G.R. No. 186019 - White Diamond Trading Corp. vs. National Labor Relations Commission

Case Summary (G.R. No. 186019)

Factual Background

The company was engaged in buying and selling second-hand motor vehicles. On February 28, 2004, Escoto consummated the sale of a Toyota Town Ace to Aquino for P200,000.00. Aquino attempted to haggle for a lower price. The receipt issued to Aquino reflected P200,000.00 in its original copy given to Aquino, while the duplicate copy retained by the company reflected P190,000.00.

The company’s narrative was that Aquino gave P200,000.00 in cash to Omela, who issued a receipt for P200,000.00, while Aquino counted the money in the presence of Pastoril. Pastoril then took out the deed of sale and handed it to Aquino. The deed of sale indicated a consideration of P190,000.00.

Shortly after, on March 8, 2004, the company terminated the employment of Escoto, Omela, and Pastoril. On March 10, 2004, the dismissed employees filed a complaint for illegal dismissal against the company and its two top officers.

Compulsory Arbitration Proceedings: Parties’ Versions

Before the labor arbiter, the dismissed employees portrayed themselves as hardworking employees with no derogatory record, and asserted that their employer terminated them without conducting an investigation and without just cause, based on an accusation that they stole company funds. They denied altering Aquino’s phone number and address, and they maintained that on the day Aquino bought the Toyota Town Ace, he paid P200,000.00 to Omela, who issued a receipt for that amount. They added that Aquino asked Escoto for a discount. According to them, Jessie Uy approved the requested discount, but Aquino had already left the premises.

The employees claimed that Omela reflected the correct amount in the duplicate receipt. The complainants also stated that when Escoto contacted Aquino on March 1, 2004, Escoto told Aquino of a refund of P10,000.00, which Aquino later collected on March 8, 2004 and received through a receipt for that refund amount.

They also described an intervening development linked to their co-employee Neil Rodriguez. Upon Rodriguez’s questioning on February 28, 2004, Escoto disclosed that they would remit the P10,000.00 discount to Aquino. Rodriguez allegedly asked that they keep the money, and told Escoto that he was in dire need of money because he had been involved in a vehicular accident and paid a substantial settlement. Escoto thereafter lent Rodriguez P1,000.00, which Rodriguez allegedly had not yet paid.

The complainants argued that the receipt for P10,000.00 Aquino issued belied the charge that they swindled the company. Based on this account, they insisted that their dismissal was without just cause.

The company presented a different theory. It alleged that during the sale of the Toyota Town Ace, Rodriguez asked the manager about the vehicle’s selling price. The manager allegedly replied that it was bought for P190,000.00. As Rodriguez continued talking, the manager allegedly became suspicious because of inconsistencies and reviewed the records. The company attempted to contact Aquino by telephone but failed. It then sent Rodriguez to Aquino’s address on record, but no such person was found.

The company stated that on March 3, 2004, Rodriguez discovered that the complainants had changed Aquino’s phone number. The company later retrieved Aquino’s correct information and, upon contacting him, recovered the original copy of the official receipt issued by Omela. Aquino, the company said, confirmed that he paid P200,000.00 in cash to Omela, but that the duplicate copy showed P190,000.00.

The company further alleged that it summoned Escoto, Omela, and Pastoril to shed light on the differing entries of the purchase price in the original and duplicate receipts. Omela and Pastoril attended the investigation conducted on March 6, 8, and 9, 2004, while Escoto could not be contacted at his given address. The company claimed that Omela and Pastoril initially denied any anomaly, but later admitted that Escoto planned and executed it, including the changing of Aquino’s address and phone number. On March 9, 2004, Omela and Pastoril were issued a memorandum terminating their services.

Labor Arbiter’s Ruling

Labor Arbiter Ermita T. Abrasaldo-Cuyuca dismissed the complaint for lack of merit in a decision dated September 30, 2004. The labor arbiter found that Escoto, Omela, and Pastoril defrauded the company through concerted action. The arbiter found that the employees made it appear in company records that Aquino bought the Toyota Town Ace for P190,000.00, while they charged Aquino and issued him a receipt for P200,000.00.

Aside from a claim for service incentive leave, the arbiter denied the complainants’ monetary claims for lack of supporting evidence.

NLRC’s Decision and Resolution

On appeal, the NLRC affirmed the labor arbiter’s ruling with modification. The NLRC found that the company had validly dismissed Escoto and Omela for “effected the discrepancies in sales amount” of the Toyota Town Ace. However, it ruled that no contributory act had been shown from Pastoril because, in Aquino’s Sinumpaang Salaysay, she merely handed him the deed of sale. It thus concluded that Pastoril’s dismissal was without just cause.

The NLRC also held that the company failed to accord Escoto and Omela the twin-notice requirement, noting that while an administrative investigation was conducted, the questions posed to the complainants were not reduced to writing. As a consequence, the NLRC awarded nominal damages of P10,000.00 each to Escoto and Omela.

For Pastoril, the NLRC awarded backwages and separation pay of one month’s pay for every year of service in lieu of reinstatement, citing strained relations as the ground for separation. The NLRC denied the company’s motion for reconsideration in a resolution dated February 15, 2006, prompting certiorari proceedings in the CA.

CA Proceedings and Disposition

The CA, in its decision promulgated on October 24, 2008, dismissed the company’s petition for lack of merit. It held that the NLRC did not commit grave abuse of discretion in its challenged rulings. The company’s attempt to reconsider was unsuccessful, hence the petition before the Supreme Court.

The Sole Issue Raised in the Petition

The petition raised the sole issue of whether the CA erred in affirming the NLRC’s conclusion that Pastoril had been illegally dismissed and in awarding her backwages and separation pay. The company and its principal officers attacked the CA’s factual findings and the conclusions derived therefrom, specifically challenging the CA’s conclusion that the record showed no substantial proof of conspiracy by Pastoril.

The Parties’ Contentions Before the Supreme Court

The company argued that Pastoril took part in the fraudulent transaction. It relied on Aquino’s Sinumpaang Salaysay, including a statement that he was brought to the office to pay and that Omela received the money for which Aquino was issued a receipt for P200,000.00, while Pastoril allegedly released the deed of sale and had it signed indicating a consideration of P190,000.00, “sabî ng abot ng gatepass.” The company further invoked Aquino’s subsequent Sinumpaang Salaysay dated December 3, 2005, which described the sequence of events from Aquino’s payment and the immediate preparation and signing of documents by the employees, along with subsequent events involving a supposed discount refund and Aquino’s interaction with Neil Rodriguez.

Pastoril maintained in her comment that the company’s allegation of conspiracy was speculative. She asserted that her participation was limited to handing the deed of sale to the buyer and nothing more.

Procedural Issue: Discretionary Review Despite Fact Questions

The Court first addressed an apparent procedural question on the propriety of giving due course to a petition that substantially raised questions of fact. While factual findings of the CA are generally binding, the Court exercised discretionary review because of a conflict in factual findings between the labor arbiter on one side and the NLRC and CA on the other. The conflict concerned Pastoril’s precise role in the irregularity surrounding the February 28, 2004 sale.

Legal Basis and Reasoning on the Merits

On the merits, the Court held that the records supported the labor arbiter’s factual and legal conclusions. The Court found that Pastoril was actively involved as were Escoto and Omela in the sale that resulted in a loss to the company. The Court reasoned that all three participated in making the company believe that Aquino bought the Toyota Town Ace for P190,000.00, although Aquino paid P200,000.00.

The Court emphasized the undisputed sequence of key events: Escoto closed the sale; Omela received P200,000.00 from Aquino and issued a receipt indicating P200,000.00, while the duplicate copy retained by the company showed P190,000.00; after this, Pastoril handed Aquino the deed of sale, which also indicated P190,000.00 as consideration. The Court rejected the view that Pastoril’s involvement was merely mechanical and that she was completely unaware of the sale’s details, particularly the actual purchase price.

The Court reasoned that the payment of the purchase price, the issuance of the receipt, and the handing of the deed of sale were not isolated acts. They occurred within one continuous logical sequence, with the employees in close proximity. For the Court, it was implausible to characterize Pastoril as having simply handed over the deed without looking at it, without knowing its contents, and without understanding what was happening in the transaction. The Court further stated that the deed of sale did not appear out of thin air; someone in the company prepared it, and given Pastoril’s position as secretary and the sequence of events, it could only have been Pastoril who prepared the deed of sale rather than Omela.

The Court found support for its conclusion in Aquino’s Sinumpaang Salaysay in July 2004, and also in

Case Syllabus (G.R. No. 186019)

The Court resolved a Petition for Review on Certiorari filed by petitioners White Diamond Trading Corporation, Jerry Uy, and Jessie Uy to nullify the Court of Appeals (CA) Decision and Resolution in CA-G.R. SP No. 94137.
The CA dismissed the petition for lack of merit, and the petitioners contested the CA and NLRC findings on the legality of Mary Grace Pastoril’s dismissal and the monetary awards.
The controversy centered on whether Pastoril’s participation in a vehicle sale irregularity constituted fraud and conspiracy, and whether the employer complied with procedural due process in dismissing her.

Parties and Procedural Posture

Petitioners were White Diamond Trading Corporation and its principal officers, Jerry Uy and Jessie Uy.
Respondents were the National Labor Relations Commission (NLRC), Norlito Escoto, Mary Grace Pastoril, and Maria Myrna Omela.
The dismissed employees filed an illegal dismissal complaint before the labor arbiter on March 10, 2004.
Labor Arbiter Ermita T. Abrasaldo-Cuyuca dismissed the complaint on September 30, 2004.
The NLRC affirmed the dismissal of Escoto and Omela but ruled Pastoril’s dismissal was without just cause, awarding her monetary benefits.
The CA sustained the NLRC and denied the employer’s petition for certiorari.
The Supreme Court granted the employer’s petition as to the CA and NLRC rulings on Pastoril, set aside the CA disposition on her, and confirmed her valid dismissal while adjusting the consequences for procedural lapses.

Key Factual Allegations

The company engaged in buying and selling second hand motor vehicles, with Jerry Uy as owner and Jessie Uy as President.
The company hired Maria Myrna Omela in 1999 as assistant secretary, Mary Jane Pastoril in 2000 as secretary, and Norlito Escoto in 2001 as salesman.
On February 28, 2004, Escoto sold a Toyota Town Ace to Teodoro Abejar Aquino for P200,000.00.
A discrepancy existed between the sale documents: the original copy of Aquino’s receipt reflected P200,000.00, while the duplicate copy retained by the company reflected P190,000.00.
Aquino paid P200,000.00 in cash to Omela, who issued a receipt for that amount in the presence of Pastoril.
The deed of sale issued to Aquino showed the consideration as P190,000.00, after Pastoril delivered the deed to Aquino while Aquino had the transaction underway.
The company terminated the employment of Escoto, Omela, and Pastoril on March 8, 2004.
Aquino’s narrative described that after agreeing on P200,000.00, he paid Omela and Omela issued a receipt for P200,000.00, while Grace (Pastoril) caused the deed of sale to be signed with a consideration reflected as P190,000.00.
Aquino later alleged that representatives from the company attempted to manage the matter involving a P10,000.00 discount/refund, including a meeting connected with Neil Rodriguez.
The labor arbiter and the employer treated the discrepancy between the actual amount paid and the amounts reflected in company-kept records as fraud committed in connection with the sale.

Compulsory Arbitration Proceedings

In the labor arbiter, the dismissed employees denied fraud and insisted they were hardworking employees with no derogatory record.
They alleged they were surprised by termination without investigation and denied that they altered the phone number and address of Aquino.
The complainants stated that Aquino paid P200,000.00 to Omela, and they framed the transaction as involving no intent to defraud the company.
The employer alleged that during the sale, Rodriguez questioned the selling price and the manager initially suspected irregularities when Rodriguez found the vehicle records inconsistent with Aquino’s actual payment.
The employer claimed that Aquino’s phone number and address on record were altered and that the company later recovered the original receipt after locating Aquino.
The employer conducted an investigation where Omela and Pastoril appeared, and it could not reach Escoto at the given address.
Omela and Pastoril first denied the anomaly but later admitted that Escoto planned and executed the scheme and that they altered Aquino’s address and phone number.
Labor Arbiter Ermita T. Abrasaldo-Cuyuca dismissed the illegal dismissal complaint for lack of merit on September 30, 2004.
The labor arbiter found that Escoto, Omela, and Pastoril defrauded the company through concerted action by making it appear that Aquino bought the Toyota Town Ace for P190,000.00 while charging and receiving P200,000.00.
The labor arbiter denied most money claims except an item connected with service incentive leave, citing lack of evidence.

NLRC Findings and Monetary Awards

The NLRC affirmed dismissal for Escoto and Omela based on “effected the discrepancies in sales amount” in the sale of the Toyota Town Ace.
The NLRC held that no contributory act was shown from Pastoril because Pastoril, in Aquino’s Sinumpaang Salaysay, merely handed Aquino the deed of sale.
The NLRC characterized Pastoril’s role as mechanical and lacking proof of knowledge of the discrepancies in the purchase price entries.
The NLRC also found that the employer failed to observe the twin-notice requirement for procedural due process because questions posed were not reduced to writing.
The NLRC awarded nominal damages of P10,000.00 each to Escoto and Omela.
For Pastoril, the NLRC awarded backwages and separation pay in lieu of reinstatement, explaining that relations had become strained.
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