Placing an erring employee under preventive suspension: Is this a violation of the worker’s right to due process?

An employee who is found guilty of committing a malfeasance or misfeasance is usually penalized by his employer with suspension, if not, termination of employment. However, before any such penalty may be imposed, the employer must establish the guilt of the employee through the conduct of an administrative investigation. This requirement of investigation is mandatory especially where the penalty is termination of employment and the employee does not admit his responsibility. As the conduct of the investigation takes a while, there are instances where the employer may find it necessary before the start of the administrative investigation to place an employee under preventive suspension.

Now is this kind of suspension not a prejudgment of the guilt of such employee? Does it not violate the employee’s right to due process?

In a number of Supreme Court cases, it has been ruled that preventive suspension does not in itself prove that the employer has prejudged that the employee was guilty of the charges he was asked to answer and explain. Preventive suspension may be necessary for the protection of the company, its operations and assets pending investigation for the alleged malfeasance or misfeasance on the part of the officers or employees of the company and pending a decision on the part of the company (Soriano v. NLRC et. Al., 155 SCRA 124 [1987]).

That it does not violate the employee’s right to due process was settled in the case of Globe Mackay Cable and Radio Corp. vs. NLRC, et. al., 206 SCRA 701 [1992] which involves a technical operations manager who was found to have committed acts in conflict with his position with the company. The Supreme Court said that such discovery necessitated immediate and decisive action. By itself, preventive suspension does not signify that the company has adjudged the employee guilty of the charges she was asked to answer and explain. Such disciplinary measure is resorted to for the protection of the company’s property pending investigation of any alleged malfeasance or misfeasance committed by the employee. The Court also explained that that the complainant’s right to due process was not violated when she was promptly suspended. If at all, the fault lay with her when she ignored the company’s memorandum giving her ample opportunity to present her side to the management. Instead she went directly to the labor department and filed her complaint for illegal suspension without giving her employee a chance to evaluate her side of the controversy.

The matter of preventive suspension is found in the rules implementing the Labor Code (Rule XIV, Book V, Secs. 3 and 4, Omnibus Rules Implementing the Labor Code; see Rule XXIII, D.O. No. 09, Series of 1997, Secs. 8, and 9). It allows the employer to place the worker concerned under such status if his continued employment poses a serious and imminent threat to life or property of the employer or of his co-workers (In Global Inc. v. Atienza 148 SCRA 69 [1986], a sales clerk was placed under preventive suspension for having violated company rules and regulation by incurring repeated absences and tardiness. The Supreme Court ruled that it was illegal since the continued presence of the complainant never posed a serious and imminent threat to the life or property of the employer or co-employees as would warrant her preventive suspension.)

No preventive suspension shall last longer than 30 days (In JRS Business Corp. v. NLRC, et. al., 246 SCRA 445 [1995], the Supreme Court penalized the employer to pay indemnity in the amount of P1,000 when it violated the maximum 30-day preventive suspension.) The employer shall thereafter, reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the employer decided, after completion of the hearing, to dismiss the worker.

In Atlas Fertilizer Corp., et al v. NLRC, et al, 273 SCRA 549 [1997], an issue was raised whether or not a notice of preventive suspension should be based on a specific finding that the employee’s presence posed a serious and eminent threat to the company’s property. The Supreme Court ruled that nothing in the rule requires that the report upon which the suspension was based should make a specific finding that the employees’ presence posed a serious and imminent threat to the company’s property. It is enough that such fact can be cleaned from the circumstances of the case. In this case, complainants were buyers assigned at the central purchasing office of the company. They were the subject of an audit. On April 23, 1992, the complainants were placed under preventive suspension pending investigation and were required to explain in writing and under oath, why they should not be dismissed for serious misconduct and willful disobedience of company rules.

In Jo Cinema Corp. et al v. NLRC et. al., 360 SCRA 142 [2001], the Supreme Court reversed the finding of the Labor Arbiter who found that the complainant was constructively dismissed when he was placed under preventive suspension. Here, the complainant was a theater porter employed by the company which is engaged in the movie business. The company has a policy prohibiting the encashment of checks without its permission. It appeared that sometime on Aug. 4, 5, 6 and 7, 1995, the complainant had encashed checks amounting to P66,000 and deposited these checks in the account of the company. However, these checks were dishonored for insufficiency of funds. On Aug. 25, 1995, the company asked the employee to explain and at the same time, placed her under preventive suspension. On Aug. 22, 1995, she was directed by the company to appear for an administrative investigation on Aug. 26, 1995 which she attended and, where she admitted to have encashed checks without the permission of the company. On Sept. 1, 1995, the complainant, while her case was being deliberated upon, filed a complaint for illegal dismissal.

The Supreme Court ruled that there was no dismissal. Dismissal connotes a permanent severance or complete separation of the worker from the service on the initiative of the employer regardless of the reasons therefor. Based on this definition, the complainant was not dismissed from the service but was merely placed under preventive suspension. Her suspension cannot be construed as a dismissal since the cessation from work is only temporary. Moreover, the complainant could not have been dismissed on Aug. 15, 1995 because a formal investigation was still being conducted. In fact she even attended said investigation on Aug. 26, 1995. If she was indeed dismissed on said date, as she claims, the company would not have continued with the investigation. Undoubtedly, the Supreme Court said that the complainant pre-empted the outcome of the investigation by filing a complaint for illegal dismissal.

In yet another case of Dayan v. Bank of the Phil. Islands et al., G.R. No. 140692, Nov. 20, 2001, the Bank noted alleged miconduct on the part of the Purchasing Officer of the bank, e.g. asking for five percent commission on purchase orders, overpricing, soliciting gifts, etc. On June 10, 1993, the employee was placed under preventive suspension effective immediately until further notice. After exhaustive investigation, the bank terminated his services on Oct. 25, 1993. Again, the Supreme Court affirmed the preventive suspension holding that the policy of preventively suspending an employee under investigation for charges involving dishonesty is an acceptable precautionary measure in order to preserve the integrity of vital papers and documents that may be material and relevant to the case and to which, otherwise, would have access by virtue of his position. Here, the complainant was not just a rank and file employee. He had the critical posts of senior assistant manager of the supplies inventory and purchasing officer of the bank, handling fiduciary accounts and transactions and dealing with the banks suppliers. His position carried the authority for the exercise of independent judgment and discretion, characteristics of sensitive posts in corporate hierarchy where a wide latitude could be supposed in setting up stringent standards for continued employment.

(The author is the resident partner of the Cebu branch of the Abello Concepcion Regala & Cruz Law Offices (ACCRALAW). He is also a professor of Labor Law at the University of San Carlos College of Law, Cebu City)