urc v castillo

9/26/2015 SUPREME COURT REPORTS ANNOTATED VOLUME 701

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G.R. No. 189686. July 10, 2013.*

UNIVERSAL ROBINA CORPORATION and LANCE Y.GOKONGWEI, petitioners, vs. WILFREDO Z. CASTILLO,respondent.

Labor Law; Termination of Employment; Separation Pay; Asthe rule now stands, the award of separation pay is authorized inthe situations dealt with in Articles 283 and 284 of the LaborCode, but not in terminations of employment based on instancesenumerated in Article 282.—The leading case of Philippine LongDistance Telephone Co. v. NLRC, 164 SCRA 671 (1988),enunciated the ruling that separation pay “as a measure of socialjustice” is allowed in those instances where the employee isvalidly dismissed for causes other than serious misconduct orthose reflecting on his moral character. The case of Toyota MotorPhils. Corp. Workers Association (TMPCWA) v. NLRC, 537 SCRA171 (2007), expanded the doctrine laid down in PLDT by addingdismissals other than those under Art. 282 of the Labor Code, likewillful disobedience, gross and habitual neglect of duty, fraud orwillful breach of trust, and commission of a crime against theemployer or his family which would preclude award of separationpay. As the rule now stands, the award of separation pay isauthorized in the situations dealt with in Articles 283 and 284 ofthe Labor Code, but not in terminations of employment based oninstances enumerated in Article 282.

Same; Same; Same; An employee who has been dismissed fora just cause under Article 282 of the Labor Code is not entitled toseparation pay.—In Bank of the Philippine Islands v. NLRC andArambulo, 621 SCRA 283 (2010), we ruled that an employee whohas been dismissed for a just cause under Article 282 of the LaborCode is not entitled to separation pay. The complainant thereinwas likewise dismissed on the ground of loss of trust andconfidence. Applying that rule to the instant case, we here holdthat respondent is not entitled to separation pay.

_______________* SECOND DIVISION.

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VOL. 701, JULY 10, 2013 65Universal Robina Corporation vs. Castillo

PETITION for review on certiorari of the decision andresolution of the Court of Appeals.

The facts are stated in the opinion of the Court. Laguesma, Magsalin, Consulta and Gastardo Law

Offices for petitioners.

PEREZ, J.:Whether a validly dismissed employee is entitled to

separation pay is the meat of this controversy.The instant petition for review assails the Decision1 and

Resolution2 of the Court of Appeals dated 20 July 2009 and17 September 2009, respectively, in CAG.R. SP. No.105604.

The facts, as culled from the records, follow.Respondent Wilfredo Z. Castillo (Castillo) was hired by

petitioner Universal Robina Corporation (URC) as a trucksalesman on 23 March 1983 with a monthly salary ofP4,000.00. He rose from the ranks and became a RegionalSales Manager, until his dismissal on 12 January 2006.

As Regional Sales Manager, respondent was responsiblefor planning, monitoring, leading and controlling allactivities affecting smooth sales operation. He isparticularly in charge of the operational andadministrative functions encompassing the formulation ofsales forecast, selling expense, budget preparation andcontrol, sales analysis, formulation and review of policiesand procedures affecting the sales force and serviceprovided to customers, including representation in keepingand maintaining key accounts of the company. He islikewise tasked to transact, sign and represent thecompany

_______________1 Penned by Associate Justice Remedios A. SalazarFernando with

Associate Justices Magdangal M. De Leon and Ramon R. Garcia,concurring. Rollo, pp. 285286.

2 Id., at p. 307.

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66 SUPREME COURT REPORTS ANNOTATEDUniversal Robina Corporation vs. Castillo

in all its dealings with key accounts or customers subjecthowever to his selling expense budget duly approved byURC Management. Consequently, he is obliged to give anaccount of all his dealings or transactions with all hiscustomers to URC.3 His area of responsibility covered someparts of Laguna, including Liana’s Supermart (Liana) inSan Pablo City, Laguna.

On 19 August 2005, URC’s Credit and CollectionDepartment (CCD) Analyst in Silangan, Laguna Branchnoted an outright deduction in the amount of P72,000.00tagged as Gift Certificate (GC) per Original Receipt No.625462 dated 18 August 2005. The CCD Analyst found theissuance of GCs as unusual. This finding prompted URC’sCorporate Internal Audit (CIA) to conduct a routine auditof the unresolved accounts of Liana’s account receivables.

Based on its investigation, CIA came up with thefollowing findings:

1. Per Ms. Prezy Manansala, Liana’s San Pablo Branch Manager,URC agreed to sponsor their “Back to School Promo”.

2. She showed us their copy of the Account Development Agreement x xx signed by URC Salesman and Ms. Manansala as proof that therewas indeed an agreed promotional activity.

3. Liana’s issued GCs worth P72,000.00 to RSM Castillo. Issuance ofLiana’s GCs was covered by Charge Sales Invoice Nos. 2189 and2190 dated June 25, 2005. As claimed by Ms. Manansala, thisissuance of GC is part of the promo activity.

x x x x[4.] Ms. Manansala informed us that the “Back to School Raffle

Promo” was cancelled. x x x.

_______________

3 Id., at p. 72.

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[5.] We showed her photocopies of Charged Invoices [N]os. 2189 and2190 x x x. Ms. Manansala confirmed that RSM Castillo is the onewho signed on the received x x x portion of the documents weshowed.




[6.] Copies of the Charged Invoice [N]os. 2189 and 2190 weremarked/stamped paid as these charges were already deducted fromtheir payment to URC.

x x x x[7.] Based on the report of Mr. Patrick Ong, Trade Marketing

personnel, dated August 29, 2005, he mentioned the followingexceptions with regard to the subject promo activity:

a. The “cut case” display was only implemented in June 2005.b. No shelf space added.c. According to Liana’s San Pablo Branch Manager, URC through

RSM Wilfredo Castillo received Gift Certificates worth P72,000.00from Liana’s.

x x x x[8.] On September 29, 2005, Liana’s HO officer confirmed that

P72,000.00 worth of Gift Certificates were issued per ChargedInvoice Nos. 2189 and 2190 dated June 25, 2005.

[9.] As of audit date, the P72,000.00 worth of promo deductionsrepresented by the Gift Certificates allegedly received by RSMCastillo still floats or remains unresolved in the URC AccountReceivable records. x x x.4

The CIA suspected that respondent might havecommitted an act of fraud against the company and Liana’sfor his personal gain.

_______________4 Records, pp. 2728.

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Liana’s Vice President for Marketing Mr. Peter Syconfirmed the receipt of the GCs by respondent.5

On 14 November 2005, respondent was asked to explainin writing why the company should not institute theappropriate disciplinary action against him for possibleviolation of Offenses Subject to Disciplinary Action 2.04, towit:

Directly or indirectly obtraining or accepting money oranything of value by entering into unauthorizedarrangement/s with supplier/s, client or other outsider/s.6




On 17 November 2005, respondent submitted hisexplanation. He recounted that Liana’s launched a “Back toSchool Raffle Promo” sponsored by URC and covered byAccount Development Agreement (ADA) No. WZC05046.The promotion cost URC sponsorship expenses amountingto P92,431.00. The tradeoffs included in said promo are:

1. Raffle Draw2. Additional shelf Space for New products3. Cut case display4. Increment of 15% (Value)7

The raffle draw portion of the promotion, however, wascancelled by Liana’s due to cost implications and difficultyin obtaining permits. In lieu of the raffle draw, additionalcut case display for 3 categories (snacks, beverages andfoods), together with 15% sales increment, was offered byLiana’s. By virtue of said revisions, Liana’s charged anddeducted P72,000.00 from URC’s collectibles whichcorrespond to the monthly rentals of the cut case display.8Respondent denied accepting any gift certificate.

_______________5 Id., at p. 110.6 Id., at p. 34.7 Id., at p. 35.8 Id.

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Another memo was sent to respondent on 8 December2005 directing him to explain why no administrativesanctions should be meted against him for the followingacts which are deemed inimical to the interest of thecompany:

1. You entered into an agreement with Liana’s Supermarket for theuse of cutcase displays for the period from June 1, 2005 to August31, 2005, inclusive, coinciding with the inclusive period of theimplementation of the Account Development Agreement (ADA No.WZC05046), and admitted that you did not have any authority toenter into such contract.

2. You signed two (2) blank Charge Invoices of Liana’s Supermarket towarrant the payment of the rentals for three (3) cutcase displays







during the said period with the use thereof as basis for deductingthe amount of PHP 72,000.00 from the account of the Company,without the authority to do so.

3. Your act of signing the blank Charge Invoices included the paymentof rental for the cutcase display that should have been part of theconcessions without rental fees as per the supposed revised ADAprepared by Salesman Jose Moises C. Villareal, thereby resulting inundue payment to Liana’s Supermarket amounting to PHP24,000.00.9

Respondent repeatedly denied that he signed two (2)blank Charge invoices intended for GCs. He also admittedthat only two (2) cutcases should have been charged andhe assumed liability for the undue payment of one (1) cutcase display.

Clarification inquiries were likewise held on 8December 2005.

On 9 January 2006, respondent was served a writtennotice of termination in the following tenor:

_______________9 Id., at p. 40.

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W[ith] deep regret, we hereby inform you that, afterDUE PROCESS, you were found guilty of acts inimical tothe interest of the Company and for breach of trust &confidence.

In the series of administrative investigations, thefollowing has been clearly established;

1. You signed two (2) blank Charge Invoices of Liana’sSupermarket. You failed to satisfactorily explain yourfailure to exercise the slightest degree of prudence requiredof your position as SENIOR MANAGER, when you signedthe “blank” Charge Invoices despite full knowledge that thesame will be used to cause the deduction of the subjectamount from the account of URC.

2. You authorized the changes in ADA despite of thefact that you have no authority to enter into any short termor long term contract for the rental of cutcase displays andshelf spaces.




In view of the above, your services shall be terminatedfor cause effective immediately. In addition, you arerequired to restitute the amount of P72,000.00 that Liana’sSupermarket charged against the account of URC for thegift certificate you unduly received.10

On 30 May 2006, respondent filed a complaint for illegaldismissal against petitioners URC and its President andChief Operating Officer (COO) Lance Gokongwei. Healleged that the grounds for which he was dismissed weretotally different from the charges leveled against himduring the investigation.11

On the other hand, URC countered that respondent wasdismissed for a just and valid cause.

On 12 June 2007, the labor arbiter rendered a decisiondeclaring respondent to have been illegally dismissed andor

_______________10 Rollo, p. 167.11 Records, pp. 23.

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dered the payment of backwages and separation pay.The dispositive portion of the Decision reads:

WHEREFORE, judgment is hereby rendered declaringcomplainant’s dismissal as ILLEGAL. Respondents are herebyordered jointly and severally liable:

1) To pay complainant the amount of P1,343,000.00,representing his backwages computed only up to thepromulgation of this decision;

2) To pay complainant the amount of P1,728,000.00,representing his separation pay;

3) To pay complainant an amount equivalent to ten (10%)percent of the total judgment award, as and for attorney’sfees.

Other claims are dismissed for lack of merit.12

The Labor Arbiter ruled that respondent was asked toexplain on charges which are different from the charges for





which he was dismissed. The Labor Arbiter also held thatURC failed to substantiate the charges against respondent.

On appeal, the National Labor Relations Commission(NLRC) found the appeal meritorious and reversed thedecision of the labor arbiter. According to the NLRC, URChad more than sufficient proof that respondent violated itstrust. Respondent sought reconsideration of the reversal,but his motion for reconsideration was denied.

This prompted respondent to file a petition for certioraribefore the Court of Appeals, which upheld his dismissal butawarded him separation pay “as a form of equitable relief.”In the final paragraphs, as well as in the dispositive, theCourt of Appeals stated:

_______________12 Rollo, p. 96.

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In fine, this Court finds just cause for petitionerCastillo’s dismissal.

Petitioner nonetheless pleads for compassion, citing thefact that he honorably served the company for abouttwentythree (23) years and this is his only and first offense.

Mindful of the Court’s duty to accord compassion to theworking man in light of the social justice mandate in ourConstitution, this Court deems proper an award ofseparation pay to petitioner Castillo as a form of equitablerelief.

WHEREFORE, premises considered, the instant petitionfor certiorari is PARTLY GRANTED. Private respondentURC is hereby ordered to pay SEPARATION PAY topetitioner Castillo for his twentythree (23) years of servicein the company, equivalent to onehalf (1/2) month salaryfor every year of service inclusive of allowances.13

URC moved for partial reconsideration but the Court ofAppeals denied the motion.

Before this Court, URC raises the lone argument thatrespondent is not entitled to separation pay in accordancewith prevailing law and jurisprudence.14 Citing case law,URC contends that if an employee’s act or violation of the




company’s code constitutes serious misconduct or isreflective of lack of moral character, then the employer isnot required to give the dismissed employee financialassistance or separation. URC maintains that respondent’sacts of signing blank Charge Invoices without anyauthority and receiving P72,000.00 worth of GCs for hispersonal benefit clearly constitute serious misconductwhich preclude an award for separation pay.

_______________13 Id., at p. 295.14 Id., at p. 34.

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In his Comment, respondent stresses that based on thetenor of the termination letter, he was never dismissed onthe ground of gross misconduct. Respondent concedes thatat most, he may have committed simple negligence. Hereiterates that he did not commit any act constitutingserious misconduct nor does it reflect any deterioration inhis moral character.

We resolve to grant the petition.Why and when separation pay may be awarded or

denied, has been the subject of many cases. We pick out therulings pertinent to the case at hand.

The leading case of Philippine Long Distance TelephoneCo. v. NLRC15 enunciated the ruling that separation pay“as a measure of social justice” is allowed in those instanceswhere the employee is validly dismissed for causes otherthan serious misconduct or those reflecting on his moralcharacter.16 The case of Toyota Motor Phils. Corp. WorkersAssociation (TMPCWA) v. NLRC17 expanded the doctrinelaid down in PLDT by adding dismissals other than thoseunder Art. 282 of the Labor Code, like willful disobedience,gross and habitual neglect of duty, fraud or willful breachof trust, and commission of a crime against the employer orhis family which would preclude award of separation pay.

As the rule now stands, the award of separation pay isauthorized in the situations dealt with in Articles 283 and284 of the Labor Code, but not in terminations of





employment based on instances enumerated in Article282.18 Article 282 states that:

_______________15 G.R. No. L80609, 23 August 1988, 164 SCRA 671.16 Id., at p. 682.17 G.R. Nos. 158786 & 158789, 15879899, 19 October 2007, 537 SCRA

171, 223.18 Central Philippines Bandag Retreaders, Inc. v. Diasnes, G.R. No.

163607, 14 July 2008, 558 SCRA 194, 204205 citing San Miguel

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ART. 282. Termination by employer.—An employer mayterminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by theemployee of the lawful orders of his employer orrepresentative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;(c) Fraud or willful breach by the employee of the trust

reposed in him by his employer or duly authorizedrepresentative;

(d) Commission of a crime or offense by the employee againstthe person of his employer or any immediate member of hisfamily or his duly authorized representatives; and

(e) Other causes analogous to the foregoing.

Central Philippines Bandag Retreaders, Inc. cautionedlabor tribunals in indiscriminately awarding separationpay as a measure of social justice, in this wise:

x x x [L]abor adjudicatory officials and the CA mustdemur the award of separation pay based on social justicewhen an employee’s dismissal is based on seriousmisconduct or willful disobedience; gross and habitualneglect of duty; fraud or willful breach of trust; orcommission of a crime against the person of the employer orhis immediate family — grounds under Art. 282 of theLabor Code that sanction dismissals of employees. Theymust be most judicious and circumspect in awardingseparation pay or financial assistance as the constitutionalpolicy to provide full protection to labor is not meant to be







an instrument to oppress the employers. The commitmentof the Court to the cause of labor should not embarrass usfrom sustaining the employers when they are right, as here.In fine, we should be more cautious in

_______________Corporation v. Lao, 433 Phil. 890, 899890; 384 SCRA 504, 510 (2002).

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awarding financial assistance to the undeserving and thosewho are unworthy of the liberality of the law.19

Indeed, respondent has committed acts constitutingwillful breach of trust and confidence reposed on him byURC based on the following facts established by the Courtof Appeals, thus:

x x x The principal charge against petitioner Castillo washinged upon “unauthorized arrangements” which heallegedly entered into. Petitioner Castillo’s unauthorizeddealing with respect to the changes in the AccountDevelopment Agreement is exactly the offending cause ofthe host of infractions he committed, i.e., his neglect insigning the blank charge invoices and his improper receiptof gift certificates for his personal gain. These acts takentogether constitute a breach of the trust and confidencereposed on petitioner Castillo by private respondent URC.x x x.

Indeed, petitioner Castillo’s acts of receiving the giftcertificates and signing the blank invoices are closelyintertwined and inextricably connected with each other. Inother words, petitioner Castillo’s acquisition of the giftcertificates could not have been facilitated without himsigning the blank invoices. Such signing was a ruse to coverup his receipt of the gift certificates. Oddly enough,petitioner Castillo readily admitted to signing receipt onCharge Invoices Nos. 2189 and 2190 covering the giftcertificates in the amounts of P60,000.00 and P12,000.00,respectively, but made the qualification that the same werein blank when he signed on them. Such claim was obviouslyto create the impression that he was really not aware of anygift certificates and that whatever misstep he committed



was merely brought about by his good faith. Nonetheless, the evidence on record negates petitioner

Castillo’s claim of good faith and furnishes suffi

_______________19 Id., at p. 207.

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cient basis for the breach of trust and loss of confidencereposed on him by private respondent URC. PetitionerCastillo’s receipt of the gift certificates is categoricallyconfirmed by Peter Sy, the Vice President of Marketing ofLiana’s Supermarket. This piece of evidence, coming from adisinterested party, speaks eloquently of petitionerCastillo’s perfidy. Such an affirmative statement coupledwith petitioner Castillo’s signatures on the charge invoicesconvincingly established the fact that he indeed received theP72,000.00 worth of gift certificates.

Assuming that he did not receive the gift certificates,petitioner Castillo’s ready admission that he signed thecharge invoices even if these were blank clearly shows hisnegligence and utter lack of care in the interests of privaterespondent URC. As a Regional Sales Manager, petitionerCastillo occupied a position or responsibility and as such, heshould have known that he placed the interests of thecompany at a disadvantage by signing the blank chargeinvoices. Because of such act, private respondent URC wasprejudiced by no less than P72,000.00. This alone issufficient cause for breach of trust and loss of confidence.20

In this case before us, respondent did not appeal thedecision of the Court of Appeals. He is deemed to haveaccepted the findings and conclusion of the appellate courtpertaining to the validity of his dismissal.

In Bank of the Philippine Islands v. NLRC andArambulo,21 we ruled that an employee who has beendismissed for a just cause under Article 282 of the LaborCode is not entitled to separation pay. The complainanttherein was likewise dismissed on the ground of loss oftrust and confidence. Applying that rule to the instant case,we here hold that respondent is not entitled to separation




pay.

_______________20 Rollo, pp. 292294.21 G.R. No. 179801, 18 June 2010, 621 SCRA 283, 293.

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WHEREFORE, the petition is GRANTED. The 20 July2009 Decision and 17 September 2009 Resolution of theCourt of Appeals in CAG.R. SP. No. 105604 areREVERSED and SET ASIDE. The Resolution dated 31March 2008 of the National Labor Relations CommissionREINSTATED.

SO ORDERED.

Carpio (Chairperson), Del Castillo, Mendoza ** andPerlasBernabe, JJ., concur.

Petition granted, judgment and resolution reversed andset aside.

Notes.—An award of back wages and separation pay isjustified only if there is a finding of illegal dismissal. (DelaCruz vs. CocaCola Bottlers Phils., Inc., 594 SCRA 767[2009])

Entitlement of qualified employees to receive separationpay and retirement benefits is not proscribed by the 1987Constitution. (Betoy vs. The Board of Directors, NationalPower Corporation, 658 SCRA 420 [2011])

——o0o——

_______________** Per Special Order No. 1484 dated 9 July 2013.

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