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THIRD DIVISION

NILO D. LAFUENTE and BILLY G.R. NO. 247410

C. PANAGUITON,
Petitioners, Present:

LEONEN, J., Chairperson,

HERNANDO,
- versus - INTING,
DELOS SANTOS, and
LOPEZ, J., JJ

DAVA.O CENTRAL WAREHOUSE

CLUB, INC.,· and LILY S. YAP, Promulgated:
Corporate Secretary,
· Respondents. March 17, 2021
X - - - - - - - - - - - - - - - - - - - - - - - - - - - ~.)~~:'~Yr - - - - - - - - - ~ X

DECISION
INTING,J.:

Before the Court is a Petition for Review on Certiorari 1 assailing

the Decision2 dated July 20, 2018 and the Resolution3 dated January 23,
2019 of the Court of Appeals (CA) in CA-G.R. SP No. 08394-MIN. The
assailed Decision and Resolution affirmed the Decision4 dated June 30,
2017 and the Resolution5 dated September 27, 2017 of the National
Labor Relations Commission (NLRC) in NLRC No. MAC-03-014836-
2017 (RAB-XI-11-00803-16) which reversed che Decision6 dated
January 25, 2017 of the Labor Arbiter (LA) and ruled that there was
valid dismissal from E'mployment.

1
Rollo, pp.12-34.
Id. at 168-179; penned t~ Associate Justice Oscar V. Badelles wit: Associate Justices Romulo V.
Borja and Tita Marilyn Payoyo-Villordon, concurring.
Id. at 192-193; penned by Associate Justice Oscar V. Badelles with Associate Justices Edgardo T.
Lloren and Tit.a Marilyn Payoyo-Villordon, concurring.
4
Id at 43-53; penned by Commissioner Elbert C. Restauro with Presiding Commissioner Bario-
Rod M. Talon and Comm;ssioner Proculo T. Sa,men, concuning.
5
Id. at 68-69.
6
Id. at 37-41; penned by Labor Arbiter Merceditas C. Larida.
Decision 2 G.R. No. 247410

The Antecedents

The case stemmed from a complaint for illegal. dismissal with

prayer for payment of holiday pay, overtime pay, proportionate 13 th
month pay, service incentive leave and separation pay filed by Nilo D.
Lafuente (Lafuente) and Billy C. Panaguiton (Panaguiton) (collectively,
petitioners) against Davao Central Warehouse Club, Inc. (DCWCI) and
Lily S. Yap (Yap) (collectively, respondents). 7

DCWCI hired Lafuente in 1993 as Dispatching-in-Charge. On the

other hand, DCWCI hired Panaguiton in 1995 as Lafuente's Assistant
Dispatcher. 8

On September 5, 2016, DCWCI issued a preventive suspension

against petitioners through a Notice of Preventive Suspension with
Investigation Hearing. 9 DCWCI immediately placed them under
preventive suspension and charged them with "Gross and Habitual
Neglect by the Employee of His Duties" and for "Fraud/Willfuzl Breach
by the Employee of the Trust Reposed on Him by His Employer."
DCWCI further required them to explain in writing why they should not
be administratively charged for the missing/loss of several appliances in
the warehouse under their watch. 10

In response, Lafuente vehemently denied having knowledge of the

incident. He explained that he had no authority to stay in the warehouse
and that the dispatching area was more or less 60 meters away from the
warehouse. As a Dispatching-in-Charge, he only recorded the model and
serial numbers of the appliances for dispatch and assisted in carrying the
withdrawn items from the warehouse only in cases of several orders. He
added that before the withdrawn units were loaded for delivery to the
branch, the guard on duty would verify and inspect the items. 11

In Panaguiton'~ written explanation, 12 he narrated that he would

take over the checking of the units and handle the requested items for
7
Id. at 37.
' Id. at 37, 44.
' Id at 93-94, 95-96.
0
' Id. at 44.
" See Letter-reply dated Se;.>tember 9, 2016 of Nila D. Lafuente, id at 63-64.
" See handwritten Letter dated September 10, 2016 of Billy C. Panaguiton, id. at 65-66.
Decision 3 G.R. No. 247410

dispatch only when Lafuente is not around. He would also bring the
items for loading when no utility personnel is present. He recounted that
when he discovered some missing units in the warehouse, he told his
manager about it; the manager, however, just inst1 ucted him to first find
the missing appliances. Despite his efforts, he only found empty
appliance boxes. ·

After the conduct of an investigation, DCV,,1, in two similarly

worded Memoranda13 dated October 5, 2016, found petitioners guilty of
Gross and Habitual Neglect by the Employee of his Duties, and
terminated their employment, portions of which are cited herein to wit:

x x x Based on the explanations you have offered in your letter

reply received September 10, 2016 and during the Investigation
hearing Septemoer 12, 2016, you acknowledged to be the Dispatching
in-charge for the Household and Appliance department, and that you
knew about the issue on missing units prior to the disclosure by
Sarnmuel Llantada to Head Office staff. You mentioned about the
charges incurred and reversal of such charges when Mr. Llantada
cleared the issue but no audit report was submitted for verification
and evaluation. Dnring the investigation hearing, you admitted to
have not implemented monthly actual inventory. When you had
doubts about the missing units, you haven't requested for actual
count/audit and were shocked to found [sic] out of the quantities lost
in the area.

After careful consideration of all the facts and circumstances

obtaining your case, we have determined that your explanation is
unacceptable. As a dispatcher, it is your main duty and responsibility
to see to it that your area of jurisdiction is in order. That, all units
taken out from. the department must have proper documentation
whether it be SOLD or for TRANSFER units. You were not able to
reach the expectation of the company as Dispatcher or Releasing in-
charge. Your fai!ure to perform work due to gross ,negligence has
resulted to the damage and prejudice of the company's interest and is
in direct violati0n of the established company rules and regulations
which warrants ,he termination of your employment. 14

Aggrieved, petitioners filed a complaint against DCWCI and Yap

for illegal dismissal. They raised that the first notice did not show .in
detail their alleged infraction; thus, null and void. They insisted _that they
were not remiss in their duties and functions as dispatchers; that they
have no knowledge of or participation in the qualified theft incident; and

"Jdatl09-112.
" Id at 109, 111.
Decisicn 4 G.R. No. 247410

that the incident was attributable to the bodega-in-charge, the security

guard, the appliance manager, :Mr. Samuel Llantada (Llantada), and Ms.
Lovely Viduya. They asserted that it was through Lafuente's efforts that
the thief, Rambo Menguito Dospueblos (Dospueblos), DCWCI's utility
man and a cousin of Lafuente, voluntarily surrendered to the authoriti_es
resulting in the recovery of a few stolen television units. 15

Respondents countered that petitioners' dismissal was anchored on

Article 297 [282](b) 16 of the Labor Code of the Philippines (Labor Code)
on gross and habitual neglect of duties. They insinuated that petitioners
did not use reasonable care and caution when 29 television sets were
taken out of its bodega without proper orders. They argued that, although
nine sets were recovered, they incurred actual losses amounting to
P448,056.00 which petitioners' long years of service or unblemished
record could not mitigate. 17

Ruling of the LA

In the Decision 18 dated January 25, 2017, the LA ruled that

petitioners have been illegally dismissed from employment; thus, it
granted them separation pay in lieu of reinstatement, plus 13 th month pay
and service incentive leave pay.

The LA held that the dismissal of petitioners for gross and habitual
neglect of duties and fraud/willful breach of trust was unjustified. For
the LA, petitioners' primary duty was simply to ascertain that all the
requirements for the final release of items sold or transferred to
DCWCI's sister companies were met. They were not in charge of the
warehouse security ax1d that the presence of the company encoder and
bodega-in-charge showed that petitioners were not directly accountable
for the stocks inside the warehouse. 19

The LA added that, assummg petitioners were also tasked to

15
Id. at 45.
16
Article 297[282](b) of the Labor Code ofLlie Philippines provides:
ARTICLE 297. [282] Termination by Employet. -An employer may terminate an
employment for any of the following causes:
XXX
(b) Gross and habitm! neglect by the employee of his duties;
XXX
" Rollo, pp. 46-47.
18
Id. at 37-41.
19
Id. at 38-39.
Decision 5 G.R. No. 247410

conduct inventory uf stocks, the extreme penalty of dismissal was

incommensurate for their failure to do so in light of the concomitant
acc0untabilities ofDC\VCI's company encoder and bodega-in-charge.

Dissatisfied, respondents filed an appeal and asserted that

petitioners, as dispaichers, were strategically stationed at the entrance
and exit of the warehouse where every item for disposal could pass
through them for inspection. For respondents, the entire .warehouse was
petitioners' place of work and their job was to control, verify, and inspect
every disposal of items while the warehouse was open.

Ruling ofthe NLRC

In the Decis:on20 dated June 30, 2017, the NLRC granted

respondents' appeal and ruled that petitioners were validly dismissed
from employment for gross and habitual neglect of their duties. The
NLRC pointed out that although it was not shown that petitioners stole
the appliances in the warehouse, they were nonetheless liable because of
their failure to monitor and support the day to day operations of the store
and properly account for all the stocks.

The NLRC denied petitioners' motion for reconsideration in the

Resolution21 dated SP-ptember 27, 2017. Consequently, petitioners filed a
Petition for Certiorari22 with the CA praying that the Decision of the
NLRC be set asidci and the ruling of the LA be reinstated with
modification as to backwages.

Ruling of the CA

In the assaileci Decision,23 the CA dismissed the petition for lack

of merit and upheld the NLRC. It ruled that the NLRC did not gravely
abuse its discretion ;Nhen it vacated and set aside the ruling of the LA,
explaining as follows:

In the incident that transpired on August 31, 2016, twenty-nine

(29) television sets went missing during the water, of petitioners. As
20
Id. at 43-53.
21
Id. at 68-69.
22
Id at 144-165.
23
Id. at 168-179.
Decision 6 G.R. No. 247410

admitted by petitioners themselves, it is their duty to check and record

the model and serial numbers of all items that are released from the
bodega in their logbook for bodega purposes. Apparently, petitioners
failed to exercise due or even ordinary diligence to protect the
company property as the missing items were taken out of the bodega,
under their watch, without the proper documentation. Had the
petitioners discharged their duties, no loss would have been incurred.
As noted by the NLRC, the twenty nine lost items were big ones and
could not be easily concealed. They could not have passed through the
process of inspection by the dispatchers prior to their final disposal
without being noticed.

Notably, [petitioners'] negligence, although gross, was not

habitual. In view of the considerable resultant damage, however, the
Court finds that the cause is sufficient to dismiss them from
employment. x x x24

Petitioners filed their Motion for Reconsideration, 25 but the CA

denied the motion in the Resolution26 dated January 23, 2019.

Hence, the instant petition.

The Court's Ruling

The petition lacks merit.

As a general rule, a petition for review on certiorari under Rule 45

of the Rules of Court precludes the Court from resolving factual issues,
However, the instant case presents a situation where there is a
divergence between the assessment of petitioners' case by the LA, the
NLRC, and the CA calling for the application of the exception where the
Court may be urged to resolve factual issues.

The propriety of the dismissal of petitioners from employment is

rooted on Article 297 [282] of the Labor Code which mandates the
concurrence of two requisites: (a) the dismissal must be for any of the
just causes provided for under the Labor Code; and (b) the employee

" Id. at 175.

" Id. at 180-189.
26
Id. at 192-193.
Decision 7 G.R. No. 247410

must be afforded an opportunity to be heard and defend himself. 27

Otherwise stated, an employer can terminate the services of an employee
for just and valid causes which must be supported by clear and
convincing evidence. Further, procedurally, the employee must be given
notice, with adequate opportunity to be heard before he is notified of his
actual dismissal for cause. 28

The petitioners' preventive

suspension did not amount to
termination ofemployment.

Petitioners argue that DCWCI immediately terminated their

employment "under the cloak of preventive suspension on the First
Notice" dated September 5, 2016 in violation of their right to due
process envisaged by the twin notice rule under Article 297 [282] of the
Labor Code.

The pertinent prov1s10n regarding preventive suspension is

Sections 8 of Rule XXIII, Book V of the Omnibus Rules Implementing
the Labor Code (Omnibus Rules), as amended by Department Order No.
9, Series of 1997, viz.:

Section 8. Preventive suspension. - The employer may place

the worker concerned under preventive suspension if his continued
employment poses a serious and imminent threat to the life or
property of the employer or of his co-workers.

Through preventive suspension, an employer safeguards itself

from further harm or losses that may be further caused by the erring
employee. This principle was explained by the Court in Gatbonton v.
NLRC: 29

Preventive suspension is a disciplinary measure for the

protection of the company's property pending investigation of any
alleged malfeasance or misfeasance committed by the employee. The
employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent
threat to the life or property of the employer or of his co-workers. 30

" Permex Inc. v. National Labor Relations Commission. 380 Phil. 79, 85-86 (2000), c1tmg
Salafranca v. Philamlife Village Homeowners Assa. Inc., 360 Phil. 652 (1998); Mirano v. NLRC,
336 Phil. 838,844 (1997); Molato v. NLRC, 334 Phil. 39, 41-42 (1997).
" Id. Citations omitted.
" 515 Phil. 387 (2006).
30
Id at 393, citing PAL v. NLRC (2"d Div.), 354 Phii. 37, 43 (1998).
Decision 8 G.R. No. 247410

The concept was applied by the Court in Bluer Than Blue Joint
Ventures Company, et al. v. Esteban,31 where it wao ruled:

Preventive suspension is a measure allowed by law and

afforded to the employer if an employee's continued employment
poses a serious and imminent threat to the employer's life or property
or of his co-workers. It may be legally imposed against an employee
whose alleged violation is the subject of an investigation.

Here, it should be pointed out that petitioners have mistaken their

preventive suspension as a violation of the twin notice rule. Preventive
suspension is not the dismissal from employment contemplated under
the provisions of the Labor Code which would require compliance wi_th
the twin notice rule. It is merely a disciplinary measure within the ambit
of the management's exercise of prerogative pending _the co"nduct of
investigation for an employee's possible infractions. Considering that
petitioners were performing functions that involved handling of
DCWCI's properties, respondents had every right to protect their assets
and operations pending their investigation. It was only prudent for
DCWCI to preventively suspend them because they were also suspects
to the stealing incident, and DCWCI had to determine whether they had
conspired with the culprit, Dospueblos, who coincidentally is Lafuente's
cousm.

The Court is likewise not convinced that there was a violation of

petitioners' due process rights. Based from the records, the first notice
denominated as Notice of Preventive Suspension with Investigation
Hearing dated September 5, 2016 charged petitioners of "Gross and
Habitual Neglect by the Employee ofIiis Duties" and of "Fraud/Willful!
Breach by the Employee of the Trust Reposed on Him by His Employer."
In this notice, petitioners were given a period of five days from notice to
explain the several missing or lost appliances in the warehouse under
their watch which tl1ey complied with. Petitioners were even afforded
the chance to be heard during the company hearing before the issuance
of the second notice32 on petitioners' termination from employment.

DCWCI having acted within its rights in preventively suspending

petitioners, the Court brushes aside the latter's contention that they were

SI 731 Phil. 502, 513-514 (2014).

32
Rollo, pp. 109-112.
Decision 9 G.R. No. 247410

immediately terminated from employment under the cloak of a

preventive suspensicc notice in violation of their right to due process.

Petitioners were grossly and

habitually negligent oftheir
duties.

Petitioners maintain that the CA erred in its conclusion that the

missing properties were under their watch because they are not directly
accountable to condt<ct a monthly inventory of stocks and that there is a
bodega-in-charge, a duty guard in the warehouse, and an encoder of
incoming and outgoing stocks.

The Court is not swayed. In order to warrant the dismissal of the

employee for just cause, Article 297 [282](b) of the Labor Code requires
the negligence to be gross and habitual. 33 Gross negligence is defined as
the want of even slig'l.t care, acting or omitting to 2.ct in a situation where
there is a duty to act, not inadvertently but willfully and intentionally,
with a conscious indifference to consequences insofar as other persons
may be affected. 34 Habitual neglect connotes repeated failure to perform
one's duties for a p~riod of time, depending upon the circumstanc~s,
which should not be limited to a single or isolated act of negligence. 35
However, in several -~ases, the Court has departed from this requirement,
like where the employer suffered substantial losses because of the
gravity of negligence displayed by the employee. 36

Undisputedly, petitioners were dispatchers of DCWCI whose

primary duties were to control, verify, and inspect every disposal of
items coming from the warehouse. They were stationed in a strategic
location where every item could pass through them for inspection. 37 As
the employees in charge of controlling, verifying. and inspecting every
disposal of units from the warehouse, the Court cannot subscribe to their
claim that they were not expected to conduct an inventory of the
appliances in the waehouse. Had petitioners regularly performed their
duties as dispatchers, which necessarily included the conduct of an
33
Sugars/eel Industrial, Inc., et al. v. Albina, et al., 786 Phil. 318, 32'7 (2016).
" Id, citing Sanchez v. Rep of the Phils., 618 Phil. 228,237 (2009).
35 Ir!.
" See LBC Express - Metro Manila, Inc., et al. v. Mateo, 607 Phil. 8 /2009) and Fuente~ v. National
Labor Relations Cammi,; 'on, 248 Phil. 980 (1988).
37
See Comment (to the Peti.ion for Review on Certiorari dated June 21, 2019) dated November 21,
2019, rollo, p. 218.
Decision 10 G.R. No. 247410

inventory, the theft of the television sets could have been averted or at
least discovered at once while the losses were still minimal. Also, the
necessary investigation and security measures - could have been
immediately conducted to prevent further pilferage.

Moreover, what aggravated petitioners' gross and habitual

negligence was their failure to report the incident after discovering that
there were already missing stocks in the warehouse. Petitioners
themselves admitted during the company hearing that they already knew
of the missing stocks even before the management conducted the
surprise inventory and even prior to the Spot Report 38 submitted by
Llantada on September 3, 2016. 39 As dispatchers tasked to control,
verify, and inspect every disposal of items from the warehouse, it was
incumbent upon them to urgently report any irregularity in the
warehouse, much more, any loss occurring therein. While there is no
direct evidence of theft on their part, or proof of their conspiracy with
Dospueblos, the Court is puzzled as to why they never bothered to report
the matter so that an investigation could be held at once. They may not
have been directly involved in the pilferage of DCWCI's products, but
their negligence and indifference facilitated the unauthorized dispatch of
products out ofDCWCI's warehouse.

The Court quotes with approval the apt disquisition of the NLRC:

We observe though that neither of the parties presented any

docrnnentary evidence, such as employment contracts, to establish
their claims relative to the actual nature ofNilo and Billy's daily tasks.
But what is apparent and substantially proven is that both acted as
dispatchers and that appellant Davao Central lost several valuable
items during their watch. It also established that it is lhe common duty
and responsibility of the complainants-appellees, as such dispatchers,
to thoroughly check all items that are dispatched from the bodega. It
is also established, as it is not disputed that the items were lost during
their watch. Thus, complainants cannot just make a general denial and
wash their hands clean, so to speak from any responsibility arising
from said incident. Had they exercised due care or even ordinary
diligence in the performance of their duties to protect appellant Davao
Central's property, no loss would have been incurred. It is immaterial
that appellees were not among those who actually stole the television
sets. They may not have been directly involved in the thievery but
they are nonetheless complicit because they miserably failed to
38
Rollo, p. 92.
39
As culled from the Memoranda dated October 5, 2016 issued by Davao Central Warehouse Club,
Inc., id. at 109, 111.
 11 G.R. No. 247410

perform their du'.iesin [sic] monitoring and supporting the day to day
operations of 1le store and ensuring that all the s, ,:.:ks were properly
accounted for. The nature of their tasks and the fact of huge loss
suffered by appei )ant dictate that they are answerable to the losses that
their employer ir•:·urred. 40

An employer has free reign over every aspect of its business,

including the dismissal of his employees as long as the exercise of its
management prerog:,tive is done reasonably, in good faith, and in a
manner fiOL otherwise intended to defeat or cir,:umvent the rights of
workers, 4 i Under the circumstances of the case, the Court finds no bad
faith on
DCWCI's po1i in dismissing petitioners in view of the gravity of
the r.cgligence they committed and the result~ht damage and losses
DCWCI sustained.

WHEREFOHE, the petition is DENIED. The Court of Appeals

Decision datedJuly)0, 2018 and the Resolution dated January 23, 2019
rendered by the C01. ,.t of Appeals in CA-G.R. SP No. 08394-.MIN are
AFFIRMED.

SO ORDERED.

WE CONCUR:

C IVI.V.R LEONEl'<'.
Associate .Justice
Chairri:rson

40
Id at 50.
41
i'J Lhuillier, Inc. v. Cama-:ho, 806 Phil. 413,425 (2017), citing Irr.isen Philippine A1anufacturing
Corporationv. Aicon, et,'., 746 Phil. 172, 180 (2014).
Decision 12 G.R. No. 247410

EDG.~.~O L. DELOS SANTOS

Associate Justice

JHOSE~OPEZ
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached
in consultation before the case was assigned to th~ writer of the opinion
of the Court's Division.

Associate Justice
Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Cons,itution and the Division
Chairperson's Attestat;on, I certify that the co clusior:s in the above Decision
had been reached in c, msultation before t..1-i.e .:as was ;:issigned to the writer of
the opinion of the Court's Division. I ~
I .