[]TVS MOTOR PHILIPPINES CORPORATION AND GRANSTAR MOTORS & INDUSTRIAL CORPORATION, DULY REPRESENTED BY RINO GELENA, PETITIONER, VS. THE SIXTH DIVISION OF THE NATIONAL LABOR RELAT…

MACALINO, J:

The Case

Petitioner is a domestic corporation engaged in the selling of motorcycles. On October 4, 2007, Petitioner hired Private Respondent as its Naga City Branch Manager for a monthly salary of PhP10,400.00.^[6]

In a memo^[7] dated May 13, 2011 and signed by Human Resources Manager Jinky L. Lacsa (“Lacsa”), Petitioner charged Private Respondent with violating its policy when he made the following transactions:

1. On April 27, 2011, Private Respondent sold to Melchor Manalo (“Manalo”) a Cruiser 150 unit for Php15,000.00 instead of PhP16,5000.00 as stated in Petitioner’s memo dated April 15, 2011; 

 

2. On the same date, Private Respondent sold to Alvin Evangelista (“Evangelista”) an FX 125 unit at the price of PhP10,000.00 instead of PhP11,500.00 as prescribed in Petitioner’s Memo dated April 15, 2011;  

 

3. Subsequently, Private Respondent sold to Donald Mora (“Mora”) an XTREME 125 unit, which was repossessed by Petitioner on April 28, 2011, for PhP11,500.00 in contravention with Petitioner’s memo dated April 20, 2011 mandating that only existing inventory as of April 15, 2011 are allowed to be sold at the said price.

In the same memo, Petitioner directed Private Respondent to submit a written explanation why he should not be terminated for serious misconduct and loss of trust and confidence at an investigation to be conducted on May 17, 2011. At the same time, Petitioner placed Private Respondent under a thirty-day preventive suspension without pay.

Thereafter, Private Respondent served his thirty-day suspension but failed to attend the May 17, 2011 investigation.^[8]

On June 9, 2011^[9], Private Respondent submitted his reply^[10] to the charges leveled against him and explained that Petitioner gave him the power to make decisions in good faith. According to him, Manalo and Evangelista asked for a discount because the units sold to them were damaged, such that they would have to shoulder mechanic labor and tipster fees. As regards the unit sold to Mora, Private Respondent pointed out that it was already scheduled for hauling on April 4, 2011 and thus, he did not violate Petitioner’s memo stating that only existing inventory as of April 15, 2011 are allowed to be sold at PhP11,500.00. Private Respondent expressed the view that he did not commit any fraudulent act since the amounts stated in the official receipts are the same as those in the triplicate copies. At any rate, he postulated that Petitioner may deduct the balance from his operational refund if it deems his explanation unacceptable.

On June 13, 2011, Private Respondent received a letter^[11] from Petitioner signed by Lacsa, apprising him of his termination from service due to his commission of acts of dishonesty, serious misconduct and loss of trust and confidence by not remitting payments amounting to PhP25,500.00 from Petitioner’s customers, to wit: Perry Tormes, Sherly Samarita, Ryan Arena Quiniano and Ricardo Nantes. In the same letter, Petitioner informed Private Respondent that it was not satisfied with his belated explanation on the underpricing of the three (3) motorcycles.

Thus, on July 11, 2011, Private Respondent filed before the Regional Arbitration Branch No. 5 in Legaspi City a verified complaint^[12] for illegal dismissal with claims for holiday pay, holiday and rest day premium pay, service incentive leave pay, 13^th month pay, separation pay and moral and exemplary damages. The complaint, docketed as NLRC RAB V Case No. 07-00163-11, impleaded Lacsa, Petitioner and its auditor, Joseph Dela Cuesta (“Dela Cuesta”).

In his Position Paper^[13], Private Respondent maintained that he was justified in selling the three (3) motorcycle units at a lower price. Allegedly, he received the memo dated May 13, 2011 only on May 25, 2011 or eight (8) days after the scheduled administrative investigation.^[14] Private Respondent posited that since he was not afforded due process and was dismissed for reasons other than those stated in the memo dated May 13, 2011, Petitioner should be held liable for illegal dismissal. Private Respondent also averred that other than his monthly salary, he received no benefits from Petitioner.

As Petitioner, Lacsa and Dela Cuesta submitted no position paper despite an order requiring them to do so^[15], the Labor Arbiter favored Private Respondent in a Decision dated December 16, 2011, decreeing as follows: 

“WHEREFORE, premises considered, judgment is hereby rendered in favor of complainant RONALDO A. ENCINAS and against respondent TVS MOTORS PHILS. CORP. AND GRAINSTAR (sic) (MOTORS) & INDUSTRIAL CORP., ordering the latter to pay the former full backwages and separation pay in lieu of reinstatement, for the total amount of Php170,726.67. 

Moreover, respondent is held liable for moral and exemplary damages for Php50,000.00. 

(computation of complainant’s monetary award is hereto attached as integral part of this decision) 

SO ORDERED.”^[16]

Since Private Respondent’s accusation of illegal dismissal was not controverted, the Labor Arbiter awarded backwages and separation pay in his favor, in view of the strained relationship between him and Petitioner. The Labor Arbiter, however, disallowed Private Respondent’s claims for holiday pay, holiday and rest day premium pay, service incentive leave pay and 13^th month pay because Private Respondent is a managerial employee who is not entitled to such benefits under Article 82 of the Labor Code. The Labor Arbiter also deemed proper the award of moral and exemplary damages against Petitioner since it effected Private Respondent’s dismissal in bad faith.

Petitioner then appealed^[17] to the NLRC and for the first time presented its case. The appeal, docketed as NLRC LAC Case No. 03-000874-12, was assigned to the Sixth (6^th) Division of the NLRC.

Before the NLRC, Petitioner stressed that Private Respondent admitted that he sold the three (3) motorcycle units at a lower price, and in the first paragraph of his reply, he likewise acknowledged receipt of the memo dated May 13, 2011 on the same day.^[18] Petitioner alleged that prior to May 13, 2011, Private Respondent had committed several other violations.^[19] Petitioner also emphasized that Private Respondent did not submit his written explanation nor attended the scheduled administrative investigation on May 17, 2011, and asserted that he was dismissed for the same causes stated in the memo dated May 13, 2011, i.e., serious misconduct and loss of trust and confidence. As it was justified in dismissing Private Respondent and complied with the two-notice rule, Petitioner contended that it cannot be adjudged liable for illegal dismissal.

Initially, the appeal was dismissed due to Petitioner’s defective surety bond^[20], but was reinstated in view of Petitioner’s rectification of the said defect.^[21]

Disposing of the case on the merits, the NLRC affirmed the Labor Arbiter’s Decision in the Assailed Decision dated January 22, 2013, the fallo of which reads: 

“WHEREFORE, premises considered, the Decision dated December 16, 2011 is AFFIRMED. 

SO ORDERED.”^[22]

The conclusion of the NLRC was founded on lack of just cause and procedural due process. The NLRC found sufficient Private Respondent’s justification in selling the three (3) motorcycle units at a lower price. It further explained that the acts of dishonesty allegedly committed by Private Respondent and cited by Petitioner as one of the grounds for his dismissal were never mentioned in the memo dated May 13, 2011, thus affording Private Respondent no opportunity to explain his side.

Upon the denial of Petitioner’s Motion for Reconsideration^[23] in the Assailed Resolution dated March 14, 2013, Petitioner lodged the instant Petition before this Court.

The Issues

Petitioner submits that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction when it:

“I 

RELIED ON THE FINDINGS OF THE LABOR ARBITER WHO MERELY RELIED ON THE PRIVATE RESPONDENT’S BARE ALLEGATION THAT THE DISMISSAL WAS FOR GROUNDS NOT EARLIER CHARGED IN THE SHOW-CAUSE LETTER

II 

IGNORED AND MISAPPRECIATED CERTAIN FACTS AND/OR DID NOT CONSIDER THE FACTS ALLEGED IN PETITIONER’S MEMORANDUM OF APPEAL”^[24]

Whereas, Private Respondent takes a firm stand that the NLRC committed no such grave abuse of discretion.^[25]

This Court’s Ruling

The Petition lacks merit.

There was no just cause
for Private Respondent’s
dismissal from service

The burden of proving that the termination of an employee was for a just or authorized cause lies with the employer. If the employer fails to meet this burden, the conclusion would be that the dismissal was unjustified and, therefore, illegal.^[26]

Since Petitioner maintains that Private Respondent committed serious misconduct and loss of trust and confidence when he sold the three (3) motorcycle units less than the mandated selling price, it bears the burden of proving that Private Respondent was validly dismissed.

Misconduct has been defined as improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful in character implying wrongful intent and not mere error of judgment. To be a just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the performance of the employee’s duties; and (c) must show that the employee has become unfit to continue working for the employer.^[27]

In other words, in order to constitute serious misconduct which will warrant the dismissal of an employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been performed with wrongful intent.^[28]

In this case, it is not disputed that Private Respondent transgressed Petitioner’s directives with respect to the selling prices of the three (3) motorcycle units. However, Private Respondent’s act of selling the said motorcycle units at a lower price cannot be deemed to have been performed by him with wrongful intent. As explained by him in his reply, Private Respondent only wanted to increase Petitioner’s sales and his efficiency when he did so.^[29] Moreover, he explained that he made such a decision in good faith. If at all, Private Respondent committed an error, it was a mere error of judgment which does not justify the extreme penalty of dismissal from service.

Neither can the same act of Private Respondent constitute fraud or willful breach of the trust reposed in him by Petitioner. Petitioner insinuates that Private Respondent committed dishonesty when he sold the motorcycle units at a lower price. It must be remembered, however, that dishonesty is a serious charge which the employer must adequately prove, especially when it is the basis for termination.^[30]

As correctly found by the NLRC, Private Respondent acted in good faith when he made the questioned transactions. Private Respondent issued corresponding receipts and turned over the proceeds to the cashier. There is no allegation nor a showing that Private Respondent benefited from the said transactions. These circumstances negate Petitioner’s imputation of fraud, which implies willfulness or wrongful intent.^[31] Thus, Petitioner is not justified in terminating Private Respondent’s employment on the basis of loss of trust and confidence.

As a final attempt to exculpate itself from liability, Petitioner posits that to tolerate Private Respondent’s acts would be to encroach upon its right as an employer to impose standards in the management of its business affairs. Indeed, Petitioner has the management prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations; but courts uphold these management prerogatives only when they are exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws and valid agreements.^[32]

Private Respondent was also not
afforded procedural due process

In cases of termination by the employer, procedural due process dictates compliance with the two-notice rule in effecting a dismissal: (a) the employer must inform the employee of the specific acts or omissions for which the dismissal is sought, and (b) the employer must inform the employee of the decision to terminate employment after affording the latter the opportunity to be heard.^[33]

While it is true that Petitioner sent Private Respondent the two (2) notices required by law, the said notices are defective for the following reasons:

Jurisprudence requires that the first written notice to be served on the employees contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. Such reasonable period should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint.^[34]

In this case, Private Respondent was not given a reasonable opportunity to explain his side. In the memo dated May 13, 2011, Petitioner required Private Respondent to submit his written explanation on the charges against him at a scheduled investigation on May 17, 2011, or within four (4) days from the date of the memo. Thus, even if Private Respondent received the memo dated May 13, 2011 on the same day, it is clear that Petitioner did not comply with the rule that an employee must be given at least five (5) calendar days from receipt of the notice to submit his written explanation.

Furthermore, as if in a haste, Petitioner scheduled the administrative investigation and the submission of the written explanation on the same date, May 17, 2011. Such act again deprived Private Respondent of due process, since the rules require that the hearing or conference be scheduled after service of the first notice.^[35]

Finally, since Private Respondent cannot be validly dismissed due to the underpricing of the three (3) motorcycles alone, Petitioner should have provided Private Respondent the opportunity to defend himself against the additional grounds for his termination. Since this was not done, Private Respondent’s alleged failure to remit payments cannot be made the basis for his termination from service.
 
As the NLRC committed no grave abuse of discretion amounting to lack or excess of jurisdiction, the assailed issuances must remain.

WHEREFORE, premises considered, the instant Petition is DENIED. Accordingly, the January 22, 2013 Decision and the March 14, 2013 Resolution of the National Labor Relations Commission Sixth (6^th) Division in NLRC LAC Case No. 03-000874-12 are hereby AFFIRMED.

SO ORDERED.

C E R T I F I C A T I O N

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusion in the above decision was reached in consultation before the case was assigned to the writer of the opinion of the Court.

Villon, S.E., Chairperson and ^[*]Inting, S.B., JJ., concur.

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^[*] Also referred to as TVS Motors Philippines Corporation in the pleadings.

^[*] Acting Junior Member per Office Order No. 161-14-AGT dated April 24, 2014.

^[1] Rollo, pp. 3-14.

^[2]  Id., pp. 15-24.

^[3] Id., pp. 31-32.

^[4]  Id., pp. 51-55.

^[5]  Id., p. 36.

^[6]  Id., p. 36.

^[7]  Id., p. 44.

^[8]  Id., p. 6.

^[8] Ibid.

^[10]  Rollo, pp. 45-49.

^[11] Id., p. 50.

^[12]  Id., p. 215.

^[13]  Id., pp. 35-43.

^[14]  Id., p. 37.

^[15]  Id.,p. 51.

^[16]  Id., pp. 53-54.

^[17]  Id., pp. 56-79.

^[18]  Id., p. 45.

^[19] Id., p. 66.

^[20]  See the NLRC’s Resolution dated June 29, 2012 (Id., pp. 111-113).

^[21]  Id., p. 16.

^[22]  Id., pp. 23-24.

^[23]  Id., pp. 25-30.

^[24]  Id., p. 6.

^[25]  See Private Respondent’s Comment (Id., pp. 151-155).

^[26]  Alps Transportation v. Rodriguez, G.R. No. 186732, June 13, 2013.

^[27]  Alviado et al. v. Procter & Gamble Phils., Inc., G.R. No. 160506, June 6, 2011.

^[28]  Ibid.

^[29]  Id., p. 46.

^[30]  Jannsen Pharmaceutica v. Silayro, G.R. No. 172528, February 26, 2008.

^[31]  Ibid.

^[32]  The Coca-Cola Export Corporation v. Gacayan, G.R. No. 149433, December 15, 2010.

^[33] Mendoza v. HMS Credit Corporation, G.R. No. 187232, April 17, 2013.

^[34]  Unilever Philippines, Inc. v. Rivera, G.R. No. 201701, June 3, 2013.

^[35] Ibid.