G.R. No. 111807 June 14, 1996
AHS/PHILIPPINES, INC., GERVACIO R. AMISTOSO and CONSTANCIO V. HALILI, petitioners,
vs.
COURT OF APPEALS and ALFONSO R. BAYANI, respondents.
BELLOSILLO, J.:p
American Hospital Supplies/Philippines, Inc. (AHS), its president Gervacio R. Amistoso, and its vice-president Constancio V. Halili seek to set aside the 31 August 1993 Decision of respondent Court of Appeals1 in CA-G.R. CV No. 32416 affirming the 25 January 1989 Decision of the Regional Trial Court of Cebu City2 awarding actual and compensatory damages to private respondent Alfonso R. Bayani, a dentist, who was dismissed from the service without the clearance then required from the Secretary of Labor.
Petitioner corporation was engaged in the sale and manufacture of medicines and pharmaceuticals in the country and did substantial business with government hospitals. On 1 June 1970 it hired private respondent as an Area Manager for Visayas and Mindanao, and later appointed him Manager of its Cebu branch. On 30 January 1978 private respondent was dismissed from the service. At that time he was receiving a monthly compensation of P3,180.00.
On 5 May 1978 private respondent filed a complaint for damages before the trial court alleging that in the course of their business petitioners were directly encouraging, abetting and promoting bribery in the guise of "commissions," "entertainment expenses" and "representation expenses" which were given to various government hospital officials in exchange for favorable recommendations, approvals and actual purchases of medicines and pharmaceuticals. For his refusal to take direct and personal hand in giving "bribe money" he was dismissed. In his complaint he asked for an amount of not less than P520,000.00 as moral and consequential damages, P25,000.00 as exemplary damages and P50,000.00 for attorney's fees. On the other hand petitioner in its answer claims that private respondent was not dismissed but that he himself resigned on his own volition.
On 25 January 1989 the trial court ruled that private respondent was illegally dismissed and awarded him P297,600.00 as actual and compensatory damages representing the minimum salary that he could have earned for the next 8 years until his retirement at 60 if he was not dismissed illegally, and P25,000.00 as attorney's fees. The trial court held that there was illegal dismissal because petitioner failed to secure a prior clearance from the Secretary of Labor before actually terminating the services of private respondent, but not for insubordination or disloyalty nor for his obstinate refusal to participate in the bribery. The trial court further ruled that private respondent was not entitled to moral and exemplary damages since "(his) hands are also tainted with the same corruption that he complained about"3
--
It appears that it was only when the repressive regime of then President Marcos started cracking down on "bribe takers" and "bribe givers" that Dr. Bayani must have started to have certain feelings of guilt and claimed that he wanted the "status quo" to be maintained, and that he will just allow his salesmen and agents to deliver the bribe money instead of him or Rene Simpao. Consequently, it is inescapable that as admitted by Dr. Bayani, he has been a party or privy to the giving out of sales REPS or (money) by signing checks which he bluntly called bribe money disguised as sales REP of 5%. Under the principle that he who comes to court must come with clean hands, Dr. Bayani cannot now pretend that he was innocent of the corrupt practices of his company and had clean hands as regards the same . . . . His hands are therefore equally tainted, are mired in the fifth of this corruption, in the matter of the giving of these "kickbacks" . . . . As a matter of conscience, he should have resigned, as that was the most honorable thing for him to do and accept the offer of Mr. Halili to pay his separation pay if he only tendered immediately his resignation. The court, therefore, is hard put, to award damages to the plaintiff in this case after betraying the confidences of his company because it would only serve his own selfish and disloyal ends. Although this is in no way saying, that this court condones corruption, yet it is evident from the proofs submitted to this court that the plaintiff was part of the corruption spun and woven, by the giving of 5% REPS to the doctors listed in his voluminous exhibits and was dismissed for insubordination and disloyalty.4
On appeal, respondent Court of Appeals affirmed in toto the decision of the trial court; hence this petition for review.
Petitioners contend that respondent court erred (1) in affirming the decision of the trial court holding that private respondent was illegally dismissed from the service for failure of petitioner to secure a prior clearance from the Department of Labor when the absence of a clearance was never put in issue during the trial; (2) in ruling that the prior-clearance rule applies to private respondent who is a managerial employee, assuming that the prior-clearance rule is a legitimate issue; (3) in affirming petitioner's liability for damages in an amount equal to private respondent's monthly salary multiplied by the number of years prior to his retirement age, assuming that lack of clearance is a proper issue; (4) when it disregarded decisions of this Court allowing backwages up to three (3) years only; (5) when it held petitioner Gervacio Amistoso personally liable when there is nothing on record to show that he had anything to do with the dismissal of private respondent; (6) when it likewise held petitioner Constancio Halili personally liable for dismissing private respondent when said act was done in his official capacity as vice-president of the corporation; and (7) when it affirmed petitioner's liability for attorney's fees.
At the outset it must be noted that when the complaint for damages was filed on 5 May 1978 the applicable law was P.D. 13675 which amended Sec. 217, par. (a), of the Labor Code by providing that "the Regional Directors (of the Ministry of Labor) shall not indorse and Labor Arbiters shall not entertain claims for moral or other forms of damages." The claim of respondent Bayani for moral, exemplary and consequential damages was thus correctly filed before the then Court of First Instance.
We go back to the findings and conclusions of the trial court. A reading of the complaint for damages filed by respondent Bayani readily shows that his cause of action stems from his allegation that "(he) has been unlawfully dismissed . . . because of (his) refusal to take direct and personal hand in giving out these bribe money to various hospitals or government officials with which (petitioners) have been doing business."6 Petitioners for their part deny the allegation of respondent Bayani that he was dismissed. They claim he resigned. Thus, as succinctly put by the trial court, "[t]he issue . . . is whether the plaintiff (herein respondent) Dr. Alfonso R. Bayani really resigned and whether Bayani was dismissed for his alleged refusal to cooperate in giving bribe money."7 In resolving the instant issue, the trial court held --
From the testimonies of the plaintiff himself and that of defendants' witnesses Ranulfo Payos and Constancio Halili, the inescapable conclusion that the court can arrive at, is that Bayani did not really resign. In fact he only intended to do so. This apparent from Exh. "FFFFF" and that Halili was forcing Bayani to tender his resignation, and so he sent Payos to Cebu City in order to receive his letter of resignation. To prove that Halili wanted really Bayani to resign, he even offered him a severance pay from their retirement fund of the company if he would tender his immediate resignation, even though according to him, the retirement fund is not supposed to be paid to any employee who resigns. It also appears very clear that Bayani was allowed to decide for himself when to resign, after he was allowed to go back to Cebu to confer and consult his family, regarding his intended resignation. It is also evident that Bayani asked if there was an opening in Manila or in Luzon. But already, the mind of Halili was closed, not to give him any other position as he said he does not believe in transferring a problem, from one area to another. In fact, it was already decided that they would close the Cebu Branch and convert it into a depot. From the telegram sent by Dr. Bayani which is Exh. "FFFFFF", Bayani said that he was not going to report to Manila anymore, and he considered this as the very act of resignation because he (Halili) expected Bayani to tender his resignation. And so, when Bayani did not tender his resignation, Halili sent Payos to terminate him, when it became clear from the resignation, Halili sent Payos to terminate him, when it became clear from the communications made by Payos to Halili that Bayani could not be disuaded from filing corruption charges against the defendant corporation AHS and exposing it in the newspaper. This was evidently considered by Payos as untenable, and so they have decided to terminate the services of Bayani by compelling him to turn over the office to Mr. Roberto Veloro, who was already scheduled anyway, to replace Bayani according to the admission of Payos, nothwithstanding, that the expected letter of resignation of Bayani, for he was already relieved effectively on January 26. But he did not wait until January 31, 1978. The court, therefore arrives at the conclusion that Bayani was dismissed because of his obstinate threats to file a corruption charge against the company and its officers before the Military Tribunal in Cebu which the defendant company considered as insubordination and disloyalty.8
However the trial court ruled that while respondent Bayani was dismissed, he was not illegally dismissed for his "obstinate threats to file a corruption charge against the company" as he was a "part of the corruption spun and woven, by the giving. of 5% REPS to the doctors listed in his voluminous exhibits." Rather, he was found to have been unlawfully dismissed from the service since his employer did not secure the required prior clearance from the Ministry of Labor before his services were actually terminated --
Obviously, therefore, the state of the law at the time that the plaintiff in this case was dismissed required the employer AHS and defendants herein, to secure a clearance to terminate the plaintiff from has been for at least one year with the employer. Plaintiff has worked for 7 1/2 years before he was terminated. Whether there was cause or not therefore the defendants should have obtained a prior clearance from the Ministry of Labor to dismiss the plaintiff. This is the cause of the illegality of the dismissal and not because the plaintiff was uncooperative in the giving of, alleged bribe money for, as the court has already declared, it does not believe that the plaintiff is innocent of this very corrupt practice alleged by him, and that according to his own testimony, and that of defendants' witnesses, the "payola" or the giving of cash incentives directly to the doctors had already been stopped in view of Blair Memorandum.9
In resolving the case at bench we defer to the well entrenched doctrine that factual findings of the trial court shall not be disturbed on appeal unless the trial court has overlooked or ignored some fact or circumstance of sufficient weight or significance which, if considered, would alter the situation. We have carefully assessed the record of this case and find no fact or circumstance which the trial court may have disregarded. Accordingly we affirm its factual findings that Dr. Alfonso R. Bayani did not resign, as what petitioners would want to impress upon this Court, but was actually dismissed from the service for insubordination and disloyalty because of his refusal to continue to give out "commissions," "entertainment expenses," and "representation expenses" to government doctors in exchange for sales contracts, and because of his obstinate threats to file a corruption charge against petitioners.
However we cannot sustain the conclusions of the trial court that respondent Bayani was illegally dismissed on account of petitioner's failure to secure a prior clearance. For, simply; the lack of prior clearance is not a legitimate issue as it was not alleged by respondent Bayani in his complaint; neither was it litigated by the parties. In fact whether respondent Bayani is a managerial employee to which the prior-clearance rule does not apply has yet to be resolved, since from the evidence submitted it was not sufficiently established if respondent Bayani was indeed a managerial employee. Consequently, we now resolve whether respondent Bayani was validly terminated for insubordination and disloyalty.
We have repeatedly said that two (2) requisites must concur so as to constitute a valid dismissal from employment: (1) the dismissal must be for any of the causes expressed in Art. 282 of the Labor Code, and, (2) the employee must be given an opportunity to be heard and to defend himself. 10 Under Art 282, as amended, an employer may terminate an employment for any of the following causes: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and, (e) other causes analogous to the foregoing.
It has been established that respondent Bayani was dismissed for insubordination and disloyalty which correspond to serious misconduct or willful disobedience under par. (a) of Art. 282. But in Gold City Integrated Port Services, Inc. v. NLRC 11 we explained that willful disobedience of the employer's lawful orders, as a just cause for dismissal of an employee, envisages the concurrence of at least two (2) requisites: the employee's assailed conduct must have been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude; and the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge. Thus in Mañebo v. NLRC 12 we held that in order that an employer may terminate an employee on the ground of willful disobedience to the former's orders, regulations or instructions, it must be established that the said orders, regulations or instructions are (a) reasonable and lawful, (b) sufficiently known to the employee, and (c) in connection with the duties which the employee has been engaged to discharge.
In the instant case, it is quite apparent that the subject order, i.e., to personally give "commissions," "entertainment expenses," and "representation expenses" to government doctors in exchange for sales contracts, was unreasonable and unlawful as it subjected respondent Bayani to criminal prosecution for graft and corruption. Definitely, the giving of commissions and entertainment and representation expenses to government officials in exchange for the approval of sales contracts is from all indications prohibited and punishable by existing laws on corruption of public officials. Accordingly respondent Bayani cannot be validly dismissed for refusing to heed the order to hand out "commissions" to government doctors.
While it may be true, as the trial court said, that the hands of respondent Bayani are "equally tainted, and mired in the filth of this corruption, in the matter of the giving of these 'kickbacks,"' as "it is evident from the proofs submitted to this court that (he) was part of the corruption spun and woven, by the giving of 5% REPS to the doctors listed in his voluminous exhibits," 13 the Court believes that should he decide not to be part of the corrupt system anymore, whatever his reasons are, he should not be dismissed. A reforming employee should not be penalized, much less with dismissal from employment at that.
When there is no showing of a clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid or authorized cause. 14 In this case the employer has miserably failed to discharge that burden. All told, we hold that respondent Bayani was dismissed without a just and valid cause.
We turn to the award of back wages. Respondent Bayani was illegally dismissed on 30 January 1978. At that time the prevailing doctrine was the so-called Mercury Drug Rule which was first explained by Mr. Justice Teehankee (later Chief Justice) in his Separate Opinion in Mercury Drug Co. v. Court of Industrial Relations 15 and later applied in full in FEATI University Faculty Club v. FEATI University. 16 The so called Mercury Drug Rule awards back wages equivalent to three (3) years (where the case is not terminated sooner), without qualification and deduction. The three-year period was used as the base figure of Mr. Justice Teehankee opined that "[n]ormally, the trial of the case and resolution of the appeal should be given preference and terminated within a period of three years (one year for trial and decision in the industrial court and two years for briefs, etc., and decision in this Court)." 17
Appying the Mercury Drug Rule to the case at bar, respondent Bayani is entitled to be paid the sum of ONE HUNDRED FOURTEEN THOUSAND FOUR HUNDRED EIGHTY PESOS (P114,480.00) as back wages for three (3) years without deduction or qualification --
P3,180.00 (Bayani's last monthly salary)
x 12 months
—————
P38,160.00 (Bayani's salary for one year)
P38,160.00
x 3 years
————
P114,480.00 (Bayani's back wages for three years)
We move to the question of reinstatement. Illegally dismissed employees are entitled to reinstatement is not possible, the illegally dismissed employees are entitled to separation pay and back wages. In the instant case it is more prudent and practical not to order reinstatement since this case has already dragged on for about 18 years. After 18 years it can now be fairly expected that respondent Bayani would find difficulty to fit into the employment structure of petitioner corporation, not to mention the fact that after all those years he may already be comfortable with his new endeavors. Besides the relationship between petitioners and respondent Bayani has been unduly strained, more so since the latter held a key position where he could work efficiently and effectively only if he enjoyed the full and complete trust and confidence of top management. Therefore instead of reinstatement, we hold that respondent Bayani is entitled to separation pay equivalent to one (1) month salary for every .year of service or in the amount of TWENTY THOUSAND SIX HUNDRED SEVENTY PESOS (P20,670.00), thus --
P3,180.00 (Bayani's last monthly salary)
x 6.5 (Bayani's years of service)
————
P20,670.00
On the issue, of joint and solidary liability of petitioner Amistoso as president of petitioner corporation, and of petitioner Halili as vice-president of the same corporation, we have already said that corporate officers are not personally liable for money claims of discharged corporate employees unless they acted with evident malice and bad faith in terminating their employment. 18 In the case at bar, while petitioners Amistoso and Halili may have had a hand in the relief of respondent. Bayani, there are no indications of malice and bad faith on their part. We take exception to the conclusion of respondent Court of Appeals that "the manner by which Halili and Amistoso acted is characterized by bad faith and malice, thus binding them personally liable to plaintiff-appellee,'' 19 On the contrary it is apparent that the relief order was a business judgment on the part of the officers, with the best interest of the corporation in mind, based on their opinion that respondent Bayani had failed to perform the duties expected of him. Hence both the trial court and respondent Court of Appeals committed a reversible error in holding petitioners Amistoso and Halili jointly and solidarily liable with petitioner corporation. We however agree with the conclusion of respondent Court of Appeals that because of the unlawful act of petitioner corporation, private respondent is entitled to recover attorney's fees as he was compelled to litigate and incur expenses to protect his interests. 20
WHEREFORE, the Decision of 31 August 1993 of respondent Court of Appeals affirming the 25 January 1989 Decision of the RTC of Cebu City is MODIFIED. Petitioner American Hospital Supplies/Philippines, Inc., is ordered to PAY respondent dentist Alfonso R. Bayani: (a) back wages for three (3) years without deduction or qualification in the amount of ONE HUNDRED FOURTEEN THOUSAND FOUR HUNDRED EIGHTY PESOS (P114,480.00); (b) separation pay equivalent to one (1) month salary for every year of service or TWENTY THOUSAND SIX HUNDRED SEVENTY PESOS (P20,670.00); and, (c) attorney's fees of TWENTY FIVE THOUSAND PESOS (P25,000.00).
SO ORDERED.
Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.
Footnotes
1 Decision penned by Associate Justice Jainal D. Rasul, concurred in by Associate Justices Pedro A. Ramirez (Chairman) and Ramon Mabutas, Jr., Eleventh Division; Rollo, pp. 45-55.
2 Decision penned by Judge German G. Lee, Jr., RTC-Br. 15, Cebu City, pp. 58-80.
3 Decision of the trial court, p. 22; Id., p. 79.
4 Id., p. 19; Id., p. 76.
5 P.D. 1367 took effect 1 May 1978.
6 Complaint, p. 2 par. 6; Rollo, p. 82.
7 Decision of the trial court, pp. 17-18; Rollo, pp. 74-75.
8 Decision, p. 18; Rollo, p. 75.
9 Decision, p. 22; Rollo, p. 79.
10 Pizza Hut/Progressive Development Corporation, G.R. No. 117059, 29 January 1996; Mapalo v. NLRC, G.R. No. 107940, 17 June 1994, 233 SCRA 266.
11 G.R. No. 86000, 21 September 1990, 189 SCRA 811.
12 G.R. No. 107721, 10 January 1994, 229 S 240.
13 See Note 4.
14 Valiant Machinery and Metal Corporation v. NLRC, G.R. No. 105877, 25 January 1996.
15 No. L-23357, 30 April 1974, 56 SCRA 694.
16 No. L-31503, 15 August 1974, 58 SCRA 395.
17 Separate Opinion of Mr. Justice Teehankee in Mercury Drug Co. v. Court of Industrial Relations, see note 15.
18 Businessday Information Systems and Services, Inc. a. NLRC, G.R. No. 103575, 5 April 1993, 221 SCRA 9.
19 Decision of respondent Court of Appeals, p. 9; Rollo, p. 53.
20 Pizza Hut/Progressive Development Corporation v. NLRC, see Note 10.
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