SURIGAO DEL NORTE ELECTRIC COOPERATIVE AND/OR EUGENIO BALUGO/CIRIACO MESALUCHA, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION (5TH DIVISION) AND ELSIE ESCULANO, RESPONDENTS.

Surigao del Norte Electric Cooperative versus National Labor Relations Commission

The Case

This is a special civil action for certiorari brought by the Surigao del Norte Electric Cooperative, together with its General Manager Eugenio Balugo and its National Electrification Administration Project Supervisor Ciriaco Mesalucha, against the National Labor Relations Commission and Elsie Esculano. The cooperative asks the Supreme Court to annul two resolutions of the Commission's Fifth Division which set aside the Labor Arbiter's ruling and declared Esculano illegally dismissed, ordering her reinstatement with backwages, allowances, and attorney's fees. The case matters because it is a compact review of two recurring labor law problems: when a tardy appeal may be given due course in a labor case, and when serious misconduct or loss of trust and confidence can justify dismissing a managerial employee who was, in the Court's words, merely doing her job.

Procedural History

Esculano filed a complaint for illegal dismissal, reinstatement with backwages, service incentive leave, and moral damages before the Sub-Regional Arbitration Branch of the National Labor Relations Commission. The Labor Arbiter declared the dismissal valid and legal, but ordered the cooperative to pay three thousand pesos as financial indemnity for not having given Esculano a hearing and for not complying with the one month notice requirement under Batas Pambansa Blg. 130. Esculano's counsel received the decision on March 22, 1994, and filed a Notice of Appeal by registered mail on April 5, 1994, one day late. He explained that typhoon Besing had closed the Surigao City Post Office on April 4, the last day to appeal, and attached a certification from the postal officer in charge. The Commission initially dismissed the appeal as out of time. On reconsideration, the Commission reinstated the appeal, set aside the Labor Arbiter's decision, and entered a new judgment declaring Esculano illegally dismissed and ordering reinstatement without loss of seniority rights, backwages and allowances, plus attorney's fees of ten percent of the total monetary awards. The cooperative's motion for reconsideration was denied. The cooperative then came to the Supreme Court by petition for certiorari, charging grave abuse of discretion.

Facts

Cosette Quinto, a former employee of the cooperative, wrote its General Manager on December 3, 1991, asking for separation benefits and incentives after nine years of service, saying she had decided to be separated in 1988 due to pressing personal problems. Copies went to the Board of Directors and the National Electrification Administration Project Supervisor. No action was taken. Nearly four months later, on March 30, 1992, Esculano, then the cooperative's Personnel Officer, sent the General Manager a letter with an attached report containing her findings and recommendations, after Quinto asked her to review the case. She concluded that Quinto had not been accorded due process before termination, and recommended separation pay, failing which Quinto would be entitled to reinstatement without loss of seniority rights and other benefits. Copies of the letter were furnished to file, PS and 201.

On July 2, 1992, Quinto filed a complaint for illegal dismissal, attaching Esculano's report and quoting it extensively. That complaint was dismissed on October 22, 1992, for being barred by prescription. On November 27, 1992, the General Manager issued a memorandum directing Esculano to explain in writing why no disciplinary action should be taken against her for acts unbecoming of a ranking employee and for acts prejudicial to the best interest of the company, faulting her for an unauthorized review and for apparently furnishing Quinto a copy. Esculano's written explanation was far from apologetic; she invoked her duties as Personnel Officer, called her review a feedback with recommendations, noted that management took eight months to react, and suggested she was being used as a scapegoat. Asked whether she had additional evidence, she replied that she had no idea she had a case. On February 6, 1993, the Board of Directors resolved to terminate her services, finding that she had furnished Quinto a copy of her internal memorandum, which she never denied, and that she had reviewed the case without authority, in violation of the cooperative's Code of Ethics and Discipline. She was notified of her termination effective February 19, 1993, and she then filed the complaint that led to this case.

Issues

• Whether or not the National Labor Relations Commission acted with grave abuse of discretion in reinstating Esculano's appeal, which was filed one day late.
• Whether or not Esculano was guilty of serious misconduct in reviewing Quinto's case without management authorization.
• Whether or not the cooperative validly dismissed Esculano on the ground of loss of trust and confidence.

Applicable Provisions

Article 223 of the Labor Code, as quoted in the decision, fixes the period to appeal from the Labor Arbiter:

Decisions, awards or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards or orders.

This is the statutory period the Court says it cannot ordinarily suspend, yet which it declined to exact strictly in the interest of substantial justice.

Section 1 of Rule VI of the New Rules of Procedure of the National Labor Relations Commission, as quoted in the decision, provides:

If the 10th day falls on a Saturday, Sunday or a holiday, the last day to perfect the appeal shall be the next working day.

This rule on the last day of the appeal period frames the Court's treatment of the one day delay caused by the typhoon.

Section 9 of the cooperative's Code of Ethics and Discipline, as quoted in the decision, provides:

9-2.2 Without proper authority, revealing, releasing or divulging confidential information to individuals other than authorized persons.

This is the confidentiality rule the Board invoked, and which the Court found was not clearly shown to have been willfully breached.

Section 10 of the same Code, as quoted in the decision, provides:

10-2.1 Having any engagement, participation or involvement, direct or indirect, in any transaction involving any person, firms, corporation or any business, or other coops, where such act is in conflict with or is improper/undesirable to interest of the REC.

The Court rejected this ground because there was no transaction whatsoever involved in Esculano's review of Quinto's case.

Ruling

On the first issue, the Court held that the Commission did not abuse its discretion. While the period to appeal in labor cases is fixed by statute, the Court recalled its ruling in Kathy-O Enterprises versus National Labor Relations Commission that strict observance of the period may not be exacted if only to dispense with substantial justice, and that in City Fair Corporation versus National Labor Relations Commission the Commission did not commit grave abuse of discretion in entertaining an appeal filed one day late. The Court found the delay adequately explained by typhoon Besing, which closed the post office on the last day, and rejected the objection to the postal certification in light of the duly signed copy in the records.

On the second issue, the Court defined misconduct as the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, implying wrongful intent and not mere error in judgment. As Personnel Officer holding a managerial position, Esculano exercised independent judgment, and matters involving employees, even former ones, fell within her line of work. Acting on Quinto's request and making recommendations was not a forbidden act, and she could not be absolutely proscribed from taking the side of labor in reviewing personnel cases. She was merely doing her job.

On the third issue, the Court held that loss of trust and confidence must be based on a willful breach of trust founded on clearly established facts, and must rest on substantial grounds and not on the employer's arbitrariness, whims, caprices or suspicion. The Court searched the records and found no direct proof that Esculano furnished Quinto a copy of her report; Quinto could have obtained it from other sources. At most, in furnishing file, PS and 201, Esculano acted carelessly, thoughtlessly, heedlessly or inadvertently, not intentionally, knowingly and purposely, so as to make her guilty of a willful breach of trust.

Doctrine

First, the ten calendar day period to appeal from the Labor Arbiter under Article 223 of the Labor Code is statutory, but in the interest of substantial justice the Commission may give due course to an appeal filed only one day late, especially where the delay is satisfactorily explained and the issue is illegal termination.

Second, serious misconduct requires a transgression of an established and definite rule of action, willful in character and implying wrongful intent, not mere error in judgment. A managerial employee who acts within the sphere of her job, exercising the independent judgment her position requires, commits no serious misconduct.

Third, loss of trust and confidence, to justify dismissal, must rest on a willful breach of trust founded on clearly established facts, not on the employer's arbitrariness, whims, caprices or suspicion. A breach is willful only if done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.

Disposition

The petition was dismissed for lack of merit, and the resolutions of the National Labor Relations Commission reinstating the appeal and declaring Esculano illegally dismissed, with reinstatement, backwages, allowances and attorney's fees, were affirmed, with no pronouncement as to costs.

Remember This

Memorize this line: loss of trust and confidence must rest on clearly established facts and a willful breach, not on the employer's suspicion, and a managerial employee acting within her job commits no serious misconduct. Examiners use this case for the one day late labor appeal and for the distinction between a willful breach of trust and a careless, thoughtless or inadvertent act.