Globe Telecom, Inc. vs. Kay Abastillas Ebitner

Serious misconduct and fraud as grounds for dismissal require proof of wrongful intent; a violation of company procedure, without evidence that it was attended by a conscious and intentional design to evade the employee's obligations, does not justify dismissal. Where the employee is authorized to perform the act complained of, the act is presumed regular, and the employer bears the burden of demonstrating how the procedural lapse translated into serious misconduct or fraud.

Globe Telecom, Inc. is a corporation engaged in the business of providing telecommunication services, and Kay Abastillas Ebitner was its employee, hired in June 2005 and promoted through the years until she became a Retail Shop Specialist. In that position, Ebitner was authorized to make credit adjustments as part of her job. The dispute thus turned on the significance of a single credit adjustment of Php998.99 made on the account of a person related to her, and on whether the employer's internal standard operating procedure for such adjustments supplied the wrongful intent that the Labor Code requires for dismissal on the grounds of serious misconduct and fraud.

Globe Telecom, Inc., a corporation engaged in the business of providing telecommunication services, hired Kay Abastillas Ebitner in June 2005. Over the years she rose through the ranks until she was eventually promoted to Retail Shop Specialist, a position in which she was authorized to make credit adjustments as part of her job.

On March 16, 2015, Globe served on Ebitner a Notice to Explain arising from a report by its Fraud Risk Management that she had facilitated an invalid credit adjustment on the account of Mr. Leon Ebitner, mobile number 09178798805, amounting to Php998.99, using her own userID. The notice directed her to explain in writing why no disciplinary action should be imposed for violation of the company's Code of Conduct, specifically non-observance of SOP, fraud against the company, and serious misconduct, and warned that failure to explain would waive her right to be heard. Ebitner was simultaneously placed under preventive suspension effective upon receipt of the memo and directed to turn over her tools of work for the duration of the suspension.

Ebitner submitted her written explanation on March 19, 2015, admitting that she was the one who facilitated the credit adjustment on October 24, 2014 using her own userID, but claiming that she could no longer remember the circumstances surrounding the transaction or why she did it. She requested that she be allowed to check the transaction records in the hope of recalling why she made the adjustment, maintained that had the transaction been invalid she would have received an e-mail from management within one month after the date of the transaction as per company policy, and expressed willingness to reimburse the amount should the transaction be proved invalid. At the administrative hearing held on March 30, 2015, she admitted that the account involved was under her father's name but that the end-user was her mother, who had complained of dropped calls every time she made a phone call; as a sign of goodwill she adjusted the "MSF" (monthly service fee), and she maintained that she made the proper notation upon adjusting the amount due.

Despite these explanations, Globe served on Ebitner a Notice of Decision dated April 30, 2015, stating that she was found to have failed to follow basic standard procedures and that there were lapses in relation to the credit adjustment. Globe further found that while she claimed during the hearing that a notation to support the credit adjustment had been made, no such notation was retrieved. She was accordingly dismissed from service on the ground of fraud against the company and serious misconduct.

Ebitner filed a Complaint for illegal dismissal, illegal suspension, and damages against Globe. The Labor Arbiter found that while she may have failed to follow company procedures, the penalty of dismissal was too harsh and unreasonable under the circumstances, and the NLRC found that neither party actually presented proof of its conflicting claims on the notation: Ebitner did not present the notation she claimed to have made to justify the credit adjustment, while Globe presented no transaction documents, records, or screenshots of the company database to show that no justification was provided, and did not even indicate the amount by which it was allegedly defrauded.

• Separation Pay: Petitioner claimed that the Court of Appeals committed error in awarding separation pay, arguing that such an award may only be made if the employee was validly dismissed for causes other than serious misconduct or those reflecting on her moral character.
• Illegality of Dismissal Already Settled: Petitioner contended that the issue of illegal dismissal was already settled, asserting that respondent's commission of an act of dishonesty was an established fact and conclusive at this stage of the proceedings.
• Serious Misconduct and Fraud: Petitioner maintained that respondent's act of adjusting her father's bill from Php998.99 to zero, thereby relieving him of payment, constituted an act of dishonesty and serious misconduct reflecting on her moral character; that it is difficult to catch offenders of this kind because offenses are discovered only through random checks, so a strict norm of discipline is enforced against them; and that the far-reaching consequences of allowing more than 5,000 employees to adjust the bills of their relatives and friends warranted dismissal as a measure of self-preservation.

• Illegal Dismissal and Separation Pay: Respondent contended that she was illegally dismissed and that the award of separation pay in her favor was proper.

• Illegal Dismissal: Whether petitioner Globe Telecom, Inc. is guilty of illegal dismissal.
• Separation Pay: Whether respondent Kay Abastillas Ebitner is entitled to separation pay.

• Illegal Dismissal: Yes. The dismissal was illegal because Globe failed to establish by substantial evidence the wrongful intent essential to serious misconduct and the intentional, knowing, and purposeful design essential to fraud, the only grounds on which the dismissal was predicated.
• Separation Pay: Yes. Separation pay in lieu of reinstatement is proper where the illegally dismissed employee's reinstatement is no longer feasible owing to strained relations between the parties; full backwages are likewise awarded on grounds of equity for the earnings lost by reason of the illegal dismissal.

• Illegal Dismissal: The threshold contention that the issue of illegal dismissal was already settled was rejected. Under Laya vs. Philippine Veterans Bank, the Court of Appeals may determine whether the factual findings of the NLRC or the Labor Arbiter were based on the evidence and in accord with pertinent laws and jurisprudence, and when the decision of the Court of Appeals in a labor case is appealed by petition for review on certiorari, the Court may delve into the propriety of the factual review conducted not only by the Court of Appeals but also by the NLRC. Administrative findings of fact, while accorded great respect and even finality when supported by substantial evidence, are not infallible and will be set aside when they fail the test of arbitrariness; and under Agabon vs. National Labor Relations Commission, where the factual findings of the NLRC and the Labor Arbiter are conflicting, the reviewing court may delve into the records and examine the questioned findings itself. Because the legality of respondent's dismissal was paramount, the Court proceeded to rule on it. The dismissal rested on serious misconduct and fraud against the company as stated in the Notice to Explain. Under Sterling Paper Products Enterprises, Inc. vs. KMM-Katipunan, misconduct as a just cause requires the concurrence of three elements: (a) the misconduct must be serious; (b) it must relate to the performance of the employee's duties showing that the employee has become unfit to continue working for the employer; and (c) it must have been performed with wrongful intent. Fraud or dishonesty, in turn, is defined as the disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; disposition to defraud, deceive or betray. Globe failed to fully establish these grounds. As to serious misconduct, Globe never convincingly proved that the credit adjustment was made with wrongful intent: it repeatedly labeled the adjustment "invalid" but never once explained why it was deemed invalid notwithstanding that respondent, as Retail Shop Specialist, was authorized to make credit adjustments as part of her job. The lack of clarity as to why the adjustment was invalid made it difficult to determine whether respondent was motivated by wrongful intent, which cannot be presumed; because she was authorized to make credit adjustments, her actions must be presumed regular unless otherwise clearly proven. Globe likewise failed to illustrate how the absence of notation, assuming it to be true, translated into serious misconduct — whether the lack of notation concealed the adjustment, hid the identity of the person who made it, or deprived Globe of lawful income. The Court also declined to agree with the Court of Appeals' assumption that the lack of notation led to the conclusion that respondent intended to make the adjustment undetected, there being no evidence presented by Globe to support it. Finally, the fact that respondent herself made the adjustment on her own father's account could not be taken against her because Globe failed to prove, much less allege, that such was against company policy. What was firmly established was only that respondent made a credit adjustment on her father's account in the amount of Php998.99, which by no stretch of imagination could be considered serious misconduct; even the presence or absence of the notation upon which Globe anchored its position was disputed, and the NLRC found that both parties merely relied on their respective sworn allegations in their pleadings. As to fraud, Article 282(c) of Presidential Decree No. 442 provides that an employer may terminate an employment for fraud or willful breach by the employee of the trust reposed in her by her employer or duly authorized representative; although written together, fraud is a separate and distinct ground for dismissal from loss of trust and confidence, and although fraud necessarily results in loss of trust and confidence, the reverse is not always true, so the discussion was limited to fraud as alleged by Globe. Globe's accusations were highly speculative: it erroneously assumed that respondent had already committed the misdeed in the past and falsely speculated that all of its 5,000 employees were predisposed to unduly adjust the bills of their friends and relatives, concluding that dismissal was warranted as a measure of self-preservation. While Globe was free to take precautionary measures to protect its interests, it could not do so at the expense of its employees. More importantly, respondent was authorized to make credit adjustments as part of her job, and Globe did not complain about the credit adjustment itself but only about the absence of the proper notation; the Court could not see how a mere violation of the SOP in itself translated to fraud or dishonesty, and it could not simply assume fraud or dishonesty, which implies a conscious and intentional design to evade the normal fulfillment of existing obligations. Fraud must be proven to have been done intentionally, knowingly, and purposely, and must not be simply a result of carelessness, negligence, or inattention; the burden lay on Globe, which failed to discharge it. The finding of the Court of Appeals that there was just cause for dismissal but that the penalty was too harsh was thus superseded by the conclusion that no just cause existed at all.
• Separation Pay: Normally, an illegally dismissed employee is entitled to full backwages and reinstatement. In view, however, of the strained relations between the parties, reinstatement was no longer feasible and separation pay in its lieu was more appropriate. Backwages are awarded on grounds of equity for earnings which a worker or employee has lost due to his or her illegal dismissal; thus, in view of the finding of respondent's illegal dismissal, the award of backwages was proper. The portion of the Court of Appeals' award requiring respondent to reimburse Globe the amount of Php998.99 was deleted.

• Serious misconduct as a just cause for dismissal — For misconduct or improper behavior to be a just cause for dismissal, three elements must concur: (a) the misconduct must be serious; (b) it must relate to the performance of the employee's duties showing that the employee has become unfit to continue working for the employer; and (c) it must have been performed with wrongful intent. A violation of a company procedure may constitute misconduct in the ordinary sense, but serious misconduct as a ground for dismissal requires wrongful intent, which cannot be presumed. The Court applied the test to hold that Globe failed to prove wrongful intent, the adjustment having been made by an employee authorized to make credit adjustments.
• Fraud or dishonesty as a just cause for dismissal — Fraud or dishonesty is the disposition to lie, cheat, deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty, probity or integrity in principle; lack of fairness and straightforwardness; disposition to defraud, deceive or betray. It implies a conscious and intentional design to evade the normal fulfillment of existing obligations and must be proven to have been done intentionally, knowingly, and purposely; it must not be simply a result of carelessness, negligence, or inattention. The employer bears the burden of proving these elements, and the Court found Globe's accusations highly speculative.
• Fraud distinguished from loss of trust and confidence — Although fraud necessarily results in loss of trust and confidence, the reverse is not always true; loss of trust and confidence does not always stem from fraud. Fraud is a separate and distinct ground for dismissal from loss of trust and confidence, so an allegation of fraud must be established on its own terms.
• Presumption of regularity of authorized acts — Where the employee is authorized to perform the act complained of as part of her job, her actions must be presumed regular unless otherwise clearly proven. The Court applied this presumption in favor of the Retail Shop Specialist who was authorized to make credit adjustments.
• Review of factual findings of quasi-judicial agencies — Findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even finality if supported by substantial evidence, especially when affirmed by the Court of Appeals; however, where the factual findings of the NLRC and the Labor Arbiter are conflicting, the reviewing court may delve into the records and examine the questioned findings itself, and administrative findings that fail the test of arbitrariness will be set aside.
• Separation pay in lieu of reinstatement — An illegally dismissed employee is normally entitled to full backwages and reinstatement, but where strained relations between the parties render reinstatement no longer feasible, separation pay in lieu of reinstatement is more appropriate.
• Backwages on grounds of equity — Backwages are awarded on grounds of equity for earnings which a worker or employee has lost due to his or her illegal dismissal.

• "To summarize, for misconduct or improper behavior to be a just cause for dismissal, the following elements must concur: (a) the misconduct must be serious; (b) it must relate to the performance of the employee's duties showing that the employee has become unfit to continue working for the employer; and (c) it must have been performed with wrongful intent." — This is the Court's canonical restatement of the elements of serious misconduct as a just cause, drawn from Sterling Paper Products Enterprises, Inc. vs. KMM-Katipunan, and is the test against which Globe's evidence was measured.
• "To reiterate, while a violation of a company procedure may constitute misconduct in the ordinary sense, serious misconduct as a ground for dismissal requires wrongful intent." — This passage states the ratio decidendi on the first ground for dismissal: the absence of a notation, even if true, was a procedural lapse that did not by itself supply the wrongful intent required by law.
• "Moreover, fraud must be proven to have been done intentionally, knowingly, and purposely; it must not be simply a result of carelessness, negligence, or inattention." — This defines the quantum and character of proof required for fraud as a just cause, and explains why Globe's speculative allegations of dishonesty failed.
• "Normally, an illegally dismissed employee is entitled to full backwages and reinstatement. In view however of the strained relations between the parties, the reinstatement is no longer feasible and therefore separation pay in its lieu is more appropriate." — This is the Court's controlling statement on the relief granted, justifying the award of separation pay in lieu of reinstatement and the concomitant award of full backwages.

• Laya vs. Philippine Veterans Bank, 823 Phil. 302 (2018) — Cited as the controlling authority that the Court of Appeals may determine whether the factual findings of the NLRC or the Labor Arbiter were based on the evidence and in accord with pertinent laws and jurisprudence, and that the Court may delve into the propriety of the factual review upon a petition for review on certiorari in a labor case.
• Agabon vs. National Labor Relations Commission, 485 Phil. 248 (2004) — Cited for the rule that findings of fact of quasi-judicial agencies like the NLRC are accorded respect and even finality if supported by substantial evidence, but that where the factual findings of the NLRC and the Labor Arbiter are conflicting, the reviewing court may delve into the records and examine the questioned findings itself.
• Sterling Paper Products Enterprises, Inc. vs. KMM-Katipunan, 815 Phil. 425 (2017) — Cited as the source of the three-element test for misconduct as a just cause for dismissal, which the Court applied to hold that wrongful intent was not proved.
• National Power Corporation vs. Olandesca, 633 Phil. 278 (2010) — Cited for the definition of fraud or dishonesty as a ground for dismissal.
• Philippine Amusement and Gaming Corporation vs. Rilloraza, 412 Phil. 114 (2001) — Cited, through National Power Corporation vs. Olandesca, as the source of the definition of fraud or dishonesty as a ground for dismissal.
• Sanden Aircon Philippines vs. Rosales, 661 Phil. 584 (2011) — Cited for the rule that fraud is a separate and distinct ground for dismissal from loss of trust and confidence, and that although fraud necessarily results in loss of trust and confidence, the reverse is not always true.
• Sps. Tumibay vs. Sps. Lopez, 710 Phil. 19 (2013) — Cited for the proposition that fraud implies a conscious and intentional design to evade the normal fulfillment of existing obligations.
• San Miguel Corporation vs. Gomez, G.R. No. 200815, August 24, 2020 — Cited for the rule that fraud must be proven to have been done intentionally, knowingly, and purposely, and must not be simply a result of carelessness, negligence, or inattention.
• Torillo vs. Leogardo, 274 Phil. 758 (1991) — Cited for the rule that backwages are awarded on grounds of equity for earnings which a worker or employee has lost due to his or her illegal dismissal.

• Article 282(c), Presidential Decree No. 442 (Labor Code of the Philippines) — Provides that an employer may terminate an employment for fraud or willful breach by the employee of the trust reposed in him or her by the employer or duly authorized representative. The Court treated fraud as a separate and distinct ground from loss of trust and confidence, limited its discussion to fraud as alleged by Globe, and held that the employer failed to prove the intentional, knowing, and purposeful character of the alleged fraud, so the provision did not justify the dismissal.

Gesmundo, C.J. (Chairperson), Zalameda, Rosario, and Marquez, JJ., concur.