Understanding Illegal Dismissal When Absence Without Leave Isn't Enough

In a 2020 ruling, the Supreme Court clarified the boundaries between a valid dismissal based on loss of trust and confidence and the employer's failure to observe procedural due process. The case of Spouses Maynes v. Oreiro (G.R. No. 206109, November 25, 2020) provides important guidance for both employers and employees on what constitutes illegal dismissal and the consequences of skipping the required notice and hearing.

The Case: A Sales Clerk's Dismissal

Sheila M. Monte worked as a Sales Clerk at Oreiro's Boutique and Merchandise in Bangar, La Union. Her duties included supervising the outlet, receiving items, safekeeping daily sales, preparing inventories, and issuing receipts. After her dismissal, Monte filed a complaint for illegal dismissal, claiming she was summarily terminated without just cause or due process.

The employer, however, presented evidence of serious infractions: Monte allegedly misappropriated daily sales, lost stocks under her care, and issued items to fictitious customers. The employer argued that these acts constituted a valid dismissal based on loss of trust and confidence.

The Issue: Did the Employer Change Its Theory on Appeal?

A key question was whether the employer improperly changed its defense on appeal. Before the labor arbiter, the employer initially raised "abandonment of work" as its defense. On appeal to the National Labor Relations Commission (NLRC), it argued "loss of trust and confidence" as a just cause for dismissal.

The Supreme Court ruled that the employer did not change its theory. In its position paper before the labor arbiter, the employer had already alluded to breach of trust and confidence. The additional documents submitted on appeal merely elaborated on this existing argument.

The Ruling: Just Cause Existed, But Due Process Was Violated

The Court found that Monte's dismissal was for a just cause. For dismissal based on loss of trust and confidence under Article 297(c) of the Labor Code, two requisites must concur: (1) the employee holds a position of trust and confidence, and (2) there must be an act justifying the loss of that trust.

Monte's position as Sales Clerk clearly involved trust and confidence—she handled the store's funds, inventory, and daily sales. The employer presented substantial evidence, including documents bearing Monte's signature, showing she misappropriated cash sales and lost stocks. Monte failed to offer any justification for these anomalies.

However, the Court also ruled that the employer violated Monte's right to procedural due process. The twin requirements of notice and hearing were not observed. Monte was not given a written notice specifying the grounds for her dismissal, nor was she given an opportunity to explain her side. She only learned of her termination when notices were posted in the store.

The Remedy: Nominal Damages, Not Illegal Dismissal

The Supreme Court distinguished between a dismissal that is substantively valid but procedurally deficient. Citing the landmark case of Agabon v. NLRC, the Court explained that when dismissal is for a just cause, the lack of statutory due process does not nullify the dismissal or render it illegal. However, the employer must indemnify the employee for violating their statutory rights.

Accordingly, the Court affirmed the award of P30,000.00 in nominal damages to Monte. The dismissal itself was upheld as valid, but the employer was penalized for its failure to observe procedural due process.

Practical Takeaways

• Loss of trust and confidence is a valid ground for dismissal but only when the employee holds a position of trust and there is an act justifying the loss of that trust.
• Employers cannot skip procedural due process. Even with a valid just cause, the employer must give the employee two written notices: one informing them of the charges and another of the decision to dismiss.
• An opportunity to be heard is mandatory. The employee must be given a chance to explain their side, even if no actual hearing is conducted.
• Evidence may be presented for the first time on appeal to the NLRC. Technical rules of evidence do not strictly apply in labor cases, so the NLRC may admit new evidence on appeal.
• Procedural violations do not automatically make a dismissal illegal. When just cause exists but due process is lacking, the remedy is nominal damages, not reinstatement or backwages.

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