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EUROTECH
HAIR SYSTEMS, INC., LUTZ KUNACK, and JOSE BARIN, Petitioners, |
G.R.
No. 160913
Present: |
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- versus - |
Quisumbing, J., Chairperson, CARPIO, Carpio morales,
TINGA,
and VELASCO, JR., JJ. |
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ANTONIO
S. GO, Respondent. |
Promulgated: August
31, 2006 |
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QUISUMBING, J.:
For review on certiorari are the Decision[1]
dated
The facts are as follows:
Petitioner Eurotech
Hair Systems, Inc. is a domestic corporation engaged in the manufacture and
export of wigs and toupees. Petitioners
Lutz Kunack and Jose E. Barin are the company’s president and general manager,
respectively.
Respondent Antonio
S. Go served as
Eurotech’s operations manager from
In 1999, the company suffered production
shortfalls. Thus, on
On
On
Consequently, respondent filed against
petitioners a complaint docketed as NLRC Case No. RAB-IV-10-11565-99-L for
illegal dismissal, separation pay, backwages, and damages.[5] The Labor Arbiter ruled for respondent.
On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit.[6] Respondent’s motion for reconsideration was denied. Hence, respondent elevated the matter to the Court of Appeals. The appellate court set aside the decision of the NLRC and essentially reinstated the ruling of the Labor Arbiter.
Respondent
received said Decision of the Court of Appeals on P450,000. Hence,
on
Petitioners thus moved for
reconsideration of the Court of Appeals’ decision in light of the said
settlement. Respondent, on the other
hand, manifested that he was not represented by his counsel when he signed the
quitclaim. He further alleged that he
was in fact advised by petitioners not to inform his counsel about the quitclaim.
The Court of Appeals denied the
motion for reconsideration for lack of merit and voided for lack of
jurisdiction the Labor Arbiter’s Order dismissing the case with prejudice.
Hence, the instant petition raising
the following issues:
A
WHETHER OR NOT THE NLRC EXHIBITED GRAVE ABUSE OF DISCRETION IN
RENDERING ITS DECISION DATED
1.
Whether or not respondent’s Petition for
Certiorari prayed for the Court of Appeals’ correction of the NLRC’s evaluation
of the evidence without establishing where the grave of abuse lies.
2.
Whether or not the findings of facts by the NLRC are
conclusive upon the Court of Appeals, which can no longer be disturbed.
B
WHETHER OR NOT
THE JUDGMENT OF THE COURT OF APPEALS HAD LEGAL BASIS AND WAS BASED ON GROSS
MISAPPRECIATION OF FACTS.
1.
Whether or not the NLRC correctly ruled that
there was sufficient and legitimate basis to terminate the services of
respondent for his gross incompetence resulting in the Company’s loss of
confidence on said employee.
2.
Whether or not the Court of Appeals had
substantial basis to support its judgment.
3.
Whether or not the Court of Appeals’ ruling has
violated the Company’s constitutional right to reasonable returns on its
investments.
4.
Whether or not respondent was afforded the
required procedural due process.
C
WHETHER OR NOT THE
COURT OF APPEALS HAD LEGAL BASIS IN HOLDING THAT THE LABOR ARBITER DID NOT HAVE
JURISDICTION TO DISMISS THE CASE IN VIEW OF THE COMPROMISE AGREEMENT REACHED
BETWEEN THE PARTIES.[9]
Simply
put, the issues now for our resolution are:
(1) Was respondent’s dismissal in accordance
with law? and (2) Is the compromise agreement entered into by the parties
valid?
Petitioners contend the NLRC
correctly ruled there was legitimate basis to terminate respondent for gross
incompetence resulting in the company’s loss of confidence in him. But petitioners also claim that the Court of
Appeals’ ruling effectively violated their constitutional right to reasonable
returns on investment. They allege that
the evidence on record shows respondent was afforded the required procedural
due process.
Petitioners likewise contend that the
pendency of respondent’s petition for certiorari before the Court of Appeals
did not divest the Labor Arbiter of jurisdiction to dismiss the case in view of
the quitclaim. They add that respondent
knowingly and voluntarily executed the waiver in the presence of the Labor
Arbiter. Petitioners further allege that
the compromise agreement has the force and effect of res judicata.
Respondent, for his part, counters
that there was no legal or factual basis to terminate him on the ground of loss
of trust and confidence. He argues that
allowing an employer to dismiss an employee on a simple claim of loss of trust
and confidence places the employee’s right to security of tenure at the mercy
of the employer.
Respondent further contends that the
petition raises only questions of fact and should therefore be denied outright.
Finally, he assails the Court of
Appeals’ deletion of the award of attorney’s fees. He argues that since moral and exemplary
damages have been awarded to respondent, an award of attorney’s fees is proper
under Article 2208[10]
of the Civil Code.
Considering all the circumstances in
this case, we find the present petition meritorious.
Loss of trust and confidence to be a
valid ground for an employee’s dismissal must be based on a willful breach and founded on clearly established facts. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently.[11]
While failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to
inefficiency may be a just cause for dismissal,[12]
the employer must show what standards of work or reasonable work assignments were
prescribed which the employee failed to observe. In addition, the employer must prove that the
employee’s failure to observe any such standards or assignments was due to his
own inefficiency.[13]
In this case, petitioners showed that
respondent failed to meet production targets despite reminders to measure up to
the goals set by the company. However,
they were unable to prove that such failure was due to respondent’s
inefficiency. Significant factors that might
explain the company’s poor production include existing market conditions at the
time, the overall spending behavior of consumers, and the prevailing state of
the country’s economy as a whole. The
company’s production shortfalls cannot be attributed to respondent alone,
absent any showing that he willfully breached the trust and confidence reposed
in him by the petitioners.
Note that the burden of proof in
dismissal cases rests on the employer.[14]
In the instant case, however,
petitioners failed to prove that respondent was terminated for a valid cause. Evidence adduced was utterly wanting as to
respondent’s alleged inefficiency constituting a willful breach of the trust
and confidence reposed in him by petitioners.
However, on the second issue, we find
for petitioners.
Article 227 of the Labor Code
provides:
ART.
227. Compromise agreements. – Any compromise settlement, including those
involving labor standard laws, voluntarily agreed upon by the parties with the
assistance of the Bureau or the regional office of the Department of Labor,
shall be final and binding upon the parties. …
Note, however, that even if contracted without
the assistance of labor officials, compromise agreements between workers and
their employers remain valid and are still considered desirable means of settling
disputes.[15]
A compromise agreement is
valid as long as the consideration is reasonable and the employee signed the
waiver voluntarily, with a full understanding of what he was entering into. All that is required for the compromise to be
deemed voluntarily entered into is personal and specific individual consent. Thus, contrary to respondent’s contention, the
employee’s counsel need not be present at the time of the signing of the compromise
agreement.
In this case, we find the
consideration of P450,000 fair and reasonable
under the circumstances. In addition,
records show that respondent gave his personal and specific individual consent
with a full understanding of the stakes involved. In our view, the compromise agreement in this
case does not suffer from the badges of invalidity.
The fact that the Order,
which dismissed the case in view of the compromise agreement, was issued during
the pendency of the petition for certiorari in the Court of Appeals does not
divest the Labor Arbiter of jurisdiction. A petition for certiorari is an original action and
does not interrupt the course of the principal case unless a temporary
restraining order or a writ of preliminary injunction has been issued against
the public respondent from further proceeding.[16]
The Labor Arbiter thus acted well within
his jurisdiction. Therefore, the Labor Arbiter’s Order dismissing the case
with prejudice in view of the compromise agreement entered into by the parties
must be upheld.
WHEREFORE, the petition is GRANTED.
The assailed Decision dated
No costs.
SO ORDERED.
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LEONARDO A. QUISUMBING Associate Justice |
WE CONCUR:
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ANTONIO T. CARPIO Associate Justice |
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CONCHITA CARPIO MORALES Associate Justice |
DANTE O. TINGA Associate Justice |
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PRESBITERO J. VELASCO,
JR. Associate Justice |
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A T T E S T A T I O N
I attest that the conclusions in the above Resolution
had been reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division.
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LEONARDO A. QUISUMBING Associate Justice Chairperson |
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution, and the Division Chairperson’s Attestation, I certify that the
conclusions in the above Resolution had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
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ARTEMIO V. PANGANIBAN Chief Justice |
[1] Rollo, pp. 60-72. Penned by Associate Justice Oswaldo D. Agcaoili, with Associate Justices Perlita J. Tria Tirona, and Edgardo F. Sundiam concurring.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10] Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;
x x x x
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim;
x x x x
(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;
x x x x
[11] Asia Pacific Chartering (Phils.), Inc. v. Farolan, G.R. No. 151370, December 4, 2002, 393 SCRA 454, 466.
[12] Buiser v. Leogardo, Jr.,
No. L-63316,
[13]
[14] Athenna International Manpower Services, Inc. v. Villanos, G.R. No. 151303, April 15, 2005, 456 SCRA 313, 320.
[15]
[16] Tomas Claudio Memorial College, Inc. v. Court of Appeals, G.R. No. 152568, February 16, 2004, 423 SCRA 122, 132.