G.R. No. 113271 October 16, 1997
Waterous Drug Corporation and Ms. Emma Co, petitioners, vs. National Labor Relations Commission and Antonia Melodia Catolico, respondents.

FACTS

Private respondent Antonia Melodia Catolico was hired as a pharmacist by petitioner Waterous Drug Corporation on 15 August 1988. On 31 July 1989, she received memoranda from Vice President-General Manager Emma R. Co warning her against dispensing medicine to employees chargeable to their accounts and against negotiating with suppliers without consulting the Purchasing Department. On 29 January 1990, Control Clerk Eugenio Valdez reported an irregularity involving Catolico and Yung Shin Pharmaceuticals, Inc. (YSP). The report stated that a purchase order for ten bottles of Voren tablets was overpriced by P64.00 per bottle, and that a check for P640.00, representing the refund of this overprice, was issued by YSP and received by Catolico. Catolico was asked to explain. She initially denied receiving the check but later, through counsel, explained it was a Christmas gift from YSP. She was placed on preventive suspension and subsequently terminated on 5 March 1990 for acts of dishonesty detrimental to the company’s interest. Catolico filed a complaint for illegal dismissal and illegal suspension. The Labor Arbiter found the dismissal illegal due to lack of proof of dishonesty and failure to show an investigation was conducted, awarding separation pay, back wages, and compensation for illegal suspension. The NLRC affirmed the Labor Arbiter’s decision but modified it by deleting the separate award for illegal suspension. The NLRC also held that the check evidence was inadmissible, having been obtained in violation of Catolico’s constitutional rights to privacy of communication and against unreasonable searches and seizures.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in affirming the Labor Arbiter’s decision that Catolico was illegally dismissed.

RULING

The Supreme Court dismissed the petition and affirmed the NLRC’s decision, but set aside its reasoning regarding the inadmissibility of the check evidence. The Court held that the constitutional provisions on privacy of communication and unreasonable searches and seizures apply only against the government and its agents, not against private individuals. Therefore, the check obtained by Catolico’s co-employee was not inadmissible. However, the Court sustained the finding of illegal dismissal. The employer failed to discharge its burden of proving by substantial evidence that the dismissal was for a just cause. The evidence presented—the check and the report—did not conclusively prove that the check was a refund for an overprice, as it could have been a gift. The employer’s own audit report indicated the check was a “refund of jack-up price,” but this characterization was not definitively established. Furthermore, the company’s failure to verify the nature of the check directly with YSP or to present YSP’s representative as a witness weakened its case. The dismissal was not based on a breach of trust due to Catolico’s position as the evidence did not convincingly show she orchestrated the overprice. The awards of separation pay in lieu of reinstatement and one year of back wages were affirmed. Costs were imposed on the petitioners.