverage plan starting January 26, 2003, as he failed to report for work. It turned out that on January 24, 2003, he suffered a stroke, and on the succeeding days, he was confined at the Davao Doctor's Hospital. He immediately informed the company about his ailment. On March 27, 2003, Dr. Daniel de la Paz, a Neurologist-Electroencephalographer in Davao City, issued a certification stating that Ynson had been under his care since January 24, 2003 and was confined in the hospital from January 24 to February 3, 2003 due to sudden weakness on the left side of his body. In another medical certificate dated June 4, 2003, Dr. de la Paz certified that Ynson may return to work, but advised him to continue with his rehabilitation regimen for another month and a half. Dr. Bernard S. Chiew, a specialist on Adult Cardiology, also issued an undated medical certificate stating that he examined Ynson, who was diagnosed with primary hypertension, diabetes mellitus II, S/P stroke on June 4, 2003, and recommended that the latter should continue with his physical rehabilitation until July 2003.

On June 9, 2003, Ynson sent an electronic mail to Hans Sigrit of Wuerth Germany, informing the latter that he could return to work on June 19, 2003, but in view of the recommendation of his doctors that he should continue with his rehabilitation until July, he requested that administrative work be given to him while in Davao City until completion of his therapy. On June 10, 2003, Alexandra Knapp, Secretary of the Management Board of Wuerth Germany, forwarded the electronic mail to Ricanor. Thereafter, Ricanor sent a letter dated June 12, 2003 to Ynson, directing him to appear before the former's office in Manila on July 1, 2003 at 9:00 a.m. for an investigation relative to the following violations which carry the penalty of suspension and/or dismissal: (1) absences without leave since January 24, 2003 to date, and (2) abandonment of work. In a letter dated June 26, 2003, Ynson replied that his attending physician advised him to refrain from traveling, in order not to disrupt his daily schedule for therapy and medication. On June 18, 2003, Knapp sent an electronic mail to Ynson, informing him that his request for detail in Davao was disapproved, as the company did not have any branch in Davao and there was no available administrative work for him. Meanwhile, the company bewailed that its sales suffered, as nobody was performing the duties of the NSM and the office space reserved for Ynson remained vacant.

Later, Ricanor sent two letters dated July 4, 2003 and July 31, 2003 to Ynson, resetting the investigation to July 25, 2003 at 9:00 a.m. and August 18, 2003, respectively. Both letters reiterated the contents of the first letter dated June 12, 2003, but included gross inefficiency as an additional ground for possible suspension or dismissal. In his letters dated July 21, 2003 and August 12, 2003, Ynson reiterated the reasons for his inability to attend the investigation proceedings in Manila, alleging that he was not capable of returning to work because he was still undergoing medications and therapy, and suggested that Ricanor come to Davao and conduct the investigation there. Finally, in a letter dated August 27, 2003, Ricanor informed Ynson of the decision of the company's management to terminate his employment, effective upon date of receipt, on the ground of continued absences without filing a leave of absence. Ynson's salary at the time of the termination of his employment was ₱175,000.00 per month.

On September 5, 2003, Ynson filed a complaint against the company and Ricanor, in his capacity as the company's Chief Executive Officer, for illegal dismissal and non-payment of allowances, with claim for moral and exemplary damages and attorney's fees, with the NLRC, Regional Arbitration Branch No. XI in Davao City. The records showed that Ynson failed to present any official receipt for his alleged medical and rehabilitation expenses, and that his rehabilitation regimen, counted from June 4, 2003, ended on July 19, 2003. The CA found that Ynson paid for doctor's professional fees and incurred other hospital expenses, but the records failed to show proof of the actual amount.

• Validity of Dismissal: Petitioner insisted that the ground for the dismissal of the respondent was his gross dereliction of duties as NSM.
• Salary Award: Petitioner argued that the CA committed reversible error in awarding ₱1,225,000.00 representing respondent's monthly salary of ₱175,000.00 from February 2003 to August 29, 2003; it claimed that assuming respondent may be considered on sick leave, the period should cover only up to June 2003.
• Medical Expenses: Petitioner argued that the CA committed reversible error in awarding medical expenses of ₱94,100.00, contending that the bare statements of Dr. de la Paz, without actual proof of receipts, cannot suffice to warrant the payment of medical expenses.
• Temperate Damages: Petitioner argued that the CA committed reversible error in awarding temperate damages of ₱100,000.00.
• 13th Month Pay: Petitioner argued that the CA committed reversible error in awarding 13th month pay of ₱175,000.00.
• Attorney's Fees: Petitioner argued that the CA committed reversible error in awarding attorney's fees.

• Validity of Dismissal: Whether respondent's dismissal from employment was valid.
• Salary Award: Whether the CA erred in awarding ₱1,225,000.00 representing respondent's salary from February 2003 to August 29, 2003.
• Medical Expenses: Whether the CA erred in awarding medical expenses of ₱94,100.00.
• Temperate Damages: Whether the CA erred in awarding temperate damages of ₱100,000.00.
• 13th Month Pay: Whether the CA erred in awarding 13th month pay of ₱175,000.00.
• Attorney's Fees: Whether the CA erred in awarding attorney's fees.

• Validity of Dismissal: Yes. Respondent was validly dismissed for unauthorized absences amounting to gross dereliction of duties under Article 282(e) of the Labor Code, reckoned from June 5, 2003, the day after he was declared fit to return to work but failed to do so.
• Salary Award: No. The award of ₱1,225,000.00 is deleted; respondent is entitled only to salary chargeable against his accrued sick leave benefits from January 24 to June 4, 2003, as may be provided by company policy.
• Medical Expenses: No. The award of ₱94,100.00 is deleted for lack of official receipts or competent proof of actual expenses.
• Temperate Damages: The award is reduced from ₱100,000.00 to ₱50,000.00, considering that the stroke was not debilitating and respondent's health condition remained stable.
• 13th Month Pay: No. The award of ₱175,000.00 is deleted; however, respondent may still be entitled to 13th month pay, either full or pro-rated, in consonance with existing company policy.
• Attorney's Fees: No. The award of 10% of the total monetary award is deleted, there being no evidence that the dismissal was tainted with bad faith.

• Validity of Dismissal: Article 284 of the Labor Code allows termination of an employee suffering from a disease whose continued employment is prohibited by law or prejudicial to his health or that of his co-employees. Section 8, Rule I, Book VI of the Omnibus Rules requires a certification by a competent public health authority that the disease cannot be cured within six months even with proper medical treatment. Triple Eight Integrated Services, Inc. vs. NLRC held that this requirement cannot be dispensed with. In this case, there was no showing that the company secured the required certification before terminating respondent. However, the medical certificate dated June 4, 2003 issued by Dr. de la Paz showed that respondent was capable of returning to work, subject to continued rehabilitation for another month and a half. Despite notices dated June 12, July 4, and July 31, 2003 requiring him to appear for investigation, respondent refused to report to his office or attend the investigations. Even counting the rehabilitation period from June 4, 2003, his regimen ended on July 19, 2003, yet he failed to attend the investigations set on July 25 and August 18, 2003. His unexplained absence should be construed as a waiver of his right to be present and adduce evidence. Apart from the doctors' clearances, he failed to provide competent proof that he was actually undergoing therapy and medication, and failed to submit official receipts. As NSM, a managerial employee, he was bound by a more exacting work ethic. His conduct showed indifference and utter disregard of his work and his employer's interest, amounting to gross dereliction of duties. The employer is allowed wide latitude of discretion in terminating managerial personnel, and the mere existence of a basis for believing that the employee breached the trust and confidence of his employer suffices for dismissal.

• Salary Award: In Leonardo vs. NLRC, the SC held that where the employee's failure to work was occasioned neither by his abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the employer; each party must bear his own loss. Respondent's inability to work from January 24 to June 4, 2003 was neither due to the company's fault nor his willful conduct, but because he suffered a stroke. Hence, each must bear the loss accordingly. Beginning June 5, 2003, respondent should have reported back to work but failed to do so. He can only be entitled to compensation for the actual number of work days. The rule of "a fair day's wage for a fair day's labor" applies; if there is no work performed, there can be no wage or pay, unless the laborer was able, willing, and ready to work but was illegally locked out, suspended, or dismissed. Petitioner should be exempted from paying backwages. Being entitled to sick leave pay during the time he was incapable of working, the reckoning date should be from January 24, 2003 to June 4, 2003, chargeable against his accrued sick leave benefits and other similar leave benefits, if any, as may be provided by existing company policy.

• Medical Expenses: To justify a grant of actual or compensatory damages, it is necessary to prove with a reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable, the actual amount of loss. Damages must not only be capable of proof but must be actually proved with a reasonable degree of certainty. The SC cannot rely on speculation, conjecture, or guesswork. Actual proof of expenses incurred for medicines and other medical supplies should have been presented in the form of official receipts. Aside from the letter of Dr. de la Paz, respondent failed to produce even a single receipt showing his alleged medical and rehabilitation expenses. The award of ₱94,100.00 should be negated for lack of basis.

• Temperate Damages: Under Article 2224 of the Civil Code, temperate or moderate damages are more than nominal but less than compensatory, and may be recovered when the court finds that some pecuniary loss has been suffered but the amount cannot, from the nature of the case, be proved with certainty. The CA found that respondent paid for doctor's professional fees and incurred other hospital expenses, but the records failed to show proof of the actual amount. The SC reduced the temperate damages from ₱100,000.00 to ₱50,000.00, considering that the stroke was not debilitating in nature and the records showed that his health condition remained stable, with no instances of subsequent or recurring ailment requiring prolonged medical attention.

• 13th Month Pay: The 13th Month Pay Law, which provides the rules on entitlement and computation of 13th month pay, cannot be applied to respondent because he is a managerial employee, and the law applies only to rank-and-file employees. Although he is not covered by the law, the records showed that he is entitled to this benefit. However, the SC cannot make a proper determination as to the exact amount, either full or pro-rated, of the 13th month pay he would be entitled to. Reference should be made to the existing company policy on the payment of 13th month pay vis-à-vis the number of days he actually worked.

• Attorney's Fees: Attorney's fees may be awarded only when the employee is illegally dismissed in bad faith and is compelled to litigate or incur expenses to protect his rights by reason of the unjustified acts of his employer. In view of the finding that respondent was validly dismissed for unauthorized absences amounting to gross dereliction of duties under Article 282(e) of the Labor Code, reckoned from June 5, 2003, and the lack of evidence that his dismissal was tainted with bad faith, the grant of 10% of the total monetary award as attorney's fees cannot be sustained.

• Disease as a Ground for Termination — Article 284 of the Labor Code allows an employer to terminate the services of an employee found to be suffering from a disease whose continued employment is prohibited by law or prejudicial to his health or that of his co-employees. Section 8, Rule I, Book VI of the Omnibus Rules requires a certification by a competent public health authority that the disease cannot be cured within six months even with proper medical treatment. The SC held that this requirement cannot be dispensed with, as otherwise it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employee's illness. In this case, the company failed to secure the required certification before terminating respondent.

• Gross Dereliction of Duties — Under Article 282(e) of the Labor Code, an employer may terminate an employee for gross and habitual neglect of duties. The SC held that a managerial employee who, after being cleared by his doctors to return to work, repeatedly fails to report for work or attend the employer's scheduled investigations without justification, commits gross dereliction of duties warranting dismissal. As a managerial employee, he is bound by a more exacting work ethic and is reposed with the employer's full trust and confidence.

• Management Prerogative to Dismiss Managerial Employees — Employers are allowed wide latitude of discretion in terminating the employment of managerial personnel. The mere existence of a basis for believing that such employee has breached the trust and confidence of his employer would suffice for his dismissal. The SC applied this to uphold respondent's dismissal as NSM.

• Actual or Compensatory Damages — To justify a grant of actual or compensatory damages, it is necessary to prove with a reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable, the actual amount of loss. Damages must not only be capable of proof but must be actually proved with a reasonable degree of certainty. The SC cannot rely on speculation, conjecture, or guesswork. The SC applied this to delete the award of medical expenses for lack of official receipts.

• Temperate Damages — Under Article 2224 of the Civil Code, temperate or moderate damages are more than nominal but less than compensatory, and may be recovered when the court finds that some pecuniary loss has been suffered but the amount cannot, from the nature of the case, be proved with certainty. The SC applied this to reduce the temperate damages from ₱100,000.00 to ₱50,000.00.

• "A Fair Day's Wage for a Fair Day's Labor" — The age-old rule governing the relation between labor and capital, or management and employee, remains the basic factor in determining employee's wages. If there is no work performed by the employee, there can be no wage or pay, unless the laborer was able, willing, and ready to work but was illegally locked out, suspended, or dismissed, or otherwise illegally prevented from working. The SC applied this to delete the salary award for the period after respondent was cleared to return to work but failed to do so.

• 13th Month Pay Law Coverage — The 13th Month Pay Law applies only to rank-and-file employees, not to managerial employees. The SC held that respondent, as a managerial employee, is not covered by the law, but may still be entitled to 13th month pay under company policy.

• Attorney's Fees — Attorney's fees may be awarded only when the employee is illegally dismissed in bad faith and is compelled to litigate or incur expenses to protect his rights by reason of the unjustified acts of his employer. The SC applied this to delete the award of attorney's fees, there being no evidence of bad faith.

• "The power to dismiss an employee is a recognized prerogative inherent in the employer's right to freely manage and regulate his business. The law, in protecting the rights of the laborers, authorizes neither oppression nor self-destruction of the employer." — This passage frames the SC's approach to the validity of dismissal, balancing labor protection with management prerogative.

• "As a general rule, employers are allowed wide latitude of discretion in terminating the employment of managerial personnel. The mere existence of a basis for believing that such employee has breached the trust and confidence of his employer would suffice for his dismissal." — This defines the standard for dismissing managerial employees, which the SC applied to respondent as NSM.

• "In order to justify a grant of actual or compensatory damages, it is necessary to prove, with a reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable by the injured party, the actual amount of loss." — This states the evidentiary standard for actual damages, which the SC applied to delete the medical expenses award.

• "The age-old rule governing the relation between labor and capital, or management and employee, of 'a fair day's wage for a fair day's labor' remains as the basic factor in determining employee's wages. If there is no work performed by the employee, there can be no wage or pay – unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed, or otherwise illegally prevented from working, a situation which is not prevailing in the present case." — This articulates the wage principle that justified deleting the salary award.

• Triple Eight Integrated Services, Inc. vs. NLRC, G.R. No. 129584, December 3, 1998, 299 SCRA 608 — Controlling precedent; held that the medical certificate requirement under Article 284 of the Labor Code cannot be dispensed with.
• Leonardo vs. National Labor Relations Commission, 389 Phil. 118 (2000) — Controlling precedent; held that where the employee's failure to work was occasioned neither by his abandonment nor by a termination, the burden of economic loss is not rightfully shifted to the employer; each party must bear his own loss.
• Navarro vs. P.V. Pajarillo Liner, Inc., G.R. No. 164681, April 24, 2009, 586 SCRA 489 — Cited for the rule that if there is no work performed by the employee, there can be no wage or pay, unless the laborer was able, willing, and ready to work but was illegally locked out, suspended, or dismissed.
• Alcazaren vs. Univet Agricultural Products, Inc., 512 Phil. 281 (2005) — Cited for the rule that a managerial employee is bound by a more exacting work ethic and is reposed with the employer's full trust and confidence.
• Ancheta vs. Destiny Financial Plans, Inc., G.R. No. 179702, February 16, 2010, 612 SCRA 648 — Cited for the rule that the worker's right to security of tenure is not an absolute right, and that the employer cannot be compelled to continue with the employment of workers when continued employment will prove inimical to the employer's interest.
• Molina vs. Pacific Plans, Inc., G.R. No. 165476, March 10, 2006, 484 SCRA 498 — Cited for the rule that employers are allowed wide latitude of discretion in terminating the employment of managerial personnel.
• Coca Cola Bottlers, Phils., Inc. vs. Roque, G.R. No. 118985, June 14, 1999, 308 SCRA 215 — Cited for the rule that damages must be proved with a reasonable degree of certainty.
• M+W Zander Philippines, Inc. vs. Enriquez, G.R. No. 169173, June 5, 2009, 588 SCRA 590 — Cited for the rule that attorney's fees may be awarded only when the employee is illegally dismissed in bad faith.

• Article 284, Labor Code — Allows an employer to terminate the services of an employee found to be suffering from a disease whose continued employment is prohibited by law or prejudicial to his health or that of his co-employees. The SC discussed this provision but ultimately grounded the dismissal on Article 282(e), noting that the company failed to secure the required medical certification.
• Article 282(e), Labor Code — Allows an employer to terminate an employee for gross and habitual neglect of duties. The SC applied this provision to uphold respondent's dismissal for unauthorized absences amounting to gross dereliction of duties, reckoned from June 5, 2003.
• Section 8, Rule I, Book VI, Omnibus Rules Implementing the Labor Code — Requires a certification by a competent public health authority that the disease cannot be cured within six months even with proper medical treatment before an employer may terminate an employee on the ground of disease. The SC held that this requirement was not complied with.
• Article 2224, Civil Code — Defines temperate or moderate damages as more than nominal but less than compensatory, recoverable when the court finds that some pecuniary loss has been suffered but the amount cannot, from the nature of the case, be proved with certainty. The SC applied this to reduce the temperate damages to ₱50,000.00.
• Presidential Decree No. 851 (13th Month Pay Law), as implemented by Memorandum Order No. 28 — Requires all employers to pay all their rank-and-file employees a 13th month pay. The SC held that the law applies only to rank-and-file employees, not managerial employees, but that respondent may still be entitled to 13th month pay under company policy.