G.R. No.

166554 November 27, 2008

JULITO SAGALES, petitioner,

vs.
RUSTAN'S COMMERCIAL CORPORATION, respondent.

DECISION

REYES, R.T., J.:

Labor is property, and as such merits protection. The right to make it available is next in
importance to the rights of life and liberty. It lies to a large extent at the foundation of most other
forms of property, and of all solid individual and national prosperity. 1

The exultation of labor by Mr. Justice Noah Haynes Swayne of the United States Supreme Court comes
to the fore in this petition for review on certiorari. The employee questions the propriety of his dismissal
after he was caught stealing 1.335 kilos of squid heads worth P50.00. He invokes his almost thirty-one
(31) years of untarnished service and the several awards he received from the company to temper the
penalty of dismissal meted on him.

The Facts

Petitioner Julito Sagales was employed by respondent Rustan's Commercial Corporation from October
1970 until July 26, 2001, when he was terminated. At the time of his dismissal, he was occupying the
position of Chief Cook at the Yum Yum Tree Coffee Shop located at Rustan's Supermarket in Ayala
Avenue, Makati City. He was paid a basic monthly salary of P9,880.00. He was also receiving service
charge of not less than P3,000.00 a month and other benefits under the law and the existing collective
bargaining agreement between respondent and his labor union.2

In the course of his employment, petitioner was a consistent recipient of numerous citations 3 for his
performance. After receiving his latest award on March 27, 2001, petitioner conveyed to respondent his
intention of retiring on October 31, 2001, after reaching thirty-one (31) years in service.4 Petitioner,
however, was not allowed to retire with his honor intact.

On June 18, 2001, Security Guard Waldo Magtangob, upon instructions from Senior Guard Bonifacio
Aranas, apprehended petitioner in the act of taking out from Rustan's Supermarket a plastic bag. Upon
examination, it was discovered that the plastic bag contained 1.335 kilos of squid heads worth P50.00.
Petitioner was not able to show any receipt when confronted. Thus, he was brought to the Security Office
of respondent corporation for proper endorsement to the Makati Headquarters of the Philippine National
Police. Subsequently, petitioner was brought to the Makati Police Criminal Investigation Division where he
was detained. Petitioner was later ordered released pending further investigation. 5

Respondent alleged that prior to his detention, petitioner called up Agaton Samson, Rustan's Branch
Manager, and apologized for the incident. Petitioner even begged Samson that he would just pay for the
squid heads. Samson replied that it is not within his power to forgive him. 6

On June 19, 2001, petitioner underwent inquest proceedings for qualified theft before Assistant
Prosecutor Amado Y. Pineda. Although petitioner admitted that he was in possession of the plastic bag
containing the squid heads, he denied stealing them because he actually paid for them. As proof,
petitioner presented a receipt. The only fault he committed was his failure to immediately show the
purchase receipt when he was accosted because he misplaced it when he changed his clothes. He also
alleged that the squid heads were already "scraps" as these were not intended for cooking. Neither were
the squid heads served to customers. He bought the squid heads so that they could be eaten instead of
being thrown away. If he intended to steal from respondent, he could have stolen other valuable items
instead of scrap.7

Assistant Prosecutor Pineda believed the version of petitioner and recommended the dismissal of the
case for "lack of evidence."8 The recommendation was approved upon review by City Prosecutor
Feliciano Aspi.9

Notwithstanding the dismissal of the complaint, respondent, on June 25, 2001, required petitioner to
explain in writing within forty-eight (48) hours why he should not be terminated in view of the June 18,
2001 incident. Respondent also placed petitioner under preventive suspension. 10

On June 29, 2001, petitioner was informed that a formal investigation would be conducted by the Legal
Department on July 6, 2001.11

Petitioner and his counsel attended the administrative investigation where he reiterated his defense
before the inquest prosecutor. Also in attendance were Aranas and Magtangob, who testified on the
circumstances surrounding the apprehension of petitioner; Samson, the branch manager to whom
petitioner allegedly apologized for the incident; and Zenaida Castro, cashier, who testified that the squid
heads were not paid.

Respondent did not find merit in the explanation of petitioner. Thus, petitioner was dismissed from service
on July 26, 2001.12 At that time, petitioner had been under preventive suspension for one (1) month.

Aggrieved, petitioner filed a complaint for illegal dismissal against respondent. He also prayed for unpaid
salaries/wages, overtime pay, as well as moral and exemplary damages, attorney's fees, and service
charges.13

Labor Arbiter, NLRC, and CA Dispositions

On July 24, 2002, Labor Arbiter Felipe P. Pati dismissed 14 the complaint.

IN VIEW OF THE FOREGOING, the complaint for illegal dismissal should be DISMISSED for
lack of merit.

SO ORDERED.15

According to the Labor Arbiter, the nature of the responsibility of petitioner "was not that of an ordinary
employee."16 It then went on to categorize petitioner as a supervisor in "a position of responsibility where
trust and confidence is inherently infused." 17 As such, it behooved him "to be more knowledgeable if not
the most knowledgeable in company policies on employee purchases of food scrap items in the
kitchen."18 Per the evidence presented by respondent, petitioner breached company policy which justified
his dismissal.

Petitioner appealed to the National Labor Relations Commission (NLRC). 19 On April 10, 2003, the NLRC
reversed20 the Labor Arbiter in the following tenor:

WHEREFORE, the decision appealed from is hereby SET ASIDE and complainant's dismissal
declared illegal. Further, respondent is hereby ordered to reinstate complainant to his former
position without loss of seniority rights and other benefits and paid backwages computed from
time of dismissal up to the finality of this decision which as of this date amounts to P269,854.16.

All other claims are denied for want of basis.

 SO ORDERED.21

The NLRC held that the position of complainant is not supervisory covered by the trust and confidence
rule.22 On the contrary, petitioner is a mere rank-and-file employee.23 The evidence is also wanting that
petitioner committed the crime charged.24 The NLRC did not believe that petitioner would trade off almost
thirty-one (31) years of service for P50.00 worth of squid heads.25

The NLRC further ruled that petitioner was illegally dismissed as respondent failed to establish a just
cause for dismissal.26 However, the claim for damages was denied for lack of evidence. 27

The motion for reconsideration28 having been denied,29 respondent brought the matter to the Court of
Appeals (CA) via a petition for certiorari under Rule 65 of the 1997 Rules on Civil Procedure.30 On July
12, 2004, the CA rendered the assailed decision, 31 with the following fallo:

WHEREFORE, the petition is GRANTED. The challenged resolutions of April 10, 2003 and July
31, 2003 of public respondent NLRC are REVERSED and SET ASIDE. The decision of the Labor
Arbiter of July 24, 2002, dismissing private respondent's complaint is REINSTATED.

SO ORDERED.32

In reversing the NLRC, the CA opined that the position of petitioner was supervisory in nature.33 The CA
also held that the evidence presented by respondent clearly established loss of trust and confidence on
petitioner.34 Lastly, the CA, although taking note of the long years of service of petitioner and his
numerous awards, refused to award separation pay in his favor. According to the CA, "the award of
separation pay cannot be sustained under the social justice theory" because the instant case "involves
theft of the employer's property."35

Petitioner filed a motion for reconsideration 36 which was denied.37 Left with no other recourse, petitioner
availed of the present remedy.38

Issues

Petitioner in his Memorandum39 imputes to the CA the following errors, to wit:

I. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO

LACK OF JURISDICTION WHEN IT CONCLUDED THAT THE POSITION OF THE PETITIONER
BEING AN ASSISTANT COOK AS A SUPERVISORY POSITION FOR BEING
CONTRADICTORY TO THE EVIDENCE ON RECORD.

II. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING

TO LACK OF JURISDICTION WHEN IT CONCLUDED THAT THE DOCTRINE OF TRUST AND
CONFIDENCE APPLIES AGAINST THE PETITIONER TO JUSTIFY HIS DISMISSAL FROM
EMPLOYMENT FOR BEING CONTRADICTORY TO THE EVIDENCE ON
RECORD.40 (Underscoring supplied)

For a full resolution of the issues in the instant case, the following questions should be answered: (1) Is
the position of petitioner supervisory in nature which is covered by the trust and confidence rule? (2) Is
the evidence on record sufficient to conclude that petitioner committed the crime charged? and (3)
Assuming that the answer is in the affirmative, is the penalty of dismissal proper?

Our Ruling
I. The position of petitioner is supervisory in nature which is covered by the trust and confidence
rule.

The nature of the job of an employee becomes relevant in termination of employment by the
employer because the rules on termination of managerial and supervisory employees are different from
those on the rank-and-file. Managerial employees are tasked to perform key and sensitive functions, and
thus are bound by more exacting work ethics.41 As a consequence, managerial employees are covered
by the trust and confidence rule.42 The same holds true for supervisory employees occupying positions of
responsibility.43

There is no doubt that the position of petitioner as chief cook is supervisory in nature. A chief cook directs
and participates in the preparation and serving of meals; determines timing and sequence of operations
required to meet serving times; and inspects galley and equipment for cleanliness and proper storage and
preparation of food.44 Naturally, a chief cook falls under the definition of a supervisor, i.e., one who, in the
interest of the employer, effectively recommends managerial actions which would require the use of
independent judgment and is not merely routinary or clerical. 45

It has not escaped Our attention that petitioner changed his stance as far as his actual position is
concerned. In his position paper, he alleged that at the time of his dismissal, he was "Chief
Cook."46 However, in his memorandum, he now claimed that he was an "Asst. Cook." 47 The ploy is clearly
aimed at giving the impression that petitioner is merely a rank-and-file employee. The change in
nomenclature does not, however, help petitioner, as he would still be covered by the trust and confidence
rule. In Concorde Hotel v. Court of Appeals,48 the Court categorically ruled:

Petitioner is correct insofar as it considered the nature of private respondent's position as

assistant cook a position of trust and confidence. As assistant cook, private respondent is
charged with the care of food preparation in the hotel's coffee shop. He is also responsible for the
custody of food supplies and must see to it that there is sufficient stock in the hotel kitchen. He
should not permit food or other materials to be taken out from the kitchen without the necessary
order slip or authorization as these are properties of the hotel. Thus, the nature of private
respondent's position as assistant cook places upon him the duty of care and custody of
Concorde's property.49 (Emphasis supplied)

Of course, the ruling assumes greater significance if petitioner is the chief cook. A chief cook naturally
performs greater functions and has more responsibilities than an assistant cook. In eo quod plus sit
simper inest et minimus. The greater always includes the less. Ang malawak ay laging sumasakop sa
maliit.

II. The evidence on record is sufficient to conclude that petitioner committed the crime charged.

Security of tenure is a paramount right of every employee that is held sacred by the Constitution. 50 The
reason for this is that labor is deemed to be "property" 51 within the meaning of constitutional
guarantees.52 Indeed, as it is the policy of the State to guarantee the right of every worker to security of
tenure as an act of social justice,53 such right should not be denied on mere speculation of any similar or
unclear nebulous basis.54 Indeed, the right of every employee to security of tenure is all the more secured
by the Labor Code by providing that "the employer shall not terminate the services of an employee except
for a just cause or when authorized" by law. Otherwise, an employee who is illegally dismissed "shall be
entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual reinstatement." 55

Necessarily then, the employer bears the burden of proof to show the basis of the termination of the
employee.56
In the case at bar, respondent has discharged its onus of proving that petitioner committed the crime
charged. We quote with approval the observation of the CA in this regard:

On this matter, petitioner presents as evidence the verified statement of security guard Aranas.
Aranas positively saw the private in the act of bringing out the purloined squid heads. Similarly,
the statement of security guard Magtangob attested to the commission by private respondent of
the offense charged. Further, the verified statement of Samson, store manager of petitioner
corporation who is in charge of all personnel, including employees of the Yum Yum Tree Coffee
Shop of which private respondent was a former assistant cook, attested to the fact of private
respondent seeking apology for the commission of the act. Likewise, the statement of Zenaida
Castro (Castro), cashier of petitioner corporation's supermarket, Makati Branch, Ayala Center,
Makati City, confirmed that indeed the 1.335 kilos of squid heads amounting to fifty pesos
(P50.00)per kilo, had not been paid for. 57

The contention of petitioner that respondent merely imputed the crime against him because he was set to
retire is difficult, if not impossible, to believe. Worth noting is the fact that petitioner failed to impute any ill
will or motive on the part of the witnesses against him. As aptly observed by the Labor Arbiter:

It seems unbelievable to believe that the apprehending officers up to the Manager, Mr. Samson,
were all telling a lie as what complainant wants to portray when he alleged in his pleadings that
he mentioned to the apprehending officers [that] he has a receipt for [the squid heads] and that
he never apologized. This is understandable on his part because complainant wants no loophole
in his version. And an easy way out is to fabricate his allegations.58

We stress that the quantum of proof required for the application of the loss of trust and confidence rule is
not proof beyond reasonable doubt. It is sufficient that there must only be some basis for the loss of
trust and confidence or that there is reasonable ground to believe, if not to entertain the moral
conviction, that the employee concerned is responsible for the misconduct and that his
participation in the misconduct rendered him absolutely unworthy of trust and confidence.59

It is also of no moment that the criminal complaint for qualified theft against petitioner was dismissed. It is
well settled that the conviction of an employee in a criminal case is not indispensable to the
exercise of the employer's disciplinary authority.60

III. The penalty of dismissal is too harsh under the circumstances.

The free will of management to conduct its own business affairs to achieve its purpose cannot be
denied.61 The only condition is that the exercise of management prerogatives should not be done in bad
faith62 or with abuse of discretion.63 Truly, while the employer has the inherent right to discipline, including
that of dismissing its employees, this prerogative is subject to the regulation by the State in the exercise
of its police power.64

In this regard, it is a hornbook doctrine that infractions committed by an employee should merit only
the corresponding penalty demanded by the circumstance. The penalty must be commensurate
with the act, conduct or omission imputed to the employee and must be imposed in connection
with the disciplinary authority of the employer.65

For example, in Farrol v. Court of Appeals,66 the employee, who was a district manager of a bank,
incurred a shortage of P50,985.37. He was dismissed although the funds were used to pay the retirement
benefits of five employees of the bank. The employee was also able to return the amount, leaving a
balance of only P6,995.37 of the shortage. The bank argued that under its rules, the penalty for the
infraction of the employee is dismissal. The Court disagreed and held that the penalty of dismissal is too
harsh. The Court took note that it is the first infraction of the employee and that he has rendered twenty-
four (24) long years of service to the bank. In the words of Mme. Justice Consuelo Ynares-Santiago,
"the dismissal imposed on petitioner is unduly harsh and grossly disproportionate to the
infraction which led to the termination of his services. A lighter penalty would have been more
just, if not humane."67

So too did the Court pronounce in Felix v. National Labor Relations Commission,68 Gutierrez v. Singer
Sewing Machine Company,69 Associated Labor Unions-TUCP v. National Labor Relations
Commission,70 Dela Cruz v. National Labor Relations Commission,71 Philippine Long Distance Telephone
Company v. Tolentino,72 Hongkong and Shanghai Banking Corporation v. National Labor Relations
Commission,73 Permex, Inc. v. National Labor Relations Commission,74 VH Manufacturing, Inc. v.
National Labor Relations Commission,75 A' Prime Security Services, Inc. v. National Labor Relations
Commission,76 and St. Michael's Institute v. Santos.77

In the case at bar, petitioner deserves compassion more than condemnation. At the end of the day, it is
undisputed that: (1) petitioner has worked for respondent for almost thirty-one (31) years; (2) his tireless
and faithful service is attested by the numerous awards78 he has received from respondent; (3) the
incident on June 18, 2001 was his first offense in his long years of service; (4) the value of the squid
heads worth P50.00 is negligible; (5) respondent practically did not lose anything as the squid heads were
considered scrap goods and usually thrown away in the wastebasket; (6) the ignominy and shame
undergone by petitioner in being imprisoned, however momentary, is punishment in itself; and (7)
petitioner was preventively suspended for one month, which is already a commensurate punishment for
the infraction committed. Truly, petitioner has more than paid his due.

In any case, it would be useless to order the reinstatement of petitioner, considering that he would have
been retired by now. Thus, in lieu of reinstatement, it is but proper to award petitioner separation pay
computed at one-month salary for every year of service, a fraction of at least six (6) months considered as
one whole year.79 In the computation of separation pay, the period where backwages are awarded must
be included.80

Word of caution.

We do not condone dishonesty. After all, honesty is the best policy. However, punishment should be
commensurate with the offense committed. The supreme penalty of dismissal is the death penalty to the
working man. Thus, care should be exercised by employers in imposing dismissal to erring employees.
The penalty of dismissal should be availed of as a last resort.

Indeed, the immortal words of Mr. Justice (later Chief Justice) Enrique Fernando ring true then as they do
now: "where a penalty less punitive would suffice, whatever missteps may be committed by labor ought
not be visited with a consequence so severe. It is not only because of the law's concern for the
workingman. There is, in addition, his family to consider. Unemployment brings untold hardships and
sorrows on those dependent on the wage-earner."81

WHEREFORE, the appealed Decision of the Court of Appeals is REVERSED and SET ASIDE. The
Decision of the National Labor Relations Commission is REINSTATED with the MODIFICATION that
petitioner is granted separation pay and backwages in lieu of reinstatement.

SO ORDERED.
 NEGROS SLASHERS, INC., RODOLFO C. ALVAREZ AND VICENTE TAN,
PETITIONERS, VS. ALVIN L. TENG, RESPONDENT.

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari assailing the Decision [1] dated September
17, 2008 and Resolution[2] dated February 11 2009 of the Court of Appeals (CA) in CA-
G.R. SP No. 00817. The appellate court had reversed and set aside the September 10,
2004 Decision[3] and March 21, 2005 Resolution[4] of the National Labor Relations
Commission (NLRC) and reinstated with modification the Decision[5] of the Labor Arbiter
finding respondent to have been illegally dismissed. cralaw

The facts are undisputed.

Respondent Alvin Teng is a professional basketball player who started his career as
such in the Philippine Basketball Association and then later on played in the
Metropolitan Basketball Association (MBA).

On February 4, 1999, Teng signed a 3-year contract[6] (which included a side contract
and agreement for additional benefits and bonuses) with the Laguna Lakers. Before the
expiration of his contract with the Laguna Lakers on December 31, 2001, the Lakers
traded and/or transferred Teng to petitioner Negros Slashers, with the latter assuming
the obligations of Laguna Lakers under Teng’s unexpired contract, including the
monthly salary of P250,000, P50,000 of which remained to be the obligation of the
Laguna Lakers. On March 28, 2000, the management of the Laguna Lakers formally
informed Teng of his transfer to the Negros Slashers.[7] Teng executed with the Negros
Slashers the Player’s Contract of Employment.[8]

On Game Number 4 of the MBA Championship Round for the year 2000 season, Teng
had a below-par playing performance. Because of this, the coaching staff decided to
pull him out of the game. Teng then sat on the bench, untied his shoelaces and donned
his practice jersey. On the following game, Game Number 5 of the Championship
Round, Teng called-in sick and did not play.

On November 21, 2000, Vicente Tan, Finance Head of Negros Slashers, wrote [9] Teng
requiring him to explain in writing why no disciplinary action should be taken against
him for his precipitated absence during the crucial Game 5 of the National
Championship Round. He was further informed that a formal investigation would be
conducted on November 28, 2000. The hearing, however, did not push through
because Teng was absent on the said scheduled investigation. Hearing was
rescheduled for December 11, 2000. On said date, the investigation proceeded,
attended by Teng’s representatives, Atty. Arsenio Yulo and Atty. Jose Aspiras.[10] A
subsequent meeting was also conducted attended by the management, coaching staff
and players of the Negros Slashers team, wherein the team members and coaching
staff unanimously expressed their sentiments against Teng and their opposition against
the possibility of Teng joining back the team.[11]

On March 16, 2001, the management of Negros Slashers came up with a decision, and
through its General Manager, petitioner Rodolfo Alvarez, wrote [12] Teng informing him
of his termination from the team.

On July 28, 2001, Teng filed a complaint before the Office of the Commissioner of the
MBA pursuant to the provision of the Uniform Players Contract which the parties had
executed. Subsequently, on November 6, 2001, Teng also filed an illegal dismissal case
with the Regional Arbitration Branch No. VI of the NLRC.[13]

On July 16, 2002, the Labor Arbiter issued a decision finding Teng’s dismissal illegal and
ordering petitioner Negros Slashers, Inc. to pay Teng P2,530,000 representing his
unpaid salaries, separation pay and attorney’s fees. The Labor Arbiter ruled that the
penalty of dismissal was not justified since the grounds relied upon by petitioners did
not constitute serious misconduct or willful disobedience or insubordination that would
call for the extreme penalty of dismissal from service. The dispositive portion of the
Labor Arbiter’s decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring the

dismissal of complainant illegal and respondents Negros Slashers, Inc. are hereby
ordered to PAY complainant the total sum of TWO MILLION FIVE HUNDRED
THIRTY THOUSAND (P2,530,000.00) PESOS representing complainant’s unpaid
salaries, separation pay and attorney’s fee, the award to be deposited with this Office
within ten (10) days from receipt of this Decision.

All other claims are hereby DISMISSED for lack of merit.

SO ORDERED.[14]

The case was then appealed to the NLRC. On September 10, 2004, the NLRC issued a
Decision setting aside the July 16, 2002 Decision of the Labor Arbiter and entering a
new one dismissing the complaint for being premature since the arbitration proceedings
before the Commissioner of the MBA were still pending when Teng filed his complaint
for illegal dismissal. The dispositive portion of the NLRC Decision reads:

WHEREFORE, premises considered, the decision of the Executive Labor Arbiter a quo is
hereby REVERSED and SET ASIDE. A new one is entered, dismissing the instant case
for being premature.

SO ORDERED.[15]

Teng filed a motion for reconsideration, but it was denied for being filed beyond the
ten-day reglementary period provided for in Section 15,[16] Rule VII of the NLRC Rules
of Procedure.

Aggrieved, Teng filed a petition for certiorari with the CA assailing the NLRC Decision
dated September 10, 2004 and the Resolution dated March 21, 2005 denying his
motion for reconsideration.

On September 17, 2008 the CA rendered the assailed Decision setting aside the
September 10, 2004 Decision and March 21, 2005 Resolution of the NLRC and
reinstating with modification the Labor Arbiter’s Decision.
The CA reinstated the findings of the Labor Arbiter that Teng was illegally dismissed
because the grounds relied upon by petitioners were not enough to merit the supreme
penalty of dismissal. The CA held that there was no serious misconduct or willful
disobedience or insubordination on Teng’s part. On the issue of jurisdiction, the CA
ruled that the Labor Arbiter had jurisdiction over the case notwithstanding the
pendency of arbitration proceedings in the Office of the Commissioner of the MBA.

Petitioners sought reconsideration of the above ruling, but their motion was denied by
the CA in a Resolution[17] dated February 11, 2009.

Petitioners now come to this Court assailing the Decision dated September 17, 2008
and Resolution dated February 11, 2009 of the CA.

Firstly, petitioners argue that respondent Teng and his counsel committed a blatant
violation of the rule against forum shopping. Petitioners aver that on July 28, 2001,
Teng filed a complaint before the MBA pursuant to the voluntary arbitration provision of
the Uniform Players Contract he executed with Negros Slashers, Inc. During the
pendency of said complaint, Teng filed another complaint for illegal dismissal with the
Labor Arbiter. It is petitioners’ position that Teng lied by certifying under oath that
there is no similar case pending between him and Negros Slashers, Inc., when in fact,
months before he had filed a complaint with the MBA alleging the same factual
antecedents and raising the same issues.

Secondly, petitioners argue that the CA erred in ruling that Teng’s offenses were just
minor lapses and irresponsible action not warranting the harsh penalty of
dismissal. Petitioners allege that the CA paid scant attention to two very important
pieces of evidence which would clearly show the gravity and seriousness of the offenses
committed by Teng. Petitioners claim that these two documents, i.e., the minutes of
the meeting[18] of players, management, and coordinating staff, and a petition[19] by the
players to the management not to allow Teng to come back to the team, would show
that Teng should not have been treated as an ordinary working man who merely
absented himself by feigning sickness when called upon to work. Petitioners argue that
the nature of the work and team atmosphere should have been considered and given
credence. By neglecting these two documents, the CA failed to appreciate the gravity
of the misconduct committed by Teng and the effects it had on the basketball
organization.

Petitioners also argue that respondent’s petition for certiorari with the CA should have
been dismissed outright because it was filed beyond the reglementary
period. Petitioners point out that Teng received the NLRC Decision on October 15, 2004
and therefore had ten days[20] or until October 25, 2004 within which to file a motion
for reconsideration. But he filed his motion for reconsideration only on October 26,
2004 and said motion was denied[21] on March 21, 2005 for being filed late. Thereafter
he filed his petition for certiorari [22] with the CA on June 20, 2005. Petitioners contend
that the petition for certiorari was filed beyond the period allowed by the Rules of Court
because the 60-day period to file the petition for certiorari should have started to run
from the receipt of the NLRC decision on October 15, 2004. And it should have expired
on December 14, 2004 because it was as if no motion for reconsideration was filed in
the NLRC. Further, petitioners argue that the CA could not take cognizance of the case
because it is a settled rule that certiorari as a special civil action will not lie unless a
motion for reconsideration is first filed before the NLRC to allow it an opportunity to
correct its errors. In this case, since the motion for reconsideration was filed late, it
should have been treated as if no motion for reconsideration was filed.

Teng, on the other hand, maintains that there is no violation of the rule against forum
shopping. He submits that he indeed filed his complaint before the MBA as early as
July 28, 2001. Unfortunately, for more than three months, the supposed voluntary
arbitration failed to yield any result until the MBA itself was dissolved. It was only on
November 2001, after exhausting the arbitration process, did he file his complaint
before the Labor Arbiter. In other words, it was only after the MBA failed to come up
with a resolution on the matter did he opt to seek legal redress elsewhere.

On the merits, Teng relies on the reasoning of the Labor Arbiter in finding that his
alleged lapses and misconduct were too minor to justify the extreme penalty of
dismissal from service. In large part, he quotes the Labor Arbiter’s decision, and
emphasizes the Labor Arbiter’s statements that (1) loosening of the shoe laces and the
donning of the practice jersey are not indicative of serious misconduct that would
justify dismissal from employment; (2) it cannot be concluded that he merely feigned
sickness when he informed the Coach of his inability to play during Game No. 5; and
(3) there is no showing of any bad faith or ill motive on his part that would qualify his
actions as serious, severe and grave as to warrant termination from service.

Teng also argues that the CA aptly clarified and explained the legal reason why the
petition for certiorari was given due course despite some procedural lapses regarding
the motion for reconsideration with the NLRC. Teng stresses that jurisprudence allows
the relaxation of procedural rules even of the most mandatory character in the interest
of substantial justice. In this particular case, justice and equity calls for the relaxation
of the reglementary period for filing a motion for reconsideration as well as the rule
prohibiting the filing of a petition for certiorari without first filing a motion for
reconsideration.

Simply put, the basic issues for our resolution are as follows: (1) whether the CA erred
in giving due course to respondent Teng’s petition for certiorari despite its late filing;
(2) whether Teng violated the rule on forum shopping when he filed a complaint for
illegal dismissal with the Regional Arbitration Branch of the NLRC while a similar
complaint was pending in the Office of the Commissioner of the MBA; and (3) whether
the CA erred in ruling that Teng’s dismissal from the Negros Slashers Team was
unjustified and too harsh considering his misconduct.

The petition is bereft of merit.

On the first issue raised by petitioners, we rule that the CA did not commit a reversible
error in giving due course to Teng’s petition for certiorari although said petition was
filed late. Ordinarily, rules of procedure are strictly enforced by courts in order to
impart stability in the legal system. However, in not a few instances, we relaxed the
rigid application of the rules of procedure to afford the parties the opportunity to fully
ventilate their cases on the merits. This is in line with the time honored principle that
cases should be decided only after giving all the parties the chance to argue their
causes and defenses. In that way, the ends of justice would be better served. For
indeed, the general objective of procedure is to facilitate the application of justice to the
rival claims of contending parties, bearing always in mind that procedure is not to
hinder but to promote the administration of justice.[23] In Ong Lim Sing, Jr. v. FEB
Leasing and Finance Corporation,[24] we ruled:

Courts have the prerogative to relax procedural rules of even the most mandatory
character, mindful of the duty to reconcile both the need to speedily put an end to
litigation and the parties’ right to due process. In numerous cases, this Court has
allowed liberal construction of the rules when to do so would serve the demands of
substantial justice and equity. x x x

Indeed the prevailing trend is to accord party litigants the amplest opportunity for the
proper and just determination of their causes, free from the constraints of needless
technicalities.

Here, besides the fact that a denial of the recourse to the CA would serve more to
perpetuate an injustice and violation of Teng’s rights under our labor laws, we find that
as correctly held by the CA, no intent to delay the administration of justice could be
attributed to Teng. The CA therefore did not commit reversible error in excusing Teng’s
one-day delay in filing his motion for reconsideration and in giving due course to his
petition for certiorari.

As regards the second issue, we likewise find no merit in petitioners’ claim that
respondent’s act of filing a complaint with the Labor Arbiter while the same case was
pending with the Office of the Commissioner of the MBA constituted forum shopping.

For forum shopping to exist, it is necessary that (a) there be identity of parties or at
least such parties that represent the same interests in both actions; (b) there be
identity of rights asserted and relief prayed for, the relief being founded on the same
facts; and (c) the identity of the two preceding particulars is such that any judgment
rendered in one action will, regardless of which party is successful, amount to res
judicata in the other action.[25]

Petitioners are correct as to the first two requisites of forum shopping. First, there is
identity of parties involved: Negros Slashers Inc. and respondent Teng. Second, there
is identity of rights asserted i.e., the right of management to terminate employment
and the right of an employee against illegal termination. However, the third requisite of
forum shopping is missing in this case. Any judgment or ruling of the Office of the
Commissioner of the MBA will not amount to res judicata. As defined in Agustin v.
Delos Santos,[26]

Res Judicata is defined as “a matter adjudged; a thing judicially acted upon or

decided; a thing or matter settled by judgment.” According to the doctrine of res
judicata, an existing final judgment or decree rendered on the merits, and without
fraud or collusion, by a court of competent jurisdiction, upon any matter within its
jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions
or suits in the same or any other judicial tribunal of concurrent jurisdiction on the
points and matters in issue in the first suit. To state simply, a final judgment or decree
on the merits by a court of competent jurisdiction is conclusive of the rights of the
parties or their privies in all later suits on all points and matters determined in the
former suit. (Emphasis supplied.)

To clarify, res judicata is defined in jurisprudence as to have four basic elements: (1)
the judgment sought to bar the new action must be final; (2) the decision must have
been rendered by a court having jurisdiction over the subject matter and the parties;
(3) the disposition of the case must be a judgment on the merits; and (4) there must
be as between the first and second action, identity of parties, subject matter, and
causes of action.[27]

Here, although contractually authorized to settle disputes, the Office of the

Commissioner of the MBA is not a court of competent jurisdiction as contemplated by
law with respect to the application of the doctrine of res judicata. At best, the Office of
the Commissioner of the MBA is a private mediator or go-between as agreed upon by
team management and a player in the MBA Player’s Contract of Employment.[28] Any
judgment that the Office of the Commissioner of the MBA may render will not result in a
bar for seeking redress in other legal venues. Hence, respondent’s action of filing the
same complaint in the Regional Arbitration Branch of the NLRC does not constitute
forum shopping.

On the third issue, we find that the penalty of dismissal handed out against Teng was
indeed too harsh.

We understand petitioners in asserting that a basketball organization is a “team-based”

enterprise and that a harmonious working relationship among team players is essential
to the success of the organization. We also take into account the petition of the other
team members voicing out their desire to continue with the team without Teng. We
note likewise the sentiments of the players and coaching staff during the meeting of
February 4, 2001 stating how they felt when Teng “abandoned” them during a crucial
Game Number 5 in the MBA championship round.

Petitioners rely heavily on the alleged effects of Teng’s actions on the rest of the
team. However, such reaction from team members is expected after losing a game,
especially a championship game. It is also not unlikely that the team members looked
for someone to blame after they lost the championship games and that Teng happened
to be the closest target of the team’s frustration and disappointment. But all these
sentiments and emotions from Negros Slashers players and staff must not blur the eyes
of the Court from objectively assessing Teng’s infraction in order to determine whether
the same constitutes just ground for dismissal. The incident in question should be
clear: Teng had a below-par performance during Game Number 4 for which he was
pulled out from the game, and then he untied his shoelaces and donned his practice
jersey. In Game Number 5, he did not play.

As an employee of the Negros Slashers, Teng was expected to report for work
regularly. Missing a team game is indeed a punishable offense. Untying of shoelaces
when the game is not yet finished is also irresponsible and unprofessional. However,
we agree with the Labor Arbiter that such isolated foolishness of an employee does not
justify the extreme penalty of dismissal from service. Petitioners could have opted to
impose a fine or suspension on Teng for his unacceptable conduct. Other forms of
disciplinary action could also have been taken after the incident to impart on the team
that such misconduct will not be tolerated.

In Sagales v. Rustan’s Commercial Corporation,[29] this Court ruled:

Truly, while the employer has the inherent right to discipline, including that of
dismissing its employees, this prerogative is subject to the regulation by the State in
the exercise of its police power.

In this regard, it is a hornbook doctrine that infractions committed by an employee

should merit only the corresponding penalty demanded by the circumstance.
The penalty must be commensurate with the act, conduct or omission imputed
to the employee and must be imposed in connection with the disciplinary
authority of the employer. (Emphasis in the original.)

In the case at bar, the penalty handed out by the petitioners was the ultimate penalty
of dismissal. There was no warning or admonition for respondent’s violation of team
rules, only outright termination of his services for an act which could have been
punished appropriately with a severe reprimand or suspension. cralaw

WHEREFORE, the petition for review on certiorari is DENIED for lack of merit and the
Decision of the Court of Appeals dated September 17, 2008 and Resolution dated
February 11, 2009, in CA-G.R. SP No. 00817 are hereby AFFIRMED.

With costs against the petitioners.

SO ORDERED.
 G.R. No. 203005, March 14, 2016

TABUK MULTI-PURPOSE COOPERATIVE, INC. (TAMPCO), JOSEPHINE DOCTOR,

AND WILLIAM BAO-ANGAN, Petitioners, v. MAGDALENA DUCLAN, Respondent.

DECISION

DEL CASTILLO, J.:

An employee's willful and repeated disregard of a resolution issued by a cooperative's

board of directors (BOD) declaring a moratorium on the approval and release of loans,
thus placing the resources of the cooperative and ultimately the hard-earned savings of
its members in a precarious state, constitutes willful disobedience which justifies the
penalty of dismissal under Article 282 of the Labor Code.

Assailed in this Petition for Review on Certiorari1 are: 1) the September 15, 2011
Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 114753, which reversed and
set aside the November 25, 2009 Decision3 and April 8, 2010 Resolution4 of the
National Labor Relations Commission (NLRC) in NLRC CA-No. 050848-06 (RA-06-09);
and 2) the CA's July 11, 2012 Resolution5 denying reconsideration of its assailed
Decision.

Factual Antecedents

Petitioner Tabuk Multi-Purpose Cooperative, Inc. (TAMPCO) is a duly registered

cooperative based in Tabuk City, Kalinga. It is engaged in the business of obtaining
investments from its members which are lent out to qualified member-borrowers.
Petitioner Josephine Doctor is TAMPCO Chairperson and member of the cooperative's
BOD, while petitioner William, Bao-Angan is TAMPCO Chief Executive Officer.

Respondent Magdalena Duclan was employed as TAMPCO Cashier on August 15, 1989,
In 2002, TAMPCO introduced Special Investment Loans (SILs) to its members and
prospective borrowers. Among those who availed themselves of the SILs were Brenda
Falgui (Falgui) and Juliet Kotoken (Kotoken).6

In June 2003, the TAMPCO BOD issued Board Action (BA) No. 28 which limited the
grant of SILs to P5 million and instructed management to collect outstanding loans and
thus reduce the amount of loans granted to allowable levels. This was prompted by a
cooperative report stating that too many SILs were being granted, the highest single
individual borrowing reached a staggering P14 million, which thus adversely affected
the cooperative's ability to grant regular loans to other members of the
cooperative.7 However, despite said board action, SILs were granted to Falgui and
Kotoken over and above the ceiling set. This prompted the BOD to issue, on October
26, 2003, BA No. 55 completely halting the grant of SILs pending collection of
outstanding loans.

Despite issuance of BA No. 55, however, additional SILs were granted to Falgui
amounting to P6,697,000.00 and to Kotoken amounting to P3.5 million.8 Eventually,
Falgui filed for insolvency while Kotoken failed to pay back her loans.
On February 23, 2004, TAMPCO indefinitely suspended respondent and other
cooperative officials pursuant to BA No. 73-03, and required them to replace the
amount of P6 million representing unpaid loans as of February 21, 2004. On March 6,
2004, respondent's suspension was fixed at 15 days, and she was ordered to return to
work on March 15, 2004.

The TAMPCO BOD then created a fact-finding committee (committee) to investigate the
SIL fiasco.9 Respondent and other TAMPCO employees were summoned to the
proceedings and required to submit their respective answers to the committee. 10

Respondent submitted to the committee an October 21, 2004 letter,11 admitting that
despite the issuance of BA No. 55, she and her co-respondents approved and released
SILs, and that she acknowledged responsibility therefor.

After conducting hearings, the committee issued its Report on the Special Investment
Loans,12 which states as follows:

xxxx
a. There are loan notes which do not contain the signature of the spouse of the
borrower as mandated under Chapter 10 of the Policy Manual. This is true in the loan
notes of Monica Oras, and Juliet Kotoken for her loan application sometime on [sic]
January 12, 2004;

b. Special loans were still granted even after the setting of the allowable ceiling on June
28, 2003 (BA No. 28) and even after the Board of Directors stopped the granting of the
Special Investment Loan on October 26, 2003 (BA No. 55);

c. Loans were released even there [sic] were lacking documents. The case of the SIL
granted for example to Mrs. Juliet Kotoken and Mrs. Brenda Falgui on January 12, 2004
were released even without the required loan note. It was revealed that Mr. Peter
Socalo prepared the voucher and Mrs. Aligo did the releasing of the amount upon the
conformity of Mrs. Magdalena Duclan. The loan notes were made and executed later
after the loans were also released;

d. Checks used to secure or postdated checks intended to pay the Special Investment
loans were not presented for payment at the time that they fall [sic] due;

e. Extension of the term of the loan were done through the substitution of the checks
without prior approval of the Board of Directors.

All the above findings were not denied and in fact respondents CEO Rev. Ismael
Sarmiento admitted the charge against him. "Mea Culpa" x x x he said[,] but at the
same time prayed for the Committee's and Board's understanding and compassion,
Magdalena Duclan and Fruto Singwey admitted [their fault under] command
responsibility for the action of their subordinates.

All the other respondents invoked that they just [performed] their duties [or be charged
with] insubordination x x x.

To the issue of the missing check which was raised by Mr. Dulawon in the previous
Board meetings, the committee heard again the side of the cashier [who] denied that
tine same is missing. Accordingly, the same was changed by Mrs. Brenda Falgui, or that
a substitute check was issued by Mrs. Falgui. She [had a] conflicting statement before
the Board when she stated that the amount belongs to Juliet's account.

CONCLUSION:

There was indeed an error, mistake, negligence or abuse of discretion that transpired in
the grant of the special investment loans, x x x [T]here are violations of the policies or
Board actions which should be dealt with[.] x x x.

RECOMMENDATIONS:

AS TO THE ACCOUNTABILITY

xxxx

Mrs. Magdalena Duclan

The committee recommended that she will be immediately suspended without pay and
for her to collect the SIL she [had] released even without the loan note and for her to
account [for] or pay the missing value of the check bearing no. 00115533 in the
amount of P1,500,000.00 [by] Dec. 31, 2004.

[For failure] to collect or account/pay [by then she] shall be [dismissed] from service
with forfeiture of all benefits.

She violated policies and Board actions, specially 28 and 55 in relation to the
manual.13 ChanRoblesV irtuala wlib rary

On November 6, 2004. the BOD adopted the report of the committee and ordered that
respondent be suspended from November 8 until December 31, 2004; respondent was
likewise directed to collect, within the said period, the unauthorized SIL releases she
made, otherwise she would be terminated from employment.14

Unable to collect or account for the P1.5 million as required, respondent was dismissed
from employment. Thus, in a February 1, 2005 communication,15 TAMPCO wrote:
chanRoblesvirtualLaw libra ry

Anent your letter dated January 26, 2005, reiterating your plea for a reconsideration of
your suspension for the reason that you were suspended twice on different days for the
commission of the same offense, the following quoted paragraph was lifted from lines
339 through 350 of the minutes of the regular meeting of the TAMPCO BOD held on
November 27, 2004, treating the matter of your concern for your information, to wit:
chanRoblesvirtualLaw libra ry

"x x x CEO Sarmiento and Cashier Duclan [requested] reconsideration of their

suspension pointing out that they are being suspended twice for the same offense, The
Board denied the request, clarifying that the basis for the second suspension is the
discovery of the release of cash to the SIL recipient without first accomplishing the
corresponding loan note and which action is. contrary to the established processes. It
was mentioned that such violation is punishable by outright dismissal but the policy was
humanized with the imposition only of suspension to the violators to give them ample
time to collect the unauthorized disbursement. x x x [The first] suspension was lifted
because their services were urgently needed in the distribution of dividends and
patronage refunds. The Board decided to stand by its decision based on the
recommendation of the fact-finding committee."
[For] failure to comply with the tasks required x x x within the effectivity period of your
suspension as set under Office Orders numbered 001-04 and 002-04, both dated
November 6, 2004, the Board, during its January 29, 2005 regular meeting, decided to
terminate your services xxx effective as of the closing of office hours on February 1,
2005.
Ruling of the Labor Arbiter

On July 12, 2005, respondent filed a complaint for illegal dismissal, with recovery of
backwages; unpaid holiday pay; premium and 13th month pay; moral, exemplary and
actual damages; and attorney's fees, against respondents which was docketed in the
NLRC RAB, Cordillera Administrative Region, Bagiuo City as NLRC Case No. RAB-CAR-
07-Q344-05 (R-11-08).

On April 24, 2009, Labor Arbiter Monroe C, Tabingan issued a Decision 16 in the case,
decreeing as follows:
chanRoblesvirtualLaw libra ry

WHEREFORE, all premises duly considered, the respondent is hereby found to have
illegally suspended, then illegally dismissed the herein complainant. In view of the fact
that this decision was a collective act of the Board of Directors and Officers of the
respondent, they, as well as the respondent Cooperative, are hereby jointly and
severally held liable to pay to the complainant the following:

1. Her full backwages from the time of her illegal suspension beginning 24
February 2004 to 15 March 2004, and her illegal dismissal from 08
November 2004 to the finality of this Decision, with legal rate of interest
thereon until fully paid, currently computed at PhP1,188,283.30, subject
to re-computation at the time of the payment of said monetary claim;

xxxx

2. Her separation pay in lieu of reinstatement of one (1) month pay for every
year of service beginning at the time of her initial date of hiring, to the
finality of this decision, with legal rate of interest thereon until fully paid,
currently computed at PhP405,002.40, said interest subject to re-
computation at the time of the payment;

xxxx

3. Moral damages in the amount of PhP100,000.00 and exemplary damages

in the amount of PhP100,000.00;

4. Her attorney's fees of not less than ten (10%) per centum of the total
monetary award hereto awarded, currently computed at P159,329.07,
subject to re-computation at the time of payment.

SO ORDERED.17 ChanRob lesVirtua lawl ibrary

In ruling that respondent was illegally dismissed, the Labor Arbiter made the following
findings: a) respondent's first suspension was for an indefinite period, hence illegal; b)
respondent was not accorded the opportunity to explain her side before she was meted
the penalty of suspension; c) placing respondent on suspension and requiring her to
personally pay the loan is not the proper way to collect irregularly released loans; d)
although respondent's indefinite suspension was eventually reduced to 15 days, by that
time respondent was suspended for 20 days already; e) respondent was deprived of the
opportunity to explain her side when she was suspended the second time on November
8, 2004 to December 31, 2004; f) the second suspension was illegal because it was
beyond 30 days; g) respondent was suspended twice for the same infraction; h) the
February 1, 2005 letter informing respondent of her termination is redundant since
respondent has been deemed constructively dismissed as early as February 23, 2004
when she was indefinitely suspended; i) as cashier, respondent's signing of the check
before its release is merely ministerial; she has no hand in the processing or approval
of the loans; j) TAMPCO had previously tolerated the practice of releasing loans ahead
of the processing of vouchers and board approval and during the prohibited period; and
k) petitioners did not terminate respondent's co-workers who were charged with
committing the same infraction.18

Ruling of the National Labor Relations Commission

Petitioners filed an appeal before the NLRC, which was docketed as NLRC CA-No.
050848-06 (RA-06-09). On November 25, 2009, the NLRC issued its
Decision19 containing the following pronouncement:

Anent respondent's first suspension, the NLRC noted that petitioners already modified
the period from being indefinite to only 15 days and that respondent was properly paid
her wages corresponding to said period of suspension. Thus, there was no need to
discuss the validity of said suspension. Regarding the second suspension from
November 8 to December 31, 2004, the NLRC found the same as illegal considering
that it was imposed as a penalty and not as a preventive suspension pending
investigation of her administrative liability. In fact, during her suspension, she was
ordered to collect the loan illegally released. However, as regards her dismissal from
service, the NLRC found the same as valid and for cause. The NLRC opined that
respondent was notified of the investigation to be conducted by the Fact-Finding
Committee; the notice apprised her that she was being charged with: (1) violation of
BA No. 55 stopping the giving of SILs; (2) violation of BA No. 28 limiting the individual
grant of SIL to P5 million; and (3) violation of lending policies requiring the consent of
spouse in the granting of loans. Respondent was given the opportunity to answer the
charges against her. In fact, she admitted having released SILs despite the board
resolution discontinuing the same. Despite this admission, petitioners continued with
the investigation and found the following infractions to have been committed by
respondent:
chanRoblesvirtualLaw libra ry

1. There were loan notes which did not contain the signature of the borrower's spouse
as mandated by the Policy Manual of the Cooperative;

2. SILs were still granted even after the BOD passed BR Nos. 28 and 55 which limited
the ceiling of SILs to be granted and even subsequently stopping the grant of the said
loan;

3. Loans were released even [when] there [were] documents [missing]. The cases of
Ms. Kotoken and Falgui were cited where their loans were released despite the absence
of loan notes;

4. [Post-dated] checks used to secure the SlLs were not presented at the time they fell
due; and

5. Extension of the term of the loans [was] done through substitution of checks without
prior approval of the BOD.20 ChanRob lesVirtua lawli brary

According to the NLRC, the Fact-Finding Committee discovered that respondent

unilaterally altered the terms of the loan by extending the dates of maturity of checks
which secured the loans and that she reported a partial payment, by way of two (2)
checks, of the loan of Kotoken in the amount of P3 million although the subject checks
were not yet encashed. Worse, the checks were later dishonored when presented for
payment.

As observed by the NLRC, respondent failed to refute the above findings. In fact, she
admitted having released SILs despite knowledge of board resolutions discontinuing the
grant of SILs and despite the fact that the borrower concerned had exceeded the
allowable ceiling.

The NLRC did not give credence to respondent's assertion that as a mere cashier, she
has no discretion at all on the approval of the loans. The NLRC opined that respondent
was the custodian of the entire funds of TAMPCO and also an honorary member of the
BOD, advising the latter on financial matters. The NLRC also held that the release of
funds is not purely ministerial as respondent was expected to check all the supporting
documents and whether pertinent policies regarding the loan had been met by the
applicant.

For the NLRC, respondent's transgressions were deliberate infractions of clear and
mandatory policies of TAMPCO amounting to gross misconduct.

The dispositive portion of the NLRC Decision reads:

chanRoblesvirtualLaw libra ry

WHEREFORE, premises considered, the appeal of respondents is GRANTED. The

Decision of the Labor Arbiter dated April 24, 2009 is hereby REVERSED AND SET
ASIDE, and a new one is hereby rendered DISMISSING the above-entitled complaint for
lack of merit. Respondent Tabuk Multi-Purpose Cooperative, Inc., is, however, ordered
to pay complainant's wages for the period of November 8 to December 31, 2004.

SO ORDERED.21 ChanRob lesVirtua lawl ibrary

Respondent moved to reconsider. However, in a Resolution dated April 8, 2010, the

NLRC held its ground.22

Ruling of the Court of Appeals

In a Petition for Certiorari23 filed with the CA and docketed therein as CA-G.R. SP No.
114753, respondent sought to set aside the NLRC dispositions and reinstate the Labor
Arbiter's judgment, arguing that she had no discretion in the release of the SILs; that
she was not an ex-officio member of the cooperative's BOD; that while she committed a
violation of the cooperative's policies, she should be accorded clemency just as her co-
respondents were pardoned and allowed to collect their benefits; that she did not
commit gross misconduct, as she was not solely responsible for the prohibited release
of the SILs to Kotoken and Falgui, since they were previously approved by the loan
investigator, the Credit Committee, and the General Manager prior to their release; that
petitioners did not properly observe the twin-notice rule prior to her dismissal, as she
was not given any notice to present her side - instead, she was dismissed outright
when she failed to collect and return the amount she disbursed via the SILs; that there
is no just cause for her dismissal; that her length of service (15 years) and her
unblemished record with the cooperative should merit the setting aside of her dismissal,
and instead, her previous suspensions should suifice as a penalty for her infraction; that
the exoneration of her co-respondents - notably the General Manager - who was
allowed to retire, given a "graceful exit" from the cooperative, honorably discharged,
allowed to collect his benefits in full, and given a certification to the effect that he did
not commit any violation of the cooperative's policies, rules, and regulations -
constitutes discrimination, favoritism, evident bad faith, and a violation of her
constitutional right to equal protection; and that the Labor Arbiter's decision is entirely
correct and should be given full credence and respect.

In their Comment24 seeking dismissal of the Petition, petitioners contended that the
Petition was filed to cover up for a lost appeal; that no reversible error is evident; that
contrary to respondent's claim, her position as cashier is the "lifeblood and very
existence of the Cooperative" since she was the "key to the vault and the dispenser of
the Cooperative's fund"; that respondent is responsible and accountable for all
disbursements because before the release of the loan proceeds, she must ensure that
all the processes and necessary documents are duly complied with and tibere are no
violations of any of the cooperative's policies and rules; that she is likewise responsible
for the collection activities of the cooperative and the coordination thereof, as required
under her job description; that respondent was customarily appointed by the BOD as its
adviser and treasurer - being so, she very well knew of its policies; that as cashier, her
signature to the checks were required prior to the release thereof to the SIL borrowers
- thus, she is liable for signing these checks and releasing them to the borrowers in
disregard of BA No. 55 prohibiting the further release of loans pending collection of
those outstanding; that there is no favoritism or discrimination when the former
General Manager was allowed a graceful exit while respondent was dismissed, as the
decision to allow the former to retire and collect his benefits is a management
prerogative that respondent cannot interfere with; and that ultimately, respondent was
dismissed not for her failure to collect the outstanding loans, but for her violation of the
cooperative's policies (BA Nos. 28 and 55); that in dismissing her, due process was
observed.

On September 15, 2011, the CA issued the herein assailed Decision, decreeing as
follows:
chanRoblesvirtualLaw libra ry

WHEREFORE, premises considered, the Decision of the NLRC dated 25 November 2009
is hereby REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated 24 April
2009 in NLRC Case No. RAB-CAR-07-0344-05 (R-11-18) is hereby REINSTATED.

SO ORDERED.25 ChanRob lesVirtua lawl ibrary

The CA held that respondent's dismissal was illegal; that she was not guilty of violating
her duties and responsibilities as Cashier; that she was under the supervision of the
cooperative's Finance and Credit Managers, who are primarily responsible for the
approval of loan applications; that as Cashier, she was a mere co-signatory of check
releases and simply acts as a "check and balance on the power and authority of the
General Manager;" that she does not exercise discretion on the matter of SILs -
specifically the assessment, recommendation, approval and granting thereof; that only
the Loan Officers, as well as the Credit, Finance, and General Managers, have a direct
hand in the evaluation, assessment and approval of SEL applications, including their
required attachments/documents; that while the questioned SILs were released without
the approval of the BOD, such practice was sanctioned and had been adopted and
tolerated within TAMPCO ever since; that it is unjust to require respondent to pay the
amounts released to SEL borrowers but which could no longer be collected; that it was
unfair to condemn and punish respondent for the anomalies, while her corespondents,
particularly the former General Manager, was given a graceful exit, honorably
discharged, and was even allowed to collect his retirement benefits in full; that
respondent's suspension from November 8 to December 31, 2004 was illegal; and that
petitioners failed to comply with the twin-notice rule prior to her dismissal.

Petitioners filed a Motion for Reconsideration,26 but the CA denied the same in its July
11, 2012 Resolution. Hence, the present Petition.

In a November 11, 2013 Resolution,27 this Court resolved to give due course to the
Petition.

On March 19, 2014, petitioners filed an Urgent Motion28 seeking injunctive relief to
enjoin the execution of judgment. In a March 24, 2014 Resolution,29 the motion was
denied.

Issues

Petitioners submit the following issues for resolution:

chanRoblesvirtualLaw libra ry

1. WHETHER THE HONORABLE COURT OF APPEALS ERRED WHEN IT HELD TO REVERSE

THE DECISION OF THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION
THEREBY AFFIRMING THE DECISION OF THE HONORABLE LABOR ARBITER.

2. WHETHER THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ERROR

WHEN IT DID NOT CONSIDER THE EVIDENCE OF THE PETITIONERS AS IT RULED THAT
THE RESPONDENT WAS REMOVED IN VIOLATION OF THE TWO-NOTICE RULE AND
THAT THERE IS NO JUST CAUSE FOR HER REMOVAL.

3. WHETHER THE HONORABLE COURT OF APPEALS PATENTLY COMMUTED A GRAVE

ERROR WHEN IT RULED THAT THE JOB OF THE RESPONDENT MAGDALENA DUCLAN
INCLUDES CHECK AND BALANCE AND YET IT CONCLUDED THAT HER FUNCTION IS
MERELY MINISTERIAL. THUS, SHE CANNOT BE HELD ACCOUNTABLE FOR HER
[CONDUCT].

4. WHETHER THE HONORABLE COURT OF APPEALS ERRED WHEN IT ACTED ON THE

PETITION FOR CERTIORARI (RULE 65) FILED BY THE RESPONDENT DESPITE THE FACT
THAT THE PROPER REMEDY SHOULD [HAVE] BEEN X X X A PETITION FOR REVIEW ON
CERTIORARI.30 ChanRob lesVirtua lawli brary

Petitioners' Arguments
Praying that the assailed CA pronouncements be set aside and that the NLRC judgment
be reinstated instead, petitioners essentially argue in their Petition and Reply 31 that due
process was observed in the dismissal of respondent; that there was just and valid
cause to dismiss her, as she violated the cooperative's policies and board resolutions
limiting and subsequently prohibiting the grant and release of SILs - which actions
jeopardized TAMPCO's financial position; that respondent's actions constituted serious
misconduct and willful disobedience, justifying dismissal under Article 282 of the Labor
Code;32 that while the Credit and General Managers possessed discretion in the
evaluation and approval of SIL applications, respondent as Cashier was still accountable
as she was duty-bound to check that the release of the loan amounts was proper and
done in accordance with the cooperative's rules and policies; and that there is no basis
to suppose that respondent was unfairly treated, since all those found responsible for
the SIL fiasco were dismissed from service after their respective cases were individually
considered and accordingly treated based on the infractions committed.

Respondent's Arguments

In her Comment,33 respondent counters that the Petition fails to present any cogent
argument that warrants reversal of the assailed CA dispositions; that on the contrary,
the CA correctly upheld her rights to security of tenure and due process; that there was
no valid cause to dismiss her; that as Cashier, she had no power to approve SIL
applications, but only release the loan amounts after the applications are evaluated and
approved by the Credit Manager, and under the supervision of the Finance Manager;
and that the respective decisions of the CA and the Labor Arbiter are correct on all
points and must be upheld.

Our Ruling

The Court grants the Petition.

Under Article 282 of the Labor Code, the employer may terminate the services of its
employee for the latter's serious misconduct or willful disobedience of its or its
representative's lawful orders. And for willful disobedience to constitute a ground, it is
required that: "(a) the conduct of the employee must be willful or intentional; and (b)
the order the employee violated must have been reasonable, lawful, made known to the
employee, and must pertain to the duties that he had been engaged to discharge.
Willfulness must be attended by a wrongful and perverse mental attitude rendering the
employee's act inconsistent with proper subordination, hi any case, the conduct of the
employee that is a valid ground for dismissal under the Labor Code constitutes harmful
behavior against the business interest or person of his employer. It is implied that in
every act of willful disobedience, the erring employee obtains undue advantage
detrimental to the business interest of the employer."34

The persistent refusal of the employee to obey the employer's lawful order amounts to
willful disobedience.35 Indeed, "[o]ne of the fundamental duties of an employee is to
obey all reasonable rules, orders and instructions of the employer. Disobedience, to be
a just cause for termination, must be willful or intentional, willfulness being
characterized by a wrongful and perverse mental attitude rendering the employee's act
inconsistent with proper subordination. A willful or intentional disobedience of such rule,
order or instruction justifies dismissal only where such rule, order or instruction is (1)
reasonable and lawful, (2) sufficiently known to the employee, and (3) connected with
the duties which the employee has been engaged to discharge."36

As TAMPCO Cashier, respondent was, among her other designated functions and duties,
responsible and accountable for all disbursements of cooperative funds and the
coordination of delinquency control and collection activities.37 She was likewise
expected to understand the cooperative's operational procedures,38 and of course,
follow its rules, regulations, and policies.

A year after introducing the SIL program, TAMPCO realized that a considerable amount
of the cooperative's loanable funds was being allocated to SILs, which thus adversely
affected its ability to lend under the regular loan program. It further discovered that
single individual borrowings under the SIL program reached precarious levels, thus
placing the resources of the cooperative at risk. Thus, in June 2003, the TAMPCO BOD
issued BA No. 28, putting a cap on SIL borrowings at P5 million. In October of the same
year, BA No. 55 was issued, completely prohibiting the grant of SILs. However, despite
issuance of BA Nos. 28 and 55, respondent and the other officers of the cooperative
including its former General Manager, continued to approve and release SILs to
borrowers, among them Falgui and Kotoken, who received millions of pesos in loans in
January and December of 2004, and in January 2005. Eventually, Falgui claimed
insolvency, and Kotoken failed to pay back her loans.

The CA failed to consider that in releasing loan proceeds to SIL borrowers like Falgui
and Kotoken even after the BOD issued BA Nos. 28 and 55, respondent, and the other
cooperative officers, willfully and repeatedly defied a necessary, reasonable and lawful
directive of the cooperative's BOD, which directive was made known to them and which
they were expected to know and follow as a necessary consequence of their respective
positions in the cooperative. They placed the resources of the cooperative - the hard-
earned savings of its members - in a precarious state as a result of the inability to
collect the loans owing to the borrowers' insolvency or refusal to honor their
obligations, Respondent committed gross insubordination which resulted in massive
financial losses to the cooperative. Applying Article 282, her dismissal is only proper.

Respondent cannot pretend to ignore the clear mandate of BA Nos. 28 and 55 and
justify her actions in releasing the loan proceeds to borrowers by claiming that she had
no choice but to release the loan proceeds after the SIL loan applications were
evaluated and approved by the loan investigator, the Credit Committee, and the
General Manager. These officers were themselves bound to abide by BA Nos. 28 and 55
- they, just as respondent, are subordinate to the TAMPCO BOD. Pursuant to the
Philippine Cooperative Code of 2008, or Republic Act No. 9520, TAMPCO's BOD is
entrusted with the management of the affairs of the cooperative (Article 5 [3]); the
direction and management of the cooperative's affairs shall be vested in the said board
(Article 37); and it shall be responsible for the strategic planning, direction-setting and
policy-formulation activities of the cooperative (Article 38).

Just the same, respondent could have simply refused to release the loan proceeds even
if the loan applications were duly approved. Had she done so, she would have been
excluded from the indictments. She would have continued with her employment. In this
regard, the CA erred completely in declaring that only the Loan Officers, as well as the
Credit, Finance, and General Managers are primarily responsible since only they
exercised discretion over SIL applications, and respondent had no choice but to
perfunctorily release the loan proceeds upon approval of the applications.

The Court likewise finds that in dismissing respondent, petitioners observed the
requirements of due process. An investigation was conducted by a fact-finding
committee; respondent and her colleagues were summoned and required to explain -
and they did; respondent submitted an October 21, 2004 letter acknowledging and
confessing her wrongdoing - that despite BA No. 55, she and her colleagues continued
to approve and release SILs. After the investigation proceedings, the committee
prepared a detailed Report of its findings and containing a recommendation to suspend
the respondent, require her to restore the amounts she wrongly disbursed - by
collecting the credits herself, and in the event of failure to restore the said amounts,
she would be dismissed from the service. The Report was approved and adopted by the
cooperative's BOD, which resolved to suspend respondent from November 8 until
December 31, 2004 and ordered her to collect, within the said period, the unauthorized
SIL releases she made; otherwise, she would be terminated from employment. When
respondent failed to restore the amounts in question, the BOD ordered her dismissal
from employment. Respondent was informed of her dismissal in a February 1, 2005
communication addressed to her; this is the second of the twin notices required by law.
Thus, as to respondent, the cooperative observed the proper procedure prior to her
dismissal.
In termination proceedings of employees, procedural due process consists of the twin
requirements of notice and hearing. The employer must furnish the employee with two
written notices before the termination of employment can be effected: (1) the first
apprises the employee of the particular acts or omissions for which his dismissal is
sought; and (2) the second informs the employee of the employer's decision to dismiss
him. x x x39ChanRob lesVirtua lawl ibrary

During the proceedings below, respondent questioned the cooperative's decision

requiring her to collect the credits from Falgui and/or Kotoken, claiming this was illegal
and improper. But there is nothing wrong in requiring her to do so; this is simply
ordering her to restore the amounts she unlawfully released. She may do so in any way
she deemed best: either by paying the amounts from her own funds, or by collecting
the same from the borrowers themselves. The cooperative could have rephrased its
directive to her by simply ordering her to restore the lost amounts. This is pretty much
standard procedure in cases of this nature: the accused in malversation cases is
required to restore the amount lost, and bank tellers or cashiers are told to pay back
what the banks lose through their willful or negligent acts.

There is also nothing irregular in the cooperative's decision to require from respondent
and her colleagues the collection or restoration of the amounts that were illegally
released, with a threat that in case of failure to do so, they would be dismissed from
employment. Respondent and her colleagues were simply given the opportunity to clear
themselves from the serious infractions they committed; their failure to restore the
amounts lost in any manner could not prevent the imposition of the ultimate penalty,
since their commission of the serious offense has been adequately shown. In fact,
respondent voluntarily confessed her crime. To the mind of the Court, respondent and
her colleagues were afforded ample opportunity to clear themselves and thus restore
the confidence that was lost, and TAMPCO was not precluded from testing their resolve.

Finally, while the CA finds that it is unfair for TAMPCO to treat respondent differently
from the former General Manager, who was permitted to retire and collect his benefits
in full, the appellate court must nonetheless be reminded that "[t]he law protects both
the welfare of employees and the prerogatives of management. Courts will not interfere
with prerogatives of management on the discipline of employees, as long as they do not
violate labor laws, collective bargaining agreements if any, and general principles of
fairness and justice."40 Moreover, management is not precluded from condoning the
infractions of its employees; as with any other legal right, the management prerogative
to discipline employees and impose punishment may be waived.41 As far as respondent
is concerned, the cooperative chose not to waive its right to discipline and punish her;
this is its privilege as the holder of such right. Finally, it cannot be said that respondent
was discriminated against or singled out, for among all those indicted, only the former
General Manager was accorded leniency; the rest, including respondent, were treated
on equal footing. As to why the former General Manager was allowed to retire, this
precisely falls within the realm of management prerogative; what matters, as far as the
Court is concerned, is that respondent was not singled out and treated unfairly. chanrobleslaw

WHEREFORE, the Petition is GRANTED. The assailed September 15, 2011 Decision
and July 11, 2012 Resolution of the Court of Appeals in CA-G.R. SP No. 114753
are REVERSED and SET ASIDE. The November 25, 2009 Decision of the National
Labor Relations Commission in NLRC CA-No. 050848-06 (RA-06-09)
is REINSTATED and AFFIRMED.