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Equitable Bank vs. NLRC and Ricardo Sadac

[GR NO. 102467] | [June 13, 1997] | [VITUG, J.]

SI FROILAN BACUNGAN LAWYER NG RESPONDENTS. WALA LANG.

DOCTRINE
ID.; ID.; ID.; DUE PROCESS; MANDATORY. Failure to comply with the procedural
requirements for terminating one's employment taints the dismissal with illegality. This
procedure is mandatory, any judgment reached by management without that compliance
can be considered void and inexistent. While it is true that the essence of due process is
simply an opportunity to be heard or, as applied in administrative proceedings, an
opportunity to explain one's side, meetings in the nature of consultation and conferences
such as the case here, however, may not be valid substitutes for the proper observance
of notice and hearing. For having violated private respondent's right to due process
private respondent shall, considering the attendant circumstances particularly his
repeated, but unheeded, request for a hearing, be entitled to an amount of P5,000.

FACTS
August 1, 1981 - Respondent Sadac was appointed as VP of the Legal Department
of Equitable. December 8 designated as banks General Counsel.
June 26, 1989 9 lawyers of the Legal Department under Sadac addressed a
letter-petition to the Chairman of Board of Directors (BoD) accusing Sadac of
abusive conduct, inefficiency, mismanagement, ineffectiveness and
indecisiveness. Respondent was given copy.
Private respondent promptly responded and manifested an intention to file
criminal, civil and administrative charges against the nine lawyers. Morales (Pres.
Who appointed Sadac, now Chairman of BoD) called a conference. It only resulted
in a broad commitment of the parties to implement the "existing procedures and
practices in the Legal Department." There was a rancorous and heated altercation
between Sadac and his subordinates.
One of the BoD, Banico, met with the parties. The 9 said they would resign if Sadac
was retained while Sadac denied the charges. Banico believed the 9 lawyers.
Board issued a memorandum (August 10, 1989) wanting Sadac to voluntarily
resign with Atty. Veto replacing him. Sadac said Banicos report contained libelous
statements and implementation of the memorandum is illegal dismissal. He
requested for a full hearing.
Romulo, Board Vice-Chairman, said Board did not terminate Sadac. Only exercised
managerial prerogative. It would be to the best interest of all concerned if the
"distasteful spectacle" of a hearing would not be resorted to "in order to adhere to
(the bank's) long standing compassionate policy." Also said Trust or confidence
like love are feelings which emanate from the heart and, as the song goes, 'once a
 heart is torn apart it is never the same again.' So also, confidence like a tooth once
pulled can never be restored."
Sadac, in a memorandum, again requested for a full hearing. Said under Sec. 31 of
Corp. Code, Board can be accountable for voting or assenting to patently unlawful
acts of the corporation.
Romulo wrote back and said he is not constructively dismissed because he is still
employed but no law can compel them to give him a particular work. Said their
confidence was lost in light of his threats.
Sadac still insisted but he was unheeded. He filed with NLRC, Manila branch, a
complaint for illegal dismissal and damages.
Upon learning of the complaint, BoD terminated his services since he was
belligerent and because of their honest belief that relationship was of client and
lawyer. Removed and disentitled to any compensation and benefits.
Petitioners client-lawyer relationship so NLRC no jurisdiction. Filed Motion to
Dismiss.
Respondents there is EER.
Labor Arbiter dismissed complaint. Lawyer-Client relationship so governed by
Rules of Court. Functions of Sadac - which "only a lawyer with highly trained legal
mind, can effectively discharge. In Hydro Resources vs. Pagalilauan lawyer was
mere legal assistant so not applicable. There was due process since he was heard
exhaustively on the matter of the charge lodged against him" and that, "for valid
practical reasons," petitioners "were not in a position to accede" to the demand for
a formal hearing.
Appeal NLRC First Division reversed. Sadac was an employee since he was never
an outside counsel. Bank president even enjoined him from attending a
symposium. In letter, he was referred to as employee. Not afforded a hearing so no
factual basis to support allegation of loss of confidence. Denied due process since
no notice and hearing. August 10 memorandum not notice since did not manifest
intention to dismiss him. Neither the meeting between private respondent and the
complaining lawyers nor those held between private respondent and petitioner
Banico could be considered the "investigations" which private respondent had
consistently sought. Granted Damages.
Petitioners filed MR. It was pending when Sadac filed urgent ex parte motion for
immediate reinstatement according to Article 223 of Labor Code. NLRC ordered
them to reinstate in a communication from Executive Clerk, otherwise writ of
execution will be issued. Petitioners filed motion to quash the untitled document.
Petitioners filed motion for immediate resolution on account of the irregularity and
dubious legality of said communication.
Also filed petition for certiorari with prayer for preliminary injunction.
SC notes MR first before certiorari so NLRC could correct mistake. This is
premature and ordinarily a fatal procedural defect. But given due course in order
not to delay final disposition.

ISSUE
1. WON EER exists YES
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2. WON there was due process NO

RATIO
1. WON YES because the court chever chever
a. Execution pending appeal may be ordered by NLRC but if reinstatement
would lead to a strained relation between employer and employee to an
atmosphere of antipathy and antagonism, reinstatement could be held back
pending appeal. SC would not rule on the dubious character of the directive
(communication). MR could have resolved that.
b. Four-fold test determines existence of EER (selection/engagement, payment
of wages, power to dismiss, and control). Control test generally assumes
primacy in overall consideration. The power of control refers to the existence
of the power and not necessarily to the actual exercise thereof.
c. NLRC found it existed since he was hired as VP with the same salaries and
benefits granted to senior officers. Not on retainership basis but as an officer.
Position of General Counsel also given. He was given payslips to evidence
monthly wages. Enrolled in SSS and Medicare. Attorneys fees, documentary
and notarial fees not given to them, credited as income of bank. They
shouldered professional tax and IBP dues of respondent. Attendance
recorded. Authorized to sign for bank on contracts covering legal services of
retained lawyers. Had car plan like any senior officer. Included as senior
officer in financial statements. Met substantial evidence. NLRC did not
commit GAOD.
d. Besa and Asis cases not applicable. Hydro resources is the one applicable. "A
lawyer, like any other professional, may very well be an employee of a
private corporation or even of the government. It is not unusual for a big
corporation to hire a staff of lawyers as its in-house counsel, pay them
regular salaries, rank them in its table of organization, and otherwise treat
them like its other officers and employees
e. There is EER so under Labor Code. Under the Code, an employee
may be validly dismissed if these requisites are attendant: (1) the
dismissal is grounded on any of the causes stated in Article 282 of
the Labor Code, and (2) the employee has been notified in writing
and given the opportunity to be heard and to defend himself as so
required by Section 2 and Section 5, Rule XIV, Book V, of the
Implementing Rules of the Labor Code.
f. Article 282(c) of the Labor Code provides that "willful breach by the
employee of the trust reposed in him by his employer" is a cause for the
termination of employment by an employer. Ordinary breach of trust will not
suffice, it must be willful and without justifiable excuse. Loss of trust and
confidence was due to the complaints by lawyers in the department.
g. Concededly, a wide latitude of discretion is given an employer in terminating
the employment of managerial employees on the ground of breach of trust
and confidence. In order to constitute a "just cause" for dismissal, however,
the act complained of must be related to the performance of the duties of
 the employee such as would show him to be thereby unfit to continue
working for the employer. Here, the grievances of the lawyers, in main, refer
to what are perceived to be certain objectionable character traits of private
respondent (Insulting them in the presence of clients, berates rather than
inspires).
2. WON NO because the court chever chever
a. Bank thought no EER so they put aside the procedural requirements
for terminating one's employment, i.e., (a) a notice apprising the
employee of the particular acts or omissions for which his dismissal
is sought, and (b) another notice informing the employee of the
employer's decision to dismiss him. Absence of these taints
dismissal with illegality. This procedure is mandatory, any judgment
reached by management without that compliance can be considered
void and inexistent. While it is true that the essence of due process
is simply an opportunity to be heard or, as applied in administrative
proceedings, an opportunity to explain one's side, meetings in the
nature of consultation and conferences such as the case here,
however, may not be valid substitutes for the proper observance of
notice and hearing
b. Moral damages if there is bad faith. Exemplary damages if effected in a
wanton, oppressive, or malevolent manner. In this case, no bad faith. Malice
or bad faith, the lesser evil of the two, the Court has once said, "implies a
conscious and intentional design to do a wrongful act for a dishonest purpose
or moral obliquity; it is different from the negative idea of negligence in that
malice or bad faith contemplates a state of mind affirmatively operating with
furtive design or ill will."
c. Petitioners, officers of Equitable, are thus not solidarily liable. Santos vs.
NLRC - A corporation is a juridical entity with a separate identity. Piercing the
corporate veil is not warranted. None of the conditions are present. Kung
sakali ito sila.
(1) He assents (a) to a patently unlawful act of the corporation, or (b) for
bad faith or gross negligence in directing its affairs, or (c) for conflict
of interest, resulting in damages to the corporation, its stockholders
or other persons; "'
(2) He consents to the issuance of watered stocks or who, having
knowledge thereof, does not forthwith file with the corporate
secretary his written objection thereto; "'
(3) He agrees to hold himself personally and solidarily liable with the
corporation; or "'
(4) He is made, by a specific provision of law, to personally answer for
his corporate action.

DECISION
For having violated private respondent's right to due process private
respondent shall, considering the attendant circumstances particularly his
repeated, but unheeded, request for a hearing, be entitled to an amount of
P5,000.00.
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No reinstatement since generated animosity among them. But entitled to

backwages. Dismissal until 60 years (1995). After that, retirement benefits.
NLRC affirmed. But Moral and exemplary damages deleted. Liability is bank
only, other petitioners absolved.

Medyo side issue lang No forum shopping. Respondent filed criminal action for libel
during pendency of this illegal dismissal case. Not forum shopping.