G.R. No.

174115, November 09, 2015

PUNONGBAYAN AND ARAULLO (P&A), BENJAMIN R. PUNONGBAYAN., JOSE G. ARAULLO, GREGORIO S.
NAVARRO, ALFREDO V. DAMIAN AND JESSIE C. CARPIO, Petitioners, v. ROBERTO PONCE LEPON, Respondent.
JARDELEZA, J.:
FACTS:

Petitioner is a professional partnership engaged in public accounting practice. Benjamin R. Punongbayan, Jose G.
Araullo, Gregorio S. Navarro, Alfredo V. Damian and Jessie S. Carpio, are partners of P&A.
P&A hired Respondent as Staff Auditor 1. After years of service, he became the Manager-in-Charge of the Cebu
operations and the Director of the Visayas-Mindanao operations of P&A.
In April 2002, accounting firm SGV commenced negotiations with P&A for a possible merger of their Philippine
operations. During negotiations, P&A's employees (including respondent) expressed fears on their fate in case of a
merger.
Later, P&A sent a Memorandum to its clients informing them about its combination with SGV expected to be effective
on 7/1/2002.
On April 26, 2002, through an email-letter to Punongbayan, respondent pleaded against the merger.
Subsequently, P&A learned that respondent (1) met with P&A's clients and invited them to engage the services of
Laya Mananghaya-KPMG (LM-KPMG) (a competitor) and (2) attempted to pirate the entire staff of P&A's Cebu City
Office and Davao City Office.
On 5/30/2002, petitioner Damian sent respondent a letter asking him to explain the alleged disloyal and inimical acts
he committed against P&A. Respondent was also suspended without pay form 6/1/2002 until 6/15/2002.
In his reply, respondent reiterated his worries about the merger, and denied the allegations against him.
Damian served upon respondent a termination notice informing him that his employment is terminated effective
6/16/2002 due to loss of trust and confidence.
Respondent filed a complaint for illegal suspension and illegal dismissal, and for payment of 13 th month pay, service
incentive leave, allowances, separation pay, retirement benefits, moral damages, and exemplary damages against
P&A and its partners. The parties failed to amicably settle the case.
The LA dismissed the complaint for lack of merit and the NLRC affirmed the LAs decision.
Respondent filed a petition for certiorari before the CA. The CA set aside the NLRC Decision and directed petitioners
to pay jointly and severally respondent full backwages.

ISSUES
1. Whether the factual findings of both the NLRC and the LA were supported by substantial evidence YES
2. Whether respondent was validly dismissed YES
3. Whether respondent was deprived of his right to due process NO
RULING:
The factual findings of the NLRC and the Labor Arbiter were supported by substantial evidence

Affidavits may be sufficient to establish substantial evidence. Substantial evidence means "that amount of relevant
evidence which a reasonable mind might accept as adequate to justify a conclusion."
In Capitol Medical Center, Inc. v. National Labor Relations Commission, the respondents failed to adduce substantial
evidence that the said affiants were coerced into executing the said affidavits. The bare fact that some portions of the
said affidavits are similarly worded does not constitute substantial evidence that the petitioner forced, intimidated or
coerced the affiants to execute the same.
In INC Shipmanagement, Inc., et al. v. Moradas, the corroborating affidavits and statements of the vessel's officers
and crew members must be taken as a whole and cannot just be perfunctorily dismissed as self-serving absent any
showing that they were lying when they made the statements therein.
CAB: Respondent did not adduce evidence to show that the affiants, including Nanola, Ganhinhin, Verdida, and
Diano, all of whom were employed by P&A, were coerced to execute an affidavit prejudicial to respondent.
Respondent never questioned the evidentiary value of the affidavits at any stage of the proceedings. There was no
single evidence submitted showing that petitioners have exerted undue pressure on the affiants.
The affidavits constitute substantial evidence to prove that respondent committed acts breaching the trust and
confidence reposed on him by P&A. The colleagues and subordinates of respondent executed the affidavits based on
their personal knowledge, and without any proof of coercion. Their statements, as discussed below, corroborate each
other and leave no room for doubt as to the acts committed by respondent.

The affidavits of his co-employees are sufficient basis for P&A's loss of trust and confidence.

An employer may terminate an employee for willful breach by the employee of trust reposed in him by his employer or
duly authorized representative [Art. 297(c), Labor Code]. While the right of an employer to freely select or discharge
his employees is subject to regulation by the State in the exercise of its paramount police power, there is also an
equally established principle that an employer cannot be compelled to continue in employment an employee
guilty of acts inimical to the interest of the employer and justifying loss of confidence in him.
The following requisites must be satisfied to justify a valid dismissal based on loss of trust and confidence, to wit:
(1) The employee concerned must be one holding a position of trust and confidence; and (2) There must be an act
that would justify the loss of trust and confidence.
The two requisites are present in this case.
Respondent was a managerial employee. At the time of his termination, he was the Manager-in-Charge of the
Cebu operations and Director of the Visayas-Mindanao operations of P&A. Respondent failed to dispute that his
position, as the highest ranking officer of P&A's Visayas-Mindanao operations, demanded utmost trust and
confidence.
P&A's loss of trust and confidence is based on a willful breach of trust, and is founded on clearly established
facts.
Degree of Proof Required: In Mendoza v. HMS Credit Corporation, the Court distinguished the degree of proof
required in proving loss of trust and confidence in a managerial employee and a rank and file employee With
respect to RANK-AND-FILE PERSONNEL, loss of trust and confidence as ground for valid dismissal requires
proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations
by the employer will not be sufficient. But as regards a MANAGERIAL EMPLOYEE, the mere existence of a
basis for believing that such employee has breached the trust of his employer would suffice for his
dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required, it
being sufficient that there is some basis for such loss of confidence, such as when the employer has
reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the
nature of his participation therein renders him unworthy of the trust and confidence demanded by his position.
CAB: Respondent breached the trust reposed in him by committing the following acts: (1) negotiating to transfer to a
competing firm while still employed with P&A; (2) enjoining a number of P&A's clients to transfer their audit business
to a competing firm; (3) inviting P&A's staff to join him in his transfer to a competing firm; and (4) enjoining P&A's staff
to engage in a sympathy strike during his preventive suspension.
The affidavits of Nanola, Ganhinhin, Verdida, and Diane show respondent's commission of these acts which are all
in breach of the trust and confidence reposed in him by P&A.

Respondent was validly dismissed on the ground of loss of trust and confidence

In Elizalde International (Philippines) Inc. v. CA: One who asserts an interest, or performs acts adverse or disloyal lo
one's employer commits a breach of an implied condition of the contract of employment which may warrant
discharge, e.g., where one secretly engages in a business which renders him a competitor and rival of his employer .
An employer has the right to expect loyalty from his employees as long as the employment relationship continues.
When an employee deliberately acquires an interest adverse to his employer, he is disloyal, and his discharge is
justified.
In Molina v. Pacific Plans, Inc.: An employer has a protectable interest in the customer relationships of its former
employee established and/or nurtured while employed by the employer, and is entitled to protect itself from the risk
that a former employee might appropriate customers by taking unfair advantage of the contract developed while
working for the employer. While acting as an agent of his employer, an employee owes the duty of fidelity and
loyalty. Being a fiduciary, he cannot act inconsistently with his agency or trust. He cannot solicit his
employer's customers or co-employees for himself or for a business competitor of his employer.
CAB: While respondent may have the liberty to express his views of the proposed merger, he was not justified when
he told clients of P&A that the latter's reputation as provider of quality service is expected to deteriorate due to the
merger and further induced them to patronize the rival firm he intended to join. As the Director of P&A's VisayasMindanao operations, owed duties of loyalty to P&A, his employer, to inform its clients about P&A's business decision
to merge, for as long as he was still employed by P&A.
Respondent's act of inviting P&A's staff to conduct a sympathy strike is inconsistent with respondent's duty of
fidelity and loyalty to P&A. In doing so, respondent urged his colleagues and subordinates to disregard their
responsibilities as employees of P&A and sought to disrupt the latter's operations. Thus, P&A merely acted within
its right as employer when it dismissed respondent. The acts he committed are sufficient basis for the loss of trust
and confidence of P&A.

Respondent was not deprived of due process; Ample Opportunity to be Heard

Article 292(b) of the Labor Code, in relation to the then applicable Section 2(d), Rule I of the Implementing Rules of
Book VI, as amended by DO No. 10, s. of 1997, requires the employer to give the employee two written notices prior
to his termination for just cause.
First notice must contain a statement of the causes for termination and shall afford the employee ample
opportunity to be heard and to defend himself with the assistance of a representative if he so desires.
Second notice (notice of termination) must indicate that upon due consideration of all the circumstances, grounds
have been established to justify the employee's termination.
P&A complied with the two-notice rule.
In Perez v. Philippine Telegraph and Telephone Company, the Court explained the meaning of "ample opportunity to
be heard" under Article 292: To be heard "does not mean verbal argumentation alone inasmuch as one may be heard
just as effectively through written explanations, submissions or pleadings. While the phrase "ample opportunity to be
heard" may in fact include an actual hearing, it is not limited to a formal hearing only. The existence of an actual,
formal "trial-type" hearing is not absolutely necessary to satisfy the employee's right to be heard.
(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the
employee to answer the charges against him and submit evidence in support of his defense, whether in a
hearing, conference or some other fair, just and reasonable way.
(b) A formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial
evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it.
(c) The "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference"
requirement in the implementing rules and regulations.
Despite the lack of formal hearing or investigation, respondent was given ample opportunity to be heard. He was
given the opportunity to refute the charges against him. In fact, his reply thoroughly discussed his justifications and
defenses to the accusations imputed on him.
In view of the foregoing, respondent's dismissal from employment is valid. Thus, respondent's monetary claims
against P&A and petitioners have no legal and factual basis.
WHEREFORE, premises considered, the petition is hereby GRANTED and the decision of the Court of Appeals dated
February 15, 2006 is hereby REVERSED. We AFFIRM the Decision dated March 31, 2005 and the Resolution dated
July 25, 2005 of the National Labor Relations Commission which affirmed the August 13, 2003 Decision of the Labor
Arbiter.