NATIONAL SUGAR REFINERIES CORPORATION (NASUREFCO), PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION  (FOURTH DIVISION) AND SUSAN PABIONA, RESPONDENTS.

National Sugar Refineries versus Pabiona

The Case

This is a petition for certiorari and prohibition filed by the National Sugar Refineries Corporation, known as NASUREFCO, against the National Labor Relations Commission and its former Sugar Accountant-Bookkeeper, Susan Pabiona. NASUREFCO asks the Supreme Court to annul the Commission's ruling that Pabiona was illegally dismissed. The case matters because it is a clean study in the labor law of dismissal: when neglect of duty becomes gross and habitual, when a position is one of trust and confidence, and how far a labor tribunal may substitute its own judgment for the employer's on a question of just cause.

Procedural History

Pabiona filed a complaint for illegal dismissal with the Labor Arbiter. Labor Arbiter Dennis Juanon ruled in her favor, holding that her dismissal was illegal. NASUREFCO appealed to the National Labor Relations Commission, which affirmed the Labor Arbiter in a Decision dated 23 June 1995. NASUREFCO moved for reconsideration, and the Commission denied the motion in a Resolution dated 20 September 1995. NASUREFCO then came to the Supreme Court by a petition for certiorari and prohibition, imputing grave abuse of discretion on the part of the Commission.

Facts

NASUREFCO is a domestic corporation engaged in sugar refining. In January 1989 it launched its Raw and Refined Sugar Exchange Program. Under that program, clients no longer had to deliver raw sugar before withdrawing refined sugar. They simply presented properly endorsed documents chargeable against their future deliveries of raw sugar. Pabiona was appointed Sugar Accountant-Bookkeeper under the program. She maintained the records of all transactions, validated the Raw Sugar Quedans submitted by participants before any Refined Sugar Delivery Order was issued, and prepared and issued those delivery orders only after validation. The validation involved checking the signatures of authorized quedan holders, validating the surveyor's reports, checking the mathematical accuracy of the quantities, and computing the refined sugar equivalent of the raw sugar exchanged.

When the books were audited in 1990, anomalous transactions were uncovered. First, in December 1989, Pabiona prepared a Refined Sugar Delivery Order in favor of Shantung Commercial without seeing the corresponding Raw Sugar Quedans or Delivery Orders, and Shantung withdrew more refined sugar than was due it. Second, in October 1989, she issued a delivery order to Shantung based on a Victorias Milling Company quedan that had not in fact been replaced, and NASUREFCO never got the raw sugar. Third, in her report as of February 1990, she made it appear that Dacongcogon Producers had endorsed eighteen thousand piculs in December 1989, when the document was received only in January 1990, thereby qualifying that client for a volume incentive of one peso per picul.

NASUREFCO charged Pabiona with violations of accounting policies. She gave a written explanation and a memorandum, and a formal investigation was conducted on 2 and 3 July 1990, at which she was advised to retain counsel. She was then terminated for willful violation of company policies, gross and habitual neglect of duties, and willful breach of trust.

Issues

• Whether or not Pabiona's dismissal was for a just and valid cause.
• Whether or not her acts of neglect of duty were gross and habitual.
• Whether or not her position was one of trust and confidence, and whether or not she willfully breached that trust.
• Whether or not NASUREFCO observed procedural due process in effecting her dismissal.

Applicable Provisions

Article 282 of the Labor Code, as amended, provides:

An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) Gross and habitual neglect by the employee of his duties; (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and (e) Other causes analogous to the foregoing.

This provision supplies the just causes invoked by NASUREFCO, particularly gross and habitual neglect of duty and willful breach of trust.

Ruling

The Court granted the petition and reversed the Commission. On the first issue, it held that the dismissal was for a just and valid cause. The Court rejected the findings below that Pabiona's infractions fell outside her job description. On the contrary, the infractions were directly within the purview of her duties, and it was only through her active participation that clients were able to withdraw refined sugar in larger quantities to the prejudice of NASUREFCO.

On the second issue, the Court held that her neglect was both gross and habitual. It stated the rule plainly:

Neglect of duty, to be a ground for dismissal, must be both gross and habitual.

Because her position related to money matters, she was expected to be extra vigilant. Yet she issued a delivery order without examining the corresponding quedan, issued another without the corresponding quedan at all, and padded the records to qualify a client for an incentive. The Court added that the timely discovery of the anomalies, which spared NASUREFCO from actual loss, did not excuse her, since she knew her acts would greatly prejudice the company.

On the third issue, the Court held that her position involved trust and confidence, since only through her issuance of a delivery order could planters avail of the company's refined sugar. It quoted the governing rule:

Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.

The Court stressed that the breach of trust must be related to the performance of the employee's functions, and here it was. On the fourth issue, the Court found that NASUREFCO faithfully observed procedural due process, having given her written charges, an opportunity to explain, a formal investigation, and the advice to retain counsel.

Doctrine

First, neglect of duty, to justify dismissal under Article 282, must be both gross and habitual; neither quality alone suffices. Second, dismissal on the ground of loss of confidence requires that the employee hold a position of trust and confidence, and the breach must be related to the performance of the employee's functions. Third, where the employee occupies a position dealing with money matters, the employer may demand extra vigilance, and the employer's freedom to dismiss for breach of trust cannot be denied by the labor tribunal where there is justifiable reason to distrust the employee. Fourth, the absence of actual loss does not excuse the employee where the acts were plainly prejudicial to the employer.

Disposition

NASUREFCO won. The Court reversed and set aside the Commission's Decision and Resolution, and dismissed Pabiona's complaint for illegal dismissal, with no costs.

Remember This

Memorize the twin requirement: neglect of duty must be both gross and habitual, and breach of trust must relate to the performance of the employee's functions. Examiners use this case to test the loss of confidence doctrine and to remind reviewees that the Supreme Court will correct a labor tribunal that ignores the employer's justifiable loss of trust in a fiduciary employee.