Due Process in Employee Dismissal: Rights Apply Even in Just Cause Terminations

The Supreme Court has long held that employees enjoy security of tenure, meaning they cannot be dismissed except for just or authorized causes and only after observance of procedural due process. But what happens when an employee is dismissed for a serious offense like violence during a strike? Does the employer still need to follow the procedural requirements of notice and hearing?

In Suico v. National Labor Relations Commission (G.R. No. 146762, January 30, 2007), the Court settled this question: even where a just cause for termination clearly exists, the employer must still comply with the procedural requirements of due process. A failure to do so does not make the dismissal illegal, but it does entitle the employee to nominal damages.

The Facts: Strike-Related Violence and Termination

The case involved several employees of the Philippine Long Distance Telephone Company (PLDT) who participated in a strike launched by their union in September 1997. During the strike, the employees were accused of committing violent acts, including assaulting a PLDT supervisor, attacking a subscriber, and throwing stones at company property.

PLDT sent each employee a notice requiring them to explain in writing why they should not be terminated for serious misconduct. The employees, however, did not submit written explanations. Instead, they invoked a company policy called Systems Practice No. 94-016, which allowed an employee under investigation to choose between submitting a written answer or requesting a formal hearing. The employees requested formal hearings and asked for copies of the evidence against them.

PLDT refused to grant the hearings unless the employees first submitted their written explanations. When the employees insisted on their request, PLDT terminated them, citing their failure to provide written explanations as a waiver of their right to be heard. The dismissed employees challenged their termination, arguing that PLDT violated their right to procedural due process.

The Issue: Does Due Process Apply to Just Cause Terminations?

The central issue was whether PLDT violated the employees' right to procedural due process when it dismissed them for strike-related violence without conducting the formal hearing they had requested under company policy.

PLDT argued that for strike-related offenses, it was enough to declare that the employees had lost their employment status without complying with the usual termination procedure. The Court rejected this argument.

The Ruling: Due Process Applies to All Terminations

The Supreme Court ruled that Article 277(b) of the Labor Code, in relation to Article 264 on prohibited strike activities, recognizes the right to due process of all workers, without distinction as to the cause of their termination. The Court emphasized that where the law makes no distinction, none should be construed.

The Court also noted that the minimum standards of due process are prescribed in Article 277(b) of the Labor Code and implemented by Rule XXIII of the Implementing Rules of Book V. These standards require:

1. A written notice to the employee specifying the grounds for termination;
2. A hearing or conference where the employee can respond to the charge and present evidence; and
3. A written notice of termination indicating that grounds have been established to justify dismissal.

Significantly, the Court held that these requirements are supplemented by existing company policy. Under the principle of management prerogative, employers may adopt company policies regulating personnel administration, including termination procedures. Once adopted, these policies are binding on the employer.

In this case, PLDT's Systems Practice No. 94-016 gave employees the option to choose between submitting a written answer or requesting a formal hearing. When the employees chose the hearing option, PLDT was bound to honor that choice. By insisting on written explanations first and then treating the employees' failure to submit them as a waiver, PLDT arbitrarily defeated the employees' exercise of a right that was part of their due process.

The Consequence: Nominal Damages, Not Reinstatement

However, the Court made an important distinction. While PLDT violated the employees' procedural due process rights, the substantive basis for their dismissal was never put in issue. The employees did not dispute that they committed the acts charged. Citing its earlier ruling in Agabon v. National Labor Relations Commission, the Court held that a procedural deficiency does not affect the validity of the dismissal when a just cause exists.

Thus, the dismissals were upheld, but each employee was awarded nominal damages of P30,000.00 for the impairment of their right to procedural due process.

Practical Takeaways

• Due process applies to all terminations. Even when an employee commits a serious offense like violence during a strike, the employer must still observe the twin requirements of notice and hearing.
• Company policies are binding. If an employer adopts a policy granting employees specific procedural rights, such as the option to request a formal hearing, the employer must honor that policy.
• The two-notice rule is the minimum. Employers must send a notice specifying the grounds for termination and a separate notice of the decision to terminate. A hearing or conference must also be conducted.
• Procedural lapses do not invalidate a just dismissal. If a valid just cause exists, the dismissal remains legal despite procedural defects. The remedy is nominal damages, not reinstatement or backwages.
• Employees should respond to notices. While employees may request a hearing, failing to respond to a valid notice can be treated as a waiver of the right to be heard.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.