MGG Marine Services, Inc. v. NLRC

G.R. No. 114313 (July 29, 1996)

Facts:

Private respondent Elizabeth A. Molina was employed by MGG Marine Services, Inc. (MGG) starting July 1, 1988. On March 1, 1990, prior to the departure of MGG's president, Doroteo C. Garlan, for the United States, Molina was appointed as the company's comptroller and overall supervisor, in addition to her role as financial officer. She was entrusted with corporate funds to pay the company's obligations as authorized by the president and the board of directors. Garlan instructed Molina to pay only the creditors specified in the cash vouchers provided to her, which included 79 prepared checks—16 of which were blank and 63 with specific amounts.

Upon the return of Garlan and the vice-president, Ma. Lourdes G. Unson, in June 1990, they discovered that the company's bank account had been drastically reduced from approximately P1.5 million to only P5,720.00. Molina had disobeyed the explicit instructions given to her, withdrawing a total of P1,515,823.00 instead of the authorized P224,131.50, and had made payments to creditors not listed in the cash vouchers. Molina claimed that she did not profit from these transactions.

MGG subsequently filed estafa charges against Molina, which were dismissed. On November 12, 1990, MGG terminated Molina's employment for loss of trust and confidence. Molina then filed a complaint for illegal dismissal against MGG and its officers. The Labor Arbiter ruled in favor of Molina, declaring her dismissal illegal and awarding her various forms of compensation, including separation pay, thirteenth month pay, overtime pay, unpaid salary, moral damages, and attorney's fees.

MGG appealed the decision to the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiter's ruling. MGG then filed a petition for certiorari with the Supreme Court.

Issues:

1. Was there lawful cause for the dismissal of private respondent?
2. Did petitioners comply with the procedural requirements for valid dismissal?
3. Were petitioners accorded due process at the hearing before the Labor Arbiter?

Arguments:

• Petitioners' Arguments:

  • MGG argued that Molina's actions constituted a loss of trust and confidence, justifying her dismissal. They contended that her unauthorized withdrawals and payments to unlisted creditors severely damaged the company's cash flow and financial stability.
  • MGG maintained that the dismissal was warranted due to Molina's breach of trust, as she failed to adhere to the specific instructions regarding the disbursement of corporate funds.

• Respondent's Arguments:

  • Molina contended that she was authorized to disburse the funds as she did, claiming that her actions were in line with her responsibilities and that she did not personally benefit from the withdrawals.
  • She argued that MGG failed to provide sufficient evidence of wrongdoing and that the dismissal was unjustified and malicious.

Court's Decision and Legal Reasoning:

The Supreme Court found that there was indeed a basis for MGG's loss of trust and confidence in Molina due to her admitted violations of the specific instructions regarding the handling of corporate funds. The Court emphasized that an employer has the right to dismiss an employee whose actions are detrimental to the company's interests, particularly when the employee holds a position of responsibility.

However, the Court also ruled that MGG failed to comply with the procedural due process requirements mandated by law. The employer must provide two written notices to the employee: one indicating the intention to dismiss and the reasons for it, and another informing the employee of the decision to dismiss. The Court found that Molina was not given adequate notice or an opportunity to defend herself before her dismissal.

As a result, while the Court upheld the just cause for Molina's dismissal, it ruled that the lack of due process tainted the dismissal with illegality. The Court ordered MGG to pay Molina indemnity for the due process violation, as well as her unrebutted claims for thirteenth month pay, overtime pay, and unpaid salary. The Court deleted the award for moral damages and attorney's fees due to the absence of proof of bad faith on the part of MGG.

Significant Legal Principles Established:

1. Loss of Trust and Confidence: An employer may dismiss an employee for loss of trust and confidence, particularly when the employee occupies a position of responsibility and has violated specific instructions.
2. Due Process in Dismissal: Employers must adhere to procedural due process requirements, including providing written notices and an opportunity for the employee to respond to the charges against them.
3. Indemnity for Due Process Violations: If an employee is dismissed for just cause but without due process, the employer may be liable for indemnity rather than reinstatement or back wages.