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Calalas vs Court of Appeals GR 122039, 31 May 2000 .

. No basis for moral damages since there was no factual finding by the
appellate court that petitioner acted in bad faith in the performance of
FACTS: . Private respondent is Eliza Sunga who is a college freshman the contract of carriage.
majoring in Physical Education in Siliman University.
. SC: affirmed the decision of the CA, moral damages is deleted.
. Petitioner -Defendant is Vicente Calalas who is the owner and
operator of the passenger jeepney. Cangco v. Manila Railroad Co. G.R. No. L-12191, 14 October 1918
. At 10AM of August 23, 1989, Sunga took a passenger jeepney owned Jose Cangco was in the employment of Manila Railroad Company. He
and operated by Calalas. lived in the pueblo of San Mateo, in the province of Rizal, which is
located upon the line of the defendant railroad company; and in coming
. As the jeepney was filled to capacity of about 24 passengers, Sunga daily by train to the company’s office in the city of Manila where he
was given by the conductor an “extension seat,” a wooden stool at the worked, he used a pass, supplied by the company, which entitled him
back of the door of the rear end of the vehicle. to ride upon the company’s trains free of charge.
During his ride in the train he arose from his seat and makes his way
. On the way to Negros Occidental, the jeepney stopped to let a to the exit while the train is still on travel. When the train has proceeded
passenger off. a little farther Jose Cangco step down into the cement platform but
unfortunately step in to a sack of watermelon, fell down and rolled under
. Sunga gave way to the outgoing passenger. Just as she was doing the platform and was drawn under the moving car which resulting to his
so, an Isuzu truck driven by Verena and owned by Salva bumped the arm to be crashed and lacerated. He was rushed to the hospital and
left rear portion of the jeepney. sued the company and the employee who put the sack of watermelon
in the platform.
. As a result, Sunga was injured. She sustained a fracture. The accident occurred between 7 and 8 o’ clock on the dark night. It is
that time of the year that may we considered as season to harvest
. Sunga filed a complaint for damages against Calalas. Calalas filed a watermelon explaining why there are sacks of watermelon in the
third party complaint against Salva. platform. The plaintiff contends that it is the negligence of the Manila
Railroad Co. on why they let their employees put a hindrance in the
. RTC: absolved Calalas and held Salva responsible platform that may cause serious accident. The defendant answered
that it is the lack of diligence on behalf of the plaintiff alone on why he
. CA: reversed ruling of the RTC on the ground that Sunga‘s cause of did not wait for the train to stop before alighting the train.
action was based on a contract of carriage, not quasi-delict and that ISSUE:
the common carrier failed to exercise the diligence required under the Whether or not the company is liable or there is a contributory
Civil Code negligence on behalf of the plaintiff.
ISSUE: W/N petitioner is liable on his contract of carriage. There is no contributory negligence on behalf of the plaintiff. The
Supreme Court provides some test that may find the contributory
RULING: . Contention of the Petitioner: the ruling in Civil Case 3490 negligence of a person. Was there anything in the circumstances
that the negligence of Verena was the proximate cause of the accident surrounding the plaintiff at the time he alighted from the train which
and to rule otherwise would be to make the common carrier an insurer would have admonished a person of average prudence that to get off
of the safety of the passengers. the train under the conditions then existing was dangerous? If so, the
plaintiff should have desisted from alighting; and his failure so to desist
. Petition has no merit. Principle of Res Judicata does not apply was contributory negligence.
because the complainant is not a party to the said civil case, there are Alighting from a moving train while it is slowing down is a common
different issues, and different sources of obligation. practice and a lot of people are doing so every day without suffering
injury. Cangco has the vigor and agility of young manhood, and it was
. In Civil Case 3490 the issue is whether or not Veran and Salva were by no means so risky for him to get off while the train was yet moving
liable for quasi delict for damages in the jeepney. In quasi-delict, the as the same act would have been in an aged or feeble person. He was
negligence or fault should be clearly established . also ignorant of the fact that sacks of watermelons were there as there
were no appropriate warnings and the place was dimly lit.
. The issue in this case is whether petitioner is liable on his contract of Article 1173, first paragraph: The fault or negligence of the obligor
carriage. In breach of contract, the action can be prosecuted merely by consists in the omission of that diligence which is required by the nature
proving the existence of the contract and the fact that the obligor, in this of the obligation and corresponds with the circumstances of that
case the common carrier, failed to transport his passenger safely to his persons, of the time and of the place. When negligence shows bad
destination. faith, the provisions of Article 1171 and 2201, paragraph 2, shall apply.
In the case the proximate cause of the accident is the lack of diligence
. It is immaterial if the proximate cause of the collision was the of the company to inform their employees to not put any hindrance in
negligence of the truck driver. The doctrine of proximate cause does the platform like sacks of watermelon. The contract of defendant to
not apply in breach of contract. It is applicable only in quasi-delict as transport plaintiff carried with it, by implication, the duty to carry him in
the obligation is created by law. But where there is a pre-existing safety and to provide safe means of entering and leaving its trains (civil
contractual relation between the parties, it is the parties themselves code, article 1258). That duty, being contractual, was direct and
who create the obligation, and the function of the law is merely to immediate, and its non-performance could not be excused by proof that
regulate the relation thus created. the fault was morally imputable to defendant’s servants. Therefore, the
company is liable for damages against Cangco.
. No extraordinary diligence: 1. The jeepney was not properly parked;
2. The jeepney took in more passengers than allowed seating capacity; FGU Insurance Corporation vs. CA
3. Sung was seated in an extension seat. FACTS:
A Mitsubishi Colt Lancer owned by FILCAR driven by a Danish tourist
Peter Dahl-Jensen collided with another Mitsubishi Colt Lancer owned
by Lydia Soriano driven by Benjamin Jacildone. The accident took
place at EDSA. The car owned by FILCAR swerved to the right hitting assurance that he will be seated in first class because allegedly in truth
the left side of the car of Soriano. At that time, Dahl-Jensen did not and in fact, that was not the true intent between the parties.
possess a Philippine driver‘s license. FGU Insurance Corporation, in Air France also questioned the admissibility of Carrascoso’s testimony
view of its contact with Soriano, paid Soriano. By way of subrogation, regarding the note made by the purser because the said note was
FGU sued Dahl-Jensen and FILCAR and Fortune Insurance never presented in court.
Corporation. Dahl-Jensen was dropped in the complaint because ISSUE 1: Whether or not Air France is liable for damages and on what
summons was not served to him. TC dismissed the case for failure to basis.
substantiate the claim of subrogation. CA affirmed the TC‘s ruling ISSUE 2: Whether or not the testimony of Carrasoso regarding the note
based on another ground, i.e. only the fault or negligence of Dahl- which was not presented in court is admissible in evidence.
Jensen was sufficiently proceed but not that of FILCAR. HELD 1: Yes. It appears that Air France’s liability is based on culpa-
ISSUE: WON on the action based on quasi-delict prosper against a contractual and on culpa aquiliana.
rent-a-car company, and consequently, its insurer for fault or Culpa Contractual
negligence of the car lease in driving the rented vehicle. There exists a contract of carriage between Air France and Carrascoso.
HELD: No. To sustain a claim based on Article 2176 CC, the following There was a contract to furnish Carrasocoso a first class
requisites must concur: a) damage suffered by the plaintiff; (b) fault or passage; Second, That said contract was breached when Air France
negligence of the defendant; and, (c) connection of cause and effect failed to furnish first class transportation at Bangkok; and Third, that
between the fault or negligence of the defendant and the damage there was bad faith when Air France’s employee compelled Carrascoso
incurred by the plaintiff. to leave his first class accommodation berth “after he was already,
It is plain that the negligence was solely attributable to Dahl-Jensen seated” and to take a seat in the tourist class, by reason of which he
thus making the damage suffered by the other vehicle his personal suffered inconvenience, embarrassments and humiliations, thereby
liability. FILCAR did not have any participation therein. causing him mental anguish, serious anxiety, wounded feelings and
The liability imposed by Art. 2180 arises by virtue of a presumption juris social humiliation, resulting in moral damages.
tantum of negligence on the part of the persons made responsible The Supreme Court did not give credence to Air France’s claim that the
thereunder, derived from their failure to exercise due care and vigilance issuance of a first class ticket to a passenger is not an assurance that
over the acts of subordinates to prevent them from causing damage. he will be given a first class seat. Such claim is simply incredible.
Art. 2180 is hardly applicable because none of the circumstances Culpa Aquiliana
mentioned therein obtains in the case under consideration. Here, the SC ruled, even though there is a contract of carriage between
Respondent FILCAR being engaged in a rent-a-car business was only Air France and Carrascoso, there is also a tortuous act based on culpa
the owner of the car leased to Dahl-Jensen. As such, there was no aquiliana. Passengers do not contract merely for transportation. They
vinculum juris between them as employer and employee. Respondent have a right to be treated by the carrier’s employees with kindness,
FILCAR cannot in any way be responsible for the negligent act of Dahl- respect, courtesy and due consideration. They are entitled to be
Jensen, the former not being an employer of the latter. protected against personal misconduct, injurious language, indignities
Par. 5 of Art. 2180 in relation to Art. 2184 of the same Code provides: and abuses from such employees. So it is, that any rule or discourteous
"In motor vehicle mishap, the owner is solidarily liable with his driver, if conduct on the part of employees towards a passenger gives the latter
the former, who was in the vehicle, could have by the use of due an action for damages against the carrier. Air France’s contract with
diligence, prevented the misfortune x x x x If the owner was not in the Carrascoso is one attended with public duty. The stress of
motor vehicle, the provisions of article 2180 are applicable." Obviously, Carrascoso’s action is placed upon his wrongful expulsion. This is a
this provision of Art. 2184 is neither applicable because of the absence violation of public duty by the Air France — a case of quasi-delict.
of master-driver relationship between respondent FILCAR and Dahl- Damages are proper.
Jensen. Clearly, petitioner has no cause of action against respondent HELD: 2: Yes. The testimony of Carrascoso must be admitted based
FILCAR on the basis of quasi-delict; logically, its claim against on res gestae. The subject of inquiry is not the entry, but the ouster
respondent FORTUNE can neither prosper. incident. Testimony on the entry does not come within the proscription
of the best evidence rule. Such testimony is admissible. Besides, when
Air France vs Rafael Carrascoso March 4, 2014 the dialogue between Carrascoso and the purser happened, the impact
Civil Law – Torts and Damages – Negligence – Malfeasance – Quasi- of the startling occurrence was still fresh and continued to be felt. The
Delict excitement had not as yet died down. Statements then, in this
Remedial Law – Evidence – Hearsay Rule – Res Gestae – Startling environment, are admissible as part of the res gestae. The utterance of
Event the purser regarding his entry in the notebook was spontaneous, and
In March 1958, Rafael Carrascoso and several other Filipinos were related to the circumstances of the ouster incident. Its trustworthiness
tourists en route to Rome from Manila. Carrascoso was issued a first has been guaranteed. It thus escapes the operation of the hearsay rule.
class round trip ticket by Air France. But during a stop-over in Bangkok, It forms part of the res gestae.
he was asked by the plane manager of Air France to vacate his seat
because a white man allegedly has a “better right” than him. PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION,
Carrascoso protested but when things got heated and upon advise of vs. COURT OF APPEALS, HON. REGINA ORDOÑEZ-BENITEZ, in
other Filipinos on board, Carrascoso gave up his seat and was her capacity as Presiding Judge of Branch 47, Regional Trial
transferred to the plane’s tourist class. Court, Manila, SEGUNDA R. BAUTISTA and ARSENIA D.
After their tourist trip when Carrascoso was already in the Philippines, BAUTISTA, respondents.
he sued Air France for damages for the embarrassment he suffered
during his trip. In court, Carrascoso testified, among others, that he A stabbing incident on 30 August 1985 which caused the death of
when he was forced to take the tourist class, he went to the plane’s Carlitos Bautista while on the second-floor premises of the Philippine
pantry where he was approached by a plane purser who told him that School of Business Administration (PSBA) prompted the parents of the
he noted in the plane’s journal the following: deceased to file suit in the Regional Trial Court of Manila (Branch 47)
First-class passenger was forced to go to the tourist class against his presided over by Judge (now Court of Appeals justice) Regina
will, and that the captain refused to intervene Ordoñez-Benitez, for damages against the said PSBA and its corporate
The said testimony was admitted in favor of Carrascoso. The trial court officers. At the time of his death, Carlitos was enrolled in the third year
eventually awarded damages in favor of Carrascoso. This was affirmed commerce course at the PSBA. It was established that his assailants
by the Court of Appeals. were not members of the school's academic community but were
Air France is assailing the decision of the trial court and the CA. It avers elements from outside the school.
that the issuance of a first class ticket to Carrascoso was not an
Specifically, the suit impleaded the PSBA and the following school presumably suffice to equip him with the necessary tools and skills to
authorities: Juan D. Lim (President), Benjamin P. Paulino (Vice- pursue higher education or a profession. On the other hand, the student
President), Antonio M. Magtalas (Treasurer/Cashier), Col. Pedro Sacro covenants to abide by the school's academic requirements and
(Chief of Security) and a Lt. M. Soriano (Assistant Chief of Security). observe its rules and regulations.
Substantially, the plaintiffs (now private respondents) sought to Institutions of learning must also meet the implicit or "built-in" obligation
adjudge them liable for the victim's untimely demise due to their alleged of providing their students with an atmosphere that promotes or assists
negligence, recklessness and lack of security precautions, means and in attaining its primary undertaking of imparting knowledge. Certainly,
methods before, during and after the attack on the victim. During the no student can absorb the intricacies of physics or higher mathematics
proceedings a quo, Lt. M. Soriano terminated his relationship with the or explore the realm of the arts and other sciences when bullets are
other petitioners by resigning from his position in the school. flying or grenades exploding in the air or where there looms around the
Defendants a quo (now petitioners) sought to have the suit dismissed, school premises a constant threat to life and limb. Necessarily, the
alleging that since they are presumably sued under Article 2180 of the school must ensure that adequate steps are taken to maintain peace
Civil Code, the complaint states no cause of action against them, as and order within the campus premises and to prevent the breakdown
jurisprudence on the subject is to the effect that academic institutions, thereof.
such as the PSBA, are beyond the ambit of the rule in the afore-stated Because the circumstances of the present case evince a contractual
article. relation between the PSBA and Carlitos Bautista, the rules on quasi-
The respondent trial court, however, overruled petitioners' contention delict do not really govern. 8 A perusal of Article 2176 shows that
and thru an order dated 8 December 1987, denied their motion to obligations arising from quasi-delicts or tort, also known as extra-
dismiss. A subsequent motion for reconsideration was similarly dealt contractual obligations, arise only between parties not otherwise bound
with by an order dated 25 January 1988. Petitioners then assailed the by contract, whether express or implied. However, this impression has
trial court's disposition before the respondent appellate court which, in not prevented this Court from determining the existence of a tort even
a decision * promulgated on 10 June 1988, affirmed the trial court's when there obtains a contract. In Air France vs. Carrascoso (124 Phil.
orders. On 22 August 1988, the respondent appellate court resolved to 722), the private respondent was awarded damages for his
deny the petitioners' motion for reconsideration. Hence, this petition. unwarranted expulsion from a first-class seat aboard the petitioner
At the outset, it is to be observed that the respondent appellate court airline. It is noted, however, that the Court referred to the petitioner-
primarily anchored its decision on the law of quasi-delicts, as airline's liability as one arising from tort, not one arising from a contract
enunciated in Articles 2176 and 2180 of the Civil Code. 1 Pertinent of carriage. In effect, Air France is authority for the view that liability
portions of the appellate court's now assailed ruling state: from tort may exist even if there is a contract, for the act that breaks the
Article 2180 (formerly Article 1903) of the Civil Code is an contract may be also a tort. (Austro-America S.S. Co. vs. Thomas, 248
adoption from the old Spanish Civil Code. The comments of Fed. 231).
Manresa and learned authorities on its meaning should give way This view was not all that revolutionary, for even as early as 1918, this
to present day changes. The law is not fixed and flexible (sic); it Court was already of a similar mind. In Cangco vs. Manila Railroad (38
must be dynamic. In fact, the greatest value and significance of Phil. 780), Mr. Justice Fisher elucidated thus:
law as a rule of conduct in (sic) its flexibility to adopt to changing The field of non-contractual obligation is much broader than
social conditions and its capacity to meet the new challenges of that of contractual obligation, comprising, as it does, the whole
progress. extent of juridical human relations. These two fields,
Construed in the light of modern day educational system, Article figuratively speaking, concentric; that is to say, the mere fact
2180 cannot be construed in its narrow concept as held in the that a person is bound to another by contract does not relieve
old case of Exconde vs. Capuno 2 and Mercado vs. Court of him from extra-contractual liability to such person. When such
Appeals; 3 hence, the ruling in the Palisoc 4 case that it should a contractual relation exists the obligor may break the contract
apply to all kinds of educational institutions, academic or under such conditions that the same act which constitutes a
vocational. breach of the contract would have constituted the source of
At any rate, the law holds the teachers and heads of the school an extra-contractual obligation had no contract existed
staff liable unless they relieve themselves of such liability between the parties.
pursuant to the last paragraph of Article 2180 by "proving that Immediately what comes to mind is the chapter of the Civil Code on
they observed all the diligence to prevent damage." This can Human Relations, particularly Article 21, which provides:
only be done at a trial on the merits of the case. 5 Any person who wilfully causes loss or injury to another in a
While we agree with the respondent appellate court that the motion to manner that is contrary to morals, good custom or public
dismiss the complaint was correctly denied and the complaint should policy shall compensate the latter for the damage. (emphasis
be tried on the merits, we do not however agree with the premises of supplied).
the appellate court's ruling. Air France penalized the racist policy of the airline which emboldened
Article 2180, in conjunction with Article 2176 of the Civil Code, the petitioner's employee to forcibly oust the private respondent to cater
establishes the rule of in loco parentis. This Court discussed this to the comfort of a white man who allegedly "had a better right to the
doctrine in the afore-cited cases of Exconde, Mendoza, Palisoc and, seat." In Austro-American, supra, the public embarrassment caused to
more recently, in Amadora vs. Court of Appeals. 6 In all such cases, it the passenger was the justification for the Circuit Court of Appeals,
had been stressed that the law (Article 2180) plainly provides that the (Second Circuit), to award damages to the latter. From the foregoing, it
damage should have been caused or inflicted by pupils or students of can be concluded that should the act which breaches a contract be
he educational institution sought to be held liable for the acts of its done in bad faith and be violative of Article 21, then there is a cause to
pupils or students while in its custody. However, this material situation view the act as constituting a quasi-delict.
does not exist in the present case for, as earlier indicated, the In the circumstances obtaining in the case at bar, however, there is, as
assailants of Carlitos were not students of the PSBA, for whose acts yet, no finding that the contract between the school and Bautista had
the school could be made liable. been breached thru the former's negligence in providing proper security
However, does the appellate court's failure to consider such material measures. This would be for the trial court to determine. And, even if
facts mean the exculpation of the petitioners from liability? It does not there be a finding of negligence, the same could give rise generally to
necessarily follow. a breach of contractual obligation only. Using the test of Cangco, supra,
When an academic institution accepts students for enrollment, there is the negligence of the school would not be relevant absent a contract.
established a contract between them, resulting in bilateral obligations In fact, that negligence becomes material only because of the
which both parties are bound to comply with. 7 For its part, the school contractual relation between PSBA and Bautista. In other words, a
undertakes to provide the student with an education that would contractual relation is a condition sine qua non to the school's liability.
The negligence of the school cannot exist independently of the answers were written in the handwriting of a co-employee, Joedito
contract, unless the negligence occurs under the circumstances set out Gasendo. Petitioners management then sent respondent a Memo
in Article 21 of the Civil Code. dated 27 July 1998 requiring an explanation for the incident. [7]
This Court is not unmindful of the attendant difficulties posed by the
obligation of schools, above-mentioned, for conceptually a school, like Soon thereafter, petitioner sent a subsequent Memo
a common carrier, cannot be an insurer of its students against all risks. dated 20 August 1998 to respondent requiring the latter to explain his
This is specially true in the populous student communities of the so- delay in submitting process reports. [8]
called "university belt" in Manila where there have been reported
several incidents ranging from gang wars to other forms of hooliganism. On 8 September 1998, respondent submitted a
It would not be equitable to expect of schools to anticipate all types of written explanation to the petitioner stating that the delay in the
violent trespass upon their premises, for notwithstanding the security submission of reports was caused by the deaths of his grandmother
measures installed, the same may still fail against an individual or and his aunt, and the hospitalization of his mother. He also averred that
group determined to carry out a nefarious deed inside school premises he had asked his co-employee Joedito Gasendo to write his answers
and environs. Should this be the case, the school may still avoid liability to the ROL test because at the time when the examination was due, he
by proving that the breach of its contractual obligation to the students already needed to leave to see his father-in-law, who was suffering
was not due to its negligence, here statutorily defined to be the from cancer and confined in a hospital in Manila. [9]
omission of that degree of diligence which is required by the nature of
the obligation and corresponding to the circumstances of persons, time Respondent was sent a new Memorandum dated 20
and place. 9 October 1998 for his delayed submission of process reports due on 14
As the proceedings a quo have yet to commence on the substance of October 1998. [10]
the private respondents' complaint, the record is bereft of all the
material facts. Obviously, at this stage, only the trial court can make Respondent was issued another Memo also dated 20 October
such a determination from the evidence still to unfold. 1998 regarding the discrepancies between the number of product
WHEREFORE, the foregoing premises considered, the petition is samples recorded in his Daily/Weekly Coverage Report (DCR) and the
DENIED. The court of origin (RTC, Manila, Br. 47) is hereby ordered to number of product samples found in his possession during the 14
continue proceedings consistent with this ruling of the Court. Costs October 1998 audit. [11] The actual number of sample products found
against the petitioners. in respondents possession exceeded the number of sample products
SO ORDERED. he reported to petitioner.

JANSSEN PHARMACEUTICA, - versus - BENJAMIN Respondent explained, through a Response Memo dated 24
A. SILAYRO, October 1998, that he failed to count the quantity of samples when they
were placed in his custody. Thus, he failed to take note of the excess
This is a petition for review on certiorari under Rule 45 of the samples from previous months. He, likewise, admitted to committing
Rules of Court, assailing the Decision, [1] dated 8 February 2006, errors in posting the samples that he distributed to some doctors during
promulgated by the Court of Appeals in CA-G.R. SP No. 81983, the months of August and September 1998. [12]
reversing the Decision [2] dated 7 May 2003 of the National Labor
Relations Commission (NLRC) in NLRC Case No. V-000880-99. The On 20 November 1998, petitioner issued a Notice of
Court of Appeals, in its assailed Decision, adjudged the dismissal of Disciplinary Action finding respondent guilty of the following offenses
respondent Benjamin Silayro by petitioner Jansen Pharmaceutica as (1) delayed submission of process reports, for which he was subjected
illegal for being an excessive and unwarranted penalty. The appellate to a one-day suspension without pay, effective 24 November 1998; [13]
court determined that the suspension of the respondent for five months and (2) cheating in his ROL test, for which he was subjected again to a
without salary as just penalty. one-day suspension. [14]

Petitioner is the division of Johnson & Johnson Philippines On the same date, petitioner likewise issued a Notice
Inc. engaged in the sale and manufacture of pharmaceutical products. of Preventive Suspension against respondent for Dishonesty in
In 1989, petitioner employed respondent as Territory/Medical Accomplishing Other Accountable Documents in connection with the
Representative. During his employment, respondent received from discrepancy between the quantities of sample products in respondents
petitioner several awards and citations for the years 1990 to 1997, such report and the petitioners audit for the September 1998 cycle. In
as Territory Representative Award, Quota Buster Award, Sipag Award, addition, the Notice directed the respondent to surrender to the
Safety Drivers Award, Ring Club Award, and a Nomination as one of petitioner the car, promotional materials, and all other accountabilities
the Ten Outstanding Philippine Salesmen. [3] On the dark side, on or before 25 November 1998. It was also stated therein that since
however, respondent was also investigated for, and in some cases this was respondents third offense for the year, he could be dismissed
found guilty of, several administrative charges. under Section 9.5.5(c) of petitioners Code of Conduct. [15]

Petitioner alleged that in 1994, respondent was found guilty of Before 25 November 1998 or the date given by
granting unauthorized premium/free goods to and unauthorized pull- petitioner for respondent to surrender all his accountabilities, a
outs from customers. [4] Petitioner failed to attach records to support Memorandum dated 24 November 1998 was issued to respondent for
its allegation and to explain the nature of and the circumstance the following alleged infractions: (1) Failure to turn over company
surrounding these infractions. Respondent, for his part, admitted to vehicles assigned after the receipt of instruction to that effect from
have been guilty of granting unauthorized premium/free goods, but superiors, and (2) Refusing or neglecting to obey Company
vehemently denied violating the rule on, or having been charged with, management orders to perform work without justifiable reason. [16]
unauthorized pull-outs from customers. [5]
Respondent wrote a letter dated 26 November 1998
The respondent was also investigated for dishonesty in addressed to the petitioner explaining that he failed to surrender his
connection with the Rewards of Learning (ROL) test. The ROL test is a accountabilities because he thought that this was tantamount to an
one-page take-home examination, with two questions to be answered admission that the charges against him were true and, thus, could
by an enumeration of the standards of performance by which territory result in his termination from the job. [17]
representatives are rated as well as the sales competencies expected
of territory representatives. [6] It was discovered that respondents
An administrative investigation of the respondents case was
held on 3 December 1998. Respondent was accompanied by union On appeal, the NLRC modified the Decision of the Labor
representative Lyndon Lim. The parties discussed matters concerning Arbiter by declaring that reinstatement was improper where respondent
the discrepancy in respondents report and petitioners audit on the was dismissed for just and authorized causes. [28] In a Decision dated
number of product samples in respondents custody in September 7 May 2003, it pronounced that:
1998. They were also able to clarify among themselves respondents
failure to return his accountabilities and, as a consequence, respondent WHEREFORE, premises considered, complainants appeal is
promised to surrender the same. They further agreed that another hereby DISMISSED. The decision of the Labor Arbiter is hereby
administrative hearing will be set, but no further hearings were held. AFFIRMED with MODIFICATION deleting the award of reinstatement.
[18] [29]

In line with his promise to surrender his accountabilities,

respondent wrote a letter, dated 9 December 1998, asking his Respondent filed a Petition for Certiorari under Rule 65 of the
superiors where he should return his accountabilities. [19] Union Rules of Court before the Court of Appeals. In reversing the Decision
representative Dominic Regoro also made requests, on behalf of of the NLRC, the appellate court pronounced that the causes were
respondent, for instructions, to whom petitioners District Supervisor insufficient for the dismissal of respondent since respondents acts were
Raymond Bernardo replied via electronic mail on 16 December 1998. not motivated by dishonesty, but were caused by mere inadvertence.
According to Bernardo, he was still in the process of making Thus, it concluded that the offenses committed by respondent merited
arrangements with Ruben Cauton, petitioners National Sales Manager, only a penalty of suspension for five months without pay. The appellate
in connection with the return of respondents accountabilities. [20] court also noted that petitioner committed some lapses in its
Respondent maintained that he did not receive any instructions from compliance with procedural due process. It further took into account
petitioner. the successive deaths and sickness in respondents family. [30] The
dispositive part of the decision reads:
In a letter dated 28 December 1998, petitioner terminated the
services of respondent. [21] Petitioner found respondent guilty of WHEREFORE, premises considered, the petition is
dishonesty in accomplishing the report on the number of product GRANTED. Thus, the Decision and Resolution respectively dated 7
samples in his possession and failing to return the company vehicle May 2003 and 14 October 2003 are hereby SET ASIDE. Accordingly,
and his other accountabilities in violation of Sections 9.2.9 and 9.2.4 of Judgment is hereby rendered:
the Code of Conduct. [22] Petitioner also found respondent to be a
habitual offender whose previous offenses included: (1) Granting a) Declaring petitioners dismissal to be illegal;
unauthorized premium/free goods to customer in 1994; (2)
Unauthorized pull-out of stocks from customer in 1994; (3) Delay in b) Reinstating petitioner to the same or equivalent
submission of reports despite oral admonition and written reprimand in position without loss of seniority rights and other privileges;
1998; and (4) Dishonesty in accomplishing other accountable
documents or instruments (in connection with the ROL test) in 1998. c) Ordering the payment of backwages (inclusive of
allowances and other benefits or their monetary equivalent), computed
Even after respondents termination from employment, there from the time compensation was withheld up to the time of actual
was still contact between petitioner and respondent regarding the reinstatement; Provided that, from such computed amount of
latters accountabilities still in his possession. Sometime in early 1999, backwages, a deduction of five (5) months (sic) salary be made to serve
in a telephone conversation, respondent informed petitioner that he will as penalty; and
return his accountabilities only upon demand from the proper
governmental agency. [23] A demand letter dated 3 February 1999 was d) If reinstatement is no longer feasible, ordering
sent to respondent by petitioner ordering the return of the company car, the payment of separation pay comprising of one month salary per year
promotional materials, samples, a slide projector, product manuals, of service computed from date of employment up to finality of this
product monographs, and training binders. [24] decision, in addition to the award of backwages.

On 14 January 1999, respondent filed a Complaint [25] Let the records of this case be remanded to the Labor Ariter a
against petitioner and its officers, Rafael Besa, Rueben Cauton, Victor quo for the proper computation of the foregoing. [31]
Lapid, and Raymond Bernardo before the Sub-Regional Arbitration
Branch of the NLRC in Iloilo City for (a) Unfair Labor Practice; (b) Illegal Hence, this Petition, wherein the following issues
Dismissal; (c) Reimbursement of operating and representation were raised:
expenses under expense reports for October and November 1998; (d)
Nonpayment of salary, bonuses and other earned benefits for I
December 1998 like rice allocation, free goods allocation, etc.; and (e) WHETHER OR NOT THE COURT OF APPEALS GRAVELY
In a Decision dated 31 August 1999, the Labor Arbiter ruled
that respondent committed infractions which breached company rules, II
and which were sufficient grounds for dismissal. However, the Labor
Arbiter found the penalty of dismissal to be too harsh considering the WHETHER OR NOT RESPONDENTS DISMISSAL FOR HIS
respondents circumstances and ordered his reinstatement without FAILURE TO TRUTHFULLY ACCOMPLISH REPORTS,
payment of back wages. [26] The dispositive portion of the Decision DELIBERATE AND REPEATED FAILURE TO SUBMIT REQUIRED
WHEREFORE, premises considered, judgment is rendered TANTAMOUNT TO DISHONESTY, GROSS AND HABITUAL
ordering respondents firm to reinstate complainant to his former or NEGLECT OF DUTY, WILLFUL DISOBEDIENCE OF COMPANY
equivalent position without backwages. POLICY, AND BREACH OF TRUST AND CONFIDENCE REPOSED
All other claims are hereby dismissed. [27]
LABOR CODE WAS LEGAL, VALID AND CARRIED OUT WITH DUE In this case, petitioner had not been able to identify an act of
PROCESS dishonesty, misappropriation, or any illicit act, which the respondent
may have committed in connection with the erroneously reported
III product samples. While respondent was admittedly negligent in filling
WHETHER OR NOT THE TOTALITY OF INFRACTIONS out his August and September 1998 DCR, his errors alone are
COMMITTED BY RESPONDENT FURTHER MERITED HIS insufficient evidence of a dishonest purpose. Since fraud implies
TERMINATION FROM THE COMPANYS EMPLOY willfulness or wrongful intent, the innocent non-disclosure of or
inadvertent errors in declaring facts by the employee to the employer
IV will not constitute a just cause for the dismissal of the employee. [37]
WHETHER OR NOT THE RESPONDENT HAS ANY BASIS In addition, the subsequent acts of respondent belie a design to
FOR CLAIMING AN AWARD OF REINSTATEMENT AND misappropriate product samples. So as to escape any liability,
BACKWAGES. [32] respondent could have easily just submitted for audit only the number
of product samples which he reported. Instead, respondent brought all
This petition is without merit. the product samples in his custody during the audit and, afterwards,
honestly admitted to his negligence. Negligence is defined as the
The main question in this case is whether or not sufficient grounds failure to exercise the standard of care that a reasonably prudent
existed for the dismissal of the respondent. To constitute a valid person would have exercised in a similar situation. [38] To this Court,
dismissal from employment, two requisites must concur: (1) the respondent did not commit any willful violation, rather he merely failed
dismissal must be for any of the causes provided in Article 282 of the to exercise the standard care required of a territory representative to
Labor Code; and, (2) the employee must be given an opportunity to be carefully count the number of product samples delivered to him in
heard and to defend himself. [33] August and September 1998.

In this case, the Court must re-examine the factual findings of the In the Memorandum dated 20 November 1998, petitioner
Court of Appeals, as well as the contrary findings of the NLRC and ordered respondent to return the company vehicle and all other
Labor Arbiter. While it is a recognized principle that this Court is not aaccountabilities by 25 November 1998. Petitioner issued its first notice
trier of facts and does not normally embark in the evaluation of on 24 November 1998, even before respondent was obligated to return
evidence adduced during trial, this rule allows for exceptions. [34] One his accountabilities. Hence, respondent could not yet have committed
of these exceptions covers instances when the findings of fact of the any offense when petitioner issued the first notice. Confused by
trial court, or in this case of the quasi-judicial agencies concerned, arepetitioners arbitrary action, respondent did not return his
conflicting or contradictory with those of the Court of Appeals. [35] accountabilities, but immediately explained in a letter dated 26
November 1998 his reasons for failing to return his accountabilities on
In the termination letter dated 28 December 1998, respondent was 25 November 1998 as previously ordered by the petitioner.
dismissed on the ground that he committed the following offenses: (1)
dishonesty in accomplishing the report on the number of product During the company hearing held on 3 December 1998,
samples in his possession; and (2) his failure to return the company respondent offered to return his accountabilities in accordance with the
vehicle and other accountabilities in violation of Sections 9.2.9 and instructions to be given by the petitioner. In a letter dated 9 December
9.2.4 of the Code of Conduct. In addition to these offenses, petitioner 1998 addressed to the petitioner, respondent reiterated his request for
took into account that the petitioner committed the following infractions instructions on the return of his accountabilities. There is no showing
in the past: (1) granting unauthorized premium/free goods in 1994; (2) that petitioner replied to respondents letter. The letter written by
unauthorized pull-outs from customers in 1995; (3) cheating during the petitioners District Supervisor Raymond Bernardo to union
ROL exam in 1998; and (4) three infractions of delayed process reports representative Dominic Regoro sent through electronic mail on 16
in 1998. December 1998 still provided no definite instructions to the respondent
for the return of his accountabilities. This is the last communication
Initially, the Court must determine whether the respondent violated between the parties on the matter until petitioner wrongfully dismissed
the Code of Conduct with his dishonesty in accomplishing his report on the respondent on 28 December 1998 for deliberately refusing to
product samples and/or failure to return the company vehicle and other surrender his accountabilities, among other grounds. The petitioner
such accountabilities. The records of this case negate a finding of such does not refer in its pleadings to any instance after the company
culpability on the part of the respondent. hearing was held and before the respondent was dismissed wherein it
had finally instructed the respondent as to how he may turn over his
Petitioner failed to present evidence that respondent was guilty of accountabilities. Per petitioners pleadings, belated demands for the
dishonesty in accomplishing the DCR, wherein he was supposed to surrender of respondents accountabilities were made in January and
indicate the number of product samples in his possession for August February 1999, after respondent had already been dismissed. Clearly,
and September 1998. Petitioner merely relied on the fact that the the charge against respondent of insubordination to the petitioners
number of product samples the respondent reported was incorrect, and instructions for the surrender of his accountabilities was unfounded
the number of product samples later found in his possession exceeded since the respondent was still waiting for said instructions when he was
that which he reported. Respondent admitted that when the product dismissed.
samples had arrived, he failed to check if the number of product
samples indicated in the DCR corresponded to the number actually Moreover, petitioner failed to observe procedural due process
delivered and that he made mistakes in posting the product samples in connection with the aforementioned charge. Section 2(d) of Rule 1
distributed during the period in question. of The Implementing Rules of Book VI states that:

In termination cases, the burden of proof rests with the employer For termination of employment based on just causes
to show that the dismissal is for just and valid cause. Failure to do so as defined in Article 282 of the Labor Code:
would necessarily mean that the dismissal was not justified and
therefore was illegal. [36] Dishonesty is a serious charge, which the (i) A written notice served on the employee specifying
employer must adequately prove, especially when it is the basis for the ground or grounds for termination, and giving said employee
termination. reasonable opportunity within which to explain his side.
(ii) A hearing or conference during which the employee would give this offense substantial weight and importance, it can only
concerned, with the assistance of counsel if he so desires is given be presumed that petitioner did not consider the offense as sufficiently
opportunity to respond to the charge, present his evidence, or rebut the momentous to disqualify respondent from receiving an award or to
evidence presented against him. even just issue the respondent a warning that a subsequent offense
would result in the termination of his employment.
(iii) A written notice of termination served on the
employee, indicating that upon due consideration of all the The rest of the infractions imputed to the respondent
circumstances, grounds have been established to justify his were committed during the time he was undergoing serious family
termination. (Emphases supplied.) problems. His inability to comply with the deadlines for his process
reports and his lack of care in accounting for the product samples in his
From the aforecited provision, it is implicit that these custody are understandably the result of his preoccupation with very
requirements afford the employee an opportunity to explain his side, serious problems. Added to the pressure brought about by the
respond to the charge, present his or her evidence and rebut the numerous charges he found himself facing, his errors and negligence
evidence presented against him or her. should be viewed in a more compassionate light.

The superficial compliance with two notices and a hearing in Petitioners inability to keep up with his deadlines and
this case cannot be considered valid where these notices were issued his carelessness with his report on product samples during a difficult
and the hearing made before an offense was even committed. The first time in his life are in no way comparable to the transgressions in the
notice, issued on 24 November 1998, was premature since respondent cases cited by petitioner involving other territory representatives Chua
was obliged to return his accountabilities only on 25 November 1998. v. National Labor Relations Commission [41] and Gustilo v. Wyeth
As respondents preventive suspension began on 25 November 1998, Philippines. [42] In the Chua case, it was not a mere case of delay in
he was still performing his duties as territory representative the day the submission of reports and the occasional mistakes in the DCR, but
before, which required the use of the company car and other company an established pattern of inattention in the submission and
equipment. During the administrative hearing on 3 December 1998, accomplishing of his reports. The employee therein did not even submit
both parties clarified the confusion caused by the petitioners premature some of the DCRs, while other DCRs were belatedly submitted in
notice and agreed that respondent would surrender his accountabilities batches covering two to three months. Doctors call cards lacked either
as soon as the petitioner gave its instructions. Since petitioners the corresponding dates or the signatures of the doctors concerned. In
ostensible compliance with the procedural requirements of notice and the Gustillo case, the employee falsified his application form, a gasoline
hearing took place before an offense was even committed, respondent receipt, a report of his trade outlet calls, and misused his leaves.
was robbed of his rights to explain his side, to present his evidence and Evidently, the employee in this case misappropriated company
rebut what was presented against him, rights ensured by the proper resources by making claims for falsified expenses and making personal
observance of procedural due process. calls in lieu of trade outlet calls. In this case, respondent had not
Of all the past offenses that were attributed to the respondent, defrauded the petitioner of its property.
he contests having committed the infraction involving the unauthorized
pull-outs from customers, allegedly made in 1994. Again, the records The gravest charge that the respondent faced was
show that petitioner did not provide any proof to support said charge. It
cheating in his ROL test. Although he avers that he formulated the
must be emphasized at this point that the onus probandi to prove the answers himself and that he merely allowed his co-employee Joedito
lawfulness of the dismissal rests with the employer, [39] and in light of
Gasendo to write down his answers for him, this Court finds this excuse
petitioners failure to discharge the same, the alleged offense cannot beto be very flimsy. The ROL test consists of one page and two
given any credence by this Court. As for the three remaining violations,straightforward questions, which can be answered by more or less ten
it is unquestioned that respondent had committed and had already sentences. Respondent could have spared the few minutes it would
been punished for them. take to write the examination. If he had lacked the time due to a family
emergency, a request for an extension would have been the more
While a penalty may no longer be imposed on offenses for reasonable and honest alternative.
which respondent has already been punished, these offenses, among
other offenses, may still be used as justification for an employees Despite the disapproving stance taken by this Court against
dismissal. Hence, this Court must now take into consideration all the dishonesty, there have been instances when this Court found the
offenses that respondent committed during his employment and decide ultimate penalty of dismissal excessive, even for cases which bear the
whether these infractions, taken together, constitute a valid cause for stigma of deceit.
In Philippine Long Distance Telephone Company v. National
Undoubtedly, respondent was negligent in reporting the Labor Relations Commission, [43] an employee intervened in the
number of product samples in his custody for August and September anomalous connection of four telephone lines. It was, likewise,
1998. He also committed three other offenses in the past. First, he was established in Manila Electric Company v. National Labor Relations
found guilty of and penalized for granting unauthorized free goods in Commission, [44] that the employee was involved in the illegal
1994. Secondly, he incurred delays in submitting his process reports installation of a power line. In both cases, the violations were clearly
for August, September and October 1998, for which charge he was prejudicial to the economic activity of his employer. Finally, in National
punished with one-day suspension. Lastly, he cheated in an ROL test Labor Relations Commission v. Salgarino, [45] a school teacher
in July 1998 for which he was punished with another one-day tampered with the grades of her students, an act which was prejudicial
suspension. to the schools reputation. Notably, the Court stopped short of
dismissing these employees for offenses more serious than the present
Respondents offense of granting unauthorized free case.
goods was vaguely discussed. Petitioner did not offer any evidence in In this case, the ROL test is a take-home examination
this connection; it was given credence only because of respondents intended to check a territory representatives understanding of
admission of the same. What acts constituted this offense and the information already contained in their Sales Career Manual, wherein
circumstances surrounding it were not explained. However, the records the examinees are even instructed to refer to their manuals. The
show that in the same year it was committed, in 1994, petitioner still improper taking of this test, while it puts into question the examinees
gave respondent two awards: membership to the Wild Boar Society moral character, does not result in any potential loss of property or
and the Five-Year Service Award. [40] Absent any explanation which damage to the reputation of the employer. Nor does respondents
previous performance show lack of knowledge required in his sales G.R. SP No. 81983, promulgated on 8 February 2006, is AFFIRMED.
career. Additionally, the dishonesty practiced by the employee did not Costs against the petitioner.
involve company property that was placed in his custody. Furthermore,
the gravity of this offense is substantially diminished by the fact that
petitioner itself had thought it unimportant enough to merit only a one-
day suspension. The respondents ten years of commendable
performance cannot be cancelled out by a single mistake made during
a difficult period of his life, a mistake that did not pose a potential
danger to his employer.
The special circumstances of this case -- respondents family
crises, the duration of his employment, and the quality of his work
during the previous years -- must necessarily influence the penalty to
be meted out to the respondent. It would be a cruel disregard of the
constitutional guarantee of security of tenure to impose the penalty of
dismissal, without giving due consideration to the ill fortune that may
befall a normally excellent employee.

In National Labor Relations Commission v. Salgarino, [46]

special consideration was given to the fact that the respondent therein
had been in the employ of the petitioners therein for 10 years and that
she was a recipient of numerous academic excellence awards and
recognized by her students and some of her peers in the profession as
a competent teacher. The Court, in other cases, has repeatedly ruled
that in determining the penalty to be imposed on an erring employee,
his or her length of service must be taken into account. [47] In Brew
Master International, Inc., v. National Federation of Labor Unions, [48]
the emotional, psychological, spiritual and physical stress and strain
undergone by the employee during a family crisis were regarded as
special circumstances which precluded his dismissal from service,
despite his prolonged absence from work. The Court explains the
circumspection it exercises when faced with the imposition of the
extremely severe penalty of dismissal thus:

The employers prerogative to discipline its employee

must be exercised without abuse of discretion. Its implementation
should be tempered with compassion and understanding. While an
employer has the inherent right to discipline its employees, we have
always held that this right must always be exercised humanely, and the
penalty it must impose should be commensurate to the offense
involved and to the degree of its infraction. The employer should bear
in mind that, in the exercise of such right, what is at stake is not the
employees position but her livelihood as well. The law regards the
workers with compassion. Even where a worker has committed an
infraction, a penalty less punitive may suffice, whatever missteps may
be committed by labor ought not to be visited with a consequence so
severe. This is not only the laws concern for workingman. There is, in
addition, his or her family to consider. Unemployment brings untold
hardships and sorrows upon those dependent on the wage-earner. [49]

Respondents violations of petitioners Code of

Conduct, even if taken as a whole, would not fall under the just causes
of termination provided under Article 282 of the Labor Code. [50] They
are mere blunders, which may be corrected. Petitioner failed to point
out even a potential danger that respondent would misappropriate or
improperly dispose of company property placed in his custody. It had
not shown that during his employment, respondent took a willfully
defiant attitude against it. It also failed to show a pattern of negligence
which would indicate that respondent is incapable of performing his
responsibilities. At any other time during his employment, respondent
had shown himself a commendable worker.

Nonetheless, the infractions committed by the respondent,

while disproportionate to a penalty of dismissal, will not be overlooked.
The suspension of five months without pay, imposed by the Court of
Appeals, would serve as a sufficient and just punishment for his
violations of the companys Code of Conduct.

IN VIEW OF THE FOREGOING, the instant Petition is

DISMISSED and the assailed Decision of the Court of Appeals in CA-

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