G.R. No. 99034 . April 12, 1993.
JEAN C. AURELIO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, NORTHWESTERN COLLEGE, BEN A. NICOLAS, ERNESTO B. ASUNCION, JOFFREY AURELIO, JOSE G. CASTRO, FRANCISCO SANTELLA, ALBA B. CADAY, LILIA PAZ, WILFRED A. NICOLAS, GLENN AQUINO, LUCIDIA RUIZ-FLOREZ, respondents.

FACTS

Petitioner Jean C. Aurelio started as a clinical instructor at Northwestern College (NWC) in June 1977. She was later appointed Dean of the College of Nursing in October 1979, promoted to College Administrator/Vice-President for Administration in September 1981, and eventually to Executive Vice-President. On April 10, 1988, her husband, Oscar Aurelio, a stockholder, was elected Auditor. On May 1, 1988, a new Board of Directors (the individual respondents) took over management and implemented a series of actions affecting the petitioner: her husband was removed as Auditor; her office facilities (airconditioner, refrigerator) were removed; she was asked to justify the use of a conference room; the Nursing librarian was reassigned; her salary was reduced from P7,500 to P2,500 per month; and while she was absent due to illness, her office and the Nursing conference room were reassigned to other officers. Due to these actions, which she perceived as indignities and humiliation, petitioner wrote a letter on September 20, 1988, informing the President of NWC that she was taking an indefinite leave of absence. She also sought assistance from the Secretary of Education, Culture and Sports (DECS). An investigation by DECS representatives confirmed her allegations and noted her willingness to withdraw her leave. The DECS directed respondents to decide on her resumption as Dean by November 14, 1988. Respondents did not reply and refused to accept her back. Consequently, on November 16, 1988, petitioner filed a complaint for illegal dismissal, seeking reinstatement, backwages, damages, and attorney’s fees. The Labor Arbiter dismissed the complaint. The National Labor Relations Commission (NLRC) modified the decision, awarding separation pay equivalent to one-half month pay for every year of service (P32,750.00) but denied reinstatement, backwages, and damages.

ISSUE

Whether the dismissal of petitioner, a managerial employee, was valid, and if not, what is the proper remedy.

RULING

The Supreme Court affirmed the NLRC decision with modification. The Court held that employers are allowed a wider latitude of discretion in terminating the employment of managerial personnel, as their functions require the employer’s trust and confidence. Loss of trust and confidence under Article 282(c) of the Labor Code is a valid ground for dismissal, requiring only a sufficient basis, not proof beyond reasonable doubt. The Court found that the Board of Directors had the prerogative to reorganize the college’s offices and abolish positions it deemed no longer necessary, absent any showing of malice or bad faith. The reduction of petitioner’s rank and salary was not done in a capricious, whimsical, or arbitrary manner. However, the Court agreed with the NLRC’s finding that petitioner was not afforded due process prior to her dismissal. In cases where there is a valid ground for dismissal but due process was not observed, the employer is liable to pay indemnity. Following precedents (Wenphil v. NLRC and Pacific Mills, Inc. v. Alonzo), the Court imposed a sanction of P1,000.00 as indemnity for non-observance of due process. The NLRC’s award of separation pay was deleted. Thus, the decision was AFFIRMED with the MODIFICATION that the award of separation pay is DELETED and private respondents are ORDERED to pay petitioner P1,000.00 as indemnity.