The Heritage Hotel, Manila vs. Lilian Sio

The Court of Appeals commits reversible error when it substitutes its own factual findings for those of the NLRC in a Rule 65 certiorari review, where the NLRC's findings are supported by substantial evidence and the NLRC did not act capriciously or whimsically. In a Rule 45 petition assailing a CA ruling on a Rule 65 petition, the Court must examine whether the CA correctly determined the presence or absence of grave abuse of discretion by the NLRC, not whether the NLRC decision was correct on the merits.

The Heritage Hotel Manila employed Lilian Sio as a Service Agent beginning September 1, 1995, with her last assignment at the hotel's restaurant, Le Cafe, where her tasks included assisting in serving food and beverages to guests. The hotel operated a casino inside its premises in partnership with the Philippine Amusement and Gaming Corporation (PAGCOR), one of Heritage's biggest clients, which drew several guests to the hotel. Under a contract between the two entities, Heritage offered food and beverages to PAGCOR's guests in the latter's casino, making it of paramount importance to Heritage to provide top-quality service to PAGCOR's guests and treat its employees with respect.

The Heritage Hotel Manila employed Lilian Sio as a Service Agent on September 1, 1995, and she was last assigned at the hotel's restaurant, Le Cafe, where her tasks included assisting in the serving of food and beverages to guests. The case involves two separate penalties of suspension imposed upon Sio for incidents occurring on two different dates.

The first subject incident occurred on April 29, 2011, at around 11:00 in the evening, when one of Heritage's guests, Erlinda Tiozon, ordered food and beverage using Heritage's Player Tracking System (PTS), a system where clients earn points while playing at the casino inside Heritage's premises, which points may be used to purchase food and beverages. The parties dispute what happened thereafter. According to Sio, Tiozon was unable to present her PTS card which is needed to process orders, and Sio sought the advice of Jeffrey Bumatay, the slot machine host in the casino, and asked for his approval. The latter, however, refused to act on the request without the PTS card. Sio relayed the matter to Tiozon, who became furious. To avoid confrontation, Sio went back to Bumatay and explained the situation, and it was then that Bumatay allowed the transaction and processed the orders of Tiozon. On the other hand, Heritage avers that Tiozon was a VIP guest of PAGCOR, one of Heritage's biggest clients which draws several guests for Heritage because of the latter's casino operations inside the hotel. After an investigation, Heritage discovered that Tiozon requested Sio to get her PTS Card at the slot machines area so that the former could order food and beverage. Instead of answering Tiozon politely, Sio arrogantly and sarcastically said, "[D]i ako pwede kumuha ng PTS card sa slot machine basement area." The impolite response irked Tiozon. Realizing that Tiozon was already upset, Sio then took Tiozon's order and went to get her PTS card. She, thereafter, proceeded to Bumatay to obtain the latter's approval for the orders. Bumatay asked Sio if there were slot machine supervisors in Sio's area who could approve her orders, as per standard operating procedure, but the latter sarcastically answered, "[P]upunta pa ba ako dito sa SM main area kung mayroong supervisor doon sa HBC?!" After Tiozon complained of her encounter with Sio to Bumatay and because of his own experience, Bumatay submitted to Heritage a written report/complaint dated April 30, 2011.

On May 2, 2011, Heritage issued a memorandum requiring Sio to submit her written explanation on the following violations of Heritage's Code of Conduct: Major Offense #09 (show of discourtesy, disrespect or use offensive, obscene, or insulting language or arrogance either by acts or words towards Hotel guests, clients, suppliers, superiors or fellow employees); Major Offense #10 (creating or contributing to disturbance, or engaging in scandalous behavior, inside Hotel premises or committing any act which in any manner disturbs the peace and order within the company premises whether on or off duty); and Major Offense #11 (engaging another person into a heated or near violent arguments or discussions, including use of obscene, grave, profane and humiliating language against another person). On May 13, 2011, Sio submitted her written explanation denying Bumatay's narration in his report/complaint. On May 26, 2011, an administrative hearing was conducted, wherein Bumatay and another witness who was an employee of Heritage, Jesse Barroga, affirmed the statements in the former's report. Sio, instead of refuting the charges, apologized to Bumatay and signed the minutes of the administrative hearing. After finding her guilty of the charges, Heritage imposed upon Sio the penalty of one-week suspension from June 7 to 14, 2011, which Sio served.

The second subject incident occurred on September 21, 2011, when another Heritage client, Mussa Mendoza, together with a companion, ordered a clubhouse sandwich from Sio. After some time, Mendoza's companion cancelled the order. Sio thereafter overheard Mendoza inquiring about her order, at which point Sio informed Mendoza that an unidentified female customer cancelled her orders. Sio then approached Mendoza's companion and, in a strong voice, remarked, "Ikaw na magexplain sa kanya at baka maghanap pa siya." Embarrassed and offended by Sio's arrogant remark as she felt "like she was a dog looking for a food to eat," Mendoza lodged a complaint against Sio on September 22, 2011 with Heritage's Human Resource (HR) Department. The HR director summoned Sio to the investigation room to explain, and therein, Sio apologized to Mendoza but the same was rejected by the latter. On October 5, 2011, Sio was issued a second memorandum requiring her to explain in writing why no disciplinary action should be imposed on her for violating the same provisions of the company rules as those enumerated in the earlier May 2, 2011 memorandum and, additionally, Major Offense #28 (issuing statements or committing acts inimical to Hotel's image, interest or reputation). Sio submitted her explanation dated October 7, 2011, stating that Mendoza's allegations in her complaint were purely hearsay because Sio was not talking to Mendoza but to the latter's companion when she was quoted as saying, "Ikaw na mag-explain sa kanya at baka maghanap pa siya." Finding no merit in her explanation, Heritage issued a memorandum and a Report, both dated October 21, 2011, finding Sio guilty of the new charges and imposing upon her the penalty of suspension for two (2) weeks, beginning October 18 to November 2, 2011, with a warning that a similar offense in the future would merit dismissal.

Aggrieved and averring that she was likewise an active union member, Sio filed a complaint for Unfair Labor Practice (ULP), illegal suspension and other monetary claims before the arbitration branch of the NLRC. The Labor Arbiter dismissed Sio's complaint for lack of merit, finding that Sio failed to refute Heritage's allegations and even apologized to her complainants during the hearings, and that her suspension was based on valid and legitimate grounds, being a legitimate exercise of management prerogative. The NLRC affirmed the LA's findings, ruling that Sio failed to disprove Heritage's charges, thus making the suspensions based on said charges legal, and that the charge of ULP must perforce fail as the suspensions were legal. The CA partially granted Sio's petition, finding that the complaining guests were not adduced by Heritage to corroborate the latter's charges, that the evidence presented by Heritage was hearsay and bereft of any evidentiary value, and that Sio's alleged statements could hardly be considered arrogant and as sufficient grounds for her suspension.

• Factual Findings of Labor Tribunals: Heritage averred that the CA erred in disturbing the factual findings of the LA, as affirmed by the NLRC, which findings are supported by substantial evidence.
• Hearsay Nature of Bumatay's Report: Heritage argued that Bumatay's report is not hearsay as he himself was a complainant in the administrative case against Sio, having himself received disrespectful words from Sio.
• Bumatay's Employment Status: Heritage argued that Bumatay was not an employee of Heritage but of PAGCOR, one of Heritage's biggest clients which operates a casino inside the hotel's premises, and that Heritage offers food and beverages to the guests of PAGCOR in the latter's casino under a contract between the two entities.
• Importance of PAGCOR Relations: Heritage argued that being a client of Heritage which draws in a significant number of guests to the hotel, it is of paramount importance to Heritage that it provides top-quality service to PAGCOR's guests and treats the latter's employees with respect.
• Sio's Admissions: Heritage argued that Sio was afforded every opportunity to deny all the charges against her but instead of doing so, she apologized to her complainants.
• Procedural Due Process: Heritage argued that having proven the charges against Sio, and with Sio having failed to even deny such charges and confront her complainants during the administrative hearings, Heritage had no choice but to penalize her with suspension.
• Other Evidence Presented: Heritage argued that pieces of evidence, other than the allegedly hearsay report/complaint, were presented by Heritage such as the minutes of the administrative hearing.
• Manner of Statements: Heritage argued that the CA failed to appreciate the arrogant and offensive manner by which Sio's questioned statements were made and merely focused on their literal meaning.
• Impropriety of Damages: Heritage argued that as Sio's suspensions were valid, the award in her favor of backwages and other benefits as well as moral and exemplary damages was improper.

N/A — The decision does not recount Sio's arguments before the Supreme Court in the present petition.

• Grave Abuse of Discretion: Whether the CA erred in ruling that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction when the latter affirmed the LA's decision and found that the suspensions of Sio were valid and legal.

• Grave Abuse of Discretion: No. The NLRC did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it affirmed the LA's decision, as its findings were supported by substantial evidence and rooted in law. The CA erred in substituting its own factual findings for those of the labor tribunals, which are accorded not only respect but finality when supported by substantial evidence.

• Grave Abuse of Discretion: The Court noted that the Petition raises mixed questions of law and fact, and although in a petition for review on certiorari generally only questions of law may be raised, the conflicting findings of the labor tribunals and the CA brought the case under jurisprudential exemptions to this general rule. The Court emphasized that the CA reviewed the NLRC decision through a special civil action for certiorari under Rule 65, the sole mode of review of NLRC decisions, and its jurisdiction was confined to errors of jurisdiction committed by the NLRC, whose decision might only be set aside if it committed grave abuse of discretion amounting to lack or excess of jurisdiction. Citing Montoya vs. Transmed Manila Corp., the Court laid down the basic approach in undertaking Rule 45 petitions of Rule 65 decisions of the CA: the Court must examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion by the NLRC, not on the basis of whether the NLRC decision on the merits of the case was correct.

The Court ruled that the NLRC's decision was supported by substantial evidence. Both the LA and the NLRC found that, in both occasions, Sio committed the acts which justified her suspension: for the first incident, she arrogantly talked to the VIP client Tiozon and the PAGCOR employee Bumatay; for the second incident, she made utterances which embarrassed another client, Mendoza. The labor tribunals also found that Sio was afforded procedural due process, as she submitted her explanations in both instances, and during the administrative hearings, she failed to refute the allegations and to present evidence to controvert them, instead even apologizing to the complainants.

The Court rejected the CA's finding that Bumatay's report/complaint and Mendoza's complaint were hearsay evidence. First, Bumatay was himself a complainant in the first administrative case against Sio, and his Complaint dated April 30, 2011 actually pertains to two separate occasions which both took place on April 30, 2011: the exchange between Sio and Bumatay and the exchange between Sio and Tiozon. The Complaint is signed by Bumatay and attested to by Tiozon. Anent the second incident, the complaint of Mendoza clearly shows that she was referring to a personal offense when she heard Sio talking about her to her companion. Second, even assuming that the aforementioned pieces of evidence were hearsay, the CA still erred in ruling that Sio was invalidly suspended on such basis, because administrative bodies like the NLRC are not bound by the technical niceties of law and procedure and the rules obtaining in courts of law. The Labor Code itself mandates the labor tribunals to use all means reasonable to ascertain the facts of the case without regard to technicalities, in the interest of due process. Third, Sio's suspensions were imposed by Heritage not solely on the basis of the reports/complaints, but rather, Sio was allowed to explain in writing, and administrative hearings were conducted to afford her an opportunity to rebut the charges against her, with other witnesses attending the hearing as shown by the minutes of the conference meeting.

On the CA's finding that Sio's statements "can hardly be considered words of arrogance, nor obscene, offensive, insulting or scandalous," the Court agreed with Heritage that the CA seemingly focused merely on the words spoken and their literal sense without considering the manner in which these statements were made. The gravity of the statements made must not only be gauged against the words uttered but likewise on the relations between the parties involved and the circumstances of the case. As Heritage had explained, the persons who were on the receiving end of Sio's improper expressions were valued guests and an employee of one of their largest clients — PAGCOR. The conduct of Sio did not just violate Heritage's Code of Conduct but was likewise inimical to its business relations with PAGCOR, and thus, prejudicial to the hotel's interest.

The Court emphasized that Sio was not dismissed but only suspended for a week for the first subject offense, and two weeks for the second, after notice, hearing and an investigation. The penalties of suspension imposed upon Sio were not without valid bases and were reasonably proportionate to the infractions committed. Citing Areno, Jr. vs. Skycable PCC-Baguio, the Court found proper the suspension imposed upon an employee who made malicious statements against a co-employee, and noted that the improper remarks hurled against valued guests and an employee of a valued client pose a greater threat to the interest of an employer. The Court reiterated that appropriate disciplinary sanction is within the purview of management imposition, and an employer has a free reign and enjoys wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline in its employees and to impose penalties, including dismissal, upon erring employees.

• Standard of Review in Rule 45 Petitions of Rule 65 Decisions in Labor Cases — In a Rule 45 review of a CA ruling in a labor case, the Court examines the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct. The question to ask is: Did the CA correctly determine whether the NLRC committed grave abuse of discretion in ruling on the case? The Court applied this doctrine in determining that the CA erred in substituting its own factual findings for those of the NLRC, which were supported by substantial evidence.

• Grave Abuse of Discretion — Grave abuse of discretion means such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction, and it must be shown that the discretion was exercised arbitrarily or despotically. The Court applied this standard in finding that the NLRC did not commit grave abuse of discretion when it affirmed the LA's findings that Sio was validly and legally suspended.

• Substantial Evidence Rule in Labor Cases — Findings of facts of quasi-judicial bodies like the NLRC, which have acquired expertise in the specific matters entrusted to their jurisdiction, are accorded not only respect but even finality if they are supported by substantial evidence. The Court applied this doctrine in reinstating the NLRC decision, finding that the labor tribunals' findings were supported by substantial evidence on record.

• Non-Binding Technical Rules of Evidence in Administrative Proceedings — Administrative bodies like the NLRC are not bound by the technical niceties of law and procedure and the rules obtaining in courts of law; rules of evidence are not strictly observed in proceedings before administrative bodies, and cases may be decided on the basis of position papers and other documents without necessarily resorting to technical rules of evidence as observed in the regular courts of justice. The Court applied this doctrine in rejecting the CA's hearsay ruling, citing Article 227 [221] of the Labor Code.

• Management Prerogative to Impose Disciplinary Sanctions — Appropriate disciplinary sanction is within the purview of management imposition; an employer has a free reign and enjoys wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline in its employees and to impose penalties, including dismissal, upon erring employees. The Court applied this doctrine in upholding the validity of the suspensions imposed upon Sio.

• "In ruling for legal correctness, we have to view the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct." — This passage from Montoya vs. Transmed Manila Corp., quoted by the Court, establishes the controlling standard of review for Rule 45 petitions assailing CA rulings on Rule 65 petitions in labor cases.

• "In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process." — This quotation from Article 227 [221] of the Labor Code supports the Court's ruling that the CA erred in applying strict hearsay rules to the evidence presented before the labor tribunals.

• "The gravity of the statements made must not only be gauged against the words uttered but likewise on the relations between the parties involved and the circumstances of the case." — This passage articulates the Court's standard for evaluating the gravity of an employee's statements in disciplinary cases, rejecting the CA's literal interpretation of Sio's words.

• Montoya vs. Transmed Manila Corp., 613 Phil. 696 (2009) — Controlling precedent establishing the basic approach in undertaking Rule 45 petitions of Rule 65 decisions of the CA in labor cases: the Court must examine whether the CA correctly determined the presence or absence of grave abuse of discretion by the NLRC.

• Pascual vs. Burgos, 776 Phil. 167 (2016) — Cited for the jurisprudential exceptions to the general rule that only questions of law may be raised in a petition for review on certiorari, including when the findings of fact are conflicting.

• St. Martin Funeral Home vs. NLRC, 356 Phil. 811 (1998) — Cited for the proposition that a special civil action for certiorari under Rule 65 is the sole mode of review of NLRC decisions.

• Philippine National Bank vs. Gregorio, G.R. No. 194944, September 18, 2017, 840 SCRA 37 — Cited for the rule that NLRC decisions may only be set aside if the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction, and that findings of facts of quasi-judicial bodies are accorded not only respect but finality if supported by substantial evidence.

• Leonis Navigation Co., Inc. vs. Villamater, 628 Phil. 81 (2010) — Cited for the definition of grave abuse of discretion as such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction.

• Samalio vs. CA, 494 Phil. 456 (2005) — Cited for the rule that administrative bodies like the NLRC are not bound by the technical niceties of law and procedure and the rules obtaining in courts of law.

• Sevilla vs. I.T. (International) Corp., et al., 408 Phil. 570 (2001) — Cited for the rule that cases before administrative bodies may be decided on the basis of position papers and other documents without necessarily resorting to technical rules of evidence.

• Areno, Jr. vs. Skycable PCC-Baguio, 625 Phil. 561 (2010) — Followed as authority for upholding the suspension imposed upon an employee who made malicious statements against a co-employee, with the Court noting that improper remarks hurled against valued guests pose a greater threat to the interest of an employer.

• Torreda vs. Toshiba Information Equipment (Phils.), Inc., 544 Phil. 71 (2007) — Cited for the rule that an employer has a free reign and enjoys wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline in its employees and to impose penalties.

• Article 227 [221], Labor Code — Provides that the rules of evidence prevailing in courts of law or equity shall not be controlling in proceedings before the NLRC or Labor Arbiters, and that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process. The Court applied this provision in rejecting the CA's hearsay ruling.

• Rule 45, Rules of Court — Governs petitions for review on certiorari, which generally raise only questions of law. The Court applied this rule in determining the scope of its review, noting the jurisprudential exceptions allowing inquiry into questions of fact when the findings of the labor tribunals and the CA are conflicting.

• Rule 65, Rules of Court — Governs the special civil action for certiorari, the sole mode of review of NLRC decisions. The Court applied this rule in defining the CA's jurisdiction, which was confined to errors of jurisdiction committed by the NLRC.

Carpio (Chairperson), Perlas-Bernabe, J. Reyes, Jr., and Lazaro-Javier, JJ., concurred.

N/A — No dissenting opinions were noted in the provided case text.