G.R. No. 133259 - Farrol vs. Court of Appeals

Petitioner Wenifredo Farrol was employed as the station cashier at RCPI’s Cotabato City station.
On June 18, 1993, the branch (district) manager notified RCPI’s main office that “Peragram funds” (amounting to P232,250.83) from the branch had been used for the payment of retirement benefits of five employees.
On October 1, 1993, a report from RCPI’s Field Auditor verified a cash shortage of P50,985.37 in the branch’s Peragram, Petty, and General Cash Funds.

Following the discovery of the shortage, petitioner was directed by the Field Auditor to explain the discrepancy within 24 hours of the notice.
The next day, on October 14, 1993, petitioner paid P25,000.00 towards the cash shortage.
On October 16, 1993, RCPI demanded a written explanation from petitioner regarding why he should not be dismissed.
Two days later, petitioner wrote to the Field Auditor, reiterating that part of the allegedly missing funds had been used for retirement benefits and confirming the P25,000.00 payment.

Petitioner made two additional payments on separate occasions, although a balance of P6,995.37 still remained unsettled.
Following these transactions, the district manager informed petitioner of his placement under preventive suspension.

On November 22, 1993, RCPI sent petitioner a termination letter, effective November 20, 1993, citing several reasons:

The allegation that part of the cash shortage was used for payment of salaries/wages and retirement benefits was denied and stated to have been properly accounted for per the auditor’s report.
Petitioner had disregarded RCPI Circular No. 63, which mandated the daily preparation of a Statistical Report and twice-daily deposit of cash collections.
The “deliberate withholding” of collections to conceal shortages or any form of misappropriation was flagged as a serious offense under RCPI’s Rules and Regulations (Section No. 20), warranting immediate dismissal.
The cashier position demanded utmost trust and confidence—a requirement that RCPI claimed was compromised in petitioner’s case.

Notably, RCPI’s dismissal notice failed to clearly state the specific facts, circumstances, and evidence supporting the allegation of a breach of trust.

Unaware of the termination letter, petitioner later requested reinstatement, noting that his preventive suspension period had lapsed.
In September 1995, petitioner expressed his willingness to settle the dispute on the condition that he be granted his retirement benefits. RCPI replied that his employment had already been terminated as per the November 22, 1993, letter.
The unresolved conflict was initially brought before the grievance committee but, after more than two years, was submitted to voluntary arbitration.
The Voluntary Arbitrator ruled that petitioner was illegally dismissed and ordered RCPI to pay backwages, separation pay, 13th month pay, and sick leave benefits.
RCPI, aggrieved by the arbitral award, filed a petition for certiorari before the Court of Appeals, which reversed the arbitrator’s ruling and dismissed the illegal dismissal claim.
Following the denial of petitioner’s motion for reconsideration by the Court of Appeals, petitioner elevated the issue through a petition for review on certiorari, contending that his dismissal was illegal because he was denied due process and could not be held liable for the supposed breach of trust and confidence.

The case was analyzed under the procedural requirements detailed in Book V, Rule XIV of the Omnibus Rules Implementing the Labor Code, which mandates:

Security of tenure and due process – no worker may be dismissed except for a just or authorized cause and only after due process is observed.
Notice of Dismissal – the employer must supply a written notice specifying the acts or omissions constituting the basis for dismissal.
Answer and Hearing – the employee is afforded an opportunity to respond within a reasonable period.
Decision to Dismiss – a written decision stating the clear reasons for dismissal must be immediately provided to the employee.
The dual requirement of first notice (informing the employee of the allegations and giving the chance to be heard) and a clear second notice (formal communication of the dismissal decision with supporting facts) is emphasized.

RCPI’s failure to adhere strictly to the above-noted procedural safeguards, especially in the issuance of a second notice that lacked clarity and detailed allegations, is central to the petitioner's challenge.

Was petitioner afforded the full due process as guaranteed by the Labor Code and judicial precedents?
Specifically, did RCPI comply with the mandated procedures—issuance of two distinct notices and a subsequent hearing—prior to dismissing petitioner?

Was the alleged breach of trust and misappropriation clearly established by RCPI, especially given that petitioner’s role as a station cashier does not inherently require the same level of trust as managerial positions?
Is there sufficient evidence that the cash shortage was a result of deliberate misconduct warranting immediate dismissal?

Given petitioner’s long years of service (24 years) and the fact that this appeared to be his first offense, was the penalty of dismissal commensurate with the offense?
Could a lighter penalty have been imposed, taking into account the remedial actions (such as payment of portions of the shortage) executed by petitioner?

To what extent can RCPI’s internal disciplinary rules override the constitutional and statutory due process requirements in dismissing an employee?
Does the strict application of RCPI’s rules, particularly relating to the “trust and confidence” requirement, justify the dismissal in light of the circumstances?