G.R. No. 180123 - Kulas Ideas and Creations vs. Alcoseba

In 1996, respondents Juliet Alcoseba and Flordelinda Arao-arao were employed as sales attendants by KULAS Ideas & Creations, a gift boutique operated by petitioners Gil Francis Maningo and Ma. Rachel Maningo.
Their duties included selling products, preparing weekly sales reports, and assisting the clerk with the monthly inventory of saleable goods in the Ayala Center outlet in Cebu.

In February 2000, the Department of Labor and Employment (DOLE) inspected the KULAS outlet and found several violations of labor standards laws.
A Notice of Summary Investigation dated September 11, 2000 was issued by DOLE, directing KULAS to pay a salary differential amounting to P173,003.28 covering January to August 2000.

On November 23, 2000, KULAS directed Juliet and Flordelinda, via a memorandum, to explain an alleged inventory discrepancy amounting to P48,179.30.
On November 29, 2000, KULAS suspended both employees for seven days, beginning December 1, 2000, accusing them of gross negligence in their duties, specifically regarding the reported inventory shortfall.
A reconciliation report dated December 7, 2000 mentioned no report of stock shortage by the respondents despite discrepancies being noted.

After the suspension, on December 11, 2000, the respondents inquired about their employment status since they were instructed not to report for work pending the explanation for the discrepancies.
On December 13, 2000, KULAS sent a memorandum detailing findings from recent inventory reconciliations that showed significant discrepancies, including an overage on December 31, 1999, an overage in February 2000, and ultimately a shortage in November 2000.
A separate memorandum on the same day warned the respondents to explain within 48 hours why they should not be terminated for alleged gross neglect of duties and dishonesty.
In response, on December 14, 2000, the respondents maintained they were not responsible for the losses, noting that discrepancies predated their employment and they did not handle sales proceeds directly.

On December 19, 2000, KULAS charged the respondents with estafa before the Cebu City Prosecutor’s Office; the complaint was later dismissed.
The respondents, consequently, amended their complaint to illegal dismissal before the National Labor Relations Commission (NLRC).
At the NLRC, the Labor Arbiter initially ruled in favor of petitioners, declaring no illegal dismissal but ordering minimal monetary awards.
On appeal, the NLRC maintained the “no illegal dismissal” stance in its decision dated April 19, 2004, although it set aside some monetary awards due to lack of jurisdiction.
A subsequent motion for reconsideration by respondents led to a temporary ruling of illegal dismissal with limited separation pay and attorney’s fees, which was later reversed by the NLRC’s March 18, 2005 Resolution.
The case was elevated to the Court of Appeals, which reversed and set aside the NLRC decisions, finding that the respondents were constructively terminated, and ordered full separation pay and backwages from December 8, 2000 onward.
Petitioners then moved for reconsideration before the appellate court, which was denied, prompting the present petition for review questioning the appellate court’s reversal of the NLRC’s common findings regarding inventory and due process.

Whether the respondents were afforded due process in relation to the allegations of gross negligence and dishonesty.
Whether the required procedural steps, such as a proper written notice of termination and a hearing or conference, were complied with by petitioners before effecting termination.

Whether there was substantial evidence to support the claim that the respondents committed gross neglect of duties or fraud as required under Article 282 (b) and (c) of the Labor Code.
Whether the alleged inventory discrepancies and resultant losses could be directly attributed to the respondents’ actions or were due to the employer’s own lapses in management.

Whether the failure to conduct regular and complete inventory turnovers by petitioners contributed to the discrepancies and negated the basis for dismissal.
Whether the absence of clear documentation (such as receiving and turning-over procedures) undermined the employer’s claim against the respondents.

Whether the appointment of separation pay, backwages, and other monetary awards was proper given the circumstances of alleged illegal dismissal.
Whether claims for additional salary differential, unpaid salaries, moral and exemplary damages, and attorney’s fees were supported by sufficient proof and legal basis.