MANILA -- The Supreme Court (SC) has reiterated balancing workers' rights with the rights of employers to exercise management prerogatives in dealing with their companies’ affairs, including their right to dismiss erring employees.
“We recognized the right of the employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of workers," the SC said in a decision written by Justice Diosdado M. Peralta.
While the High Court held that the general principle of labor law discourages interference with an employer's judgment in the conduct of his business, it also recognized their right to decision-making in terms of management.
“Thus, for as long as the company's exercise of judgment is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees under the laws or valid agreements, such exercise will be upheld,” the tribunal said.
The pronouncement was made in the case of Debra Ann P. Gaite who was terminated in 2012 as general manager of the Filipino Society of Composers, Authors and Publishers, Inc. (FILSCAP).
Incorporated in 1965 as a non-stock, non-profit association of composers, lyricists, and music publishers, Filscap collectively enforces the public performance rights granted by law to copyright owners of musical works.
Several issues were raised against Gaite before FILSCAP’s board of trustees.
FILSCAP discussed a graceful exit and separation package with Gaite and scheduled the signing of a Release, Waiver, and Quitclaim on June 26, 2012.
The package provided that FILSCAP would release, waive and discharge Gaite from any and all actions, whether civil, criminal or administrative, or from any all claims of any kind or character arising out of or in connection with her employment with FILSCAP in exchange for PHP1,440,386.01, the same records showed.
A few days before the signing of the quitclaim, FILSCAP discovered that funds were transferred and credited to cover shortage in operating expenses without the approval of the board of trustees, thus prompting an inquiry.
On July 10, 2012, FILSCAP issued a show cause notice to Gaite requiring her to explain why no disciplinary sanctions should be imposed on her. She was placed under preventive suspension with pay. Gaite denied any wrongdoing and informed the board of trustees that she had already filed a case for constructive dismissal against FILSCAP on June 28, 2012.
On Gaite’s complaint, the labor arbiter ruled in 2013 that FILSCAP should pay her more than PHP1.4 million representing the amount in the quitclaim that could have been signed in 2012 to give her a graceful exit and a separation package.
The NLRC ruled that the acts of FILSCAP prior to terminating Gaite’s services amounted to constructive dismissal.
On Nov. 24, 2014, the Court of Appeals (CA) reversed NLRC’s decision and ruled that “the acts of FILSCAP in seeking the opinion of its counsel, foregoing the signing of the Quitclaim, and conducting an administrative hearing cannot be considered as acts of discrimination, insensibility, and disdain for it was merely exercising prudence and due diligence in good faith to ensure that Gaite's dismissal would be proper and based on valid grounds.”
On Gaite’s dismissal, the CA ruled that she was validly dismissed for serious misconduct and loss of trust and confidence.
In resolving the issue, the SC found Gaite's acts constitute serious misconduct.
“First, the seriousness of the same cannot be denied. Not only is the amount involved herein a staggering amount of Pl7,720,455.77, the alleged reallocation violated an express provision of the company's Distribution Rules and was accomplished without the knowledge, consent, or authorization of the Board.
“Second, Gaite committed said transfer in the performance of her duties as General Manager of FILSCAP who is responsible for the overall operations thereof, including the regular review and updating of its distribution guidelines to facilitate royalty distribution to FILSCAP members and foreign affiliates.
“Third, because of this grave infraction causing the depletion of the company's Special Accounts held in trust for the rightful copyright owners, Gaite's ability to duly perform and accomplish her duties and responsibilities as General Manager has been seriously put into question.
“It is clear, therefore, that Gaite's acts amounted to serious misconduct warranting her dismissal.
“On the second ground for termination, the Court has held that ‘loss of trust and confidence’ will validate an employee's dismissal when it is shown that: (a) the employee concerned holds a position of trust and confidence; and (b) he performs an act that would justify such loss of trust and confidence.”
But the SC said the termination of an employee on loss of trust and confidence “is never intended to provide the employer with a blank check for terminating its employees and neither should it be loosely applied in justifying the termination of an employee nor should it be used as a subterfuge for causes which are improper, illegal, or unjustified.”
In the case of Gaite, the SC said “there is no doubt that she held a position of trust and confidence.” (PNA)
