BRENT HOSPITAL INC. AND MORLITO B. APUZEN, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION AND TERESITA M. FERNANDEZ, RESPONDENTS.

Brent Hospital versus National Labor Relations Commission

The Case

This is a labor case about a nurse and school principal who was dismissed for collecting a coordinator's fee from midwifery reviewees. Brent Hospital, through its administrator Morlito Apuzen, terminated Teresita Fernandez on a charge of loss of trust and confidence. She sued for illegal dismissal and damages. The case matters because the Supreme Court uses it to fix the strict standard for dismissal based on loss of trust and confidence, to confirm that managerial employees enjoy the same security of tenure as rank and file workers, and to clarify when moral and exemplary damages and attorney's fees may be awarded.

Procedural History

Fernandez filed a complaint for illegal dismissal and damages against Brent Hospital before the Labor Arbiter. The Labor Arbiter declared the dismissal illegal and ordered Brent to pay separation pay, backwages, moral damages, exemplary damages, and attorney's fees. Brent appealed to the National Labor Relations Commission, which affirmed the Labor Arbiter's decision. Brent's motion for reconsideration was denied. Fernandez, for her part, partially appealed the award of backwages, arguing that it should be computed from dismissal until the decision becomes final and executory, but the Commission rejected her claim as filed out of time. Brent then filed a petition for certiorari before the Supreme Court, and Fernandez's partial appeal was likewise brought up. The Supreme Court decided the case in July 1998.

Facts

Teresita Fernandez was employed by Brent Hospital in June 1968 as a staff nurse, served in different capacities, and was eventually promoted as acting clinic coordinator. In August 1990, the principal and several faculty members of Brent's School of Midwifery resigned to take jobs abroad, crippling its operations. Fernandez was offered the position of principal. She initially refused, but accepted after continuous prodding and upon the assurance that she could return to her former position as clinic coordinator after one year.

The school sends its midwifery graduates to Manila for review one month before the board examinations, and each reviewee was asked to pay 350 pesos to defray the coordinator's expenses. In May 1993, the school's Board of Directors scrapped the coordinator's fee. The reviewees nonetheless asked Fernandez and an instructor, Norma Pada, to accompany them to Manila, as was customary, and expressed willingness to voluntarily shoulder the fees. Because of time constraints, the collection was not communicated to the Board or to the parents. The collection was later discovered by the hospital administrator, Morlito Apuzen, who reported it to the Board. The Board convened the protesting parents and assured them that Fernandez would be confronted.

Upon her return from Manila, Fernandez voluntarily presented to the Board a report of her expenses, which were charged against the voluntary contributions of the reviewees. For allegedly violating the policy on the imposition and collection of the coordinator's fee, Fernandez and Pada were terminated. Pada sought reconsideration, while Fernandez filed the case for illegal dismissal and damages.

Issues

• Whether or not Fernandez was dismissed for a just cause, specifically loss of trust and confidence, and with due process.
• Whether or not the award of moral and exemplary damages is supported by the evidence.
• Whether or not Morlito Apuzen may be held personally liable for the judgment against Brent Hospital.
• Whether or not the award of attorney's fees is proper.

Applicable Provisions

The decision does not quote a specific statutory provision verbatim. It applies the constitutional guarantee of security of tenure, which it quotes through the ruling in Midas Touch Food Corporation versus National Labor Relations Commission:

The right of security of tenure cannot be eroded, let alone forfeited except upon a clear and convincing showing of a just and lawful cause. No less than the Constitution itself has guaranteed the state's protection to labor and its assurance to workers of security of tenure in their employment. The application of this rule encompasses both the rank and file as well as managerial employees.

This is the standard against which Fernandez's dismissal for loss of trust and confidence is measured.

Ruling

On the first issue, the Court held that the question of whether the dismissal was for a just cause is factual, and that the factual findings of quasi-judicial agencies like the National Labor Relations Commission are generally accorded respect and even finality when supported by substantial evidence. The Court found that Fernandez did not infringe the policy of the hospital. It was the reviewees themselves who asked her and Pada to accompany them to Manila, as shown by their letter-request, and ninety-five reviewees agreed to voluntarily shoulder the expenses pegged at 350 pesos each. The Court laid down the rule that loss of trust and confidence, to be a valid ground for dismissal, must be based on a willful breach of trust and founded on clearly established facts sufficient to warrant separation from work. The loss of confidence must rest on an actual breach of duty committed by the employee and not on the employer's caprices, and it has never been intended to afford an occasion for abuse because of its subjective nature. The allegations that Fernandez violated the standing policy and took advantage of her position were not established. As the Solicitor General observed, the voluntariness of the payments negates any finding of impropriety, much less of serious misconduct. The Court also rejected the argument that the rules on termination are different for managerial employees, citing the Midas Touch ruling quoted above.

On the second issue, the Court deleted the award of moral and exemplary damages for want of factual basis. Moral damages are recoverable only where the dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. Exemplary damages may be awarded if the dismissal constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy. None of these circumstances obtained. The Board conducted an inquiry where Fernandez was duly notified of the charges, she explained her actions and presented an itemized account of expenses, and she was afforded her statutory rights to notice and hearing. The dismissal was premised on the honest belief that she violated the policy, and so it could not be characterized as wanton, oppressive or malevolent.

On the third issue, the Court held that co-petitioner Morlito Apuzen cannot be held liable for any judgment rendered against Brent Hospital. A corporation, being a juridical entity, may act only through its directors, officers and employees, and obligations incurred by them acting as corporate agents are not theirs but the direct accountabilities of the corporation they represent.

On the fourth issue, the Court held that the award of attorney's fees must fail, because the reason for the award must be stated in the text of the court's decision and not in the dispositive portion only.

Doctrine

Loss of trust and confidence, to be a valid ground for dismissal, must be based on a willful breach of trust and founded on clearly established facts sufficient to warrant the employee's separation from work. The loss of confidence must rest on an actual breach of duty committed by the employee and not on the employer's caprices. The right of security of tenure cannot be eroded, let alone forfeited, except upon a clear and convincing showing of a just and lawful cause, and this protection extends to both rank and file and managerial employees. Moral damages are recoverable only where the dismissal was attended by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public policy, and exemplary damages may be awarded under the same circumstances. A corporation acts only through its directors, officers and employees, and obligations incurred by them as corporate agents are the direct accountabilities of the corporation, not of the agents personally. Attorney's fees must be justified in the text of the decision, not merely in the dispositive portion.

Disposition

The petition was dismissed for lack of merit and the assailed resolution was affirmed, subject to the modifications deleting the awards of moral and exemplary damages and attorney's fees for want of factual basis, and reversing the finding that Morlito Apuzen is jointly and severally liable with Brent Hospital, with costs against the petitioner.

Remember This

Memorize the line that loss of trust and confidence must rest on an actual breach of duty committed by the employee and not on the employer's caprices. Examiners use this case to test the strict standard for dismissal for loss of trust and confidence, the equal security of tenure of managerial employees, and the rule that a corporate officer is not personally liable for the corporation's obligations.