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AGRIPINO V. MOLINA, Petitioner, versus PACIFIC PLANS, INC., Respondent.2006 Mar 101st DivisionG.R. No.

165476D E C I S I O N

CALLEJO, SR., J.:

Before us is a Petition for Review on Certiorari assailing the Decision[1] and Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 81298 reversing the Decision[3] of the National Labor Relation Commission (NLRC) in NLRC-NCR (South) Case No. 30-07-03393-01.

Pacific Plans, Inc. (PPI) is a domestic corporation engaged in the business of selling pre-need plans, such as educational, pension, and memorial plans.[4] It maintains regional offices throughout the Philippines. At the time material to this case, Metro Manila regional offices were divided into two sales divisions - the South Sales Division and the North Sales Division. Metro Manila VI was part of the North Sales Division.[5] Among the corporate officers of PPI were Geoffrey Martinez, Executive Vice-President for Finance; Luciano Abia, Senior Assistant Vice-President, Metro Manila Marketing Division; and Atty. Manuel Reyes, the Head of the Legal Department.[6] Roy Padiernos then occupied the position of Regional Manager of Metro Manila VI.[7]

PPI solicited subscribers and buyers of its pre-need plans through clusters of sales associates. One of them was Ruth Padiernos, wife of Roy Padiernos.[8]

Sometime in October 1994, PPI hired Agripino Molina as Regional Manager of Metro Manila VI, replacing Roy Padiernos who was promoted as First Vice-President for Marketing Operations. As Regional Manager, Molina performed both administrative and marketing functions, whose duties and responsibilities included the following:

a. formulating and recommending short and long range marketing plans for the Region and executing approved plans;

b.

generating new and conserving existing pre-need plan businesses;

c. motivating, training, and developing a dedicated and effective counselor force;

d. conducting researches to determine sales potentials and share of the market, pricing, and profitability of Company's products, competition and the directing of product development for the Region;

e. hiring and terminating counselors, unit managers or group managers in accordance with policies previously laid out;

f. recommending the creation of additional positions or termination of services of any employee within the Region;

g. recommending promotions or changes in salaries of personnel within the Region and lateral shifts of supervisor, their assistants, understudies of positions of equal rank;

h. training and developing understudies for each position within the Region to provide immediate replacement whenever vacated;

i. changing methods and procedures not affecting the other Regions, provided, however, that radical changes should first be cleared with [the] superior;

j. controlling the operations of the Region and establishing a system of periodic work reporting;

k.

coordinating the Regions activities with those of the other Regions;

l. keeping [the] superior informed of [the] Region's activities and specially of [the] decision on matters for which he may be held responsible;

m.

realizing the Companys objective for service, growth, and profit;

n. establishing and maintaining harmonious and dignified relationship with plan holders, counselors, employees, the public, government instrumentalities, other pre-need plan companies; [and]

o. further enhancing the prestige of the Company and maintaining its position of leadership in its field.[9]

Since Metro Manila VI was consistently on top in terms of nationwide sales and productivity, Molina was promoted Assistant Vice-President with the same functions as those of a regional manager of the same sales region.[10]

Caritas Health Shield, Inc. (Caritas for brevity), a health maintenance organization (HMO) engaged in selling health and hospitalization plans, was established on December 16, 1998. Geoffrey Martinez resigned as Executive Vice-President of PPI and became the President and Chief Executive Officer of Caritas.[11] Among the incorporators and members of the Board of Directors were Luciano Abia and Atty. Manuel Reyes.[12] Molina was hired as Assistant Vice-President and Marketing Head of Area 10. His wife, Fe Molina, was the head of a sales agency of Caritas.

In the meantime, from February 2000, there was a considerable decrease in the sales output production of PPIs Metro Manila Region VI.[13]

On March 21, 2000, Molina received a Memorandum from PPI, through its Senior Assistant Vice-President for Human Relations, Patricio A. Picazo, informing him that, based on written reports, he committed the following: 1) recruiting and pirating activities in favor of Caritas, in particular, initiating talks and enticing associates to join Caritas, and a number of associates have already signed up; 2) he called for a meeting with his associates sometime in November 1999, and solicited contributions from them for the bill but later asked for reimbursement from the company; and 3) acts of misdemeanor on several occasions, such as coming to the office under the influence of liquor, initiating a smear campaign against PPI, and other acts inimical to the companys interest.[14] Molina was also required to

submit, on March 23, 2000, a written explanation why he should not be held administratively liable for said acts which, it opined, might constitute conduct unbecoming of an officer, conflict of interest, and breach of trust and confidence. Molina was also informed that he was preventively suspended pending formal investigation effective immediately until April 24, 2000.[15]

In a letter addressed to Picazo dated March 22, 2000, Molina categorically denied the acts attributed to him. He, however, requested that he be furnished with copies of the alleged written reports to enable him to prepare the required written explanation.[16] However, instead of acceding to the request of copies of the written reports, Picazo wrote a letter dated April 3, 2000, citing the particulars of the charges against Molina, thus:

I. Conflict of Interest

1. Recruiting and pirating activities in favor of Caritas Health Shield, Inc.

* You have acted as conduit for Caritas in recruiting/pirating Mr. Restie Acosta on March 04, 2000 and Ms. Eppie Acosta on March 06, 2000.

*Your failure to stop and/or tolerating your wife's activities in recruiting for Caritas Ms. Lennie Gatmaitan who belongs to Ms. Celeste Villena, a PPI GA.

II. Misappropriation of Funds

1. Solicitation of associates' personal funds in the amount of P200.00 per person, to which 12 persons contributed for a total P2,400.00, for payment of official function during the meeting held at Barrio Fiesta last November 27, 1999. Amount solicited was subsequently reimbursed from the company but not returned to the associates concerned.

III. Dereliction of Duties

1. You failed to prevent associates from leaving the company in favor of competitors, thus causing demoralization among your sales associates.

2.

You even encouraged associates to transfer to Caritas.

IV. Conduct unbecoming of a Company Officer

1. Often reporting to office under the influence of liquor.

2. Sowing intrigue in the case of Vilma del Rosario which almost caused her early retirement from the company and transfer to Caritas.

3. Sowing intrigues between Mr. Roy Padiernos and Mr. Abia.

4. Showing disrespect to immediate superior, Mr. Roy Padiernos, by shouting at him and walking out in one of the meetings called by him after the retirement of Atty. Haceta.[17]

During the investigation the following day, April 4, 2000, Molina reiterated his request to be provided with a copy of the written reports.[18] Picazo denied the request in a Memorandum dated April 6, 2000, and reiterated his order for Molina to submit his written explanation on April 11, 2000, and to address his concerns during the investigation scheduled on April 14, 2000.[19] Molina failed to submit any written explanation. On April 24, 2000, PPI issued a Memorandum advising Molina that he would be reinstated in the payroll effective April 25, 2000 without requiring him to report for work during the pendency of his investigation.[20]

Molina filed a Motion to Dismiss Complaints and Motion for Full Reinstatement on May 2, 2000.[21] He asserted that the charges should be dismissed since he was compelled to prepare a written explanation on the basis of summarized specific acts, denying him the right to be informed of the exact charges and to confront

those who made written reports against him. As to the issue of reinstatement, he alleged that he should be allowed to report for work, conformably with Rule XIV, Section 4 of the Implementing Rules of the Labor Code.[22]

On May 11, 2000, Picazo wrote Molina that his motion to dismiss the charges would be resolved after the investigation. He was warned that his non-appearance at the investigation would be considered a waiver of his right to be heard.[23]

On the same day, May 11, 2000, Abia issued an inter-office Memorandum announcing the appointment of Sercy F. Picache as the Officer-In-Charge (OIC) for Metro VI and XVI effective May 6, 2000.[24]

Molina and his counsel attended the May 19, 2000 investigation and filed a Motion to Suspend Proceedings,[25] praying that the administrative investigation be deferred until the resolution of the prejudicial issues raised in his previous motion. [26]

When Picazo failed to respond, Molina filed, on June 1, 2000, a complaint for damages with a prayer for a temporary restraining order and preliminary injunction based on Article 19 of the New Civil Code. PPI filed a Motion to Dismiss, maintaining that the courts have no jurisdiction over matters arising from employee-employer relationship. The trial court denied the motion as well as PPIs motion for reconsideration.[27]

Meanwhile, in letter dated June 13, 2000, Molina was notified of the termination of administrative investigation. PPI considered his failure to submit a written explanation as a waiver of his right to be heard, and as such, the investigating committee had evaluated the evidence at hand and submitted its recommendations to the higher management for decision. Also, it confirmed the denial of his Motion to Suspend Proceedings.[28]

On June 23, 2000, the trial court issued an Order granting Molina's prayer for temporary restraining order, which was later made permanent per its Order dated July 12, 2000. The motion for reconsideration filed by PPI on July 26, 2000 was likewise denied. Thereafter, it filed a petition for certiorari before the CA, assailing the writ of preliminary injunction issued by the RTC and its order denying the

motion to dismiss the complaint. On July 16, 2001, the CA rendered judgment in favor of PPI and nullified the writ of preliminary injunction issued by the RTC as well as the order denying the motion of PPI for the dismissal of the complaint.[29]

On July 30, 2001, PPI resolved to dismiss Molina from employment on its finding that the latter violated its standard operating procedure.[30]

Molina forthwith filed a complaint with the NLRC against PPI and Alfredo C. Antonio, Patricio A. Picazo, and Certerio B. Uy, in their capacity as President, Senior Assistant Vice-President of Human Resources Development, and Division Head, respectively, for illegal dismissal and illegal suspension with claim for monetary benefits.

In his Position Paper,[31] Molina principally argued that he was denied the right to due process due to the failure of PPI to furnish him a copy of the written reports of the sales associates and co-employees, the basis of the accusations against him. Since an OIC for his position was already appointed even before all his pending motions were resolved, he surmised that there were really no such reports, and that the alleged accusations were merely concocted in order to replace him with someone close to Picazo. Molina maintained that since he was denied the opportunity to dispute the authenticity and substantive contents of the reports, his alleged violations of company rules and policies were hearsay and, therefore, lacked probative value. Besides, the termination of his employment was made without the 30-day prior notice; his dismissal from employment took effect immediately, only six days after PPI received the CA decision decreeing that the NLRC has the rightful jurisdiction over the case. Thus, he prayed for the following relief:

1.

Total Money Claims

a) Salary with (overriding) commission from March 21 to April 24, 2000 suspended w/o pay - P45,000.00 (P25,000[.00] mo. salary & P20,000[.00] [overriding])

b) Unpaid (overriding) commission from April 25, 2000 to present P400,000[.00]

c)

Unpaid salary from August 1, 2001 to present - P125,000[.00]

d) One mo. salary for every yr. of service in lieu of reinstatement - 7 years = P175,000.00

2.

Leave Credits - P100,000.00 for 7 years

3.

Profit Bonus for Year 2000 & 2001 - P400,000.00

4.

Moral Damages - P300,000.00

5.

Exemplary Damages - P500,000.00

6. Actual Damages - for lifetime medical attendance and medicines at 16 more years life expectancy - P1,249,384.00

7.

Attorney's Fees - P300,000.00

8. Amount debited from complainant's ATM [as partial payment for hospitalization expenses incurred by him which PPI had advanced] P12,000.00

9.

Retention of complainant's car, as additional penalty for illegal dismissal.[32]

For its part, PPI stressed that Caritas was its competitor in the pre-need plans business, and that Molina and his wife recruited and enticed some of the sales associates of PPI to work for Caritas, in violation of its policy against conflict of interest. Some of these sales associates were the spouses Eppie and Restie Acosta,

Lenita Gatmaitan, Lolita Casaje, Lydia Magalso, Lydia San Miguel, and Alice Halili, and including Vilma del Rosario, the secretary of Roy Padiernos. PPI, likewise, averred that Molina had the habit of coming to the office under the influence of liquor; he constantly shouted to lady employees and solicited money from his sales associates in connection with an official company function without returning the same after PPI reimbursed him for the expenses incurred; disseminated intrigues and created divisiveness among the employees and PPIs senior officers; and disrespected Padiernos, his superior, by shouting at him during one of the meetings with other senior officers, and walked out of the meeting afterwards. Supporting its claims that Molina committed breach of trust, serious misconduct, fraud, and gross neglect of duty by reason thereof, PPI appended to its position paper the statements/affidavits of Marivic Uy, Ruth and Roy Padiernos, Eppie and Restie Acosta, Celeste Villena, and Vilma del Rosario.[33]

On the claim of Molina that he was denied due process, PPI averred that he was given sufficient opportunity to present his personal submissions before finally issuing the notice of dismissal but Molina persistently refused to submit his explanation.[34] PPI further argued that he was not entitled to the payment of 13th and 14th month salaries, overriding commission, profit bonus, actual, moral or exemplary damages, and attorneys fees. PPI maintained that, under Article 217(a) of the Labor Code, as amended, and the ruling of this Court in Baez v. Valdevilla, [35] Molina should be held liable for P1,000,000 as moral damages and an amount not less than P428,400.00 for the salary he received during the time when the restraining order/ writ of injunction was erroneously enforced.[36]

In his Reply, Molina averred that the affidavits submitted by PPI were antedated since he was never furnished copies of said reports/affidavits despite demands. PPI even failed to present the reports/affidavits before the RTC where his complaint for damages against PPI and its officers was pending. He and Roy Padiernos had been at odds because the latter appointed his brother and wife as agency manager and group manager of PPI to which he objected. Molina averred that the P200.00 collected from each of the employees of PPI during their luncheon meeting was a voluntary contribution, and that they spent P4,000.00, more than the amount collected from the employees. He contended that he had no motive to recruit sales associates or employees of PPI to be employed by Caritas because the depletion of sales associates would diminish his effectiveness as an area manager, including his overriding commission, profit bonus and fringe benefits. He admitted that he may have raised his voice in the heat of arguing a point during meetings, but averred that it should not be considered as disrespect or misdemeanor.

Molina further emphasized that Caritas was not a competitor of PPI, as the former was engaged in selling health care and is supervised by the Department of Health (DOH), while the latter is into the business of selling pre-need plans and supervised by the Securities and Exchange Commission (SEC). Finally, he averred that the socalled associates of PPI were not actually employees but independent journeymen who derived income on commission basis, free to engage in any kind of selling activities not in direct competition with PPI.

Molina admitted having had drinking sessions with Certerio Uy, Ilustre Acosta and Reynaldo Villena, who provided the hard liquor and pulutan, but only after office hours. He claimed that his officemates mistook him for being drunk when he went to his office even after office hours because of his mestizo complexion.

In its response, PPI averred that, based on the sales data, the acts of Molina caused demoralization of the sales associates, resulting in a sudden decrease of the region's output from P343,009,643.00 in 1998 to P263,099,773.00 in 1999, and P228,752,090.00 in 2000.[37] PPI insisted that he should be held liable for not less than P507,348.00, P2,000,000, and P1,000,000 as actual, moral and exemplary damages, and attorney's fees, respectively, and P273,600.00 which was the balance on his car plan agreement with PPI.[38]

In his Rejoinder[39] and Sur-Rejoinder[40] Molina submitted the affidavit of Geoffrey Martinez, who belied the reports of Uy, Villena, Del Rosario, and the spouses Padiernos and Acosta.[41] He also appended the affidavits of Natividad Gatchalian, [42] San Miguel,[43] Gatmaitan,[44] and Magalso,[45] who all disputed, in one way or another, Molina's alleged violations. To counter the imputations of conflict of interest, Molina also alleged that Abia and Atty. Reyes were incorporators of Caritas,[46] and that Villena had in her possession a license to sell Caritas products. [47] With regard to the declining sales output of his region, Molina attributed the same to the Asian regional crisis that hit the Philippines sometime in 1997. He noted, however, that the same records revealed that despite the financial bane, Metro VI still managed to be on top from 1998 up to 2000 in terms of its sales relative to the other regions.

Molina denied any liability for the car plan, claiming that he already settled the obligation when PPI demanded full payment as, in fact, all the papers related thereto, including the Release of Mortgage, were already in his possession.

In its Sur-Rejoinder,[48] PPI stressed its claim that Caritas was a business competitor, as may be inferred from the benefits available under its health care agreement and the pre-need contract of PPI. Particularly with regard to the pension plan contract, it noted the following similarities: (a) Caritas also provides Term Life Insurance, Accidental Death Insurance, Credit Life Insurance, and Waiver of Installment Due to Disability; (b) there are similarities in the provisions on contract price, grace period, cancellation, reinstatement, and transfer and termination; and (c) unlike other health care programs that provide a one-year coverage, renewable every year thereafter, Caritas offers a continuous five year coverage and sells the same in units payable in five-year installment basis, with maturity period and guaranteed return of investment in the form of Full-Term Medical Expense Fund computed at P10,000.00 for every unit purchased with increment of 10% yearly after the maturity period, which may be withdrawn in cash by its member. It stressed that this was similar to the pension program offered by PPI which was also sold in per unit basis, payable by installment in certain number of years or lump sum payment, and upon maturity also gives P10,000.00 pension benefit per unit purchased by the plan holder. With respect to the alleged interest of Atty. Reyes with Caritas, PPI adduced in evidence a Deed of Sale to prove that as early as February 1999 he had already divested his stockholdings in Caritas.[49]

On November 18, 2002, Labor Arbiter Roma C. Asinas rendered a Decision[50] dismissing the complaint and the counterclaims for lack of merit. The labor arbiter ruled that Molina was lawfully dismissed from his employment for serious misconduct in office and fraud or willful breach of trust and confidence. It declared that Molinas mere denial of the charges against him did not overthrow the overwhelming evidence against him tending to show that he committed the allegations against him. Moreover, his wife was then an agency manager of Caritas, and some PPI sales associates were with Caritas because they were recruited by Molina. The labor arbiter also ruled that other employees of respondent attested to the fact that they were being recruited and enticed by the complainant to join Caritas. This act of pirating constituted serious misconduct in office, fraud or willful breach of trust and confidence, which are just causes for termination of employment under Article 282 of the Labor Code, as amended. As such, PPI could not legally be compelled to continue Molinas employment due to breach of trust.

The labor arbiter likewise held that Molina was afforded his right to due process, but that he refused to give an answer to the charges leveled against him, and instead insisted that he be furnished a copy of the alleged reports against him. Since he was given ample opportunity to answer the charges and explain his side during the investigation, and a formal or trial-type hearing is not at all times essential, Molinas right to due process was not violated. The labor arbiter stressed that the

requirements of due process are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand.[51]

Molina appealed the decision to the NLRC, which rendered judgment in his favor. The NLRC reversed the decision of the Labor Arbiter and ordered Molinas immediate reinstatement to his former position as Assistant Vice President without demotion in rank and salary; and the payment of his backwages from August 1, 2001 up to his actual reinstatement, and other accrued monetary benefits. However, the NLRC denied all other claims for damages.[52]

According to the NLRC, the charges of coming to the office under the influence of liquor and making PPI reimburse the expenses already paid by Molina's coemployees were not supported by the records. The loss of trust and confidence had no factual basis since the alleged acts of Molina did not result to any loss in favor of PPI.

Anent Molinas recruitment activities, the NLRC ratiocinated that PPI failed to show that Caritas was a competitor of PPI. Caritas caters to the health care needs of its clients while PPI to the pre-need (pension, educational, and memorial) requirements of its plan holders. Any similarity between PPI and Caritas extra features like term life insurance, accidental death insurance, credit life insurance, and waiver of installment due to disability, did not ipso facto make Caritas a competitor of PPI. Thus, there was no conflict of interest in Molinas act of trying to recruit counselors for Caritas to help his wife. Moreover, PPI failed to establish that recruiting for Caritas affected Molinas decisions in the performance of his duties with PPI. According to the NLRC, the drop in the sales and productivity of complainants area of responsibility may be due to market forces and depressed economic condition at that time; absent any clear and convincing proof, it cannot be attributed to the alleged acts of Molina which constituted willful breach of trust or confidence.[53]

PPI filed a motion for reconsideration, and appended a Letter dated June 13, 2002 from the SEC to Caritas, indicating that its HMO Plan was similar to the previous plans offered by pre-need companies, hence, under the regulatory suspension of the SEC;[54] another letter of SEC ordering Caritas to immediately desist from selling its HMO plan with the full term medial expense fund;[55] and the letter of Caritas, through counsel, endorsing the objectionable features of the HMO plan.[56]

The NLRC, however, was not persuaded, and resolved to deny PPIs motion in its Order dated September 30, 2003.[57] On November 19, 2003, the NLRC declared its Decision final and executory as of November 14, 2003.[58]

PPI filed a Petition for Certiorari with the CA for the nullification of the decision and resolution of the NLRC and the reinstatement of the decision of the Labor Arbiter. [59]

On August 13, 2004, the CA rendered a decision reversing the Decision and Resolution of the NLRC, and reinstating the November 18, 2002 Decision of the Labor Arbiter.[60] Later, the CA denied Molinas Motion for Reconsideration[61] in its Resolution dated September 27, 2004.[62]

The issues for resolution are the following: whether the decision of the NLRC was already final and executory when PPI filed its petition for certiorari in the CA; and whether the NLRC committed grave abuse of discretion amounting to excess or lack of jurisdiction in issuing the assailed decision and resolution.

On the first issue, we find and so hold that the decision of the NLRC had become final and executory when PPI filed its Petition for Certiorari in the CA. PPI received a copy of the NLRC Decision on July 11, 2003 and filed the Motion for Reconsideration thereof on July 18, 2003, which motion was denied on September 30, 2003. Under Rule VII, Section 2 of the NLRC Omnibus Rules of Procedure, the decision of the NLRC becomes final and executory after ten (10) calendar days from receipt of the same. PPI received a copy of the NLRC decision on November 30, 2003; hence, such decision became final and executory on December 3, 2003. Nonetheless, the Court ruled in St. Martin Funeral Home v. NLRC[63] that, although the 10-day period for finality of the NLRC decision may have elapsed as contemplated in the last paragraph of Section 223 of the Labor Code, the CA may still take cognizance of and resolve a petition for certiorari for the nullification of the decision of the NLRC on jurisdictional and due process considerations. Indeed, the remedy of the aggrieved party from an adverse decision of the NLRC is to timely file a motion for reconsideration as a precondition for any further or subsequent remedy, and if the motion is denied, such party may file a special civil action in accordance with law and jurisprudence considering that these matters are inseparable in resolving the main issue of whether the NLRC committed grave abuse of discretion.

The Labor Arbiter and the NLRC act in quasi-judicial capacity in resolving cases after hearing and on appeal, respectively. On the presumption that they have already acquired expertise in their jurisdiction, which is confined on specific matters, their findings of facts are oftentimes accorded not only with respect but even finality if supported by substantial evidence. However, in spite of the statutory provision making final the decision of the NLRC, the Court has taken cognizance of petitions challenging such decision where there is a clear showing that there is want of jurisdiction, grave abuse of discretion, violation of due process, denial of substantial justice, or erroneous interpretation of law.[64]

In this case, the Labor Arbiter declared that there is substantial evidence on record warranting the dismissal of petitioner as Assistant Vice President for serious misconduct in office, fraud or willful breach of trust and confidence. The NLRC disagreed with the Labor Arbiter and reversed the latters findings. The CA, for its part, concurred with the findings of the Labor Arbiter. In view of the discordance between the findings of the Labor Arbiter and the CA on one hand, and the NLRC on the other, there is a need for the Court to review the factual findings and the conclusions based on the said findings. As this Court held in Diamond Motors Corporation v. Court of Appeals:[65]

A disharmony between the factual findings of the Labor Arbiter and the National Labor Relations Commission opens the door to a review thereof by this Court. Factual findings of administrative agencies are not infallible and will be set aside when they fail the test of arbitrariness. Moreover, when the findings of the National Labor Relations Commission contradict those of the labor arbiter, this Court, in the exercise of its equity jurisdiction, may look into the records of the case and reexamine the questioned findings.[66]

Article 282 of the Labor Code of the Philippines provides:

Art. 282. Termination by employer. An employer may terminate an employment for any of the following causes:

a. Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative 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 his duties of the trust reposed in him by his employer or duly authorized representative;

d. Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and

e. Other causes analogous to the foregoing.

Misconduct has been defined as improper or wrong conduct; the transgression of some established and definite rule of action; a forbidden act, a dereliction of duty, unlawful in character and implies wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. Such misconduct, however, serious, must nevertheless, be in connection with the employees work to constitute just cause for his separation.[67]

The loss of trust and confidence, in turn, must be based on the willful breach of the trust reposed in the employee by his employer. Ordinary breach will not suffice. A breach of trust is willful if it is done intentionally, knowingly and purposely without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.[68]

The Court has laid down the guidelines for the application of the doctrine for loss of confidence, thus:

1. the loss of confidence must not be simulated;

2. it should not be used as a subterfuge for causes which are illegal, improper or unjustified;

3. it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary;

4. it must be genuine, not a mere afterthought, to justify earlier action taken in bad faith; and

5. the employee involved holds a position of trust and confidence.[69]

In Samson v. Court of Appeals,[70] the Court enumerated the conditions for one to be considered a managerial employee:

(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof;

(2) They customarily and regularly direct the work of two or more employees therein;

(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight.[71]

As a general rule, employers are allowed wide latitude of discretion in terminating the employment of managerial personnel.[72] The mere existence of a basis for believing that such employee has breached the trust and confidence of his employer would suffice for his dismissal.[73]

In this case, petitioner was not a mere employee of respondent. He was the Assistant Vice-President with the same functions of a regional manager of the same sales region, Metro Manila VI. Taking into account his job description, he was one of

the top managers of the respondent, tasked to perform key and sensitive functions in the interest of his employer and, thus, bound by the more exacting work ethic.

We find, however, that the charge of misappropriation of funds was not proven with substantial evidence. As gleaned from the handwritten statement of Ilustre Acosta, the General Manager of the Springs and Blessings General Agency under Metro Manila VI, it appears that, aside from him and petitioner, there were 10 other attendees during the luncheon conference on November 27, 1999 at the Barrio Fiesta, Cubao, Quezon City. Petitioner received the amount of only P2,386.00 from respondent to pay for the cost of the luncheon for the conference, based on Petty Cash Voucher signed by petitioner,[74] but the conferees spent more than P4,000.00. Upon petitioners suggestion, the conferees agreed to contribute P200.00 each, or the total amount of P2000.00 to answer for the difference. Petitioner had no obligation to return the contributions of the conferees, nor was he liable for said amount. Significantly, except for Ilustre Acosta, the other attendees in the conference never complained against petitioner or requested him to return their respective contributions of P200.00.

Regarding the charge that the petitioner peddled false and malicious informations against Abia and Padiernos, Abia has not executed any affidavit to confirm paragraph 9 of the affidavit of Roy Padiernos. As admitted by del Rosario, the informations allegedly relayed to her by the petitioner pertaining to Roy Padiernos were confirmed by Zita Domingo.[75]

The petitioner does not deny having had a heated exchange of words with Roy Padiernos in the course of a meeting. However, such incident does not constitute proof that the petitioner thereby showed disrespect to Roy Padiernos, nor a valid cause for petitioners dismissal. It does happen that in the course of exchange of views during a meeting, participants may become so assertive to the point of being overbearing or unyielding and in the process lose their temper, on their sincere belief of being right. There is no evidence on record that petitioner committed the same or similar acts thereafter.

To prove its charge of conduct unbecoming of a company officer, more specifically of drinking alcoholic beverages within the premises of the company during office hours or going to work drunk, respondent relied on the statement/affidavit of Celeste Villena, the Agency Manager of the Wondrous and Miraculous General Agency under Metro Manila VI;[76] and

Marivic Uy, the General Manager of the DMBP General Agency under Metro Manila VI. Both claimed that they always saw petitioner drunk during office hours, most especially during cut-offs when many sales counselors were present.[77] Petitioner admitted having had drinking sessions with Certerio Uy, the husband of Marivic Uy, Ilustre Acosta and Reynaldo Villena, the husband of Celeste Villena, and who, according to petitioner, provided the hard liquor and the pulutan.[78] He, however, denied reporting to office drunk and insisted that he reported for work sober.

We are inclined to give credence to petitioners claim, noting that in her handwritten letter-report to Norman Gonzales dated March 10, 2000, Villena made no mention of the petitioner going to office drunk.[79] It was only in her affidavit dated January 16, 2002 that Villena made such declaration.[80] Villena did not explain her failure to report the matter to Gonzales on March 10, 2000, and why she made the charge for the first time in her Affidavit dated January 16, 2002. Uy is the wife of no less than Certerio Uy, the Senior Vice-President of the Manila North Sales Division of respondent. If petitioners drinking problem had any ring of truth, she should have immediately reported the matter to her husband or to other officials concerned. Uys unexplained silence until March 10, 2000 thus renders her report implausible.

Respondent avers that petitioner served directly as agent of Caritas, a business competitor of the respondent, when he connived with his wife in recruiting Sales Associates of the Metro Sales Division VI to transfer to Caritas as sales associates. Respondent claims that, by his acts, petitioner failed to dedicate his full time on the job with respondent and prevented said sales associates from doing the same. Aside from violating its policy against conflict of interest, petitioners acts adversely affected his decisions in the performance of his duties and obligations to respondent.[81]

Loyalty of an employee to his employer consists of certain very basic and common sense obligations. An employee must not, while employed, act contrary to the employers interest.[82] The scope of the duty of loyalty that an employee owes to his employer may vary with the nature of their relationship. Employees occupying a position of trust and confidence owe a higher duty than those performing low-level tasks. Assisting an employees competitor can even constitute a breach of the employees duty of loyalty. An employees self-dealing may breach that duty.[83] However, it has been ruled that

A reality of contemporary life is that many families will consist of two wage earners, one wage earner with two jobs, or both. For some employees, particularly those earning low or modest incomes, second sources of income are an economic necessity. For them, a second job or moonlighting is the only way to make ends meet. Conversely, employers need the assurance that employees will not disserve them by furthering their own interests or those of competitors at the employers expense.[84]

A slight assistance to a direct competitor could constitute a breach of the employees duty of loyalty. However, when competition is indirect or minimal, the employer may be required to show that the employee received substantial assistance from the competitor. If an employee usurped a corporate opportunity or secretly profited from a competitive activity, the employer may receive the value of the lost opportunity or the secret profit.[85]

An employees skill, aptitude, and other subjective knowledge obtained in the course of employment are not the property of his employer.[86] However, an employee occupying a managerial position or office is obliged to protect the trade secret of his employer consisting of formula, process, device or compilation which it uses in its business and gives it an opportunity to obtain an advantage over competitors who do not know of such trade secret. However, the rule does not apply to a matter of public knowledge or of general knowledge within the industry. [87] Moreover, an employer has a protectible interest in the customer relationships of its former employee established and/or nurtured while employed by the employer, and is entitled to protect itself from the risk that a former employee might appropriate customers by taking unfair advantage of the contract developed while working for the employer.[88] While acting as an agent of his employer, an employee owes the duty of fidelity and loyalty. Being a fiduciary, he cannot act inconsistently with his agency or trust. He cannot solicit his employers customers or co-employees for himself or for a business competitor of his employer. If such employee or officer connives with and induces another to betray his employer in favor of a business competitor of his employer, he is held accountable for his mischief.[89]

In this case, we are not persuaded that Caritas is the business competitor of respondent. The evidence on record shows that while Abia, the Senior VicePresident of respondents Metro Manila Marketing, is one of the incorporators of Caritas and is even a member of the Board of Directors, respondent did not dismiss

him from employment. The Head of the Legal Division of the respondent, Atty. Reyes, was also an incorporator of Caritas and a member of its Board of Directors, and although he appears to have sold his shares to Herminigildo C. Belen for P127,312.34, he only did so on March 7, 1999. There is no evidence on record whether the transfer of such shares of stocks has already been reflected in the books of Caritas. Celeste Villena, one of the Sales Associates of respondent, is herself licensed by Caritas to sell plans for the latter. Villena has likewise not been prohibited from selling pre-need plans for Caritas. Fe Molina, who is the head of a sales agency of Caritas, is also a sales agency head of respondent.

Petitioner, his wife, and Villena were not charged nor meted any sanction by the respondent for conflict of interest. Petitioner was the Assistant Vice-President, Marketing Head, Area 10, of Caritas, and for a while, without any protest from respondent. If Caritas is a business competitor of the respondent, it should have meted sanctions not only on petitioner but also on Abia, Reyes, Fe Molina and Villena as well.

The truth of the matter is that, as averred by Caritas President Geoffrey Martinez, Caritas is engaged in health care and hospitalization package, whereas respondent sells educational, pension, and pre-need plans. Caritas is an HMO and is directly supervised by the DOH, while respondent is under the supervision of the SEC. The so-called sales associates of the respondent are non-salaried employees and are paid on commission basis only. Their commissions are based on their individual initiative and industry. That the contracts executed by the beneficiaries of both corporations have similar provisions regarding contract price, grace period, cancellation, reinstatement, transfer and termination, do not constitute proof that Caritas and respondent are business competitors. There is also no proof that the two corporations compete with each other in the same or similar business; in fact, the business of Caritas and that of the respondent complement each other.

Respondent relied on the declarations of Ruth Padiernos, Spouses Eppie and Ilustre Acosta, Celeste Villena, and Marivic Uy to prove its charge that Fe Molina pirated sales associates working for respondent and that petitioner tolerated the actuations of his wife and even connived with her.

The Court finds, however, that the evidence adduced by respondent insufficient to warrant the petitioners dismissal from employment.

Ruth Padiernos, wife of Roy Padiernos, averred in her written statement dated March 8, 2000, that as far back as July 1999, she had a conference with her husband and Abia where she reported that petitioner connived with his wife in pirating sales associates. She was assured that something would be done to arrest the problem.[90] However, Ruth Padiernos failed to name any such sales associate who was recruited by Fe Molina. There is likewise no evidence that Abia ever confronted petitioner relative to the charge. Roy Padiernos confronted petitioner, but the latter denied the charge. Since then, no further action was taken against the petitioner by respondent, until the letter of Picazo dated March 21, 2000 was sent to him. Roy Padiernos did not explain why he executed his affidavit regarding the matter almost three years later, only on January 18, 2002. In an Affidavit dated January 18, 2002, it was made to appear that Ruth Padiernos claimed that petitioners wife, the Unit Manager of the Ark Group under Metro Manila Sales Group VI and also an Agency Manager of Caritas, recruited sales associates under respondent to work for Caritas, and that petitioner did the same; and that she (Padiernos) learned that almost all the productive Sales Associates in Metro Manila VI were already connected with Caritas, using different names.[91] Although notarized, the affidavit has no probative weight because it was unsigned.

Celeste Villena, for her part, declared in her handwritten statement dated March 10, 2000 that Fe Molina recruited Lenie Gatmaitan to join Caritas and that she confronted petitioner.[92] In her Affidavit dated January 16, 2002, she alleged that petitioner and his wife, Fe Molina, recruited Gatmaitan to join Caritas.[93] However, the signature of the notary public does not appear in said affidavit. For his part, Ilustre Acosta, averred in his handwritten statement dated March 11, 2000, that on March 4, 2000, petitioner informed him that Geoffrey Martinez called petitioner to inquire if petitioner would have no objection for him (Ilustre) to be with Caritas and that petitioner replied that he had no objection if that was Ilustres decision.[94] Ilustre maintained this claim in his Affidavit dated January 16, 2002.[95] Eppie Acosta, the wife of Ilustre Acosta, averred in her handwritten statement of March 12, 2000, that on March 6, 2000, petitioner commented about their low sales production, and she retorted that he was the cause, hence, may have grudges against him. Petitioner replied that he and his wife did not interfere with each others business dealings, and that petitioner even declared Mare, for all you know, ikaw na lang ang hindi nag-ca-Caritas. She reiterated her claim in her affidavit dated January 16, 2000.[96] Marivic Uy averred that the wife of petitioner had been pirating sales associates of respondent since 1999 to join Caritas and that she tried to recruit Morena Siasoco, one of the Group Managers. Petitioner failed to stop his wife, but rather tolerated her actuations.[97] She reiterated her claim in her Affidavit dated January 16, 2002.[98]

However, there is no evidence on record to prove that respondent expressly prohibited its Sales Associates from selling for Caritas. Neither is there evidence on record to prove that Caritas prohibited its sales associates from selling pre-need plans of respondent.

Respondent likewise failed to present the affidavits of Siasoco, Casaje, Magalso, San Miguel and Halili. In contrast to the evidence of respondent, Gatchalian, San Miguel, Siasoco, and Gatmaitan executed their respective affidavits declaring that neither petitioner nor his wife ever recruited them.[99] They admitted that they sold plans for Caritas, but without any prodding from petitioner and his wife. Geoffrey Martinez declared, in his affidavit, that Siasoco, San Miguel, Casaje, Magalso, and Halili joined Caritas voluntarily and individually, through him, and he was not aware that petitioner and his wife recommended them to Caritas. Lenita Gatmaitan called him and inquired if she could join Caritas, and he replied in the affirmative. He never called petitioner concerning Ilustre Acosta; on the contrary, it was the latter who called to inquire if he was entitled to a discount if he purchased a Caritas health plan. He talked to Vilma Del Rosario and convinced her to apply as Branch Manager of Caritas, which she did, but backed out later on.

IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby GRANTED. The August 13, 2004 Decision and September 27, 2004 Resolution of the Court of Appeals are REVERSED AND SET ASIDE. The decision and resolution of the NLRC are reinstated.

SO ORDERED.

ROMEO J. CALLEJO, SR. Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN Chief Justice

Chairperson

CONSUELO YNARES-SANTIAGO Associate Justice

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

MINITA V. CHICO-NAZARIO Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN Chief Justice

[1] Penned by Associate Justice Delilah Vidallon-Magtolis, with Associate Justices Eliezer R. Delos Santos and Arturo D. Brion, concurring.

[2] CA rollo, p. 551.

[3] Penned by Presiding Commissioner Roy V. Seeres, with Commissioners Romeo L. Go and Vicente S.E. Veloso, concurring.

[4] CA rollo, p. 4.

[5] Rollo, p. 37.

[6] CA rollo, pp. 66, 250-251.

[7] Rollo, p. 145.

[8] Id. at 140.

[9] CA rollo, pp. 172-173.

[10] Rollo, p. 74.

[11] CA rollo, p. 205.

[12] Id. at 258-259.

[13] Id. at 57.

[14] Id. at 97.

[15] Id.

[16] Id. at 98-100.

[17] Id. at 104-105.

[18] Id. at 131, 144.

[19] Id. at 144.

[20] Id. at 107, 145.

[21] Id. at 146-150.

[22] Id. at 148-149.

[23] Id. at 151-152.

[24] Id. at 153.

[25] Id. at 59, 131.

[26] Id. at 108-111, 154-157.

[27] Id. at 131.

[28] Id. at 112.

[29] Id. at 60.

[30] Id. at 130-134.

[31] Id. at 130-138.

[32] Id. at 136-137.

[33] Id. at 54-81.

[34] Id. at 70.

[35] G.R. No. 128024, May 9, 2000, 331 SCRA 584.

[36] CA rollo, pp. 76-79.

[37] Id. At 178-180.

[38] Id. at 165-180, 188-193

[39] Id. at 199-204.

[40] Id. at 249-251.

[41] Id. at 205-206.

[42] Id. at 252-253.

[43] Id. at 254.

[44] Id. at 255.

[45] Id. at 256.

[46] Id. at 258-259.

[47] Id. at 202, 206.

[48] Id. at 213-220.

[49] Id. at 248.

[50] Id. at 265-276.

[51] Id. at 273-275.

[52] Id. at 273-275.

[53] Id. at 47-48.

[54] Rollo, pp. 196-197.

[55] Id. at 198-199.

[56] Id. at 201.

[57] CA rollo, pp. 52-53.

[58] Id. at 389.

[59] Id. at 2-37.

[60] Id. at 511-519.

[61] Id. at 520-531.

[62] Id. at 551.

[63] G.R. No. 130866, September 16, 1998, 295 SCRA 494, 500-501.

[64] See National Steel Corporation v. Court of Appeals, 436 Phil. 656, 670 (2002).

[65] G.R. No. 151981, December 1, 2003, 417 SCRA 46.

[66] Supra, at 50.

[67] Samson v. National Labor Relations Commission, 386 Phil. 669, 682 (2000).

[68] Diamond Motors Corporation v. Court of Appeals, supra note 65, at 50-51.

[69] Ramos v. Court of Appeals, G.R. No. 145405, June 29, 2004, 433 SCRA 177, 183.

[70] Supra note 67.

[71] Id.

[72] Gonzales v. National Labor Relations Commission, G.R. No. 131653, March 26, 2001, 355 SCRA 195, 208.

[73] Asia Pacific Chartering (Phils.), Inc. v. Farolan, 441 Phil. 776, 791.

[74] CA rollo, p. 119.

[75] Id. at 95-96.

[76] Id. at 125.

[77] Id. at 93.

[78] Id. at 184.

[79] Id. at 85-87.

[80] Id. at 125.

[81] Id. at 455.

[82] Lamorte Burns & Co., Inc. v. Walters, 167 N.J. 285, 770 A.2d 1158 (2001).

[83] Platinum Management, Inc. v. Dahms, 285 N.J. Super 276, 666 A.2d 1028 (1995).

[84] Cameco, Inc. v. Gedicke, 157 N.J. 504, 724 A.2d. 783, (1999).

[85] Id.

[86] American Buildings Company v. Pascoe Building System, Inc., 392 S.E.2d 860, 260 Ga. 346 (1990).

[87] Sun Dial Corporation v. Rideout, 16 N.J. 252, 108 A.2d 442 (1954).

[88] American Software US A., Inc.. v. Moore, 448 S.E.2d 206, 264 Ga. 480 (1994).

[89] Corroon & Black of Illinois, Inc. v. Magner, 494 N.E.2d 785 (1986).

[90] CA rollo, p. 82.

[91] Id. at 122-123.

[92] Id. at 85-87.

[93] Id. at 125.

[94] Id. at 88-89.

[95] Id. at 126.

[96] Id. at 124.

[97] Id. at 93-94.

[98] Id. at 122.

[99] Id. at 252-256.

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([2006V274] AGRIPINO V. MOLINA, Petitioner, versus PACIFIC PLANS, INC., Respondent., G.R. No. 165476, 2006 Mar 10, 1st Division)