Case Digest: Caltex, Inc., et al. v. Agad & Caltex Supervisors

G.R. No. 162017: April 23, 2010




Petitioner Caltex Philippines, Inc. (Caltex) employed respondent Hermie G. Agad as Depot Superintendent-A on a probationary basis for six months.On 28 February 1984, Agad became a regular employee. For the next eleven years, Agad obtained various commendationsand held the positions of Depot Superintendent-A, Field Engineer, Senior Superintendent, and Bulk Depot Superintendent until his dismissal on8 August 1994. On 5 July 1993, petitioner E.C. Cavestany (Cavestany), the Regional Manager of Caltex, issued a Memorandum to Agad directing him to explain the following audit review findings: (1) the questionable reimbursement of crating expense; and (2) the alleged unauthorized withdrawal and sale of190 pieces of LPG cylinders. On 29 July 1993, Agad sent his reply answering all the charges against him.Agad stated: (1) that Delda Services constructed the two crates worthP15,500 as evidenced by an official receipt issued by Delda; and (2) that the withdrawal of the scrap LPG cylinders formed part of his housekeeping duties as depot superintendent. Caltex created an investigating panel chaired by Cavestany to look into the offenses allegedly committed.On 17 August 1993, the investigating panel held its first formal inquiry. On29 April 1994, Caltex placed Agad under preventive suspension.On 26 May 1994 or almost 10 months after the first formal inquiry, the investigating panel conducted another hearing. Two other hearings were held on 14 June and 6 July 1994.In a Confidential Memorandum dated 8 August 1994, Cavestany informed Agad of his dismissal on the grounds of serious misconduct and loss of trust and confidence, both just causes for termination of employment.Respondents Agad and Caltex United Supervisors Association filed a complaintwith the Labor Arbiter (LA) for illegal dismissal against petitioners Caltex and its officers William P. Tiffany, President and Chief Executive Officer; E.M. Cruz, General Manager for Distribution; and Cavestany. The LA rendered a decision in favor of Agad. On appeal, the NLRC reversed the decision of the LA.The CA modified the judgment of the NLRC and ruled in favor of Agad.
Whether or not Caltex legally terminated Agads employment on just causes:

[1] acts tantamount to serious misconduct and willful violation of company rules and regulations; and,[2] willful breach of trust and confidence as Depot Superintendent.


In termination cases, the burden of proof rests on the employer to show that the dismissal is for just cause. When there is no showing of a clear, valid, and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal. The quantum of proof which the employer must discharge is substantial evidence.An employees dismissal due to serious misconduct and loss of trust and confidence must be supported by substantial evidence. Substantial evidence is that amount of relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.

In the present case, petitioners terminated Agads employment based on these acts: (1) Agads submission of a fictitious crating expense amounting toP15,1500; and (2) the unauthorized withdrawal and sale of 190 pieces of 11 kg. LPG cylinders for his personal gain and profit.

The official receipt submitted by Agad serves as the best evidence of payment and is presumed regular on its face absent any showing to the contrary.Records show that the reimbursement of the crating expense was approved by Agads superior upon presentment of the receipt.At the time, Agads superior did not mention that the amount of the crating expense incurred was unreasonable. Delda, in his affidavit, disclosed that he was forced to issue the receipt in order to get a favorable recommendation from the incoming superintendent who would replace Agad in the Depot.However, in the same affidavit, Delda mentioned that he had been a standby worker at the Depot from 1956 to 1982 and a piece-worker from 1982 up to 1993, the date he executed the affidavit.It appears then that Delda had established a name for himself and his business with Caltex.Any favorable recommendation from Agad, as the outgoing superintendent, would not provide much impact compared to the reputation he had built all those years. The testimonies of the two corroborating witnesses, Esperas and Villalino, cannot be given credence since Agad was not given an opportunity to cross-examine them. Their testimonies are considered as hearsay evidence.Petitioners did not present any other evidence to show that Agad violated company policy dealing with crating expenses to be limited to a certain amount.Reasonableness was the only criterion given by the employer. Thus, petitioners were not able to fully substantiate the alleged fictitious reimbursement of the crating expense. Deldas testimony alone, without any corroborating evidence to prove otherwise, is insufficient to overcome the presumption of regularity in the issuance of his own official receipt which he gave to Agad.

Petitioners assert that Agad committed serious violation of internal control procedures and company policies due to the following: (1) no Records of Materials Received/Delivered (RMRD) were issued to cover the withdrawal of the empty cylinders for repair purposes; (2) the testimony of Millanes demonstrates that the cylinders were initially stored at his premises on 8 February 1991 and later sold as good units without bidding, upon the instructions of Agad, to Leyte Development and Ernesto Mercado; (3) no evidence was submitted to show that the sales proceeds were turned over to Caltex and petitioners surmise that the total prevailing price of the LPG cylinders would have been from a low of P95,000 to a high of P133,000;(4) the periodic report of inventory of the LPG cylinders, considered part of storehouse materials, to Head Office Accounting was not submitted by the depot; and (5) the depot clerk acted beyond his authority when he approved the gate passes for the withdrawal of the cylinders.

Respondents, on the other hand, maintain the following: (1) that as depot superintendent,Agad had the authority to transfer materials, including scrap, from one place to another; (2) Agad had specific authority, per Memorandum dated 12 February 1992, to withdraw the scrap materials as replacement for the missing scrap tanks, pumps and pipelines earlier sold to Boy Bato; (3) the withdrawal of the LPG cylinders was covered by gate passes 8499 and 8500, negating any fraudulent intent on Agads part; and(4) petitioners own witness, Millanes, testified that the LPG cylinders withdrawn were actually junk or scrap materials and of no accounting value.In addition, even assuming that the withdrawal of the LPG cylinders wasunauthorized, the penalty of dismissal is too harsh a penalty.

The findings of the CA and NLRC establish the following: (1) Agads request for withdrawal of the 190 pieces of LPG cylinders as stated in a Memorandum dated 12 February 1992 cannot be given credence since the Memorandum pertains to the replacement of the scrap materials due to Boy Bato consisting of 3,000 kilograms of black iron plates and not to the subject LPG cylinders; (2) Agad did not observe Caltex's rules and regulations when he transferred the said cylinders to Millanes compound without the RMRD form as required under Caltex's Field Accounting Manual; (3) Agad gave specific instructions to Millanes to sell the cylinders without bidding to third parties in violation of company rules; (4)Agad failed to submit the periodic inventory report of the LPG cylinders to the accounting department; (5) Agad did not remit the proceeds of the sale of the LPG cylinders; and (6) even if considered as scrap materials, the LPG cylinders still had monetary value which Agad cannot appropriate for himself without Caltex's consent.Considering these findings, it is clear that Agad committed a serious infraction amounting to theft of company property.This act is akin to a serious misconduct or willful disobedience by the employee of the lawful orders of his employer in connection with his work, a just cause for termination of employment recognized under Article 282(a) of the Labor Code. Further, Agads conduct constitutes willful breach of the trust reposed in him, another just cause for termination of employment recognized under Article 282(c) of the Labor Code.Loss of trust and confidence, as a just cause for termination of employment, is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence.The employee must be invested with confidence on delicate matters, such as the custody, handling, care and protection of the employers property and funds. As a superintendent, Agad occupied a position tasked to perform key and sensitive functions which necessarily involved the custody and protection of Caltexs properties.Consequently, Agad comes within the purview of the trust and confidence rule.

In sum, even if Agad did not commit the alleged charge of fictitious reimbursement of crating expense, he was found to have acted without authority, a serious infraction amounting to theft of company property, in the withdrawal and sale of the 190 pieces of LPG cylinders owned by the company.Caltex, as the employer, has discharged the burden of proof necessary in terminating the services of Agad, who was ascertained to have blatantly abused his position and authority.Thus, Agads dismissal from employment based on (1) acts tantamount to serious misconduct or willful violation of company rules and regulations; and (2) willful breach of trust and confidence as Depot Superintendent was lawful and valid under the circumstances as mandated by Article 282 (a) and (c) of the Labor Code.


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