In ATCI Overseas Corporation v. Court of Appeals, the Supreme Court affirmed that employers must strictly comply with labor laws when terminating employees due to health reasons. The Court emphasized that employers must provide a certification from a competent public health authority stating that the employee’s disease is incurable within six months, even with medical treatment. This ruling protects employees from arbitrary dismissal and ensures that employers follow due process when health issues arise.

Dismissed Due to Illness? Unpacking Employee Rights and Employer Obligations

The case revolves around Marissa Alcantara and Rosanna E. Cabatbat, who were hired as dental hygienists by the Ministry of Public Health of Kuwait through ATCI Overseas Corporation. After passing pre-departure medical exams in the Philippines, they began working in Kuwait, only to be terminated after two months due to alleged lung defects. They were not provided with copies of their medical examination results or a written notice of termination. The central legal question is whether their dismissal was legal and whether the employer, ATCI, complied with the necessary procedures for terminating an employee due to health reasons.

The initial complaint filed by Alcantara and Cabatbat with the Philippine Overseas Employment Administration (POEA) resulted in a decision favoring the employees. The POEA found ATCI and its surety, Prudential Guarantee & Assurance, Inc., solidarily liable for illegal dismissal. The POEA emphasized the lack of written notice and the absence of a doctor’s report to substantiate the claim of lung defects.

We find the charge of illegal dismissal meritorious.  The alleged just cause which triggered complainants’ dismissal, i.e., lung defects was not satisfactorily established.  There is no notice in writing informing complainants of the reasons why they were not allowed to work anymore. Moreover, granting that they have “lung defects”, the same should have been accompanied by a doctor’s report or a medical certificate to attest to their “unfitness” to work. 

The case then moved to the National Labor Relations Commission (NLRC), which reversed the POEA’s decision. The NLRC considered additional evidence submitted by ATCI, including a letter from the Ministry of Health of Kuwait indicating that the employees were found to be positive for tuberculosis and heart sickness. The NLRC also took into account a certification from the Philippine Labor Attache in Kuwait, which supported the Ministry’s findings.

Contrary therefore to the POEA findings that the alleged just cause which triggered complainant’s dismissal i.e. lung defects was not satisfactorily established’, the records show that based on the certification by the Ministry of Public Health of Kuwait complainants had undergone medical examination and found to be positive of tuberculosis and heart sickness and are unfit to work.

However, the Court of Appeals reversed the NLRC’s decision, reinstating the POEA’s original ruling. The Court of Appeals held that the employer failed to comply with the requirements of Article 284 of the Labor Code and its implementing rules. This legal provision outlines the procedure for terminating an employee due to a disease that makes their continued employment prohibited by law or prejudicial to their health.

A key aspect of the case revolves around Article 284 of the Labor Code, which governs the termination of employment due to disease. The implementing rules of the Labor Code specify that employers must obtain a certification from a competent public health authority stating that the disease is incurable within six months, even with proper medical treatment. This requirement is outlined in Sec. 8, Rule I, Book VI, of the Omnibus Rules Implementing the Labor Code:

Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment.

The Supreme Court agreed with the Court of Appeals, emphasizing that ATCI failed to provide the necessary certification from a competent public health authority before terminating Alcantara and Cabatbat. The Court highlighted that the letter from the Ministry of Health of Kuwait and the certification from the Philippine Labor Attache did not meet the stringent requirements of the Omnibus Rules. Specifically, there was no finding that the disease was incurable within six months.

Moreover, the Court noted that the employer failed to prove that the letter from the Ministry was presented to the employees prior to their termination. The Court viewed the submission of this document during the NLRC appeal as a belated attempt to comply with Philippine laws after an adverse judgment by the POEA. The Supreme Court thus upheld the illegality of the dismissal.

The Supreme Court also addressed the issue of whether Alcantara and Cabatbat were probationary employees, as claimed by ATCI. The Court found no evidence to support this claim, noting the absence of a probationary period stipulation in the employment contract or the Memorandum of Understanding. Furthermore, there was no indication that the employees were informed of their probationary status or the requirements for regularization. As such, the Court concluded that they were regular employees at the time of their dismissal.

The Court then discussed the remedies available to illegally dismissed employees under Article 279 of the Labor Code, which includes reinstatement and backwages. While reinstatement was typically mandated, the Court recognized the impracticality of enforcing such an order against the Ministry of Public Health of Kuwait. Instead, the Court awarded separation pay equivalent to one-sixth of their monthly salary, considering their brief employment period. The award of attorney’s fees was also deemed legally justified, as the employees were compelled to litigate to protect their rights.

The liability of ATCI was also clarified, based on the principle that private employment agencies are jointly and severally liable with the foreign-based employer for claims arising from the employment contract. This solidary liability is rooted in the Rules and Regulations Governing Overseas Employment, which requires agencies to undertake this responsibility to protect the rights of recruited workers.

FAQs

What was the key issue in this case?	The key issue was whether the dismissal of the dental hygienists by the Ministry of Public Health of Kuwait, facilitated by ATCI Overseas Corporation, was legal under Philippine labor laws, specifically concerning the requirements for terminating an employee due to health reasons.
What did the POEA decide?	The POEA initially ruled in favor of the dental hygienists, finding ATCI and its surety solidarily liable for illegal dismissal due to the lack of proper notice and medical documentation.
How did the NLRC rule?	The NLRC reversed the POEA’s decision, considering additional evidence that the employees were found unfit for employment due to lung defects, based on a letter from the Ministry of Health of Kuwait and a certification from the Philippine Labor Attache.
What was the Court of Appeals’ decision?	The Court of Appeals reversed the NLRC’s ruling and reinstated the POEA’s decision, holding that the employer failed to comply with the requirements of Article 284 of the Labor Code and its implementing rules for terminating an employee due to illness.
What does Article 284 of the Labor Code require?	Article 284 of the Labor Code, as implemented by Sec. 8, Rule I, Book VI, of the Omnibus Rules, requires a certification from a competent public health authority stating that the employee’s disease is incurable within six months, even with proper medical treatment, before the employee can be terminated.
Were the employees considered probationary or regular?	The Supreme Court found that the employees were regular employees at the time of their dismissal, as there was no evidence of a probationary period stipulated in their contract or communicated to them.
What remedies were awarded to the employees?	Instead of reinstatement, the employees were awarded separation pay equivalent to one-sixth of their monthly salary, given their short employment period, as well as attorney’s fees.
What is the extent of the recruitment agency’s liability?	The recruitment agency, ATCI Overseas Corporation, was held jointly and severally liable with the foreign employer for the claims arising from the illegal dismissal, based on the Rules and Regulations Governing Overseas Employment.

In conclusion, the Supreme Court’s decision in ATCI Overseas Corporation v. Court of Appeals underscores the importance of strict compliance with labor laws when terminating employees for health reasons. Employers must adhere to procedural requirements and provide substantial evidence to justify such terminations, ensuring that employees’ rights are protected.

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: ATCI Overseas Corporation v. Court of Appeals, G.R. No. 143949, August 09, 2001