G.R. No. 174115 , November 09, 2015
PUNONGBAYAN AND ARAULLO (P&A), BENJAMIN R. PUNONGBAYAN, JOSE G. ARAULLO, GREGORIO S. NAVARRO, ALFREDO V. DAMIAN AND JESSIE C. CARPIO, PETITIONERS, VS. ROBERTO PONCE LEPON, RESPONDENT.

FACTS

Petitioner Punongbayan and Araullo (P&A) is a professional partnership engaged in public accounting. Respondent Roberto Ponce Lepon was hired by P&A on July 5, 1988, and eventually became the Manager-in-Charge of its Cebu operations and Director of its Visayas-Mindanao operations. In April 2002, P&A entered into negotiations for a possible merger with Sycip Gorres Velayo and Company (SGV). Respondent expressed opposition to the merger via an email to a partner. P&A later learned that respondent had met with P&A’s clients to invite them to engage the services of a competing firm, Laya Mananghaya-KPMG, and attempted to recruit P&A’s staff from its Cebu and Davao offices. On May 30, 2002, petitioner Alfredo V. Damian sent respondent a letter requiring him to explain these alleged disloyal acts. The letter also placed respondent on a leave of absence with pay from June 1 to June 15, 2002, and required him to turn over firm-issued materials. In his reply dated June 6, 2002, respondent denied the allegations. On June 17, 2002, after considering his explanation, Damian served a termination notice on respondent, effective June 16, 2002, due to loss of trust and confidence. Respondent filed a complaint for illegal suspension and illegal dismissal. The Labor Arbiter dismissed the complaint, a decision affirmed by the NLRC. The Court of Appeals reversed the NLRC, ruling that the dismissal was illegal and that respondent was denied due process. The CA directed petitioners to pay backwages, separation pay, and attorney’s fees.

ISSUE

1. Whether the factual findings of both the NLRC and the Labor Arbiter were supported by substantial evidence.
2. Whether respondent was deprived of his right to due process.
3. Whether the petitioners are jointly and severally liable with P&A to pay the judgment award.

RULING

1. Yes, the factual findings of the NLRC and Labor Arbiter were supported by substantial evidence. The Supreme Court found that the Court of Appeals erred in reversing these findings. The Labor Arbiter and NLRC based their decisions on substantial evidence, including affidavits from P&A’s employees detailing respondent’s acts of soliciting clients and recruiting staff for a competitor. The Court held that the CA improperly re-evaluated the credibility of this evidence. The affidavits were found to be credible, detailed, and consistent, and there was no proof that the affiants were motivated by ill will. Respondent’s acts, committed while he was still a manager of P&A, constituted willful breach of trust justifying dismissal.
2. No, respondent was not deprived of due process. The Court ruled that the procedural requirements for dismissal were substantially complied with. Respondent was given a written notice stating the specific grounds for termination and a reasonable opportunity to explain his side through his written reply dated June 6, 2002. The law does not always require a formal hearing; the opportunity to be heard can be through written explanations. Respondent did not request a hearing. His termination notice was served after his explanation was considered. His preventive suspension (the leave of absence) was justified to prevent him from continuing the alleged inimical acts using firm time and resources.
3. No, the individual partners are not jointly and severally liable with the partnership for the judgment award. The Supreme Court held that a partnership, like P&A, has a juridical personality separate and distinct from that of each partner. The complaint was filed against the partnership and its partners. Since the Court found the dismissal to be valid, no liability for backwages, separation pay, or damages arises. However, the Court clarified the principle: absent evidence that the partners acted in bad faith or beyond the scope of their authority, their liability is limited to the partnership’s assets. The solidary liability of partners under the Civil Code applies only to the partnership’s contractual obligations and does not automatically extend to liability for illegal dismissal awards.
The Supreme Court GRANTED the petition. The Decision and Resolution of the Court of Appeals were REVERSED and SET ASIDE. The Decisions of the NLRC and the Labor Arbiter, which found respondent’s dismissal valid, were REINSTATED.