MARAGUINOT, JR. et al vs. NLRC and VIVA FILMS depends on the availability of movie projects.
As a consequence,
FACTS: Maraguinot, Jr. maintains that he was employed by private
respondents (Vic Del Rosarion and Viva Films) as part of the filming
crew. About four months later, he was designated Assistant
Electrician, in which his salary increased. He was promoted to the rank
of Electrician, which again increased his salary. Petitioner Enero, on his
part, claims that private respondents employed him as a member of
the shooting crew.
Petitioners' tasks consisted of loading, unloading and arranging movie
equipment in the shooting area as instructed by the cameraman,
returning the equipment to Viva Films' warehouse, assisting in the
"fixing" of the lighting system, and performing other tasks that the
cameraman and/or director may assign.  behalf of VIVA, whose business is to "make" movies. The employment
Sometime, petitioners sought the assistance of their supervisors to
facilitate their request that private respondents adjust their salary in
accordance with the minimum wage law. Mr. Vic del Rosario would
agree to increase their salary only if they signed a blank employment
contract.
As petitioners refused to sign, private respondents forced Enero to go
on leave, then refused to take him back when he reported for wor.
Meanwhile, Maraguinot was dropped from the company payroll, but
was returned. He was again asked to sign a blank employment
contract, and when he still refused, private respondents terminated
his services. Petitioners thus sued for illegal dismissal  before the
Labor Arbiter.
ARGUMENT OF VIC AND VIVA FILMS:
Private respondents claim that Viva Films is primarily engaged in the
distribution and exhibition of movies - but not in the business of
making movies; in the same vein, Vic del Rosario is merely an
executive producer, i.e., the financier who invests a certain sum of
money for the production of movies distributed and exhibited by
VIVA.  VIVA's control is evident in its mandate that the end result must
Private respondents assert that they contract persons called
"associate producers" - to "produce" or make movies; and contend
that petitioners are project employees of the association producers
who, in turn, act as independent contractors. Hence, there is no
employer-employee relationship between petitioners and private
respondents.
It was the associate producer of the film "Mahirap Maging Pogi," who
hired petitioner Maraguinot. Maraguinot was released upon payment
of his last salary, as his services were no longer needed. Anent
petitioner Enero, he was hired for the movie entitled "Sigaw ng Puso,"
later re-tired "Narito and Puso." He went on vacation, and by the time
he reported for work, shooting for the movie had already been
completed.  petitioners' salaries as evidenced by vouchers, containing VIVA's
LA: Complainants were illegally dismissed.
Complainants are the employees of the respondents. The
producer cannot be considered as an independent contractor but
should be considered only as a labor-only contractor and as such, acts
as a mere agent of the real employer (respondents). It is an admitted
fact that the complainants received their salaries from the
respondents. It is very clear also that complainants are doing
activities which are necessary and essential to the business of the
respondents, that of movie-making.
NLRC: Concluded that circumstances indicated that complainants
were "project employees."
The work of the shooting units are not continuous in nature but
complainants have an irregular work load and schedule. However,
complainants were paid a standard weekly salary regardless of the
number of working days and hours they logged in. They were not
prohibited from working with other movie companies whenever they
are not working for the independent movie producers engaged by
respondents.
ISSUE: Whether petitioners are project employees of associate
producers who, in turn, act as independent contractors.
HELD: NO. The relationship between VIVA and its associate
producers seems to be that of agency, as the latter make movies on
relationship is actually one between petitioners and VIVA, with the
latter being the direct employer.
Private respondents' evidence reveals that the movie-making
equipment are supplied to the producers and owned by VIVA. It is thus
clear that the associate producer merely leases the equipment from
VIVA.This only shows that the associate producer did not have
substantial capital nor investment in the form of tools, equipment and
other materials necessary for making a movie. Private respondents in
effect admit that their producers are not engaged in permissible job
contracting.
The associate producers of VIVA cannot be considered labor-only
contractors as they did not supply, recruit nor hire the workers. In the
instant case, it was Cesario, Shooting Unit Supervisor and an employee
of VIVA, who recruited crew members from an "available group of
free-lance workers which includes the complainants Maraguinot and
Enero."  This clearly showed that the associate producers did not
supply the workers required by the movie project.
The employer-employee relationship between petitioners and VIVA
can further be established by the "control test."
be a "quality film acceptable to the company." The means and
methods to accomplish the result are likewise controlled by VIVA, viz.,
the movie project must be finished within schedule without exceeding
the budget, and additional expenses must be justified; certain scenes
are subject to change to suit the taste of the company; and the
Supervising Producer, the "eyes and ears" of VIVA and del Rosario,
intervenes in the movie-making process by assisting the associate
producer in solving problems encountered in making the film.
The element of selection and engagement is likewise present in the
instant case and exercised by VIVA.
Notably, nowhere in the appointment slip does it appear that it
was the producer or associate producer who hired the crew members;
moreover, it is VIVA's corporate name which appears on the heading
of the appointment slip. What likewise tells against VIVA is that it paid
letterhead, for that purpose. 
ISSUE: Whether petitioners were illegally dismissed.
HELD: Petitioners had already gained the status of REGULAR
EMPLOYEES.
Private respondents expressly admitted that petitioners were part of a
work pool; and, while petitioners were initially hired possibly as
project employees, they had attained the status of regular employees
in view if VIVA's conduct.
A project employee or a member of a work pool may acquire the
status of a regular employee when the following concur:
1) There is a continuous rehiring of project employees even after
 cessation of a project;  and
2) The tasks performed by the alleged "project employee" are vital,
necessary and indispensable to the usual business or trade of
the employer.  defective or non-functional equipment. He is not allowed to keep the
However, the length of time during which the employee was
continuously re-hired is not controlling, but merely serves as a badge
of regular employment.  items.
In the instant case, the evidence on record shows that petitioner
Enero was employed for a total of 2 years and engaged in at least 18
projects, while petitioner Maraguinot was employed for some 3 years
and worked on at least 23 projects. Moreover, as petitioners' tasks
involved, the loading, unloading and arranging of movie equipment in
the shooting area, returning the equipment to the Viva Films'
warehouse, and assisting in the "fixing" of the lighting system, these
tasks were vital, necessary and indispensable to the usual business or
trade of the employer.
Once a project or work pool employee has been: (1) continuously re-
hired by the same employer for the same tasks or nature of tasks; and
(2) these tasks are vital, necessary and indispensable to the usual
business or trade of the employer, then the employee must be
deemed a regular employee, pursuant to Article 280 of the Labor Code
and jurisprudence.
As petitioners had already gained the status of regular employees,
their dismissal was unwarranted, for the cause invoked, that is,
completion of project, was not a valid cause for dismissal under Article
282 of the Labor Code. Petitioners are entitled to receive full back
wages from the date of their dismissal up to the time of their
reinstatement, without deducting whatever earnings derived
elsewhere during the period of illegal dismissal.
PEREZ et al. vs. THE MEDICAL CITY
FACTS: Prompted by reports of missing medicines and supplies in the
Emergency Room/Trauma Room (ER/TR) and upon the suggestion of
one of the Hospital's staff nurses, the Hospital opened 22 lockers of
employees assigned to the ER/TR. The Hospital found four lockers with
items belonging to it.
4 employees were directed to submit written explanations as to
why these items were inside their lockers. Perez, Campos and Butardo
submitted their written explanations, while Espiritu opted to resign.
An administrative hearing was held. Perez and Campos (petitioners)
were found to have violated category seven of the company rules, a
serious infraction meriting dismissal. The Hospital offered them the
opportunity to voluntarily resign with separation pay, under a clause
provided in the Collective Bargaining Agreement. They refused and the
Hospital dismissed them from the service. Petitioners filed a complaint
for illegal dismissal.
LA: found respondents guilty of illegal dismissal and ordered the
reinstatement of petitioners
NLRC: reversed and the complaint was dismissed.
CA: affirming the decision of the NLRC.
ISSUE: Whether petitioners are illegally dismissed.
HELD: Court finds there was sufficient basis to hold that petitioners
misappropriated hospital property.
Petitioners themselves have admitted that properties belonging
to the Hospital were found inside their lockers. As to how these items
got inside the lockers, petitioners acknowledged having placed them
there against company rules. In view of these admissions, there is
ample evidence to support a charge for pilferage unless petitioners
can satisfactorily explain their possession.
Perez's responsibility is limited to checking and recommending
items but is required to deliver them to the ward clerk who, in turn,
will keep them in the supplies locker until their delivery to the scrap
officer. The Court sees no reason why Perez needed to have such
For Campos, the Court cannot comprehend the need for her to keep
them in her pocket when she can easily get hold of them from the
emergency cart. Also, keeping nebules inside her pocket does not
explain why she had to keep two at a time, as two were found inside
her locker. Lastly, there were other items found in her locker for which
Campos failed to account.
ISSUE: Whether dismissal was the appropriate penalty.
HELD: NO.
The power to dismiss an employee is a recognized prerogative that is
inherent in the employer's right to freely manage and regulate his
business. An employer may not be compelled to continue to employ a
person whose continuance in service will patently be inimical to his
interest. The dismissal of an employee is a measure of self-protection.
The Court agrees with the LA that dismissal would not be
proportionate to the gravity of the offense considering the
circumstances present in this case.
Perez has been an employee of the Hospital for 19 consecutive
years. Campos can lay claim to 7 consecutive years. During their long
tenure with the Hospital, it does not appear that they have been the
subject of disciplinary sanctions and they have kept their records
unblemished. Moreover, the Court also takes into account the fact
that petitioners are not managerial or confidential employees in whom
greater trust is placed by management and from whom greater fidelity
to duty is correspondingly expected. This can be gleaned from the
supervisor's letter explaining that orderlies' duties are limited to
checking equipment and recommending their condemnation.
In previous cases decided by this Court, a number of employees were
granted reinstatement after a determination that their dismissals were
not proportionate to the offense committed.
The REINSTATEMENT of petitioners is in line with the social justice
mandate of the Constitution. Nevertheless, the Court does not
countenance the wrongful act of pilferage but simply maintains that
the extreme penalty of dismissal is not justified and a lesser penalty
would suffice. Under the facts of this case, SUSPENSION would be
adequate. Without making any doctrinal pronouncement on the
length of the suspension in cases similar to this, the Court holds that
considering petitioners' non-employment since January 2000, they
may be deemed to have already served their period of suspension.
JERUSALEM vs. KEPPEL MONTE BANK
FACTS: James Jerusalem (James) was employed by Keppel as Assistant
Vice-President, and was assigned as Head of the newly created VISA
Credit Card Department. Carrying the same rank, James was
reassigned as Head of the Marketing and Operations of the Jewelry
Department.
Sometime, James received from Jorge Javier a sealed envelope
said to be containing VISA Card application forms. The VISA credit card
applications which James forwarded to the VISA Credit Card Unit, all of
which were subsequently approved.  As it turned out, all the accounts
under these approved applications became past due.
James upon knowing the status of the accounts, recommended
the filing of a criminal case for estafa against Jorge, and a coordination
with the other banks where Jorge has deposits should be made
promptly so that they can ask said banks to freeze Jorge's accounts.  ground for James's termination has therefore no basis at all.
James received a Notice to Explain why no disciplinary action should
be taken against him for referring/endorsing fictitious VISA card
applicants. The said referrals resulted in substantial financial losses to
Keppel.
James submitted his written explanation pointing out that he
had no participation in the processing of the VISA card applications
since he was no longer connected with the VISA Credit Card Unit at
the time of such transactions.  He explained that he can only endorse
the applications referred by Jorge to the VISA Credit Card Unit because
he was already transferred to Jewelry Department, as Head.
Later on, James received a Notice of Termination informing him that
he was found guilty of breach of trust and confidence for knowingly
and maliciously referring, endorsing and vouching for VISA card
applicants who later turned out to be impostors resulting in financial
loss to Keppel. This prompted James to file a complaint for illegal
dismissal.
LA: found Keppel guilty of illegal dismissal.
NLRC: affirmed the decision.
ISSUE: Whether Keppel legally terminated James's employment on the
ground of willful breach of trust and confidence.
HELD: NO. Dismissal was illegal.
Article 282(c) of the Labor Code prescribes two separate and distinct
grounds for termination of employment, namely: (1) fraud; or (2)
willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative.
"But, in order to constitute a just cause for dismissal, the act
complained of must be `work-related' such as would show the
employee concerned to be unfit to continue working for the
employer."
The burden of establishing facts as bases for an employer's loss of
confidence in an employee is on the employer.
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. In this case, there is no doubt that
James held a position of trust and confidence as Assistant Vice-
President of the Jewelry Department.
"The second requisite is that there must be an act that would justify
the loss of trust and confidence. 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." Keppel's evidence against James
fails to meet this standard.
It is clear that James did nothing wrong when he handed over to
Marciana the envelope containing the applications of persons under
the referred accounts of Jorge who were later found to be fictitious.  transaction between petitioner and Josefina was private in character
As the records now stand, James was no longer connected with the
VISA Credit Card Unit when the applications for VISA card were
approved. His act therefore of forwarding the already accomplished
applications to the VISA Credit Card Unit is proper as he is not in any
position to act on them. The processing and verification of the
identities of the applicants would have been done by the proper
department, which is the VISA Credit Card Unit. Therefore, it is
incumbent upon Marciana as Unit Head to have performed her duties.
The invocation of Keppel of the loss of trust and confidence as
PANUNCILLO vs. CAP PHILIPPINES
FACTS: Petitioner Panuncillo was hired as Office Senior Clerk by CAP.
To secure the education of her son, Panuncillo procured an
educational plan (the plan) from respondent which she had fully paid
but which she later sold to Josefina. Before the actual transfer of the
plan could be effected, however, petitioner pledged it to Chua who,
however, sold it to Bonghanoy. Bonghanoy in turn sold the plan to Uy.
Josefina informed respondent that petitioner had "swindled" her
but that she was willing to settle the case amicably as long as
petitioner pay the amount involved and the interest. She expressed
her appreciation "if respondent could help her in anyway."
Respondent required petitioner to explain in writing why the plan had
not been transferred to Josefina and was instead sold to another. A
show-cause memorandum was thereupon sent to petitioner, giving
her 48 hours from receipt thereof to explain why she should not be
disciplinarily dealt with. Petitioner did not comply.
Respondent thus conducted an investigation, and recommended that
administrative action should be taken against petitioner for violating
respondent's Code of Discipline.
Another show-cause memorandum was sent to petitioner giving her
another 48 hours to explain why she should not be disciplinarily dealt
with in connection with the complaints of Josefina and Evelia.
Complying with the directive, petitioner on top of reiterating her
admission of having "defrauded" Josefina, admitted having received
from Evelia the payment for a lapsed plan. Panuncillo admitted her
wrongdoing which violative of the company’s Code of Discipline, and
she is open for whatever disciplinary action that will be sanctioned
againts her. 
CAP thereupon terminated the services of Panuncillo. Petitioner
sought reconsideration of her dismissal, availing of the retirement
benefit of the company that could help her pay some of her
obligations. Pending resolution of motion for reconsideration,
respondent received a letter from Gwendolyn, who informed that she
had been paying her (CAP) "quarterly dues" through petitioner but
found out that none had been remitted to respondent, on account of
which she (Gwendolyn) was being penalized with interest charges.
The motion for reconsideration was denied. To allow you to retire with
benefits, is to tolerate and encourage others to do the same in the
future, as it will be a precedent that will surely be invoked in similar
situations in the future, as it will be a precedent that will surely be
invoked in similar situations in the future. 
Panuncillo thus filed a complaint for illegal dismissal.
LA: while finding that the dismissal was for a valid cause, found the
same too harsh. He thus ordered the reinstatement of petitioner to a
position one rank lower than her previous position.
NLRC: found that petitioner’s dismissal was illegal and
accordingly ordering her reinstatement to her former position. The
and, therefore, respondent did not suffer any damage, hence, it was
error to apply respondent's Code of Discipline.
CA: reversed the NLRC Decision and held that the dismissal was valid
and that respondent complied with the procedural requirements of
due process before petitioner's services were terminated.
ISSUE: Whether petitioner violated the trust and confidence of CAP
and its customers.
HELD: YES. Whether CAP did not suffer any damage resulting from the
transactions entered into by petitioner is immaterial. The lack of
resulting damage was unimportant, because "the heart of the charge
is the crooked and anarchic attitude of the employee towards his
employer.
The transaction with Josefina aside, there was this case of
misappropriation by petitioner of the amounts given to her by Evelia
representing payment for the lapsed plan of Corazon Lintag.
Additionally, there was still another complaint lodged before
respondent by Gwendolyn against petitioner for failure to remit the
cash payments she had made to her, a complaint she was apprised of
but on which she was silent.
By petitioner's repeated violation of respondent's Code of Discipline,
she violated the trust and confidence of respondent and its
customers. To allow her to continue with her employment puts
respondent under the risk of being embroiled in unnecessary lawsuits
from customers similarly situated as Josefina, et al. Clearly,
respondent exercised its management prerogative when it dismissed
petitioner.
Under the Labor Code, the employer may terminate an employment
on the ground of serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative in
connection with his work. Infractions of company rules and
regulations have been declared to belong to this category and thus
are valid causes for termination of employment by the employer.
ISSUE: Whether Panuncillo was afforded due process.
HELD:
Before terminating the services of an employee, the law requires two
written notices: (1) one to apprise him of the particular acts or
omissions for which his dismissal is sought; and (2) the other to
inform him of his employer's decision to dismiss him. As to the
requirement of a hearing, the essence of due process lies in an
opportunity to be heard, and not always and indispensably in an
actual hearing.
When respondent received the letter-complaint of Josefina, petitioner
was directed to comment and explain her side thereon. She did
comply, wherein she admitted that she "had defrauded Ms. J. Pernes,
but that she didn't do it intentionally."
Respondent subsequently sent petitioner a show-cause memorandum
giving her 48 hours from receipt why she should not be disciplinarily
sanctioned. Despite the 48-hour deadline, nothing was heard from her
until when she complied with the second show-cause memorandum.
Petitioner was informed of the termination of her services to which
she filed a motion for reconsideration.
There can thus be no doubt that petitioner was given ample
opportunity to explain her side. Parenthetically, when an employee
admits the acts complained of, as in petitioner's case, no formal
hearing is even necessary.
ISSUE ON REINSTATEMENT:
The third paragraph of Article 223 of the Labor Code is clear, however
- the employee, who is ordered reinstated, must be accepted back to
work under the same terms and conditions prevailing  prior to his
dismissal or separation.
Petitioner's being demoted to a position one rank lower than her
original position is certainly not in accordance with the said third
paragraph provision of Article 223. Besides, the provision
contemplates a finding that the employee was illegally dismissed or
there was no just cause for her dismissal. As priorly stated, in
petitioner's case, the Labor Arbiter found that there was just cause for
her dismissal, but that dismissal was too harsh, hence, his order for
her reinstatement to a lower position.
In Colgate Palmolive Philippines, Inc. v. Ople: …to reinstate the
employees despite a clear finding of guilt on their part is not in
conformity with law. 
The NLRC was thus correct when it ruled that it was erroneous for the
Labor Arbiter to order the reinstatement of petitioner, even to a
position one rank lower than that which she formerly held.
Article 223 (3rd paragraph) of the Labor Code as amended, and
Section 2 of the NLRC Interim Rules on Appeals, Amending the Labor
Code, provide that an order of reinstatement by the Labor Arbiter is
immediately executory even pending appeal. The rationale of the law
is to enhance the provisions of the 1987 Constitution on labor and the
working man.
Hence, even if the order of reinstatement of the Labor Arbiter is
reversed on appeal, it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the
period of appeal until reversal by the higher court. On the other
hand, if the employee has been reinstated during the appeal period
and such reinstatement order is reversed with finality, the employee is
not required to reimburse whatever salary he received for he is
entitled to such, more so if he actually rendered services during the
period.
In the present case, since the NLRC found petitioner's dismissal illegal
and ordered her reinstatement, following the provision of paragraph 6
of Article 223, which provides that the NLRC decision became "final
and executory after ten calendar days from receipt of the decision by
the parties" for reinstatement.
In view, however, of Article 224 of the Labor Code which provides: The
Secretary of Labor and Employment or any Regional Director, the
Commission or any Labor Arbiter, or med-arbiter or voluntary
arbitrator may, motu proprio or on motion of any
interested party, issue a writ of execution on a judgment within five
(5) years from the date it becomes final and executory ,.
Unlike then the order for reinstatement of a Labor Arbiter which is
self-executory, that of the NLRC is not.
In Pioneer Texturizing Corp. v. NLRC:
To require the application for and issuance of a writ of execution as
prerequisites for the execution of a reinstatement award would
certainly betray and run counter to the very object and intent of
Article 223, i.e., the immediate execution of a reinstatement order. On
appeal, however, the appellate tribunal concerned may enjoin or
suspend the reinstatement order in the exercise of its sound
discretion.
The issuance of the temporary restraining order - did not nullify the
rights of private respondents to their reinstatement and to collect
their wages during the period of the effectivity of the order but
merely suspended the implementation thereof. Where the Court
affirmed the decision of the NLRC and recognized the right of private
respondents to reinstatement,' private respondents are entitled to the
wages accruing during the effectivity of the temporary restraining
order.
In sum, while under the sixth paragraph of Article 223 of the Labor
Code, the decision of the NLRC becomes final and executory after the
lapse of ten calendar days from receipt thereof by the parties, the
adverse party is not precluded from assailing it via Petition
for Certiorari under Rule 65 before the Court of Appeals and then to
this Court via a Petition for Review under Rule 45. If during the
pendency of the review no order is issued by the courts enjoining the
execution of a decision of the Labor Arbiter or NLRC which is favorable
to an employee, the Labor Arbiter or the NLRC must exercise extreme
prudence and observe judicial courtesy when the circumstances so
warrant if we are to heed the injunction of the Court.
Petition is DENIED.
AGUANZA vs. ASIAN TERMINAL, INC. et al
FACTS: Aguanza was employed with respondent company Asian
Terminal, Inc. He initially employed as Crane Operator and was
assigned as such aboard Bismark IV, a floating crane barge owned by
Asian Terminals, Inc. based at the port of Manila. He was receiving the
following salaries and benefits from ATI:
A. Basic salary - P8,303.30;
b. Meal allowance - P1,800 a month;
c. Fixed overtime pay of 16 hours when the barge is assigned outside
Metro Manila;
d. P260.00 per day as out of port allowance when the barge is
assigned outside Manila.
Sometime, the Bismark IV, together with its crew, was temporarily
assigned at the Mariveles Grains terminal in Mariveles, Bataan.
Respondent James Keith issued a memo to the crew of Bismark IV
stating that the barge had been permanently transferred to the
Mariveles Grains terminal, and because of that, its crew would no
longer be entitled to out of port benefits of 16 hours overtime
and P200 a day allowance.
Aguanza, with four other members of the crew, stated that they did
not object to the transfer, but they objected to the reduction of their
benefits.While Aguanza did not agree with private respondents' terms
and conditions, he was nonetheless willing to continue working
without prejudice to taking appropriate action to protect his rights.
Because of private respondents' refusal to give him any work
assignment and pay his salary, Aguanza filed a complaint for illegal
dismissal against respondents.
LA: found that respondents illegally dismissed Aguanza.
The Labor Arbiter also construed ATI's offer of separation pay
worth two months' salary for every year of service as indicative of
ATI's desire to terminate Aguanza's services. ATI's refusal to pay the
same amount to Aguanza violated the rule against diminution of
benefits. Although ATI had the prerogative to transfer employees, the
prerogative could not be exercised if the result was demotion of rank
or diminution of salary, benefits and other prerogatives of the
employee.
NLRC: dismissed Aguanza's complaint. Aguanza's insistence to be paid
out-of-town benefits, despite the fact that the crane to which he was
assigned was already permanently based outside Metro Manila, was
unreasonable.
CA: affirmed the ruling of the NLRC. The fixed overtime of 16 hours,
out-of-port allowance and meal allowance previously granted to
Aguanza were merely supplements or employment benefits given
under a certain condition, i.e., if Aguanza will be temporarily assigned
out-of-port. It is not fixed and is contingent or dependent of Aguanza's
out-of-port reassignment. Hence, it is not made part of the wage or
compensation.
This Court also finds utter bad faith on the part of Aguanza, who
claims that he does not contest his permanent reassignment to
Mariveles, Bataan and yet he insisted on reporting to Manila. There
was no illegal dismissal since it was Aguanza who refused to report
to Mariveles, Bataan where he was assigned.
ISSUE: Whether the transfer of Aguanza constituted constructive
dismissal.
HELD: NO.
The transfer of an employee may constitute constructive dismissal
"when continued employment is rendered impossible, unreasonable
or unlikely; when there is a demotion in rank and/or a diminution in
pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee."
Aguanza's continued employment was not impossible, unreasonable
or unlikely; neither was there a clear discrimination against him.
Aguanza's assertion that he was not allowed to "time in" in Manila
should be taken on its face. There was no demotion in rank, as
Aguanza would continue his work as Crane Operator. Furthermore,
there was no diminution in pay.
When ATI transferred Bismark IV's operations to Bataan, ATI offered
Aguanza similar terms: basic pay for 40 hours of work from Monday
to Friday, overtime pay for work done in excess of eight hours per day,
overtime pay for work done on Saturdays and Sundays, no additional
allowance and no transportation for working in Bataan. We surmise
that it would not be any different from the salary structure applied for
work done out-of-port.
We, thus, agree with the NLRC and the appellate court when they
stated that the fixed overtime of 16 hours, out-of-port allowance and
meal allowance previously granted to Aguanza were merely
supplements or employment benefits given on condition that
Aguanza's assignment was out-of-port. The fixed overtime and
allowances were not part of Aguanza's basic salary. Aguanza's basic
salary was not reduced; hence, there was no violation of the rule
against diminution of pay.
ATI did not dismiss Aguanza; rather, Aguanza refused to report to his
proper workplace.
NOKOM vs. NLRC, RENTOKIL (PHILS.)
Nokom was employed as a manager by private respondent Rentokil
for its Healthcare Division.
Sometime, private respondents Stern and Harris, received
information that fictitious invoices were sent to Rentokil clients in the
Healthcare Division whose contracts have already been terminated.
The fictitious invoices were allegedly made to inflate the gross
revenues of the Healthcare Division to make up for the shortfall in its
target revenues for the year 1995. Because initial findings showed that
petitioner Nokom was involved in the anomaly, private respondents
placed her on preventive suspension.
Petitioner admitted the irregularities and, in her written
explanation as required under the notice of preventive suspension,
petitioner told Stern that she had no explanation and said that she was
leaving her fate up to management.
During the hearing conducted by Rentokil management to
investigate the anomalies, petitioner failed to appear despite notice.
After the investigation, it was found out that petitioner was aware,
tolerated and in fact participated in the production of fictitious
invoices. Thus, Nokom’s employment was terminated in a letter.
Nokom filed a complaint for illegal suspension, illegal dismissal and
non-payment of salaries against Rentokil
LA: decided in favor of petitioner Nokom.
NLRC: set aside the decision of LA. When complainant refused to
explain her side in writing as well as in the hearing scheduled for said
purpose, she not only waived her right to due process as guaranteed
by Article 277 (b) of the Labor Code, worse, she raised the
presumption that she was guilty of the infractions she was asked to
explain about.
CA: affirmed the NLRC. Nokom’s failure to detect and report to the
respondent company the fraudulent activities in her division as well as
her failure to give a satisfactory explanation on the existence of the
said irregularities constitute ‘fraud or willful breach’ of the trust
reposed on her by her employer or duly authorized representative" –
one of the just causes in terminating employment as provided for by
paragraph c, Article 283 of the Labor Code, as amended."
ISSUE: Whether petitioner Nokom was legally dismissed.
HELD: YES.
To constitute a valid dismissal from employment, two requisites must
concur, namely: (a) the dismissal must be for any of the causes
provided for in Article 282 of the Labor Code, and (b) the employee
must be afforded an opportunity to be heard and defend himself. The
requirements of due process must be met, that is, the employee
concerned must be given both due notice and the opportunity to be
heard and present his side.
In the case at bar, petitioner held the position of Manager in the
Healthcare Division. Her position demands a high degree of
responsibility that necessarily includes unearthing of fraudulent and
irregular activities. This, she failed to do. Her ‘bare denial’ of her
participation in the anomalies does not prove her innocence nor
disprove her alleged guilt.  her planned resignation upon the advice of her lawyer.
The ordinary rule is that one who has knowledge peculiarly within his
control, and refuses to divulge it, cannot complain if the court puts the
most unfavorable construction upon his silence, and infers that a
disclosure would have shown the fact to be as claimed by the
opposing party. Considering the possible effects of the charges
against her, petitioner nevertheless chose to remain silent and deny
the accusations hurled at her. She did not present evidence in her
behalf to prove her innocence.
The Court cannot, therefore, compel private respondents to retain the
employment of Nokom who is shown to be lacking in candor, honesty
and efficiency required of her position.
Loss of confidence is a valid ground for dismissing an employee and it
is enough that there be ‘some basis’ for such loss of confidence. In
Vitarich Corporation et al. v. NLRC et al., the guidelines for the
application of the doctrine of loss of confidence are:
a) loss of confidence should not be simulated;
b) it should not be used as a subterfuge for causes which are
improper, illegal or unjustified;
c) it may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and
d) it must be genuine, not a mere afterthought to justify earlier
action taken in bad faith.
The Court finds that the policies of private respondent Rentokil are fair
and reasonable, the decision to terminate the employment of
petitioner was justified and appropriate in the light of the acts
committed by her, and considering that the requirements of the
constitutional right to due process were duly accorded to petitioner.
NIPPON HOUSING PHIL. INC. vs. LEYNES
FACTS: Nippon Housing (NHPI) ventured into building management,
providing such services as handling of the lease of condominium units,
collection of dues and compliance with government regulatory
requirements.
Having gained the Bay Gardens Condominium Project (the Project) of
the Bay Gardens Condominium Corporation (BGCC) as its first and only
building maintenance client, NHPI hired Leynes as Property Manager.
Leynes was also responsible for the hiring and deployment of
manpower, salary and position determination as well as the
assignment of the schedules and responsibilities of employees.
Leynes had a misunderstanding with the building Engr. Cantuba,
regarding the extension of the latter’s working hours. Aside from
instructing the security guards to bar Engr. Cantuba from entry into
the Project and to tell him to report to the NHPI’s main office in
Makati, Leynes also sent a letter by telefax to Reyes, NHPI’s Human
Resources Department (HRD) Head, apprising the latter of said
Building Engineer’s supposed insubordination and disrespectful
conduct. Takada, (NHPI’s Vice Presiden) went on to issue a
memorandum, attributing the incident to "simple personal
differences" and directing Leynes to allow Engr. Cantuba to report
back for work.
Disappointed with the management decision, Leynes, thru a letter,
asked for an emergency leave of absence for the supposed purpose of
coordinating with her lawyer regarding her resignation letter. While
NHPI offered the Property Manager position to Engr. Carlos Jose as a
consequence Leynes’ signification of her intention to resign, it also
appears that Leynes sent another letter to Reyes by telefax on the
same day, expressing her intention to return to work and to call off
Leynes was further served with a letter and memorandum from Reyes,
relieving her from her position and directing her to report to NHPI’s
main office while she was on floating status.
Leynes filed a complaint for illegal dismissal.
Labor Arbiter rendered a decision, finding that NHPI’s act of putting
Leynes on floating status was equivalent to termination from
employment without just cause and compliance with the twin
requirements of notice and hearing.
NLRC set aside the decision and ruled that NHPI’s placement of Leynes
on floating status was necessitated by the client’s contractually
guaranteed right to request for her relief. The CA reversed, upon the
following findings and conclusions: (a) absent showing that there was
a bona fide suspension of NHPI’s business operations, Leynes’ relief
from her position – even though requested by the client – was
tantamount to a constructive dismissal; (b) the bad faith of NHPI and
its officers is evident from the hiring of Engr. Jose as Leynes’
replacement on 13 February 2002 or prior to her being relieved from
her position on 22 February 2002; and, (c) the failure of NHPI and its
officers to prove a just cause for Leynes’ termination, the redundancy
of her services and their compliance with the requirements of due
process renders them liable for illegal dismissal.
ISSUE: Whether to place Leynes on floating status is tantamount to
constructive dismissal.
HELD: NO.
In view of the sensitive nature of Leynes’ position and the critical
stage of the Project’s business development, NHPI was constrained to
relay the situation to BGCC which, in turn, requested the immediate
adoption of remedial measures, including the appointment of a new
Property Manager for the Project. NHPI’s immediate hiring of Engr.
Jose as the new Property Manager was brought about by Leynes’ own
rash announcement of her intention to resign from her position.
Although she subsequently changed her mind and sent Reyes a letter
by telefax announcing the reconsideration of her planned resignation
and her intention to return to work, Leynes evidently had only herself
to blame for precipitately setting in motion the events which led to
NHPI’s hiring of her own replacement.
The record shows that Leynes filed the complaint for actual illegal
dismissal from which the case originated on 22 February 2002 or
immediately upon being placed on floating status as a consequence of
NHPI’s hiring of a new Property Manager for the Project.
The rule is settled, however, that "off-detailing" is not equivalent to
dismissal, so long as such status does not continue beyond a
reasonable time and that it is only when such a "floating status" lasts
for more than 6 months that the employee may be considered to
have been constructively dismissed. A complaint for illegal dismissal
filed prior to the lapse of said 6-month and/or the actual dismissal of
the employee is generally considered as prematurely filed.
Constructive dismissal exists where there is cessation of work
because continued employment is rendered impossible, unreasonable
or unlikely, as an offer involving a demotion in rank and a diminution
in pay. Stated otherwise, it is a dismissal in disguise or an act
amounting to dismissal but made to appear as if it were not.
In constructive dismissal cases, the employer is charged with the
burden of proving that its conduct and action or the transfer of an
employee are for valid and legitimate grounds such as genuine
business necessity. To our mind, Nippon, et al, have more than amply
discharged this burden with proof of the circumstances surrounding
Engr. Carlos’ employment as Property Manager for the Project and the
consequent unavailability of a similar position for Leynes.
We find that NHPI was acting well within its prerogatives when it
eventually terminated Leynes’ services on the ground of redundancy.
One of the recognized authorized causes for the termination of
employment, redundancy exists when the service capability of the
workforce is in excess of what is reasonably needed to meet the
demands of the business enterprise. A redundant position is one
rendered superfluous by any number of factors, such as overhiring of
workers, decreased volume of business, dropping of a particular
product line previously manufactured by the company or phasing out
of service activity priorly undertaken by the business. An employer has
no legal obligation to keep more employees than are necessary for
the operation of its business.
Where dismissal is for an authorized cause like redundancy, the
employer is required to serve a written notice of termination on the
worker concerned and the DOLE, at least one month from the
intended date thereof.  would justify its dismissal of Angelo, the NLRC correctly ruled that the
Here, NHPI specifically made Leynes’ termination from service
effective 22 August 2002, but only informed said employee of the
same on 8 August 200250 and filed with the DOLE the required
Establishment Termination Report only on 16 August 2002. For its
failure to comply strictly with the 30-day minimum requirement for
said notice and effectively violating Leynes’ right to due process, NHPI
should be held liable to pay nominal damages in the sum of
₱50,000.00.
Having been validly terminated on the ground of redundancy, Leynes
is entitled to separation pay equivalent to one month salary for every
year of service but not to the backwages adjudicated in her favor by
the Labor Arbiter.
NISSAN MOTORS PHILS., INC. vs. ANGELO
FACTS: Angelo was employed by Nissan as one of its payroll staff.
Angelo was on sick leave, thus, he was not able to prepare the payroll
for the period of April 7-17, 2000. Again, on April 27 and 28, Angelo
was on an approved vacation leave which again resulted in the non-
preparation of the payroll for that particular period.
Angelo received a Memorandum from the Nissa informing him of his
dismissal from employment on the grounds of serious misconduct,
willful disobedience and gross neglect of duties. Angelo filed a
Complaint for illegal suspension with the (DOLE).
Nissan conducted an investigation, and concluded that Angelo's
explanation was untrue and insufficient. Thus, Nissan issued a Notice
of Termination.
Angelo amended his previous complaint to include the charge of illegal
dismissal.
The Labor Arbiter dismissed Angelo's complaint for lack of merit. The
NLRC affirmed. The CA reversed, reinstating Angelo and ordering
Nissan to pay him backwages from the time of his illegal dismissal.
ISSUE: Whether or not dismissal is proper.
HELD:
For misconduct or improper behavior to be a just cause for dismissal,
(a) it must be serious; (b) it must relate to the performance of the
employee's duties; and (c) it must show that the employee has
become unfit to continue working for the employer.
The Court found evidence to support the allegation of serious
misconduct or insubordination.
Nissan claims that the language used by Angelo in his Letter-
Explanation is akin to a manifest refusal to cooperate with company
officers, and resorted to conduct which smacks of outright disrespect
and willful defiance of authority or insubordination.
This Court finds the letter-explanation to be grossly discourteous
in content and tenor. Past decisions of this Court have been one in
ruling that accusatory and inflammatory language used by an
employee to the employer or superior can be a ground for dismissal
or termination.
A willful or intentional disobedience of such rule, order or instruction
justifies dismissal only where such rule, order or instruction is (1)
reasonable and lawful, (2) sufficiently known to the employee, and (3)
connected with the duties which the employee has been engaged to
discharge. This allegation of willful disobedience can still be adduced
and proven from the same Letter-Explanation cited earlier.
Neglect of duty, to be a ground for dismissal, must be both gross and
habitual. In finding that Nissan was able to adduce evidence that
Angelo's failure to turn over his functions to someone capable of
performing the vital tasks which he could not effectively perform or
undertake because of his heart ailment or condition constitutes gross
neglect.
In termination cases, the burden of proof rests upon the employer to
show that the dismissal is for just and valid cause. In this case, both
the Labor Arbiter and the NLRC were not amiss in finding that the
dismissal of Angelo was legal or for a just cause based on substantial
evidence presented by Nissan. Substantial evidence, which is the
quantum of proof required in labor cases, is that amount of relevant
evidence which a reasonable mind might accept as adequate to justify
a conclusion.
However, although the dismissal was legal, Angelo is still entitled to a
separation pay as a measure of financial assistance, considering his
length of service and his poor physical condition which was one of the
reasons he filed a leave of absence. As a general rule, an employee
who has been dismissed for any of the just causes enumerated under
Article 282[29] of the Labor Code is not entitled to separation
pay. Although by way of exception, the grant of separation pay or
some other financial assistance may be allowed to an employee
dismissed for just causes on the basis of equity.
TECHNOL EIGHT PHILIPPINES CORP. vs. NLRC and
AMULAR
FACTS: Technol manufactures metal parts and motor vehicle
components. It hired the Amular and assigned him to Technol's
Shearing Line, together with (Ducay). Mendoza was the line's team
leader.
Mendoza went to the Surf City Internet CafÃ. As he was leaving the
establishment, he was confronted by Amular and Ducay who engaged
him in a heated argument regarding their work in the shearing line,
particularly Mendoza's report to (De Leon), about Amular's and
Ducay's questionable behavior at work. The heated argument resulted
in a fistfight that required the intervention of the barangay tanods in
the area.
Upon learning of the incident, Technol's management sent to Amular
and Ducay a notice of preventive suspension/notice of discharge
advising them that their fistfight with Mendoza violated Technol's
Human Resource Department (HRD) Manual.
The two were given (48) hours to explain why no disciplinary action
should be taken against them for the incident. They were placed under
preventive suspension for (30) days. Amular submitted a written
statement.
Thereafter, Amular received a notice informing him that Technol
management will conduct an administrative hearing. He was also given
(2) days to respond in writing to the statements attached to and
supporting the notice.
A day before the hearing, Amular filed a complaint for illegal
suspension/constructive dismissal against Technol. Amular failed to
attend the administrative hearing on the following day.Technol sent
him a notice of dismissal.
Labor Arbiter found that Amular's preventive suspension and
subsequent dismissal were illegal. The Arbiter held that Technol failed
to afford him procedural due process since he was not able to present
his side because he had filed a case before the (NLRC) at the time he
was called to a hearing; Technol also failed to substantiate its
allegations against Amular; the fistfight occurred around 200 to 300
meters away from the work area and it happened after office hours.
The NLRC affirmed the labor arbiter's ruling. The CA affirmed that
Amular was illegally dismissed. It opined that Technol failed to comply
with the jurisprudential guidelines that misconduct warranting a
dismissal: (1) must be serious; (2) must relate to the performance of
the employees duties; and (3) must show that the employee has
become unfit to continue working for the employer.
The CA pointed out that the mauling incident occurred outside the
company premises and after office hours; it did not in any manner
disrupt company operations nor pose a threat to the safety or peace
of mind of Technol workers; neither did it cause substantial prejudice
to the company. It explained that although it was not condoning
Amular's misconduct, it found that "the penalty of dismissal imposed
by Technol on Amular was too harsh and evidently disproportionate
to the act committed.
ISSUE: Whether the suspension and dismissal are illegal.
HELD: The CA misappreciated the true nature of Amular's
involvement in the mauling incident. Although it acknowledged that
Amular committed a misconduct, it did not consider the misconduct as
work-related and reflective of Amular's unfitness to continue working
for Technol.
We find a work-connection in Amular's and Ducay's assault on
Mendoza. The underlying reason why Amular and Ducay confronted
Mendoza was to question him about his report to De Leon - Technol's
PCD assistant supervisor - regarding the duo's questionable work
behavior. The motivation behind the confrontation, as we see it, was
rooted on workplace dynamics as Mendoza, Amular and Ducay
interacted with one another in the performance of their duties.
Based on their written statements, Amular and Ducay purposely set
out for the Balibago commercial area looking for Mendoza. It was not
an incidental or casual encounter.
Amular undoubtedly committed a misconduct or exhibited improper
behavior that constituted a valid cause for his dismissal under the
law and jurisprudential standards. The circumstances of his misdeed,
to our mind, rendered him unfit to continue working for Technol; guilt
is not diminished by his claim that Technol's management called the
three of them to a meeting, and asked them to explain their sides and
settle their differences, which they did. Mendoza significantly denied
the alleged settlement, maintaining that while they were summoned
by De Leon after the incident, he could not shake hands and settle
with Amular and Ducay since they did not even apologize or ask
forgiveness for what they did.[42] We do not find Mendoza's denial of
Amular's claim unusual as Mendoza would not have stood his ground
in this case if a settlement had previously been reached.
Neither do we believe that Amular was discriminated against because
he was not the only one preventively suspended. Ducay received his
notice of preventive suspension/notice of charge on May 19, 2002
while Amular received his on May 21, 2002. These notices informed
them that they were being preventively suspended for 30 days.
Thus, Amular was not illegally dismissed; he was dismissed for cause.
What we see in the records belie Amular's claim of denial of
procedural due process. He chose not to present his side at the
administrative hearing. In fact, he avoided the investigation into the
charges against him by filing his illegal dismissal complaint ahead of
the scheduled investigation. Under these facts, he was given the
opportunity to be heard and he cannot now come to us protesting
that he was denied this opportunity. The essence of due process is
simply an opportunity to be heard; it is the denial of this opportunity
that constitutes violation of due process of law.
TIRAZONA vs. CA,
PHILIPPINE EDS-TECHNO SERVICE INC. (PET INC.)
FACTS: (PET) is a corporation engaged in the business of designing
automotive wiring harnesses for automobile manufacturers. Private
respondents Ken Kubota, Mamoru Ono and Junichi Hirose are all
Japanese nationals, the first being the President and the latter two
being the directors of PET.
PET employed Tirazona as Administrative Manager. Being the top-
ranking Filipino Manager, she acted as the liaison between the
Japanese management and the Filipino staff.
Fe Balonzo, a rank-and-file employee, wrote a letter, complaining that
Tirazona humiliated her while she was reporting back to work after
recuperating from a bout of tuberculosis. Balonzo explained that
Tirazona insinuated, in a manner loud enough to be heard from the
outside, that Balonzo still had the disease, despite Balonzo’s
possession of a medical clearance that proved her fitness to return to
work. Balonzo thus requested that the necessary action be undertaken
to address the said incident.
The PET management directed Tirazona to file her comment. Tirazona
replied, denying the accusations against her. Tirazona stated that her
only intention was to orient Balonzo about the latter’s rights as a sick
employee, i.e., that under the law, if the latter planned to resign, the
company can give her separation pay. Tirazona likewise asked for an
independent investigation and threatened to file a libel case against
Balonzo for allegedly trying to destroy her reputation and credibility.
The PET (Ono) sent a memorandum to Tirazona stating its satisfaction
that the latter did not intend to humiliate Balonzo.
Later on, Tirazona’s counsels sent demand letters to Ono and Balonzo
expressing that she was denied due process when she was not given
the opportunity to be heard and confront her accuser. The letter also
sought of damages for Balonzo’s allegedly baseless and unfounded
accusations against Tirazona.
Because of Tirazona’s obstinate demand for compensation, PET sent
her a Notice of Charge, which informed her that they were considering
her termination from employment by reason of serious misconduct
and breach of trust. According to the management, they found her
letter libelous, since it falsely accused the company of finding her
guilty of the charges of Balonzo and depriving her of due process.
Tirazona explained in a letter that her counsels’ demand letter was
brought about by the denial of her repeated requests for
reinvestigation of the Balonzo incident, and that the same was
personally addressed to Mamoru Ono and not to the company. She
also reiterated her request for an investigation and/or an open
hearing to be conducted on the matter.
The PET management replied that the Balonzo incident was already
deemed a closed matter, and that the only issue for consideration was
Tirazona’s "ill-advised response to the Management’s disposition to
the Fe Balonzo incident," for which an administrative hearing was
scheduled. Tirazona submitted a written demand to PET that the
Balonzo incident be included in the scheduled hearing.
The PET management rejected Tirazona’s demands and informed her
that the hearing was reset, which would be presided by PET’s external
counsel.
Tirazona and her counsel did not appear at the administrative hearing,
and sent a written explanation reiterating her claims.
After finding the explanations unsatisfactory, PET sent Tirazona a
Notice of Termination, which found her guilty of serious misconduct
and breach of trust because of her demand against the company and
her invasion of PET’s right to privileged communication.
Tirazona then instituted with the NLRC a complaint for illegal dismissal
against PET.
Labor Arbiter ruled in favor of Tirazona, holding that the latter’s
termination from employment was illegal.
NLRC reversed the rulings and concluded that Tirazona’s termination
from employment was in accordance with law. It ruled that Tirazona’s
demand letter addressed to Ono constituted a just cause for dismissal,
as the same was "an openly hostile act" by a high-ranking managerial
employee against the company. The NLRC likewise found that PET
complied with the notice and hearing requirements of due process,
inasmuch as Tirazona’s demand for a special panel was without any
legal basis. Furthermore, Tirazona breached the company’s trust when
she read the confidential legal opinion of PET’s counsel without
permission. The CA affirmed the NLRC.
ISSUE: Whether or not Tirazona was legally dismissed from
employment.
HELD: YES.
It would clearly show that Tirazona has absolutely no basis for a P2
million demand, coupled with lawsuit if the same was not paid within
the (5) days period. Her justification for the demand of money is that
she was allegedly found by the PET through respondent Ono guilty of
the charges filed by Ms. Balonzo.
As the records would indubitably show, Tirazona was never charged
of any offense with respect to the Fe Balonzo’s incident. She was
never issued a Notice of Charge, much less a Notice of Disciplinary
Action. What was issued to her by respondent Ono in his letter was a
gentle and sound reminder to be more circumspect in handling the
incident or situation like this.
But for reasons only known to Tirazona, she treated respondent Ono’s
letter as an affront to her honor and dignity. This, instead of seeking a
dialogue with PET on her felt grievance, Tirazona through her lawyer
sent the questioned demand letter to respondent Ono. This act of
Tirazona bared animosity in the company and was definitely not a
proper response of a top level manager like her over a trivial matter.
In fine, Tirazona’s actions or omissions affecting her employer’s rights
and interest, would undoubtedly show that she is no longer worthy of
being a recipient of the trust and confidence of her employer.
Tirazona was never deprived of procedural due process.
It is fairly obvious in this case that Tirazona was served with the
required twin notices. The first was embodied in the Notice of Charge
dated 25 March 2002 where PET informed Tirazona that it was
considering her termination from employment and required her to
submit a written explanation. In the said Notice, PET apprised Tirazona
of the ground upon which it was considering her dismissal: (1) her
letter that contained false accusations against the company, and (2)
her demand for P2M in damages, with a threat of a lawsuit if the said
amount was not paid. The Notice of Termination dated 22 April 2002
given to Tirazona constitutes the second notice whereby the company
informed her that it found her guilty of breach of trust warranting her
dismissal from service.

It needs to be pointed out that it was Tirazona herself and her counsel
who declined to take part in the administrative hearing set by PET 10
April 2002. Tirazona rejected the company’s appointment of its
external counsel as the investigating panel’s presiding officer, because
her own demands on the panel’s composition were denied.
This Court has held that there is no violation of due process even if no
hearing was conducted, where the party was given a chance to
explain his side of the controversy. What is frowned upon is the denial
of the opportunity to be heard.  custody of the employer’s money or property. To the first class belong
Tirazona in this case has been afforded a number of
opportunities to defend her actions. Even when Tirazona failed to
attend the scheduled hearing, PET still informed Tirazona about what
happened therein and gave her the chance to submit a supplemental
written explanation. Only when Tirazona again failed to comply with
the same did PET terminate her employment.
LOPEZ vs.KEPPEL BANK PHILIPPINES, INC.
FACTS: Lopez was the Branch Manager of the Keppel Bank. Allegedly,
through his efforts, Hertz Exclusive Cars, Inc. became a client of the
bank. By notice, the bank asked Lopez to explain in writing why he
should not be disciplined for issuing, without authority, two purchase
orders (POs) for the Hertz account amounting to a total of
₱6,493,000.00, representing the purchase price of 13 Suzuki Bravo and
two Nissan Exalta vehicles.
Lopez submitted his written explanation on the same day, but the
bank refused to give it credit. Through respondents Bosano III and
Stefan Tong Wai Mun, the bank terminated Lopez’s employment
effective immediately.
In response to the consideration, the bank, through the respondent
officers, met with Lopez at its headquarters. Lopez came with his
lawyer and a military man. After the meeting, the bank found no
reason to reconsider and reiterated its decision to dismiss Lopez.
Lopez filed a complaint for illegal dismissal, alleging that he issued the
POs as part of his strategy to enhance the bank’s business, in line with
his duty as branch manager to promote the growth of the bank.
He claimed that the bank honored the first PO for ₱1.8M from which
the bank derived an income of ₱142,000.00. He added that the second
PO did not materialize because Mr. Concepcion, a Hertz incorporator
and director who opened the Hertz account, stopped depositing with
the bank because of the negative credit rating he received from the
bank’s credit committee. Allegedly, the committee discovered that
Concepcion had several pending court cases.
The bank denied approving the first PO, arguing that Lopez did not
have the authority to issue the POs for the Hertz account as there was
a standing advice that no Hertz loan application was to be approved. It
stressed that Lopez committed a serious violation of company rules
when he issued the POs.
Labor Arbiter ruled that Lopez was illegally dismissed. The evidence
showed that Lopez had been issuing POs which the bank had paid,
including the first of the two POs that led to his dismissal.
NLRC reversed the labor arbiter’s ruling. The NLRC found merit in the
bank’s submission that by issuing the questioned POs without
authority and against the bank’s express orders, Lopez thereby
committed a willful disobedience against his superiors — a sufficient
basis for the bank to lose its trust and confidence in him as branch
manager.
CA affirmed the NLRC decision finding that Lopez had not been illegally
dismissed.
ISSUE: Is Lopez liable for loss of trust and confidence for issuing the
two disputed POs?
HELD: YES.
Loss of confidence should ideally apply only (1) to cases involving
employees occupying positions of trust and confidence, or (2) to
situations where the employee is routinely charged with the care and
managerial employees, i.e., those vested with the powers and
prerogatives to lay down management polices and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or discipline employees, or
effectively recommend such managerial actions. To the second class
belong cashiers, auditors, property custodians, or those who, in the
normal and routine exercise of their functions, regularly handle
significant amounts of money or property.
As branch manager, Lopez clearly occupies a "position of trust."
Despite evidence of his past exercise of authority (as found by the
labor arbiter), we cannot disregard evidence showing that in August
2003, the bank specifically instructed Lopez not to proceed with the
Hertz loan application because of the negative credit rating issued by
the bank’s credit committee. We find it undisputed that Lopez
processed the loan despite the adverse credit rating. In fact, he
admitted that he overlooked the "control aspects" of the transaction
as far as the bank was concerned because of his eagerness to get a
bigger share of the market.
Evident in his written explanation was his failure to inform the credit
committee of his own efforts to check on the committee’s adverse
findings against Hertz and his independent action based solely on his
own authority. As a bank official, the Lopez must have been aware
that it is basic in every sound management that people under one’s
supervision and direction are bound to follow instructions or to inform
their superior of what is going on in their respective areas of concern,
especially regarding matters of vital interest to the enterprise.
Under these facts, we find it undisputed that Lopez disobeyed the
bank’s directive to put the Hertz loan application on hold, and did not
wait until its negative credit rating was cleared before proceeding to
act. The bank can be placed at risk if this kind of managerial attitude
will be repeated, especially if it becomes an accepted rule among
lower managers.
The Court is convinced that the bank was justified in terminating
Lopez’s employment by reason of loss of trust and confidence. He
admitted issuing the two POs, claiming merely that he had the
requisite authority. He could not present any proof in this regard,
however, except to say that it was part of his inherent duty as bank
manager. He also claimed that the bank acquiesced to the issuance of
the POs as it paid the first PO and the POs he issued in the past. This
submission flies in the face of the bank’s directive for him not to
proceed unless matters are cleared with the bank’s credit committee.
The bank had a genuine concern over the issue as it found through its
credit committee that Hertz was a credit risk. Whether the credit
committee was correct or not is immaterial as the bank’s direct order
left Lopez without any authority to clear the loan application on his
own. After this defiance, we cannot blame the bank for losing its
confidence in Lopez and in separating him from the service.
We find Lopez to have been afforded due process when he was
dismissed. He was given the required notices. More importantly, he
was actually given the opportunity to be heard; when he moved for
reconsideration of the bank’s decision to terminate his employment, it
scheduled a hearing where he appeared together with his lawyer and
a military man. This was an opportunity to be heard that the law
recognizes.