Etcuban vs. Sulpicio Lines (Measure of Penalty) DOCTRINES: The rules on termination of employment, penalties for infractions, insofar as fiduciary employees are concerned, are not necessarily the same as those applicable to the termination of employment of ordinary employees. When an employee accepts a promotion to a managerial position or to an office requiring full trust and confidence, he gives up some of the rigid guaranties available to an ordinary worker. Infractions which, if committed by others, would be overlooked or condoned or penalties mitigated may be visited with more serious disciplinary action. FACTS: Etcuban was the Chief Purser of the M/V Surigao Princess owned by Sulpicio Lines. As the Chief Purser, he handled the funds of the vessel and was the custodian of all the passage tickets and bills of lading. It was also his responsibility to issue passage tickets and to receive payments from the customers and to issue receipts therefor. He was also tasked to disburse the salary of the crewmen of the vessel. Sometime in 1994, the newly designated jefe de viaje of the vessel, in a surprise examination, discovered that several yellow passenger’s duplicate original of yet to be sold or unissued passage tickets already contained the amount of P88.00 (adult fare). He also noticed that noticed that three other original copies which made up the full set did not bear the same impression, although they were supposed to have been prepared at the same time. Acting on what appeared to be a strong evidence of short-changing the company, the jefe de viaje dug deeper on what he uncovered. As expected, he found inordinate amount of ticket issuances for children at half the fare of P44.00 in Voyage 434 of the vessel. Etcuban, through a memorandum, was instructed to report to the main office and to explain in writing why no disciplinary action should be meted on him or to submit himself to an investigation. Failure to comply would be tantamount to waiver of his right to be heard. It also provided that he was under preventive suspension until further notice. He refused to acknowledge the receipt of the memorandum which was personally served on him, so the company sent the same via mail. Upon arrival at the office, he was questioned regarding the anomalous tickets. After the initial investigation, Etcuban was told to sign the minutes but he adamantly refused, claiming the same to be "self-incriminatory." The next day, the petitioner was replaced by Mr. Felix Almonicar as the Chief Purser of the M/V Surigao Princess. As a result, he thought that he was fired from his job and filed a complaint for illegal dismissal with the NLRC. He alleged that the ground for his dismissal, which was loss of trust and confidence, was ill-motivated and without factual basis. He did not deny that the anomalous tickets were in his possession, but denied that he was guilty of any wrongdoing. He averred that the "trumped-up" charge was a clever scheme resorted to by his employer so it could avoid paying him monetary benefits, considering that he was with the company for more than sixteen (16) years. He argued that assuming that it was he who wrote those entries in the tickets, the fact remains that they were still unissued; hence, no money went to his pocket and no material prejudice was caused to the respondent. According to the petitioner, he would not jeopardize his livelihood for something as miniscule as P88.00. He did not request for reinstatement but prayed for separation pay among others. LA: Ruled in favor of Etcuban because Sulpicio failed to substantiate and prove that Etcuban did any wrongdoing. NLRC: Affirmed the decision. No clear and competent evidence and that no damage suffered by the company because of the anomalous tickets. CA: Reversed the decision. There was valid and just cause for the Etcuban’s dismissal, as there was sufficient basis for loss of trust and confidence on him. ISSUES: 1. 2. 3. Whether or not Etcuban was illegally dismissed. – NO. Whether or not dismissal was a harsh measure of penalty. – NO. Whether or not Etcuban was entitled to separation pay. – NO. RULING: 1. Law and jurisprudence have long recognized the right of employers to dismiss employees by reason of loss of trust and confidence. More so, in the case of supervisors or personnel occupying positions of responsibility, loss of trust justifies termination. Loss of confidence as a just cause for termination of employment is premised from the fact that an employee concerned holds a position of trust and confidence. This situation holds where a person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employer's property. But, in order to constitute a just cause for dismissal, the act complained of must be "work-related" such as would show the employee concerned to be unfit to continue working for the employer. The degree of proof required in labor cases is not as stringent as in other types of cases. With respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position. In the present case, the petitioner is not an ordinary rank-and-file employee. Being the Chief Purser, he occupied a highly sensitive and critical position and may thus be dismissed on the ground of loss of trust and confidence. 2. The rules on termination of employment, penalties for infractions, insofar as fiduciary employees are concerned, are not necessarily the same as those applicable to the termination of employment of ordinary employees. Employers, generally, are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those of similar rank performing functions which by their nature require the employer's trust and confidence, than in the case of ordinary rank-and-file. The fact that the petitioner has worked with the respondent for more than 16 years, if it is to be considered at all, should be taken against him. The infraction that he committed, vis-a- vis his long years of service with the company, reflects a regrettable lack of loyalty. It must also be stressed that when an employee accepts a promotion to a managerial position or to an office requiring full trust and confidence, he gives up some of the rigid guaranties available to an ordinary worker. Infractions which, if committed by others, would be overlooked or condoned or penalties mitigated may be visited with more serious disciplinary action. It cannot be over emphasized that there is no substitute for honesty for sensitive positions which call for utmost trust. Fairness dictates that the respondent should not be allowed to continue with the employment of the petitioner who has breached the confidence reposed on him. Unlike other just causes for dismissal, trust in an employee, once lost, is difficult, if not impossible, to regain. 3. Well-settled is the rule that separation pay shall be allowed only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Inasmuch as reason for which the petitioner was validly separated involves his integrity, which is especially required for the position of purser, he is not worthy of compassion as to deserve at least separation pay for his length of service. Villamor Gold Club v. Rodolfo Pehid (Insubordination) DOCTRINE: "Serious misconduct" as a valid cause for the dismissal of an employee is defined as improper or wrong conduct. To be serious within the meaning and intendment of the law, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant. It must be in connection with the employee’s work to constitute just cause for his separation. The act complained of must be related to the performance of the employee’s duties such as would show him to be unfit to continue working for the employer. FACTS: Rodolfo F. Pehid was employed by the Villamor Golf Club (VGC) as an attendant in the men's locker room, and, thereafter, he became the Supervisor-in-Charge. His subordinates included Juanito Superal, Jr., Patricio Parilla, Ricardo Mendoza, Cesar Velasquez Vicente Casabon, Pepito Buenaventura and Carlito Modelo. On May 1, 1998, the aforenamed employees agreed to establish a common fund from the tips they received from the customers, guests and members of the club for their mutual needs and benefits. Each member was to contribute the amount of P100.00 daily. By October 31, 1998, the contributions of the employees had reached the aggregate amount of P17,990.00 based on the logbook maintained in the locker room. This agreement, however, was not known to the VGC management. An audit of the Locker Room Section of the golf club was conducted. There was an undeclared and unrecorded aggregate amount of P17,990.00 for the fund during the period of May 1998 to October 1998. Further, not one in the said section admitted custody of such amount and there was no record that the money had been distributed among those employed in the locker room. An administrative complaint was filed by Juanito Superal, Jr., Patricio Parilla, Ricardo Mendoza, Cesar Velasquez, and Vicente Casabon charging Pehid with misappropriating the P17,990.00. A certain Mil Raymundo, a VGC member, filed a letter-complaint against Pehid for misappropriating P3,000.00 from the common fund. Pehid submitted his verified Explanation to Col. Estepa denying the charges against him... and alleging that it was Pepito Buenaventura who had custody of the fund. He also alleged that the charges filed against him stemmed from his strict management of the men's locker room and that his co-employees wanted to install Carlito Modelo as the person-in-charge in his... stead. Pehid demanded that a formal investigation of the matter be conducted. Pehid received Office Order No. 11-99 from the General Manager of the club informing him that his employment was terminated effective July 1, 1999. Pehid committed gross misconduct in the performance of his duties in violation of Paragraph IV-E(d) of the VGC Rules and Regulations. He was also informed that he committed acts of dishonesty which caused and tend to cause prejudice to the club for misappropriating the common fund of P17,990.00 for his personal benefit. Pehid filed a case for illegal dismissal against VGC and averred that he was dismissed without just cause and due process of law; that there was no basis or evidence to show that he had custody of the common fund which was used for his own benefit. He declared that there was no formal official publication among the members of the locker room personnel designating Pehid as the custodian of the fund. Worse, the witnesses who testified against Pehid failed to prove that he was the custodian of the said mutual fund since they only concluded the same by the mere fact that he was the officer-in-charge of the locker room. LA: Ruled in favor of Pehid. NLRC: Set aside and reversed the decision. lawfully dismissed from his employment for loss of trust and confidence on account of his misappropriation of the funds in his custody. CA: Reinstated the decision of the LA. ISSUE: Whether or not the cause of dismissal of Pehid would fall under the just causes under Art. 282 of the Labor Code. – NO. RULING: Paragraph IV-E(a) and (d) of the VGC Rules and Regulation cited by the petitioners reads: E. Dishonesty The following shall constitute violation of this section. a) Misappropriation or malversation of Club funds. ... d) All other acts of dishonesty which cause or tend to cause prejudice to Villamor Golf Club. The voluntary contribution by the locker personnel amongst themselves to a mutual fund for their own personal benefit in times of need is not in any way connected with the work of the locker boys and the complainant. If ever there was misappropriation or loss of the said mutual fund, the respondent will not and cannot be in any way "tend or cause to prejudice the club." Such mutual fund is a separate transaction among the employees and is not in any way connected with the employee's work. As provided in the VGC rule, the dishonesty of an employee, to be a valid cause for dismissal must relate to or involve the misappropriation or malversation of the club funds, or cause or tend to cause prejudice to VGC. The substantial evidence on record indicates that the P17,990.00, which was accumulated from a portion of the tips given by the golfers from May 1998 to October 1998 and was allegedly misappropriated by the respondent as the purported custodian thereof, did not belong to VGC but to the forced savings of its locker room personnel. Even the VGC management did not know about the mutual fund or sanctioned its existence. The petitioners rely on Article 282 of the Labor Code. Clearly, based on the grounds of termination provided under Article 282 of the Labor Code and the VGC Rules and Regulations, the common denominator thereof to constitute gross misconduct as a ground for a valid termination of the employee, is that - it is committed in connection with the latter's work or employment. In the instant case, as previously pointed out, the alleged petitioner's misappropriation or malversation was committed, assuming it to be true, against the common funds of the Locker Room personnel, which did not belong nor s anctioned by respondent VGC. A fortiori, respondent VGC was not prejudiced or damaged by the loss or misappropriation thereof. Undoubtedly, the parties who were prejudiced or damaged by the alleged embezzlement, were locker room personnel, who may ventilate any proper civil or criminal action to whomsoever responsible therefor. "Serious misconduct" as a valid cause for the dismissal of an employee is defined as improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. To be serious within the meaning and intendment of the law, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant. It must be in connection with the employee’s work to constitute just cause for his separation. The act complained of must be related to the performance of the employee’s duties such as would show him to be unfit to continue working for the employer. Sampaguita Garments Corporation v. NLRC (Commission of Crime) DOCTRINE: Where the reason for the valid dismissal is an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice FACTS: Santos allegedly attempted to bring out piece of cloth belonging to Sampaguita Garments. As a result, she was dismissed. She then filed a complaint for illegal dismissal but the labor arbiter sustained the company. However, LA’s decision was reversed by the NLRC, which ordered her reinstatement with backwages from the time of her illegal suspension until her actual reinstatement. Meantime, the petitioner had also filed a criminal action against Santos for the same offense in the Municipal Trial Court of Caloocan City. After trial, she was found guilty. This decision was affirmed by the Regional Trial Court, CA, and SC. The decisions in both cases became final and executory and the corresponding entries of judgment were eventually made. Subsequently, Santos moved for the execution of the NLRC decision. The petitioner opposed, invoking her conviction in the criminal case. ISSUES: 1. Whether or not the subsequent conviction of an employee in a criminal prosecution affect the administrative decision in a labor case where an employee is absolved of an offense that led to her dismissal and is ordered to be reinstated. – YES. 2. Whether or not Santos is entitled to separation pay. – NO. RULING: 1. It is true that once a judgment has become final and executory, it can no longer be disturbed except only for the correction of clerical errors or where supervening events render its execution impossible or unjust. 8 In the latter event, the interested party may ask the court to modify the judgment to harmonize it with justice and the facts. There is no dispute in the case at bar that the decision of the respondent NLRC ordering the private respondent’s reinstatement with back wages had indeed become final and executory. Even so, we find, in light of the subsequent developments, that the NLRC was not correct in sustaining the implementation of that decision. In Heirs of Francisco Guballa, Sr. v. Court of Appeals. this Court held that "the power of the NLRC to issue a writ of execution carries with it the right to look into the correctness of the execution of the decision and to consider supervening events that may affect such execution. 2. Santos was found guilty of a crime involving moral turpitude and so is disqualified from this benefit under the ruling in PLDT v. NLRC, 164 SCRA 671. That case laid down the rule as follows: We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. A contrary rule would have the effect of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the company is granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion is not going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not deserve the protection and concern of the Constitution. The same rationale exists for not enforcing the respondent Commission’s award of back wages in favor of the private Respondent. The private respondent’s conviction of the crime of theft of property belonging to the petitioner has affirmed the existence of a valid ground for her dismissal and thus removed the justification for the administrative decision ordering her reinstatement with back wages. Nevertheless, the petitioner is still subject to sanction for its failure to accord the private respondent the right to an administrative investigation in conformity with the procedural requirements of due process. Magsalin v. National Organization of Working Men (Fixed-Term Employees) DOCTRINE: The repeated rehiring of workers and the continuing need for their services clearly attest to the necessity or desirability of their services in the regular conduct of the business or trade of petitioner company. The pernicious practice of having employees, workers and laborers, engaged for a fixed period of few months, short of the normal six-month probationary period of employment, and, thereafter, to be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be countenanced. FACTS: Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondent workers as "sales route helpers" for a limited period of five months. After five months, respondent workers were employed by petitioner company on a day-to-day basis. According to petitioner company, respondent workers were hired to substitute for regular sales route helpers whenever the latter would be unavailable or when there would be an unexpected shortage of manpower in any of its work places or an unusually high volume of work. The practice was for the workers to wait every morning outside the gates of the sales office of petitioner company. If thus hired, the workers would then be paid their wages at the end of the day. Ultimately, respondent workers asked petitioner company to extend to them regular appointments. Petitioner company refused. Subsequently, the respondents filed with the NLRC a complaint for the regularization of their employment with petitioner company. Claiming that petitioner company meanwhile terminated their services, respondent workers filed a notice of strike and a complaint for illegal dismissal and unfair labor practice with the NLRC. The parties, later on, agreed to submit the controversy, for voluntary arbitration but the Voluntary Arbitrator dismissed the complaint on the ground that the respondent workers were not employees of Coca-cola. CA reversed the decision of the Voluntary Arbitrator. Hence, the appeal. ISSUE: Whether or not the nature of work of respondents in the company is of such nature as to be deemed necessary and desirable in the usual business or trade of petitioner that could qualify them to be regular employees. – YES. RULING: The argument of petitioner that its usual business or trade is softdrink manufacturing and that the work assigned to respondent workers as sales route helpers so involves merely “postproduction activities,” one which is not indispensable in the manufacture of its products, scarcely can be persuasive. If, as so argued by petitioner company, only those whose work are directly involved in the production of softdrinks may be held performing functions necessary and desirable in its usual business or trade, there would have then been no need for it to even maintain regular truck sales route helpers. The nature of the work performed must be viewed from a perspective of the business or trade in its entirety and not on a confined scope. The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the necessity or desirability of their services in the regular conduct of the business or trade of petitioner company. The Court of Appeals has found each of respondents to have worked for at least one year with petitioner company. While this Court, in Brent School, Inc. vs. Zamora, has upheld the legality of a fixed-term employment, it has done so, however, with a stern admonition that where from the circumstances it is apparent that the period has been imposed to preclude the acquisition of tenurial security by the employee, then it should be struck down as being contrary to law, morals, good customs, public order and public policy. The pernicious practice of having employees, workers and laborers, engaged for a fixed period of few months, short of the normal six-month probationary period of employment, and, thereafter, to be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be countenanced. The fact that respondent workers have agreed to be employed on such basis and to forego the protection given to them on their security of tenure, demonstrate nothing more than the serious problem of impoverishment of so many of our people and the resulting unevenness between labor and capital. A contract of employment is impressed with public interest. The provisions of applicable statutes are deemed written into the contract, and “the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.” Chateau Royale Sports and Country Club, Inc. v. Rachelle Balba (Transfer) DOCTRINE: The employee who has consented to the company's policy of hiring sales staff willing to be assigned anywhere in the Philippines as demanded by the employer's business has no reason to disobey the transfer order of management. Verily, the right of the employee to security of tenure does not give her a vested right to her position as to deprive management of its authority to transfer or re-assign her where she will be most useful. FACTS: Petitioner Chateau Royale hired respondents as Account Executives. They were then promoted to Account Managers after almost a year. As part of their duties, respondents were instructed by the Director of Sales and Marketing to forward all proposals, event orders and contracts for an orderly and systematic bookings in the operation of the petitioner’ s business. However, they failed to comply with the directive. Accordingly, a notice to explain was served on them, to which they promptly responded. After investigation, respondents were found to have committed acts of insubordination, and that they were suspended for seven (7) days. However, said suspension order was lifted before its implementation. Respondents then filed a complaint for illegal suspension and non-payment of allowances and commissions. Respondents amended their complaint to include constructive dismissal based on their information from the Chief Financial Officer of the petitioner on the latter’s plan to transfer them to the Manila Office. The proposed transfer was prompted by the shortage of personnel at the Manila Office as a result of the resignation of three account managers and the director of sales and marketing. Despite attempts to convince them to accept the transfer to Manila, they declined because their families were living in Nasugbu, Batangas. LA: Ruled in favor of respondents. NLRC: Reversed the same and dismissed the complaint for lack of merit. CA: granted the petition for certiorari and set aside NLRC’s decision. ISSUE: Whether or not the transfer of respondents constitutes constructive dismissal. – NO. RULING: The petitioner was able to discharge its burden, and thus established that, contrary to the claim of the respondents that they had been constructively dismissed, their transfer had been an exercise of the petitioner’s legitimate management prerogative. First, the resignations of the account managers and the director of sales and marketing in the Manila office brought about the immediate need for their replacements with personnel having commensurate experiences and skills. With the positions held by the resigned sales personnel being undoubtedly crucial to the operations and business of the petitioner, the resignations gave rise to an urgent and genuine business necessity that fully warranted the transfer from the Nasugbu, Batangas office to the main office in Manila of the respondents, undoubtedly the best suited to perform the tasks assigned to the resigned employees because of their being themselves account managers who had recently attended seminars and trainings as such. Secondly, although the respondents’ transfer to Manila might be potentially inconvenient for them because it would entail additional expenses on their part aside from their being forced to be away from their families, it was neither unreasonable nor oppressive. The petitioner rightly points out that the transfer would be without demotion in rank, or without diminution of benefits and salaries. Instead, the transfer would open the way for their eventual career growth, with the corresponding increases in pay. Thirdly, the respondents did not show by substantial evidence that the petitioner was acting in bad faith or had illmotive in ordering their transfer. In contrast, the urgency and genuine business necessity justifying the transfer negated bad faith on the part of the petitioner. Lastly, the respondents, by having voluntarily affixed their signatures on their respective letters of appointment, acceded to the terms and conditions of employment incorporated therein. One of the terms and conditions thus incorporated was the prerogative of management to transfer and re-assign its employees from one job to another “as it may deem necessary or advisable.” The employee who has consented to the company's policy of hiring sales staff willing to be assigned anywhere in the Philippines as demanded by the employer's business has no reason to disobey the transfer order of management. Verily, the right of the employee to security of tenure does not give her a vested right to her position as to deprive management of its authority to transfer or re-assign her where she will be most useful.