G.R. No.

164016 March 15, 2010

RENO FOODS, INC., and/or VICENTE KHU,​ Petitioners,

vs.

Nagkakaisang Lakas ng Manggagawa (NLM) - KATIPUNAN on behalf of its member, NENITA

CAPOR,​ Respondent.

DECISION

DEL CASTILLO, ​J.:

There is no legal or equitable justification for awarding financial assistance to an employee who was
dismissed for stealing company property. Social justice and equity are not magical formulas to erase
the unjust acts committed by the employee against his employer. While compassion for the poor is
desirable, it is not meant to coddle those who are unworthy of such consideration.

This Petition for Review on ​Certiorari1​ assails the June 3, 2004 Decision​2 of the Court of Appeals
(CA) in CA-G.R. SP No. 76789 which denied the petition for ​certiorari filed by the petitioners and
affirmed the award of financial assistance to respondent Nenita Capor.

Factual Antecedents

Petitioner Reno Foods, Inc. (Reno Foods) is a manufacturer of canned meat products of which
Vicente Khu is the president and is being sued in that capacity. Respondent Nenita Capor (Capor)
was an employee of Reno Foods until her dismissal on October 27, 1998.

It is a standard operating procedure of petitioner-company to subject all its employees to reasonable

search of their belongings upon leaving the company premises. On October 19, 1998, the guard on
duty found six Reno canned goods wrapped in nylon leggings inside Capor’s fabric clutch bag. The
only other contents of the bag were money bills and a small plastic medicine container.

Petitioners accorded Capor several opportunities to explain her side, often with the assistance of the
union officers of Nagkakaisang Lakas ng Manggagawa (NLM) – Katipunan. In fact, after petitioners
sent a Notice of Termination to Capor, she was given yet another opportunity for reconsideration
through a labor-management grievance conference held on November 17, 1999. Unfortunately,
petitioners did not find reason to change its earlier decision to terminate Capor’s employment with
the company.

On December 8, 1998, petitioners filed a complaint-affidavit against Capor for qualified theft in the
Office of the City Prosecutor, Malabon-Navotas Substation. On April 5, 1999, a Resolution​3 was
issued finding probable cause for the crime charged. Consequently, an Information was filed against
Capor docketed as Criminal Case No. 207-58-MN.

Meanwhile, the Nagkakaisang Lakas ng Manggagawa (NLM) – Katipunan filed on behalf of Capor a
complaint​4 for illegal dismissal and money claims against petitioners with the Head Arbitration Office
of the National Labor Relations Commission (NLRC) for the National Capital Region. The complaint
prayed that Capor be paid her full backwages as well as moral and exemplary damages. The
complaint was docketed as NLRC NCR Case No. 00-01-00183-99.

Ruling of the Labor Arbiter

In the proceedings before the Labor Arbiter, Capor alleged that she was unaware that her clutch bag
contained the pilfered canned products. She claimed that petitioners might have planted the
evidence against her so it could avoid payment of her retirement benefits, as she was set to retire in
about a year’s time.

After the submission of the parties’ respective position papers, the Labor Arbiter rendered his
Decision​5 dated November 16, 1999 finding Capor guilty of serious misconduct which is a just cause
for termination.

The Labor Arbiter noted that Capor was caught trying to sneak out six cans of Reno products without
authority from the company. Under Article 232 of the Labor Code, an employer may terminate the
services of an employee for just cause, such as serious misconduct. In this case, the Labor Arbiter
found that theft of company property is tantamount to serious misconduct; as such, Capor is not
entitled to reinstatement and backwages, as well as moral and exemplary damages.

Moreover, the Labor Arbiter ruled that consistent with prevailing jurisprudence, an employee who
commits theft of company property may be validly terminated and consequently, the said employee
is not entitled to separation pay.​6

Ruling of the National Labor Relations Commission

On appeal, the NLRC affirmed the factual findings and monetary awards of the Labor Arbiter but
added an award of financial assistance. The decretal portion of the September 20, 2002 Decision​7
reads:

WHEREFORE, premises considered, the decision under review is hereby MODIFIED by granting an
award of financial assistance in the form of separation pay equivalent to one-half month pay for
every year of service. In all other respects the decision stands affirmed. All other claims of the
complainant are dismissed for lack of merit.​8

Both parties moved for a reconsideration of the NLRC Decision. Petitioners asked that the award of
financial assistance be deleted, while Capor asked for a finding of illegal dismissal and for
reinstatement with full backwages.​9

On February 28, 2003, the NLRC issued its Resolution​10 denying both motions for reconsideration
for lack of merit.

Ruling of the Court of Appeals

Aggrieved, petitioners filed a Petition for ​Certiorari​11 before the CA imputing grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the NLRC for awarding financial
assistance to Capor.

Citing Philippine Long Distance Telephone Company v. National Labor Relations Commission,​12
petitioners argued that theft of company property is a form of serious misconduct under Article
282(a) of the Labor Code for which no financial assistance in the form of separation pay should be
allowed.

Unimpressed, the appellate court affirmed the NLRC’s award of financial assistance to Capor. It
stressed that the laborer’s welfare should be the primordial and paramount consideration when
carrying out and interpreting provisions of the Labor Code. It explained that the mandate laid down in
Philippine Long Distance Telephone Company v. National Labor Relations Commission​13 was not
absolute, but merely directory.

Hence, this petition.

Issue

The issue before us is whether the NLRC committed grave abuse of discretion amounting to lack or
excess of jurisdiction in granting financial assistance to an employee who was validly dismissed for
theft of company property.

Our Ruling

We grant the petition.

Conviction in a criminal case is not necessary to find just cause for termination of employment.

On the date that the appellate court issued its Decision, Capor filed a Manifestation​14 informing the
CA of her acquittal in the charge of qualified theft. The dispositive portion of said Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered acquitting Nenita Capor of the
crime charged against her in this case on the ground of reasonable doubt with costs de oficio.

Capor thus claims that her acquittal in the criminal case proves that petitioners failed to present
substantial evidence to justify her termination from the company. She therefore asks for a finding of
illegal dismissal and an award of separation pay equivalent to one month pay for every year of
service.

On the other hand, petitioners argue that the dismissal of a criminal action should not carry a
corresponding dismissal of the labor action since a criminal conviction is unnecessary in warranting
a valid dismissal for employment.

Petitioners further maintain that the ruling in Philippine Long Distance Telephone Company v.
National Labor Relations Commission​15 regarding the disallowance of separation pay for those
dismissed due to serious misconduct or moral turpitude is mandatory. Petitioners likewise argue that
in Zenco Sales, Inc. v. National Labor Relations Commission,​16 the Supreme Court found grave
abuse of discretion on the part of the NLRC when it ignored the principles laid down in the Philippine
Long Distance Telephone Company v. National Labor Relations Commission. Thus, petitioners pray
for the reversal of the CA Decision and reinstatement of the Labor Arbiter’s Decision dated
November 16, 1999.

Capor was acquitted in Criminal Case No. 207-58-MN based on reasonable doubt. In his Decision,
the trial judge entertained doubts regarding the guilt of Capor because of two circumstances: (1) an
ensuing labor dispute (though it omitted to state the parties involved), and (2) the upcoming
retirement of Capor. The trial judge made room for the possibility that these circumstances could
have motivated petitioners to plant evidence against Capor so as to avoid paying her retirement
benefits. The trial court did not categorically rule that the acts imputed to Capor did not occur. It did
not find petitioners’ version of the event as fabricated, baseless, or unreliable. It merely
acknowledged that seeds of doubt have been planted in the juror’s mind which, in a criminal case, is
enough to acquit an accused based on reasonable doubt. The pertinent portion of the trial court’s
Decision reads:

During the cross examination of the accused, she was confronted with a document that must be
related to a labor dispute. x x x The Court noted very clearly from the transcript of stenographic
notes that it must have been submitted to the NLRC. This is indicative of a labor dispute which,
although not claimed directly by the accused, could be one of the reasons why she insinuated that
evidence was planted against her in order to deprive her of the substantial benefits she will be
receiving when she retires from the company. Incidentally, this document was never included in the
written offer of evidence of the prosecution.

Doubt has, therefore, crept into the mind of the Court concerning the guilt of accused Nenita Capor
which in this jurisdiction is mandated to be resolved in favor of her innocence.

Pertinent to the foregoing doubt being entertained by this Court, the Court of Appeals citing People
v. Bacus, G.R. No. 60388, November 21, 1991: "the phrase ‘beyond reasonable doubt’ means not a
single iota of doubt remains present in the mind of a reasonable and unprejudiced man that a person
is guilty of a crime. Where doubt exists, even if only a shred, the Court must and should set the
accused free." (People v. Felix, CA-G.R. No. 10871, November 24, 1992)

WHEREFORE, premises considered, judgment is hereby rendered acquitting accused Nenita Capor
of the crime charged against her in this case on the ground of reasonable doubt, with costs de oficio.

SO ORDERED.​17

In Nicolas v. National Labor Relations Commission,​18 we held that a criminal conviction is not
necessary to find just cause for employment termination. Otherwise stated, an employee’s acquittal
in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not
preclude a determination in a labor case that he is guilty of acts inimical to the employer’s
interests.​19
Criminal cases require proof beyond reasonable doubt while labor disputes require only substantial
evidence, which means such relevant evidence as a

reasonable mind might accept as adequate to justify a conclusion.​20 The evidence in this case was
reviewed by the appellate court and two labor tribunals endowed with expertise on the matter – the
Labor Arbiter and the NLRC. They all found substantial evidence to conclude that Capor had been
validly dismissed for dishonesty or serious misconduct. It is settled that factual findings of
quasi-judicial agencies are generally accorded respect and finality so long as these are supported by
substantial evidence. In the instant case, we find no compelling reason to doubt the common
findings of the three reviewing bodies.

The award of separation pay is not warranted under the law and jurisprudence.

We find no justification for the award of separation pay to Capor. This award is a deviation from
established law and jurisprudence. 21
​

The law is clear. Separation pay is only warranted when the cause for termination is not attributable
to the employee’s fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as
in cases of illegal dismissal in which reinstatement is no longer feasible.​22 It is not allowed when an
employee is dismissed for just cause,​23​ such as serious misconduct.

Jurisprudence has classified theft of company property as a serious misconduct and denied the
award of separation pay to the erring employee.​24 We see no reason why the same should not be
similarly applied in the case of Capor. She attempted to steal the property of her long-time employer.
For committing such misconduct, she is definitely not entitled to an award of separation pay.

It is true that there have been instances when the Court awarded financial assistance to employees
who were terminated for just causes, on grounds of equity and social justice. The same, however,
has been curbed and rationalized in Philippine Long Distance Telephone Company v. National Labor
Relations Commission.​25 In that case, we recognized the harsh realities faced by employees that
forced them, despite their good intentions, to violate company policies, for which the employer can
rightfully terminate their employment. For these instances, the award of financial assistance was
allowed. But, in clear and unmistakable language, we also held that the award of financial assistance
shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of
some depravity in their moral character. When the employee commits an act of dishonesty,
depravity, or iniquity, the grant of financial assistance is misplaced compassion. It is tantamount not
only to condoning a patently illegal or dishonest act, but an endorsement thereof. It will be an insult
to all the laborers who, despite their economic difficulties, strive to maintain good values and moral
conduct.

In fact, in the recent case of Toyota Motors Philippines, Corp. Workers Association (TMPCWA) v.
National Labor Relations Commission,​26 we ruled that separation pay shall not be granted to all
employees who are dismissed on any of the four grounds provided in Article 282 of the Labor Code.
Such ruling was reiterated and further explained in Central Philippines Bandag Retreaders, Inc. v.
Diasnes:​27

To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of
separation pay based on social justice when an employee’s dismissal is based on serious
misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust;
or commission of a crime against the person of the employer or his immediate family – grounds
under Art. 282 of the Labor Code that sanction dismissals of employees. They must be most
judicious and circumspect in awarding separation pay or financial assistance as the constitutional
policy to provide full protection to labor is not meant to be an instrument to oppress the employers.
The commitment of the Court to the cause of labor should not embarrass us from sustaining the
employers when they are right, as here. In fine, we should be more cautious in awarding financial
assistance to the undeserving and those who are unworthy of the liberality of the law.​ 1avvphi1

We are not persuaded by Capor’s argument that despite the finding of theft, she should still be
granted separation pay in light of her long years of service with petitioners. We held in Central
Pangasinan Electric Cooperative, Inc. v. National Labor Relations Commission​28​ that:

Although long years of service might generally be considered for the award of separation benefits or
some form of financial assistance to mitigate the effects of termination, this case is not the
appropriate instance for generosity x x x. The fact that private respondent served petitioner for more
than twenty years with no negative record prior to his dismissal, in our view of this case, does not
call for such award of benefits, since his violation reflects a regrettable lack of loyalty and worse,
betrayal of the company. If an employee’s length of service is to be regarded as justification for
moderating the penalty of dismissal, such gesture will actually become a prize for disloyalty,
distorting the meaning of social justice and undermining the efforts of labor to clean its ranks of
undesirables.

Indeed, length of service and a previously clean employment record cannot simply erase the gravity
of the betrayal exhibited by a malfeasant employee.​29 Length of service is not a bargaining chip that
can simply be stacked against the employer. After all, an employer-employee relationship is
symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer had
treated his employee well, has accorded him fairness and adequate compensation as determined by
law, it is only fair to expect a long-time employee to return such fairness with at least some respect
and honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and
odious for a fair employer. As stated in another case:

x x x The fact that [the employer] did not suffer pecuniary damage will not obliterate respondent’s
betrayal of trust and confidence reposed by petitioner. Neither would his length of service justify his
dishonesty or mitigate his liability. His length of service even aggravates his offense. He should have
been more loyal to petitioner company from which he derived his family bread and butter for
seventeen years.​30

While we sympathize with Capor’s plight, being of retirement age and having served petitioners for
39 years, we cannot award any financial assistance in her favor because it is not only against the
law but also a retrogressive public policy. We have already explained the folly of granting financial
assistance in the guise of compassion in the following pronouncements:

x x x Certainly, a dishonest employee cannot be rewarded with separation pay or any financial
benefit after his culpability is established in two decisions by competent labor tribunals, which
decisions appear to be well-supported by evidence. To hold otherwise, even in the name of
compassion, would be to send a wrong signal not only that "crime pays" but also that one can enrich
himself at the expense of another in the name of social justice. And courts as well as quasi-judicial
entities will be overrun by petitioners mouthing dubious pleas for misplaced social justice. Indeed,
before there can be an occasion for compassion and mercy, there must first be justice for all.
Otherwise, employees will be encouraged to steal and misappropriate in the expectation that
eventually, in the name of social justice and compassion, they will not be penalized but instead
financially rewarded. Verily, a contrary holding will merely encourage lawlessness, dishonesty, and
duplicity. These are not the values that society cherishes; these are the habits that it abhors.​31

WHEREFORE​, the petition is ​GRANTED. ​The assailed June 3, 2004 Decision of the Court of
Appeals in CA-G.R. SP No. 76789 affirming the September 20, 2002 Decision of the National Labor
Relations Commission is ​ANNULLED and SET ASIDE​. The November 16, 1999 Decision of the
Labor Arbiter is ​REINSTATED ​and ​AFFIRMED​.

SO ORDERED.
G.R. No. 181974 February 1, 2012

LYNVIL FISHING ENTERPRISES, INC. and/or ROSENDO S. DE BORJA,​ Petitioners,

vs.

ANDRES G. ARIOLA, JESSIE D. ALCOVENDAS, JIMMY B. CALINAO AND LEOPOLDO G.

SEBULLEN,​ Respondents.

DECISION

PEREZ, ​J.:

1​ 2​
Before the Court is a Petition for Review on Certiorari​ of the Decision​ of the Fourteenth Division
of the Court of Appeals in CA-G.R. SP No. 95094 dated 10 September 2007, granting the Writ of
Certiorari prayed for under Rule 65 of the 1997 Revised Rules of Civil Procedure by herein
respondents Andres G. Ariola, Jessie D. Alcovendas, Jimmy B. Calinao and Leopoldo Sebullen
thereby reversing the Resolution of the National Labor Relations Commission (NLRC). The
dispositive portion of the assailed decision reads:

WHEREFORE, premises considered, the Decision dated March 31, 2004 rendered by the National
Labor Relations Commission is hereby REVERSED and SET ASIDE. In lieu thereof, the Decision of
the Labor Arbiter is hereby REINSTATED, except as to the award of attorney’s fees, which is
3
ordered DELETED.​

The version of the petitioners follows:

1. Lynvil Fishing Enterprises, Inc. (Lynvil) is a company engaged in deep-sea fishing, operating
4 ​
along the shores of Palawan and other outlying islands of the Philippines.​ It is operated and
managed by Rosendo S. de Borja.

2. On 1 August 1998, Lynvil received a report from Romanito Clarido, one of its employees, that on
31 July 1998, he witnessed that while on board the company vessel Analyn VIII, Lynvil employees,
namely: Andres G. Ariola (Ariola), the captain; Jessie D. Alcovendas (Alcovendas), Chief Mate;
Jimmy B. Calinao (Calinao), Chief Engineer; Ismael G. Nubla (Nubla), cook; Elorde Bañez (Bañez),
oiler; and Leopoldo D. Sebullen (Sebullen), bodegero, conspired with one another and stole eight (8)
tubs of "pampano" and "tangigue" fish and delivered them to another vessel, to the prejudice of
5
Lynvil.​

3. The said employees were engaged on a per trip basis or "por viaje" which terminates at the end of
each trip. Ariola, Alcovendas and Calinao were managerial field personnel while the rest of the crew
6
were field personnel.​
4. By reason of the report and after initial investigation, Lynvil’s General Manager Rosendo S. De
Borja (De Borja) summoned respondents to explain within five (5) days why they should not be
7​
dismissed from service. However, except for Alcovendas and Bañez,​ the respondents refused to
sign the receipt of the notice.

5. Failing to explain as required, respondents’ employment was terminated.

6. Lynvil, through De Borja, filed a criminal complaint against the dismissed employees for violation
of P.D. 532, or the Anti-Piracy and Anti-Highway Robbery Law of 1974 before the Office of the City
8
Prosecutor of Malabon City.​

7. On 12 November 1998, First Assistant City Prosecutor Rosauro Silverio found probable cause for
9​
the indictment of the dismissed employees for the crime of qualified theft​ under the Revised Penal
Code.

On the other hand, the story of the defense is:

10
1. The private respondents were crew members of Lynvil’s vessel named Analyn VIII.​

2. On 31 July 1998, they arrived at the Navotas Fishport on board Analyn VIII loaded with 1,241
bañeras of different kinds of fishes. These bañeras were delivered to a consignee named SAS and
11
Royale.​

The following day, the private respondents reported back to Lynvil office to inquire about their new
job assignment but were told to wait for further advice. They were not allowed to board any
12
vessel.​

3. On 5 August 1998, only Alcovendas and Bañez received a memorandum from De Borja ordering
them to explain the incident that happened on 31 July 1998. Upon being informed about this, Ariola,
Calinao, Nubla and Sebullen went to the Lynvil office. However, they were told that their
13
employments were already terminated.​

Aggrieved, the employees filed with the Arbitration Branch of the National Labor Relations
Commission-National Capital Region on 25 August 1998 a complaint for illegal dismissal with claims
for backwages, salary differential reinstatement, service incentive leave, holiday pay and its premium
and 13th month pay from 1996 to1998. They also claimed for moral, exemplary damages and
14
attorney’s fees for their dismissal with bad faith.​
They added that the unwarranted accusation of theft stemmed from their oral demand of increase of
salaries three months earlier and their request that they should not be required to sign a blank
15
payroll and vouchers.​

On 5 June 2002, Labor Arbiter Ramon Valentin C. Reyes found merit in complainants’ charge of
16 ​
illegal dismissal.​ The dispositive portion reads:

WHEREFORE, premises considered, judgment is hereby rendered finding that complainants were
illegally dismissed, ordering respondents to jointly and severally pay complainants (a) separation pay
at one half month pay for every year of service; (b) backwages; (c) salary differential; (d) 13th month
pay; and (e) attorney’s fees, as follows:

Andres Ariola
"1) Backwages P234,000.00

(P6,500.00 x 36 = P234,000.00)

Separation Pay –
P74,650.00

13th Month Pay –

P6,500.00

P325,250.00

Jessie Alcovendas
"2) Backwages P195,328.00

(P5,148.00 x 36 = P195,328.00)

Separation Pay –
P44,304.00

13th Month Pay –

5,538.00

Salary Differential –
1,547.52

P246,717.52

Jimmy Calinao
"3) Backwages P234,000.00
 (P6,500.00 x 36 = P234,000.00)

Separation Pay –
55,250.00

13th Month Pay –

P6,500.00

P295,700.00

Leopoldo Sebullen
"4)
Backwages P154,440.00

(P4, 290.00 x 36 = P154,440.00)

Separation Pay –
P44,073.00

13th Month Pay –

2,473.12

Salary Differential –
4,472.00

P208,455.12

Ismael Nubla
"5) Backwages P199,640.12

Separation Pay –
P58,149.00

13th Month Pay –

2,473.12

Salary Differential –
P5,538.00

P265, 28.12
 TOTAL
P 1, 341, 650.76

17
All other claims are dismissed for lack of merit."​

The Labor Arbiter found that there was no evidence showing that the private respondents received
the 41 bañeras of "pampano" as alleged by De Borja in his reply-affidavit; and that no proof was
18
presented that the 8 bañeras of pampano [and tangigue] were missing at the place of destination.​

The Labor Arbiter disregarded the Resolution of Assistant City Prosecutor Rosauro Silverio on the
theft case. He reasoned out that the Labor Office is governed by different rules for the determination
19
of the validity of the dismissal of employees.​

The Labor Arbiter also ruled that the contractual provision that the employment terminates upon the
end of each trip does not make the respondents’ dismissal legal. He pointed out that respondents
20
and Lynvil did not negotiate on equal terms because of the moral dominance of the employer.​

The Labor Arbiter found that the procedural due process was not complied with and that the mere
notice given to the private respondents fell short of the requirement of "ample opportunity" to present
21
the employees’ side.​

On appeal before the National Labor Relations Commission, petitioners asserted that private
respondents were only contractual employees; that they were not illegally dismissed but were
accorded procedural due process and that De Borja did not commit bad faith in dismissing the
22
employees so as to warrant his joint liability with Lynvil.​

On 31 March 2004, the NLRC reversed and set aside the Decision of the Labor Arbiter. The
dispositive portion reads:

WHEREFORE, judgment is hereby rendered REVERSING AND SETTING ASIDE the Decision of
the Labor Arbiter a quo and a new one entered DISMISSING the present complaints for utter lack of
merit;

However as above discussed, an administrative fine of PhP5,000.00 for each complainant, Andres
Ariola, Jessie Alcovendas, Jimmy Canilao, Leopoldo Sebullen and Ismael Nobla or a total of
23
PhP25,000.00 is hereby awarded.​

24 ​
The private respondents except Elorde Bañez filed a Petition for Certiorari​ before the Court of
Appeals alleging grave abuse of discretion on the part of NLRC.
The Court of Appeals found merit in the petition and reinstated the Decision of the Labor Arbiter
except as to the award of attorney’s fees. The appellate court held that the allegation of theft did not
warrant the dismissal of the employees since there was no evidence to prove the actual quantities of
25 ​
the missing kinds of fish loaded to Analyn VIII.​ It also reversed the finding of the NLRC that the
dismissed employees were merely contractual employees and added that they were regular ones
performing activities which are usually necessary or desirable in the business and trade of Lynvil.
Finally, it ruled that the two-notice rule provided by law and jurisprudence is mandatory and
non-compliance therewith rendered the dismissal of the employees illegal.

The following are the assignment of errors presented before this Court by Lynvil:

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THE

ESTABLISHED DOCTRINE LAID DOWN IN NASIPIT LUMBER COMPANY V. NLRC HOLDING
THAT THE FILING OF A CRIMINAL CASE BEFORE THE PROSECUTOR’S OFFICE
CONSTITUTES SUFFICIENT BASIS FOR A VALID TERMINATION OF EMPLOYMENT ON THE
GROUNDS OF SERIOUS MISCONDUCT AND/OR LOSS OF TRUST AND CONFIDENCE.

II

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE TERMINATION OF

RESPONDENTS’ EMPLOYMENT WAS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.

III

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THAT THE

RESPONDENTS’ EMPLOYMENT, IN ANY EVENT, WERE CONTRACTUAL IN NATURE BEING
ON A PER VOYAGE BASIS. THUS, THEIR RESPECTIVE EMPLOYMENT TERMINATED AFTER
THE END OF EACH VOYAGE

IV

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENTS WERE
NOT ACCORDED PROCEDURAL DUE PROCESS.

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENTS ARE
ENTITLED TO THE PAYMENT OF THEIR MONEY CLAIMS.

VI

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THAT PETITIONER

ROSENDO S. DE BORJA IS NOT JOINTLY AND SEVERALLY LIABLE FOR THE JUDGMENT
26
WHEN THERE WAS NO FINDING OF BAD FAITH.​
 The Court’s Ruling

27 ​
The Supreme Court is not a trier of facts. Under Rule 45,​ parties may raise only questions of law.
We are not duty-bound to analyze again and weigh the evidence introduced in and considered by
the tribunals below. Generally when supported by substantial evidence, the findings of fact of the CA
are conclusive and binding on the parties and are not reviewable by this Court, unless the case falls
under any of the following ​recognized exceptions​:

(1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures;

(2) When the inference made is manifestly mistaken, absurd or impossible;

(3) Where there is a grave abuse of discretion;

(4) When the judgment is based on a misapprehension of facts;

(5) When the findings of fact are conflicting;

(6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the
same is contrary to the admissions of both appellant and appellee;

(7) When the findings are contrary to those of the trial court;

(8) When the findings of fact are conclusions without citation of specific evidence on which they are
based;

(9) When the facts set forth in the petition as well as in the petitioners' main and reply briefs are not
disputed by the respondents; and

(10) When the findings of fact of the Court of Appeals are premised on the supposed absence of
28
evidence and contradicted by the evidence on record. (Emphasis supplied)​

The contrariety of the findings of the Labor Arbiter and the NLRC prevents reliance on the principle
of special administrative expertise and provides the reason for judicial review, at first instance by the
appellate court, and on final study through the present petition.

In the first assignment of error, Lynvil contends that the filing of a criminal case before the Office of
the Prosecutor is sufficient basis for a valid termination of employment based on serious misconduct
29
and/or loss of trust and confidence relying on Nasipit Lumber Company v. NLRC.​

Nasipit is about a security guard who was charged with qualified theft which charge was dismissed
by the Office of the Prosecutor. However, despite the dismissal of the complaint, he was still
terminated from his employment on the ground of loss of confidence. We ruled that proof beyond
reasonable doubt of an employee's misconduct is not required when loss of confidence is the ground
for dismissal. It is sufficient if the employer has "some basis" to lose confidence or that the employer
has reasonable ground to believe or to entertain the moral conviction that the employee concerned
is responsible for the misconduct and that the nature of his participation therein rendered him
30 ​
absolutely unworthy of the trust and confidence demanded by his position.​ It added that the
31
dropping of the qualified theft charges against the respondent is not binding upon a labor tribunal.​

32 ​
In Nicolas v. National Labor Relations Commission,​ we held that a criminal conviction is not
necessary to find just cause for employment termination. Otherwise stated, an employee’s acquittal
in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not
preclude a determination in a labor case that he is guilty of acts inimical to the employer’s
33 ​
interests.​ In the reverse, the finding of probable cause is not followed by automatic adoption of
such finding by the labor tribunals.

In other words, whichever way the public prosecutor disposes of a complaint, the finding does not
bind the labor tribunal.

Thus, Lynvil cannot argue that since the Office of the Prosecutor found probable cause for theft the
Labor Arbiter must follow the finding as a valid reason for the termination of respondents’
employment. The proof required for purposes that differ from one and the other are likewise
different.

Nonetheless, even without reliance on the prosecutor’s finding, we find that there was valid cause for
respondents’ dismissal.

In illegal dismissal cases, the employer bears the burden of proving that the termination was for a
34
valid or authorized cause.​

35 ​
Just cause is required for a valid dismissal. The Labor Code​ provides that an employer may
terminate an employment based on fraud or willful breach of the trust reposed on the employee.
Such breach is considered willful if it is done intentionally, knowingly, and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently. It must also be based on substantial evidence and not on the employer’s whims or
caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer.
Loss of confidence must not be indiscriminately used as a shield by the employer against a claim
that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal,
the act complained of must be work-related and shows that the employee concerned is unfit to
continue working for the employer. In addition, loss of confidence as a just cause for termination of
employment is premised on the fact that the employee concerned holds a position of responsibility,
trust and confidence or that the employee concerned is entrusted with confidence with respect to
delicate matters, such as the handling or care and protection of the property and assets of the
employer. The betrayal of this trust is the essence of the offense for which an employee is
36
penalized.​
Breach of trust is present in this case.

We agree with the ruling of the Labor Arbiter and Court of Appeals that the quantity of tubs expected
to be received was the same as that which was loaded. However, what is material is the kind of fish
loaded and then unloaded. Sameness is likewise needed.

We cannot close our eyes to the positive and clear narration of facts of the three witnesses to the
commission of qualified theft. Jonathan Distajo, a crew member of the Analyn VIII, stated in his letter
37 ​
addressed to De Borja​ dated 8 August 1998, that while the vessel was traversing San Nicolas,
Cavite, he saw a small boat approach them. When the boat was next to their vessel, Alcovendas
went inside the stockroom while Sebullen pushed an estimated four tubs of fish away from it. Ariola,
on the other hand, served as the lookout and negotiator of the transaction. Finally, Bañez and
Calinao helped in putting the tubs in the small boat. He further added that he received ₱800.00 as
his share for the transaction. Romanito Clarido, who was also on board the vessel, corroborated the
38 ​
narration of Distajo on all accounts in his 25 August 1998 affidavit.​ He added that Alcovendas told
him to keep silent about what happened on that day. Sealing tight the credibility of the narration of
39 ​
theft is the affidavit​ executed by Elorde Bañez dated 3 May 1999. Bañez was one of the
dismissed employees who actively participated in the taking of the tubs. He clarified in the affidavit
that the four tubs taken out of the stockroom in fact contained fish taken from the eight tubs. He
further stated that Ariola told everyone in the vessel not to say anything and instead file a labor case
against the management. Clearly, we cannot fault Lynvil and De Borja when it dismissed the
employees.

The second to the fifth assignment of errors interconnect.

The nature of employment is defined in the Labor Code, thus:

Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where the employment
has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph:

Provided, That any employee who has rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with respect to the activity in which he
is employed and his employment shall continue while such activity exists.

Lynvil contends that it cannot be guilty of illegal dismissal because the private respondents were
employed under a fixed-term contract which expired at the end of the voyage. The pertinent
provisions of the contract are:

xxxx
1. NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-ayon sa patakarang
"por viaje" na magmumula sa pagalis sa Navotas papunta sa pangisdaan at pagbabalik sa
pondohan ng lantsa sa Navotas, Metro Manila;

xxxx

1. NA ako ay nakipagkasundo na babayaran ang aking paglilingkod sa paraang "por viaje" sa

40
halagang P__________ isang biyahe ng kabuuang araw xxxx.​

41 ​
Lynvil insists on the applicability of the case of Brent School,​ to wit:

Accordingly, and since the entire purpose behind the development of legislation culminating in the
present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent
circumvention of the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements conflicting with the concept
of regular employment as defined therein should be construed to refer to the substantive evil that the
Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It
should have no application to instances where a fixed period of employment was agreed upon
knowingly and voluntarily by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and employee dealt with each other on more or less
equal terms with no moral dominance whatever being exercised by the former over the latter. Unless
thus limited in its purview, the law would be made to apply to purposes other than those explicitly
stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to
absurd and unintended consequences.

Contrarily, the private respondents contend that they became regular employees by reason of their
continuous hiring and performance of tasks necessary and desirable in the usual trade and business
of Lynvil.

42 ​
Jurisprudence,​ laid two conditions for the validity of a fixed-contract agreement between the
employer and employee:

First, the fixed period of employment was knowingly and voluntarily agreed upon by the parties
without any force, duress, or improper pressure being brought to bear upon the employee and
absent any other circumstances vitiating his consent; or

Second, it satisfactorily appears that the employer and the employee dealt with each other on more
43
or less equal terms with no moral dominance exercised by the former or the latter.​

Textually, the provision that: "NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain
sang-ayon sa patakarang "por viaje" na magmumula sa pagalis sa Navotas papunta sa pangisdaan
at pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila" is for a fixed period of employment.
In the context, however, of the facts that: (1) the respondents were doing tasks necessarily to
Lynvil’s fishing business with positions ranging from captain of the vessel to bodegero; (2) after the
end of a trip, they will again be hired for another trip with new contracts; and (3) this arrangement
continued for more than ten years, the clear intention is to go around the security of tenure of the
respondents as regular employees. And respondents are so by the express provisions of the second
paragraph of Article 280, thus:

xxx Provided, That any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered a regular employee with respect to the activity
in which he is employed and his employment shall continue while such activity exists.

The same set of circumstances indicate clearly enough that it was the need for a continued source
of income that forced the employees’ acceptance of the "por viaje" provision.

Having found that respondents are regular employees who may be, however, dismissed for cause
as we have so found in this case, there is a need to look into the procedural requirement of due
process in Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code. It is required
that the employer furnish the employee with two written notices: (1) a written notice served on the
employee specifying the ground or grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side; and (2) a written notice of termination served on the
employee indicating that upon due consideration of all the circumstances, grounds have been
established to justify his termination.

From the records, there was only one written notice which required respondents to explain within five
(5) days why they should not be dismissed from the service. Alcovendas was the only one who
signed the receipt of the notice. The others, as claimed by Lynvil, refused to sign. The other
employees argue that no notice was given to them. Despite the inconsistencies, what is clear is that
no final written notice or notices of termination were sent to the employees.

The twin requirements of notice and hearing constitute the elements of [due] process in cases of
employee's dismissal. The requirement of notice is intended to inform the employee concerned of
the employer's intent to dismiss and the reason for the proposed dismissal. Upon the other hand, the
requirement of hearing affords the employee an opportunity to answer his employer's charges
44 ​
against him and accordingly, to defend himself therefrom before dismissal is effected.​ Obviously,
the second written notice, as indispensable as the first, is intended to ensure the observance of due
process.

Applying the rule to the facts at hand, we grant a monetary award of ₱50,000.00 as nominal
damages, this, pursuant to the fresh ruling of this Court in Culili v. Eastern Communication
45 ​
Philippines, Inc.​ Due to the failure of Lynvil to follow the procedural requirement of two-notice rule,
nominal damages are due to respondents despite their dismissal for just cause.

Given the fact that their dismissal was for just cause, we cannot grant backwages and separation
pay to respondents. However, following the findings of the Labor Arbiter who with the expertise
presided over the proceedings below, which findings were affirmed by the Court of Appeals, we
grant the 13th month pay and salary differential of the dismissed employees.

Whether De Borja is jointly and severally liable with Lynvil

As to the last issue, this Court has ruled that in labor cases, the corporate directors and officers are
solidarily liable with the corporation for the termination of employment of employees done with
46 ​
malice or in bad faith.​ Indeed, moral damages are recoverable when the dismissal of an
employee is attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a
manner contrary to good morals, good customs or public policy.

47 ​
It has also been discussed in ​MAM Realty Development Corporation v. NLRC​ that:

x x x A corporation being a juridical entity, may act only through its directors, officers and employees.
Obligations incurred by them, acting as such corporate agents, are not theirs but the direct
accountabilities of the corporation they represent. True, solidary liabilities may at times be incurred
but only when exceptional circumstances warrant such as, generally, in the following cases:

1. When directors and trustees or, in appropriate cases, the officers of a corporation:

xxx

(b) act in bad faith or with gross negligence in directing the corporate affairs;

48
xxx​

The term "bad faith" contemplates a "state of mind affirmatively operating with furtive design or with
49 ​
some motive of self-interest or will or for ulterior purpose."​ 1âwphi1

We agree with the ruling of both the NLRC and the Court of Appeals when they pronounced that
there was no evidence on record that indicates commission of bad faith on the part of De Borja. He
is the general manager of Lynvil, the one tasked with the supervision by the employees and the
operation of the business. However, there is no proof that he imposed on the respondents the "por
viaje" provision for purpose of effecting their summary dismissal.

WHEREFORE, the petition is partially GRANTED. The 10 September 2007 Decision of the Court of
Appeals in CA-G.R. SP No. 95094 reversing the Resolution dated 31 March 2004 of the National
Labor Relations Commission is hereby MODIFIED. The Court hereby rules that the employees were
dismissed for just cause by Lynvil Fishing Enterprises, Inc. and Rosendo S. De Borja, hence, the
reversal of the award for backwages and separation pay. However, we affirm the award for 13th
month pay, salary differential and grant an additional ₱50,000.00 in favor of the employees
representing nominal damages for petitioners’ non-compliance with statutory due process. No cost.

SO ORDERED.

JOSE PORTUGAL PEREZ

Associate Justice