CASE DIGEST: Alilem Credit Coop. v. Bandiola, Jr.

G.R. No. 173489 : February 25, 2013 | ALILEM CREDIT COOPERATIVE, INC., now known as ALILEM MULTIPURPOSE COOPERATIVE, INC., Petitioner, v .SALVADOR M. BANDIOLA, JR., Respondent. PERALTA, J.:

Respondent was employed by petitioner as bookkeeper. Petitioner's Board of Directors (the Board) received a letter from a certain Napoleon Gao-ay (Napoleon) reporting the alleged immoral conduct and unbecoming behavior of respondent by having an illicit relationship with Napoleon sister, Thelma G. Palma (Thelma). This prompted the Board to conduct a preliminary investigation. During the preliminary investigation, the Board received evidence of respondent alleged extramarital affair.Respondent, on the other hand, denied the accusation against him. He, instead, claimed that the accusation was a result of the insecurity felt by some members of the cooperative and of the Board because of his growing popularity owing to his exemplary record as an employee. Thelma executed an affidavit likewise denying the allegations of extra-marital affair.

Meanwhile, on June 7, 1997, the Board received a petition from about fifty members of the cooperative asking the relief of respondent due to his illicit affair with Thelma.

In its Summary Investigation Report, the Ad Hoc Committee of petitioner concluded that respondent was involved in an extra-marital affair with Thelma. On July 10, 1997, the Chairman of the Board sent a letterto respondent informing him of the existence of a prima facie case against him for "illicit marital affair, an act that brings discredit to the cooperative organization and a cause for termination per AMPC (Alilem Multi-Purpose Cooperative) Personnel Policy. Respondent was directed to appear and be present at the AMPC office for a hearing. He was likewise advised of his right to be assisted by counsel.

On the day of the hearing, respondent requested for postponement on the ground that his lawyer was not available. The request was, however, denied and the hearing proceeded as scheduled.

In a Memorandum dated July 16, 1997, respondent was informed of Board Resolution No. 05, series of 1997 embodying the Board decision to terminate his services as bookkeeper of petitioner, effective July 31, 1997, without any compensation or benefit except the unpaid balance of his regular salary for services actually rendered.

Aggrieved, respondent filed a Complaint for Illegal Dismissal against petitioner before the Regional Arbitration Branch of the NLRC.

On April 30, 1998, the Labor Arbiter (LA) dismissed respondent complaint for lack of merit. The LA concluded that respondent had been or might still be carrying on an affair with a married woman. The LA found it unforgiving in the case of a married employee who sleeps with or has illicit relations with another married person for in such case, the employee sullies not only the reputation of his spouse and his family but the reputation as well of the spouse of his paramour and the latter family. As opposed to respondent claim that the accusation is a mere fabrication of some of the directors or cooperative members who were allegedly envious of his growing popularity, the LA gave more credence to the testimonies of petitioner witnesses who were relatives of Thelma and who had no motive to falsely testify because their family reputation was likewise at a risk of being tarnished. The LA, thus, found respondent to have been validly dismissed from employment for violation of the cooperative Personnel Policy. The LA also found no violation of respondent right to due process as he was given ample opportunity to defend himself from the accusation against him.

On appeal, the NLRC set aside the LA decision. The NLRC found petitioner Personnel Policy to be of questionable existence and validity because it was unnumbered. It held that even assuming that respondent had an extra-marital affair with a married woman, the latter is not his fellow worker in petitioner business establishment. It, thus, concluded that respondent dismissal was not founded on any of the just causes for termination of employment under Article 282 of the Labor Code, as amended.

Petitioner elevated the matter to the CA, but it failed to obtain a favorable decision. Petitioner now comes before the Court in this petition for review on certiorari insisting on the validity of respondent dismissal from employment.

ISSUE: Whether or not petitioner illegally dismissed respondent.

HELD: The Court of Appeals decision is reversed and set aside.

It is undisputed that respondent was dismissed from employment for engaging in extramarital affairs, a ground for termination of employment stated in petitioner Personnel Policy. This basis of termination was made known to respondent as early as the first communication made by petitioner. In its June 20, 1997 letter, petitioner directed respondent to explain in writing or personal confrontation why he should not be terminated for violation of Section 4.1.4 of the Personnel Policy. Respondent merely denied the accusation against him and did not question the basis of such termination. When the LA was called upon to decide the illegal dismissal case, it ruled in favor of petitioner and upheld the basis of such dismissal which is the cited Personnel Policy. The NLRC, however, refused to recognize the existence and validity of petitioner Personnel Policy on which the ground for termination was embodied.

The existence of the Personnel Policy containing provisions on the grounds for termination of employees was not questioned by respondent. In his position paper, respondent only assailed the effectivity of the policy, as for him as it was amended on the same date as the letter-complaints against him. In other words, he claimed that the policy was amended in order to include therein the ground for his termination to make sure that he is removed from his position.

Contrary to respondent claim, with the amendment of the Personnel Policy, petitioner did not create a new ground for the termination of employment to make sure that respondent is removed from his position. The ground under the old policy is similar to that provided for in the new policy. The enumeration containing the specific act of "illicit marital affairs" is not an additional ground, but an example of an act that brings discredit to the cooperative. It is merely an interpretation of what petitioner considers as such. It is, thus, clear from the foregoing that engaging in extra-marital affairs is a ground for termination of employment not only under the new but even under the old Personnel Policy of petitioner. The effectivity of the policy as to respondent cannot, therefore, be questioned.

To be sure, an employer is free to regulate all aspects of employment. It may make reasonable rules and regulations for the government of its employees which become part of the contract of employment provided they are made known to the employee. In the event of a violation, an employee may be validly terminated from employment on the ground that an employer cannot rationally be expected to retain the employment of a person whose lack of morals, respect and loyalty to his employer, regard for his employer rules and application of the dignity and responsibility, has so plainly and completely been bared.

Applying now the above-discussed ground for termination, we now determine whether respondent was properly dismissed from employment. In other words, did petitioner adequately prove that respondent indeed engaged in extra-marital affairs, an act which petitioner considers as would bring discredit to the cooperative?

We answer in the affirmative.

The employer evidence consists of sworn statements of either relatives or friends of Thelma and respondent. They either had direct personal knowledge of the illicit relationship or revealed circumstances indicating the existence of such relationship.

There is also no reason to doubt the statement of Melanie Gao-ay, the wife of Napoleon, who witnessed the embarrassing "encounter", to borrow the term she used, between [respondent] and Thelma in her own boarding house.

While respondent act of engaging in extra--marital affairs may be considered personal to him and does not directly affect the performance of his assigned task as bookkeeper, aside from the fact that the act was specifically provided for by petitioner Personnel Policy as one of the grounds for termination of employment, said act raised concerns to petitioner as the Board received numerous complaints and petitions from the cooperative members themselves asking for the removal of respondent because of his immoral conduct.

The next question is whether procedural due process was observed in the termination of respondent services. "Before the services of an employee can be validly terminated, the employer must furnish him two written notices: (a) a written notice served on the employee specifying the ground or grounds for termination, and giving the employee reasonable opportunity to explain his side; and (b) a written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination." The employer must inform the employee of the charges against him and to hear his defenses. A full adversarial proceeding is not necessary as the parties may be heard through pleadings, written explanations, position papers, memorandum or oral argument.

In this case, respondent was adequately afforded the opportunity to defend himself and explain the accusation against him. Upon receipt of the complaint, petitioner conducted a preliminary investigation and even created an Ad Hoc Committee to investigate the matter. Respondent was directed to explain either in writing or by a personal confrontation with the Board why he should not be terminated for engaging in illicit affair. Not only did petitioner give him the opportunity but respondent in fact informed petitioner that he opted to present his side orally and did so as promised when he specifically denied such allegations. Moreover, respondent was also allowed to peruse the investigation report prepared by the Ad Hoc Committee and was advised that he was entitled to assistance of counsel. Afterwhich, hearing was conducted. It was only after thorough investigation and proper notice and hearing to respondent that petitioner decided whether to dismiss the former or not. The decision to terminate respondent from employment was embodied in Board Resolution No. 05, series of 1997 a copy of which was furnished respondent. With this resolution, respondent was adequately notified of petitioner decision to remove him from his position. Respondent cannot now claim that his right to due process was infringed upon. GRANTED.