Sunday Machine Works, Inc. v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Private respondent Jaime D. Santos was employed by petitioner Sunday Machine Works, Inc. for over twenty-three years, rising from Manager to Assistant General Manager and then Manager. On February 3, 1987, the company president confronted Santos with accusations of falsifying daily cash statements by including expenses for an employee, Alfredo Fernando. Santos requested an examination of the statements, but the president ordered him and Fernando on vacation leave while an ex parte investigation was conducted. Santos was told to vacate his quarters and was not paid his salaries, receiving only a P566.00 voucher for 'commission.' After several unanswered letters inquiring about his status, Santos received an antedated letter dated March 3, 1987, stating he was dismissed for 'loss of trust and confidence.' Procedural History: Santos filed a complaint for illegal dismissal, praying for separation pay, moral damages, attorney's fees, and reimbursement of litigation expenses. The Arbitration Branch of the NLRC ordered the respondent to pay P47,400.00 plus attorney's fees. Both parties appealed. The NLRC, on October 11, 1990, set aside the Labor Arbiter's decision and ordered the respondent to pay backwages not exceeding three years and separation pay equivalent to one-half month's pay for every year of service, plus attorney's fees. All other claims were dismissed. The Petition: Petitioner Sunday Machine Works, Inc. filed a petition for certiorari with the Supreme Court, assailing the NLRC decision as having been issued with grave abuse of discretion, arguing that Santos was validly dismissed under the principle of loss of trust and confidence, and questioning his entitlement to separation pay and backwages.
Issue(s)
Whether or not private respondent Jaime D. Santos was validly dismissed under the principle of loss of trust and confidence. Whether or not private respondent Jaime D. Santos is entitled to separation pay if he is found to be legally dismissed. Whether or not private respondent Jaime D. Santos is entitled to backwages as a consequence of illegal dismissal.
Ruling
The petition is DENIED, and the Decision of the public respondent National Labor Relations Commission promulgated on October 11, 1990, is AFFIRMED. The dismissal of Jaime D. Santos was illegal.
Ratio Decidendi
On the issue of valid dismissal under loss of trust and confidence: The Court held that the dismissal was illegal because the petitioner failed to provide the private respondent with due process. The employer's accusation that Santos pocketed P111,875.33 as commission/rebates was based on the affidavit of an office clerk, Danilo Tolentino. Santos explained that these amounts were commissions due to customers, denominated as 'discounts' to avoid expanded withholding tax, and that his signature on the vouchers served as proof that the commissions were given to the customers or spent for their entertainment, not pocketed by him. The Court found Santos' explanation credible, noting that the petitioner failed to present more convincing evidence, such as affidavits or testimony from the customers, or the official receipts related to the transactions. Furthermore, no formal investigation was conducted, violating the Labor Code. The Court distinguished this case from Riker vs. Hon. Blas Ople and Reynolds Philippine Corporation vs. Genaro Eslava, where dismissals based on loss of trust and confidence were upheld due to clear evidence of employee misconduct. On the entitlement to separation pay: Since the dismissal was found to be illegal, the private respondent is entitled to separation pay. The NLRC correctly ordered the payment of separation pay equivalent to one-half month's pay for every year of service, based on his latest salary, with a fraction of at least six months counting as one year. This is a standard remedy for illegal dismissal when reinstatement is no longer feasible due to strained relations or the employee's advanced age, as in this case where Santos had served for over twenty-three years and was sixty years old. On entitlement to backwages: As the dismissal was illegal, the private respondent is entitled to backwages. The NLRC's order for backwages not exceeding three years from the finality of its decision, based on his latest salary, is consistent with labor law principles. The Court rejected the petitioner's contention that backwages should be deducted for reasonable allowances, as backwages are meant to compensate for lost earnings due to illegal dismissal, and the employee is entitled to the full amount awarded.
Main Doctrine
An employer cannot validly dismiss an employee on the ground of loss of trust and confidence without affording the employee due process, including a formal investigation, especially when the charges are unsubstantiated by convincing evidence.