House Of Sara Lee v. Rey
House of Sara Lee v. Cynthia F. Rey, G.R. No. 149013, August 31, 2006
- Procedural (Remedial Law)
- Labor Law
- illegal dismissal
- loss of trust and confidence
- managerial employee
- credit administration supervisor
- Rule 65 certiorari
- grave abuse of discretion
- labor arbiter
- NLRC
- Court of Appeals
- audit report
- just cause
- 13th month pay deletion
- moral and exemplary damages denial
I. Facts of the Case
House of Sara Lee dismissed Cynthia F. Rey, a Credit Administration Supervisor (CAS), for alleged breach of trust and confidence based on alleged voluntary admissions and irregularities found through an auditor’s report concerning unauthorized changes in dealers’ credit terms. Rey filed a complaint for illegal dismissal with monetary claims, which the Labor Arbiter and the NLRC denied in favor of the employer. The Court of Appeals dismissed Sara Lee’s Rule 65 petition on the ground that it raised factual issues, but the Supreme Court eventually reversed and declared Rey’s dismissal valid.
1993-11
Respondent Cynthia Rey was transferred to petitioner House of Sara Lee’s Cagayan de Oro branch, still as Accounts Receivable Clerk.
1994-01
Respondent Rey was elevated to the position of Credit Administration Supervisor (CAS).
1995-06-22
Villagracia reported to higher management that Rey, in tears and remorse, admitted adjusting credit terms in the computer for purposes of computing service fees.
1995-06-24
Villagracia served Rey a show-cause letter and placed her on indefinite suspension effective the same day.
1995-06-27
Rey submitted her explanation denying the accusations and asserting that discrepancies may have resulted from holidays and BOM-approved reconsiderations, and that she did not admit the acts charged.
1995-07-29
Petitioner directed Rey to explain in more detail the anomalies uncovered by the audit.
1995-07-31
After requesting more time to respond to the audit report, Rey requested a formal investigation with the presence of her lawyer; meanwhile, her suspension was lifted without prejudice to the outcome.
Petitioner conducted a formal hearing attended by Rey and her counsel; the transcripts were later signed by both.
1995-06-25
Petitioner formally dismissed Rey for breach of trust and confidence based on alleged admissions during the investigation and findings reflected in an auditor’s report.
1996-09-24
Rey filed a Complaint for illegal dismissal, backwages and damages before the Labor Arbiter against House of Sara Lee.
1998-10-29
The NLRC rendered a Decision dismissing petitioner’s appeal and affirmed the Labor Arbiter, holding that the alleged scheme was a long-standing practice and that loss of trust/confidence was negated.
2000-08-25
The Court of Appeals dismissed petitioner’s Rule 65 petition solely on the ground that factual issues are not proper subjects for a special civil action of certiorari.
2001-07-04
The Court of Appeals denied petitioner’s Motion for Reconsideration through a Resolution.
2006-08-31
The Supreme Court granted the petition, set aside the CA decision and resolution, declared Rey’s dismissal valid, and dismissed Rey’s complaint.
II. Issues
Whether the Court of Appeals erred in dismissing the petitioner’s Rule 65 petition on the ground that factual issues are not proper subjects for a petition for certiorari.
Whether respondent’s dismissal for breach of trust and confidence was valid under labor law and jurisprudence.
III. Ruling
Whether the Court of Appeals erred in dismissing the petitioner’s Rule 65 petition on the ground that factual issues are not proper subjects for a petition for certiorari.
The Court of Appeals committed reversible error by dismissing the Rule 65 petition despite grave abuse of discretion in the NLRC’s handling of the material facts.
How the Court reasoned
- Certiorari under Rule 65 is available when the lower tribunal’s acts amount to grave abuse of discretion, meaning there is an arbitrary or capricious exercise of judgment.
- The Court found that the NLRC and CA committed grave abuse of discretion by ignoring facts established in the record.
- Because the case required reviewing how the lower tribunals treated material record facts bearing on whether there was just cause, the CA’s sole reliance on the rule that certiorari cannot cover factual issues was incorrect in context.
- Thus, the procedural dismissal by the CA did not prevent the Supreme Court from correcting the grave abuse found to exist.
“We grant the petition.”
Rule applied
Rule 65 of the Rules of Court; certiorari lies to correct grave abuse of discretion amounting to lack or excess of jurisdiction, including when material facts are ignored or misappreciated to the point of grave abuse.
Whether respondent’s dismissal for breach of trust and confidence was valid under labor law and jurisprudence.
Rey’s dismissal for breach of trust and confidence was for a just cause, because the circumstances supported loss of trust and confidence in her capacity as a fiduciary/managerial employee.
How the Court reasoned
- Loss of trust and confidence is a just cause for dismissal when the employee’s duties require a high degree of trust and the evidence shows acts that justify the employer’s loss of confidence.
- The Court found that the NLRC and CA conclusions were inconsistent with the record, which contained circumstances supporting breach of trust.
- The charge was linked to anomalies in credit term changes and the manner by which credit information was adjusted for computation of service fees, matters within Rey’s monitoring/control responsibilities.
- The Court held that Rey was dismissed for a just cause due to loss of trust and confidence as a managerial/fiduciary employee, and it disagreed with the NLRC’s and CA’s contrary appreciation of the record.
“Contrary to the findings of the NLRC and the CA, the Court holds that respondent was dismissed for a just cause.”
Rule applied
Article 282 of the Labor Code (now renumbered), as applied in jurisprudence on termination for just cause based on loss of trust and confidence; standards on when the employee’s position requires trust and confidence.
Doctrines
Certiorari under Rule 65 corrects not only errors of jurisdiction but also grave abuse of discretion amounting to lack or excess of jurisdiction, including situations where material facts in the record are ignored or misappreciated in a manner that renders the tribunal’s conclusions arbitrary.
Dismissal for breach of trust and confidence constitutes a just cause when the employee holds a position requiring a high degree of trust and the evidence reasonably supports the employer’s loss of trust and confidence.
When an employee’s dismissal is declared valid, monetary awards granted by the lower tribunals based on illegal dismissal—such as 13th month pay and claims for moral and exemplary damages—are deleted or denied for lack of legal and factual basis.
Final Disposition
WHEREFORE, the petition is GRANTED. The challenged Decision and Resolution of the Court of Appeals are hereby SET ASIDE and a new one entered DECLARING respondent's dismissal valid. The complaint of respondent is DISMISSED.
Notes
In addition to declaring the dismissal valid, the Supreme Court deleted certain monetary awards previously granted (including 13th month pay) and denied moral and exemplary damages, attorney’s fees, and separation pay for lack of basis in fact and law as reflected in the extracted ruling quotes.