G.R. No. 169965 -66; December 15, 2010
CARLOS V. VALENZUELA, Petitioner, vs. CALTEX PHILIPPINES, INC., Respondent.

FACTS

Petitioner Carlos Valenzuela was employed by respondent Caltex Philippines, Inc. in 1965, holding various positions over his tenure. In 1996, he was assigned as a warehouseman at the Lapu-Lapu Terminal, responsible for inventory and monitoring of company stocks. On November 23, 1999, a spot operational audit revealed a significant inventory shortage amounting to P823,100.49. Valenzuela was required to explain the shortage and was preventively suspended to prevent further losses or evidence tampering. An administrative investigation was conducted with hearings on December 15, 1999, and January 18, 2000, where Valenzuela participated with counsel. Subsequently, Caltex terminated his employment for gross and habitual neglect of duties, failure to perform month-end inventories, failure to investigate shortages, and commission of fraud.
Valenzuela filed a complaint for illegal dismissal before the Labor Arbiter, who dismissed the complaint for lack of merit. On appeal, the National Labor Relations Commission (NLRC) reversed the Labor Arbiter, declaring the dismissal illegal and awarding separation pay. Both parties elevated the case to the Court of Appeals via certiorari. The CA reinstated the Labor Arbiter’s decision, finding the dismissal valid. Valenzuela’s motion for reconsideration was denied, prompting this petition.

ISSUE

Whether the Court of Appeals erred in affirming the validity of Valenzuela’s dismissal.

RULING

The Supreme Court denied the petition and affirmed the CA’s decision with modification. The Court held that the dismissal was for a just cause, supported by substantial evidence. As a warehouseman, Valenzuela was directly accountable for the custody and monitoring of company stocks. The audit uncovered a substantial inventory shortage under his watch, which constituted gross neglect of duties. The Court emphasized that loss of trust and confidence is a valid ground for dismissal of employees charged with care of employer property. The administrative investigation complied with due process, as Valenzuela was given notice, an opportunity to explain, and hearings with legal representation.
However, the Court modified the CA decision regarding Valenzuela’s preventive suspension. The initial 30-day suspension from November 26 to December 25, 1999, was valid. Yet, Caltex extended this suspension for another 30 days from December 26, 1999, to January 24, 2000, without paying Valenzuela’s wages during the extension period, which contravened Article 279 of the Labor Code. The Code permits extension of preventive suspension only if the employee is paid. Consequently, the Court ordered Caltex to pay Valenzuela his corresponding salary, allowances, and benefits from December 26, 1999, until his actual termination on January 21, 2000. The core finding of a lawful dismissal based on gross neglect and loss of trust was upheld.