The Supreme Court ruled that FLP Enterprises, Inc. illegally dismissed its employees because it failed to provide substantial evidence of a company policy violation. This case underscores the importance of employers providing clear, convincing proof of just cause when terminating employees, ensuring that companies cannot arbitrarily dismiss workers without a valid reason. The decision reinforces the constitutional right to security of tenure, preventing employers from fabricating reasons to terminate employees and reminding employers that employees are protected.

Unproven Policy, Unjust Dismissal: When Evidence Fails, Employees Prevail

This case, FLP Enterprises Inc. v. Dela Cruz and Malunes, revolves around the dismissal of two sales ladies, Ma. Joeralyn D. Dela Cruz and Vilma Malunes, by FLP Enterprises Inc. – Francesco Shoes (FLPE). The company alleged that Dela Cruz and Malunes violated a company policy regarding the safekeeping of cash sales, leading to their termination. The core legal question is whether FLPE presented sufficient evidence to justify the dismissal of the employees for violating company policy.

The factual backdrop involves the disappearance of sales proceeds from the Alabang Town Center store of FLPE. Following the discovery of the missing funds, FLPE accused Dela Cruz and Malunes of violating a company policy that required sales proceeds to be stored in the stockroom rather than the cash register. The employees denied the existence of such a policy or any knowledge of it. Subsequently, FLPE terminated their employment, prompting the employees to file a complaint for illegal dismissal.

The Labor Arbiter (LA) initially dismissed the complaint, siding with FLPE and concluding that the employees were guilty of habitually violating the company’s standard procedure. However, the National Labor Relations Commission (NLRC) affirmed this decision. The Court of Appeals (CA) reversed the NLRC ruling, declaring that the employees had been illegally dismissed, prompting FLPE to elevate the case to the Supreme Court.

The Supreme Court emphasized the limited scope of its jurisdiction in a petition for review on certiorari, which generally involves reviewing errors of law rather than factual findings. However, the Court also recognized an exception when the factual findings are unsupported by evidence or based on a gross misapprehension of facts. In this case, the Court agreed with the CA’s determination that the NLRC had gravely abused its discretion, justifying a review of the factual issues.

A central tenet of Philippine labor law is that an employee can only be dismissed for a valid cause. Article 282 of the Labor Code specifies the just causes for termination, including gross and habitual neglect of duties. The Supreme Court clarified that neglect of duty must be both gross, meaning a want of care in performing duties, and habitual, implying repeated failure to perform those duties over a period of time. The Court underscored that substantial evidence is necessary for an employer to effectuate any dismissal. As it noted:

Substantial evidence is also necessary for an employer to effectuate any dismissal. Uncorroborated assertions and accusations by the employer would not suffice, otherwise, the constitutional guaranty of security of tenure would be put in jeopardy.

The burden of proof rests on the employer to demonstrate that the dismissal was for a just cause. FLPE claimed that a company policy existed since October 23, 2003, requiring sales staff to keep sales proceeds in a shoebox in the stockroom, not inside the cash register. To support this claim, FLPE presented a memorandum, but failed to prove that the policy was actually in place and disseminated among employees.

The Supreme Court outlined the elements necessary to sustain the dismissal of employees based on a violation of company policy. The CA correctly ruled that FLPE needed to show:

1) the existence of the subject company policy; 2) the dismissed employee must have been properly informed of said policy; 3) actions or omissions on the part of the dismissed employee manifesting deliberate refusal or wilful disregard of said company policy; and 4) such actions or omissions have occurred repeatedly.

The Court found that FLPE failed to establish the existence of the company policy and its proper dissemination. FLPE did not provide any evidence, such as signed acknowledgments from the employees, to demonstrate that Dela Cruz and Malunes were informed of the policy. The company’s failure to substantiate its claim with concrete evidence was a critical factor in the Court’s decision.

Even if the company policy existed, FLPE failed to prove that the employees were guilty of disobedience amounting to gross and habitual neglect of duty. Dela Cruz was not even at work on the day in question, and Malunes claimed she only placed the money in the cash register upon instruction from the store manager. Furthermore, there was no proof that the employees had repeatedly violated the alleged policy. As the Supreme Court highlighted:

In termination cases, the burden of proof rests on the employer to show that the dismissal is for a just cause. The one who alleges a fact has the burden of proving it; thus, FLPE should prove its allegation that it terminated respondents for a valid and just cause. It must be stressed that the evidence to prove this fact must be clear, positive, and convincing.

In conclusion, the Supreme Court affirmed the CA’s decision that FLPE illegally dismissed Dela Cruz and Malunes. The Court held that the company failed to provide sufficient evidence to support its claim that the employees violated a known company policy. This ruling underscores the importance of employers ensuring that company policies are clearly communicated and consistently enforced and that any disciplinary actions are based on substantial evidence. The rate of interest was modified as well to 6% starting July 1, 2013, pursuant to the Bangko Sentral ng Pilipinas Circular No. 799, Series of 2013.

FAQs

What was the key issue in this case?	The key issue was whether FLP Enterprises Inc. (FLPE) had sufficient cause to dismiss its employees, Ma. Joeralyn D. Dela Cruz and Vilma Malunes, for allegedly violating a company policy. The court examined whether FLPE adequately proved the existence and dissemination of the policy, as well as the employees’ violation of it.
What did the Supreme Court decide?	The Supreme Court affirmed the Court of Appeals’ decision, ruling that FLPE illegally dismissed Dela Cruz and Malunes. The Court found that FLPE failed to provide substantial evidence to support its claim that the employees violated a known company policy.
What evidence did FLPE present to justify the dismissal?	FLPE presented a memorandum dated October 23, 2003, which allegedly outlined the company policy regarding the safekeeping of cash sales. However, the company failed to prove that this policy was properly communicated to the employees or consistently enforced.
What must an employer prove to dismiss an employee for violating company policy?	An employer must prove the existence of the company policy, that the employee was properly informed of the policy, that the employee’s actions demonstrated a deliberate refusal or disregard of the policy, and that these actions occurred repeatedly. This was established in Cavite Apparel, Incorporated v. Marquez, G.R. No. 172044, February 6, 2013, 690 SCRA 48, 57.
Who has the burden of proof in termination cases?	In termination cases, the burden of proof rests on the employer to show that the dismissal was for a just cause. The employer must present clear, positive, and convincing evidence to support the termination.
What constitutes gross and habitual neglect of duty?	Gross negligence entails a lack of care in the performance of one’s duties, while habitual neglect implies a repeated failure to perform such duties over a period of time. Both elements must be proven to establish just cause for dismissal under Article 282 of the Labor Code.
Why was the NLRC’s decision overturned?	The NLRC’s decision was overturned because the Court of Appeals found that it was based on a misapprehension of facts and was not supported by substantial evidence. The Supreme Court agreed with the Court of Appeals’ assessment.
What is the significance of this ruling for employers?	This ruling emphasizes the importance of employers having well-documented and communicated company policies. Employers must also ensure they have substantial evidence to support any disciplinary actions, particularly terminations, to avoid findings of illegal dismissal.
What is the significance of this ruling for employees?	The ruling reinforces employees’ right to security of tenure and highlights the protections against arbitrary dismissal. It underscores that employers cannot terminate employees based on unsubstantiated claims or poorly communicated policies.

This case serves as a reminder of the importance of due process and the need for employers to act in good faith when dealing with employees. By requiring employers to provide substantial evidence of just cause for termination, the courts protect the rights of workers and promote fairness in the workplace.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: FLP ENTERPRISES INC. vs. DELA CRUZ, G.R. No. 198093, July 28, 2014