Title
Sunday Machine Works, Inc. vs. National Labor Relations Commission
Case
G.R. No. 95692
Decision Date
Mar 16, 1992
Employee Jaime D. Santos was illegally dismissed without formal investigation or sufficient evidence of loss of trust. SC upheld NLRC’s award of backwages, separation pay, and attorney’s fees.
wrongful dismissal
backwages
separation pay

Case Summary (G.R. No. 95692)

Factual Background

Private respondent was confronted on February 3, 1987 by Sunday Pineda, the company president, who accused him of a habit of entering into the daily cash statements the expenses of an employee named Alfredo Fernando. Private respondent answered that the best proof required examination of the questioned daily cash statements. The president then ordered private respondent to go on vacation leave together with Alfredo Fernando while the president conducted an investigation.

Private respondent requested a formal investigation within the purview of the due process clause of labor law. The company president refused and conducted an ex-parte inquiry, telling private respondent that it was “Salita lang yan” and that private respondent would still receive his salaries while the president investigated. Private respondent vacated his living quarters the following day. He was not paid his salaries, and he was issued only a single voucher for P566.00, which he was forced to sign as “commission.”

After several months without any communication, private respondent wrote five letters inquiring about his status. No response was given. On October 22, 1987 at about 5:50 P.M., private respondent received an antedated letter dated March 3, 1987, stating that he was considered dismissed due to loss of trust and confidence.

Private respondent alleged that the dismissal was a scheme to avoid paying benefits to retireable employees, considering that he had served the company for more than twenty-three years and was already sixty years old. He therefore filed a complaint with the Department of Labor and Employment on November 12, 1987, seeking a declaration of illegal dismissal, separation pay of at least three years’ salary, moral damages of P200,000, attorney’s fees of twenty-five percent with a minimum of P20,000, and reimbursement of proved litigation expenses. He also alleged that his salary was P4,100 per month and that he had not been receiving it since the second half of February 1987, while he had also received free room and lodging, water, and electricity conservatively computed at P1,000 per month.

Proceedings Before the Labor Arbiter

In its position paper, the petitioner denied illegality and maintained that private respondent pocketed commission or rebates due to customers. The company pointed to an investigation and a rejoinder-affidavit executed by an office clerk named Danilo Tolentino, asserting that private respondent received commissions or rebates across some 260 vouchers totaling P111,875.33.

The Arbitration Branch, National Labor Relations Commission issued a decision on April 20, 1989, ordering the petitioner to pay private respondent benefits in the total amount of P47,400, plus attorney’s fees of ten percent. Both parties appealed.

Appeals and the NLRC Decision

Private respondent appealed and argued, among others, that the Labor Arbiter erred in failing to order backwages after finding the dismissal illegal; failed to compute retirement benefits by including the cash equivalent of P1,000 per month; failed to award moral and exemplary damages; and failed to award statutory 13th month pay and five days incentive leave.

The petitioner appealed but did not raise its own “assignment of errors” in the appeal record. Instead, it framed issues, including whether a formal investigation was necessary before dismissal, whether the company should present the receipt allegedly involved, whether customer testimony was still needed, whether separation pay should be granted if dismissal was legal, and whether it had a legal ground to terminate.

On October 11, 1990, the NLRC Second Division promulgated its decision setting aside the appealed labor arbiter ruling. It ordered the petitioner to pay (a) backwages not exceeding three years from the finality of the decision based on private respondent’s latest salary; and (b) separation pay equivalent to one-half month pay for every year of service, based on the latest salary, with a fraction of at least six months treated as one year, plus ten percent attorney’s fees of the total award. The NLRC dismissed all other claims for lack of merit.

The Petitioner’s Contentions in Certiorari

Aggrieved, the petitioner filed the instant petition for certiorari. It presented three issues: whether the private respondent was validly dismissed under the principle of loss of trust and confidence; whether separation pay was still due if dismissal were legally justified; and whether private respondent was entitled to the full three years of backwages without deductions for reasonable allowances for transportation, food, clothing, and shelter if he was not dismissed.

The petition treated the first issue—whether the loss of trust and confidence ground supported the dismissal—as dispositive of the second and third issues.

The NLRC’s Evaluation of “Loss of Trust and Confidence” and Due Process

The petitioner invoked Riker vs. Hon. Blas Ople, 155 SCRA 85, asserting that where serious offenses justify a loss of trust and confidence dismissal, labor tribunals must recognize the employer’s authority to dismiss. The petitioner argued that the NLRC’s conclusion differed from Riker’s approach. It also cited Metro Drug Corporation vs. NLRC, 143 SCRA 132, and Reynolds Philippine Corporation vs. Genaro Eslava, 137 SCRA 259, among other cases, in support of the general principle that breach of trust or ample reason to distrust bars labor tribunals from denying the employer’s right to dismiss when the evidence sustains the employer’s trust issue.

The NLRC, however, rejected the petitioner’s theory as applied to the private respondent. On the company’s specific contention that private respondent pocketed about P111,000 as commissions or rebates in 260 vouchers, the NLRC observed that, under company procedures, those amounts were due to customers and should have been paid to them. The NLRC noted that the vouchers were signed by company officials including private respondent, but were not signed by the customers. On that basis, the NLRC recognized the initial impression created by the petitioner’s evidence—that the discounts or commissions were pocketed by private respondent because he had power to give them.

Private respondent’s explanation was then treated as sufficient to absolve him. The NLRC adopted private respondent’s rejoinder that: (a) Tolentino was not an office clerk but a receiving clerk at the time of the affidavit; (b) the amounts were commissions of customers, denominated as discounts to avoid expanded withholding tax, and customers wanted their commission “clean” without deduction; (c) private respondent ordered the customer’s representative to sign the discount voucher as evidence that the commission had been given; and (d) the company could not show official receipts issued to customers for the transactions in the vouchers because the company used two kinds of receipts, some registered and others unregistered or fake, and it had previously challenged the company’s proof.

The NLRC held that, having examined the foregoing explanation, it adopted it “to absolve complainant from the charge.” It further reasoned that if private respondent had committed the alleged acts, the company should have adduced more convincing evidence, such as affidavits or testimony from customers who made job orders with the company and allegedly did not receive the discounts. It also faulted the petitioner for failing to present official receipts, if an

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