eurotech hair systems, inc. vs. go

7/28/2019 Eurotech Hair Systems, Inc. vs. Go

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3. Whether or not the Court of Appeals ruling has violated the Companys constitutional right to reasonable returns on itsinvestments.

4. Whether or not respondent was afforded the required procedural due process.

C

WHETHER OR NOT THE COURT OF APPEALS HAD LEGAL BASIS IN HOLDING THAT THE LABOR ARBITER DID NOT HAVEJURISDICTION TO DISMISS THE CASE IN VIEW OF THE COMPROMISE AGREEMENT REACHED BETWEEN THE PARTIES. 9

Simply put, the issues now for our resolution are: (1) Was respondents dismissal in accordance with law? and (2) Is thecompromise agreement entered into by the parties valid?

Petitioners contend the NLRC correctly ruled there was legitimate basis to terminate respondent for gross incompetence resultingin the companys loss of confidence in him. But petitioners also claim that the Court of Appeals ruling effectively violated theirconstitutional right to reasonable returns on investment. They allege that the evidence on record shows respondent was affordedthe required procedural due process.

Petitioners likewise contend that the pendency of respondents petition for certiorari before the Court of Appeals did not divest theLabor Arbiter of jurisdiction to dismiss the case in view of the quitclaim. They add that respondent knowingly and voluntarilyexecuted the waiver in the presence of the Labor Arbiter. Petitioners further allege that the compromise agreement has the forceand effect ofres judicata.

Respondent, for his part, counters that there was no legal or factual basis to terminate him on the ground of loss of trust andconfidence. He argues that allowing an employer to dismiss an employee on a simple claim of loss of trust and confidence placesthe employees right to security of tenure at the mercy of the employer.

Respondent further contends that the petition raises only questions of fact and should therefore be denied outright. Finally, heassails the Court of Appeals deletion of the award of attorneys fees. He argues that s ince moral and exemplary damages havebeen awarded to respondent, an award of attorneys fees is proper under Article 2208 10 of the Civil Code.

Considering all the circumstances in this case, we find the present petition meritorious.

Loss of trust and confidence to be a valid ground for an employees dismissal must be based on a willful breach and founded onclearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, asdistinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. 11

While failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may be a justcause for dismissal, 12 the employer must show what standards of work or reasonable work assignments were prescribed whichthe employee failed to observe. In addition, the employer must prove that the employees failure to observe any such standard sor assignments was due to his own inefficiency. 13

In this case, petitioners showed that respondent failed to meet production targets despite reminders to measure up to the goalsset by the company. However, they were unable to prove that such failure was due to respondents inefficiency. Significantfactors that might explain the companys poor production include existing market conditions at the time, the overall spendingbehavior of consumers, and the prevailing state of the countrys economy as a whole. The companys production shortfalls cannotbe attributed to respondent alone, absent any showing that he willfully breached the trust and confidence reposed in him by thepetitioners.

Note that the burden of proof in dismissal cases rests on the employer. 14 In the instant case, however, petitioners failed to provethat respondent was terminated for a valid cause. Evidence adduced was utterly wanting as to respondents alleged inefficiencyconstituting a willful breach of the trust and confidence reposed in him by petitioners.

However, on the second issue, we find for petitioners.

Article 227 of the Labor Code provides:

ART. 227. Compromise agreements. Any compromise settlement, including those involving labor standard laws, voluntarilyagreed upon by the parties with the assistance of the Bureau or the regional office of the Department of Labor, shall be final andbinding upon the parties.

Note, however, that even if contracted without the assistance of labor officials, compromise agreements between workers andtheir employers remain valid and are still considered desirable means of settling disputes. 15

A compromise agreement is valid as long as the consideration is reasonable and the employee signed the waiver voluntarily, witha full understanding of what he was entering into. All that is required for the compromise to be deemed voluntarily entered into is

personal and specific individual consent. Thus, contrary to respondents contention, the employees counsel need not be presentat the time of the signing of the compromise agreement.

In this case, we find the consideration of P450,000 fair and reasonable under the circumstances. In addition, records show thatrespondent gave his personal and specific individual consent with a full understanding of the stakes involved. In our view, thecompromise agreement in this case does not suffer from the badges of invalidity.

The fact that the Order, which dismissed the case in view of the compromise agreement, was issued during the pendency of thepetition for certiorari in the Court of Appeals does not divest the Labor Arbiter of jurisdiction. A petition for certiorari is an originalaction and does not interrupt the course of the principal case unless a temporary restraining order or a writ of preliminaryinjunction has been issued against the public respondent from further proceeding. 16 The Labor Arbiter thus acted well within his

jurisdiction. Therefore, the Labor Arbiters Order dismissing the case with prejudice in view of the compromise agreement enteredinto by the parties must be upheld.

WHEREFORE, the petition is GRANTED. The assailed Decision dated July 9, 2003 and Resolution dated November 19, 2003, ofthe Court of Appeals in CA-G.R. SP No. 69909 are SET ASIDE. The July 16, 2003 Order of the Labor Arbiter in NLRC Case No.


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RAB-IV-10-11565-99-L dismissing the case with prejudice is AFFIRMED.

No costs.

SO ORDERED.

LEONARDO A. QUISUMBING Associate JusticeWE CONCUR:

ANTONIO T. CARPIO Associate JusticeCONCHITA CARPIO MORALES Associate Justice DANTE O. TINGA Associate Justice

PRESBITERO J. VELASCO, JR. Associate JusticeA T T E S T A T I O N

I attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writerof the opinion of the Courts Division.

LEONARDO A. QUISUMBING Associate Justice ChairpersonC E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conc lusions inthe above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the CourtsDivision.

ARTEMIO V. PANGANIBAN

Chief Justice

Footnotes

1Rollo, pp. 60-72. Penned by Associate Justice Oswaldo D. Agcaoili, with Associate Justices Perlita J. Tria Tirona, and Edgardo F.Sundiam concurring.

2 Id. at 74-77.

3 Id. at 79-95.

4 Id. at 117-122.

5 Id. at 115.

6 Id. at 94.

7 Id. at 569.

8 Id. at 96.

9 Id. at 520-521.

10 Art. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot berecovered, except:

(1) When exemplary damages are awarded;

(2) When the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protecthis interest;

x x x x

(5) Where the defendant acted in gross and ev ident bad faith in refusing to satisfy the plaintiffs plainly valid, just anddemandable claim;

x x x x

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

x x x x

11Asia Pacific Chartering (Phils.), Inc. v. Farolan, G.R. No. 151370, December 4, 2002, 393 SCRA 454, 466.


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12Buiser v. Leogardo, Jr., No. L-63316, July 31, 1984, 131 SCRA 151, 158.

13Asia Pacific Chartering (Phils.), Inc. v. Farolan, supra note 11 at 467-468.

14Athenna International Manpower Services, Inc. v. Villanos, G.R. No. 151303, April 15, 2005, 456 SCRA 313, 320.

15Galicia v. NLRC (Second Division), G.R. No. 119649, July 28, 1997, 276 SCRA 381, 387.

16Tomas Claudio Memorial College, Inc. v. Court of Appeals, G.R. No. 152568, February 16, 2004, 423 SCRA 122, 132.

eurotech hair systems, inc. vs. go

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