PHILIPPINE REFINING CO., INC., PETITIONER, VS. RODOLFO GARCIA, EDILBERTO MARCELO AND THE COURT OF APPEALS, RESPONDENTS.

The above-captioned cases are separate appeals from the decision of
the Court of Appeals, in its Case CA-G.R. No. 24501-R, reversing the
judgment of the Court of First Instance of Manila, Branch XII, in its
Civil Case No. 34933, and ordering the defendant Philippine Refining
Company, Inc. to pay the plaintiffs Rodolfo Garcia and Edilberto
Marcelo their termination pay, moral and exemplary damages, attorney’s
fees and costs.

Briefly stated, the findings of fact of the appellate court are the following:

The Philippine Refining Company, petitioner in case L-21871, had
received reports of losses or shortages of finished products stored in
its warehouse in Cristobal Street, Paco, Manila, more commonly known as
the Yu Chu Bodega. Accordingly, it alerted its security guards.

On 8 July 1957, respondents herein Rodolfo Garcia and Edilberto
Marcelo, who were employed as helpers in a company delivery truck
driven by Luis Manalo, loaded the truck with empty cartons and “covo”
liner to be taken, as usual, to the soapery department at Tanque
Street. At the warehouse gate, their cargo was inspected by the
company’s finished products supervisor, Luis Smyth, and by two guards,
Primo Gonzales and Felipe Santos. The inspection yielded nothing
anomalous, so the truck was allowed to proceed; but the inspecting
party boarded and accompanied the truck to its destination, with Smyth
sitting beside the driver, Gonzales placing himself on the running
board and Santos staying at the rear, together with respondents herein
Garcia and Marcelo.

On 11 July 1957, the plaintiffs and driver Manalo were charged with
frustrated qualified theft before the City Fiscal of Manila and, on the
same date, they were suspended by the company for alleged “involvement
in a theft of company property x x x x x until court proceedings in
connection with the case are terminated”. But the criminal case was
subsequently dismissed by the fiscal for insufficiency of evidence.

On 11 October 1957, driver Manalo was reinstated, but Garcia and
Marcelo were not; they were dismissed, effective as of the date of
their suspension, on 11 July 1957. Thus, the dismissed workers filed
suit in the Court of First Instance for reinstatement, back wages and
damages. The trial court, after hearing, dismissed the case. The
plaintiffs appealed.

The appellate court found untrue the evidence for the company that,
on the particular trip, Rodolfo Garcia threw to the ground four boxes
of toilet soap, one by one, warning guard Santos not to report the
matter; but Santos, upon their arrival at the soapery, did report the
matter to his superior, and the security guards went back to where the
boxes were thrown out and recovered them.

In disbelieving the company’s version, the Court of Appeals took
into account the fact that the place where the boxes were allegedly
thrown out was a public place, which made recovery remote; the boxes
were big and their being thrown from the truck to the ground would have
been noticed by passers-by and by supervisor Smyth and guard Gonzales,
who were riding with the driver in front; the cargo was inspected
before the departure of the truck and accompanied by armed guards; and
the plaintiffs knew that they were being watched and could not have
imprudently committed the act imputed to them.

The Court of Appeals, therefore, reversed the trial court’s
decision, awarded plaintiffs damages, attorney’s fees, separation pay
and costs, but refused to order their reinstatement. The judgment of
reversal is now the subject of these separate appeals by the company
(L-21871) and by the dismissed laborers (L-21962).

It is contended for the company that the Court of Appeals –

“erred and gravely abused its discretion in awarding
moral damages, the present action being one for alleged breach of
contract and there being no proof whatever of fraud or bad faith on the
part of petitioner.”

The premises for the assigned error are incorrect, first, because
the action was not only for a breach of contract but also for malicious
prosecution, and second, because there was proof of bad faith in the
dismissal of the laborers. The company’s bad faith lies in its act in
suspending them ostensibly until the theft case would be terminated,
but actually dismissing them before the investigation by the fiscal had
ended, and making their dismissal retroactive to the date of the
pretended suspension. So that, even viewed from the standpoint of
breach of contract of employment, as the company advocates (Brief, p.
10), the employer company would still stand liable for moral damages
under the last sentence of Article 2220 of the Civil Code, “where the
defendant acted fraudulently or in bad faith”.

But to put things aright, the appealed decision in fact predicated the grant of moral damages on the –

“circumstances under which the plaintiffs were
illegally dismissed, the nature of the charge for which they were
repeatedly investigated by the officials of the company, the police
department and the fiscal’s office; and the attendant embarrassment and
humiliation to which they were unnecessarily exposed.”

While the appealed decision does not cite the particular provision
of law under which it held the company liable for moral damages, yet
the points upon which it predicated the award, when taken together,
evidence anti-social and oppressive abuse by the company of its right
to investigate and dismiss its employees. The company’s conduct
violated Article 1701, which prohibits acts of oppression by either
capital or labor against the other, and Article 21 on human relations,
the sanction of which, by way of moral damages, is provided for in
Article 2219, No. 10, all of the Civil Code.

“Moral damages may be recovered in the following and analogous cases:

*     *     *     *     *     *     *     *     *     *     *   *     *     *     *

(10) Acts and actions referred to in articles 21, 26 * * *.”

“ART.
21. Any person who wilfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damage.”

It is true, and it is not disputed, that the acquittal of an accused
employee does not bar his dismissal from employment. In raising this
issue the company plainly misinterpreted the decision of the Court of
Appeals. That court cited the fact that the fiscal refused to file an
information against the employees only as an additional reason why it
did not choose to believe that the plaintiffs had stolen products of
the company, as alleged by the latter.

The last two assignments of error presented by the appellant company
are non-reviewable by this Court, as they pertain to questions of fact
and credibility within the exclusive jurisdiction of the Court of
Appeals.

On the other hand, the dismissed employees have appealed on the
ground that, since the Court of Appeals found that their dismissal was
“unjust, unreasonable and unlawful”, the Court of Appeals erred in not
ordering their reinstatement and the payment of their back salaries.

In support of the above contention, the appellants-employees cited
the case of Gutierrez vs. Bachrach Motors Co., L-11298, L-11586 and
L-11603, 19 January 1959. While holding that an action for
reinstatement should be filed within a reasonable time, the said case
did not precisely uphold the right to reinstatement of an unjustifiably
dismissed employee. Nor have these appellants cited any specific
statutory provision.

On the contrary, Republic Act 1052, as amended by Republic Act 1787,
impliedly recognizes the right of the employer to dismiss his employees
(hired without definite period) whether for just cause, as therein
defined or enumerated, or without it. If there be just cause, the
employer is not required to serve any notice of discharge nor to
disburse termination pay to the employee. If the dismissal be without
just cause, the employer must serve timely notice to the employee; but
if he fails to serve due notice, then, and only then, is the employer
obliged to pay termination pay. Except where other applicable statutes
provide differently, it is not the cause for the dismissal but the employer’s failure to serve notice upon the employee that renders the employer answerable to the employee for terminal pay.

The employer’s right to dismiss his employee, however, differs from,
and should not be confused with, the manner in which the right is
exercised. The manner in which the company exercised its right to
dismiss in the case at bar was abusive; hence, it is liable for moral
damages, as previously discussed.

For the foregoing reasons, the appealed decision is hereby affirmed. Appellants shall bear their respective costs.

Concepcion, C.J., Barrera, Dizon, Makalintal, Bengzon, JP, Zaldivar, Sanchez, and Ruiz Castro, JJ., concur.
Regala, J., no part.