G.R. No. 218425 - People vs. Cacho y Songco

Case Summary (G.R. No. 218425)

Employment Background and the Pepsi Contract Issue

On January 2, 2002, Kimwa Construction & Development Corporation hired respondent as a liaison officer. Allegedly, Kimwa also operated Leo’s Restaurant and Bar Cafe (“Restobar”) and Mountain Suite Business Apartelle (“Apartelle”). On July 4, 2005, Kimwa appointed respondent as Administrative Officer/Human Resource (HR) Head of these establishments with a salary of P15,000.00 per month. The appointment became effective on October 18, 2005, when the establishments became fully operational.

Thereafter, Leo Y. Lua, the manager of the Restobar and the Apartelle, issued memoranda requiring respondent to report at Kimwa’s main office and to explain certain matters. On December 30, 2005, respondent received a memorandum demanding an explanation concerning the agreement between the Restobar and Pepsi Products Philippines, Inc. (“Pepsi”), as well as the benefits she derived therefrom. The memorandum alleged that Pepsi provided soft drink cases during the establishments’ opening and subsequent deliveries, but Pepsi’s records allegedly showed that receipts were inconsistent. In her explanation, respondent stated that on October 24, 2005, Jovenal Ablanque, Pepsi’s sales manager, discussed the contract with her in Leo’s presence, and that Leo verbally authorized her to sign the Pepsi agreement on behalf of the Restobar. Respondent further claimed that she did not intervene in discussions between Leo and Ablanque and that she personally received no benefits from Pepsi.

On January 2, 2006, Leo issued another memorandum requiring respondent to explain why she signed the Pepsi contract without authority and to clarify whether her apology signified acceptance of fault. Respondent replied that she did not receive personal benefits and that she apologized because Leo appeared doubtful, not because she accepted the accusations. On January 3, 2006, a further memorandum required her to answer charges of dishonesty tied to charging meals to the Restobar’s account without approval, violation of duties for not informing Leo of the signing of the Pepsi contract, and failure to account for certain Pepsi cases. Respondent maintained that her alleged dishonesty was not related to the Pepsi contract and that Pepsi later clarified the discrepancies.

Pepsi, through its settlement and credit manager, certified on January 4, 2006 that it delivered specified Pepsi cases to the Restobar, that it gave no cash assistance or cash equivalents to any staff, and that any erroneous volume in documents inadvertently provided to Leo had been adjusted in Pepsi’s records. Despite this, Leo terminated respondent on January 12, 2006, effective January 15, 2006, invoking loss of trust and confidence.

NLRC and Labor Arbiter Proceedings: Illegal Dismissal Dispute

Respondent then filed an Amended Complaint for illegal dismissal, illegal suspension, non-payment of 13th month pay, separation pay in lieu of reinstatement, moral and exemplary damages, and attorney’s fees against Kimwa and petitioners, including the Restobar, the Apartelle, Leo, and/or Amelia.

In the Executive Labor Arbiter’s Decision dated November 20, 2007, the complaint was dismissed for lack of merit. The Executive Labor Arbiter nonetheless ordered the payment of separation pay of P15,000.00, reasoning that the dismissal was valid on the ground of loss of trust and confidence. It concluded that employers should not be compelled to retain employees guilty of acts inimical to their interests and that dismissal was a measure of self-protection. It also found that respondent committed acts contrary to the employer’s interest by charging personal food consumption to the Restobar, entering an exclusive contract with Pepsi, and failing to account for donated Pepsi products. On procedural due process, it found that memoranda informed respondent of charges and that notice of dismissal was given. Yet, separation pay was granted because the Executive Labor Arbiter perceived that respondent entered the Pepsi contract in good faith, presuming she was authorized.

Respondent appealed. On November 28, 2008, the NLRC issued a Resolution finding the dismissal illegal. It set aside the Executive Labor Arbiter’s Decision and ordered petitioners to pay backwages, separation pay, moral and exemplary damages, 13th month pay differential, and attorney’s fees, with specific computations tied to respondent’s latest salary and employment period. The NLRC held that respondent’s claim of authority to sign the Pepsi contract had evidentiary support, citing a sworn statement by Pepsi’s sales manager and Pepsi certifications. It added that even if respondent lacked explicit authority from the owner, signing the contract fell within her operational duties since she was in charge of the establishments. The NLRC also ruled that respondent was not shown to be ill-motivated and that there was no evidence she abused her privilege in relation to charging food expenses connected with entertaining guests.

Petitioners moved for reconsideration. On June 4, 2009, the NLRC granted it and reversed course. It set aside the November 28, 2008 Resolution and dismissed the complaint for lack of merit. The NLRC reasoned that respondent’s functions did not include authority to sign or execute contracts on behalf of the Restobar. It held that even if Leo verbally authorized respondent, she signed the contract in her own name as if she were the Restobar’s owner. It further posited that without her suspension and dismissal, donated Pepsi products would not have been traced. It faulted respondent for charging meals at fifty percent of her personal consumption without approval from the owner or chief officer. It also stated that respondent had been given opportunity to be heard through the memoranda.

The NLRC denied respondent’s Motion for Reconsideration on July 31, 2009.

The Court of Appeals’ Ruling

Respondent filed a Petition for Certiorari before the CA, essentially reiterating illegal dismissal. On November 27, 2012, the CA set aside the NLRC’s June 4, 2009 and July 31, 2009 Resolutions and reinstated the NLRC’s November 28, 2008 Resolution. On the CA’s view, respondent occupied a position of trust and confidence as Administrative Officer/HR Head, but petitioners failed to prove that respondent committed the specific acts imputed to her: signing the Pepsi agreement without authority from Leo, failing to account for Pepsi products donated to the Restobar, and charging food on the Restobar’s account without authorization. The CA emphasized that these grounds had been addressed in the NLRC’s November 28, 2008 Resolution before the later reversal. It held that even if respondent lacked express authority, entering into the Pepsi contract did not, by itself, justify dismissal absent malicious intent or fraud. The CA found that the Restobar did not suffer damage due to the Pepsi contract and that respondent acted in good faith, believing such act was part of her duties. It also reiterated that there was no evidence of abuse of representation privilege in relation to food expense handling for guests. It further noted that respondent had no prior infractions in more than three years of service, and thus dismissal was disproportionate.

The CA denied petitioners’ Motion for Reconsideration on July 12, 2013.

Petitioners’ Arguments and Respondent’s Position

In the present Petition, petitioners argued that the CA erred in (a) accepting respondent’s theory that Kimwa operated the Restobar and the Apartelle, and (b) applying a standard requiring acts supporting a loss of trust and confidence dismissal to be proven by substantial evidence founded on clearly established facts. Petitioners also challenged the award of moral and exemplary damages.

Petitioners maintained that the establishments were owned by Amelia and managed by Leo, as separate from Kimwa, and insisted that respondent had sufficient basis for dismissal because she signed the Pepsi exclusivity contract as though she were the Restobar’s owner and failed to account for the Pepsi products donated. They further denied bad faith and argued that respondent was not entitled to moral and exemplary damages.

Respondent countered that despite her position of trust, there was no showing of a willful breach of trust. She insisted that she acted in good faith when signing the Pepsi exclusivity contract and that there was no dishonest conduct warranting petitioners’ loss of trust.

Supreme Court Review of the Divergent Labor Findings

The Court denied the Petition. It acknowledged the general rule that CA findings of fact, when supported by evidence, are conclusive. Yet it recognized an exception where CA findings are contrary to those of the labor tribunals. Given that the Executive Labor Arbiter and NLRC initially upheld the dismissal, but the CA reinstated the earlier NLRC resolution finding illegality, the Court deemed it necessary to re-evaluate the CA’s contrary factual determinations.

On the matter of ownership and operation of the establishments, petitioners denied Kimwa’s ownership and control and asserted that Amelia owned the Restobar and Apartelle while Leo merely managed them. The Court rejected that position. It found that substantial pieces of evidence showed that Kimwa, Leo, and Amelia owned, controlled, and managed the Restobar and Apartelle. It relied on the fact that Leo, while acting as “Proprietor/Chief Executive Officer” of Kimwa Construction & Development Corp./Mountain Suite Business Apartelle, appointed respondent as Administrative Officer/HR Head of the Restobar and Apartelle, with effectivity tied to when the establishments became operational. It further noted that Leo confirmed respondent’s appointment in the same capacity and issued memoranda requiring respondent to report at Kimwa’s main office. It also observed that the memoranda to explain and the termination notice were written under the heading “Kimwa Construction & Dev. Co

Case Syllabus (G.R. No. 218425)

The case involved a Petition for Review on Certiorari assailing the Court of Appeals (CA) Decision dated November 27, 2012 and its Resolution dated July 12, 2013, both arising from labor proceedings.
The petitioners sought to overturn the CA ruling that reinstated an NLRC Resolution finding illegal dismissal and ordering monetary and other awards in favor of the respondent.
The respondent, Laarne C. Bensing, challenged her dismissal from work and asserted that the ground invoked by the employer did not amount to a just cause.

Parties and Procedural Posture

The petitioners were Leo’s Restaurant and Bar Cafe, Mountain Suite Business Apartelle, Leo Y. Lua, and Amelia Lua.
The respondent was Laarne C. Bensing.
The petitioners assailed the CA action which set aside the NLRC Resolutions dated June 4, 2009 and July 31, 2009, and reinstated the NLRC Resolution dated November 28, 2008.
The National Labor Relations Commission (NLRC) had earlier reversed the Executive Labor Arbiter (LA) ruling through an initial November 28, 2008 Resolution, then later reversed itself again through June 4, 2009 and July 31, 2009 Resolutions.
The Supreme Court denied the petition, thereby affirming the CA Decision and Resolution.

Key Factual Allegations

The respondent began work on January 2, 2002 with Kimwa Construction & Development Corporation (Kimwa) as a liaison officer.
The respondent alleged that Kimwa also operated Leo’s Restaurant and Bar Cafe and the Mountain Suite Business Apartelle.
Kimwa allegedly appointed the respondent on July 4, 2005 as Administrative Officer/Human Resource (HR) Head of the establishments, with an effective date on October 18, 2005 when the establishments became operational.
Leo Y. Lua issued memoranda directing the respondent to report and to explain alleged irregularities involving a Pepsi Products Philippines, Inc. (Pepsi) agreement and the corresponding delivered products.
On December 30, 2005, the respondent was required to explain why she had signed the Pepsi contract without authority from the owner/manager and why she failed to inform Leo of benefits allegedly arising from the agreement.
The memoranda stated that Pepsi gave the Restobar ten cases of soft drinks on opening night and additional sixty-seven cases for December 2005, while the employer’s records reflected receiving only twenty out of the alleged sixty-seven.
In her explanations, the respondent maintained that Leo verbally authorized her to sign the Pepsi contract on behalf of the Restobar in the presence of Jovenal Ablanque, Pepsi’s Sales Manager.
On January 2, 2006, Leo issued another memorandum requiring the respondent to explain why she signed the Pepsi contract without authority and why her apology allegedly did not accept fault on the charges.
On January 3, 2006, the employer required the respondent to answer further charges including: (a) dishonesty for charging to the Restobar account fifty percent of her food orders without owner or manager approval; (b) failure to inform Leo of signing the Pepsi contract; and (c) failure to account for forty-seven allegedly missing Pepsi soft drink cases.
The respondent insisted that she did not receive personal benefits from the Pepsi contract and that Pepsi clarified the alleged discrepancy in delivered quantities.
Pepsi, through its representative, issued a certification and explanation that it had donated ten cases on opening day and twenty cases of Pepsi twelve-ounce products on a specified date, and that it gave no cash assistance or cash equivalent to Restobar staff.
On January 12, 2006, Leo terminated the respondent effective January 15, 2006 on the ground of loss of trust and confidence.
The respondent filed an amended complaint for illegal dismissal, related monetary benefits, separation pay in lieu of reinstatement, damages, and attorney’s fees, against Kimwa and the petitioners.

Labor Tribunal Positions

The Executive Labor Arbiter (LA) dismissed the complaint for lack of merit but ordered separation pay of P15,000.00, holding that the dismissal was valid under loss of trust and confidence.
The LA reasoned that employers should not be compelled to retain employees guilty of acts inimical to the employer’s interests, and that the respondent had committed acts contrary to the employer’s interests, including charging personal food to the Restobar, entering an exclusive Pepsi contract, and failing to account for donated Pepsi products.
The LA found that procedural due process had been observed because the respondent was informed of the charges through memoranda.
The NLRC, in its November 28, 2008 Resolution, found the respondent’s dismissal illegal and ordered backwages, separation pay, moral and exemplary damages, thirteenth month pay differential, and attorney’s fees, reasoning that the respondent’s evidence supported authority or duty-based signing and that there was no showing she acted with malice.
The NLRC cited evidence including Pepsi-linked statements and certifications to support that Pepsi delivered only the amounts specified, thereby negating the claim of unaccounted donations.
The NLRC held that even assuming the respondent had no express authority from the owner, signing fell within her duties as the operational-in-charge person, and that there was no evidence she abused her representation privilege.
On June 4, 2009, the NLRC granted the petitioners’ motion for reconsideration, set aside its earlier illegal dismissal ruling, and dismissed the complaint for lack of merit.
In reversing itself, the NLRC ruled that the respondent’s functions did not include authority to sign contracts for and on behalf of the Restobar, and that signing in the respondent’s name as if she were the owner showed problematic conduct.
The NLRC further reasoned that if not for the suspension and dismissal, the employer would not have traced the whereabouts of Pepsi-donated items.
On July 31, 2009, the NLRC denied the respondent’s motion for reconsideration and maintained its dismissal for lack of merit.
The respondent then went to the CA via petition for certiorari, asserting illegal dismissal.

CA Ruling and Reasoning

The CA Decision dated November 27, 2012 set