Good Faith and Backwages

It seems to be almost SOP to award backwages in cases of illegal dismissal. However, in March of this year the Supreme Court had occasion to clarify that not all instances of illegal dismissal warrant an award of backwages. Such is the ruling of the Court in Jackqui R. Moreno vs. San Sebastian College-Recoletos, Manila (G.R. No. 175283; March 28, 2008).

Jackqui was a member of the permanent college faculty of San Sebastian. It seems she was one of the better teachers in the Accounting Department. She consistently landed among the five best teachers per yearly evaluation of the performance of teachers, and she was even asked to be the chairman of Business Finance and Accountancy for SY 2002-2003.

It was later on discovered, however, that Jackqui had unauthorized teaching assignments at the Centro Escolar University during the first semester of SY 2002-2003 and at the College of the Holy Spirit, Manila during SY 2000-2001 and SY 2001-2002 as well as during the first semester of SY 2002-2003. Said activities were violative of San Sebastian’s Faculty Manual and were punishable by suspension or dismissal.

In reply to a memorandum from the Dean of her college, Jackqui explained her side and mentioned that she merely wanted to improve her family’s poor financial conditions. A Special Grievance Committee was thereafter set up which eventually issued a resolution unanimously finding that Jackqui had violated the prohibition against a full-time faculty having an unauthorized external teaching load. San Sebastian approved and adopted the findings and recommendations of the grievance committee and sent Jackqui a letter informing her of the effectivity date of the termination of her employment.

Jackqui filed a labor case against San Sebastian. The labor arbiter found in favor of San Sebastian; the National Labor Relations Commission, however, reversed the labor arbiter’s decision; the Court of Appeals, on its part, reversed the Commission; and, finally, the Supreme Court reversed the Court of Appeals – in effect reinstating the Commission’s decision but with important modifications.

In upholding Jackqui’s stance that she was illegally dismissed, the Supreme Court agreed that she was guilty of misconduct, “However, said misconduct falls below the required level of gravity that would warrant dismissal as a penalty.” In support of this finding the Court cited its previous ruling in NLRC vs. Salgarino (497 SCRA 361, 375-376):

“Misconduct is defined as improper or wrong conduct.It is the trangression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character and implies wrongful intent and not mere error of judgment.The misconduct to be serious within the meaning of the act must be of such a grave and aggravated character and not merely trival or unimportant.Such misconduct, however serious, must nevertheless be in connection with the work of the employee to constitute just cause from his separation.

“In order to constitute serious misconduct which will warrant the dismissal of an employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated some established rules or policies.It is equally important and required that the act or conduct must have been performed with wrongful intent.”

The Supreme Court went on to explain that it is the employer who has the burden of proving wrongful intent, and this San Sebastian failed to do: “In the present case, SSC-R failed to adduce any concrete evidence that Moreno indeed harbored perverse or corrupt motivations in violating the aforesaid school policy.” The Court noted that San Sebastian failed to submit evidence controverting Jackqui’s claim that she was “prompted to engage in illicit teaching activities in other schools, as she desperately needed to augment her income.” Incidentally, the Supreme Court also found the penalty of dismissal disproportionate to the offense; suspension, in its view, would have been sufficient.

Despite said finding of illegal dismissal, the Supreme Court decided to grant reinstatement but without backwages:

“In accordance with Durabuilt Recapping Plant & Co. v. National Labor Relations Commission [152 SCRA 328] the court may not only mitigate, but also absolve entirely, the liability of the employer to pay backwages where good faith is evident. Likewise, backwages may be withheld from a dismissed employee where exceptional circumstances are availing.

“In the present case, the good faith of SSC-R is apparent.The termination of Moreno from her employment cannot be said to have been carried out in a malevolent, arbitary or oppressive manner.Indeed, the only mistake of the respondent school has committed was to strictly apply the provisions of its Faculty Manual and its contract with Moreno without regard for the aforementioned special circumstances that were attendant in this case.Even then, Moreno’s right to procedural due process was fully respected, as she was given the required twin notices and ample opportunity to be heard. This fact was not even disputed by Moreno herself.” [Emphasis added]

The moral of the story, insofar as management is concerned, is: Always comply with due process when dismissing an employee. Whether or not a just cause for dismissal exists in a particular case is oftentimes a highly debatable issue. In this case the labor arbiter and the Court of Appeals thought there was no illegal dismissal; the NLRC and the Supreme Court thought otherwise. The Supreme Court, however, has the final say. But at least the Supreme Court saw that San Sebastian was in good faith and that, therefore, it was not liable to pay backwages.

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