Lafuente vs. Davao Central Warehouse Club, Inc.

Preventive suspension is not tantamount to dismissal and does not require compliance with the twin notice rule, while gross and habitual neglect of duties justifies dismissal, especially where the employer suffers substantial losses due to the gravity of the employee's negligence.

Nilo D. Lafuente and Billy C. Panaguiton were long-time employees of Davao Central Warehouse Club, Inc. (DCWCI), hired in 1993 and 1995, respectively. Lafuente served as Dispatching-in-Charge, and Panaguiton as his Assistant Dispatcher. Their functions involved controlling, verifying, and inspecting the disposal of appliances from the company's warehouse.

DCWCI hired Lafuente in 1993 as Dispatching-in-Charge and Panaguiton in 1995 as Assistant Dispatcher. On September 5, 2016, DCWCI issued a Notice of Preventive Suspension with Investigation Hearing against petitioners, charging them with "Gross and Habitual Neglect by the Employee of His Duties" and "Fraud/Willfull Breach by the Employee of the Trust Reposed on Him by His Employer" for the loss of several appliances in the warehouse under their watch. Lafuente denied knowledge of the incident, stating he had no authority to stay in the warehouse and that the dispatching area was 60 meters away, while Panaguiton claimed he reported the missing units to their manager, who merely instructed him to find them.

After an investigation, DCWCI found them guilty of gross and habitual neglect and terminated their employment on October 5, 2016, citing their failure to implement monthly inventory and report the missing units. Petitioners filed a complaint for illegal dismissal, arguing they were not remiss in their duties and that the theft was attributable to other employees, including the bodega-in-charge and security guard. They asserted that it was through Lafuente's efforts that the thief, a utility man and cousin of Lafuente, voluntarily surrendered to the authorities.

The Labor Arbiter ruled in their favor, finding that petitioners were not directly accountable for the stocks inside the warehouse. However, the NLRC and the CA reversed, finding that 29 television sets went missing under their watch and that their failure to exercise due diligence caused the company actual losses amounting to P448,056.00. The CA noted that the missing items were large and could not have passed through inspection without being noticed, concluding that while the negligence was gross, it was not habitual, but the resultant damage was sufficient to justify dismissal.

• Due Process (Preventive Suspension): Petitioners argued that DCWCI immediately terminated their employment under the cloak of preventive suspension on the First Notice, violating their right to due process under the twin notice rule.
• Lack of Negligence: Petitioners maintained that they were not remiss in their duties, asserting they were not directly accountable for conducting inventory of stocks, and that the loss was attributable to the bodega-in-charge, security guard, appliance manager, and others.

• Just Cause for Dismissal: Respondents argued that the dismissal was anchored on Article 297(b) of the Labor Code for gross and habitual neglect of duties, as petitioners failed to use reasonable care when 29 television sets were taken out without proper orders, resulting in actual losses of P448,056.00.
• Strategic Position: Respondents asserted that as dispatchers, petitioners were strategically stationed at the entrance and exit of the warehouse, making the entire warehouse their place of work where they were tasked to control, verify, and inspect every disposal of items.

• Preventive Suspension: Whether the preventive suspension of petitioners amounted to termination of employment in violation of the twin notice rule.
• Gross and Habitual Neglect: Whether petitioners were grossly and habitually negligent of their duties, warranting their dismissal from employment.

• Preventive Suspension: No. Preventive suspension is not a dismissal from employment and does not require compliance with the twin notice rule, as it is merely a disciplinary measure pending investigation.
• Gross and Habitual Neglect: Yes. Petitioners were grossly and habitually negligent, and the resultant substantial losses justified their dismissal despite the negligence not being habitual in the strict sense.

• Preventive Suspension: Preventive suspension is a disciplinary measure for the protection of the company's property pending investigation of alleged malfeasance or misfeasance. It is not the dismissal contemplated under the Labor Code requiring the twin notice rule. Since petitioners handled DCWCI's properties, the employer had the right to protect its assets pending investigation, especially as they were suspects in the stealing incident.
• Gross and Habitual Neglect: While Article 297(b) requires negligence to be gross and habitual, the Court has departed from this requirement where the employer suffered substantial losses due to the gravity of negligence. As dispatchers, petitioners were stationed strategically to control, verify, and inspect every disposal of items. Their failure to perform their duties, including conducting inventory and reporting missing stocks, facilitated the unauthorized dispatch of products. The 29 missing television sets were large and could not have passed inspection without being noticed. The resultant damage of P448,056.00 justified the dismissal.

• Preventive Suspension — It is a disciplinary measure for the protection of the company's property pending investigation of alleged malfeasance or misfeasance. It is not a dismissal and does not require the twin notice rule. The employer may place the worker under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or co-workers.
• Gross and Habitual Neglect as Just Cause for Dismissal — Gross negligence is the want of even slight care, acting or omitting to act willfully and intentionally with conscious indifference to consequences. Habitual neglect connotes repeated failure to perform duties. However, the Court has allowed dismissal even if negligence is not habitual when the employer suffers substantial losses because of the gravity of the employee's negligence.
• Management Prerogative — An employer has free reign over every aspect of its business, including the dismissal of employees, as long as the exercise of management prerogative is done reasonably, in good faith, and not intended to defeat or circumvent the rights of workers.

• "Preventive suspension is not the dismissal from employment contemplated under the provisions of the Labor Code which would require compliance with the twin notice rule. It is merely a disciplinary measure within the ambit of the management's exercise of prerogative pending the conduct of investigation for an employee's possible infractions." — This passage clarifies the nature of preventive suspension and distinguishes it from actual termination, resolving the procedural due process issue.
• "However, in several cases, the Court has departed from this requirement, like where the employer suffered substantial losses because of the gravity of negligence displayed by the employee." — This articulates the exception to the strict requirement that neglect must be habitual to justify dismissal, emphasizing the gravity of negligence and resultant damage.
• "They may not have been directly involved in the pilferage of DC WCI's products, but their negligence and indifference facilitated the unauthorized dispatch of products out of DC WCI's warehouse." — This underscores the principle that employees tasked with monitoring and securing company property can be dismissed for negligence that facilitates loss, even without direct participation in the theft.

• Gatbonton vs. NLRC, 515 Phil. 387 (2006) — Cited to explain that preventive suspension is a disciplinary measure for the protection of the company's property pending investigation.
• Bluer Than Blue Joint Ventures Company, et al. vs. Esteban, 731 Phil. 502 (2014) — Followed to support the rule that preventive suspension may be legally imposed against an employee whose alleged violation is the subject of investigation.
• LBC Express - Metro Manila, Inc., et al. vs. Mateo, 607 Phil. 8 (2009) — Cited as an example of a case where the Court departed from the requirement that neglect must be habitual, due to substantial losses suffered by the employer.

• Article 297 [282] of the Labor Code of the Philippines — Governs termination by employer, specifically just causes like gross and habitual neglect by the employee of his duties. The Court applied this to determine if the dismissal was for a valid cause.
• Section 8, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code — Defines preventive suspension, allowing the employer to place a worker under preventive suspension if continued employment poses a serious and imminent threat to life or property.

Leonen (Chairperson), Hernando, Delos Santos, and J. Lopez, JJ., concur.