Philippine Supreme Court Clarifies Due Process Requirements in Employment Termination Supporting Your Business May 2010 On April

7, 2009, the Philippine Supreme Court rendered a decision in the case of Felix B. Perez and Amante Doria v. Philippine Telegraph and Telephone Company and Jose Luis Santiago (G.R. No. 152048) clarifying the due process requirements in employment termination for just cause under the Labor Code of the Philippines (Labor Code). The following are the just causes for termination undperer Article 282 of the Labor Code: 1. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; 2. Gross and habitual neglect by the employee of his duties; 3. Fraud or willful breach by the employee of the trust reposed upon him by his employer or duly authorized representative; 4. Commission of a crime or offense by the employee against the person of his employer or any immediate member of the latter's family or the latter's duly authorized representative; and 5. Other causes analogous to the foregoing. Just causes for employment termination are acts or omissions attributable to the employee that are sufficient to warrant dismissal from employment. In Perez, the Supreme Court tried to harmonize the standards of due process in just cause termination under Article 277 (b) of the Labor Code and Section 2 (d), Rule I, Book VI of the Implementing Rules of the Labor Code ("Implementing Rules"). Labor Code Article 277 (b) of the Labor Code in part provides: "... the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires ... Implementing Rules of the Labor Code On the other hand, the Implementing Rules provide that in casese of termination of employment based on just cause, the following standards of due process shall

be sunstantially observed: "a) A written notice served on the employe specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. b) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him. c) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination." In addition to the notice requirement under the Labor Code, the Implementing Rules mention a hearing or conference as part of procedural due process before an employee is dismissed from employment. In this connection, many employers have asked whether a formal hearing or conference is always required before an employer may dismiss an employee for just cause. Significance of Complying with Due Process Compliance with procedural due process is an integral part of employment termination in the Philippines. If the employer does not comply with the requirements of procedural due process, the employer may be held liable for nominal damages even if the employer has a substantive basis (i.e., just cause) for terminating an employee. Moreover, a due process violation may sometimes cloud the labor courts appreciation of an illegal dismissal case even in respect of the substantive basis for termination. The Supreme Court's Clarification To harmonize Article 277 (b) of the Labor Code and the Implementing Rules, the Supreme Court reaffirmed in Perez, the time honored doctrine that, in case of conflict, the law prevails over the administrative rule or regulation implementing it. The Supreme Court stated that the authority to promulgate implementing rules proceeds from the law itself. Accordingly, a rule or regulation must conform to, and be consistent with, the provisions of the law. The Supreme Court clarified that a formal face-to-face hearing or conference as part of due process is not always required in employment terminations. The ample opportunity to be heard standard is neither synonymous nor similar to a formal hearing. While a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process. The Supreme Court further explained that the Implementing Rules, which should

be interpreted in broad strokes, are satisfied not only by a formal face-to-face confrontation but by any meaningful opportunity given to the employee to controvert the charges and to submit evidence. The Supreme Court stated that ample opportunity to be heard does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions, or pleadings. Hence, while the phrase ample opportunity to be heard may in fact include an actual hearing, it is not limited to a formal hearing. To summarize, the Supreme Court laid down the following guiding principles for due process in just cause employment termination: 1. Ample opportunity to be heard means any meaningful opportunity (verbal or written) given to the employee to answer the charges and submit evidence, whether in a hearing, conference, or some other fair, just and reasonable way. 2. A formal hearing or conference becomes mandatory only when: (a) requested by the employee in writing; (b) substantial evidentiary disputes exist; (c) a company rule or practice requires it; or (d) when similar circumstances justify it. 3. The ample opportunity to be heard standard in the Labor Code prevails over the hearing or conference requirement in the Implementing Rules. Conclusion The decision of the Supreme Court in Perez sought to address the nagging questions frequently posed by employers on the need to conduct a formal hearing or conference as part of due process. Perez is a welcome development for employers as well as labor law practitioners, as it harmonizes the provisions of the Labor Code and the Implementing Rules on due process in just cause terminations.