G.R. No. 116813 November 24, 1995
Magnolia Corporation and Mr. Nathaniel E. Orillazarea, Sales Manager, petitioners, vs. National Labor Relations Commission and Mr. Romero A. Vestil, respondents.

FACTS

Private respondent Romeo Vestil was a route salesman for petitioner Magnolia Corporation with a decade of service and a record of numerous sales awards. In 1992, the company launched a “Special Dealer Incentive Promo.” Vestil reported distributing free ice cream products to several dealers as incentives under this scheme. However, a routine company confirmation revealed that the named dealers denied receiving these incentive products. The company also discovered that Vestil delayed remitting a customer’s check payment for several days. After investigation, Magnolia terminated Vestil for misappropriation and withholding of company funds, constituting breach of trust and serious misconduct.
Vestil filed a complaint for illegal dismissal. During proceedings before the Labor Arbiter, he alleged unfair labor practice for the first time in his Reply to the company’s position paper, claiming his dismissal was meant to bust a union he was helping to organize. The petitioners did not file a rejoinder. The Labor Arbiter ruled in Vestil’s favor, finding illegal dismissal and unfair labor practice, ordering reinstatement with backwages and awarding damages. The NLRC affirmed the illegal dismissal finding but deleted the monetary awards. It, however, sustained the unfair labor practice finding.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in: (1) finding that Vestil was illegally dismissed, and (2) finding the petitioners guilty of unfair labor practice.

RULING

The Supreme Court affirmed the NLRC’s finding of illegal dismissal but set aside the finding of unfair labor practice. On the first issue, the Court found no grave abuse of discretion. The NLRC correctly held that the evidence presented by Magnolia was insufficient to prove just cause for dismissal. The alleged misappropriation of incentive products was based solely on the unverified denial of the dealers, without corroborating evidence like sworn statements. The delayed remittance of a single check for six days, without proof of actual pecuniary loss to the company or dishonest intent, was deemed a minor infraction insufficient to constitute serious misconduct or willful breach of trust for a long-serving employee with an exemplary record.
On the second issue, the Court ruled the NLRC committed grave abuse of discretion in upholding the unfair labor practice charge. This charge was raised for the first time only in Vestil’s Reply, not in his original complaint. Under the NLRC’s own rules, parties are not allowed to allege facts or present evidence on causes of action not included in the complaint or position papers. The petitioners, having no opportunity to address this new and serious allegation in their position paper, were denied due process. A finding of unfair labor practice, a criminal offense under the Labor Code, cannot be sustained based on an allegation improperly introduced in a Reply.