G.R. No. 196142 , March 26, 2014
VENUS B. CASTILLO, LEAH J. EVANGELISTA, DITAS M. DOLENDO, DAWN KAREN S. SY and PRUDENTIAL PLANS, INC. EMPLOYEES UNION – FEDERATION OF FREE WORKERS (PPEU-FFW), Petitioners, vs. PRUDENTIALIFE PLANS, INC., and/or JOSE ALBERTO T. ALBA, ATTY. CEFERINO A. PATINO, JR., and ROSEMARIE DE LEMOS, Respondents.

FACTS

Petitioners were regular employees of respondent Prudentialife Plans, Inc., an insurance company. Under their Collective Bargaining Agreement, employees were granted an optical benefit allowance of P2,500.00 to subsidize prescription eyeglasses. Prudentialife suspected fraud after being flooded with reimbursement requests for eyeglasses supposedly purchased from a single supplier, Alavera Optical. An investigation revealed that Alavera Optical’s contact details were fictitious, the official receipts and prescriptions appeared forged, the eyeglasses were grossly overpriced, and reimbursement was sought for eyeglasses not yet released. Petitioners and other employees were issued Notices to Explain. In their written explanations, petitioners claimed good faith and lack of knowledge of any fraud. However, other employees admitted in their written statements to participating in a scheme where the true cost of their eyeglasses (P1,200.00-P1,800.00) was inflated on receipts to the maximum benefit amount (P2,500.00-P2,600.00) with their knowledge and consent, and that the scheme was spearheaded by a co-employee. Prudentialife’s verification with reputable optical shops found that some petitioners’ eyeglasses had no grade or had mismatched prescriptions, and were excessively priced. Consequently, Prudentialife terminated petitioners for dishonesty, specifically for “padding receipt for reimbursement.” Petitioners filed a complaint for illegal dismissal. The Labor Arbiter ruled in favor of Prudentialife, finding the dismissals valid. The National Labor Relations Commission (NLRC) reversed, finding the dismissals illegal and ordering reinstatement. The Court of Appeals (CA) reinstated the Labor Arbiter’s decision, validating the dismissals.

ISSUE

Whether the Court of Appeals erred in reversing the NLRC and in ruling that petitioners were validly dismissed for dishonesty, particularly in admitting and relying on the written statements of petitioners’ co-employees who were not presented for cross-examination.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ Decision. The Court held that the written statements of the co-employees, admitting their participation in the fraudulent scheme, were admissible in evidence. The argument that these statements constitute hearsay because their authors were not presented for cross-examination is not persuasive. The rules of evidence are not strictly observed in proceedings before the NLRC, which are summary in nature, and decisions may be based on position papers and other documents. The Court found that Prudentialife had substantial evidence to prove that petitioners committed dishonesty by padding their reimbursement receipts. The findings of the Labor Arbiter and the CA, that petitioners knowingly participated in a scheme to defraud the company by claiming the maximum optical benefit for overpriced or substandard eyeglasses from a fictitious supplier, were supported by evidence. The loss of trust and confidence justified their dismissal. The NLRC’s reversal was a grave abuse of discretion, which the CA correctly rectified.