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THIRD DIVISION

DIGITAL TELECOMMUNICATIONS G.R. No. 195614

PIIlLS., INCJJOHN GOKONGWEI,
JR., Present:
Petitioner,
VELASCO, JR., J.,
Chairperson,
BERSAMIN,
- versus - LEONEN,
MARTIRES, and
GESMUNDO, JJ.

NEILSON M. AYAPANA, Promulgated:

x------- ~:s~~~d-e~t~ -----------:?;~ :~-x

DECISION

MARTIRES, J.:

This is a petition for review on certiorari under Rule 45 of the Rules

of Court assailing the 7 October 2010 Decision 1 and 4 February 2011
Resolution2 rendered by the Court of Appeals (CA) in CA-G.R. SP No.
112160. The CA affirmed with modification the 29 June 2009 Decision3 and
28 October 2009 Resolution 4 of the National Labor Relations Commission
(NLRC) in NLRC LAC Case No. 05-001831-08, which declared Neilson M.
Ayapana (respondent) to have been illegally dismissed.

THE FACTS

t~e
Digital Telecommunications Philippines, Inc. (petitioner or
company) hired respondent as Key Accounts Manager for
its r7
/lJi11J

Rollo, pp. 34-41; penned by Associate Justice Juan Q. Enriquez, with Associate Justice Ramon M.
Sato Jr. and Associate Justice Fiorito S. Macalino, concurring.
Id. at 43-44.
Id. at 71-76; penned by Presiding Commissioner Gerardo C. Nograles, with Commissioner Perlita B.
Velasco and Romeo L. Go, concurring.
Id. at 77.
Decision 2 G.R. No. 195614

telecommunication products and services in the areas of Quezon,

Marinduque, and Laguna provinces, with a monthly basic pay of
Pl3,100.00. Respondent was tasked, among others, to offer and sell
DIGITEL's foreign exchange (FEX) line to prospective customers.

On 6 September 2006, respondent successfully offered two (2) FEX

lines for Atimonan, Quezon, to Estela Lim (Lim), the owner of Star Lala
Group of Companies (Star Lala). He received from Lim the total amount of
P7,000.00 (the subject amount) for the two lines, for which he issued two (2)
official receipts. Respondent, however, did not remit the subject amount to
petitioner on the same date.

On 7 September 2006, petitioner's sales team, which included

respondent, held a meeting during which respondent learned, from his
immediate superior, that there was no available FEX line in Atimonan,
Quezon; and that it was not possible to have a FEX line in the area due to
technical constraints. On the same day, respondent retrieved from Lim the
two (2) official receipts issued to the latter and replaced them with an
acknowledgment receipt.

On 23 November 2006, Teresita Cielo (Cielo ), secretary of Lim, went

to petitioner's business office to pay bills and to ask for the refund of the
subject amount. Upon verification by Myra Santiago (Santiago), petitioner's
customer representative, she found that there was no existing application for
the said service under the name of Star Lala Group of Companies.

When Santiago found that respondent was the sales person handling
Lim's transaction, she informed respondent of Cielo's request for refund on
that same day; but it was only on 28 November 2006, or five (5) days from
said notice, that respondent was able to make the refund.

On 29 November 2006, petitioner issued a Notice to Explain 5 to

respondent, asking him to explain: why he offered an inexistent FEX line;
why he withdrew the official receipts issued to Lim and replaced them with
an acknowledgment receipt; why he did not immediately remit the proceeds
of the transaction to petitioner's business center; and why he retained the
subject amount for 84 days.

On 30 November 2006, respondent submitted a written response. 6 He

explained that he was not aware of the unavailability of the Atimonan line at
the time he offered it to Lim; that he retrieved the official receipts to avoid
explaining the late remittance to the treasury department because, at the
time, Lim was still undecided whether to take up respondent's alternative
5
"11
Id. at 57.
Id. at 58-59.
Decision 3 G.R. No. 195614

offer of subscribing to a FEX line in Lucena until such time that an

Atimonan line could become available; that he issued the acknowledgment
receipt as proof that the subject amount is in his possession; that prior to 23
November 2006, he made several attempts to obtain Cielo's advice as to the
return of the subject amount, to no avail; and that after being informed of
Cielo's request on 23 November 2006, he went to Star Lala's office, which
was closed, and thereafter tried to obtain Cielo's address in order to return
the money, to no avail. According to respondent, he handed the subject
amount to Santiago after she informed him that Cielo would retrieve the
money from her.

On 4 December 2006, petitioner sent a Notice of Offense 7 to

respondent, scheduling his administrative hearing and requesting his
presence there.

On 19 January 2007, petitioner issued a Notice of Dismissal 8 finding

respondent guilty of "breach by the employee of the trust and confidence
reposed in him by management or by a company representative" under
petitioner's disciplinary rules, which merited dismissal for the first offense.

Aggrieved, respondent filed a complaint for illegal dismissal. The

Labor Arbiter dismissed the complaint, ruling that substantial evidence
exists that respondent was involved in an event that justified petitioner's loss
of trust and confidence in him, and therefore, he was validly dismissed from
employment. 9 Respondent then appealed to the NLRC.

The NLRC Ruling

The NLRC reversed and set aside the decision of the Labor Arbiter. It
ruled that respondent was merely guilty of imprudence and not of bad faith
or malice. The NLRC found that dismissal was too harsh a penalty,
especially since respondent appeared to have a clean record except for the
Notice of Final Warning 10 issued to him by petitioner on 17 October 2005.
The NLRC also considered in respondent's favor the certificates of
commendation issued to him for being the most outstanding account
manager in 2001 and 2002, as well as the service award he received in 2006.
Consequently, it ordered the petitioner to pay respondent separation pay in
the amount of P78,600.00 computed at one-month pay for every year of
service, viz:~

Id. at 60.
Id. at 61.
9
Id. at 63-68; penned by Labor Arbiter Melchisedek A. Guan.
10
Id. at 78.
Decision 4 G.R. No. 195614

WHEREFORE, the appeal filed by complainant is GRANTED

IN PART. The Decision of Labor Arbiter Melchisedek A. Guan dated
March 6, 2008 is REVERSED and SET ASIDE, and a NEW ONE
rendered finding dismissal a harsh penalty and ordering respondents to pay
complainant separation pay in the sum of P.78,600.00 as computed above.

SO ORDERED. 11

Respondent thereafter filed a motion for reconsideration, which was

denied by the NLRC. Unsatisfied with the decision, respondent appealed to
the CA.

The CA Ruling

The CA affirmed the NLRC ruling with modification that petitioner

was further ordered to pay full back wages inclusive of allowances and other
benefits or their monetary equivalent, viz:

WHEREFORE, premises considered, the Decision dated June 29,

2009 of the National Labor Relations Commission (NLRC) in NLRC LAC
Case No. 05-001831-08 is AFFIRMED with MODIFICATION that
private respondent DIGITEL is ordered to pay petitioner separation pay
and full back wages inclusive of allowances and other benefits or their
monetary equivalent from January 19, 2007 up to the finality of this
Decision.

SO ORDERED. 12

The CA held that respondent's dismissal was not valid because

neglect of duty, as a just cause for dismissal, must not only be gross but also
habitual. An isolated act of negligence cannot be ground for dismissal, and
respondent was found negligent in only one instance.

Aggrieved, petitioner filed a motion for reconsideration, which was

denied by the CA. Hence, this petition.

ISSUES

Petitioner raises the following issues: ~

11
Id. at 75.
12
Id. at 41.
Decision 5 G.R. No. 195614

I.

THE COURT OF APPEALS ERRED IN AFFIRMING THE

NLRC'S FINDING THAT NO JUST CAUSE EXISTS TO
WARRANT RESPONDENT AYAPANA'S DISMISSAL DESPITE
THE LAW AND EVIDENCE TO THE CONTRARY.

II.

THE COURT OF APPEALS ERRED IN AW ARD ING BACK

WAGES AND SEPARATION PAY TO RESPONDENT AYAPANA
DESPITE LACK OF LEGAL BASIS.

Simply put, this Court is tasked to consider whether the CA correctly

held that respondent's dismissal was invalid and that he is entitled to full
back wages and separation pay.

DISCUSSION

Incipiently, this Court addresses respondent's contention that

petitioner can no longer raise the issue on the validity of his dismissal since
it has failed to file a motion for reconsideration from the NLRC's decision,
thus, it is bound by the NLRC's finding on this issue.

Respondent errs. It is settled that the entire case becomes open to

review, and the Court can review matters not specifically raised or assigned
as error by the parties, if their consideration is necessary in arriving at a just
resolution of the case. 13

The issue of whether respondent was validly dismissed, though ruled

upon by the NLRC without an appeal from petitioner, is pivotal in
determining respondent's entitlement to back wages and separation pay,
which was raised by respondent in his appeal to the CA. It is clearly
necessary to arriving at a just disposition of the controversy. Thus, it was
proper for the CA to pass upon said issue, and for petitioner to interpose an
appeal therefrom.

Now to the primary issue at bar: was respondent validly dismissed?

The Court rules in the affirmative. {iltif

13
Aliling v. Feliciano, 686 Phil. 889, 903-904 (2012).
Decision 6 G.R. No. 195614

Respondent held a position of

trust and confidence and
committed an act that justified
petitioner's loss of trust and
confidence.

A perusal of the notice of dismissal issued by petitioner to respondent

shows that the ground relied upon by the former was the latter's breach of
the trust and confidence reposed in him by the company, contrary to the
ruling of the CA, which based its decision on gross and habitual neglect, a
separate ground under Article 29?1 4 of the Labor Code.

The willful breach by the employee of the trust reposed in him by his
employer or the latter's duly authorized representative is a just cause for
dismissal. However, the validity of a dismissal based on this ground is
premised upon the concurrence of these conditions: ( 1) the employee
concerned must be holding a position of trust and confidence; and (2) there
must be a willful act that would justify the loss of trust and confidence. 15

The first requisite is certainly present. In a number of cases, this Court

has held that rank-and-file employees who are routinely charged with the
care and custody of the employer's money or property are classified as
occupying positions of trust and confidence. 16 In Philippine Plaza Holdings,
Inc. v. Episcope, 17 the Court held that a service attendant tasked to attend to
dining guests, handle their bills, and receive their payments for transmittal to
the cashier is an employee occupying a position of trust and confidence and
is thus expected to act with utmost honesty and fidelity. 18

It is not disputed that respondent was tasked to solicit subscribers for

petitioner's FEX line and, in the course thereof, collect money for
subscriptions and issue official receipts therefor, as was the case in the
transaction subject of this controversy. Being involved in the handling of the
company's funds, respondent undeniably occupies a position of trust and
confidence.

The records likewise reveal that the second requisite is present. It

must be emphasized that a finding that an employer's trust and confidence
has been breached by the employee must be supported by substantial
evidence, 19 or such amount of relevant evidence which a reasonable mind~

14
This is based on the Labor Code of the Philippines, Presidential Decree No. 442, as Amended &
Renumbered on 21July2015.
15
Martinez v. Central Pangasinan Electric Cooperative, Inc., 714 Phil. 70, 75 (2013).
16
Id.; Bluer than Blue Joint Ventures Co. v. Esteban, 731 Phil. 502, S 11 (2014).
17
705Phil.210(2013).
18
Id.at218.
19
Id.at219.
 Decision 7 G.R. No. 195614

might accept as adequate to justify a conclusion. It must not be based on the

employer's whims or caprices or suspicions; otherwise, the employee would
eternally remain at the mercy of the employer. 20

The totality of the circumstances in the case at bar supports a

conclusion that respondent's dismissal was based on substantial evidence
that he had willfully breached the trust reposed upon him by petitioner, and
that petitioner was not actuated by mere whim or capriciousness.

It is uncontroverted that respondent took part in a series of

irregularities relative to his transaction with Lim, to wit:

First, he offered an inexistent FEX line to Lim, for which he received

a subscription payment of P7,000.00. Even granting he did not know that the
Atimonan line was unavailable at the time he offered the same to Lim, he
was remiss in not ascertaining its availability before he concluded his
transaction with Lim and received from her the subscription payment. As an
employee admittedly tasked with soliciting subscribers for the Company's
FEX line, it was an integral part of his functions to ensure that the lines he
offered to potential subscribers were valid and subsisting.

Second, it is not disputed that respondent was required and expected

to immediately remit the proceeds acquired in the course of his sales
transactions; which he failed to do in Lim's case, without sufficient
explanation for such lapse.

Third, respondent readily admits that when he came to know of the

Atimonan line's unavailability, he did not immediately effect a refund nor
inform management of his decision to retain the money supposedly pending
Lim's decision to acquire another line. Instead, he retrieved the official
receipts from Lim and issued an acknowledgment receipt.

Respondent contends that he could not be imputed with any reckless,

willful, or deliberate act of breaching petitioner's trust and confidence
because he was of the honest belief that the Atimonan line was existent
when he offered it to Lim; that he retained the money pursuant to an oral
agreement between him and Lim, wherein he gave her time to contemplate
the option of obtaining a refund or availing of another FEX line pending the
availability of the Atimonan line; and that he issued the acknowledgment
receipt as evidence that the sum collected was in his possession.M

20
Lopez v. Alturas Group of Companies, 663 Phil. 121, 128 (2011), citing Cruz v. Court of Appeals, 527
Phil. 230, 243 (2006).
Decision 8 G.R. No. 195614

Respondent's arguments are misplaced. Even if this Court were to

concede that he was merely negligent in offering an FEX line whose
existence he did not ascertain first, his acts subsequent to being aware of the
Atimonan line's unavailability indubitably manifests willfulness and
deliberateness. In his response to petitioner's notice to explain, respondent
admitted he came to know of the Atimonan line's unavailability during their
team's 7 September 2006 meeting when he was informed by his superior,
Rene Rico (Rico). When respondent inquired from Rico if it was possible
that the Atimonan line would be available in the near future, the latter
answered in the negative. 21 It therefore reeked of underhandedness that
petitioner still gave Lim the option to avail of a different FEX line until such
time that the Atimonan line would become available, when he already knew
at the time that the Company was not even contemplating such service.
There is also no showing that he disclosed the full extent of Rico's response
to Lim.

Respondent's act of retrieving and cancelling the official receipts

without petitioner's knowledge or conformity was also highly irregular and
prejudicial to the company, as its cancellation has tax and reportorial
implications that may result in liability.

Moreover, respondent admitted that the reason he cancelled the

official receipts was to conceal from the treasury department the fact of late
remittance. 22 Notably, petitioner also failed to explain why he did not at least
inform management about his oral agreement with Lim, considering that the
company could incur liability arising from his continued retention of the
subscription money. Lim's consent to such retention is immaterial, because
the duty to remit the proceeds or at least disclose any action relative to funds
acquired for the availment of the company's services was mandatory to the
company.

Third, respondent retained the subject amount from 6 September 2006

to 28 November 2006, offering no sufficient explanation for this prolonged
period of retention, other than to insist that he was allowed to do so by Lim.
However, as discussed earlier, this does not explain why respondent would
withhold from the company information regarding company funds or a
potentially contentious transaction, if he had truly acted in good faith. As
borne by the records, it was only on 23 November 2006 that the petitioner,
through its customer representative Santiago, became aware of such M
21
The following is taken verbatim from respondent's response to the Company's Notice to Explain: "By
that time, I was not aware that Manila Line is not available in ATM. The next day Sept. 7, 2006 our
monthly meeting was held here in Lucena. If S'Rene remembered I even asked him if Manila Line is
available in Atimonan. When he said that it's not available, I asked him if it is possible in the near
future that it would be offered in Atimonan. S'Rene said "NO." I immediately informed the owner
thru phone that Atimonan is not included in '02' areas. I told her for the meantime to avail our FEX
Line in Lucena and Laguna unti such time that FEX Line is offered in Atimonan." (emphasis
supplied); rollo, p. 58.
22 Id.
 Decision 9 G.R. No. 195614

retention. Moreover, while respondent claims that he issued an

acknowledgment receipt as proof that he possessed the money and would
return it as soon as Lim signified her desire for a refund, it is curious that he
was only able to return the subject amount on 28 November 2006, or five (5)
days after being told by Santiago to refund it on 23 November 2006.

All the above circumstances militated against respondent's claim of

good faith and clearly established an act that justified the Company's loss of
trust and confidence in him. In Bristol Myers Squibb (Phils.), Inc. v.
Baban, 23 the Court held that "as a general rule, employers are allowed a
wider latitude of discretion in terminating the services of employees who
perform functions by which their nature require the employer's full trust and
confidence. Mere existence of basis for believing that the employee has
breached the trust and confidence of the employer is sufficient and does not
24
require proof beyond reasonable doubt."

Furthermore, no bad faith or ill will could be imputed to the company

in dismissing respondent because the latter was apprised of the charges
against him and was given an opportunity to submit a written explanation,
which he complied with. A hearing was also conducted.

It must be remembered that the discipline, dismissal, and recall of

employees are management prerogatives, limited only by those imposed by
labor laws and dictated by the principles of equity and social justice. 25 This
Court finds that petitioner exercised its management prerogatives consistent
with these principles.

Even with a finding that

respondent was validly
dismissed, separation pay may
be !(ranted as a measure of
social justice.

Generally, an employee dismissed for any of the just causes under

Article 297 is not entitled to separation pay. By way of exception, the Court
has allowed the grant of separation pay based on equity and as a measure of
social justice, as long as the dismissal was for causes other than serious
conduct or those manifesting moral depravity. 2. , ,

23
594 Phil. 620 (2008).
24
Id. at 631-632, citing Atlas Fertilizer Corporation v. NLRC, 340 Phil. 85, 94 (1997).
25
Peckson v. Robinsons Supermarket Corporation, 713 Phil. 471, 480-481 (2013).
26
Philippine Commercial International Bank v. Abad, 492 Phil. 657, 663-664 (2005).
Decision 10 G.R. No. 195614

This Court is mindful of the new rule it established in Toyota v.

NLRC, 27 where the Court held that "in addition to serious misconduct, in
dismissals based on other grounds under Art. 282 28 like willful disobedience,
gross and habitual neglect of duty, fraud or willful breach of trust, and
commission of a crime against the employer or his family, separation pay
should not be conceded to the dismissed employee." 29 However, the Court
also recognizes that some cases merit a relaxation of this rule, taking into
consideration their peculiar circumstances.

Here, while it is clear that respondent's act constitutes a willful breach

of trust and confidence that justified his dismissal, it also appears that he was
primarily actuated by zealousness in acquiring and retaining subscribers
rather than any intent to misappropriate company funds; as he admitted in
his response to the notice to explain that offering an alternative FEX line to
Lim was part of his strategy to ensure her subscription.

The lack of moral depravity on respondent's part is also shown by the

following circumstances: ( 1) he was the recipient of certificates of
commendation 30 from petitioner in the years 2001 and 2002, for being an
outstanding account manager, as well as of a service award in 2006 for
continuous service to the company; (2) he was granted promotional
increases 31 in 2002, 2004, and 2005, as well as a merit increase 32 in 2003;
(3) he has served the company from 16 February 2001 to 19 January 2007
with only one other known infraction embodied in a notice of final warning
that petitioner failed to expound on; and (4) based on Cielo's Salaysay, 33
Lim did allow respondent to retain the subject amount for a time, even
though, as discussed earlier, this is immaterial to determining whether his act
justified his dismissal, since he had an independent duty to disclose material
agreements or transactions to petitioner.

To be sure, his zealousness was manifested through acts that showed

an inordinate lapse of judgment warranting his dismissal in accordance with
management prerogative, but this Court considers in his favor the above

month pay for every year of service.

34
M
circumstances in granting him separation pay in the amount of one (1)

27
562 Phil. 759, 812 (2007).
28
Now Article 297 of the Labor Code.
29
Toyota v. NlRC, supra note 27 at 812.
30
Rollo, pp. 100-10 I.
31
Id. at 122-123 and 125-126.
32
Id. at 124.
33
Id. at 121.
34
Philippine long Distance Telephone Co. v. National labor Relations Commission, 247 Phil. 641, 650
( 1988), where the Court ruled that "separation pay, if found due under the circumstances of each case,
should be computed at the rate of one month salary for every year of service, assuming the length
of such service is deemed material."
Decision 11 G.R. No. 195614

WHEREFORE, premises considered, the petition is GRANTED.

The assailed 7 October 2010 Decision and 4 February 2011 Resolution of
the Court of Appeals in CA-G.R. SP No. 112160, are REVERSED and SET
ASIDE. The Decision of the Labor Arbiter dismissing respondent Neilson
M. Ayapana's complaint for illegal dismissal and other monetary claims
is REINSTATED with MODIFICATION that respondent should be paid
separation pay equivalent to one month of his latest salary for every year of
service.

SO ORDERED.

WE CONCUR:

PRESBITERO' J. VELASCO, JR.

I'
Associate Justice
 .
Decision 12 G.R. No. 195614

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

PRESBITE~O J. VELASCO, JR.

sociate Justice
Chaivberson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the

Division Chairperson's Attestation, I certify that the conclusions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P.A. SERENO

Chief Justice

CERTittED TRlJE COPY

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FEB 2 O 2018