GR. NO.

98458
COCOLAND CORP v. NLRC

FACTS:
1. Cocoland Corporation was engaged in the production of coffee, coconut, cacao, etc.
2. In early 1980, Cocoland Corp. hired an agriculturist as a field supervisor for the company,
herein Jeremias Mago.
3. In January 1989, Cocoland Corp. had known that Mago was extending its technical
services to small farmers in the area without prior consent from management.
4. As a management action, the Vice President of Cocoland Corp. issued a memorandum
charging Mago by imparting company technology in coffee propagation techniques by
rendering professional services to outside parties without the knowledge and consent of
the management and stated the it was a violation of a company policy against
unauthorized disclosure of trade secrets, which is a ground for termination of Mago’s
services to the company.
5. As a reply, Mago admitted that he was giving consultancy services from small farm
owners but denied the allegation against him of violating company policy of
unauthorized disclosure of its trade secret, as the technology of coffee propagation
techniques were already available to the public. He also stated that he was not the first
one to offer such services, as it was first offered by the manager of the company itself,
Edgardo M. Sena.
6. In reply, Dela Cruz stated that while the public already knew about the coffee
propagation technique, he reiterated that some cutting techniques were developed by
them. Also, he confirmed that Edgardo offered consultancy services to farmers but it was
duly authorized by the management.
7. In February 14, 1989, Dela Cruz ordered to explain in writing within 48 hours why the
company should not terminate Mago’s services. Mago complied but his letter was
deemed not admissible to management, resulting on his termination of services.
8. Mago then filed a complaint before DOLE arbitration against petitioner for illegal
dismissal with damages finding the dismissal tainted with illegality. Subsequently, the
labor arbiter found merit on Mago’s complaint and awarded separation pay, back wages,
and attorney’s fees.
9. Hence, this petition claiming that the NLRC abused certain discretions.

ISSUES: Whether or not NLRC committed grave abuse discretion for ruling illegal dismissal and
awarding damages to Mago and W/N there was an unauthorized propagation of trade secret.

RULING: The court found no abuse of discretion on the part of the NLRC and modified the
arbiter’s ruling by deleting moral and exemplary damages as well as attorney’s fees; and The
Court found no merit in an unauthorized propagation of trade secret.

Cocoland Corp., via its VP, failed to give Mago a benefit of hearing and investigation before
terminating his contract is a clear indication of infringement of due process of law. The written
letter of explanation awarded to Mago does not signify a due process of the law and was
erroneous.

On the other hand, the Court stated that what constitutes a trade secret was only supported by
the company’s naked contention is dangerous and deserves the barest consideration. A
fictitious or non-existent secret cannot be a basis of a reasonable company policy regarding
confidentiality. Also, the company failed to establish competent evidence to support the
existence of such secret within the company.