G.R. No. 121791 December 23, 1998
ENRIQUE SALAFRANCA, petitioner, vs. PHILAMLIFE (PAMPLONA) VILLAGE HOMEOWNERS ASSOCIATION, INC., BONIFACIO DAZO and THE SECOND DIVISION, NATIONAL LABOR RELATIONS COMMISSION (NLRC), respondents.

FACTS

Petitioner Enrique Salafranca was hired by respondent Philamlife Village Homeowners Association as an administrative officer in 1981 under successive six-month contracts until December 31, 1983. After his last contract expired, he continued working without a new appointment. In 1987, the association amended its by-laws to state that the administrative officer serves at the pleasure of the Board of Directors. Petitioner was informed his term was co-terminous with the appointing Board and his employment was placed on a month-to-month basis pending submission of a medical certificate. He continued working without submitting the certificate until his dismissal in December 1992. He filed a complaint for illegal dismissal.
The Labor Arbiter ruled in Salafranca’s favor, declaring him a regular employee not subject to the 1987 by-law amendment and awarding backwages and separation pay. The NLRC reversed this decision, holding that his position was co-terminous with the Board of Directors under the amended by-laws and thus his dismissal was valid, awarding only retirement pay equivalent to one-half month’s pay per year of service.

ISSUE

Whether the NLRC committed grave abuse of discretion in ruling that petitioner was not illegally dismissed.

RULING

Yes, the NLRC committed grave abuse of discretion. The Supreme Court held that an employer-employee relationship existed, and petitioner had attained regular employee status after years of continuous service, entitling him to security of tenure. The 1987 by-law amendment could not retroactively convert his already-regular status into a co-terminous one. Regular employment status, once attained, cannot be diminished by a subsequent unilateral corporate act. For dismissal to be valid, the employer must prove both substantive and procedural due process. The respondent association failed to substantiate the alleged cause for dismissal (“gross negligence”) with clear and convincing evidence. Mere allegations without proof are insufficient. Consequently, the dismissal was illegal. The Supreme Court reinstated the Labor Arbiter’s decision awarding backwages and separation pay, as the NLRC’s ruling lacked any factual or legal basis, constituting grave abuse of discretion.