Case Summary (G.R. No. 42669)
Employment Background and Duties of Petitioner
Lamadrid was employed as a Senior Purser, with duties including supporting the In-flight Service Manager, ensuring communication and service plans were followed, supervising other cabin crew, and overseeing the safety and security standard compliance of her section. Cathay’s Conditions of Service required all cabin crew to be based in Hong Kong.
Incident Leading to Dismissal
On May 19, 2007, Cathay’s Airport Services Officer in Sydney received a report that Lamadrid, among other crew members, was found in possession of items—specifically a 1.5 liter Evian water bottle and magazines—confiscated from her without authorization. The items were processed by Cathay officials and sent to their Hong Kong office.
Employer’s Demand for Explanation and Termination
Cathay requested a written explanation from Lamadrid, who denied the allegations, claiming the magazine was not company property and the water bottle was hers, purchased legally. After further requests for explanation, Cathay terminated her employment by letter dated July 10, 2007, citing serious misconduct in removing company property without permission, resulting in loss of trust.
Petitioner's Claims and Employer’s Defense
Lamadrid filed a complaint for illegal dismissal, asserting lack of just cause, improper proof of misconduct, procedural due process violations, and disproportionality of the penalty relative to her years of service and first offense. Cathay argued lack of jurisdiction by Philippine authorities initially, asserted that dismissal was justified by breach of trust justified by pilferage, and maintained her position required trust and confidence.
Labor Arbiter's Decision
The Labor Arbiter affirmed jurisdiction over the case, considering Cathay a business operating in the Philippines and Lamadrid’s employment contract executed there. The Arbiter held Lamadrid was not a managerial employee and that dismissal was an excessive penalty for the allegation. Separation pay in lieu of reinstatement was awarded due to strained relations.
Decision of the National Labor Relations Commission (NLRC)
The NLRC affirmed the Labor Arbiter's jurisdiction under Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act) which grants jurisdiction over claims involving overseas Filipino workers (OFWs). The NLRC concluded dismissal was too harsh considering Lamadrid’s clean record and the minor value of the property involved. It ordered reinstatement, granted back wages but denied damages due to lack of bad faith by employer, deducting benefits already received by Lamadrid.
Court of Appeals (CA) Ruling
The CA reversed the NLRC and Labor Arbiter decisions, ruling that labor authorities had jurisdiction and that Lamadrid’s dismissal was valid due to theft and dishonesty. The CA held that dismissal is justified regardless of the value of the pilfered items to protect company interest, emphasizing Lamadrid’s position as one vested with trust and confidence. The CA also found the relationship between employer and employee was strained, justifying denial of reinstatement.
Issues Raised in the Petition for Review
The main issue was whether Lamadrid's dismissal was illegal, focusing on: (1) lack of sufficient evidence to prove pilferage; (2) breach of procedural due process; and (3) whether Lamadrid’s position involved trust and confidence justifying dismissal on grounds of loss of trust.
Petitioner's Arguments
Lamadrid contended Cathay failed to prove the pilferage with clear and convincing evidence, argued that bringing water was not prohibited, and that procedural due process was violated because she was denied opportunity to confront evidence. She denied the applicability of loss of trust or confidence as she was not in a managerial or supervisory position entrusted with company property.
Respondents' Arguments
Respondents asserted Lamadrid was a permanent resident in Hong Kong, entrusted with custody of valuable company properties—including chinaware, consumables, and inflight materials—and that her role included supervisory functions over other cabin crew. They presented evidence that Cathay’s disciplinary policy authorizes summary dismissal for removal of company property without authorization. They confirmed that the produced batch number indicated the water bottle was company property and challenged the veracity of Lamadrid's denials. They maintained that procedural due process was observed.
Jurisdiction and Applicable Law
The Court affirmed jurisdiction under Article 224 [217] of the Labor Code and Section 10 of RA 8042 (Migrant Workers and Overseas Filipinos Act), as amended by RA 10022, governing labor disputes involving OFWs. Lamadrid's status as an OFW based in Hong Kong triggered jurisdiction of Philippine labor authorities.
Classification of Lamadrid’s Position as Imbued with Trust and Confidence
The Court classified positions of trust and confidence under two categories: (1) managerial employees with power to execute management policies; (2) employees who routinely handle employer’s significant money or property in the normal and routine exercise of duties. Based on detailed affidavits from Cathay’s management, Lamadrid’s role involved exclusive custody and control of valuable company property inflight and supervision over other crew members, making her position one of trust and confidence.
Just Cause for Dismissal: Loss of Trust and Confidence
Article 297 [282] of the Labor Code enumerates just causes for termination, including fraud or willful breach of trust. Loss of trust requires proof that the employee holds a position of trust and committed an act that justifies loss of trust and confidence, supported by clear and sufficient evidence. The Court found Cathay established both elements, including proof that the Evian water bottle was company property.
Nature of the Misconduct and Its Impact on Employer-Employee Relationship
Removal of company property without authorization constitutes serious misconduct, transgressing clear company rules and policies, which inherently involves wrongful intent and breaches trust. Lamadrid’s violation, though the first in 17 years of service and involving a relatively low-value item, nevertheless eroded trust as mandated by company policy.
Consideration of Appropriateness of Penalty
Despite the proven misconduct, the Court emphasized the principle of proportionality and totality of infractions. Given Lamadrid’s long and otherwise clean record
Case Syllabus (G.R. No. 42669)
Facts and Antecedents
- Salvacion A. Lamadrid was employed by Cathay Pacific Airways Limited (Cathay) as a cabin crew member starting in 1990, holding the position of Senior Purser with a monthly salary of HK$26,613.00 prior to termination.
- Cathay's Conditions of Service required all cabin crew to be based in Hong Kong; Lamadrid had rendered approximately 17 years of service.
- Her duties included supporting the In-flight Service Manager, ensuring communication during briefings, overseeing in-flight service consistent with company philosophy, ensuring crew competence in safety and service procedures, and reporting any crew, passenger, or cabin property issues.
- On May 19, 2007, Cathay Airport Services Officer received a report that some crew members, including Lamadrid, were found in possession of goods after disembarking from flight CX 139 at Sydney Airport.
- Confiscated items from Lamadrid included a 1.5-liter Evian water bottle and magazines; these were processed through official channels and sent to Cathay’s Hong Kong office.
- Lamadrid and another crew member pleaded with Cathay's Airport Services Manager not to report the incident, citing their long years of service, but the report was already relayed.
- Cathay requested Lamadrid to submit a written explanation and show cause why disciplinary action should not be imposed, citing removal of company property without authorization as serious misconduct.
- Lamadrid denied allegations, claiming the magazine was not company property and that another crew member admitted to taking other items; she also claimed the bottle of water was her own.
- Despite these contentions, Cathay eventually terminated Lamadrid’s employment on July 10, 2007, citing serious misconduct and loss of trust and confidence.
- Lamadrid filed a complaint for illegal dismissal and money claims against Cathay and Vivian Lo (Lo).
Proceedings Before the Labor Arbiter
- Cathay and Lo argued lack of jurisdiction and denied illegal dismissal claims, asserting compliance with substantive and procedural due process.
- The Labor Arbiter ruled that jurisdiction existed because Cathay is licensed and operating in the Philippines and the employment contract was executed therein.
- The Arbiter found that Lamadrid was not a managerial employee and that loss of trust was insufficient grounds for dismissal based on her duties.
- The penalty of dismissal was deemed too harsh given Lamadrid’s 17 years of unblemished service.
- The Labor Arbiter declared Cathay guilty of illegal dismissal, ordered payment of separation pay in lieu of reinstatement due to strained relations.
National Labor Relations Commission (NLRC) Ruling
- The NLRC affirmed jurisdiction based on Republic Act No. 8042 (Migrant Workers and Overseas Filipinos Act), as Lamadrid was an Overseas Filipino Worker (OFW) deployed abroad.
- The NLRC ruled that Lamadrid was not a managerial employee and dismissed Cathay’s argument to the contrary.
- Reinstatement instead of separation pay was ordered, considering no strained relations existed between the parties.
- Damages were denied due to lack of bad faith by Cathay.
- The monetary award was reduced by benefits and bonuses received by Lamadrid during separation amounting to HK$622,077.54.
- Cathay’s motion for reconsideration was denied.
Petition for Certiorari before the Court of Appeals (CA)
- Cathay filed a petition asserting the NLRC and Labor Arbiter lacked jurisdiction, alleging Lamadrid was a permanent resident of Hong Kong.
- Cathay further contended Lamadrid was a confidential employee vested with trust and confidence, justifying dismissal for pilferage regardless of the value of the goods.
- The CA held that both the Labor Arbiter and NLRC had jurisdiction pursuant to Article 217 (224) of the Labor Code, Section 10 of RA 8042, and related regulations.
- The CA found that dismissal was justified on grounds of theft and dishonesty; management has the right to dismiss employees for conduct injurious to company interest.
- The CA reversed the decisions of th