G.R. No. 189607 - Castillo vs. De Leon Castillo

Petitioner Midas Touch Food Corporation, owner of West Villa Restaurants and other food outlets, and its officers—Wilson Chu (Chairman of the Board) and Ramon T. Luy (President and CEO)—are the petitioners.
Private respondent Iris Fe B. Isaac was employed as Operations Manager, a position second only to the President, and was responsible for establishing and overseeing the management scheme, formulating company policies, recruitment, training, business planning and expansion, and procurement for the fast-food chain.

Isaac was hired on September 16, 1986, with the authority to appoint personnel such as Alice Te as Commissary Manager, thus contributing to the management team.
On June 15, 1987, Isaac received a termination letter from the Executive Committee for alleged “lack of confidence.” However, on July 7, 1987, petitioner Luy informed her that this termination had been recalled, allowing her to continue as Operations Manager.
In October 1987, an investigation was initiated against Alice Te for alleged theft of food supplies destined for another restaurant, Food Center, which eventually led to her resignation on November 3, 1987.

On the same day that Alice Te resigned, petitioner Luy claimed that Isaac admitted she was operating the Food Center—a business venture allegedly conducted using company resources.
Based on this alleged admission, petitioner Luy terminated Isaac on November 6, 1987 through a letter stating that her dismissal was effected on the ground of loss of confidence. Key excerpts from the termination letter highlighted the alleged admission related to ownership and use of company facilities to support her canteen.

Isaac filed a complaint for illegal dismissal on March 9, 1988, which led to the Labor Arbiter’s judgment on November 23, 1990, finding her dismissal valid and awarding her certain monetary benefits including separation pay and other wage components.
Both petitioners and respondent Isaac appealed the decision to the NLRC, where petitioners contested the award of separation pay and the imposition of personal liabilities on their officers.
On July 20, 1993, the NLRC reversed the Labor Arbiter’s decision by declaring Isaac’s dismissal illegal and ordering monetary awards comprising backwages for three years, separation pay in lieu of reinstatement (computed for each year of service), proportionate 13th month pay for 1987, and unpaid wages for November 1–6, 1987.

Petitioners did not present any witnesses during the proceedings at the Labor Arbiter level.
Respondent Isaac contended that the evidence against her was self-serving, hearsay, and undocumented, with the investigative process itself being deficient as it was conducted only after her termination.
The procedural lapse was underscored by the failure to afford Isaac a proper opportunity to be heard and to defend herself, highlighting a violation of her due process rights.

Petitioners argued that their individual roles as corporate officers (President and Chairman of the Board) should preclude personal liability for the dismissal because they were not the direct employers of Isaac.
The issue eventually extended to whether petitioners Luy and Chu could be held jointly and severally liable alongside the corporation for the monetary awards to Isaac.

Whether the dismissal of respondent Isaac was valid, particularly in light of the requirements set forth by Article 282 of the Labor Code, which necessitate a just cause and due process.

Did Isaac, as a managerial employee, receive the necessary procedural due process, including proper notice and the opportunity to be heard, prior to her termination?
Was the proclaimed "loss of confidence" substantiated by sufficient and credible evidence, or was it based on unverified, hearsay allegations made after her termination?

Whether petitioners’ failure to conduct a thorough investigation and present corroborative evidence rendered the termination procedurally and substantively defective.

Was the reliance on post-dismissal affidavits and uncorroborated witness statements sufficient under the rules of evidence and due process?
Can the employer’s claim of loss of trust and confidence be sustained without a fair and impartial hearing?

Can corporate officers be held personally liable for monetary claims in cases of illegal dismissal when they are not the direct employers?
Whether the alleged misuse of company resources and self-serving actions, as asserted in the termination letter, translated into individual fault amounting to personal liability.