SECOND DIVISION

ABELARDO P. ABEL,
Petitioner,

G.R. No. 178976

Present:

- versus -

PHILEX MINING CORPORATION, represented by

FERNANDO AGUSTIN,
Respondent.

QUISUMBING, J., Chairperson,

CARPIO MORALES,
CHICO-NAZARIO,*
LEONARDO-DE CASTRO,** and
PERALTA,*** JJ.
Promulgated:
July 31, 2009

x-------------------------------------------------- x
DECISION
CARPIO MORALES, J.:
Assailed in this petition for review on certiorari is the January 22, 2007 Decision of the Court of Appeals in CAG.R. SP No. 91988 denying due course to and dismissing petitioners petition for certiorari which assailed the January 31,
2005 Decision of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 037631-03 that petitioner was
legally dismissed from service on the grounds of loss of trust and confidence and gross and habitual neglect of duty.
By his claim, petitioner was first hired by respondent in January, 1988.

He was eventually assigned to

respondents Legal Department as a Contract Claims Assistant, a position he occupied for five years prior to his transfer
to the Mine Engineering and Draw Control Department wherein he was appointed Unit Head in early 2002. 1[1]
Sometime in September, 2002, petitioner was implicated in an irregularity occurring in the subsidence area of
respondents mine site at Pacdal, Tuba, Benguet. Petitioners co-worker Danilo R. Lupega (Lupega), a Subsidence
Checker at the mine site who was himself under administrative investigation for what came to be known as the
subsidence area anomaly, executed an affidavit2[2] which read in relevant part:

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3.

That as a Subsidence Checker, I was strict in monitoring the trips of ANSECA contract [ sic] for
their backfilling operations, seeing to it that every truck is to be fully loaded with backfills;

4.

That I noticed that there were many instances when the ANSECA trucks were not fully loaded
and, likewise, the bucket of the back-hoe machine was not fully/properly loaded;

5.

That I reported my unusual observations to Crispin Y. Tabogader and he replied, Sige sasabihin
ko kay Ben Garcia. (Alright, I will tell Ben Garcia.), project manager of ANSECA;

6.

That I remember reporting also the matter to Robert L. Montes, but I heard no response from
him;

7.

That for some days, the back-hoe operator had fully loaded the ANSECA trucks but the irregular
practice of not fully loading the same had been continued;

8.

That when my reports seemed unacted [sic] by Crispin Y. Tabogader & Robert L. Montes
because I still observe [sic] the continuance of the irregularity of the loading operations, I went at
[sic] the office of the Contract Committee to report the matter, and when I was there, I reported it
to Abelardo P. Abel, and he told me, mauna ka na at susunod na lang ako at maghahanap pa
ako ng sasakyan. (Go ahead, I will follow when I find a ride.). So I went ahead and kept on
waiting but Abel did not show up at the Subsidence Area;
xxxx

13. That sometime in 2001, I was then on 2nd shift duty eating my dinner at a little past 7:00 PM
when the telephone rang. I lifted the phone receiver and the caller was asking for Didith, whom I
knew was the ANSECA Accountant. I told the caller to re-dial the phone number and after he
had done it, I was tempted to lift the phone receiver and I heard the caller telling Didith, Si Abel
ito, paano na yung usapan natin? (This is Abel. What happened to our deal?), and Didith
answered that, O sige, huwag kang mag-alala, ipapaalam ko sa Cebu (Alright, do not worry. I
will take it up with our Cebu office.), then I put back the phone receiver on its place;
14. That again sometime in 2001, I was then on 1 st shift duty when the telephone rang. I lifted the
receiver and the caller said, Open pit watcher, sa ANSECA nga (To ANSECA please.), and I
answered I-dial mo ulit (Please dial again.), and I immediately put the receiver down on its
place. When he re-dialed and was answered by ANSECA, I was again tempted to lift the phone
receiver and I heard the caller saying, Si Abel ito, paano na yung usapan natin[?] (This is
Abel. What happened to our deal?), and the ANSECA accountant replied, O sige, hintayin mo
ako sa bangko at magwiwithdraw ako. (Alright, wait for me at the bank. I will come to make the
withdrawal.). That this was only the conversation I heard between the two because I already put
down the phone receiver. (Italics and translations supplied)

The incidents alleged in Lupegas affidavit supposedly took place when petitioner was still a Contract Claims Assistant at
respondents Legal Department.
In compliance with respondents directive to respond to Lupegas charges, petitioner wrote a letter to Fernando
Agustin (Agustin), respondents Vice President for Operations, denying Lupegas allegations of extortion from Anseca
Development Corporation (ANSECA) and failure to report the incidents of underloading of ANSECAs trucks during
backfilling operations.

Petitioner averred that Lupega was only seeking to deflect his own responsibility for the

irregularities then occurring at the mine site.3[3]

An investigation was promptly launched by respondents officers by conducting several fact-finding meetings for
the purpose. Petitioner attended the meetings but claimed that he was neither asked if he needed the assistance of
counsel nor allowed to properly present his side.4[4]
By Memorandum dated December 7, 2002, 5[5] respondents Administrative Division, Litigation and Investigation
Section found petitioner guilty of (1) fraud resulting in loss of trust and confidence and (2) gross neglect of duty, and was
meted out the penalty of dismissal from employment effective December 8, 2002.6[6]
Petitioner thus filed a complaint for illegal dismissal with the NLRC against respondent, represented by Agustin,
with claims for annual vacation leave pay for 2001 and 2002.7[7]
Respondent, admitting that it dismissed petitioner, contended that the decision was preceded by regular and
proper proceedings, all attended by petitioner; that petitioner had agreed to submit his case for decision; that it lost almost
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P9,000,000 from the subsidence area anomaly; and that Crispin Y. Tabogader, Jr. (Tabogader), Subsidence Area Head,
Robert L. Montes, Draw Control Superintendent, and Eduardo R. Garcia, Jr., Mine Engineering and Draw Control
Department Manager, had all been dismissed for their involvement in the anomaly.8[8]
By Decision of September 19, 2003,9[9] the Labor Arbiter, ruling that petitioner was dismissed illegally, disposed
as follows:
WHEREFORE, premises considered, judgment is hereby rendered finding respondents
guilty of illegal dismissal.
Respondents must reinstate complainant to his former or equivalent position without loss of
seniority rights and other privileges and to pay him full backwages reckoned from the time his
compensation was effectively withheld from him up to the time of his actual reinstatement, which as
of this writing amount to One Hundred Sixty Nine Thousand Four Hundred Fifty Eight Pesos and
Thirty Four Centavos (P169,458.34).
The Labor Arbiter found that respondent failed to prove by substantial evidence the alleged fraud committed by
petitioner, explaining that the telephone conversations between petitioner and Didith Caballero of ANSECA would not
suffice to lay the basis for respondents loss of trust and confidence in petitioner.
On the charge of gross negligence, the Labor Arbiter held that no negligence was present as respondent itself
admitted that petitioner reported the underloading to Tabogader, who was then in charge of the subsidence area where
the alleged anomaly was happening.
On respondents appeal, the NLRC reversed the decision of the Labor Arbiter by Decision dated January 31,
2005,10[10] finding that petitioner was guilty of gross and habitual neglect of duty as he continually reported ANSECAs
backfilling operations as okay per his inspection notwithstanding the gross underloading; and that he did not act on
Lupegas report concerning certain irregularities. To the NLRC, petitioners failure to perform his duty of inspecting
ANSECAs operations and vacillation on certain matters during the company investigation, among other things,
constituted sufficient basis for respondents loss of trust and confidence.
Petitioners Motion for Reconsideration having been denied by Resolution of July 7, 2005, 11[11] he appealed to
the Court of Appeals via certiorari.12[12]
As reflected early on, the appellate court denied due course to, and dismissed, petitioners appeal by Decision
dated January 22, 2007,13[13] upon a finding that what petitioner was questioning were the findings of fact and conclusions
of the NLRC which would, at most, constitute errors of law and not abuse of discretion correctable by certiorari. It likewise
found that petitioner failed to substantiate the grave abuse of discretion imputed to the NLRC, he not having
demonstrated how the NLRC decided in a manner contrary to the constitution, law or jurisprudence, or how it acted
whimsically, capriciously, or arbitrarily out of malice, ill will, or personal bias.

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His Motion for Reconsideration having been denied by Resolution of July 6, 2007, 14[14] petitioner comes before
this Court via the present Petition for Review on Certiorari.
Petitioner argues that respondents lone witness Lupega offered no proof of the alleged incidents of
underloading of the trucks of ANSECA during backfilling operations; that he nevertheless reported the supposed
underloading to Tabogader who subsequently told him that the problem had been solved; that it was not his principal duty
to inspect the actual loading of every truck of ANSECA as he was in fact only spending about 20% of his time on the field;
that the charge of fraud based on the purported extortion attempt was not proven; and that assuming he was negligent in
handling the reported underloading, the penalty of dismissal was too harsh given his length of service and untarnished
record.15[15]
Respondent counters that petitioner raises questions of fact or evidentiary matters which are improper in a
petition for review on certiorari; and that the findings of the NLRC are supported by substantial evidence. 16[16]
The petition is impressed with merit.
While it is well-established that the jurisdiction of the Court in cases brought before it via a petition for review on
certiorari is limited to reviewing errors of law,17[17] excepted therefrom is where, as in the present case, the findings of the
NLRC contradict those of the Labor Arbiter, then the Court, in the exercise of its equity jurisdiction, may look into the
records of the case and reexamine the questioned findings.18[18]
The heart of the controversy is the validity of petitioners dismissal, which hinges on the satisfaction of two
substantive requirements, viz: (1) the dismissal must be for any of the causes provided for in Article 282 of the Labor
Code; and (2) the employee was accorded due process, basic of which is the opportunity to be heard and to defend
himself.19[19]
The law mandates that the burden of proving the validity of the termination of employment rests with the
employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal was not justified and,
therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do not provide legal justification
for dismissing employees. In case of doubt, such cases should be resolved in favor of labor pursuant to the social justice
policy of labor laws and the Constitution.20[20]
This burden of proof was clarified in Community Rural Bank of San Isidro (N.E.), Inc. v. Paez 21[21] to mean
substantial evidence:
The Labor Code provides that an employer may terminate the services of an employee for
just cause and this must be supported by substantial evidence. The settled rule in administrative and
quasi-judicial proceedings is that proof beyond reasonable doubt is not required in determining the
legality of an employer's dismissal of an employee, and not even a preponderance of evidence is
necessary as substantial evidence is considered sufficient. Substantial evidence is more than a mere
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scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support
a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.
In this case, respondent dismissed petitioner on the following grounds: (1) fraud resulting in loss of trust and
confidence and (2) gross neglect of duty.
Respecting the first ground, Article 282(c) of the Labor Code allows an employer to terminate the services of an
employee for loss of trust and confidence:
ART. 282. Termination by employer. - An employer may terminate an employment for any of
the following causes:
xxxx
c)
Fraud or willful breach by the employee of the trust reposed in him by his
employer or his duly authorized representative.

The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned
must be holding a position of trust and confidence. Verily, the Court must first determine if petitioner holds such a
position.
There are two classes of positions of trust. 22[22] The first class consists of managerial employees. They are
defined as those vested with the powers or prerogatives to lay down management policies and to hire, transfer, suspend,
lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions. 23[23] The
second class consists of cashiers, auditors, property custodians, etc.. They are defined as those who, in the normal and
routine exercise of their functions, regularly handle significant amounts of money or property.24[24]
In this case, petitioner was a Contract Claims Assistant at respondents Legal Department at the time he
allegedly committed the acts which led to its loss of trust and confidence. It is not the job title but the actual work that the
employee performs.25[25] It was part of petitioners responsibilities to monitor the performance of respondents contractors
in relation to the scope of work contracted out to them.26[26]
Respondent relies on petitioners reports regarding his inspection of the work accomplishment of such
contractors. As a result of his monitoring the enforcement of respondents contracts which involve large sums of money,
petitioner may well be considered an employee with a position of trust analogous to those falling under the second class.
A position where a person is entrusted with confidence on delicate matters, or with the custody, handling or care and
protection of the employers property is one of trust and confidence.27[27]
The second requisite is that there must be an act that would justify the loss of trust and confidence. 28[28] Loss of
trust and confidence, to be a valid cause for dismissal, must be based on a willful breach of trust and founded on clearly
established facts. The basis for the dismissal must be clearly and convincingly established but proof beyond reasonable
doubt is not necessary.29[29]
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Respondents evidence against petitioner fails to meet this standard. Its lone witness,

Lupega, did not support his affidavit and testimony during the company investigation with any piece of evidence at all. No
other employee working at respondents mine site attested to the truth of any of his statements. Standing alone, Lupegas
account of the subsidence area anomaly could hardly be considered substantial evidence. And while there is no concrete
showing of any ill motive on the part of Lupega to falsely accuse petitioner, that Lupega himself was under investigation
when he implicated petitioner in the subsidence area anomaly makes his uncorroborated version suspect.
The Labor Arbiter correctly found that the alleged telephone conversations between petitioner and Didith
Caballero of ANSECA would not suffice to lay the basis for respondents loss of trust and confidence in petitioner. The
relevant paragraphs of Lupegas affidavit30[30] are restated below for convenience:
13. That sometime in 2001, I was then on 2nd shift duty eating my dinner at a little past 7:00 PM
when the telephone rang. I lifted the phone receiver and the caller was asking for Didith, whom I
knew was the ANSECA Accountant. I told the caller to re-dial the phone number and after he
had done it, I was tempted to lift the phone receiver and I heard the caller telling Didith, Si Abel
ito, paano na yung usapan natin? (This is Abel. What happened to our deal?), and Didith
answered that, O sige, huwag kang mag-alala, ipapaalam ko sa Cebu (Alright, do not worry. I
will take it up with our Cebu office.), then I put back the phone receiver on its place;
14. That again sometime in 2001, I was then on 1 st shift duty when the telephone rang. I lifted the
receiver and the caller said, Open pit watcher, sa ANSECA nga (To ANSECA please.), and I
answered I-dial mo ulit (Please dial again.), and I immediately put the receiver down on its
place. When he re-dialed and was answered by ANSECA, I was again tempted to lift the phone
receiver and I heard the caller saying, Si Abel ito, paano na yung usapan natin? (This is Abel.
What happened to our deal?), and the ANSECA accountant replied, O sige, hintayin mo ako sa
bangko at magwiwithdraw ako. (Alright, wait for me at the bank. I will come to make the
withdrawal.). That this was only the conversation I heard between the two because I already put
down the phone receiver. (Italics and translations supplied)

Even assuming that the foregoing conversations attributed to petitioner and Didith Caballero of ANSECA took place, they
do not amply establish petitioners involvement in a scheme to defraud respondent. Lupegas account is only one piece of
a huge puzzle. There are yet too many missing pieces. The purported telephone conversations fail to convince the Court
that they constitute such relevant evidence as a reasonable mind might accept as adequate to support the conclusion that
petitioner attempted to extort money from ANSECA in connection with its backfilling operations to the prejudice of
respondent. To doubt is to rule in favor of labor.
With regard to the second ground for petitioners dismissal, Article 282(b) of the Labor Code provides:
ART. 282. An employer may terminate an employment for any of the following causes:
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(b)

Gross and habitual neglect by the employee of his duties.

To warrant removal from service, the negligence should not merely be gross but also habitual. 31[31] Gross negligence
implies a want or absence of or failure to exercise even slight care or diligence, or the entire absence of care. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid them. 32[32] Habitual neglect implies repeated
failure to perform one's duties for a period of time, depending upon the circumstances. The single or isolated act of
negligence does not constitute a just cause for the dismissal of the employee.33[33]

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In this case, respondent faulted petitioner for his supposed inaction on Lupegas report regarding the alleged
incidents of underloading of ANSECAs trucks during backfilling operations. Respondent considered petitioners referral of
the matter to Tabogader improper because his immediate superior was Gil C. Pagulayan, Contract and Claim Section
Head.34[34]
Respondents arguments fail to persuade. To the Court, petitioners referral of the matter to Tabogader, who
was then the Subsidence Area Head, hardly indicates gross negligence as it in fact belies the total absence of care or
thoughtless disregard of consequences. Petitioners subsequent inaction was brought about by Tabogaders assurance
that the problem had been solved, which respondent does not contest.
AT ALL EVENTS, even assuming that there was some lapse in judgment on the part of petitioner in the way he
handled the report of Lupega, the same does not amount to habitual neglect as petitioner did not repeatedly fail to perform
his duties for a period of time. Respondent has not cited other similar shortcomings of petitioner to show habituality.
There being no just cause for the termination of petitioners employment, the compelling conclusion is that he
was dismissed illegally. While it is unnecessary at this point to delve into the requirement of procedural due process, the
Court shall nevertheless discuss it in view of its importance.
In R.B. Michael Press v. Galit,35[35] the Court had occasion to reiterate that under the twin notice requirement, the
employees must be given two notices before their employment could be terminated: (1) a first notice to apprise the
employees of their fault, and (2) a second notice to communicate to the employees that their employment is being
terminated. To this, the Court added:
Not to be taken lightly, of course, is the hearing or opportunity for the employee to defend himself
personally or by counsel of his choice.

The procedure for this twin notice and hearing requirement was thoroughly explained in King of Kings Transport
v. Mamac

36[36]

in this wise:

(1)
The first written notice to be served on the employees should contain the specific
causes or grounds for termination against them, and a directive that the employees are given the
opportunity to submit their written explanation within a reasonable period. Reasonable opportunity
under the Omnibus Rules means every kind of assistance that management must accord to the
employees to enable them to prepare adequately for their defense. This should be construed as a
period of at least five (5) calendar days from receipt of the notice to give the employees an
opportunity to study the accusation against them, consult a union official or lawyer, gather data and
evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to
enable the employees to intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that will serve as basis for the charge
against the employees. A general description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or which among the grounds under
Art. 282 is being charged against the employees.
(2)
After serving the first notice, the employers should schedule and conduct a
hearing or conference wherein the employees will be given an opportunity to (1) explain and clarify
their defenses to the charge against them; (2) present evidence in support of their defenses; and (3)
rebut the evidence presented against them by the management. During the hearing or conference,
the employees are given the chance to defend themselves personally, with the assistance of a
representative or counsel of their choice. Moreover, the conference or hearing could be used by the
parties as an opportunity to come to an amicable settlement.
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(3)
After determining that termination of employment is justified, the employers shall
serve the employees a written notice of termination indicating that: (1) all circumstances involving the
charge against the employees have been considered; and (2) grounds have been established to
justify the severance of their employment.

A careful examination of the disciplinary procedure adopted by respondent which led to the dismissal of
petitioner shows that respondent did not satisfy the first written notice requirement.
Albeit the September 17, 2002 Notice to Explain 37[37] of respondent to petitioner required him to show cause why
he should not be meted out any disciplinary sanction for his involvement in the subsidence area anomaly per Lupegas
allegations, there was clearly no intimation therein that petitioner could be terminated from employment.

No such

intention to dismiss petitioner can be inferred from the general tenor of the notice. Neither did it apprise petitioner as to
which among the grounds under Article 282 of the Labor Code was being charged against him. No mention whatsoever
was made of either loss of trust and confidence or gross and habitual neglect of duty.
The Court cannot overemphasize that the first written notice to the employee bears heavily upon his intelligent
preparation for his defense. It enables him to squarely address the accusations against him and guides him in deciding
whether to consult a union official or lawyer, or gather data and evidence.
The Court is not unmindful of the equally important right of respondent as employer under the Constitution to be
protected in its property and interest. The particular circumstances attendant in this case, however, convince the Court
that the supreme penalty of dismissal upon petitioner is not justified. The law regards the workers with compassion. Even
where a worker has committed an infraction of company rules and regulations, a penalty less punitive than dismissal may
suffice. This is not only because of the law's concern for the workingman. There is, in addition, his family to consider.
Unemployment brings untold hardships and sorrows on those dependent upon the wage-earner.38[38]
IN FINE, petitioner, although not entirely faultless, was dismissed without just cause and procedural due
process.

Consequently, he is entitled to reinstatement and full backwages. If, however, reinstatement is no longer

possible due to the strained relations between petitioner and respondent, separation pay should instead be paid
equivalent to one month salary for every year of service, in addition to full backwages.
Finally, petitioners claims for annual vacation leave pay for 2001 and 2002 must be denied in light of his failure
to prove the bases therefor.
WHEREFORE, the assailed Decision of the Court of Appeals is REVERSED and SET ASIDE. Respondent is
ordered to reinstate petitioner to his former position or its equivalent without loss of seniority rights and privileges, and to
pay him full backwages inclusive of allowances and other benefits or their monetary equivalent, from the time of his
dismissal until his actual reinstatement; or, if reinstatement is no longer feasible, to give him separation pay equivalent to
at least one month salary for every year of service, computed from the time of engagement up to the finality of this
decision.
SO ORDERED.

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FIRST DIVISION

ESTER B. MARALIT,
Petitioner,

G.R. No. 163788

Present:

- versus -

PHILIPPINE NATIONAL BANK,

Respondent.

PUNO, C.J., Chairperson,

CARPIO,
CORONA,
LEONARDO-DE CASTRO, and
ABAD, * JJ.
Promulgated:
August 24, 2009

x--------------------------------------------------x
DECISION
CARPIO, J.:
The Case
This is a petition39[1] for review on certiorari under Rule 45 of the Rules of Court.

The petition

challenges the 31 May 2004 Decision 40[2] of the Court of Appeals in CA-G.R. SP No. 72540. The Court of Appeals
set aside the 27 August 2001 Resolution 41[3] of the National Labor Relations Commission (NLRC) in NLRC NCR CA
No. 027826-01, affirming with modification the 22 January 2001 Decision 42[4] of the Labor Arbiter in Sub-RAB Case
No. 05-09-00316-00.
The Facts

*
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Petitioner Ester B. Maralit (Maralit) worked for respondent Philippine National Bank (PNB) from 27 August 1968
to 31 December 1998. She began as a casual clerk and climbed her way to become branch manager.
In February 1998, PNB offered its personnel an early retirement plan. In its 25 February 1998 Board Resolution No. 1,
PNB approved the Special Separation Incentive Plan (SSIP). On 7 July 1998, PNB issued General Circular No. 1355/9843[5] laying down the guidelines for the availment of the SSIP. Under the Circular, personnel with pending
administrative cases or who are under preliminary investigation may avail of the SSIP. However, payment of their benefits
shall be made only after the resolution of their cases and only if they are not disqualified from receiving such benefits.
The Circular stated:
A. Period for Submission of Prescribed Forms Under the Plan
Officers and employees who will retire or will be separated from the service under the Plan
shall accomplish the attached prescribed form for availment of the separation benefits under the SSIP
(Annex A). The duly accomplished forms shall be submitted directly to the Personnel Administration
and Industrial Relations Division (PAIRD). These forms will only be received and acknowledged by
PAIRD starting 8:00 AM of July 13, 1998 up to but not later than 5:00 PM of September 30, 1998.
The deadline for submission will strictly be observed and submissions made after 5:00 PM of September 30, 1998 will no
longer be accepted.
All duly accomplished forms received by PAIRD during the prescribed period can no longer be withdrawn.
xxxx

D. Personnel With Administrative Cases/Exclusions

1. Personnel with pending administrative cases or those who are under preliminary
investigation can also submit duly accomplished forms for availment of benefits under the
SSIP but payment thereof shall be made only upon final resolution of their cases provided that
the decision in said case does not disqualify them from the enjoyment of said benefits .44[6]
(Emphasis supplied)

In its 8 September 1998 memorandum,45[7] PNBs Internal Audit Group (IAG) found that Maralit violated bank
policies, which resulted in the return of unfunded checks amounting to P54,950,000. The IAG stated that:
BASIS OF THIS REPORT
Memorandum of VP Florencio C. Lat of Branch Operations and Consumer Banking Division Southern
Luzon/Bicol dated July 9, 1998 referring to IAG for an immediate investigation the possible kiting operation in Pili Branch
as reported in the memorandum dated July 8, 1998 of Per Pro Gay Ophelia T. Alano of Pili Branch addressed to SAM
Ben-Hur Relativo of Branch Accounting Supervision Division on DAUD accommodation (Annexes A & B).
xxxx
VIOLATIONS OF BANK POLICIES AND PRESCRIBED PROCEDURES
Sanao Marketing Corporation was allowed drawings against uncollected deposits contrary to the provisions of
Gen. Cir. 3-335/97 of May 15, 1997 Re: Drawings Against Uncollected Deposits (DAUD) which provides, among others,
that (Annex W):
In view of the inherent risk involved and the sanction that may be
imposed by BSP in allowing DAUDs, concerned officers are enjoined to strictly
observe the BSP and the Banks policy on DAUD.
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The following personnel allowed these DAUDs which resulted in the return of unfunded checks for P54.950 MM
and its debit to Accounts Receivable Others:
1) Manager Ester B. Maralit
a. For approving (as co-signatory) the issuance of five Managers Checks
totalling P49.550 MM against the uncleared five Maybank checks for the same
amount which she approved for deposit on the same day.
b. For Failure to stop the apparent kiting operation of Sanao Marketing Corporation wherein Managers Checks payable to
Amado Sanao were purchased against uncleared check deposits drawn by Mr. Sanao against his current account
maintained at Maybank Naga Branch where the Managers Checks purchased were negotiated.
In her memorandum dated July 9, 1998, addressed to VP Florencio Lat of Branch
Operations & Consumer Banking Division SOL/Bicol, Manager Maralit stated, among others, that
(Annex X):
xxxx
ACTIONS TAKEN
1. SVP Leopoldo A. Manuel approved the recommendation of AVP Milagros Pastrana of
Branch Administrative Office Southern Luzon and Bicol dated July 9, 1998, for the 60-day
temporary assignment of Manager Ester B. Maralit to Naga Branch vice Per Pro Ildefonso T. Lizaso,
Unit Head Loans, Naga Branch who was assigned as Officer-In-Charge of Pili Branch, effective
upon assumption of duties upon approval, without change in salary and allowances and without per
diems (Annex Y).
Manager Maralit and Per Pro Lizaso assumed assumed their new assignments on July 15, 1998.
2. Branch Manager Lizaso furnished IAG, with a copy of Pili Branch report to Bangko Sentral ng Pilipinas dated
July 28, 1998 on the Report on Crime/Losses P54,950,000.00 Drawings Against Uncollected Deposits Sanao
Marketing Corporation (Annex Z). The report is in compliance with Gen Cir. 7-26/90 dated March 1, 1990 prescribing the
format and requiring the submission of the report within five days from knowledge of crimes (Annex AA). 46[8]
The IAG recommended that Maralit be required to submit her written explanation under oath.
On 15 September 1998, Maralit filed with PNBs Personnel Administration and Industrial Relations Division her
application47[9] for early retirement.
In its 29 September 1998 memorandum,48[10] PNB charged Maralit with serious misconduct, gross violation of bank rules
and regulations, and conduct prejudicial to the best interest of the bank. PNB stated:
You are hereby charged with Serious Misconduct, Gross Violation of Bank Rules and
Regulations, and Conduct Grossly Prejudicial to the Best Interest of the Service consisting of giving
undue and unwarranted preference, advantage or benefit to a private party through manifest partiality
and evident bad faith committed by you while performing your duties as Manager of Pili Branch as
follows:
1.
On July 1, 1998, you approved five (5) unfunded Maybank-Naga Branch checks
aggregating P49.550 MM for deposit to Current Account No. 377-830027-8 of Sanao Marketing
Corporation and were used to purchase five Managers Checks for the same amount against
uncleared balance.
On July 2, 1998, the said Maybank checks were returned for reason drawn against uncollected
deposits (DAUD). On the following day, these checks were redeposited. On July 6, 1998, said
checks were again returned for reason DAIF.
2.
On July 6, 1998, you consented tolerated, and abetted the approval of four (4) unfunded
Maybank-Naga Branch checks aggregating P5.4 MM for deposit to the abovementioned account to
cover the over-the-counter encashment of on-us checks and incoming clearing checks on the day of
the deposit, which eventually were returned on July 7, 1998 for reason DAIF.
46
47
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3.
On July 7, 1998, you approved five (5) unfunded PCIBank-Paseo de Roxas Branch checks
aggregating P54.950 MM for deposit to CA #377-830027-8 to fund the previously returned unfunded
Maybank checks for P52.950 MM. The said PCIBank checks were likewise returned for reason
Payment Stopped and Insufficient Fund.
4.
As a consequence of your foregoing acts, Bank funds were used for the benefit of the
above-named private party to the damage and prejudice of the Bank.
BANK LOSS
As of July 10, 1998, the Bank stands to suffer losses in the total amount of P54.950 MM representing unpaid amount of
the aforesaid returned checks, exclusive of interest and other charges.
In view of the foregoing, please submit to the Inspection and Investigation Unit (IIU) of the Internal Audit Group (IAG) your
written answer under oath to the above charges together with whatever affidavits and other documentary evidence you
may wish to submit within five (5) days from receipt of this memorandum why you should not be penalized for Serious
Misconduct, Willful Breach of Trust and Gross Violation of Bank Rules and Regulations under Article 282 of the Labor
Code.
Further, you are hereby informed that you have the right to be assisted by a representative in the preparation of your
answer and you are entitled to all the rights you have under the labor laws.
Attached is the Internal Audit report dated September 8, 1998.

PNB directed Maralit to submit her written answer under oath, together with affidavits and other documentary
evidence, explaining why she should not be punished under Article 282 of the Labor Code for serious misconduct, willful
breach of trust, and gross violation of bank rules and regulations.
In its 16 October 1998 memorandum,49[11] PNB placed Maralit under preventive suspension. PNB stated:
In connection with the Special Audit report of Internal Audit Group dated September 8, 1998
re: Unfunded Returned Checks for P54.950 MM of Sanao Marketing Corporation Pili Branch,
which cited you as one of the personnel who allowed/approved drawings against uncollected deposits
(DAUD) that resulted in the return of unfunded checks for P54.950 MM, you are hereby placed under
preventive suspension for thirty (30) days effective upon receipt hereof pursuant to Section 3, Rule
XIV of the Omnibus Rules Implementing the Labor Code.
On 20 November 1998, PNB conditionally approved Maralits application for early retirement effective at the
close of business hours on 31 December 1998. PNB stated that, Payment of Special Separation Incentive and other
Benefits shall be made only upon final resolution of the administrative case against you, provided that the decision in said
investigation does not disqualify you from the enjoyment of said benefits. Under the SSIP, Maralit was entitled to
P1,359,086.02 retirement benefits.
Maralit submitted her answer dated 11 January 1999. She stated that The favorable accommodations granted to (a
certain) Mr. Amado A. Sanao were made in good faith and intended for the higher interests of the Bank, and that Said
accommodations was [sic] a business decision, bearing in mind the consequential interests beneficial to the Bank. She
admitted that the accommodations were deviation[s] from Banks policies.
In its report dated 22 September 1999, PNBs Inspection and Investigation Unit found that (1) Maralit did not
deny the irregular transactions imputed against her, (2) Maralits approval of drawings against uncollected deposits was a
wanton violation of the policy of the Bangko Sentral ng Pilipinas (BSP) and PNB, (3) Maralit was fully aware of the
prohibition against drawings against uncollected deposits, (4) Maralits actions prejudiced PNB, (5) Maralit had no
discretion to do prohibited acts, and (6) PNBs interest was unreasonably put at risk.
On 14 April 2000, Maralit received a letter50[12] dated 23 March 2000 together with a copy of PNBs Administrative

49
50

Adjudication Panels decision51[13] dated 14 February 2000 finding her guilty of serious misconduct, gross violation of bank
rules and regulations, and conduct prejudicial to the best interest of the bank. PNB dismissed Maralit from the service
with forfeiture of her retirement benefits effective at the close of business hours on 31 December 1998.
Maralit filed with the arbitration branch of the NLRC a complaint for non-payment of retirement benefits and separation
pay, and for damages against PNB.
The Labor Arbiters Ruling
In his 22 January 2001 Decision, the Labor Arbiter held that Maralit was entitled to P1,359,086.02 retirement
benefits, P200,000 exemplary damages, and P155,908.60 attorneys fees. The Labor Arbiter found that (1) Maralit was
not under preliminary investigation when she filed her application for early retirement; (2) had Maralit known that she
would

be administratively charged, she would not have availed of the SSIP so

that she could continue receiving her

monthly salary; (3) when PNB approved Maralits application for early retirement, the Administrative Adjudication Panel
had not decided the administrative case against her;

(4) there was no hearing or conference held where Maralit could

respond to the charge, present her evidence, or rebut the evidence presented against her; and (5) PNB illegally dismissed
Maralit and committed an act oppressive to labor.
PNB appealed to the NLRC, claiming that the Labor Arbiter gravely abused his discretion and erred in his
factual findings.
The NLRCs Ruling
In its 27 August 2001 Resolution, the NLRC affirmed with modification the Labor Arbiters 22 January
2001 Decision. The NLRC deleted the award of P200,000 exemplary damages. The NLRC held that (1) there was
no grave abuse of discretion on the part of the Labor Arbiter, (2) the material facts as found by the Labor Arbiter
were consistent with the evidence, and (3) the award of exemplary damages lacked basis.

PNB filed with the Court of Appeals a petition 52[14] for certiorari under Rule 65 of the Rules of Court with
prayer for preliminary injunction. PNB claimed that the NLRC committed grave abuse of discretion when it
affirmed the Labor Arbiters 22 January 2001 Decision because (1) Maralit was not entitled to retirement benefits,
(2) Maralit was afforded due process, and (3) Maralit was not entitled to attorneys fees.

The Court of Appeals Ruling

In its 31 May 2004 Decision, the Court of Appeals set aside the

27 August 2001 Resolution of the NLRC.

The Court of Appeals held that the NLRC committed grave abuse of discretion when it affirmed the Labor Arbiters 22
January 2001 Decision. The Court of Appeals found that Maralit was under preliminary investigation when she filed her
application for early retirement and that she was afforded due process.
Hence, the present petition.
The Issues
In her petition dated 16 July 2004, Maralit raised the following issues:
51
52

I.
WHETHER THE ACT OF THE HONORABLE NLRC IN AFFIRMING IN TOTO
[sic] THE DECISION OF ITS LABOR ARBITER CONSTITUTES A GRAVE ABUSE OF
DISCRETION.
II.
WHETHER THE ALLEGED ERRORS ATTRIBUTED BY THE COURT A QUO TO
THE LABOR AGENCY CONSTITUTE GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION OR JUST MERELY ERRORS OF JUDGMENT.

III.
WHETHER IN A SPECIAL CIVIL ACTION FOR CERTIORARI THE
COURT A QUO CAN SUBSTITUTE ITS OWN FINDINGS OF FACTS AND
CONCLUSIONS WITH THAT OF THE LABOR AGENCY WHICH ARE ALL SUPPORTED
BY SUBSTANTIAL EVIDENCE, AFTERWARDS, DECLARE THE LATTER TO HAVE
COMMITTED GRAVE ABUSE OF DISCRETION[.]
IV.
WHETHER THE COURT A QUO IN A SPECIAL CIVIL ACTION FOR
CERTIORARI CAN ENTERTAIN NEW EVIDENCE TO PROVE FACTS NOT PROVEN
BEFORE THE LABOR AGENCY.
V.
WHETHER THE COURT A QUO ERRED IN NOT UPHOLDING THE
RETIREMENT OF PETITIONER FROM THE SERVICE OF RESPONDENT EFFECTIVE 31
DECEMBER 1998[.]
VI.
WHETHER OR NOT PETITIONER HAS RETIRED OR WAS
DISMISSED FROM THE SERVICE EFFECTIVE 31 DECEMBER 1998.
VII.
WHETHER THE DECISION OF THE LABOR ARBITER DATED 22
JANUARY 2001 HAD LONG BECOME FINAL AND EXECUTORY, BY REASON OF
RESPONDENTS UNTIMELY APPEAL TO THE HONORABLE NLRC.
OR PUT
OTHERWISE, WHETHER THE DECISION OF THE LABOR ARBITER DATED 22
JANUARY 2001 CAN BE REINSTATED.

The Courts Ruling

The petition is unmeritorious.
Maralit claims that Articles 21753[15] and 22354[16] of the Labor Code grant the NLRC the power to review decisions of labor
arbiters. Since the law expressly grants the NLRC the power to review decisions of labor arbiters, the NLRC did not
commit grave abuse of discretion when it affirmed with modification the Labor Arbiters 22 January 2001 Decision. She
stated:
With all due respect, the appellate powers of the Honorable NLRC to affirm, modify,
reverse, or set aside decisions of Labor Arbiters are legally mandated. In this case, when the
Honorable NLRC issued the Resolution dated 27 August 2001 (Appendix C), affirming with
modification the decision of the Labor Arbiter dated 22 January 2001 (Appendix B), it is to be
considered as merely exercising a duty mandated by law. Hence, said act of affirming per se cannot
be considered as an act of grave abuse of discretion.
Said powers of the Commission are contained in the Labor Code as amended by R.A. No. 6715.
xxxx
[T]he act of the Honorable NLRC in affirming in toto the decision of its Labor Arbiter does not
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constitute a grave abuse of discretion, but instead, a valid discharge or exercise of a duty mandated
by law.55[17]
The Court is unimpressed. Grave abuse of discretion arises when a court or tribunal exercises powers granted
by law capriciously, whimsically, or arbitrarily.56[18] Indeed, the law grants the NLRC the power to review decisions of labor
arbiters. However, the fact that the law grants the NLRC the power to review decisions of labor arbiters does not
automatically rule
out the possibility of grave abuse of discretion. Grave abuse of discretion may arise if the NLRC exercises such power in
a capricious, whimsical, arbitrary, or despotic manner.
Maralit claims that the Labor Arbiters findings that she was not under preliminary investigation when she filed her
application for early retirement and that she was denied due process were errors of judgment, and thus the Labor Arbiter
did not commit grave abuse of discretion. She stated:
With all due respect, the aforesaid findings relied upon by the court a quo in nullifying the
Resolution of the Honorable NLRC dated 27 August 2001 are mere Errors of Judgment and not acts
constituting Grave Abuse of Discretion. It may be observed, the court a quo even stated in First
Error found above that the Labor Arbiter erred, thereby admitting that the same was a mere error of
judgment.57[19]

The Court is unimpressed. Labor officials commit grave abuse of discretion when their factual findings are
arrived at arbitrarily or in disregard of the evidence. 58[20] In the present case, the Labor Arbiter and the NLRC acted with
grave abuse of discretion because their factual findings were arrived at in disregard of the evidence.
In his 22 January 2001 Decision, the Labor Arbiter found that Maralit was not under preliminary investigation when she
filed her application for early retirement. In its 27 August 2001 Resolution, the NLRC held that the material facts as found
by the Labor Arbiter were consistent with the evidence.
The evidence shows that Maralit was under preliminary investigation when she filed her application for early retirement:
(1) in a memorandum dated 8 July 1998, a certain Gay Ophelia T. Alano reported Maralits irregular transactions; (2) in a
memorandum dated 9 July 1998, Vice President Florencio C. Lat of Branch Operations and Consumer Banking Division
for Southern Luzon and Bicol referred Maralits irregular transactions to the IAG for immediate investigation; (3) Maralit
submitted a memorandum dated 9 July 1998 admitting the irregular transactions; (4) on 9 July 1998, Vice President
Milagros Pastrana of Branch Administrative Office for Southern Luzon and Bicol recommended that Maralit be temporarily
assigned to the Naga Branch; (5) on 15 July 1998, Maralit assumed her new assignment at the Naga Branch; (6) on 28
July 1998, PNB reported to the BSP the P54,950,000 drawings against uncollected deposits; (7) in a memorandum dated
8 September 1998, the IAG found that Maralit violated bank policies which resulted in the return of unfunded checks
amounting to P54,950,000 and recommended that Maralit be required to submit her written answer under oath; (8) on 15
September 1998, Maralit filed her application for early retirement; (9) in its 29 September 1998 memorandum, PNB
stated, Attached is the Internal Audit report dated September 8, 1998; and (10) in its 16 October 1998 memorandum,
PNB stated, In connection with the Special Audit report of Internal Audit Group dated September 8, 1998.
In his 22 January 2001 Decision, the Labor Arbiter found that there was no hearing or conference held where
Maralit could respond to the charges against her, present her evidence, or rebut the evidence presented against her, and
thus PNB illegally dismissed Maralit and committed an act oppressive to labor. In its 27 August 2001 Resolution, the
NLRC held that the material facts as found by the Labor Arbiter were consistent with the evidence.

The evidence shows that Maralit was afforded due process. The essence of due process is an opportunity to be heard or,
as applied to administrative proceedings, an opportunity to explain ones side. A formal or trial-type hearing is not
essential.59[21] In the present case, PNB gave Maralit ample opportunity to explain her side. In its 29 September 1998
memorandum, PNB directed Maralit to submit her written answer under oath together with affidavits and other
55
56
57
58

documentary evidence:
In view of the foregoing, please submit to the Inspection and Investigation Unit (IIU) of
the Internal Audit Group (IAG) your written answer under oath to the above charges together
with whatever affidavits and other documentary evidence you may wish to submit within five
(5) days from receipt of this memorandum why you should not be penalized for Serious Misconduct,
Willful Breach of Trust and Gross Violation of Bank Rules and Regulations under Article 282 of the
Labor Code.
Further, you are hereby informed that you have the right to be assisted by a representative in the preparation of
your answer and you are entitled to all the rights you have under the labor laws.60[22] (Emphasis supplied)

In its comment61[23] dated 23 September 2004, PNB described its procedure in investigating erring employees:
The administrative investigation in PNB undergoes a three-tiered process which
commences with an audit report made by the Internal Audit Division (IAD). IAD comes up with its
findings on the administrative lapses and audit exceptions involved and advises the employee
concerned to submit his comment under oath. Subsequently, if the circumstances warrant, IAD
forwards the matter to a fact-finding body in the Legal Department known as the IIU which stands for
Investigation and Inspection Unit. The employee is again given the opportunity to file an answer
under oath. If still the circumstances warrant further investigation, the matter is elevated to the
Administration and Adjudication Panel (AAP) which is a special body created by the Bank to conduct
its own formal inquiry and summon the employee concerned for proper ventilation of his defenses.
Thereafter, the AAP submits its findings and recommendation to the Office of the President for
approval.
It bears to stress that all these three investigative bodies are separate and independent from each other, and they
proceed without influence from the other bodies having their own respective mandates and processes. 62[24]

Maralit submitted her answer dated 11 January 1999. In her answer, Maralit admitted that she violated PNBs
policy against drawings against uncollected deposits. She stated that, The accommodations though admittedly a
deviation from Banks policies, were all aboveboard and well-motivated. In Lagatic v. NLRC,63[25] the Court held that there
is no necessity for a formal hearing when the employee admits responsibility for an alleged misconduct.
Maralit claims that, in a special civil action for certiorari, the Court of Appeals cannot make its own factual determination.
She stated:
Such an act of the court a quo in substituting its own findings of facts with that of the Labor Agency is
not allowed in certiorari proceedings under Rule 65 of the Rules of Court as it tantamount [sic] to
excessive exercise of jurisdiction. x x x
As earlier discussed, in a certiorari proceedings [sic] under Rule 65 of the Rules of Court, the Court is confined
only in [sic] issues of want of jurisdiction and grave abuse of discretion amounting to lack or excess of jurisdiction. 64[26]

The Court is unimpressed. In a special civil action for certiorari, the Court of Appeals has ample authority to
make its own factual determination. In Gutib v. Court of Appeals,65[27] the Court held:

59
60
61
62
63
64
65

[I]t has been said that a wide breadth of discretion is granted a court of justice in certiorari
proceedings. The cases in which certiorari will issue cannot be defined, because to do so would be
to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that authority
is not wanting to show that certiorari is more discretionary than either prohibition or mandamus. In
the exercise of our superintending control over inferior courts, we are to be guided by all the
circumstances of each particular case as the ends of justice may require. So it is that the
writ will be granted where necessary to prevent a substantial wrong or to do substantial
justice. (Emphasis supplied)

In Globe Telecom, Inc. v. Florendo-Flores,66[28] the Court held:

[T]he Court in the exercise of its equity jurisdiction may look into the records of the case and reexamine the questioned findings. As a corollary, this Court is clothed with ample authority to review
matters, even if they are not assigned as errors in the appeal, if it finds that their consideration is
necessary to arrive at a just decision of the case. The same principles are now necessarily
adhered to and are applied by the Court of Appeals in its expanded jurisdiction over labor
cases elevated through a petition for certiorari; thus, we see no error on its part when it made
anew a factual determination of the matters and on that basis reversed the ruling of the NLRC.
(Emphasis supplied)

The Court of Appeals can grant a petition for certiorari when, as in the present case, it finds that the NLRC
committed grave abuse of discretion by disregarding evidence material to the controversy. To make this finding, the Court
of Appeals necessarily has to look at the evidence and make its own factual determination.67[29]
Maralit claims that, in a special civil action for certiorari, the Court of Appeals cannot receive new evidence. She stated
that, tcourt a quo gave utmost credence to [the IAGs 8 September 1998 memorandum], disregarding all the evidence
presented by the parties before the Labor . Worse, it nullified the decisions of the Honorable NLRC relying primarily on
said belated evidence. This is not allowed x x x.
The Court is unimpressed. In a special civil action for certiorari, the Court of Appeals has ample authority to receive new
evidence and perform any act necessary to resolve factual issues. Section 9 of Batas Pambansa Blg. 129, as amended,
states that, The Court of Appeals shall have the power totry cases and conduct hearings, receive evidence and
perform any and all acts necessary to resolve factual issuesraised in cases falling within its original and appellate
jurisdiction, including the power to grant and conduct new trials or further proceedings. In VMC Rural Electric Service
Cooperative, Inc. v. Court of Appeals,68[30] the Court held:
[I]t is already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic
Act No. 7902 (An Act Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of
Section Nine of Batas Pambansa Blg. 129 as amended, known as the Judiciary Reorganization Act of
1980), the Court of Appeals pursuant to the exercise of its original jurisdiction over
Petitions for Certiorari is specifically given the power to pass upon the evidence, if and
when necessary, to resolve factual issues. As clearly stated in Section 9 of Batas Pambansa Blg.
129, as amended by Republic Act 7902:
The Court of Appeals shall have the power to try cases and conduct
hearings, receive evidence and perform any and all acts necessary to resolve
factual issues raised in cases falling within its original and appellate jurisdiction,
including the power to grant and conduct new trials or further proceedings. x x x.
(Emphasis supplied)

Maralit claims that PNB had already approved her application for early retirement and she had effectively
retired, thus PNB could no longer dismiss her. She stated:
Petitioners retirement was approved by respondents President Benjamin P. Palma Gil and
66
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68

communicated to her through a letter dated 20 November 1998 sent by respondents PAIRD. [sic]
where respondent even appreciated petitioners 30 years of loyal service x x x.
It is clearly established in the foregoing discussion that petitioner has retired from the service effective 31 December 1998
on the basis of respondents approval of her application for retirement under the SSIP on 20 November 1998. This fact
was even confirmed by the court a quo in its assailed decision when it states that Private respondents separation from
the service took effect after the business hours of 31 December 1998. (APPENDIX A, p. 4).
xxxx
Basic is the rule, an employee who has already retired can no longer be subsequently dismissed, as naturally, how can
you dismiss an employee who has already retired?. [sic] However, in this case, respondent in trying to circumvent this
principle, made the dismissal of the petitioner to take effect retroactively on 31 December 1998, the date of petitioners
retirement. x x x
Invoking the principle on estoppel, an employer who accepts or approves the retirement of an employee loses the right to
dismiss such employee in a subsequent action. Retirement and Dismissal are entirely different and incompatible from
each other. Each is a distinct and separate mode of extinguishing an employer-employee relationship, and has its own
legal effects in our jurisdiction. Consequently, they cannot be taken together for the purpose of terminating employment
relation.
xxxx
It is therefore our view that the subsequent action of respondent dismissing petitioner after she had long retired from the
service, have [sic] no legal force and effect, for the simple reason that when respondent issued its administrative Decision
on 14 February 2000, there was no longer an employer-employee relationship between the parties, as such relationship
had long been extinguished or severed away back on December 31, 1998 when petitioner retired from the service. 69[31]
The Court is unimpressed. The evidence shows that Maralit was under preliminary investigation when she filed
her application for early retirement. PNB consistently stated that payment of Maralits retirement benefits shall be paid
only after final resolution of the administrative case against her, provided that she is not disqualified to receive
such benefits. PNBs 7 July 1998 General Circular No. 1-355/98, which laid down the guidelines for the availment of the
SSIP, stated:
Personnel with pending administrative cases or those who are under preliminary
investigation can also submit duly accomplished forms for availment of benefits under the SSIP but
payment thereof shall be made only upon final resolution of their cases provided that the decision in
said case does not disqualify them from the enjoyment of said benefits. 70[32]

PNBs 20 November 1998 letter, which approved Maralits application for early retirement effective at the close
of business hours on 31 December 1998, stated that, Payment of Special Separation Incentive and other Benefits shall
be made only upon final resolution of the administrative case against you, provided that the decision in said investigation
does not disqualify you from the enjoyment of said benefits.
In its 14 February 2000 decision, PNBs Administrative Adjudication Panel found Maralit guilty of serious misconduct,
gross violation of bank rules and regulations, and conduct prejudicial to the best interest of the bank. Maralit violated
bank policies which resulted in the return of unfunded checks amounting to P54,950,000. Accordingly, PNB dismissed
Maralit from the service with forfeiture of her retirement benefits effective at the close of business hours on 31 December
1998.
PNB may rightfully terminate Maralits services for a just cause, including serious misconduct. 71[33] Serious misconduct is
improper conduct, a transgression of some established and definite rule of action, a forbidden act, or a dereliction of duty.
Having been dismissed for a just cause, Maralit is not entitled to her retirement benefits.72[34]
Maralit claims that the Labor Arbiters 22 January 2001 Decision had already become final and executory on 18 February
69
70
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2001, thus, all proceedings taken after 18 February 2001 are void. She stated:
The decision of the Labor Arbiter dated 22 January 2001 (Appendix B) was received by
respondent on 08 February 2001.
On 20 February 2001, or after 12 days from receipt of said Decision, respondent filed an Appeal Memorandum, and paid
therefor the corresponding appeal fee and posted the required appeal bond, as per Certification dated 22 February 2001
issued by the Arbitration Branch of the NLRC, hereto attached and marked as APPENDIX G;
On 22 February 2001, petitioner filed a Motion to Dismiss respondents Appeal on the ground that the appeal was filed
out of time. Copy of the Motion to Dismiss Appeal, etc., is hereto attached and marked as APPENDIX H;
On 28 February 2001, respondent filed its opposition thereto. On 06 March 2001, petitioner filed her reply to such
opposition. However, on 13 March 2001, petitioner received a copy of a Letter of Transmittal from the Labor Arbiter
transmitting all the records of the case to NLRC, Manila on appeal, but without resolving the aforesaid incident
On 2 April 2001, petitioner filed with the Honorable Commision a Manifestation with Motion to Resolve Complainants
Motion to Dismiss Appeal as said motion was not resolved by the Labor Arbiter. Without resolving said incident, the
Honorable Commission, issued its Resolution dated 27 August 2001 (Appendix C) affirming the decision of the Labor
Arbiter dated 22 January 2001 (Appendix B).
When respondent brought this case before the Honorable Court of Appeal[s] on Certiorari under Rule 65, petitioner raised
the same issue in her Comment, x x x but said issue was never passed upon by the court a quo in the assailed Decision.
xxxx
With the foregoing, we humbly submit that the decision of the Labor Arbiter dated 22 January 2001 (Appendix B) had
long become final and executory or to be exact on 18 February 2001. Hence, all proceedings taken from said dated and
up to the present, except those related to its execution, are null and void ab initio. We asked, therefore, that said decision
be ordered REINSTATED.73[35]

The Court is unimpressed. The gravity of Maralits infraction demands the relaxation of strict rules of procedure.
Strict rules of procedure may be set aside to serve the demands of substantial justice. Labor cases must be decided
according to justice, equity, and the substantial merits of the controversy. In Azul v. Banco Filipino Savings and Mortgage
Bank,74[36] the Court held:
The seriousness of petitioners infraction demanded the setting aside of strict rules of
procedure as to allow the determination on the merits of whether he was lawfully dismissed. As held
by the Court, the application of technical rules of procedure may be relaxed to serve the demands of
substantial justice, particularly in labor cases, because they must be decided according to justice and
equity and the substantial merits of the controversy.
There is substantial evidence showing that there was valid cause for the bank to dismiss
petitioners employment for loss of trust and confidence. Petitioner was a bank accountant, which is a
position of trust and confidence. The amount involved is significant, almost P4.5 million.

WHEREFORE, the Court DENIES the petition. The Court AFFIRMS the 31 May 2004 Decision of the Court of
Appeals in CA-G.R. SP No. 72540 which set aside the 27 August 2001 Resolution of the National Labor Relations
Commission in NLRC NCR CA No. 027826-01 which, in turn, affirmed with modification the 22 January 2001 Decision of
the Labor Arbiter in Sub-RAB Case No. 05-09-00316-00.
SO ORDERED.

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74

FIRST DIVISION

EDUARDO M. TOMADA, SR.,

Petitioner,

G.R. No. 163270

Present:
PUNO, C.J., Chairperson,
CARPIO,
CORONA,
LEONARDO-DE CASTRO, and
BERSAMIN, JJ.

- versus -

RFM CORPORATION-BAKERY FLOUR DIVISION and

JOSE MARIA CONCEPCION III,
Respondents.

Promulgated:

September 11, 2009

x-------------------------------------------------- x

DECISION
CARPIO, J.:
The Case

This is a petition for review75[1] assailing the Decision76[2] promulgated on 23 December 2003 as well as the
Resolution77[3] promulgated on 19 April 2004 of the Court of Appeals (appellate court) in CA-G.R. SP Nos. 69901 and
70069. The appellate court dismissed the petition filed by Eduardo M. Tomada, Sr. (Tomada) and partially granted the
petition filed by RFM Corporation-Bakery Flour Division and Jose Maria Concepcion III (respondents). The appellate
court affirmed the decision of the National Labor Relations Commission (NLRC) with the modification that RFM
Corporation should pay Tomada P127,660 as separation pay.

The Facts
The appellate court narrated the facts as follows:
On February 24, 1998, [Tomada] filed a complaint for illegal dismissal against RFM
Corporation Bakery Flour Division and Jose Ma. Concepcion, Jr.
The case was subsequently assigned to Labor Arbiter Daniel C. Cueto who required both
parties to submit their respective position papers. In his position paper, [Tomada] alleged:
x x x

xxx xxx

2.
That I have worked with the said company since March 9, 1979 and my latest
salary therein is P491.00 per day;
3.
That the company dismissed me from work because I was allegedly sleeping on
my job during my working time and in the process, I failed to detect the fire which was taking place
inside my work area;
4.

That I was not sleeping however and was never negligent in my job;

5.
That on November 22, 1997, there was no certified operator manning the third
floor of the flour mill. What was present there was only a trainee;
6.
Since there was no certified operator in the third floor, I was forced to go up to
the said area whenever there was trouble even if my assigned area was only at the second floor
where I was head spoutman;
7.
At about 9:00 in the evening of November 22, 1997, the B3A Plan Sifter at the 3 rd
Floor choked up. I was therefore forced to go up to the said area to assist the trainee (Fernando
Filarea) to attend to the said trouble;
8.
After attending to the choke-up, I went up to the Fourth Floor to inspect the
cyclone if it had trouble also;
9.
After seeing that the cyclone was in good condition, I went down to the second
floor but felt the call of nature so I entered the screen room from where I could proceed to the comfort
room;
10.
That at the screen room, I tried to fight the urge to relieve myself and it was at
this point in time when Ver Ignacio, the duty shift miller arrived and told me that there was a fire at the
bran grinder;
11.
That I assisted in putting out said fire but Ver Ignacio eventually charged me with
sleeping on my job which resulted to my dismissal on January 26, 1998;
12.
That as I have explained earlier, I was not sleeping on my job. I was not also
negligent. If ever I was not at the vicinity of the bran grinder at the time of the fire, it was because I
attended to a trouble at the 3rd floor and inspected the 4th floor due to the lack of available personnel
therein;

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76
77

13.

That under the circumstances, it is clear that my dismissal was illegal.

For their part, RFM and Jose Ma. Concepcion made the following allegations in their
position paper:
1.
The complainant was a former employee of the respondent, assigned
to the position headspoutman of the Flour Milling Department at the time of his
termination;
2.
As headspoutman of the Flour Milling Department, the complainant was assigned
at the second floor and is in-charge of the bran grinding machine on the same floor;
3.
Sometime on November 22, 1997, at about 9:00 in the evening, Aries Lazaro, a
contractual employee assigned at the Semolina Tipping, noticed the thick smoke coming from the
bran;
4.
That when he made an investigation, the said employee noticed that smoke was
coming from the bran grinding machine and the bran being grounded inside the machine was already
smoldering;

5.
That immediately, Aries Lazaro went down to the ground floor to seek assistance
and found Heronico Mancilla;
6.

Together, they went back upstairs to the second floor to try to contain the fire;

7.
It was then that Heronico Mancilla instructed Aries Lazaro to go down and call
Virgilio F. Ignacio, the Shift Miller on duty;
8.
growing rapidly;

That Virgilio F. Ignacio hurriedly ran upstairs and found that the fire was already

9.
That immediately, Virgilio F. Ignacio went down to the ground floor panel board to
shut down mills II and IA;
10.
That when Virgilio F. Ignacio returned to the bran grinding machine at the second
floor, he found Heronico Mancilla, Fernando Felarca and a number of flour packers were already
trying to stop the fire with the use of fire extinguishers;
11.
Realizing that the packing area and the screen room were still operating, Virgilio
F. Ignacio ran to the panel board of the packing area to shut down the machine and then to the
screen room, likewise with the intention of shutting off the screen room machine;
12.
That it was in the screen room, an air-conditioned room, where Virgilio F. Ignacio
found the complainant [Tomada] who was supposed to be at the second floor watching and
monitoring the machine thereat, soundly asleep on top of two (2) units of automatic voltage regulators
(AVR);
13.
That it was only after Virgilio F. Ignacio woke the complainant up did the latter
proceed to the bran grinding machine room on the second floor;
14.
The following day, November 23, 1997, Virgilio F. Ignacio submitted a
memorandum report of the incident, a copy of which is hereto attached as Annex 1;
15.
That same day, a memorandum was likewise issued to the complainant,
requiring him to explain within 48 hours why no disciplinary action should be taken against him for
violating company rules and regulations, a copy of the memorandum is hereto attached as Annex 2;
16.
In compliance [with] the aforesaid memorandum, the complainant submitted his
written explanation dated November 27, 1997, a copy of which is hereto attached as Annex 3;
17.
In a memorandum dated December 4, 1997, the complainant was served notice
that his case was set for administrative investigation on December 6, 1997 and that he was directed
to attend the said investigation, a copy of the memorandum is hereto attached as Annex 4;
18.
The investigation and hearings were set three (3) times where the complainant
was apprised of the nature and the cause of the charges against him; afforded the opportunity of
confronting the witness against him; and full opportunity to present his side duly assisted by a
representative of his own choice;

19.
After hearing, investigation and evaluation of complainants case, management
found him guilty of violating company rules and regulations #32, that of sleeping on company time
outside of work area with adverse effect or damage, and his services were terminated. A copy of the
Memorandum dated February 21, 1998 is hereto attached as Annex 5.
Both parties filed their respective Reply to the Position Papers and Rejoinder to Reply.
Thereafter, the case was submitted for decision.78[4]

The Labor Arbiters Ruling

In his Decision dated 4 May 2000, the Labor Arbiter dismissed Tomadas case for lack of merit. The Labor
Arbiter found that Tomada was grossly remiss in performing his assigned duties and his separation from work was
justified. The Labor Arbiter further stated that:
Precisely, personnel rules and regulations are promulgated as a vital component in sound
personnel administration and for as long as the rules and regulations are reasonable in character and
in application, this Office should not interfere in the matter of its exercise. Such is part and parcel of
the duly recognized prerogatives of management in instilling discipline to its employees that should
not be interferred [sic] into by this Tribunal.
In the case at bar, since the rules and regulations upon which [Tomadas] dismissal was
based are reasonable in application and it appearing that [Tomada] by his conduct shown violated the
rules against sleeping on company time that caused damage and/or adverse effect to the
respondents operation his conduct is considered serious and thus cannot be taken lightly by this
Office considering the unfavorable and serious impact on respondents business which also deserves
legal protection against erring personnel like in the case of [Tomada].
[Tomadas] act amounted to dereliction of duty and gross negligence which is a legal
ground to dismiss him for cause.
[Tomada], it appears, was given the opportunity to explain his side but sadly, it was not
convincing to us based on the factual milieu of the case.
WHEREFORE, instant case is dismissed for lack of merit.
SO ORDERED.79[5]

The Ruling of the NLRC

Tomada filed an appeal before the NLRC. In its Decision promulgated on 22 October 2001, the NLRC also dismissed
Tomadas appeal for lack of merit. The NLRC reiterated the Labor Arbiters findings that Tomada was not only absent
from his area of responsibility at the time the fire started in the second floor, but Tomada was also sleeping in the screen
room. The NLRC, however, modified the Labor Arbiters decision when it decreed that Tomada should receive separation
pay, equivalent to one-half months pay for every year of service with a fraction of six months considered as one whole
year, since the cause of Tomadas dismissal was not reflective of his moral character.
On 12 December 2001, the NLRC resolved to deny Tomadas Motion for Reconsideration for lack of merit. 80[6]
The Decision of the Appellate Court

78
79
80

Tomada, as well as respondents, assailed the NLRCs decision and resolution before the appellate court.
Tomada imputed grave abuse of discretion upon the NLRC in sustaining the validity of his dismissal from employment.
On the other hand, respondents questioned the NLRCs grant of separation pay to Tomada, as well as Jose Maria
Concepcion IIIs joint liability with RFM Corporation.
The appellate court ruled that Tomadas dismissal from employment was valid. RFM Corporation entrusted
Tomada with the responsibility involving a delicate matter, that of the care, custody and operation of the bran grinding
machine for the duration of his duty. The nature of Tomadas infraction, leaving his post and sleeping while on duty,
rendered Tomada unworthy of the trust and confidence demanded by his position. The appellate court agreed with the
NLRCs award of separation pay to Tomada. The appellate court considered Tomadas service to RFM Corporation for 20
years, as well as his commission of only one, yet very serious, violation of company rules. However, the appellate court
modified the NLRCs ruling regarding Jose Maria Concepcion IIIs liability. The award of separation pay may only be
enforced against RFM Corporation because of the corporations separate juridical personality. A stockholder or an officer
of a corporation cannot be made personally liable for corporate liabilities in the absence of malice or bad faith. The
dispositive portion of the appellate courts decision reads as follows:
WHEREFORE, the petition filed by Eduardo Tomada, Sr. is hereby DISMISSED and the
petition filed by petitioners RFM and Jose Ma. Concepcion is PARTIALLY GRANTED. Accordingly,
the assailed decision of public respondent dated October 22, 2001 is hereby AFFIRMED with
modification that petitioner RFM Corporation Bakery, Flour Division is hereby ordered to pay
Eduardo M. Tomada, Sr. his separation pay in the amount of P127,660.00
SO ORDERED.81[7]

The appellate court denied both parties respective motions for reconsideration in a Resolution promulgated on
19 April 2004.82[8]
All parties filed their respective petitions for review before this Court. On 13 March 2006, we issued a
Resolution denying respondents petition, docketed as G.R. Nos. 163263-64, for failure to file the required reply.
Respondents, however, filed the requisite comment to the present petition. On 23 June 2008, this Court resolved to
deconsolidate the present petition from G.R. Nos. 163263-64 in view of our 13 March 2006 Resolution.
The Issues
Tomada raises the following grounds for allowance of his petition:
1.

The appellate court committed a serious error of law in imposing the penalty of dismissal
upon Tomada despite the fact that respondents did not sustain any damage on account of
Tomadas supposed negligence.

2.

The appellate courts ruling that Tomada was negligent in his job is a patent nullity and
should be reversed.83[9]

The Ruling of the Court

The petition has no merit. We see no reason to overturn the factual findings of the Labor Arbiter, which were
subsequently approved by the NLRC and the appellate court. The present case adheres to the rule that factual findings of
quasi-judicial and administrative bodies are accorded great respect and even finality by the courts. Tomada failed to show
that the factual findings were arbitrarily made and disregarded evidence on record.
Serious Misconduct

81
82
83

as a Just Cause for Dismissal

Tomadas acts constitute serious misconduct, one of the five enumerated causes for termination by employer in
Article 282 of the Labor Code.
Art. 282. Termination by employer. An employer may terminate an employment for any
of the following causes:
(a)

Serious misconduct or willful disobedience by the employee of the lawful orders

of his employer or representative in connection with his work;

xxxx
By sleeping on the job and leaving his work area without prior authorization, Tomada did not merely disregard
company rules. Tomada, in effect, issued an open invitation for others to violate those same company rules. Indeed,
considering the presence of trainees in the building and Tomadas acts, Tomada failed to live up to his companys
reasonable expectations. Tomadas offenses cannot be excused upon a plea of being a first offense, or have not
resulted in prejudice to the company in any way. No employer may rationally be expected to continue in employment a
person whose lack of morals, respect and loyalty to his employer, regard for his employers rules, and appreciation of the
dignity and responsibility of his office, has so plainly and completely been bared.84[10]
Misconduct is improper or wrong conduct. It is the transgression 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 must be of grave and aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must nevertheless be in
connection with the employees work to constitute just cause for his separation. Thus, for misconduct or improper behavior to be a just cause for dismissal, (1) it must be serious; (2) it must relate to the
performance of the employees duties; and (3) it must show that the employee has become unfit to continue working for the employer. Indeed, an employer may not be compelled to continue to employ such
person whose continuance in the service would be patently inimical to his employers interest.85[11]

The present case fulfills the requisites mentioned above. The Labor Arbiter established the following facts:

1.

That the fire incident occurred in the second floor of the building which is specifically within

the area of jurisdiction of [Tomada].

2.

That at the time of the occurrence of the fire, [Tomada] was on duty but he was not in his

area of work/jurisdiction and that his absence in his area was without any approval of the supervisory
authorities and/or incurred for an urgent nature which are official in character. It is not shown that
[Tomada] is authorized to trouble shoot or conduct inspection beyond his area of jurisdiction.
3.

That [Tomada] no less admitted that he entered the screenroom on November 22, 1997,

the night when the incident occurred. The screenroom does not appear to be within the area of work
jurisdiction of [Tomada]. It is the place where [Tomada] was located by supervisor Ver Ignacio when
the fire was already taking place.
4.

The official fire incident (Annex 1, respondents position paper) of supervisor Ignacio that he

saw [Tomada] soundly sleeping atop two (2) units of AVR at screenroom, was not effectively
rebutted by [Tomada] other than his bare denial. The fact however remains undisputed that it was at
84
85

the screenroom where [Tomada] was caught by Supervisor Ver Ignacio at the very time when the fire
broke out in [Tomadas] actual area of work wherein he was supposed to be working during the time
of the incident. There is no showing that Supervisor Ignacios report was motivated by personal ill-will
or motive as to create a suspicion or belief that his report was personally motivated to oust [Tomada]
from his job.
5.

[Tomadas] allegation that he was attending to some trouble shooting works at the third and

fourth floors was not established by concrete and convincing evidence. On the contrary, the logbook
entries presented by the respondent (Annex 2, Reply (respondent)), do not indicate any trouble
shooting work to be undertaken in the said sections of the third and fourth floors.86[12]

It has been shown that Tomada, in the normal and routine exercise of his functions, was directly responsible for
a significant portion of respondents property. By his acts, Tomada is guilty of serious misconduct, such that he is not
entitled to financial assistance or separation pay. Indeed, the Labor Arbiter even categorized Tomadas acts under
dereliction of duty and gross negligence.

Although his nearly two decades of service might generally be considered for some form of financial assistance
to shield him from the effects of his termination, Tomadas acts reflect a regrettable lack of concern for his employer. If
length of service justifies the mitigation of the penalty of dismissal, then this Court would be awarding disloyalty, distorting
in the process the meaning of social justice and undermining the efforts of labor to cleanse its ranks of undesirables. 87[13]
WHEREFORE, we DENY the petition. We AFFIRM the Decision promulgated on 23 December 2003 as well as
the Resolution promulgated on 19 April 2004 of the Court of Appeals in CA-G.R. SP Nos. 69901 and 70069 with the
MODIFICATION that the grant of separation pay to Eduardo M. Tomada, Sr. is DISALLOWED.
SO ORDERED.

86
87

THIRD DIVISION
EATS-CETERA FOOD SERVICES OUTLET and/or SERAFIN
RAMIREZ,
Petitioners,

G.R. No. 179507

Present:
YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

- versus -

MYRNA B. LETRAN and MARY GRACE ESPADERO,

Respondents.

Promulgated:
October 2, 2009

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

Before us is a petition for review on certiorari assailing the December 13, 2006 Decision 88[1] of the Court of
Appeals (CA), as well as its August 30, 2007 Resolution, 89[2] denying the motion for partial reconsideration filed by
petitioners in CA-G.R. SP No. 92551. The appellate court, in its assailed decision and resolution, affirmed the July 18,
2005 Resolution90[3] of the National Labor Relations Commission (NLRC) with respect to Myrna B. Letrans complaint but
modified it with respect to Mary Grace Espaderos (Espadero) complaint declaring petitioners liable for her illegal
dismissal. Petitioners are now assailing the CAs decision only with respect to its ruling on Espaderos case.
The factual antecedents follow.
Espadero had been employed by Eats-cetera Food Services Outlet since June 30, 2001 as cashier. On
November 20, 2002, when she reported for duty, Espadero discovered that her time card was already punched in. After
asking around, she found out that a certain Joselito Cahayagan was the one who punched in her time card. Espadero,
however, failed to report the incident to her supervisor, Clarissa Reduca (Reduca). This prompted Reduca to report the
incident to the personnel manager, Greta dela Hostria. Espadero contended that she was dismissed outright without being
given ample opportunity to explain her side. She claimed that on November 21, 2002, petitioners called her and asked her
to make a letter of admission as a condition for her reemployment. Espadero, thus, wrote:
Dear Sir/Madam,
Ako po ay humihingi ng paumanhin sa aking nagawang pagkakamali. Hindi ko po alam na
pina in po ng aking kasama sa trabaho ang aking time card. Di ko agad nasabi sa supervisor.
Nagpapasalamat din po ako kay Januarylyn Paq (some text missing) at Nida Tendenilla sa kanilang
ginawa dahil dito maituwid po ang aking pagkakamali. Sana po ako ay inyong maunawaan.
Gumagalang,
Mary Grace Espadero91[4]
After writing the letter, Espadero was told to wait for an assignment. The following day, on November 22, 2002, the
company issued a Memorandum92[5] terminating her for violation of Rule 24 of the company rules and regulations. 93[6]
Because of this, Espadero decided to file a complaint for illegal dismissal before the NLRC.
Petitioners, however, maintained that the company rules and regulations, as well as the corresponding penalties
in case of violation thereof, were made known to Espadero before and upon her actual employment as cashier. They also
argued that contrary to her claim, petitioners gave Espadero ample opportunity to explain her side. To prove their
contention, petitioners presented the affidavit of supervisor Reduca stating thus:
On November 20, 2002, someone else punched in the respective time cards of the said
Mary Grace Espadero and Fritzie Eviota, but the said employees deliberately failed to inform her (sic)
about it, [which is] a gross violation of Rule # 24 of the companys Rules and Regulations. The matter
was immediately reported to our Personnel Manager, Ms. GRETA V. DELA HOSTRIA. She then
issued separate memorandum each for Mary Grace Espadero and Fritzie Eviota to explain in writing,
within 72 hours, why no disciplinary action should be taken[] against them.

88
89
90
91
92
93

She personally handed over to Mary Grace Espadero and Fritzie Eviota their individual
memoranda for their acknowledgement, but they requested a little time more before returning the duly
acknowledged cop[ies] as, allegedly, they would be going over the same first. While they were able to
submit their respective written explanations anent the aforesaid incident, they never returned the duly
acknowledged cop[ies] of my (sic) memoranda to me.94[7]
Petitioners also claimed that they conducted an impartial investigation of the incident and found substantial
evidence that Espadero was in cahoots with a co-worker in punching in her time card. 95[8] For this reason, petitioners
decided to terminate her.
On January 31, 2005, Labor Arbiter Luis D. Flores rendered a Decision 96[9] declaring petitioners liable for illegally
terminating Espadero. The Labor Arbiter faulted petitioners for their failure to prove that Espadero deliberately caused
another person to punch in her time card on her behalf, and said that no hearing or investigation was conducted to prove
that Espadero was in cahoots with somebody in the alleged dishonest act prior to her dismissal. 97[10] Petitioners were
ordered to reinstate Espadero and to pay her full backwages from the date of dismissal up to actual reinstatement.
Upon appeal, the NLRC reversed the Labor Arbiters findings. It ratiocinated that Espadero was duly afforded
her right to due process as can be gleaned from Reducas affidavit, the contents of which were never denied nor rebutted
by Espadero.98[11]
Aggrieved, respondents filed a petition for certiorari before the CA. On December 13, 2006, the CA rendered a
ruling affirming the Labor Arbiters pronouncement that Espadero was not afforded due process. The appellate court also
observed that the punishment of dismissal was too harsh and unjustified.99[12]
Petitioners now come before this Court via this Rule 45 petition. It is their contention that Espaderos infraction
constitutes serious misconduct, considering that Espaderos job requires a higher degree of honesty.
There are essentially two issues to be resolved: first, whether Espadero was afforded her right to due process
prior to being dismissed from her job; and second, whether Espaderos infraction was serious enough to warrant the
penalty of dismissal.
The petition is impressed with merit.
Article 282 of the Labor Code includes serious misconduct, fraud and willful breach of trust among the just
causes for termination.100[13] But prior to termination on such grounds, the employer must satisfy both substantive and
procedural due process. Not only must the employee be afforded a reasonable opportunity to be heard and to submit any
evidence he may have in support of his defense, but the dismissal must be for a just or authorized cause as provided by
law.101[14]

94
95
96
97
98
99
100
101

The procedural requirements are set forth in Section 2(d), Rule I of the Implementing Rules of Book VI of the
Labor Code, to wit:
SEC. 2. Security of Tenure. x x x.
xxxx
(d) In all cases of termination of employment, the following standards of due process shall
be substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Labor
Code:
(i) A written notice served on the employee specifying the ground or grounds for
termination, and giving said employee reasonable opportunity within which to explain
his side.
(ii) 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.
(iii)

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.

Reducas affidavit avers that Espadero was notified by the personnel manager and was asked to explain her
side within 72 hours. As there was no duplicate copy, the only copy of the notice to explain remained with Espadero. While
it may be highly suspicious for a personnel manager not to keep a copy of such an important document, Reducas
averment that the only copy of the notice to explain was handed to Espadero herself was never denied nor controverted
by the latter. Wittingly or not, the averment is deemed to have been admitted by Espadero. This being so, petitioners may
be said to have sufficiently complied with the first notice requirement, i.e., that the employee must first be given a notice to
explain her side.
Petitioners likewise complied with the second notice requirement. On November 22, 2002, Greta dela Hostria,
as personnel manager, issued a Memorandum stating with clarity the reason for Espaderos dismissal. It reads:
MEMORANDUM
TO
FROM
RE
DATE

:
:
:
:

Mary Grace Espadero CB Manila

Personnel Department
As stated
November 22, 2002

We received your explanation regarding [you] not reporting to your immediate supervisor that
somebody have (sic) punched in your Time Card last November 20, 2002. After a thorough
investigation of the incident, we found that you violated Rule # 24 which states:
Punching/Signing of timecards for other employees or requesting another employee to punch/sign
his Time Card Record, which is punishable by DISMISSAL.
Because of this we regret that we are terminating your services effective November 22, 2002 as
provided by [the] company[s] Rules and Regulations.
(Sgd.) GRETA V. DELA HOSTRIA
Personnel Manager
NOTED:
(Sgd.) SERAFIN T. RAMIREZ
Vice-President102[15]
102

Substantively, we also sustain petitioners reasoning that Espaderos position as a cashier is one that requires a
high degree of trust and confidence, and that her infraction reasonably taints such trust and confidence reposed upon her
by her employer.
A position of trust and confidence has been defined as one where a person is entrusted with confidence on
delicate matters, or with the custody, handling, or care and protection of the employers property 103[16] and/or funds.104[17]
One such position is that of a cashier. A cashier is a highly sensitive position which requires absolute trust and honesty on
the part of the employee. 105[18] It is for this reason that the Court has sustained the dismissal of cashiers who have been
found to have breached the trust and confidence of their employers. In one case, the Court upheld the validity of the
dismissal of a school cashier despite her 19 years of service after evidence showed that there was a discrepancy in the
amount she was entrusted to deposit with a bank.106[19]
In Metro Drug Corporation v. National Labor Relations Commission,107[20] we explained:
Loss of confidence as a ground for dismissal does not entail proof beyond reasonable
doubt of the employees misconduct. It is enough that there be some basis for such loss of
confidence or that the employer has reasonable grounds to believe, if not to entertain the moral
conviction[,] that the employee concerned is responsible for the misconduct and that the nature
of his participation therein rendered him absolutely unworthy of the trust and confidence
demanded by his position.108[21]
The rule, therefore, is that if there is sufficient evidence to show that the employee occupying a position of trust
and confidence is guilty of a breach of trust, or that his employer has ample reason to distrust him, the labor tribunal
cannot justly deny the employer the authority to dismiss such employee.109[22]
In the instant case, petitioners cannot be faulted for losing their trust in Espadero. As an employee occupying a
job which requires utmost fidelity to her employers, she failed to report to her immediate supervisor the tampering of her
time card. Whether her failure was deliberate or due to sheer negligence, and whether Espadero was or was not in
cahoots with a co-worker, the fact remains that the tampering was not promptly reported and could, very likely, not have
been known by petitioners, or, at least, could have been discovered at a much later period, if it had not been reported by
Espaderos supervisor to the personnel manager. Petitioners, therefore, cannot be blamed for losing their trust in
Espadero.
Moreover, the peculiar nature of Espaderos position aggravates her misconduct. Misconduct has been defined
as improper or wrong conduct; the transgression of some established or definite rule of action, a forbidden act, a
dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. The misconduct, to be
serious, must be of such a grave character and not merely trivial or unimportant. To constitute just cause for termination, it
must be in connection with the employees work. 110[23] With the degree of trust expected of Espadero, such infraction can

103
104
105
106
107
108
109
110

hardly be classified as one that is trivial or unimportant. Her failure to promptly report the incident reflects a cavalier regard
for the responsibility required of her in the discharge of the duties of her position.
WHEREFORE, premises considered, the petition is GRANTED. The December 13, 2006 Decision of the Court
of Appeals, as well as its August 30, 2007 Resolution with respect to Mary Grace Espaderos case, is REVERSED and
SET ASIDE. Accordingly, the National Labor Relations Commissions Resolution dated July 18, 2005 is REINSTATED.
SO ORDERED.

FIRST DIVISION
SUPERLINES
TRANSPORTATION
COMPANY, INC.,

G.R. No. 188742

Petitioner,

Present:

versus -

CORONA, J., Acting Chairperson,*

VELASCO, JR.,**
NACHURA,***
LEONARDO-DE CASTRO and
BERSAMIN, JJ.

EDUARDO PINERA,
Respondent.

Promulgated:
October 13, 2009

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
RESOLUTION
CORONA, J.:
Sometime in 2004, Zeny Iligan sent a letter to petitioner Superlines Transportation Company, Inc. complaining
against respondent Eduardo Pinera for allegedly misappropriating the P1,000 which she sent her children thru petitioner
Superlines. Petitioner immediately investigated the complaint. It informed respondent of the allegations against him and
ordered him to answer the same.

Respondent admitted using the money for his personal needs. Thus, petitioner

terminated respondents employment on June 18, 2004 and notified him of its decision.
Subsequently, respondent filed a complaint for illegal dismissal with the labor arbiter asserting that petitioner did
not have any just or valid cause for terminating his employment. In a decision dated March 23, 2007, 111[1] the labor arbiter
dismissed the complaint for lack of cause of action. She found that respondents dismissal was legal as he was guilty of
serious misconduct.
On appeal, the National Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter in toto.112
[2]

On petition for certiorari in the Court of Appeals (CA), the appellate court held that misappropriation did not
constitute serious misconduct, hence, respondent was illegally dismissed. Thus, the CA set aside the decision of the
NLRC and remanded the matter to the labor arbiter for the computation of respondents backwages, service incentive
leave pay and holiday pay as well as attorneys fees.113[3]
Petitioner moved for reconsideration but it was denied.114[4] Hence, this petition.
We grant the petition.

*
*
*
111
112
113
114

An employee who fails to account for and deliver the funds entrusted to him is liable for misappropriating the
same and is consequently guilty of serious misconduct.115[5] Petitioner therefore validly dismissed respondent.
WHEREFORE, the December 5, 2008 decision and July 9, 2009 resolution of the Court of Appeals in CA-G.R.
SP No. 102097 are hereby REVERSED and SET ASIDE. The August 31, 2007 resolution of the National Labor Relations
Commission in NLRC CN. RAB IV 08-19687-04-Q CA No. 052520-07 is REINSTATED.
SO ORDERED.

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY,

Petitioner,

G.R. No. 165199

Present:
CARPIO, J., Chairperson,
LEONARDO-DE CASTRO,*
BRION,
DEL CASTILLO,
and
ABAD, JJ.

- versus -

INOCENCIO B. BERBANO, JR.,

Respondent.
x-----------------------------------------------------------------------------------------x

Promulgated:
November 27, 2009

DECISION
CARPIO, J.:
The Case
This is a petition for review116[1] of the Court of Appeals Decision 117[2]

dated 21 January 2004 and Resolution

dated 9 September 2004 in CA-G.R. SP No. 75125. The Court of Appeals reversed the Decision 118[3] dated 29 May 2002
and Resolution dated 29 October 2002 of the National Labor Relations Commission (NLRC).

The Antecedent Facts

The facts, as summarized by the Labor Arbiter and adopted by the NLRC and the Court of Appeals, are as
follows:

115
*
116
117
118

In his position paper, complainant [Inocencio B. Berbano, Jr.] alleged that he was hired by
the respondent Philippine Long Distance [Telephone] Company (PLDT, for brevity) on June 1, 1988
as Engineering Assistant. After his probationary period of three months, he was issued an
appointment letter with a status of a regular employee of respondent. After several promotions,
complainant finally held the position of Computer Assistant M-2 on June 16, 1993 in the Sampaloc
Exchange Department/Operation and Maintenance Center of the respondent. Although his function is
Computer Assistant M-2, complainant further alleges that he performed the functions of a Specialist
for EWSD who was responsible for handling, operations and maintenance of the whole EWSD
Network handling network database, fault clearance, database modification alarm monitoring, traffic
routing, trunk administration, password and tariff administration and others.
Being trained as EW[S]D OMC Specialist, complainant claims that respondent expected him to have depth of
understanding in continuous painstaking research and study. Thus, he initiated a study of hi-tech EWSD Switching
Equipment, a part of which is the software installation of various subscriber service features and control operation. It is at
this time that complainant tapped his brother-in-laws number (911-8234) without the latters knowledge and installed
service features in it for study. Such service features included:
1.
2.
3.
4.
5.
6.
7.
8.

Security Code
Conference Call Three (Three-way calling)
Abbreviated Dialing
Hot Line Delayed
Call Diversion Immediate
Call Diversion Dont Answer
Call Hold
Non-Changeable

Later, on April 21, 1994, complainant learned that the phone number 911-8234 is under investigation by the
Quality Control Inspection Office due to the unauthorized installation of service features thereto. Complainant admitted
that he was responsible for such installation for purposes of study and testing.
Formal investigation ensued on April 22, 1994 and subsequently, on July 6, 1994, complainant received a
Memorandum from the Department Head of the Sampaloc Exchange asking him to explain within 72 hours upon receipt
why an [a]dministrative [a]ction should not be taken against complainant regarding the matter of the unauthorized
installations mentioned at the phone number 911-8234.
On July 11, 1994, complainant submitted a written explanation claiming that the aforementioned installation of
service features was for purposes of study and research.
Finding unacceptable the complainants explanation, respondent PLDT dismissed complainant from the service
effective August 16, 1994.
On the other hand, respondent submits that upon discovery of the installation of service features to the phone
number 911-8234 without the authorization and approval of the respondent, and after investigation, complainant readily
admitted having programmed the said features and that this installation was without prior authorization. Respondents
position paper further avers that having worked as [a] Computer Assistant, complainant took advantage of his position and
his access to respondent companys computer to favor his brother-in-laws telephone by irregularly providing it with
special features. Such special features included the following:
1.
2.
3.
4.

Push Button
Test Call Only
Malicious Call Identification
Non-chargeable (Calls to subscriber with this class of service

are free of charge for the

caller)
5. Three-way Calling (Allows a third party to be linked to an
existing call)
6. Call Hold
7. Abbreviated dialing 90 numbers
8. Hotline delay
9. Pin Code
10. Call Diversion Immediate
11. Call Diversion to Fixed Announcement
12. Traffic Restr. Class Act Auth. (Authorization to activate traffic
restriction classes)
13. Call Diversion Dont Answer (Authorization to enter a destination
diversion on no answer)
14. Traffic Restriction Class 1
15. Abbreviated Dial Number Mod. Auth. (Authorization for subs
controlled entry and and modification of abbreviated nos.)
16. Call Diversion Immediate (Modification Authorization)
17. Hotline Delay Mod. Auth.(Modification Authorization)

no. for call

Respondent also found complainants explanation that the installment was for
testing purposes, unmeritorious and unjustified considering that said special features were only
deleted upon discovery, two months after their installations. Further, testings, according to the
respondent companys rules should only last for one day.119[4]

On 28 September 1998, the Labor Arbiter120[5] rendered a Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering the
reinstatement of the complainant to his previous position of Computer Assistant M-2 without loss of
seniority rights. Furthermore, respondent is hereby ordered to pay to the complainant the amount of
FIVE HUNDRED THIRTY SEVEN THOUSAND FOUR HUNDRED TWENTY PESOS (P537,420.00)
representing the backwages of the complainant from the time that he was terminated in August 1994
up to the present, minus any possible income earned elsewhere since complainants dismissal. The
equivalent ten (10%) percent attorneys fees of the total award in the amount of P53,742.00 is also
granted.
SO ORDERED.121[6]
On 29 May 2002, the NLRC rendered a Decision reversing that of the Labor Arbiter, with the following
dispositive portion:
WHEREFORE, premises considered, the assailed decision is hereby reversed and set
aside. Respondents are adjudged not guilty of illegal dismissal. Accordingly, the award of
backwages and attorneys fees is hereby deleted from the decision.
SO ORDERED.122[7]
On 15 August 2002, Berbano filed a Motion for Reconsideration, but this was denied by the NLRC in its
Resolution dated 29 October 2002.123[8]

The Court of Appeals Ruling

Berbano filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil
Procedure. On 21 January 2004, the Court of Appeals rendered judgment granting the petition and reversing the NLRC
decision. We quote the dispositive portion of the Court of Appeals decision below.
WHEREFORE, premises considered, the petition is GRANTED. The decision of the public
respondent NLRC promulgated on May 29, 2002 is REVERSED and SET ASIDE and the decision
dated September 28, 1998 of the Honorable Labor Arbiter Romulus S. Prota[s]io is hereby
REINSTATED in all respect. Private respondent PLDT is ordered to pay the backwages to which the
petitioner is entitled from January 15, 2003, the date of his dismissal, until his actual reinstatement.
SO ORDERED.124[9]

PLDT filed a Motion for Reconsideration, but this was denied by the Court of Appeals in its Resolution of 9
September 2004.125[10]
Hence, this appeal.

119
120
121
122
123
124
125

The Issues
Petitioner PLDT raises the following issues for our consideration:
3.

Whether the Court of Appeals erred in reversing the NLRC decision despite its finding that
respondent committed the infraction that caused his dismissal;

4.

Whether the Court of Appeals erred in ordering petitioner to pay respondent backwages
and attorneys fees;

5.

Whether respondent Inocencio Berbano, Jr. was denied due process of law; and

6.

Whether the Court of Appeals had jurisdiction over the Petition for Certiorari filed by
respondent.

The Courts Ruling

We find the appeal without merit.
On whether the Court of Appeals had jurisdiction
over the Petition for Certiorari filed by respondent
We first consider the issue on jurisdiction raised by petitioner. Petitioner contends that the NLRC Decision
dated 29 May 2002 was received by respondent on 29 June 2002; hence, respondent had only ten (10) days, or up to 09
July 2002, to file a motion for reconsideration of the NLRC decision. Without a motion for reconsideration timely filed, the
NLRC decision would become final and executory, pursuant to Section 2, paragraphs (a), (b) and (c) of Rule VIII [now
Section 14 of Rule VII] of the New Rules of Procedure of the NLRC. Petitioner claims that when respondent filed a motion
for reconsideration of the NLRC decision on

15 August 2002, which was beyond the 10-day reglementary period

imposed by law, the decision was already final and executory. Consequently, the Court of Appeals had no jurisdiction over
the petition for certiorari (assailing the NLRC decision) filed by respondent on 10 February 2003.
The New Rules of Procedure of the NLRC mandate that a motion for reconsideration of the NLRC decision
must be filed within 10 calendar days from receipt of said decision, otherwise, the decision shall become final and
executory.126[11] A motion for reconsideration of the NLRC decision must be filed before the remedy of a petition for
certiorari may be availed of, to enable the commission to pass upon and correct its mistakes without the intervention of
the courts.127[12] Failure to file a motion for reconsideration of the decision is a procedural defect that generally warrants a
dismissal of the petition for certiorari.128[13] However, in Surima v. NLRC,129[14] we held that despite procedural lapses,
fundamental consideration of substantial justice may warrant this Court to decide a case on the merits rather than dismiss
it on a technicality.

In so doing, we exercise our prerogative in labor cases that no undue sympathy is to be accorded to

any claim of procedural misstep, the idea being that our power must be exercised according to justice and equity and
substantial merits of the controversy.130[15] In the instant case, we are persuaded that the rigid rules of procedure must
give way to the demands of substantial justice, and that the case must be decided on the merits. Moreover, the petition
filed with the Court of Appeals sought the issuance of a writ of certiorari which is a prerogative writ, not demandable as a

126
127
128
129
130

matter of right, but issued in the exercise of judicial discretion. 131[16] Thus, the Court of Appeals committed no error when it
admitted the petition for certiorari filed by respondent, and had jurisdiction over said petition.

On whether the Court of Appeals erred in reversing

the NLRC decision despite its finding that respondent
committed the infraction that caused his dismissal

Petitioner contends that the Court of Appeals erred when it found respondent to have committed an infraction,
i.e., programming and installing special features in his (respondents) brother-in-laws telephone line without prior
authorization from petitioner, but nonetheless ruled that the infraction was not serious enough to warrant respondents
dismissal from service. Petitioner also asserts that, contrary to respondents claim, due process was observed in the
dismissal of respondent.
Well-settled is the rule that no employee shall be validly dismissed from employment without the observance of
substantive and procedural due process. The minimum standards of due process are prescribed under Article 277(b) of
the Labor Code of the Philippines (Labor Code) to wit:
Art.

277.

Miscellaneous

Provisions.

xxx
(b) Subject to the constitutional right of workers to security of tenure and their right to be
protected against dismissal except for a just and authorized cause and without prejudice to the
requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose
employment is sought to be terminated a written notice containing a statement of the cause 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, in accordance with company rules and regulations
promulgated pursuant to guidelines set by the Department of Labor and Employment. x x x
The above provision is implemented by Section 2, Rule XXIII of Book V of the Omnibus Rules Implementing the
Labor Code, which states:

Section 2. Standards of due process: requirements of notice. In all cases of termination of

employment, the following standards of due process shall be substantially observed:
I. For termination of employment based on just causes as defined in Article 282 of the
Code:
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving to 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
the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut
the evidence presented against him; and
(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. x x x.
Thus, dismissal from service of an employee is valid if the following requirements are complied with: (a)
substantive due process which requires that the ground for dismissal is one of the just or authorized causes enumerated
in the Labor Code, and (b) procedural due process which requires that the employee be given an opportunity to be heard
and defend himself.132[17] The employee must be furnished two written notices the first notice apprises the employee of

131
132

the particular act or omission for which his dismissal is sought, and the second notice informs the employee of the
employers decision to dismiss him.133[18]
In this case, petitioner formally notified respondent of the complaint against him through an inter-office
memorandum dated 6 July 1994. The memorandum enumerated the service features allegedly installed by respondent in
his brother-in-laws telephone line (911-8234), and stated the acts of the respondent complained of, viz:
You readily admitted to QCI that subscriber of subject telephone is your brother-in-law and
that you installed the features claiming it was for testing purposes.
Records show that subject telephone was temporarily disconnected last March 24, 1994
for non-payment, reconnect order was faxed to Data Control Unit of OMCC at 1:30PM. In the
process of reconnection at OMCC, subject telephone was found already working. 134[19]
In the same memorandum, petitioner asked respondent to explain within 72 hours upon receipt thereof why an
administrative action should not be imposed against him.135[20] On 11 July 1994, respondent submitted his written
explanation or reply to the complaint against him.136[21] More than a month thereafter, or on 9 August 1994, petitioner
issued another inter-office memorandum informing respondent that his act of installing special features in his brother-inlaws telephone line without authorization from petitioner constituted gross misconduct and was grossly violative of
existing company rules and regulations, hence, warranting his termination from service. 137[22] Clearly, petitioner complied
with the requirement of procedural due process.
As regards substantial due process, the grounds for termination of employment must be based on just or
authorized causes. Article 282 of the Labor Code enumerates the just causes for termination of employment by the
employer, to wit:
Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or
representative
in
connection
with
his
work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly
authorized
representative;
or

any

(d) Commission of a crime or offense by the employee against the person of his employer
immediate member of his family or his duly authorized representative; and
(e) Other causes analogous to the foregoing. (Emphasis supplied)

The notice of termination sent by petitioner to respondent indicated that the latter was dismissed from service
due to unauthorized installation of service features in his brother-in-laws telephone line, which allegedly constituted gross
misconduct. Thus, we are left with the issue on whether the said unauthorized act of the respondent constitutes a serious
misconduct which warrants dismissal from service under Article 282(a) of the Labor Code.
Misconduct has been defined as improper or wrong conduct. It is the transgression 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. 138[23] Ordinary misconduct would not justify the
termination of services of the employee as the Labor Code is explicit that the misconduct must be
serious.139[24] To be serious, the misconduct must be of such grave and aggravated character and not
merely trivial and unimportant.140[25] Such misconduct, however serious, must nevertheless be in
connection with the employees work to constitute just cause for his separation. 141[26] As amplified by
133
134
135
136
137
138
139
140
141

jurisprudence, misconduct, to be a just cause for dismissal, must (a) be serious; (b) relate to the
performance of the employees duties; and (c) show that the employee has become unfit to continue
working for the employer.142[27] Moreover, in National Labor Relations Commission v. Salgarino,143[28]
this Court stressed that [i]n 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.
We believe that the misconduct of respondent is not of serious nature as to warrant respondents dismissal from
service. The records of this case are bereft of any showing that the alleged misconduct was performed by respondent
with wrongful intent. On the contrary, respondent readily admitted having installed the service features in his brother-inlaws telephone line for purposes of study and research which could have benefitted petitioner. Respondent explained the
installation of the service features in the written explanation he sent to petitioner as follows:
xxx

There had been a time on that period where I conducted special study on service features of EWSD. It includes testing
the integrity of its actual operation in all digital exchanges connected to our OMC.

During which [sic] I conducted my study of these features for Cubao there was no available test number at OMC for code
911 and 912. So to complete my study I decided to use the number 9118234 at home temporarily and remove those
features after the test.144[29]

Moreover, as pointed out by the appellate court, respondents misconduct did not result in any economic loss
on the part of petitioner since the service features were not yet available in the market at the time respondent caused its
unauthorized installation.

We also note that respondents dedicated service to petitioner for almost six (6) years, prior to his commission
of the misconduct, is apparent from the records.

His employment was untainted with any irregularity. He had been

promoted several times, and had been chosen by petitioner on several occasions to attend various trainings to improve
his craft. He conducted advance research based on his training background and technical expertise, and had even
compiled a service feature manual which served as quick reference guide of his colleagues for inquiries regarding
subscriber operation of special (or service) features.145[30]
Based on the foregoing, we consider respondents offense to be a simple misconduct which does not merit
termination of his employment. The penalty of dismissal from service is not commensurate to respondents offense.
Although petitioner, as an employer, has the right to discipline its erring employees, exercise of such right should be
tempered with compassion and understanding. The magnitude of the infraction committed by an employee must be
weighed and equated with the penalty prescribed and must be commensurate thereto, in view of the gravity of the penalty

142
143
144
145

of dismissal or termination from the service. 146[31] The employer should bear in mind that in termination cases, what is at
stake is not simply the employees job or position but his very livelihood.

On whether the Court of Appeals erred in ordering

petitioner to pay respondent backwages and attorneys fees
Since respondent was illegally dismissed, he is entitled to reinstatement without loss of seniority rights, and to
payment of backwages.

Article 279 of the Labor Code, as amended by Section 34 of Rep. Act No. 6715, provides as

follows:
Art. 279. Security of Tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages inclusive of allowances, and to his other
benefits or their monetary equivalent computed from the time his compensation was withheld from
him up to the time of his actual reinstatement.
Thus, an illegally dismissed employee is entitled to the twin reliefs of
reinstatement is no longer viable, and (b) backwages.

147[32]

(a) either reinstatement or separation pay, if

These reliefs are given to alleviate the economic damage

suffered by the illegally dismissed employee.148[33]

Finally, we find no error in the award of attorneys fees. In San Miguel Corporation v. Aballa,149[34] we held that in
actions for recovery of wages or where an employee was forced to litigate and thus incur expenses to protect his rights
and interests, a maximum of 10% of the total monetary award by way of attorneys fees is justifiable under Article 111 of
the Labor Code;150[35] Section 8, Rule VIII of Book III of the Omnibus Rules Implementing the Labor Code;151[36] and
paragraph 7, Article 2208 of the Civil Code.152[37] The award of attorneys fees is proper and there need not be any showing
that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the
lawful wages were not paid accordingly.153[38]
WHEREFORE, we DENY the petition. We AFFIRM the Court of Appeals Decision dated 21 January 2004 in
CA-G.R. SP No. 75125.
SO ORDERED .

ROMEO N. VENTURA,
146
147
148
149
150
151
152
153

G.R. No. 182570

Petitioner,
Present:
- versus -

COURT OF APPEALS, NATIONAL LABOR RELATIONS

COMMISSION, GENUINO ICE CO., INC., and HECTOR
GENUINO,
Respondents.

AUSTRIA-MARTINEZ, J.,
Acting Chairperson,
TINGA,*
CHICO-NAZARIO,
NACHURA, and
LEONARDO-DE CASTRO,** JJ.
Promulgated:
January 27, 2009

x------------------------------------------------------------------------------------x
RESOLUTION
NACHURA, J.:

Petitioner Romeo N. Ventura (petitioner) was hired by Genuino Ice Co., Inc., (company) as Field Auditor
sometime in April 1987 and continuously up to December 20, 2004, or for a period of more than seventeen (17) years.
Sometime in August 2004, one Glicerio Alido (Alido), an employee of the company, informed petitioner that he
heard from a certain Zaldy, a contractor of ice-tube generators, that one Lilio Lejos (Lejos), petitioner's nephew and also
an employee of the company, was involved in the theft of the company's properties. Lejos eventually resigned on
September 24, 2004.154[1]
On November 4, 2004, petitioner submitted to the company the Sinumpaang Salaysay155[2] of Lejos dated
October 28, 2004, stating therein that some of his co-employees were involved in the theft. On the same date, petitioner
submitted to the management his Partial Audit Report 156[3] which pertinently provides that on October 28, 2004, Lejos
came to petitioner's house and revealed the theft of company properties that was committed, and the identities of the
employees involved.
On November 22, 2004, petitioner was served with a Notice of Preventive Suspension 157[4] for his failure to
report the theft, despite his prior knowledge of the criminal activities. Petitioner was charged with suppression of evidence
and of withholding information to cover up for the crime committed. The company considered it a serious violation of
company rules and regulations, particularly Art. XII, par. (i) thereof, and a breach of the trust and confidence reposed in
petitioner. The company directed petitioner to submit his written explanation within two (2) days from receipt of the said
notice why he should not be terminated from employment. Moreover, as the incident posed a serious and imminent threat
to the property and lives of the company and its employees, respectively, petitioner was placed under preventive
suspension for thirty (30) days effective November 22, 2004.

*
*
154
155
156
157

On November 23, 2004, petitioner submitted his Sagot na Sinumpaang Salaysay,158[5] denying that he violated
Art. XII, par. (i) of the company rules and regulations, and alleging that when Alido informed him that Lejos was involved,
he immediately reported the matter to Alejandro Barrera (Barrera), immediate superior of petitioner and Chief Auditor of
the company; that he did not want to join in the investigation as Lejos is his nephew, hence, petitioner might be suspected
of covering up for Lejos; that petitioner personally brought Lejos to SM North Edsa, Quezon City on November 4, 2004 so
that Edgar Carriaga (Carriaga), Personnel Manager of the company, may talk to Lejos; that petitioner was the one who
submitted Lejos' affidavit to the company; that the preventive suspension was a harsh penalty, considering that he did not
participate in stealing company properties; and that petitioner executed the said affidavit, as the company required him to
answer and explain why he should not be terminated from employment.
In his Counter-Affidavit,159[6] Barrera denied that petitioner reported the matter to him; otherwise, he would have
ordered a surveillance and/or spot monitor to detect the illegal activities. Barrera also pointed out that the Partial Audit
Report prepared by petitioner was without his knowledge, as the same did not bear his signature.
Thus, on December 20, 2004, petitioner was served with a Notice of Termination 160[7] effective on the same date,
for concealing the information regarding the criminal activities in the company, particularly those committed by Lejos, thus,
constituting a willful breach of trust. The company also informed petitioner that a case had already been filed with the
Prosecutor's office, impleading petitioner as an accessory to the crime of theft.
On January 12, 2005, petitioner filed with the Labor Arbiter (LA) a case against the company and its president,
Hector S. Genuino, for Illegal Dismissal with monetary claims for payment of separation pay, 13 th month pay, damages
and attorney's fees.161[8] On April 17, 2006, the LA rendered a Decision 162[9] in favor of petitioner, declaring him to have
been illegally dismissed and ordering his reinstatement with payment of full backwages.
Private respondents appealed to the National Labor Relations Commission (NLRC). On March 30, 2007, the
NLRC reversed and set aside the ruling of the LA. However, the NLRC directed the private respondents to pay petitioner
his 13th month pay in the amount of P6,926.66.163[10] Petitioner filed his Motion for Reconsideration which was denied by
the NLRC in its Resolution dated June 28, 2007.
Aggrieved, petitioner went to the Court of Appeals (CA) via Certiorari under Rule 65 of the Rules of Civil
Procedure. On January 28, 2008, the CA held that, having been terminated from employment for a valid cause and with
observance of due process, petitioner's complaint for Illegal Dismissal must be dismissed. The CA affirmed the NLRC's
ruling.164[11] On February 21, 2008, petitioner filed his Motion for Reconsideration which was denied by the CA in its
Resolution165[12] dated April 11, 2008.
Hence, this Petition166[13] raising the following grounds:

158
159
160
161
162
163
164
165
166

7.

The CA erred when it ruled that the petitioner was dismissed for a cause;

8.

The NLRC erred when it ruled that the dismissal of the petitioner was with the observance
of due process;

9.

The CA erred when it upheld the ruling of the NLRC which failed to consider petitioner's
length of service to the company; and

10.

The petitioner is entitled to reinstatement with full backwages or in lieu thereof, separation
pay, with payment for moral and exemplary damages.

Petitioner argues that private respondents failed to discharge the burden of proving that, indeed, a just cause
exists, tantamount to loss of trust and confidence, as to warrant petitioner's dismissal. He posits that he disclosed the
illegal activities when he submitted an Audit Report to the company. Petitioner points out that, on the other hand, private
respondents presented no evidence that petitioner indeed had knowledge of and participation in the subject theft.
Petitioner adds that the NLRC and the CA accorded more weight to the self-serving denial made by Barrera over the
categorical and honest claims of the petitioner. Thus, where the basis for the loss of trust and confidence is unclear, the
penalty of dismissal is not warranted, because the breach of trust must be willful and must be founded on clearly
established facts. Petitioner also submits that the two notices furnished by the company to petitioner are not the two
notices that would satisfy the requirements of due process, as contemplated by law. The first notice was a mere Notice of
Preventive Suspension. No hearing was conducted before the petitioner was dismissed. Lastly, the penalty of dismissal
was imposed on petitioner without considering what appears to be his first offense, and his length of service to the
company.
On the other hand, private respondents contend that petitioner was indeed terminated for a just cause, i.e., loss
of trust and confidence. The private respondents heavily relied on the factual findings of the NLRC duly affirmed by the CA
that the allegation of petitioner that he reported the subject theft to Barrera in August 2004 after receiving information from
Alido was a mere afterthought. The NLRC opined that this was evident in petitioner's Partial Audit Report dated November
2, 2004 in which he never mentioned that he prepared the same upon instruction from Barrera, that Alido furnished him
such information as early as August 2004, that Lejos was implicated in said Audit Report. Petitioner only disclosed these
matters when he was required to explain per the company's directive on first notice, including the meeting with Carriaga at
SM North Edsa in Quezon City. Moreover, private respondents argue that petitioner was accorded his right to due
process because he was furnished with a first notice and petitioner, accordingly, submitted his answer thereto. They aver
that when petitioner went to the office of Carriaga to submit his answer, petitioner manifested that he had no more
evidence to submit. Private respondents also aver that this issue on due process is belatedly raised, as petitioner never
raised the same in his pleadings before the LA and the NLRC. Lastly, petitioner's length of service to the company cannot
justify his exemption from the law.
In sum, the two ultimate issues in this case are:
1)

Whether petitioner was terminated for a just cause; and

2)

Whether petitioner was accorded due process.

The petition is bereft of merit.

On the first issue, we rule in the affirmative.

Under Article 282(c) of the Labor Code, loss of trust and confidence is one of the just causes for dismissing an
employee, where the employee is entrusted with duties of confidence on delicate matters, such as care and protection,
and handling or custody of the employer's property.167[14] In this case, an Auditor would be one such employee.168[15]
Petitioner, in his Position Paper filed before the LA and in his Sagot na Sinumpaang Salaysay, averred that
sometime in August 2004, Alido informed him of the illegal activities in the company premises. But this fact was not
reflected in his Partial Audit Report; instead, petitioner made it appear therein that it was upon the initiative of Lejos that
he discovered the illegal activities only on October 28, 2004, after Lejos already resigned from the company. The basis for
terminating the employment of petitioner actually came from petitioner himself due to the substantial and irreconcilable
inconsistencies in the narration of facts in his Audit Report and his Sagot na Sinumpaang Salaysay filed before the
company, and his pleadings before the lower tribunals and before this Court. In sum, it cannot be denied that he withheld
this information from his immediate supervisor and from the company a clear breach of the trust and confidence the
company had reposed in him as one of its Auditors.
On the second issue, we likewise rule in the affirmative.
Before the services of an employee can be validly terminated, the employer must furnish him two written
notices: (a) a written notice served on the employee specifying the ground or grounds for termination, and giving the
employee reasonable opportunity to explain his side; and (b) 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.169[16]
It is well settled that the basic requirement of notice and hearing in termination cases is for the employer to
inform the employee of the specific charges against him and to hear his side and defenses. This does not, however, mean
a full adversarial proceeding. The parties may be heard through pleadings, written explanations, position papers,
memorandum or oral argument. In all of these instances, the employer plays an active role by providing the employee
with the opportunity to present his side and answer the charges in substantial compliance with due process. 170[17]
In this case, private respondents complied with these requirements. On November 22, 2004, petitioner was
served with a Notice of Preventive Suspension, apprising him of the particular acts or omissions constituting the alleged
infraction and requiring him to explain within two (2) days. The following day, petitioner submitted his written explanation
as evidenced by his Sagot na Sinumpaang Salaysay. Subsequently, private respondents furnished petitioner with a notice
of termination informing him of the basis of his dismissal.
Lastly, in its assailed decision, the CA affirmed the ruling of the NLRC and adopted as its own the latter's factual
findings. Long-established is the doctrine that findings of fact of quasi-judicial bodies like the NLRC are accorded respect,
even finality, if supported by substantial evidence. When passed upon and upheld by the CA, they are binding and
conclusive upon the Supreme Court and will not normally be disturbed. Though this doctrine is not without exceptions, the
Court finds that none are applicable to the present case.171[18]
All told, we find no reversible error to disturb, much less, reverse the assailed CA Decision.
167
168
169
170
171

WHEREFORE, the petition is DENIED. No costs.

SO ORDERED.

ERIC DELA CRUZ and RAUL M. LACUATA,

Petitioners,

G.R. No.

180465

Present:
QUISUMBING, J., Chairperson,
CARPIO MORALES,
CHICO-NAZARIO,*
LEONARDO-DE CASTRO,** and
PERALTA,*** JJ.

- versus -

COCA-COLA BOTTLERS PHILS. INC.,

Respondent.

Promulgated:
July 31, 2009

x-------------------------------------------------- x
DECISION
CARPIO MORALES, J.:
On August 12, 2000, Raymund Sales (Sales), a salesman of Coca-Cola Bottlers Phils., Inc. (respondent), figured
in a motor vehicle accident while driving respondents motor vehicle which he was then not authorized to use.
Sales was hospitalized in Lorma Medical Center in San Fernando, La Union where he was observed to have
been under the influence of liquor at the time of the accident. 172[1] The August 12, 2000 police blotter of the incident indeed
indicates that Sales was under the influence of liquor.173[2]
Respondent soon discovered that Sales co-employees secured an August 15, 2000 police report and an August
14, 2000 medical certificate which omitted the statement that Sales was under the influence of liquor.174[3]
After an initial investigation, respondent issued separate memoranda to its Sales Supervisor John F. Espina
(Espina), and herein petitioners Sales Delivery Supervisor Raul M. Lacuata (Lacuata) and Sales Supervisor Eric David C.
dela Cruz (dela Cruz) requiring them to explain why no disciplinary action should be taken against them for violation of the
Employees Code of Disciplinary Rules and Regulations vis--vis Article 282 of the Labor Code in connection with their
production of the August 15, 2000 police report and August 14, 2000 medical certificate which did not indicate full details of
the accident, and the use of the name of the General Manager in producing such reports.175[4]
Petitioner de la Cruz replied that all he did was to send to Melvin Asuncion, a refrigeration foreman of
respondent, a text message asking for a copy of the police report.176[5]

*
*
*
172
173
174
175
176

Petitioner Lacuata, on the other hand, claimed that he had no participation in the preparation of the questioned
documents as all he did was to pick up the medical certificate from the hospital. 177[6]

Espina likewise denied any

participation in the alteration of the documents.178[7]

Further investigation conducted by respondent showed that Espina and petitioners conspired to have an altered
report prepared to make it appear that Sales was not under the influence of liquor at the time of the accident.
Espina and petitioners were thereupon dismissed from employment, 179[8] drawing them to file separate complaints
for illegal suspension and dismissal against respondent. 180[9]
The Labor Arbiter dismissed Espinas complaint for lack of merit. 181[10]
De la Cruz was found to have been illegally dismissed, hence, his reinstatement, as well as payment to him of
back wages, 13th month pay, attorneys fees, and moral damages,182[11] was ordered.
Respecting Lacuata, the Labor Arbiter found him to be at fault in d[oing] nothing to stop Espina from obtaining
false police and medical reports, hence, respondent was justified in losing trust and confidence in him. Nevertheless,
respondent was ordered to grant him back wages, 13th month pay, and separation pay.183[12]
On appeal by respondent, the National Labor Relations Commission (NLRC) affirmed the Labor Arbiters
decision but deleted the award of moral damages in favor of dela Cruz. 184[13]
been denied,

186[15]

respondent filed a Petition for Certiorari

187[16]

Its motion for reconsideration 185[14] having

before the Court of Appeals.

By Decision188[17] of July 27, 2007, the Court of Appeals SET ASIDE the NLRC decision, it finding that petitioners,
were validly dismissed.
Hence, the present petition for Review,189[18] petitioners contending that the Court of Appeals erred

177
178
179
180
181
182
183
184
185
186
187
188
189

I.

In rejecting the Labor Arbiters and NLRCs appreciation of the facts, concluding that
there were facts established to warrant petitioners separation from employment.

II.

In considering that the respondent has successfully discharged the burden of proof
required by the Constitution.

III.

In considering the alleged breach of confidence, if any there be, willful breach of
confidence.

IV.

In considering the alleged infraction, if any there be, as connected with petitioners
work.

V.

In holding that dismissal from service was the proper penalty to be imposed upon
the petitioners, notwithstanding the absence of substantial evidence and manifestly
oppressive nature of the penalty.

VI.

In rejecting the keystone principle that all doubt in the implementation of the Labor
Code or arising from the evidence should be resolved in favor of labor.190[19]
(Emphasis in the original)

As a general rule, findings of fact of the Labor Arbiter and the NLRC will not be interfered with unless it is shown
that they arbitrarily disregarded or misappreciated the evidence before them to such extent as to compel a contrary
conclusion if such evidence has been properly appreciated.191[20]
In the case of Lacuata, the Court of Appeals concurred with the findings of fact of the Labor Arbiter and the
NLRC, but held that it was error to award back wages and separation pay to him in light of the finding that [r]espondent . . .
was justified in losing its trust and confidence in Lacuata 192[21] for not doing anything to prevent Espina from obtaining the
altered documents.
The petition fails.
Indeed, an award of back wages and separation pay is justified only if there is a finding of illegal dismissal. Since
petitioners were supervisory employees and were thus covered by the trust and confidence rule, 193[22] the Court of Appeals
correctly overturned the ruling of the NLRC and the Labor Arbiter.
Petitioners contend, however, that for loss of trust and confidence to be a ground for termination of employment,
it must be willful and must be connected with the employees work.194[23] This contention has been passed upon by the
Court of Appeals, thus:
The records of the case are rife with proof that the supervisors committed acts which are
inimical to the interests and stability, not only of management, but of the company itself. They did so,
through deceitful means and methods. The detailed account of what transpired between August 12 to
16, 2002 by Asuncion, Calderon, the witnesses and the supervisors themselves were not only
substantial proof of the grave infraction committed by them but indubitable proof of their anomalous
acts.195[24] (Underscoring supplied)

Indeed, by obtaining an altered police report and medical certificate, petitioners deliberately attempted to cover
up the fact that Sales was under the influence of liquor at the time the accident took place. In so doing, they committed
acts inimical to respondents interests. They thus committed a work-related willfull breach of the trust and confidence
reposed in them.

190
191
192
193
194
195

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals dated July 27, 2007 is AFFIRMED.
Costs against petitioners.
SO ORDERED.
THIRD DIVISION
CHONA ESTACIO and LEOPOLDO MANLICLIC,
Petitioners,

G.R. No. 183196

- versus -

Present:

PAMPANGA I ELECTRIC COOPERATIVE, INC., and

LOLIANO E. ALLAS,
Respondents.

CARPIO MORALES,* J.,

CHICO-NAZARIO,**
Acting Chairperson,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.
Promulgated:

August 19, 2009

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the
Decision196[1] of the Court of Appeals dated 29 May 2008 in CA-G.R. SP No. 93971, which annulled and set aside the
Decision dated 30 June 2005 and Resolution dated 24 January 2006 of the National Labor Relations Commission (NLRC)
in NLRC-NCR Case No. 040757-04. The NLRC found that petitioners Chona Estacio (Estacio) and Leopoldo Manliclic
(Manliclic) were illegally dismissed by respondents Pampanga I Electric Cooperative, Inc. (PELCO I) and Engineer
Loliano E. Allas (Engr. Allas), and ordered the reinstatement of petitioners and payment of their backwages. The NLRC
reversed the Decision dated 30 April 2004 of the Labor Arbiter in NLRC Case No. RABIII-03-5517-03 dismissing
petitioners Complaint for illegal dismissal against respondents for lack of merit.
The facts of the case as culled from the records are as follows:
Respondent PELCO I is an electric cooperative duly organized, incorporated, and registered pursuant to
Presidential Decree No. 269.197[2] Respondent Engr. Allas is the General Manager of respondent PELCO I. 198[3]
Petitioner Estacio had been employed at respondent PELCO I as a bill custodian since 1977, while petitioner
Manliclic had been working for respondent PELCO I as a bill collector since June 1992.199[4]
*
*
196
197
198
199

On 22 August 2002, Nelia D. Lorenzo (Lorenzo), the Internal Auditor of respondent PELCO I, submitted her
Audit Findings at the San Luis Area Office to respondent Engr. Allas, pertinent portions of which state:
Evaluation of the results of physical inventory of bills through reconciliation of records such
as aging schedule of consumer accounts receivable balance, collection reports and other related
documents revealed 87 bills amounting to One Hundred Twenty Six Thousand Seven Hundred Fifty
and 93/100 (P126,750.93) remained unremitted as of August 20, 2002.
Accounting of which includes the accountability of Ms. Estacio amounting to One Hundred
Twenty Three Thousand Eight Hundred Seven and 14/100 (P123,807.14) representing 86 bills.200[5]
Respondent Engr. Allas issued a Memorandum dated 6 September 2002 to petitioner Estacio informing her of
the audit findings, and directing her to explain in writing, within 72 hours upon receipt thereof, why no disciplinary action
should be imposed upon her for Gross Negligence of Duty under Section 6.6 of Board Policy No. 01-04 dated 23 July
2001.
In her written explanation, petitioner Estacio averred that she had no control over and should not be held
answerable for the failure of the bill collectors at the San Luis Area Office to remit their daily collections. Petitioner Estacio
also asserted that according to her revised job description as a bill custodian, she merely had to ascertain on a daily basis
the total bills collected and uncollected by collectors. Any failure on her part to update the bill custodian records by the
time the audit was conducted on 9 August 2002 was due to the abnormal weather conditions during July 2002, resulting in
the flooding of San Luis and Candaba, Pampanga. Such negligence could not be categorized as gross in character as
would warrant the imposition of disciplinary action against her.201[6]
Unsatisfied with petitioner Estacios explanation, respondent Engr. Allas issued a Memorandum 202[7] dated 26
September 2002 charging Estacio with gross negligence of duty. A formal investigation/hearing then ensued, during
which petitioner Estacio was duly represented by counsel. The investigating committee, in the report it submitted to
respondent Engr. Allas on 23 October 2002, found petitioner Estacio guilty of dishonesty and gross negligence of duty
under Section 6.4203[8] and Section 6.6,204[9] respectively, of Board Policy No. 01-04 dated 23 July 2001; and recommended
her dismissal from service with forfeiture of benefits.205[10]
On 25 October 2002, respondent Engr. Allas rendered a Decision which adopted the recommendation of the
investigation committee dismissing petitioner Estacio from service, with forfeiture of her benefits, effective 28 October
2002; with the modification deleting the charge of dishonesty.206[11] Petitioner Estacio sought a reconsideration of the said
decision but it was denied by respondent Engr. Allas.
In the same Audit Findings at the San Luis Area Office submitted to respondent Engineer Allas on 22 August
2002, Internal Auditor Lorenzo reported that petitioner Manliclic, a bill collector, failed to remit to respondent PELCO I
management his collection amounting to P4,813.11, as of 20 August 2002. Respondent Engr. Allas issued a
Memorandum dated 6 September 2002 directing petitioner Manliclic to explain in writing, within 48 hours from receipt
200
201
202
203
204
205
206

thereof, why no disciplinary action should be taken against him for committing offenses against respondent PELCO I
properties,207[12] under Section 2.1 of Board Policy No. 01-04 dated 23 July 2001.
On 11 September 2002, petitioner Manliclic submitted his written explanation 208[13] admitting the he used the
amount of P4,813.11 from his collection to cover pressing family obligations and requesting two months to pay the same.
With this admission, respondent Engr. Allas issued another Memorandum 209[14] dated 28 September 2002 dismissing
petitioner Manliclic from service effective 1 October 2002, with forfeiture of benefits.

Petitioner Manliclic sought

reconsideration210[15] of his dismissal, but was rebuffed by respondent Engr. Allas in the latters letter 211[16] dated 10 October
2002, which reads:
Your letter of reconsideration detailed in full the manner by which the amount of P4,813.11
was misappropriated. You admitted having lend (sic) to Joselito Ocampo the sum of P3,719.75 and
this is supported by the affidavit of admission of said Mr. Joselito Ocampo which was duly notarized
by Notary Public, Juan Manalastas. Thus, said affidavit is taken by management as gospel truth.
This affidavit does not however exculpate you from the offense of misappropriation, defined
and penalized under Section 2, paragraph 2.1 ON COOP FUNDS (2.1.2, 2.1.3 & 2.1.4) of the Board
Policy No. 27-96 and Administrative Policy No. 10-89.
If we may inform you the money you collected are held in trust by you so that you have to
remit the same to the cooperative (San Luis Area Office) at the proper time.
You should not take the liberty of lending them to any co-employee because you have to
account for them to the last centavo at the end of the collection day.
In view of the foregoing, it is sad to say that your letter of reconsideration is hereby
denied.212[17]
From respondent Engr. Allas actions on their administrative case, petitioners Estacio and Manliclic separately
filed with the Board of Directors of respondent PELCO I their memoranda of appeal. 213[18] The Board of Directors of
respondent PELCO I subsequently passed two resolutions, with essentially the same contents, i.e., Resolutions No.
38214[19] dated 15 November 2002 and No. 39, 215[20] dated 25 November 2002, respectively. In said Resolutions, the Board
of Directors of respondent PELCO I reinstated petitioners to their positions without loss of seniority, and ordered
respondent Engr. Allas to pay in full the salaries and other incentives accruing to petitioners after deducting the first 15
days of their suspension.
Notwithstanding the approval of Resolutions No. 38 and No. 39, respondent Engr. Allas refused to reinstate
petitioners and proceeded to dismiss them from service. Addressing the Board of Directors of respondent PELCO I,
respondent Engr. Allas stated in his letter dated 29 November 2002216[21]:
The act of reducing their penalties is a gross abuse of authority and commission of acts inimical to the
interest of the cooperative and the public at large because you have no authority to do so since Board
Policy No. 01-04 of PELCO I clearly provides the penalty of dismissal for the offenses they were
found guilty. Your honors authority to act is governed by the rules as provided in the aforesaid Board
207
208
209
210
211
212
213
214
215
216

Policy. Going beyond that is abuse of authority instead of protecting the interest of the cooperative
you protected the employees who through their acts depleted the earnings and funds of the
cooperative.
In a letter dated 9 December 2002 by Regional Director Alberto A. Guiang of the National Electrification
Administration (NEA) to the Board of Directors of respondent PELCO I, he wrote:
THE BOARD OF DIRECTORS
Pampanga I Electric Cooperative, Inc. (PELCO I)
Mexico, Pampanga
Gentlemen:
This has reference to your Board Resolution No. 38 and 39 series of 2002, granting the
letters of appeal of Ms. Chona Estacio and Mr. Leopoldo Manliclic for reinstatement of their positions
to the PELCO I workforce.
While we appreciate your concern to the coop operation, we wish to call your attention to
the NEA Guidelines dated 27 January 1995, specifying the delineation of Roles of EC Board of
Directors and General Managers, and on Memorandum No. 35. Accordingly, the Board is not vested
with the authority to hire and fire nor rehire employees. The General Manager is the only authorized
official for this matter, while the Board has to formulate policies nor guidelines only for the GM to
implement.
This office carefully reviewed the facts surrounding the issues raised by the concerned
parties, and we found that due process was undertaken after rendering the decision by the General
Manager on this matter, and should be enforced. This is healthy move of eradicating dishonesty and
inefficiency among the employees. Thus, the disapproval of the above resolutions.
Thank you.
Very truly yours,
(SGD)ALBERTO A. GUIANG217[22]
NEA through Regional Director Alberto A. Guiang issued another letter to the Board of Directors of respondent
PELCO I dated 10 December 2002 stating that it was disapproving Resolution No. 39 issued by the Board of Directors of
respondent PELCO I granting the letter of appeal of petitioners.218[23]
The foregoing events prompted petitioners to file with the NLRC, Regional Arbitration Board (RAB)-III, City of
San Fernando, Pampanga, their Complaints219[24] against respondents for illegal dismissal and payment of backwages, 13th
month pay, and other benefits. The Complaints were docketed as NLRC Case No. RABIII-03-5517-03.
In a Decision dated 30 April 2004, the Labor Arbiter ruled in favor of respondents, for the following reasons:
Respondents under their onus were required to show that [herein petitioners] were
dismissed for cause.
As to [petitioner] Chona Estacio respondents contended that she was guilty of gross
negligence of duty under sec. 6.6.6. of its Employees Code of Discipline (Board Policy 01-04).
Respondents have shown that [petitioner] Estacio failed to carry out her duties and responsibilities as
a bill custodian per the latters job description more particularly no. 2 and no. 3 of her detailed duties,
namely:
2. Maintains an accurate record of all Official Electric Bill Receipts
(OERB) issued to and returned by collectors, and sees to it that the same are
properly signed or initialed by the collector as clearance to any accountability;
217
218
219

3. Accounts and ascertains on a daily basis the total bills collected

and uncollected by collectors and those bills paid in the office by consumers
through the maintenance of bill route control and related record (Annex 1 of
respondents Reply).
It was likewise shown that this infraction carries the penalty of dismissal. Record also
showed that the requirements of procedural due process was afforded the [petitioner] before she was
finally separated.
In the case of [petitioner] Manliclic, respondents were able to show with the admission of
the former that sec. 2, subsection 2.1, pars. 2.1.2 to 2.1.4 of Board Policy No. 01-04 were violated by
[petitioner]. The same violations carry the penalty of dismissal. The procedural requirements of
notice and hearing were likewise afforded [petitioner] Manliclic before he was finally terminated.
In view of the above, we hold that there is no illegal dismissal.220[25]
In the end, the Labor Arbiter decreed:
WHEREFORE, premises considered, judgment is hereby rendered dismissing instant
complaint for illegal dismissal for lack of merit.
However, respondents are held liable and ordered to pay [petitioners] the following:
13th month pay

Service Incentive
Leave pay
1. Chona Estacio
2. Leopoldo Manliclic

P5,765.19
8,294.19

P5,074.03
6,596.25

All other claims are hereby dismissed for utter lack of merit.221[26]
Disgruntled with the Labor Arbiters Decision, petitioners appealed to the NLRC. The appeal was docketed as
NLRC-NCR Case No. 040757-04.
The NLRC, in its Decision dated 30 June 2005, disagreed with the Labor Arbiter:
There is nothing on record showing that Resolution No. 39, Series of 2002 is null and void.
Neither is there any evidence on record showing that there is legal basis to hold the December 9 and
10, 2002 letters of Alberto A. Guiang, Regional Director, National Electrification Administration (NEA),
Regional Electrification Office III as having nullified Resolution No. 39, Series of 2002. For what the
mentioned letters may be worth, we are convinced they were nothing but mere opinions which bear
no weight on the labor dispute obtaining between complainants and respondents.
Verily,
complainants employer is Pampanga I Electric Cooperative, Inc. (PELCO), not the National
Electrification Administration (NEA).
Finally, jurisprudence teaches us that the Court, out of its concern for those less privileged
in life, has inclined towards the worker and upheld his cause on his conflicts with the employer
(Revidad vs. NLRC, 245 SCRA 356). Time and again we have held that should doubts exist between
the evidence presented by the employer and the employee, the scales of justice must be tilted in
favor of the latter (Asuncion vs. NLRC, G.R. No. 129329, July 31, 2001). This favored treatment is
directed by the social justice policy of the Constitution (Article II of the 1987 Constitution), and
embodied in Articles 3 and 4 of the Labor Code.222[27]
The dispositive portion of the NLRC Decision223[28] reads:

220
221
222
223

WHEREFORE, premises considered, the decision appealed from is hereby MODIFIED.

The findings a quo dismissing the complaint for illegal dismissal is REVERSED and SET
ASIDE and a new one entered finding [herein petitioners] to have been illegally dismissed by
respondents. Accordingly, respondents are hereby ordered to reinstate [petitioners] and pay them
backwages pursuant to Article 279 of the Labor Code. The rest of the assailed decision is
AFFIRMED.
Let the Arbitration Branch of origin render the appropriate computations of [petitioners]
backwages.224[29]
Respondents filed a Motion for Reconsideration 225[30] of the NLRC Decision dated 30 June 2005, asking the
Commission to affirm, instead, the Decision dated 30 April 2004 of the Labor Arbiter which dismissed petitioners
Complaints for illegal dismissal for lack of merit.
On 24 January 2006, the NLRC promulgated its Resolution 226[31] denying respondents Motion for
Reconsideration.227[32]

Respondents elevated their case to the Court of Appeals via a Petition for Certiorari, under Rule 65 of the 1997
Rules of Civil Procedure, docketed as CA-G.R. SP No. 93971.
In a Decision dated 29 May 2008, the Court of Appeals held:
We agree with the [herein respondents], who was joined by the Labor Arbiter in their
stance, pointing out that if only [herein petitioner] Estacio had conscientiously performed her duties in
accordance with the revised job description of a bill custodian, then the unremitted collection of
P123,807.14, representing different collection periods from July 3, 5, 6, 10, 23, 26, 27, 31 to August 1,
3, 5, 7, 2002, in the hands of the bill collector could have been discovered earlier and could not have
accumulated to a bigger amount. [Petitioner] Estacios excuse that if she was not able to update the
records of the Bill Custodian at the time when the audit was made on August 9, 2002, it is because
due to the abnormal weather condition on the month of July 2002 when San Luis and Candaba were
flooded, was correctly rejected by [respondents] for being insufficient justification since the whole
month of July 2002 was not flooded and she was only on leave for a total of five (5) days.
So also, from the evidence adduced by [respondents], it has been adequately established
that [herein petitioner] Manliclic violated Section 2.1 of the Revised Employees Code of Discipline
under Board Policy No.` 01-04 for failure on his part to remit/turn-over his collection to the
management and misappropriating the same for his own personal use and benefit, constituting
serious misconduct.228[33]
The Court of Appeals disposed of CA-G.R. SP No. 93971, thus:
WHEREFORE, premised considered, the instant petition is GRANTED. The assailed
Decision dated June 30, 2005 and the Resolution dated January 24, 2006 rendered by public
respondent NLRC are hereby ANNULLED and SET ASIDE. The Decision dated 30 April 2004 of the
Labor Arbiter in NLRC Case No. RAB-III-03-5517-03 is REINSTATED.229[34]
Petitioners did not file a Motion for Reconsideration to the Court of Appeals.

224
225
226
227
228
229

Petitioners now come to this Court raising the following issues in the instant Petition:
I.

WHETHER OR NOT THE DECISION OF THE COURT OF APPEALS IS IN

ACCORDANCE WITH LAW AND APPLICABLE DECISION OF THE SUPREME COURT
AND ITS FINDINGS AND CONCLUSIONS WHICH ARE BASED ON MISAPPREHENSION
OF FACTS WITHOUT CITATION OF SPECIFIC EVIDENCE OF WHICH THEY ARE
PREMISED DUE TO THE APPARENT REASON THAT THEY WERE NOT SUPPORTED
BY EVIDENCE AND CONTRADICTED BY RECORDS, SHALL PREVAIL OR
PREPONDERATE OVER THE DECISION OF THE NLRC, WHICH IS SUPPORTED BY
EVIDENCE ADDUCED BY BOTH PARTIES, LAWS, APPLICABLE JURISPRUDENCE AND
CONSTITUTIONAL PROVISIONS.

II.

WHETHER OR NOT THE COURT OF APPEALS ACTED IN ACCORDANCE WITH

EVIDENCE ON RECORD, APPLICABLE LAWS AND JURISPRUDENCE WHEN IT RULED
THAT RESOLUTIONS NOS. 38 AND 39 GRANTING THE LETTERS OF APPEAL OF
ESTACIO AND MANLICLIC AND ORDERING THEIR REINSTATEMENT WITHOUT LOSS
OF SENIORITY RIGHTS AND THE PAYMENT OF THEIR BACKWAGES INVALID.

III

WHETHER OR NOT THE COURT OF APPEALS ACTED IN ACCORDANCE WITH LAWS,

ESTABLISHED JURISPRUDENCE AND CONSTITUTIONAL MANDATES WHEN IT
RULED THAT RESPONDENT ALLAS AS GENERAL MANAGER OF PELCO I HAS THE
SOLE PREROGATIVE AND POWER TO SUSPEND AND/OR DISMISS THE EMPLOYEES
OF PELCO I, BASED ON NATIONAL ELECTRIFICATION ADMINISTRATION BULLETIN
NO. 35.

IV.

WHETHER OR NOT THE FINDINGS OF THE COURT OF APPEALS COMMITTED

SERIOUS ERRORS IN IGNORING OR THRUSTING ASIDE THE UNDISPUTED FACTS
THAT THE PETITION FOR CERTIORARI FILED BY ALLAS TO THE COURT OF
APPEALS WHICH WAS VERIFIED BY HIM WITHOUT BOARD RESOLUTION OF PELCO
I BOARD OF DIRECTORS ASSAILING OR QUESTIONING RESOLUTIONS NO. 38 AND
39 OF PELCO I BOARD OF DIRECTORS DISCLOSED HIS LACK OF LEGAL
PERSONALITY CONSIDERING THAT THE LATTER IS THE GOVERNING BODY OF
PELCO I, AND HAS THE DIRECT INTEREST AND CONTROL OF ITS CORPORATE
POWERS AND IN OVERLOOKING OR DISREGARDING THE FACT THAT RESOLUTION
NO. 53-06 BELATEDLY ISSUED BY ANOTHER SET OF MEMBERS OF BOARD OF
DIRECTORS OF PELCO I ATTACHED BY ALLAS IN A MOTION FOR
RECONSIDERATION IN EFFECT RATIFIED OR CONSENTED ALLAS PETITION
QUESTIONING OR ASSAILING PELCO I BOARD OF DIRECTORS VERY OWN
RESOLUTIONS NO. 38 AND 39 EARLIER PROMULGATED BY DIFFERENT SET OF
MEMBERS OF BOARD OF DIRECTORS, DEBAR OR PRECLUDE PELCO I FOR DOING
SO, FOR IT IS AN OBVIOUS INSTANCE OF ESTOPPEL AND LACHES AND AN
ELOQUENT PROOF OF AFTERTHOUGHT.

V.

WHETHER OR NOT RESOLUTIONS NO. 38 AND 39 WHICH WAS (sic) UPHELD BY THE
NLRC IS IN ACCORDANCE WITH LAW, SETTLED JURISPRUDENCE AND
CONSTITUTIONAL MANDATES.230[35]

Before delving into the substantial issues in this case, the Court must first resolve the procedural issue of
whether respondent Engr. Allas had the legal personality to file before the Court of Appeals the Petition in CA-G.R. SP No.
93971.
The Court answers in the affirmative.
It bears to stress that petitioners themselves filed their Complaints before the NLRC against both respondents
PELCO I and Engr. Allas. Respondent Engr. Allas participated in the proceedings before the Labor Arbiter and the NLRC.
As a party aggrieved by the NLRC decision and resolution, respondent Engr. Allas had a substantial interest to file with
the Court of Appeals the Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure, on his own
behalf.231[36]

230
231

As for respondent Engr. Allas authority to file the same Petition on behalf of respondent PELCO I, it is
evidenced by Board Resolution No. 53-06,232[37] approved by the Board of Directors of the cooperative on 5 August 2006.
Even though Board Resolution No. 53-06 was belatedly filed, the Court of Appeals rightfully accepted the same. In the
present case, the findings and conclusion of the Labor Arbiter and the NLRC are at odds, and the case concerns a labor
matter to which our fundamental law mandates the state to give utmost priority and full protection. 233[38] Necessarily, this
Court will look beyond alleged technicalities to open the way for resolution of substantive issues. 234[39]
The Court cannot subscribe to petitioners argument that after passing Resolutions No. 38 and No. 39 reversing
petitioners dismissal from service and ordering that they be reinstated and paid their backwages, the Board of Directors
of respondent PELCO I was estopped from subsequently passing Board Resolution No. 53-06. The Board Resolution
authorized respondent Engr. Allas to file the Petition for Certiorari with the Court of Appeals, challenging the NLRC
judgment that petitioners were illegally dismissed.
Estoppel, an equitable principle rooted upon natural justice, prevents persons from going back on their own acts
and representations, to the prejudice of others who have relied on them.235[40]
The party claiming estoppel must show the following elements:
1) lack of knowledge and of the means of knowledge of the truth as to the facts in question;
2) reliance in good faith, upon the conduct or statements of the party to be estopped; and
3) action or inaction based thereon of such character as to change the position or status of
the party claiming the estoppel, to his injury, detriment or prejudice. 236[41]
In this case, the essential elements of estoppel are inexistent.237[42]
The first element is unavailing in the case at bar. Petitioners have the knowledge and the means of knowledge
of the truth as to the facts in question. In issuing Resolutions No. 38 and No. 39, the Board of Directors of respondent
PELCO I relayed its initial determination that petitioners dismissal from service was harsh and drastic. These Resolutions
merely expressed the position of the Board of Directors of respondent PELCO I at the time of their issuance. The
subsequent passing of Board Resolution No. 53-06 by the same Board of Directors of respondent PELCO I, explicitly
conveyed a change of mind, i.e., the Board now wanted to contest, through respondent Engr. Allas, the finding of the
NLRC that petitioners were illegally dismissed.
Without any basis, the Court cannot conclude that by the mere issuance of Board Resolution No. 53-06, the
Board of Directors of respondent PELCO I committed false representation or concealment of material facts in its earlier
Resolutions No. 38 and No. 39. What is apparent to this Court, on the face of these Resolutions, is that the Board of
Directors of respondent PELCO I eventually arrived at a different conclusion after reviewing the very same facts, which it
considered for Resolutions No. 38 and No. 39.

232
233
234
235
236
237

Also, Board Resolution No. 53-06 was unanimously passed by all the directors of respondent PELCO I. There
is no allegation, much less, evidence, of any irregularity committed by the Board in the approval and issuance of said
Board Resolution. Hence, the Court cannot simply brush Board Resolution No. 53-06 aside. Questions of policy and of
management are left to the honest decision of the officers and directors of a corporation (or in this case, cooperative), and
the courts are without authority to substitute their judgment for the judgment of the board of directors. The board is the
business manager of the corporation, and so long as it acts in good faith, its orders are not reviewable by the courts. 238[43]
Moreover, petitioners were unable to establish the third element of estoppel. It bears stressing that if there be
any injury, detriment, or prejudice to the petitioners by the action of the Board of Directors in passing Resolution Nos. 38
and 39 and subsequently Resolution No. 53-06, such injury was due to petitioners own fault. Petitioner Estacio failed to
account for and ascertain on a daily basis a total of 86 bills collected and uncollected by the bill collectors of PELCO I,
resulting in unremitted bills amounting to P123,807.14. In the case of petitioner Manliclic, he admitted having used the
amount of P4,813.111 from his collection. Estoppel is a shield against injustice; a party invoking its protection should not
be allowed to use the same to conceal his or her own lack of diligence.239[44]
To be sure, estoppel cannot be sustained by mere argument or doubtful inference; it must be clearly proved in
all its essential elements by clear, convincing and satisfactory evidence.240[45]
The Court then proceeds to resolve the substantive issue of whether petitioners were illegally dismissed by
respondents.
The requisites for a valid dismissal are: (a) the employee must be afforded due process, i.e., he must be given
an opportunity to be heard and defend himself; and (b) the dismissal must be for a valid cause as provided in Article
282241[46] of the Labor Code or for any of the authorized causes under Articles 283242[47] and 284243[48] of the same Code.
Well-settled is the rule that the essence of due process is simply an opportunity to be heard or as applied to
administrative proceedings, an opportunity to explain one's side or an opportunity to seek a reconsideration of the action
or ruling complained of.244[49]
It is undisputed that petitioners were accorded due process. Through the Memoranda issued by respondent Engr.
Allas, petitioners were duly informed of the results of the audit conducted by Internal Auditor Lazaro, which were
unfavorable to petitioners. Petitioners were given a chance to submit their written explanations. As to petitioner Estacio,
a formal hearing/investigation was even conducted by an investigating committee. Only thereafter, did respondent Engr.
Allas notify petitioners Estacio and Manliclic, through a Decision dated 25 October 2002 and Memorandum dated 28
September 2002, respectively, that they were found guilty of the charges against them and were being dismissed from
service. Both petitioners had the opportunity to seek reconsideration of their dismissal.
The Court also finds that there was valid cause for petitioner Estacios dismissal.

238
239
240
241
242
243
244

Petitioner Estacio was dismissed from service for the commission of an offense under Board Policy No. 01-04
dated 23 July 2001 of respondent PELCO I, particularly:
Section 6.6 On Negligence of Duty
6.6.6

Gross negligence in assigned tasks/duties as specified in the job description.

Gross negligence connotes want or absence of or failure to exercise even slight care or diligence, or the total
absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. To
warrant removal from service, the negligence should not merely be gross, but also habitual. 245[50] A single or isolated act of
negligence does not constitute a just cause for the dismissal of the employee.246[51]
In JGB and Associates, Inc. v. National Labor Relations Commission,247[52] the Court further declared that gross
negligence connotes want of care in the performance of ones duties. Habitual neglect implies repeated failure to perform
ones duties for a period of time, depending upon the circumstances. Fraud and willful neglect of duties imply bad faith of
the employee in failing to perform his job, to the detriment of the employer and the latters business.
To determine if indeed petitioner Estacio was grossly negligent in the performance of her duties, the Court must
first understand what her duties were. Petitioner Estacio, as a bill custodian of respondent PELCO I
1)

Issues and accounts all electric bills issued to and returned by collectors as well as paid
office bills and shall be accountable and liable for all uncollected bills under his/her custody.

2)

Maintains an accurate record of all Official Electric Bill Receipts (OEBR) issued to and
returned by collectors, and sees to it that the same are properly signed or initialed by the
collector as clearance to any accountability.

3)

Accounts and ascertains on a daily basis the total bills collected and uncollected by
collectors and those bills paid in the office by consumers through the maintenance of bill
route control and related records;

4)

Prepares listings of delinquent consumers due for disconnection;

5)

Issues or certifies to the clearance of accounts of consumers before reconnection or

change of billing names is effected.

6)

Issues bills due from employees to be deducted from their respective pay and
correspondingly logs the same in the bill route control;

7)

Files in an orderly and systematic manner all the pertinent electric bills and other related
documents in her possession for easy access and reference;

8)

Performs other duties that may be assigned from time to time.248[53]

There is no more question that petitioner Estacio did fail to account for and record the bill collections for eight
days of July and four days of August 2002. As a result of petitioner Estacios improper accounting and records keeping,
the amount of P123,807.14 remains unremitted to respondent PELCO I. As correctly observed by the investigating
committee of PELCO249[54]:

245
246
247
248
249

From the record of the case and investigation conducted it appears that Ms. Estacio as the
designated Bill Custodian at San Luis Area Office is responsible for the safekeeping of consumers of
electric bills especially the unpaid or uncollected bills. That for control and accounting purposes, she
has to account daily all collected and uncollected bills in her custody including the bills paid in the
office. That in issuing the bills to the bill collectors, she has to maintain an accurate record which is
the basic tool in maintaining and controlling all the bills in her possession. Then in case the collectors
do not return the bills uncollected and do not make a report of the collected bills in a day, as Bill
Custodian, it is also her duty to require the collectors to return the bills and make a report of the
collected bills. If the collector still failed to do such, the custodian should report the matter to the
immediate supervisor or Area Manager. But sad to say Ms. Estacio failed to perform all the above
stated duties which resulted to the accumulation of unremitted bills (86) amounting to P123,807.14.
If only Ms. Estacio is performing her duties as Bill Custodian in accordance with what is
prescribed on the job description these unremitted collections could have been discovered earlier and
did not accumulate to a bigger amount.
Petitioner Estacio, despite the opportunities given to her, did not offer any satisfactory explanation or evidence
in her defense. Her only reason for failing to comply with the requisite daily accounting and reporting of the bill collections
was the terrible weather condition during the month of July 2002, which resulted in the flooding of the San Luis and
Candaba area in Pampanga, hence, keeping her from going to work. Like the investigating committee, the Labor Arbiter,
and the Court of Appeals, this Court is unconvinced. Petitioner Estacio was on leave for only five days of July 2002. She
had the occasion to update her records on the bill collections during the other days of July and August 2002, when the
weather was fine and she was able to report for work; yet, she still did not do so. She waited until her infraction was
discovered during the conduct of the internal audit, only to proffer a feeble excuse.
Petitioner Estacios failure to make a complete accounting and reporting of the bill collections plainly
demonstrated her disregard for one of her fundamental duties as a bill custodian. It was an omission repeated by
petitioner Estacio for several days, spanning several billing periods for July and August 2002; thus, she allowed, during
the said period, the accumulation of the amounts unremitted by bill collectors to respondent PELCO I, until these reached
the substantial amount of P123,807.14. All the foregoing considered, the Court can only conclude that there was valid
cause to dismiss petitioner Estacio for gross and habitual negligence.
Similarly, the Court rules that there is valid cause for petitioner Manliclics dismissal from service.
To recall, petitioner Manliclic, a bill collector, admitted to having used the amount of P4,813.11 from his
collection, lending P3,719.75 thereof to a Joselito Ocampo and presumably keeping the rest to himself. This qualifies as
an offense against properties of respondent PELCO I, which may be committed by any of the means described in Section
2.1 of Board Policy No.01-04 dated 23 July 2001, to wit:
2.1.1.
Malversation of Coop funds or other financial securities and such other funds or other
financial securities in the care and custody of or entrusted to the Coop for which it maybe held liable.
2.1.2.
Failure to remit collection and/or failure to turn-over materials/equipments due the Coop
within the required period of time pursuant to Coop policies and rules and regulations. (Depending on
the gravity as a result of the offense.)
2.1.3. Malversing/misappropriating or withholding Coop funds or any attempt/frustration thereof.250[55]
In Piedad v. Lanao del Norte,251[56] Warlito Piedad was a bill collector with the Lanao del Norte Electric
Cooperative. Upon audit, Piedad was found to have incurred a shortage in his cash collection in the amount of P300.00.
He acknowledged having used said amount. The Court affirmed Piedads termination from service on account of such
250
251

shortage, despite his having rendered nine years of unblemished service and being awarded as Collector of the Year. We
expostulated in that case that it was neither with rhyme nor reason that the petitioner was dismissed from employment.
His acts need not have resulted in material damage or prejudice before his dismissal on grounds of loss of confidence
may be effected. Being charged with the handling of company funds, the petitioners position, though generally described
as menial, was, nonetheless, a position of trust and confidence. No company can afford to have dishonest bill collectors.
In Garcia v. National Labor Relations Commission,252[57] Evelyn Garcia, a cashier at a school, committed several
irregularities in handling school funds. The Court upheld her dismissal from service on the ground of breach of trust.
Bearing in mind that the position of cashier is a highly sensitive position, requiring as it does the attributes of absolute trust
and honesty because of the temptations attendant to the daily handling of money, it could not be helped that Garcia's acts
would sow mistrust and loss of confidence on the part of respondent employer.
Petitioner Manliclics honesty and integrity are the primary considerations for his position as a bill collector
because, as such, he has in his absolute control and possession -- prior to remittance -- a highly essential property of the
cooperative, i.e., its collection. Respondent PELCO I, as the employer, must be able to have utmost trust and confidence
in its bill collectors.
The amount misappropriated by petitioner Manliclic is irrelevant. More than the resulting material damage or
prejudice, it is petitioner Manliclics very act of misappropriation that is offensive to respondent PELCO I. If taxes are the
lifeblood of the state, then, by analogy, the payment collection is the lifeblood of the cooperative. The collection provides
respondent PELCO I with the financial resources to continue its operations. Respondent PELCO I cannot afford to
continue in its employ dishonest bill collectors.
By his own admission, petitioner Manliclic committed a breach of the trust reposed in him by his employer,
respondent PELCO I. This constitutes valid cause for his dismissal from service.
WHEREFORE, premises considered, the instant Petition is DENIED and the Decision dated 29 May 2008 of
the Court of Appeals in CA-G.R. SP No. 93971 is AFFIRMED. No costs.
SO ORDERED.

252

THIRD DIVISION
ST. LUKES MEDICAL CENTER, INCORPORATED,
Petitioner,

G.R. No. 185933

Present:
CORONA, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

- versus -

JENNIFER LYNNE C. FADRIGO, *

Respondent.

Promulgated:
November 25, 2009

x------------------------------------------------------------------------------------x

RESOLUTION
NACHURA, J.:

Petitioner St. Lukes Medical Center, Incorporated (SLMC) appeals by certiorari the August 15, 2008
Decision253[1] of the Court of Appeals (CA) in CA-G.R. SP. No. 98959 and the January 7, 2009 Resolution 254[2] denying its
reconsideration.
Respondent Jennifer Lynne C. Fadrigo (respondent) was the Customer Affairs Department Manager of
petitioner SLMC. As such, respondent supervised the Wellness Program Office (WPO), which administers SLMCs check
up packages.
On April 23, 2005, Dr. Charity Gorospe called up the WPO to refer a patient for immediate check up. The call
was answered by Michelle Rillo (Rillo), a trainee at the front desk, who transferred the call to Hazel Tingzon (Tingzon), a
casual employee. Tingzon explained to Dr. Gorospe the mechanics of undergoing a check up, which could not be
administered immediately as Dr. Gorospe wanted.
Dr. Gorospe informed SLMCs Corporate President, Jose Ledesma (Ledesma), of the incident. Ledesma then
called the WPO to inquire if it was its policy to reject patients, like what it did to Dr. Gorospes referral. The WPO staff
denied that they declined Dr. Gorospes request for immediate admission of her patient, and added that the request for
check up was already being processed for scheduling.
At around 5 oclock in the afternoon of the same day, respondent, who was then at home enjoying her rest day,
received a phone call from SLMCs Associate Director for Corporate Affairs, Marilen Lagniton (Lagniton), informing her
what had transpired at the WPO on that day; and directing respondent to instruct Tingzon and Rillo not to report for duty
the following day. Respondent immediately called the WPO. She was able to talk to Gail Manalastas (Manalastas), a
senior associate, who also relayed to her what had happened in the office. Respondent, however, was not able to talk to
*
253
254

Tingzon and Rillo because the two already went home. She tried to reach them through their cellular phones to inform
them of Lagnitons instruction not to report for work, but respondents efforts proved futile. Thus, respondent instructed
Manalastas to tell Tingzon and Rillo not to work the following day and to wait for her at her office.
In the morning of April 24, 2005, Lagniton called the WPO and found out that Tingzon and Rillo were in the
office. She talked to the two and instructed them to go home. Thus, when respondent arrived in the office, Tingzon and
Rillo had already gone home.255[3]
On April 27, 2005, respondent received a memorandum 256[4] from Lagniton requiring her to show cause why no
disciplinary action should be taken against her for insubordination, gross inefficiency and incompetence due to the April 23
incident. The memorandum stated that respondent allowed a trainee and a casual employee, Rillo and Tingzon, to man
the WPO during official business hours. Likewise, respondent allegedly failed to comply with the management order to
immediately pull out Rillo and Tingzon.
In her letter-reply, respondent denied the charges against her.

She explained that Manalastas, a senior

associate, was present at WPO at the time of the incident. She also denied that she ignored the management directive to
instruct Rillo and Tingzon not to report for work the following day. Respondent further requested for a bill of particulars,
since the memorandum did not state the specific acts or omissions that amounted to insubordination and gross
inefficiency leveled against her.257[5]
On May 4, 2005, Fe Corazon B. Ramos-Muit (Muit), Chairman of SLMCs Committee on Values Ethics and
Discipline (COVED), issued a memorandum requiring respondent to explain in writing why no disciplinary action should be
imposed on the latter for alleged insubordination, gross inefficiency and incompetence; and further informing respondent
of the COVED conference set for May 6, 2005.258[6]
During the COVED conference, respondent reiterated her request for a bill of particulars, but it was denied. The
Committee, likewise, denied respondents request to summon Dr. Gorospe.
On May 16, 2005, respondent received a memorandum259[7] from Muit advising the former of the COVED
decision to terminate her employment effective May 18, 2005. In the presence of several employees, respondent was
subjected to a thorough search by security officers, pursuant to SLMCs directive.260[8]
Claiming termination without cause, respondent filed with the Labor Arbiter a complaint for illegal dismissal with
prayer for reinstatement, and for payment of full backwages, moral damages, as well as attorneys fees, against SLMC
and COVED members, namely: Editha M. Simeon, Fe Corazon R. Muit, Araceli E. Ona, Marilen T. Lagniton, Jovie Anne
M. Monsalud, and Atty. Conrado Dar Santos.
SLMC and the COVED members responded that there was a valid termination. They asserted that respondent
was dismissed for a just cause and with due process. Respondent willfully breached her duty when she allowed a trainee

255
256
257
258
259
260

and a casual employee to man the WPO during official business hours; and when she ignored the management directive
to immediately pull out the personnel involved in the incident, justifying the termination of her employment.
After due proceedings, the Labor Arbiter rendered a decision 261[9] finding respondents dismissal illegal.
According to the Arbiter, SLMC utterly failed to substantiate the charges of insubordination, gross inefficiency and
incompetence against respondent. Her termination from employment was, therefore, without just cause. The Arbiter also
found respondents dismissal without due process and attended by malice and bad faith, justifying the awards of
P1,000,000.00 as moral damages, and P163,051.72 as attorneys fees.
The Labor Arbiter disposed, thus:
WHEREFORE, in view of all the foregoing, [SLMC] is hereby ordered to reinstate
[respondent] to her former position without loss of seniority rights and other privileges and benefits
with full backwages computed from the time of [respondents] illegal dismissal up her actual
reinstatement, which up to this promulgation already amounted to THREE HUNDRED FIFTEEN
THOUSAND TWO HUNDRED FIFTY-EIGHT PESOS and 66/100 (P315,258.66). FURTHERMORE,
[SLMC] is hereby ordered to pay [respondent] the sum of ONE MILLION ONE [HUNDRED] SIXTYTHREE THOUSAND FIFTY-ONE PESOS and 70/100 (P1,163,051.70) as discussed above.
The reinstatement aspect of this decision is immediately executory and [SLMC] is hereby
directed to submit report of compliance within ten (10) calendar days from receipt hereof.
SO ORDERED.262[10]

On appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter. 263[11] It found that
respondent was remiss in her duties as Department Manager for Customer Affairs, particularly in handling the WPO. The
April 23, 2005 incident proved that respondent had not put in place, or at the very least had not made clear, the office
policy on admission of clients which resulted in the fiasco. SLMC, thus, lost its trust and confidence in respondent to head
a critical and significant department. The operation of a hospital, the NLRC explained, is service oriented, as it provides
the public with medical services. Thus, when an employee is guilty of breach of trust or his employer has ample reason to
distrust him, the employees dismissal is justified. Accordingly, the NLRC granted the appeal and dismissed respondents
complaint for illegal dismissal. However, it awarded separation pay, after considering respondents exemplary
performance in her five years stay with SLMC. Thus:
WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and
correspondingly, the complaint for illegal dismissal is dismissed for lack of merit. However, consistent
with our adherence to the principles of social justice, the payment of separation pay equivalent to
one-half (1/2) month salary per every year of service is awarded to [respondent].
SO ORDERED.264[12]
Respondent filed a motion for reconsideration, but the NLRC denied it.
Respondent then elevated the NLRC ruling via certiorari to the CA, which rendered the now assailed
Decision265[13] reversing the NLRC and reinstating, but with modification, the Labor Arbiters decision. The CA sustained
the Arbiters finding that respondent committed no insubordination of such willful and intentional character amounting to a
wrongful and perverse attitude as would warrant her dismissal. It also failed to perceive any gross inefficiency on the part
261
262
263
264
265

of respondent. The assignment of a casual employee and a trainee to the WPO, it held, could hardly constitute gross
inefficiency. It added that the April 23, 2005 incident was either a misunderstanding or a case of someone wanting to
have something done without following hospital procedure. The CA, therefore, held that no just cause exists to warrant
respondents dismissal. Respondent is, thus, entitled to reinstatement with backwages. The CA, however, ruled that
reinstatement is no longer viable considering that respondent no longer enjoys SLMCs full trust and confidence; thus, in
lieu of reinstatement, the CA ordered the payment of separation pay equivalent to at least one month pay, or one month
pay for every year of service, whichever is higher. Both backwages and separation pay should be computed from the
date of illegal dismissal until the finality of the decision. The CA further reduced the award of moral damages from
P1,000,000.00 to P100,000.00.
The dispositive portion of the CA Decision reads:
WHEREFORE, premises considered, the petition is GRANTED and the assailed October
31, 2006 Decision is, accordingly, NULLIFIED and SET ASIDE. In lieu thereof, the Labor Arbiters
Decision is REINSTATED with MODIFICATIONS, viz: awarding [respondent], in lieu of reinstatement,
separation pay equivalent to one month salary for every year of service; and reducing the award of
moral damages from P1,000,000.00 to P100,000.00.
SO ORDERED.266[14]
SLMC filed a motion for reconsideration, but the CA denied the same in its January 7, 2009 Resolution. 267[15]
Before us, SLMC insists that respondent was validly dismissed. It argues that respondent was a managerial
employee and, as such, the mere existence of a basis for believing that respondent has breached the trust of her
employer would suffice for her dismissal. SLMC asserts that the CA committed reversible error in reversing the NLRC
decision.

266
267

The petition is devoid of merit.

SLMC attributes loss of confidence to respondents alleged gross inefficiency, incompetence and
insubordination. The termination letter reads:
You are charged with allowing a casual reliever and a student trainee to man a frontline desk
unsupervised by a senior staff, failing to document Wellness Program Office operations policies and
procedures as guides for staff to implement, failing to orient new staff, failing to implement corrective
and preventive actions on the most recent previous related incident that occurred on April 6, 2005,
failing to personally report to Management the details of the incident and follow-up reports thereafter,
failing to ensure Management directive is carried out and failure to inform Management of any
changes by you to their directive.
Therefore, it is with deep regret that we find Gross Inefficiency, Incompetence and Insubordination in
the discharge of your duties and responsibilities as Department Manager. Furthermore, you have
made false and inconsistent claims in your letters of explanation dated April 28 and May 5, 2005 as
well as during the May 6, 2005 COVED conference. It would be inadvisable to consider retaining you
as a Department Manager of the Medical Center as there is no reason for the Management to further
provide you with the trust and confidence that your position entails. In considering the pertinent facts
of the case, the COVED is constrained to decide against your favor.
We regret to inform you that your services are Terminated effective May 18, 2005. x x x.268[16]
Gross inefficiency is closely related to gross neglect, for both involve specific acts of omission on the part of the
employee resulting in damage to the employer or to his business. 269[17]

As a just cause for an employee's dismissal,

inefficiency or neglect of duty must not only be gross but also habitual. Thus, a single or isolated act of negligence does
not constitute a just cause for the dismissal of the employee.270[18]
We reviewed the records before us and we did not see any gross and habitual neglect or gross inefficiency on
the part of respondent that would justify her termination from employment. As aptly pointed out by the Labor Arbiter:
[SLMC] has not cited any specific policy prohibiting such assignment of casuals and trainees under
pain of dismissal from employment. On the other hand, we find [respondents] explanation for such a
situation reasonable, i.e., it is a practice resorted to due to lack of manpower and managements
reluctance to hire regular employees. Furthermore, as explained by [respondent], there was in fact a
senior staff (regular employee) in the person of Ms. Gail Manalastas assigned to the 7 a.m. to 4 p.m.
shift on that particular day.271[19]

Neither can SLMC validate respondents termination on the ground of gross inefficiency for her alleged failure to
document WPO policies, to orient new staff, and to act on the incident of April 6, 2005, for no convincing evidence was
offered to prove the allegation. Likewise, the alleged failure was never included in the show cause memorandum given to
respondent, which strengthens our belief that this allegation was a mere afterthought to try to justify the illegal dismissal.
Furthermore, respondents alleged inefficiency or neglect of duty, assuming this to be true, does not appear to
be habitual that would constitute a just cause for the termination of her employment. In her five-year stay with SLMC,
respondent had shown exemplary performance, evidenced by the testimonials and commendations given to her. 272[20]
Clearly, SLMC cannot justify respondents termination on the ground of gross inefficiency or gross neglect of duty.

268
269
270
271
272

SLMC also attributes loss of confidence to respondents alleged insubordination.

Willful disobedience or insubordination, as alleged in this case, necessitates the concurrence of at least two
requisites: (1) the employee's assailed conduct must have been willful, that is, characterized by a wrongful and perverse
attitude; and (2) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to
the duties which he had been engaged to discharge. 273[21] The facts of this case do not show the presence of the first
requisite.
As the CA had taken pains to explain:
[Respondent] committed no insubordination of such willful and intentional character amounting to a
wrongful and perverse attitude as would warrant the penalty of dismissal. The order coming from
management to pull out the casual and trainee staff came through sometime after five oclock in the
afternoon of April 22, 2006 (sic) when said staff had already left the office. Even then, [respondent]
tried to call up the two (2) on their mobile phones as well as send text messages to them but to no
avail. In the end, [respondent] left instructions with two (2) of her senior associates at the WPO who
would be present at the office the following day not to allow the casual and trainee staff to work
anymore but to just let them wait for her in her office so that she could personally inform them of
managements decision to pull them out.
Under the circumstances, we find that [respondent] did the best that she could possibly do
to comply with managements orders. Furthermore, it appears from the records that although the
casual and trainee staff(s) were indeed present the following day, they were in fact no longer allowed
to handle any work at the WPO. They merely waited for [respondent] to arrive. Management appears
to have concluded that just because the two (2) were at the WPO, they were still allowed to work,
which was not the case. Being their immediate supervisor, [respondents] act of making them wait for
her in her office so she could personally inform them of their dismissal is understandable. We see
nothing wrong with that it is even humane, to say the least.274[22]
Undoubtedly, respondent cannot be dismissed for loss of confidence arising from alleged gross inefficiency and
insubordination.
We are not unmindful of the employers right to dismiss an employee based on fraud or willful breach of trust.
However, the loss of confidence must be based not on an ordinary breach by the employee of the trust reposed in him by
the employer, but, in the language of Article 282(c) of the Labor Code, on a willful breach. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly, or inadvertently. It must rest on substantial grounds and not on the employers arbitrariness,
whims, caprices or suspicion; otherwise, the employee would eternally remain at the mercy of the employer. It should be
genuine and not simulated; nor should it appear as a mere afterthought to justify an earlier action taken in bad faith or as
a subterfuge for causes that are improper, illegal or unjustified. It has never been intended to afford an occasion for
abuse because of its subjective nature. There must, therefore, be an actual breach of duty committed by the employee,
which must be established by substantial evidence. 275[23] In this case, SLMC utterly failed to establish the requirements
prescribed by law and jurisprudence for a valid dismissal on the ground of breach of trust and confidence.
The principle echoed and reechoed in jurisprudence is that the onus of proving that the employee was
dismissed for a just cause rests on the employer,276[24] and the latters failure to discharge that burden would result in a
finding that the dismissal is unjustified.277[25] The CA, therefore, committed no reversible error in not sustaining the legality
of respondents dismissal.
273
274
275
276
277

Article 279 of the Labor Code mandates that an employee who was unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, as well as to other benefits or their monetary equivalent, computed from the time her compensation was
withheld up to the time of her actual reinstatement.278[26] Since the circumstances obtaining in this case do not warrant
respondents reinstatement due to her strained relations with SLMC, the award by the CA of separation pay, in lieu of
reinstatement, in addition to full backwages, is in order.
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CAG.R. No. 98959 are AFFIRMED.
Costs against petitioner.
SO ORDERED.

Liberal Application of the Rules of Procedure

The Court is unimpressed. The gravity of Maralits infraction demands the relaxation of strict rules of procedure. Strict
rules of procedure may be set aside to serve the demands of substantial justice. Labor cases must be decided according

278

to justice, equity, and the substantial merits of the controversy. In Azul v. Banco Filipino Savings and Mortgage Bank, the
Court held:
The seriousness of petitioners infraction demanded the setting aside of strict rules of procedure as to allow the
determination on the merits of whether he was lawfully dismissed. As held by the Court, the application of technical rules
of procedure may be relaxed to serve the demands of substantial justice, particularly in labor cases, because they must
be decided according to justice and equity and the substantial merits of the controversy.
There is substantial evidence showing that there was valid cause for the bank to dismiss petitioners employment for loss
of trust and confidence. Petitioner was a bank accountant, which is a position of trust and confidence. The amount
involved is significant, almost P4.5 million. (ESTER B. MARALIT v. PHILIPPINE NATIONAL BANK, G.R. No. 163788,
August 24, 2009)

Social Justice
The Court is not unmindful of the equally important right
o f res pond en t as emp lo yer under the Con stitutio n to be protec ted in itsp rop er ty and
interes t. The pa rtic ular c ircu mstan ces a tten da nt in th is c a s e , h o w e v e r , c o n v i n c e
t h e C o u r t t h a t t h e s u p r e m e p e n a l t y o f d ism iss al upo n p etitio ner is not
justifi ed. Th e law reg ards th e wo rker s with compassion. Even where a worker has committed an
infraction of c omp an y ru les a nd reg ulatio ns , a pena lty less punitive than dis missa l m a y
s u ffi c e . T h i s i s n o t o n l y b e c a u s e o f t h e l a w ' s c o n c e r n f o r t h e w o r k i n g m a n .
T h e r e i s , i n a d d i t i o n , h i s f a m i l y t o
c o n s i d e r . U n e m p l o y m e n t b r i n g s u n t o l d h a r d s h i p s a n d
s o r r o w s o n t h o s e
61
d e p e n d e n t u p o n t h e w a g e - e a r n e r . ( A B E L A R D O P . A B E L v . P H I L E X MINING
CORPORATION, G.R. No. 178976, July 31, 2009)