Under Philippine Labor laws, it is a recognized principle that management has a wide latitude of discretion and freedom to conduct its own affairs as it sees fit. This is called management prerogative, or the right of an employer to regulate all aspects of employment according to their best judgment. This regulation extends to work assignments, working methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers, and the discipline, dismissal, and recall of workers. Because of this right, courts often decline to interfere in legitimate business decisions of employers. In fact, labor laws discourage interference in employer’s judgment concerning the conduct of their business.

Among those included in management prerogative is the right to prescribe reasonable rules and regulations necessary or proper for the conduct of its business concern, to provide certain disciplinary measures to implement said rules, and to assure that the same would be complied with. On the other hand, the employee has the corollary duty to obey all reasonable rules, orders, and instructions of the employer. However, it must be remembered that despite the wide discretion afforded to the employers, the same is not without limitations.

To further understand this concept, let us take a look in the 2020 case of Verizon Communications Philippines v. Laurence C. Margin.

Brief Background

In the said case, Margin was hired as a network engineer of Verizon in 2007. Sometime in January 2012, he noticed a decline in his health and experienced constant nausea, difficulty in breathing, colds and cough with spots of blood. When he consulted a doctor, the results showed that he was suffering from “PTB vs. Pneumonia,” for which he was recommended to be in isolation and bed rest for 60 days. Margin informed his manager and did not report to work starting 3 February 2012. On 14 March 2012, he received a Notice to Explain and when he called his manager, he was informed that his employment was already terminated on 12 March 2012. Thus, Margin filed a complaint for illegal dismissal and damages against Verizon.

Verizon countered that Laurence was aware of the company’s policies on attendance and absences. Nonetheless, he failed to notify the company of the duration of his leave, nor mention how long he will be absent. Thus, Laurence’s 38-day absence, from February 3 to March 8, 2012, warrant the termination of his employment.

Proceedings before the Labor Arbiter, NLRC, and the Court of Appeals

The Labor Arbiter dismissed Margin’s complaint, on the grounds that the company has a rule that unauthorized absences for five (5) consecutive days is considered abandonment which carries a penalty of dismissal and that the prolonged unauthorized absence for thirty-eight (38) days indubitably hampered the operation of the company.

On appeal however, the National Labor Relations Commission (NLRC) set aside the Labor Arbiter’s decision, because Laurence’s prolonged absence was due to health reasons, and he did not intend to abandon his work. Verizon moved for reconsideration, but to no avail, which prompted them to elevate the matter to the Court of Appeals.

The Court of Appeals, however, upheld the Decision of the NLRC, ruling that the length of his absence is justified considering that it is common knowledge that pulmonary tuberculosis and pneumonia are serious infectious diseases. Aggrieved, Verizon went to the Supreme Court.

Ruling of the Supreme Court

Upon Its review of the records, the Supreme Court found that Verizon’s policy on excessive absenteeism, which prescribes the penalty of dismissal as penalty, is too harsh.

It noted that while the Court recognizes the right of an employer to terminate the services of an employee for a just or authorized cause, the dismissal must be made within the parameters of law and pursuant to the tenets of equity and fair play.

While it recognized that the power to dismiss is a formal prerogative of the employer, the Supreme Court reminded that the employer is bound to exercise caution in terminating the services of his employees and dismissals must not be arbitrary and capricious. There must be a reasonable proportionality between the offense and the penalty. Dismissal, without doubt, is the ultimate penalty that can be meted to an employee. Hence, where a penalty less punitive would suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe.

It emphasized that “even when there exist some rules agreed upon between the employer and employee on the subject of dismissal, the same cannot preclude the State from inquiring on whether their rigid application would work too harshly on the employee.” This Court will not hesitate to disregard a penalty that is manifestly disproportionate to the infraction committed.

Since Verizon based their defense on violation of company rules, it is incumbent upon Verizon to prove that Laurence clearly, voluntarily and intentionally committed the infraction. Laurence’s absence from work was due to sickness. He gave proper notification of his absence, which reason should have been given kind consideration by Verizon. An employee cannot anticipate when an illness may happen, thus, he may not be able to give prior notice or seek prior approval of his absence but could only do so after the occurrence of the incident.

Even assuming that there was deliberate violation of the company’s rules, the penalty of dismissal is too harsh and not proportionate to the wrongdoing committed. Knowledge of the company’s rules, its violation, and dismissal in accordance with said rules do not automatically bind the Supreme Court. It is settled that the law serves to equalize the unequal. The labor force is a special class that is constitutionally protected because of the inequality between capital and labor.

Conclusion

From the foregoing, it must be noted that while the employee’s security of tenure is guaranteed by law, it is also well-settled that employers have the right and regulate every aspect of the business affairs in accordance with their discretion and judgment subject to the regulation of the State. The free will of the management to conduct its own business includes the promulgation of policies, rules and regulations on work-related activities. The policies and regulations so promulgated, unless shown to be grossly oppressive or contrary to law, are generally valid and binding on the parties and must be complied with until finally revised or amended, unilaterally or through negotiation, by competent authority.

For the employers, they must be reminded that the Constitution looks with compassion on the working class and its intent in protecting their rights. A worker’s employment is property in a constitutional sense, and he/she cannot be deprived thereof without due process and unless the deprivation is commensurate to his/her acts and degree of moral depravity. Thus, extreme caution should be exercised in crafting the company’s rules and regulations and the penalties for its violations. The proportionality between the policy and its violation should be manifest and clear, lest the employer risk of being subject to a labor case.

^1. St. Luke’s Medical Center, Inc. v. Sanchez, G.R. No. 212054, 11 March 2015.
^2. G.R. No. 216599, 16 September 2020.