THIRD DIVISION
[G.R. No. 199553. February 13, 2019.]
EDUARDO P. LARA, petitioner, vs.DERMPHARMA, INC., respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution dated February 13, 2019, which reads as follows:
"G.R. No. 199553 (EDUARDO P. LARA, petitioner, v. DERMPHARMA, INC., respondent). — Loss of trust and confidence based on facts proven with substantial evidence is sufficient to remove a managerial employee. However, notices that are not clear on the basis of dismissal are tantamount to a deprivation of procedural due process of law. The dismissal remains valid, but the employer is liable for nominal and moral damages.
This is a Petition for Review on Certiorari 1 filed by Eduardo P. Lara (Lara), alleging illegal and constructive dismissal against Dermpharma, Inc. (Dermpharma). Lara also filed a Motion for Issuance of Writ of Execution 2 before the National Labor Relations Commission, seeking to execute its December 2, 2008 Decision 3 rendered in his favor.
In 2008, Lara filed a Complaint against Dermpharma for constructive illegal dismissal, moral and exemplary damages, and attorney's fees. 4 He claimed that for the past two (2) years, he worked for Dermpharma as a company project manager and received a monthly salary of P30,000. 5
As project manager, Lara handled bids and awards of construction projects. 6 On April 15, 2008, he received an Inter-Office Memorandum dated April 11, 2008, directing him to submit within 24 hours a written explanation on the alleged irregularities on the proposed renovation of the A. Barclay Realty, Inc. building and the proposed electrical renovation of the first and second floors of the DPI/Champaca building. 7
On April 16, 2008, Lara submitted his written explanation. 8 The day after, he was informed through another Inter-Office Memorandum dated April 16, 2008 that he was being placed on preventive suspension for two (2) weeks. 9
On April 30, 2008, two (2) other Inter-Office Memoranda were issued. The first was to inform Mr. Alfredo Cabacoy, the security officer of Dermpharma, of Lara's employment termination. The second was addressed to the security staff, barring Lara from entering the premises effective May 2, 2008. 10 acEHCD
On May 4, 2008, Lara was prohibited from entering the Light of the World Church, where Dr. Vinzon B. Pineda (Dr. Pineda), Dermpharma's president, was the senior pastor. 11
On May 7, 2008, Lara's wife received an Inter-Office Memorandum dated May 6, 2008, requiring Lara "to explain in writing why he should not be terminated for not reporting for work on May 2, 2008 up to May 6, 2008[.]" 12 Dermpharma stated that such action constituted abandonment, which served as sufficient basis for dismissal. 13
Dermpharma further claimed that under its rules and procedures, bidding and award of company projects must comply with the three (3)-vendor policy, and accredited by the Bids and Awards Committee. 14 It alleged that Lara violated the rules and, though outside of his functions, submitted the quotations and bids from three (3) bidders. 15
Moreover, Dermpharma suspected that Lara leaked information on electrical works and bills to Antioch Builders, Inc. (Antioch Builders), which gave it an unfair advantage over the other bidders. It also claimed that it was Lara who issued BAC Resolution No. 001, series of February 2008, which placed Antioch Builders as the best bidder. This claim was supported by Dermpharma's witnesses, including its finance manager and purchasing officers. 16
During the proceedings before the Labor Arbiter, Lara countered that it was Dr. Pineda who introduced him to Antioch Builders. He claimed that he was on sick leave on February 28, 2008, when the alleged actions imputed upon him were made. 17 He also alleged that BAC Resolution No. 001 was issued under an order from his supervisor. 18
In his December 2, 2008 Decision, 19 Labor Arbiter Arden S. Anni found that there was constructive and illegal dismissal on Dermpharma's part. He ruled that the basis for dismissing Lara was ambiguous. It was unclear whether the dismissal was due to the alleged leave without absence or the irregular actions in the bidding process. He found that Dermpharma did not fulfill its burden to prove the basis for the dismissal with clear causes and justifiable reasons. 20
The dispositive portion of the Labor Arbiter's Decision read:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered as follows:
1. Declaring the dismissal of complainant as unjust and illegal;
2. Ordering respondents, jointly and severally, to reinstate complainant to his former position without loss of seniority rights and other privileges. For this purpose, respondents are directed to submit a report of compliance within ten (10) calendar days from receipt of this Decision pursuant to Article 223, paragraph 3, of the Labor Code, in relation to the last paragraph of Section 14, Rule V of the 2005 Revised NLRC Rules of Procedure;
3. Ordering respondents, jointly and severally, to pay complainant his backwages from the time of his dismissal on May 2, 2008 up to his actual or payroll reinstatement. As of the date of this Decision, the amount due complainant as [backwages] is TWO HUNDRED TEN THOUSAND PESOS (P210,000.00).
4. Ordering respondents, jointly and severally, to pay complainant ten percent (10%) of the total monetary award as attorney's fees. SDHTEC
SO ORDER[E]D. 21 (Emphasis in the original)
Dermpharma filed a Memorandum of Appeal 22 before the National Labor Relations Commission.
In its January 29, 2010 Decision, 23 the National Labor Relations Commission affirmed the Labor Arbiter's Decision on illegal dismissal, but held that Dr. Pineda could not be held solidarily liable because Dermpharma and its officers "have juridical personality separate and distinct from one another." 24
The dispositive portion of the National Labor Relations Commission Decision read:
WHEREFORE, the appeal is GRANTED IN PART and the appealed Decision is hereby MODIFIED by excluding individual respondent Pineda as part[l]y liable.
All other aspects of the Decision STAND.
SO ORDERED. 25 (Emphasis in the original)
On appeal, the Court of Appeals, in its September 6, 2011 Decision, 26 reversed the rulings of the labor tribunals regarding the dismissal's illegality. It held that Dermpharma was able to prove loss of trust and confidence, which justified the dismissal. 27
The Court of Appeals gave credence to Dermpharma's witnesses who attested to the irregularity committed by Lara. 28 Moreover, it held that the lack of procedural due process neither nullifies nor renders a dismissal illegal. It found it proper to give nominal damages worth P50,000.00 to Lara to vindicate Dermpharma's violation of his right to procedural due process. 29
The dispositive portion of the Court of Appeals Decision read:
WHEREFORE, premises considered, the January 29, 2009 decision and the April 29, 2010 resolution of the National Labor Relations Commission in NLRC LAC No. 02-000493-09/NLRC NCR Case No. 05-06991-08 are REVERSED and SET ASIDE. Petitioner Dermpharma, Inc., however is ORDERED to pay private respondent Eduardo P. Lara the amount of fifty thousand pesos (P50,000.00) as nominal damages for non-compliance with the requirements of due process pursuant to current jurisprudence.
SO ORDERED. 30 (Emphasis in the original)
Lara filed a Motion for Reconsideration, but it was denied by the Court of Appeals in its December 1, 2011 Resolution. 31
Aggrieved, Lara filed a Petition for Review on Certiorari. 32
Petitioner claims that the Court of Appeals Decision is erroneous for he was constructively dismissed. He argues that respondent discriminated against him, and that it had every intention to terminate his services, guilty or not of the violations charged. 33
Petitioner further claims that the Inter-Office Memoranda contained no notice that he was being terminated upon loss of trust and confidence for not following the bidding procedures for the two (2) buildings and/or for falsifying BAC Resolution No. 001. 34 He argues that in his written explanation, he stated that Dr. Pineda instructed him to immediately coordinate with Antioch Builders — a claim that respondent did not refute. 35
Petitioner argues that the Court of Appeals erred in applying Philippine Pizza, Inc. v. Bungabong36 here since the facts and circumstances are different. Unlike in Philippine Pizza, Inc., he argues that he did not have access to respondent's property. He did not even have any power to manipulate the projects assigned to him. 37 AScHCD
Petitioner further claims that since the right to procedural due process was violated, as conceded by the Court of Appeals, the statements of respondent's witnesses cannot be used as basis for his dismissal. Moreover, he argues that the theory of loss of trust and confidence clashes with the May 6, 2008 Inter-Office Memorandum, which directed him to explain in writing why he should not be dismissed for not reporting to work from May 2, 2008 to May 6, 2008. Thus, petitioner claims evident bad faith and discrimination, because no matter the findings, his employment would have been terminated. 38
In its Comment, 39 respondent counters that petitioner merely rehashed the arguments he raised in his Motion for Reconsideration of the Court of Appeals Decision. 40 It reiterates that the mere existence of a belief that a managerial employee violated his or her employer's trust and confidence justifies dismissal. 41
Respondent again argues that petitioner was fully aware of the bidding process. Moreover, he was guilty of improper and immoral conduct because his actions were tainted with dishonesty. The bidding process was established precisely to avoid impropriety; by failing to uphold it, petitioner became privy to the very evils that the arduous process of bidding wants to avoid. Respondent also contends that the witnesses' testimonies were not biased despite them being its employees. Finally, it claims that there is no need for a hearing since procedural due process was followed. 42
In his Reply, 43 petitioner reiterates the findings of the Labor Arbiter. He also raises that respondent failed to establish the proven facts, which would serve as basis for his dismissal. 44
The issue for this Court's resolution is whether or not the Court of Appeals erred in reversing the rulings of the National Labor Relations Commission and the Labor Arbiter.
The Petition lacks merit.
The Court of Appeals correctly held that the dismissal was for a just and valid cause. However, petitioner was denied his right to procedural due process.
Article 297 of the Labor Code provides the grounds for a valid termination by the employer:
ARTICLE 297. [282] Termination by employer. — An employer may terminate an employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing. (Emphasis supplied)
Here, petitioner was dismissed on the ground of loss of trust and confidence. Alaska Milk Corporation v. Ponce45 discussed the two (2) classes of employees reposed with trust and confidence:
(1) managerial employees whose primary duty consists of the management of the establishment in which they are employed or of a department or a subdivision thereof, and to other officers or members of the managerial staff; and (2) fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or those who, in the normal exercise of their functions, regularly handle significant amounts of money or property. These employees, though rank-and-file, are routinely charged with the care and custody of the employer's money or property, and are, thus, classified as occupying positions of trust and confidence. 46 (Citation omitted)
As the project manager, there was never any doubt that petitioner was classified as a managerial employee. When it comes to managerial employees, this Court has consistently ruled that the mere existence of a basis for believing that an employee breached the employer's trust and confidence suffices as a ground for his or her dismissal. 47 AcICHD
Moreover, the degree of proof required to justify loss of trust and confidence is merely substantial evidence. Thus, the Court of Appeals correctly concluded that there was, indeed, substantial basis for respondent to dismiss petitioner. Respondent's claim that petitioner violated the company policies and took undue interest in favoring Antioch Builders in the bidding process was supported by its witnesses' affidavits. These witnesses were then officers holding significant positions in the company. 48
This Court agrees with the Court of Appeals in finding that the witnesses had no ill motives to lie, and in giving full weight and credit to their statements, which it found to have been given freely and voluntarily. 49
However, this Court also agrees with the Court of Appeals in finding that petitioner's right to procedural due process was severely violated.
In an Inter-Office Memorandum dated April 11, 2008, petitioner was informed of the charges against him, and was asked to write an explanation within 24 hours. Immediately after, however, he was placed on preventive suspension for two (2) weeks. Before he even had a chance to report to work, he was refused entry not only to work, but also to his church. Further, on April 30, 2008, respondent issued an Inter-Office Memorandum prohibiting his entry.
On top of all this, petitioner was given another Inter-Office Memorandum dated May 6, 2008, asking him to explain why he did not report to work after his preventive suspension.
Respondent's actions were confusing. It demanded an explanation as to why petitioner did not report for work after it had given instructions prohibiting petitioner's entry.
In Unilever Philippines, Inc. v. Rivera, 50 the standard for procedural due process was lengthily explained:
To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. TAIaHE
(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment.51 (Emphasis supplied, citation omitted)
Evidently, respondent did not meet the standard of procedural due process. This not only deprived petitioner of an opportunity to be heard, to explain, and clarify his defenses; it also left him in actual, perpetual confusion.
Thus, this Court agrees with the award of P50,000.00 as nominal damages to vindicate petitioner's right to due process.
Lastly, in view of this Court's ruling in Nacar v. Gallery Frames, 52 legal interest at the rate of six percent (6%) per annum shall be imposed on the award for damages from the finality of this Resolution until its full satisfaction.
WHEREFORE, the Petition is DENIED. The assailed Court of Appeals September 6, 2011 Decision and December 1, 2011 Resolution in CA-G.R. SP No. 115286 are AFFIRMED. Respondent Dermpharma, Inc. is ordered to pay Fifty Thousand Pesos (P50,000.00) as nominal damages.
The total monetary award shall be subject to interest at the rate of six percent (6%) per annum from the finality of this Resolution until its full satisfaction. 53
SO ORDERED."
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Rollo, pp. 3-48.
2.Id. at 566-567.
3.Id. at 49-57. The Decision in NLRC NCR Case No. 05-06991-08 was penned by Labor Arbiter Arden S. Anni of the National Labor Relations Commission, Quezon City.
4.Id. at 278.
5.Id. at 196-197.
6.Id. at 50.
7.Id.
8.Id. at 50.
9.Id. at 52.
10.Id. at 52-53.
11.Id. at 53.
12.Id. at 104-105.
13.Id. at 106.
14.Id. at 197.
15.Id. at 197-198.
16.Id. at 198.
17.Id. at 102-103.
18.Id. at 50-51.
19.Id. at 49-57.
20.Id. at 53-55.
21.Id. at 57.
22.Id. at 58-77.
23.Id. at 100-115. The Decision was penned by Commissioner Perlita B. Velasco and concurred in by Presiding Commissioner Gerardo C. Nograles and Commissioner Romeo L. Go of the First Division, National Labor Relations Commission, Quezon City.
24. Id. at 114.
25. Id.
26. Id. at 196-204. The Decision was penned by Associate Justice Danton Q. Bueser and concurred in by Associate Justices Hakim S. Abdulwahid and Ricardo R. Rosario of the Ninth Division, Court of Appeals, Manila.
27. Id. at 200-203.
28. Id. at 200-201.
29. Id. at 202-203.
30. Id. at 203-204.
31. Id. at 261-262.
32. Id. at 3-48.
33. Id. at 27-30.
34. Id.
35. Id. at 32-33.
36. 497 Phil. 602 (2005) [Per J. Quisumbing, First Division].
37. Rollo, pp. 34-39.
38. Id. at 39-43.
39. Id. at 511-552.
40. Id. at 511.
41. Id. at 532.
42. Id. at 540-544.
43. Id. at 553-565.
44. Id. at 558-559.
45. G.R. Nos. 228412 & 228439, July 26, 2017, 833 SCRA 332 [Per J. Mendoza, Second Division].
46. Id. at 350 citingPhilippine Plaza Holdings, Inc. v. Episcope, 705 Phil. 210 (2013) [Per J. Perlas-Bernabe, Second Division].
47. Id.See also Caoile v. National Labor Relations Commission, 359 Phil. 399 (1998) [Per J. Quisumbing, First Division].
48. Rollo, p. 200.
49. Id. at 201.
50. 710 Phil. 124 (2013) [Per J. Mendoza, Third Division].
51. Id. at 136-137.
52. 716 Phil. 267 (2013) [Per J. Peralta, En Banc].
53. Id.