ROMULO J. FUENTEBELLA AND JOSE ANGELO LLANEZA, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, HI MARKETING CORPORATION, MAUEL H. PUEY AND RIBOLU D. TERRE, RESPONDENTS.

Fuentebella versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Romulo Fuentebella and Jose Angelo Llaneza, two dismissed sales employees, against the National Labor Relations Commission, their employer Hi Marketing Corporation, and its officers Manuel Puey and Ribolu Terre. The petitioners ask the Supreme Court to set aside the Commission's ruling that their dismissal was lawful, and to restore the finding of the Labor Arbiter that they were illegally dismissed. The case matters because it is a compact lesson on the employer's duty to observe due process before dismissal, and on how the Court weighs a charge of dishonesty when the employee's withholding of funds was an act of self-protection rather than theft.

Procedural History

The petitioners first filed a complaint for illegal dismissal, unpaid wages, commissions and damages before the labor arbiter. The Labor Arbiter ruled in their favor, finding the termination illegal, ordering reinstatement with full backwages and accrued benefits, and awarding Fuentebella his commission of 12,800 pesos, less the 6,000 peso collection he had withheld. The employer appealed to the National Labor Relations Commission. The Commission reversed the Labor Arbiter, upheld the dismissal as lawful, dismissed the complaints, and ordered only the payment of Fuentebella's unpaid commission of 3,132 pesos and Llaneza's separation pay. The petitioners moved for reconsideration, which was denied. They then came to the Supreme Court by petition for certiorari, raising the principal issue of whether the Commission gravely abused its discretion in setting aside the Labor Arbiter's decision.

Facts

Fuentebella and Llaneza began as salesmen of Hi Marketing Corporation, which promoted and sold a hot water high pressure washer. Fuentebella was given a raise for good performance, while Llaneza was promoted to sales supervisor, with Fuentebella reporting to him. In January 1982, Terre became general manager of the administrative and machinery department, with both men under his direct supervision.

On July 22, 1982, Fuentebella filed a claim for unpaid third party commissions of 2,400 pesos, which Terre recommended for approval and President Puey approved. The next day, Terre issued a memorandum requiring salesmen to secure his prior clearance on third party commissions and on selling below the company price. On August 13, 1982, without stating any cause, Terre required the petitioners to submit their resignations upon orders of top level management, told them to see the President, and instructed them to stop their field transactions pending an audit. The following day, a Saturday, Fuentebella collected 6,000 pesos from a customer and deposited it in a bank, intending to remit it on the next working day. On August 16, he could not withdraw the amount because of the appointment with the President, and he informed Terre that he would retain the collection until his status was cleared and his commissions settled.

On August 31, 1982, the Comptroller offered the petitioners one month's salary for every year of service plus unpaid commissions, in exchange for their resignations and the return of the 6,000 pesos and the receipt booklets. They declined and insisted on an investigation. That same day and the next, they received their letters of termination. They filed their complaint on September 7, 1982. The employer answered that they were dismissed for dishonesty, fraud and breach of trust, pointing to Fuentebella's deposit of the collection in his own account and Llaneza's failure to surrender his receipt booklet.

Issues

• Whether or not the National Labor Relations Commission gravely abused its discretion in setting aside the Labor Arbiter's decision and holding the dismissal lawful.
• Whether or not the petitioners were dismissed with due process, having been given the opportunity to know the charges against them and to be heard in their defense.
• Whether or not Fuentebella's withholding of the 6,000 peso collection and Llaneza's failure to surrender the receipt booklet amounted to dishonesty, fraud, breach of trust or insubordination justifying dismissal.

Applicable Provisions

The decision rests on the constitutional guarantee of due process in dismissal, which the Court applies through the employer's duty to inform and to hear. The text of the provision is not set out in the decision, so it is stated here as the rule the Court enforces: no employee may be dismissed without being told the cause and given a chance to answer.

The decision also applies the rule that a felony of estafa requires a demand and a refusal before the withholding of funds can ripen into a crime. The Court states it in these words:

Until a demand is made by HIMARK, and a refusal thereto is made by Fuentebella, the withholding of said amount cannot legally be considered to have ripened into a felony.

This bears directly on the dishonesty charge, because without demand and refusal the withholding could not be treated as a criminal act against the employer.

Ruling

The Court granted the petition. On the first issue, it held that the Commission gravely abused its discretion, because the records showed that from August 13 to the dates of termination, the managers merely gave the petitioners the runaround and never let them know the charges or be heard. Even the President, after promising an investigation within twenty four to forty eight hours, never conducted a formal investigation. The close dates of the termination letters showed management was already dead set on dismissing them without due process.

On the second issue, the Court found the dismissal tainted by want of due process, and traced the proximate cause to the matter of sharing third party commissions. Terre wanted a share of Fuentebella's commissions, as shown by the July 23 memorandum requiring his clearance, and by Fuentebella's unrebutted testimony that Terre asked for one half of the commissions. Since no infraction was shown between January and August 1982, the refusal to comply with Terre's demand was the reason for asking them to resign.

On the third issue, the Court held that Fuentebella acted for self-protection, since his unpaid commissions of 12,800 pesos were more than double the 6,000 pesos he withheld, and he had reported the collection in his written demand to the President. The criminal case was filed for leverage. As for Llaneza, no further request was made for the return of the booklets after his letter-query, so he could not be held liable for insubordination.

Doctrine

First, the employer must observe due process before dismissal: the employee must be informed of the charges and given an opportunity to be heard. A dismissal carried out while management merely gives the employee the runaround is illegal.

Second, the withholding of company funds by an employee who has unpaid commissions, where the amount withheld is less than what is owed and the employee reports the collection, is an act of self-protection and not dishonesty. Without a demand and a refusal, the withholding cannot ripen into estafa.

Third, a charge of insubordination fails where the employer, after the employee's query, makes no further request for compliance.

Disposition

The Court set aside and reversed the decision of the National Labor Relations Commission, and affirmed and reinstated the decision of the Labor Arbiter finding the dismissal illegal and granting reinstatement with backwages and commissions.

Remember This

Memorize this line: without a demand and a refusal, the withholding of funds cannot ripen into a felony, so it cannot be dishonesty. Examiners use this case to test due process in dismissal and the rule that an employee withholding money to protect unpaid commissions is not guilty of breach of trust.