HARPOON MARINE SERVICES, Inc. and JOSE LIDO T.

ROSIT, Petitioners.
vs.
FERNAN H. FRANCISCO, Respondent.

G.R. No. 167751, March 2, 2011

DOCTRINES:

1. Illegal Dismissal. There is illegal dismissal when there is termination of

employment or separation from employment without complying the due process
of law. This may result in reinstatement, full backwages, moral damages,
exemplary damages, nominal damages, and attorney’s fees.

2. Separation Pay. It is an additional pay given to employees who are separated

from their employment due to authorized causes as these employees are not at
fault since their employment was ended due to legitimate business reasons.
Also, where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be awarded
as an alternative. The payment of separation pay is in addition to payment of
backwages.

3. Solidary Liability of Corporate Officer. Corporate officer is solidarily liable with

the corporation for the termination of employment of employee if done with
malice or in bad faith. There should be evidence on record that an officer acted
maliciously or in bad faith in terminating an employee to sustain such finding.

FACTS:
Petitioner Harpoon, a company engaged in ship building and ship repair, with petitioner
Rosit as its President and Chief Executive Officer (CEO), originally hired respondent in
1992 as its Yard Supervisor tasked to oversee and supervise all projects of the
company.

On June 15, 2001, respondent averred that he was unceremoniously dismissed by

petitioner Rosit. He was informed that the company could no longer afford his salary
and that he would be paid his separation pay and accrued commissions. Relying on the
promise of petitioner Rosit, respondent went to the office on June 30, 2001 to receive
his separation pay and commissions, but petitioner Rosit offered only his separation
pay. Respondent refused to accept it and also declined to sign a quitclaim. After several
unheeded requests, respondent, through his counsel, sent a demand letter dated
September 24, 20016 to petitioners asking for payment of ₱70,000.00, which represents
his commissions for the seven boats constructed and repaired by the company under
his supervision. In a letter-reply dated September 28, 2001, petitioners denied that it
owed respondent any commission, asserting that they never entered into any contract
or agreement for the payment of commissions. Hence, on October 24, 2001,
respondent filed an illegal dismissal complaint praying for the payment of his
backwages, separation pay, unpaid commissions, moral and exemplary damages and
attorney’s fees. He supported his claim for commissions with two vouchers evincing
payments for vessel repairs, arguing that he was paid P10,000 for each vessel he
repaired.

Harpoon averred that on June 15, 2001, Rosit merely met with Francisco to warn him
regarding his habitual absences and tardiness. When Francisco continued to be absent,
Harpoon sent him memoranda informing him of his absences, which were filed with the
DOLE on August 15, 2001. Francisco was then terminated on July 30, 2001. With
regard to the commissions claimed, Harpoon averred that Francisco was only a regular
employee, with a regular salary, and that the supposed "commissions" were merely
additional money recognizing Francisco’s efforts.
The Labor Arbiter ruled that Francisco was legally dismissed and that due process was
served through the several memoranda sent to him. It also ruled that commissions were
due Francisco, and gave credence to the vouchers. The NLRC, however, held that
Francisco was illegally dismissed, for his timecard for June 2001 only showed three
absences, which could hardly be called habitual and therefore cannot be a ground for
termination. It upheld the Labor Arbiter with regard to the commissions. The CA affirmed
the NLRC, and held that Harpoon president Rosit should be solidarily liable with the
company.

ISSUES:

1. Whether respondent was illegally dismissed for failure of petitioners to prove the
existence of a just cause for his dismissal.

2. Whether respondent is not entitled to the payment of commissions since the

check vouchers and purported list of vessels show vagueness as to sufficiently
prove the claim.

3. Whether Rosit could not be held solidarily liable with Harpoon for lack of
substantial evidence of bad faith and malice on his part in terminating
respondent.

RULING:
1. Yes, the Court held that the termination was illegal. As stated by the NLRC,
Francisco’s timecard only showed three consecutive absences and no record of
tardiness, which hardly constitutes gross or habitual absence/tardiness. Moreso,
the reasons for Francisco’s three-day absence were not contested by Harpoon
before the Labor Arbiter, and no other evidence was presented before the Labor
Arbiter to prove such "habitual" tardiness/absence. The argument that Francisco
abandoned his work and went AWOL also does not hold water, since Harpoon
failed to prove that the two elements of work abandonment existed: namely, that
there is absence of failure to report to work for no justifiable reason, and that
there is intent to sever the employee-employer relationship. Here, Harpoon failed
to prove that it was respondent who voluntarily refused to report back for work by
his defiance and refusal to accept the memoranda and the notices of absences
sent to him. Harpoon failed to present evidence that they sent these notices to
respondents last known address for the purpose of warning him that his
continued failure to report would be construed as abandonment of work. Verily,
an absence of three days does not constitute habitual absence justifying a
termination from work.

2. Yes, the Court held that Francisco was not entitled to the commissions. The
check vouchers contained very scant details and did not state that they were
paid for the construction or repair of a vessel. They did not state the purpose for
which the amounts were paid. Moreover, the list of vessels presented with the
vouchers does not validate Francisco’s monetary claim for it only contains a list
of vessels, and nothing more. The vouchers patent vagueness makes them
unreliable as a basis for Francisco’s claim of commissions. Entitlement to
commissions cannot be proved by vouchers which are silent as to the purpose
for which they are issued.

3. Yes, the Court disagrees with the Labor Arbiter and NLRC in according solidary
liability on Rosit and Harpoon for the illegal dismissal. As held in the case of
MAM Realty Development Corporation v. National Labor Relations Commission,
"obligations incurred by [corporate officers], acting as such corporate agents, are
not theirs but the direct accountabilities of the corporation they represent." As
such, they should not be generally held jointly and solidarily liable with the
corporation. The Court, however, cited circumstances when solidary liabilities
may be imposed, as when the officer acted in bad faith or gross negligence in
handling corporate affairs. Here, the CA imposed personal liability on Rosit
based on bad faith, even though there was no proof that Rosit acted with bad
faith or outside of his authority as company president. At most, his acts merely
showed the absence of a just or valid cause in terminating the employment of
Francisco.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated January 26, 2005 and
Resolution dated April 12, 2005 of the Court of Appeals in CA-G.R. SP No. 79630 finding
respondent Fernan H. Francisco to have been illegally dismissed and awarding him backwages and
separation pay are AFFIRMED. The award of commissions in his favor is, however, DELETED.
Petitioner Jose Lido T. Rosit is ABSOLVED from the liability adjudged against co-petitioner Harpoon
Marine Services, Incorporated.