NICANOR MALCABA, ET AL, Petitioners – versus – PROHEALTH PHARMA

PHILIPPINES, INC., Respondents

G.R. No. 209085 | June 06, 2018 | Third Division | Leonen, J.

DOCTRINE: Illegal Dismissal of Employees

FACTS:
ProHealth Pharma Philippines, Inc. is a corporation engaged in the sale
of pharmaceutical products and health food on a wholesale and retail basis.
Generoso Del Castillo is the Chair of the Board of Directors and Chief
Executive Officer while Dante Busto is the Executive Vice President. Malcaba,
Tomas Adona, Jr., Nepomuceno, and Palit-Ang were employed as its President,
Marketing Manager, Business Manager, and Finance Officer, respectively.
Malcaba had been employed with ProHealth since it started in 1997. He
was one of its incorporators together with Del Castillo and Busto, and they
were all members of the Board of Directors in 2004. He held 1,000,000 shared
in the corporation. He was initially the Vice President for Sales then became
President in 2005.
Malcaba alleged that Del Castillo did acts that made his job difficult. He
asked to take a leave on October 23, 2007. When he attempted to return on
November 5, 2007, Del Castillo insisted that had already resigned and had his
things removed from his office. He attested that he was paid a lower salary in
December 2007 and his benefits were withheld. On Janaury 7, 2008, Malcaba
tendered his resignation effective February 1, 2008.
Nepomuceno, for his part alleged that he applied for a vacation leave for
the dates April 24, 25, and 28, 2008, which Busto approved. When he left for
Malaysia on April 23, 2008, ProHealth sent him a Memorandum dated April 24,
2008 asking him to explain his absence. He replaied through email that he
tried to call ProHealth to inform them that his flight on April 22, 2008 and not
on April 23, 2008 but was unable to connect on the phone. On May 7, 2008,
Nepomuceno was given a notice of termination, which was effective May 5,
2008, on the ground of fraud and willful breach of trust.
Palit-Ang, on the other hand, was issued a show cause memorandum on
November 27, 2007 for her failure to release the cash advance. She was also
relieved of her duties and reassigned to the office of the Personnel and
Administration Manager. In her explanation, she alleged that when Gamboa
saw that she was busy reciveing cash sales from another District Business
Manager, he told her that he would just return the next day to collect his cash
advance. Del Castillo, being dissatisfied with her explanation, transferred her
to another office. She was then invited to a fact-finding investigation, where
Palit-Ang was asked to explain her actions. On December 17, 2007, she was
handed a notice of termination effective December 31, 2007, for disobeying the
order of ProHealth’s highest official.
Malcaba, Nepomuceno, and Palit-Ang, and Adona separately filed
Complaints before the Labor Arbiter for illegal dismissal, nonpayment of
salaries and 13th month pay, damages, and attorney’s fees.
The LA found that Malcaba constructively dismissed. He found that
ProHealth never controverted the allegation that Del Castillo made it difficult
for Malcaba to effectively fulfill his duties. The LA also declared that
Nepomuceno’s failure to state the actual date of his flight was an excusable
mistake on his part, considering that this was his first infraction in his nine (9)
years of service. Palit-Ang’s dismissal was also found to have been illegal as
delay in complying with a lawful order was not tantamount to disobedience.
The LA further noted that delay in giving cash advance for car maintenance
would not have affected the company’s operations.
ProHealth appealed to the NLRC. On September 29, 2019, the NLRC
rendered its Decision, affirming the Labor Arbiter’s Decision with modifications.
ProHealth moved for reconsideration but was denied by the NLRC. Thus,
ProHealth, Del Castillo, and Busto filed a Petition for Certiorari before the
Court of Appeals. On February 19, 2013, the Court of Appeals rendered its
Decision reversing and setting aside the NLRC Decision. Malcaba,
Nepomuceno, and Palit-Ang moved for reconsideration but were denied. Hence
a petition was filed before the Supreme Court.
Petitioners argue that Nepomuceno and Palit-Ang were illegally
dismissed. They claim that petitioner Nepomuceno committed an “honest and
negligible mistake” that should not have warranted dismissal considering his
loyal service for nine (9) years. Petitioners maintain that Palit-Ang believed in
good faith that Gamboa would just claim his cash advance the day after he
tried to claim it and there was nothing in her actions that would prove that she
intended to disobey or defy respondent Del Castillo’s instructions. They insist
that delay in complying with orders is not tantamount to disobedience an
would not constitute just cause for petitioner Palit-Ang’s dismissal.
ISSUE/S:
1. Whether the LA and the NLRC Commision had jurisdiction over
petitioner Malcaba’s termination dispute considering the allegation that
he was a corporate officer, and not a mere employee (NO);
 2. Whether petitioner Nepomuceno was validly dismissed for willful breach
of trust (NO);
3. Whether Palit-Ang was validly dismissed for willful disobedience (NO).
RULING:
I
Under the Labor Code, the Labor Arbiter exercises original and exclusive
jurisdiction over termination disputes between an employes and an employee
while the National Labor Relations Commission exercises exclusive appellate
jurisdiction over the cases provided in Article 244.
Under Section 25 of the Coporation Code, the President of a corporation
is considered a corporate officer. The dismissal of a corporate officer is
considered an intra-corporate dispute, not a labor dispute. Thus, in Matling
Industrial and Commercial Corporation v . Coros, the Supreme Court stated that
jurisdiction over intra-corporate disputes involving the illegal dismissal of
corporate officers was with the Regional Trial Court, not with the Labor Arbiter.
Finding that petitioner Malcaba is the President of respondent
corporation and a corporate officer, any issue on his alleged dismissal is
beyond the jurisdiction of the Labor Arbiter or the National Labor Relations
Commission. Their adjudication on his money claims is void for Lack of
jurisdiction.
II
For an act to be considered a loss of trust and confidence, it must be
first, work-related, and second, founded on clearly established facts. The
breach of trust must likewise be willful, that is, “it is done intentionally,
knowingly and purposely, without justifiable excuse, as distinguished from an
act done carelessly, thoughtlessly, heedlessly or inadvertently.
As found by the LA and the NLRC, petitioner turned over all of his
pending work to a reliever before he left for Malaysia. He was able to reach his
sales quota and surpass his sales target even before taking his vacation leave.
Respondents did not suffer any financial damage as a result of his absence.
This was also petitioner Nepomuceno's first infraction in his nine (9) years of
service with respondents. None of these circumstances constitutes a willful
breach of trust on his part. The penalty of dismissal, thus, was too severe for
this kind of infraction.
Considering that petitioner Nepomuceno's dismissal was done without
just cause, he is entitled to reinstatement and full backwages.
III
 For disobedience to be considered as just cause for termination, two (2)
requisites must concur: first, "the employee's assailed conduct must have been
wilful or intentional," and second, "the order violated must have been
reasonable, lawful, made known to the employee and must pertain to the
duties which he [or she] had been engaged to discharge." For disobedience to
be willful, it must be "characterized by a wrongful and perverse mental attitude
rendering the employee's act inconsistent with proper subordination.”
When Gamboa went to collect the money from petitioner Palit-Ang, he
was told to return the next day as she was still busy. When petitioner Palit-Ang
found out that the money was to be used for a car tune-up, she suggested to
Gamboa to just get the money from his mobilization fund and that she just
would reimburse it after. The Court of Appeals found that these circumstances
characterized petitioner Palit-Ang's "arrogance and hostility," in failing to
comply with respondent Del Castillo's order, and thus, warranted her
dismissal. On the contrary, there was no ill will between Gamboa and
petitioner Palit-Ang. Petitioner Palit-Ang's failure to immediately give the money
to Gamboa was not the result of a perverse mental attitude but was merely
because she was busy at the time. Neither did she profit from her failure to
immediately give the cash advance for the car tune-up nor did respondents
suffer financial damage by her failure to comply.
Petitioner Palit-Ang, nonetheless, is considered to have been illegally
dismissed, her penalty not having been proportionate to the infraction
committed. Thus, she is entitled to reinstatement and full backwages.

Q: Malcaba has been employed with ProHealth since it started in 1997. He

was initially the Vice President for Sales until he became the President in 2005.
Malcaba allaged that Del Castillo, the Chair of the Board of Directors and Chief
Executive Officer, did acts that made his job difficult. He asked to take a leave
on October 23, 2007. When he attempted to return on November 5, 2007, Del
Castillo insisted that had already resigned and had his things removed from
his office. He attested that he was paid a lower salary in December 2007 and
his benefits were withheld. On Janaury 7, 2008, Malcaba tendered his
resignation effective February 1, 2008.
Does the Labor Arbiter or the National Labor Relations Commission have
a jurisdiction over petitioner Malcaba’s termination dispute considering the
allegation that he was a corporate officer, and not a mere employee?
A: NO. Under the Labor Code, the Labor Arbiter exercises original and
exclusive jurisdiction over termination disputes between an employes and an
employee while the National Labor Relations Commission exercises exclusive
appellate jurisdiction over the cases provided in Article 244.
Under Section 25 of the Coporation Code, the President of a corporation
is considered a corporate officer. The dismissal of a corporate officer is
considered an intra-corporate dispute, not a labor dispute.