G.R. No. L-20238 - Perez vs. Court of Appeals

On August 1, 1958, petitioner Damaso P. Perez appointed respondent Armando Herradura as manager of the D. P. Perez Insurance Agency, with a monthly salary of P400.00.
Respondent immediately assumed the managerial functions of the agency.

On January 15, 1959, petitioner informed respondent by letter that, due to his failure to generate the promised amount of business, the agency would change his employment arrangement.
Effective that same day, respondent was reassigned as manager of the Non-Life department with compensation on a commission basis only.
As a consequence of the alteration in terms, respondent tendered his resignation the following day.

On February 11, 1959, respondent filed a claim for separation pay with the Regional Office No. 3 of the Department of Labor.
Likewise, on February 24, 1959, respondent filed a criminal complaint for estafa against petitioner alleging non-payment of his salaries.
On August 4, 1959, while the criminal complaint was pending investigation, petitioner instituted a civil action for consignation and declaratory relief in the Court of First Instance of Manila (Civil Case No. 41080), asserting that he had offered payment of P600.00 for the alleged unpaid salaries and had deposited the same in court.

The lower court found petitioner liable for respondent’s unpaid salaries covering the period from December 1, 1958 to January 15, 1959.
The judgment also ordered petitioner to pay separation pay equivalent to one month’s salary (P400.00), moral damages amounting to P2,000.00, and attorney’s fees of P500.00.
On appeal, the Court of Appeals modified the lower court’s decision by reducing moral damages to P1,000.00 and eliminating the award for attorney’s fees.

Under Republic Act 1052, an indefinite employment contract cannot be terminated without either a one-month advance notice or separation pay equivalent to one month’s salary, without regard to the employee’s length of service.
The amended law (Republic Act 1787) further clarified that in cases of termination without just cause, the employee is entitled either to at least one month’s notice or severance pay computed as one-half month’s salary for every year of service (with the fraction of at least six months being considered as one whole year), whichever is longer.
In this case, it was emphasized that the employee’s length of service is not a basis to deny the minimum statutory entitlement of one month’s notice or the corresponding separation pay.

Petitioner contended that respondent was not entitled to separation pay because his service lasted less than six months.
Petitioner also argued against the award of moral damages, asserting that there was no evidence of malicious, fraudulent, or bad faith conduct in the non-payment of salaries.
Respondent, on the other hand, maintained his claim for unpaid salaries, separation pay, and moral damages as a result of the change in employment terms and the consequent resignation.

Whether respondent is entitled to unpaid salaries for the period from December 1, 1958 to January 15, 1959, despite petitioner’s claim of tender and consignation.
Whether respondent is entitled to separation pay under Republic Act 1052 (as amended by Republic Act 1787) even though his period of employment was only five and one-half months.
Whether the award of moral damages is justified given the absence of evidence showing malicious or fraudulent behavior on the part of petitioner.
Whether the statutory requirement for termination notice and the computation of separation pay was properly applied in light of the change in respondent’s employment conditions.