G.R. No. 165968 ; April 14, 2008
PEPSI COLA PRODUCTS PHILIPPINES, INC. AND ERNESTO F. GOCHUICO, petitioners, vs. EMMANUEL V. SANTOS, respondent.

FACTS

Respondent Emmanuel V. Santos was employed by petitioner Pepsi Cola Products Phils., Inc. in July 1989 and was promoted to Acting Regional Sales Manager in March 1996. On February 14, 1997, he received a memorandum from petitioner Ernesto F. Gochuico charging him with fraud, breach of trust, engaging in fictitious sales transactions, and serious misconduct under Article 282(a) of the Labor Code. The charges stemmed from alleged artificial sales by his office’s personnel in March 1996, purportedly under his instruction, causing alleged damage of P795,454.54. After an administrative investigation, he was found guilty and dismissed on June 27, 1997.
Santos filed an illegal dismissal case. The Labor Arbiter initially dismissed it but, on remand by the NLRC, ruled the dismissal illegal, awarding separation pay, backwages, and attorney’s fees, but moral and exemplary damages were later deleted by the NLRC. The Court of Appeals affirmed the NLRC’s finding of illegal dismissal. Petitioners now argue before the Supreme Court that the dismissal was valid, a trial on the merits was necessary, and the attorney’s fees award was improper.

ISSUE

The issues are: (1) whether Santos was validly dismissed; (2) whether a full trial on the merits was required; and (3) whether the award of attorney’s fees was proper.

RULING

The Supreme Court partially granted the petition, deleting the award of attorney’s fees but upholding the finding of illegal dismissal and the procedural sufficiency of the proceedings. On the first issue, the Court affirmed that petitioners failed to prove just cause for dismissal. The burden of proof rests on the employer. The only substantial evidence presented was the notice of termination, which merely narrated the investigation. This was insufficient to establish the serious charges of fraud and willful misconduct. The long delay—almost a year from discovering the alleged fraud to suspending Santos—also weakened petitioners’ position.
On the second issue, the Court held a full-blown trial was not mandatory. The Labor Arbiter has discretion to decide based on position papers and supporting documents, especially when the parties, as here, had agreed to submit the case for resolution based on the pleadings. The rules of procedure in labor cases are flexible to ensure speedy resolution. Finally, the Court deleted the award of attorney’s fees. While illegal dismissal was established, the NLRC had correctly deleted moral and exemplary damages due to absence of proof of bad faith or malice. Attorney’s fees require similar factual basis of unlawful or bad faith conduct compelling litigation, which was absent. No premium should be placed on the right to litigate.