G.R. No. 234501 - Mercantile Insurance Co., Inc. vs. Yi

Respondent Arturo R. Tolentino was employed by petitioner PLDT for 23 years, beginning in 1972.
At the time of his dismissal in 1995, he held the position of division manager of the Project Support Division, Provincial Expansion Center, Meet Demand Group.
His responsibilities included the evaluation, recommendation, and review of documents related to provincial lot acquisitions.

In 1995, a supervisor under respondent Tolentino, Jonathan de Rivera, was discovered to have entered into an “internal arrangement” with sellers of a parcel of land recommended for acquisition under PLDT’s expansion program.
Quirino Donato, serving as the attorney-in-fact for the landowner, executed an affidavit disclosing the internal arrangement, which entailed:

Out of a purchase price of P4,100,000.00, only P3,400,000.00 would be released automatically to Mrs. Albay, net of all documentation and transfer expenses.
A scheduled release of funds to pay off Mrs. Albay’s outstanding loan, followed by further payments upon completion of the transfer, with the final amount delivered personally by de Rivera and his company, all according to the terms of the internal arrangement.

The affidavit further revealed that any follow-up on the transaction was to be coordinated with the office of respondent Tolentino and de Rivera.

Upon learning of the internal arrangement, PLDT dismissed supervisor de Rivera.
After his dismissal, de Rivera submitted a sworn statement implicating respondent Tolentino as being behind the anomalous transaction.
Respondent Tolentino, through his affidavit, denied involvement, clarifying that his authority to approve real estate acquisitions was limited to properties valued below P200,000.
PLDT issued a notice of dismissal to Tolentino on October 27, 1995, which was accompanied by a handwritten note from VP Nicanor E. Sacdalan offering him the option to resign, instead of affording him a formal hearing.
The dismissal was delayed but eventually declared final – on December 4, 1995, PLDT informed Tolentino that his dismissal would become effective the following day.

Respondent Tolentino filed a complaint for illegal dismissal, as well as claims for moral and exemplary damages, in January 1996.
The labor arbiter ruled in favor of Tolentino by declaring his dismissal illegal and ordering his reinstatement with full backwages and additional benefits.
Further, the labor arbiter ordered PLDT to pay moral damages of P1,000,000.00, exemplary damages of P100,000.00, and attorney’s fees amounting to 10% of the total award.
The NLRC, on appeal, reversed the labor arbiter’s decision on the ground that respondent was a managerial employee, asserting that loss of trust and confidence was a sufficient basis for dismissal.
The Court of Appeals (CA) then reinstated the labor arbiter’s ruling ordering respondent Tolentino’s reinstatement, which subsequently became the subject of the petition for review.

Whether the evidence, notably the affidavits and sworn statements, established respondent Tolentino’s complicity in the internal arrangement with sufficient clarity to warrant dismissal.
Whether the mere existence of a basis for the loss of trust and confidence, based on the misconduct of a subordinate, is adequate proof to justify the dismissal of a managerial employee.

Whether the inherent prerogative of employers to dismiss managerial employees for loss of trust and confidence must be balanced against the employee’s security of tenure.
Whether the alleged loss of trust and confidence was substantial and founded on clearly established facts sufficient to justify termination of employment.

Whether PLDT’s claim of strained relations between management and respondent provided a valid ground for dismissal.
Whether the option given to respondent Tolentino to resign (instead of a formal hearing) is indicative of an absence of actual irreconcilable differences.