Doubts that pervade in the presentation of evidence to establish validity of dismissal are resolved in favor of labor.

The Supreme Court held in the following case where it is doubtful as to whether the employee stole the helmet of co-worker.

Hocheng Philippines Corporation vs. Antonio M. Farrales
G.R. No. 211497, March 18, 2015


Antonio M. Farrales was first employed by HPC on May 12, 1998 as Production Operator. Prior to the filing of the case, he was Assistant Unit Chief of Production, a supervisory position.

On December 2, 2009, a report reached HPC management that a motorcycle helmet of an employee, Reymar Solas (Reymar), was stolen at the parking lot within its premises. Security Officer Francisco Paragas III confirmed a video sequence recorded on closed-circuit television (CCTV) around 3:00 p.m. on November 27, 2009 showing Farrales taking the missing helmet from a parked motorcycle.

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Later that day, HPC sent Farrales a notice to explain his involvement in the alleged theft. The investigation was supported by the employees’ union, ULO-Hocheng. Farrales explained the incident stating that he borrowed a helmet from his co-worker Eric Libutan (“Eric”) since they reside in the same barangay. They agreed that Eric could get it at his house or the latter could return it the next time that they will see each other. Eric told him that his motorcycle was black in color. As there were many motorcycles with helmets, he asked another employee, Andy Lopega (“Andy”) who was in the parking area where he could find Eric’s helmet. Andy handed over to him the supposed helmet which he believed to be owned by Eric, then he went home.

Farrales explained further that on November 28, 2009, at around 6 o’clock in the morning, he saw Eric at their barangay and told him to get the helmet. But Eric was in a rush to go to work, he did not bother to get it. In the morning of December 3, 2009, upon seeing Eric in the workplace, he asked him why he did not get the helmet from his house. Eric told him that, “Hindi po sa akin yung nakuha nyong helmet.” Farrales was shocked and he immediately phoned the HPC’s guard to report the situation that he mistook the helmet which he thought belonged to Eric. After several employees were asked as to the ownership of the helmet, he finally found the owner thereof, which is Jun Reyes’s (“Jun”) nephew, Reymar. Farrales promptly apologized to Jun and undertook to return the helmet the following day and explained that it was an honest mistake. These all happened in the morning of December 3, 2009. Farrales did not know yet that HPC will send a letter demanding him to explain.

A hearing was held. Present were Farrales, Eric Libutan (Eric), Andy Lopega (Andy), Jun Reyes, Antonio Alinda, a witness, and Rolando Garciso, representing ULO-Hocheng. From Andy it was learned that at the time of the alleged incident, he was already seated on his motorcycle and about to leave the company compound when Farrales approached and asked him to hand to him a yellow helmet hanging from a motorcycle parked next to him. When Andy hesitated, Farrales explained that he owned it, and so Andy complied. But Eric had specifically told Farrales that his helmet was colored red and black and his motorcycle was a black Honda XRM-125 with plate number 8746-DI, parked near the perimeter fence away from the walkway to the pedestrian gate. The CCTV showed Farrales instructing Andy to fetch a yellow helmet from a blue Rossi 110 motorcycle with plate number 3653-DN parked in the middle of the parking lot, opposite the location given by Eric. Farrales in his defense claimed he could no longer remember the details of what transpired that time, nor could he explain why he missed Eric’s specific directions.

PC issued a Notice of Termination12 to Farrales dismissing him for violation of Article 69, Class A, Item No. 29 of the HPC Code of Discipline, which provides that “stealing from the company, its employees and officials, or from its contractors, visitors or clients,” is akin to serious misconduct and fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative, which are just causes for termination of employment under Article 282 of the Labor Code.

Farrales filed a complaint for illegal dismissal, non-payment of appraisal and mid-year bonuses, service incentive leave pay and 13th month pay. He also prayed for reinstatement, or in lieu thereof, separation pay with full backwages, plus moral and exemplary damages and attorney’s fees.

LA Ruling:

The LA ruled in favor of Farrales.

NLRC Ruling:

On appeal by HPC, the NLRC reversed the LA, and denied Farrales’ motion for reconsideration, finding substantial evidence of just cause to terminate Farrales.

CA Ruling:

On petition for certiorari to the CA, Farrales sought to refute the NLRC’s factual finding that he committed theft, as well as to question NLRC’s jurisdiction over HPC’s appeal for non-payment of appeal fees. But the CA found that HPC was able to perfect its appeal by posting a bond equivalent to the monetary award of ­897,893.37 and paying the appeal fees by postal money order in the amount of ­520.00.

Concerning the substantive issues, the appellate court agreed with the LA that Farrales’ act of taking Reymar’s helmet did not amount to theft, holding that HPC failed to prove that Farrales’ conduct was induced by a perverse and wrongful intent to gain, in light of the admission of Eric that he did let Farrales borrow one of his two helmets, only that Farrales mistook Reymar’s helmet as the one belonging to him.


Whether or not the taking of helmet by Farrales which belonged to his co-worker without the latter’s consent or knowledge constitutes serious misconduct and ground for dismissal.

SC Ruling:

The SC denied the petition.

The SC held that to validly dismiss an employee, the law requires the employer to prove the existence of any of the valid or authorized causes, which, as enumerated in Article 282 [now Article 297] of the Labor Code, are:

(a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter’s 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 his 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.

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As a supervisorial employee, Farrales is admittedly subject to stricter rules of trust and confidence, and thus pursuant to its management prerogative HPC enjoys a wider latitude of discretion to assess his continuing trustworthiness, than if he were an ordinary rank-and-file employee. HPC therefore insists that only substantial proof of Farrales’ guilt for theft is needed to establish the just causes to dismiss him, as the NLRC lengthily asserted in its decision.

Article 4 of the Labor Code mandates that all doubts in the implementation and interpretation of the provisions thereof shall be resolved in favor of labor.   Consistent with the State’s avowed policy to afford protection to labor, as Article 3 of the Labor Code and Section 3, Article XIII of the 1987 Constitution have enunciated, particularly in relation to the worker’s security of tenure, the Court held that “[t]o be lawful, the cause for termination must be a serious and grave malfeasance to justify the deprivation of a means of livelihood. This is merely in keeping with the spirit of our Constitution and laws which lean over backwards in favor of the working class, and mandate that every doubt must be resolved in their favor.” Moreover, the penalty imposed on the erring employee ought to be proportionate to the offense, taking into account its nature and surrounding circumstances.

As aptly pointed out by the LA, while HPC has the onus probandi that the taking of Reymar’s helmet by Farrales was with intent to gain, it failed to discharge this burden, as shown by the following circumstances: Farrales sought and obtained the permission of Eric, his co-employee as well as barangay co-resident, to borrow his helmet; at the parking lot, Farrales asked another employee, Andy, to fetch a yellow helmet from one of the parked motorcycles, mistakenly thinking it belonged to Eric (whom he knew owned two helmets); the following day, Farrales asked Eric why he had not dropped by his house to get his helmet, and Eric replied that Farrales got the wrong helmet because he still had his other helmet with him; Farrales immediately sought the help of the company guards to locate the owner of the yellow helmet, who turned out to be Reymar; Farrales apologized to Reymar for his mistake, and his apology was promptly accepted.30 All these circumstances belie HPC’s claim that Farrales took Reymar’s helmet with intent to gain, the LA said.

Farrales committed no serious or willful misconduct or disobedience to warrant his dismissal. It is not disputed that Farrales lost no time in returning the helmet to Reymar the moment he was apprised of his mistake by Eric, which proves, according to the CA, that he was not possessed of a depravity of conduct as would justify HPC’s claimed loss of trust in him. Farrales immediately admitted his error to the company guard and sought help to find the owner of the yellow helmet, and this, the appellate court said, only shows that Farrales did indeed mistakenly think that the helmet he took belonged to Eric.

When Farrales told Andy that the yellow helmet was his, his intent was not to put up a pretence of ownership over it and thus betray his intent to gain, as the NLRC held, but rather simply to assuage Andy’s reluctance to heed his passing request to reach for the helmet for him; Andy, it will be recalled, was at that moment already seated in his motorbike and about to drive out when Farrales made his request. As to Farrales’ claim that he and Eric were neighbors, suffice it to say that as the CA noted, they resided in the same barangay, and thus, loosely, were neighbors.

Theft committed by an employee against a person other than his employer, if proven by substantial evidence, is a cause analogous to serious misconduct. Misconduct is improper or wrong conduct, it is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must, nevertheless, be in connection with the employee’s work to constitute just cause for his separation.

But where there is no showing of a clear, valid and legal cause for termination of employment, the law considers the case a matter of illegal dismissal. If doubts exist between the evidence presented by the employer and that of the employee, the scales of justice must be tilted in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.


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