Apo Cement Corporation v. Baptisma G.R. No.

176671 1 of 9

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 176671 June 20, 2012
APO CEMENT CORPORATION, Petitioner,
vs.
ZALDY E. BAPTISMA, Respondent.
DECISION
DEL CASTILLO, J.:
In labor cases, all that is required is for the employer to show substantial evidence to justify the termination of the
employee.
This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision dated November
15, 2006 and the Resolution dated February 6, 2007 of the Court of Appeals (CA) in CA-G.R. CEB-SP No. 01220.
Factual Antecedents
On June 16, 1998, respondent Zaldy E. Baptisma was employed by petitioner Apo Cement Corporation, a duly
registered corporation maintaining and
operating a cement manufacturing plant in Tinaan, Naga, Cebu.
Sometime in September 2003, petitioner received information from one of its employees, Armando Moralda
(Moralda), that some of its personnel, including respondent who was then the manager of petitioners Power Plant
Department, were receiving commissions or "kickbacks" from suppliers. To ascertain the veracity of the
information given by Moralda, the top management of petitioner conducted an investigation during which Jerome
Lobitaa (Lobitaa), one of petitioners accredited suppliers, doing business under the name and style "Precision
Process," came forward to corroborate the statement of Moralda.
On October 10, 2003, Moralda and Lobitaa executed separate affidavits to substantiate their claims. Pertinent
portions of the affidavits read:
Moraldas Affidavit:
xxxx
3. As a Buyer/Canvasser at the Purchasing Department enjoying the trust and confidence of Mr. Tinoco, I was
privy to several anomalous practices and transactions involving the procurement of various supplies and services
for the Company. Among the various modus operandi employed by some people in Apo are the following:
xxxx
e. 10% to 20% of the quoted price usually set aside as bribe money for certain personnel. Suppliers would often
factor-in an additional 10% to 20% in their quoted price which would be used to bribe certain Apo personnel. A
canvasser like me would get about 1% to 3% of the quoted price from the winning supplier. Some suppliers would
Apo Cement Corporation v. Baptisma G.R. No. 176671 2 of 9

categorically inform me how much has been promised to other Apo personnel who would help facilitate the award
of the contract in their favor. Among those who receive bribes from suppliers aside from Mr. Tinoco are Mr. Jose
Cruz, the Mechanical Maintenance Manager and Zaldy Baptisma, Apo Power Plant Manager.
xxxx
Lobitaas Affidavit:
xxxx
8.1. There were times when Mr. Tinoco himself talked directly to the end-user [to] negotiate for the amount or
percentage of the kickback that they would get from me. There was one time when Mr. Tinoco informed me that he
has negotiated with Mr. Zaldy Baptisma, the Power Plant Manager, and committed to give him a ten percent (10%)
"commission" or kickback for all transactions which would be awarded to me. Upon the award of the contract
amounting to approximately Two Hundred Thousand Pesos (P200,000.00) and the remittance by Apo of the
payment, I met with Mr. Baptisma outside the Apo plant and personally handed to him his ten percent (10%)
"commission"/ kickback in cash.
xxxx
Having been implicated in the irregularities, respondent, on November 3, 2003, received a Show Cause Letter with
Notice of Preventive Suspension from Plant Director Ariel Mendoza.
On November 5, 2003, respondent submitted his written explanation denying the accusations hurled against him.
To further afford respondent ample opportunity to defend himself, petitioner conducted a series of administrative
investigation hearings during which respondent was able to face his accusers. This time, Lobitaa gave a more
detailed narration of the events that transpired in August and September 2002. He said:
xxxx
(a) That [on] two (2) separate occasions, I personally handed over to Mr. Baptisma some amounts
representing the latters ten [percent] (10%) "commission" and/or "kickbacks." The first instance took place
sometime around the first or second week of August 2002, where I met with Mr. Baptisma at the Papas
Grill, a native restaurant located in V. Rama Avenue, Cebu City. Mr. Baptismas two (2) subordinates, Mr.
Reno Cedeo and Bobby Banzon, were also present. After our dinner, I personally handed over to Mr.
Baptisma the amount of P37,701.81 (cash), which was 10% of the aggregate contract price of P377,018.19
for three (3) purchase orders I got from Apo, i.e. P.O. ON-00028642 (P159,090.91), ON-000-28630
(P168,181.82), and ON-00030162 (P49,745.46). Mr. Baptisma readily received the amount from me.
(b) That the second instance took place sometime in the second week of September 2002. I again met with
Mr. Baptisma and his two (2) subordinates, Mr. Reno Cedeo and Bobby Banzon, at the same Papas Grill
Restaurant. After our dinner, I personally handed over to Mr. Baptisma the amount of P15,909.09, which
was 10% of the total contract price of P159,090.91 under P.O. No. ON-00030067 dated 8 June 2002 which I
got from Apo.
(c) That I submitted to the Investigating Committee copies of the Purchase Orders corresponding to the
transactions I had with Apo out of which Mr. Baptisma received "commissions" and/or "kickbacks" from
me, as follows:
Apo Cement Corporation v. Baptisma G.R. No. 176671 3 of 9

xxxx
(d) That I maintain a notebook where I could enter the details of my dealings with Apo personnel who have
been receiving "commissions" and/or "kickback[s]" from me. During the administrative investigation held
on 9 December 2003, I showed to the Investigating Committee the particular portion of my notebook where
I recorded the total amount of P53,610.00 representing the "commission[s]" and/or "kickbacks" that I gave
to the "Power Plant Boys," in connection with the transactions I had with Apo covered by aforementioned
Purchase Orders. One of the "Power Plant Boys" I referred to in my notebook was Mr. Baptisma.
xxxx
For his part, respondent presented his co-employees Bobby Banzon (Banzon), Reno Cedeo (Cedeo) and
Christopher Navarro. Banzon testified that sometime in December 2002, he, along with respondent and other Apo
employees, went to Papas Grill; that on said occasion, he saw Lobitaa with some companions at another table;
and that Lobitaa did not approach them but only gave food and bottles of beer through a waiter. Cedeo, on the
other hand, denied meeting Lobitaa at Papas Grill.
On March 22, 2004, respondent received the Notice of Termination dated March 19, 2004 informing him of his
dismissal from employment effective immediately on the ground of loss of trust and confidence. At the time of his
termination, respondent was a Power Plant Manager earning a monthly salary of P71,100.00.
On March 31, 2004, respondent filed with the Regional Arbitration Branch VII of the National Labor Relations
Commission (NLRC) in Cebu City a complaint for illegal dismissal with claims for non-payments of salaries, 13th
month pay, service incentive leave, damages, and attorneys fees, docketed as RAB Case No. VII-03-0701-04,
against petitioner and its Vice-President for Human Resources, Atty. Maria Virginia Ongkiko-Eala.
Ruling of the Labor Arbiter
On January 5, 2005, Labor Arbiter Jose G. Gutierrez rendered judgment in favor of respondent. The Labor Arbiter
opined that since respondent was not involved in the canvassing and purchasing of supplies, he could not have
entered into any irregular arrangement with suppliers. The Labor Arbiter likewise considered the testimony of
Moralda as hearsay and the testimony of Lobitaa as self-serving and doubtful. Hence, he ruled that there was "no
justifiable ground to support the validity of [respondents] dismissal x x x." The decretal portion of his Decision
reads:
WHEREFORE, the foregoing premises considered, judgment is hereby rendered declaring the [respondent]
illegally dismissed from his employment. [Petitioner and Atty. Eala] are therefore, directed to reinstate the
complainant to his former position without loss of seniority rights and other privileges. Further, [petitioner and
Atty. Eala] are directed to jointly and severally pay [respondent] the following:

I. Backwages ------- P668,184.60

II. 13th Month Pay ------- 71,200.00
III. Unpaid Salaries ------- 16,450.00

P755,834.60
plus P79,141.53 or ten (10%) percent attorneys fees or a total aggregate amount of PESOS: EIGHT HUNDRED
THIRTY ONE THOUSAND FOUR HUNDRED EIGHTEEN & 06/100 (P831,418.06). The amount awarded to
Apo Cement Corporation v. Baptisma G.R. No. 176671 4 of 9

[respondent] however should be recomputed when this decision becomes final and executory.
[Petitioners] counter-claim is dismissed for lack of merit.
SO ORDERED.
Aggrieved, petitioner filed an appeal with the NLRC, docketed as NLRC Case No. V-000248-2005.
Respondent, on the other hand, filed a Motion for Issuance of a Writ of Execution.
On February 21, 2005, the Labor Arbiter ordered petitioner to reinstate respondent as Power Plant Manager of its
plant at Tinaan, Naga, Cebu, prompting petitioner to file an Urgent Motion for Issuance of a Temporary Restraining
Order and/or Writ of Preliminary Injunction with the NLRC, docketed as NLRC INJ. Case No. 000001-2005.
Ruling of the National Labor Relations Commission
On July 11, 2005, the NLRC reversed the ruling of the Labor Arbiter. It ruled that respondents "personal and direct
involvement in the irregularities complained of renders him unworthy of the trust and confidence demanded [of]
his position." The fallo of the Decision reads:
WHEREFORE, premises considered the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a
new one entered dismissing the complaint.
SO ORDERED.
Respondent moved for reconsideration but his motion was denied by the NLRC in a Resolution dated August 25,
2005. Thus, respondent elevated the matter to the CA.
Ruling of the Court of Appeals
On November 15, 2006, the CA reinstated the Decision of the Labor Arbiter. It ruled that petitioner failed to prove
the existence of a just cause to warrant the termination of respondent as the alleged loss of trust and confidence was
not based on established facts. It decreed:
IN LIGHT OF ALL THE FOREGOING, the petition filed in this case is hereby GRANTED. The assailed decision
dated July 11, 2005 promulgated by the National Labor Relations Commission (Fourth Division) and its
subsequent resolution dated August 25, 2005 in NLRC Case No. V-000248-2005 and NLRC INJ. Case No. V-
000001-2005 are hereby SET ASIDE. The decision dated January 5, 2005 of Labor Arbiter Jose G. Gutierrez is
hereby REINSTATED.
IT IS SO ORDERED.
On reconsideration, the CA stood pat on its finding that there was no basis for petitioners loss of trust and
confidence in respondent. It, however, modified
the dispositive portion of its Decision, in this wise:
WHEREFORE, [petitioners] Motion for Reconsideration is hereby PARTIALLY GRANTED. Our Decision,
dated November 15, 2006, reinstating the decision of Labor Arbiter Jose G. Gutierrez, is hereby MODIFIED. The
portion of the said decision directing x x x Atty. Maria Virginia Ongkiko-Eala to pay the monetary awards in favor
of [respondent] is now SET ASIDE. [Petitioner] Apo Cement Corporation is hereby ORDERED to pay
[respondent] his separation pay, in lieu of the order to reinstate the latter to his former position, at the rate of one
Apo Cement Corporation v. Baptisma G.R. No. 176671 5 of 9

(1) month salary for every year of his employment, with a fraction of at least six (6) months being considered as
one (1) year, computed from the first day of employment up to finality of this decision.
SO ORDERED.
Issues
Hence, this petition raising the following issues:
I.
IN RULING THAT "THE LOSS OF CONFIDENCE WAS NOT GROUNDED ON ESTABLISHED
FACTS," THE [CA] HAS DECIDED THE INSTANT CASE IN A WAY NOT IN ACCORD WITH LAW
AND ESTABLISHED DECISIONS OF THE SUPREME COURT THAT NEITHER DIRECT EVIDENCE
NOR PROOF BEYOND REASONABLE DOUBT IS REQUIRED TO JUSTIFY THE DISMISSAL OF A
MANAGERIAL EMPLOYEE FOR LOSS OF TRUST AND CONFIDENCE.
II.
THE COURT OF APPEALS FINDING THAT "THERE WAS NO REASON WHY A SUPPLIER
WOULD GIVE COMMISSION TO THE RESPONDENT" IS BASED ON GROSS MISAPPREHENSION
OF FACTS, SPECULATIONS, SURMISES AND GUESSWORK, WHICH WARRANTS A REVIEW BY
THE HONORABLE COURT, IN ACCORDANCE WITH THE RULING IN MEGAWORLD AND
HOLDINGS, INC. VS. HON. JUDGE BENEDICTO G. COBARDE, ET. AL. IN FACT, THE SAID
FINDING OF THE [CA] IS AT VARIANCE WITH AND CONTRADICTORY TO THE DEFINITIVE
FINDING OF THE NATIONAL LABOR RELATIONS COMMISSION THAT THE RESPONDENT
"WOULD EXERCISE SOME DISCRETION EITHER TO ACCEPT OR REJECT THE ITEMS
DELIVERED BY THE SUPPLIERS" AND THAT "IT IS OBVIOUSLY BECAUSE OF THIS INHERENT
POWER TO ACCEPT OR REJECT THAT MR. LOBITAA HAD TO GIVE 10% KICKBACKS TO THE
RESPONDENT," WHICH ALL THE MORE WARRANTS THE EXERCISE BY THE HONORABLE
COURT OF ITS POWER OF REVIEW, IN ACCORDANCE WITH THE CASE OF DUCUSIN VS.
COURT OF APPEALS.
III.
IN DISREGARDING THE POSITIVE AND UNBIASED TESTIMONY OF JEROME LOBITAA, THE
[CA] X X X DECIDED THE INSTANT CASE IN A WAY NOT IN ACCORD WITH LAW AND
SETTLED DECISIONS OF THE SUPREME COURT THAT THE "TESTIMONY OF A WITNESS WHO
HAS NOT BEEN SHOWN TO HAVE ANY ILL-MOTIVE TO FALSELY TESTIFY AGAINST
ANOTHER DESERVES FULL WEIGHT AND CREDENCE" AND THAT THE "AFFIRMATIVE
TESTIMONY OF A WITNESS PREVAILS OVER A MERE SELF-SERVING AND
UNSUBSTANTIATED DEFENSE OF DENIAL."
IV.
THE [CA] X X X DECIDED THE INSTANT CASE IN A WAY NOT IN ACCORD WITH LAW AND
SETTLED DECISIONS OF THE HONORABLE SUPREME COURT, WHEN IT REINSTATED THE
DECISION OF THE LABOR ARBITER DATED 5 JANUARY 2005 FINDING PETITIONER GUILTY
OF ILLEGAL DISMISSAL AND HOLDING IT LIABLE TO PAY RESPONDENT BACKWAGES,
Apo Cement Corporation v. Baptisma G.R. No. 176671 6 of 9

UNPAID SALARIES, PROPORTIONATE 13th MONTH PAY AND ATTORNEYS FEES, DESPITE THE
FACT THAT:
(A) RESPONDENTS DISMISSAL WAS VALID AND THERE WAS TOTAL ABSENCE OF ANY
FINDING OF BAD FAITH ON PETITIONERS PART IN TERMINATING RESPONDENTS
EMPLOYMENT;
(B) RESPONDENT HAS BEEN PAID HIS SALARY FOR THE PERIOD MARCH 1-15, 2004,
AND THEREFORE, THE AWARD OF UNPAID SALARY HAS NO LEGAL BASIS;
(C) RESPONDENT HAS UNPAID CASH ADVANCES AND, THEREFORE, HE CANNOT
LAWFULLY CLAIM PAYMENT OF HIS SALARY FOR THE PERIOD MARCH 16-22, 2004,
AND HIS PROPORTIONATE 13th MONTH PAY FOR 2004;
(D) RESPONDENT IS LIABLE TO PAY HIS CASH ADVANCES TO THE PETITIONER UNDER
THE CASH BENEFIT AGREEMENT HE HAD SIGNED;
(E) RESPONDENT IS NOT ENTITLED TO ATTORNEYS FEES AS THE PETITIONER DID
NOT ACT IN BAD FAITH.
Simply put, the crux of the controversy is whether there was just cause for the dismissal of respondent.
Petitioners Arguments
At the outset, petitioner asserts that this petition is an exception to the rule that only questions of law may be raised
in a petition under Rule 45 of the Rules of Court. It submits that a factual review of the instant case is necessary
because the factual findings of the NLRC and the CA are contradictory.
Petitioner also imputes error on the CA for holding that the "loss of confidence was not grounded on established
facts." It points out that although respondent was not tasked to canvass, award, and approve the purchase orders for
company supplies and equipment, he, nevertheless, had some authority to reject the delivery and demand
replacement. Petitioner likewise denies any inconsistencies in the affidavits of Lobitaa, and claims that in the
absence of any ill-motive on the part of Lobitaa to falsely accuse respondent of the offense, Lobitaas testimony
should prevail over the bare denials of respondent and his witnesses.
Respondents Arguments
Respondent prays for the dismissal of the petition on the ground that factual issues are not allowed in a petition
filed under Rule 45 of the Rules of Court. In any case, he insists that he was terminated without cause as the
affidavits of Lobitaa do not merit any weight and consideration. He maintains that the affidavits of Lobitaa are
full of fabrications and inconsistencies. Thus, he implores that the ruling of the Labor Arbiter, as affirmed by the
CA, be upheld.
Our Ruling
The petition has merit.
The rule that only questions of law may be raised in a petition brought under Rule 45 of the Rules of Court is not
without exception. Factual review may warrant when the factual findings of the NLRC are contrary to those of the
Labor Arbiter and the CA; or when the CAs findings of fact, supposedly premised on the absence of evidence, are
Apo Cement Corporation v. Baptisma G.R. No. 176671 7 of 9

contradicted by evidence on record. In this case, the Labor Arbiter and the CA found no just cause to warrant the
dismissal of respondent. The NLRC, however, found otherwise. A factual review is, therefore, in order.
To validly dismiss an employee on the ground of loss of trust and confidence under Article 282 (c) of the Labor
Code of the Philippines, the following guidelines must be observed: "1) loss of confidence should not be simulated;
2) it should not be used as subterfuge for causes which are improper, illegal or unjustified; 3) it may not be
arbitrarily asserted in the face of overwhelming evidence to the contrary; and 4) it must be genuine, not a mere
afterthought to justify earlier action taken in bad faith." More important, it "must be based on a willful breach of
trust and founded on clearly established facts."
In this case, we agree with the NLRC that the termination of respondent on the ground of loss of trust and
confidence was justified. Unlike the Labor Arbiter and the CA, we find the testimony of Lobitaa credible and
truthful.
To begin with, we find no inconsistencies between the first and the second affidavits of Lobitaa. If at all, the only
difference between the two is that the second affidavit is more detailed than the first one. This, however, is
understandable considering that the first affidavit was executed by Lobitaa during petitioners initial investigation,
when it was still verifying the information it received from Moralda, while the second affidavit, which contains
Lobitaas testimony during respondents administrative hearing, was executed long after the investigation was
conducted.
Also, there appears to be no ill-motive on the part of Lobitaa to falsely accuse respondent of accepting
commissions and/or "kickbacks." In fact, it was not Lobitaa but Moralda who reported the irregularities to
petitioner. Lobitaa came forward only during petitioners initial investigation to confirm the testimony of Moralda
that some personnel were indeed receiving commissions and/or "kickbacks."
Moreover, as between the positive testimony of Lobitaa that he gave respondent commissions and/or "kickbacks"
on two separate occasions, and the negative testimony of respondents witnesses Cedeo and Banzon that no such
meeting took place, we are more inclined to give credence to the former. It bears stressing that a positive testimony
prevails over a negative one, more especially in this case where respondents witnesses did not even execute
affidavits to attest to the truthfulness of their statements. Thus, it was error on the part of the Labor Arbiter and the
CA to disregard the testimony of Lobitaa.
Likewise erroneous is the reasoning of the Labor Arbiter and the CA that since respondent was not involved in the
procurement process, he could not be guilty of violating Section 2.04 of petitioners Company Rules and
Regulations, which prohibits employees from:
Obtaining or accepting money or anything of value by entering into unauthorized arrangements(s) with supplier (s),
client(s) or other outsiders(s).
This is a non sequitur. As aptly pointed out by the NLRC, although he was not directly involved in the procurement
process, respondent, as the then Power Plant Manager, had some power or authority "vital and indispensable to the
procurement process." Quoted below is the NLRCs ratiocination, which we approve and adopt:
After going through the records, we are afraid the Labor Arbiter completely missed the point.1wphi1 While
canvassing, awarding, and approving of purchase orders for company supplies, materials and equipment may not
strictly be the official functions of the [respondent], these being the concerns of the Procurement Department,
nevertheless as the then Power Plant Manager, [respondent] actually wielded some authority which is vital and
Apo Cement Corporation v. Baptisma G.R. No. 176671 8 of 9

indispensable to the "procurement process." As is usual in any industrial firm, the procurement of company
supplies, materials, and equipment is being handled by its procurement department, then headed by Mr. Romeo
Tinoco, Jr. The procurement department is tasked with the duty to "canvass" and place "purchase orders" for
supplies, materials, and equipment sought to be procured by the other departments, from which the purchase
request originated. The requesting department which generated the Purchase Request is called the "end-user" or
"requestor."
Being more familiar with the particulars of the supplies, materials and equipment that their respective
department[s] need, especially the technical aspect of it, the "end-users" are tasked with the duty to provide the
specifications of the supplies, materials, equipment sought to be procured for their respective department[s]. Since
the "end-users" are the ones [who] provide for specifications, they are necessarily empowered to determine
whether the materials or equipment delivered by the supplier have complied with the given specifications. If the
item delivered fails to meet the given specifications, the end-user has the discretion to reject the delivery and
demand for replacement.
One of the end-users that often generates purchase requests is the Power Plant, of which [respondent] was then the
manager.1wphi1 Being then the manager of the Power Plant, it was [respondents] duty to approve purchase
requisition[s] and prepare or caused to be prepared the desired specifications of the item sought to be procured for
the Power Plant, especially on the technical side of the items. Upon the delivery, [respondent] has the authority to
determine if the items or equipment delivered are in accordance with the specifications given.
In performing this function, [respondent] would exercise some discretion either to accept the items delivered if he
finds them to have complied with the desired specifications or reject the same if to his judgment the items
delivered failed to meet the desired specifications. In fact, [respondent] himself categorically admitted during the
administrative investigation that in the event the item is rejected, the end-user has the right to demand for
replacement:
xxxx
Thus, to the mind of any supplier, the role of the end-user, like the Power Plant then headed by [respondent], in the
entire procurement process is as important and indispensable as that of the procurement personnel. Since the final
acceptance of the items and/or equipment delivered/supplied by a supplier lies with the "end-user," the "end-user"
equally wields the power to "make or break" a supplier, and therefore, the suppliers have all the reasons in the
world to "bribe" the "end-users" if only to smoothen the acceptance of the items supplied/ delivered.
Consequently, just because [respondents] signature cannot be found in Annexes "10," "10-A," "10-B," "12," "12-
A," "13" and "13-A", it does not necessarily mean that "he has absolutely nothing to do" with the entire
procurement process. As said, while [respondent] may not have been empowered, "to canvass and award purchase
orders to suppliers," he was empowered, as an end-user, to determine whether to accept or reject any item delivered
by any supplier, which authority is part and parcel of the entire procurement mechanism put in place by the
company.
It is obviously because of this inherent power to accept or reject any item delivered that Mr. Lobitaa had to give
10% kickbacks to the [respondent]. x x x
All told, we find that the testimony of Lobitaa constitutes substantial evidence to prove that respondent, as the
then Power Plant Manager, accepted commissions and/or "kickbacks" from suppliers, which is a clear violation of
Apo Cement Corporation v. Baptisma G.R. No. 176671 9 of 9

Section 2.04 of petitioners Company Rules and Regulations. Jurisprudence consistently holds that for managerial
employees "the mere existence of a basis for believing that such employee has breached the trust of his employer
would suffice for his dismissal." As we then see it, respondents termination was for a just and valid cause.
WHEREFORE, the petition is hereby GRANTED. The assailed Decision dated November 15, 2006 and the
Resolution dated February 6, 2007 of the Court of Appeals in CA-G.R. CEB-SP No. 01220 are hereby
REVERSED and SET ASIDE. The Decision of the National Labor Relations Commission dated July 11, 2005
and its Resolution dated August 25, 2005 are hereby REINSTATED and AFFIRMED.
SO ORDERED.
Leonardo-De Castro, (Acting Chairperson), Bersamin, Villarama, Jr., and Perlas-Bernabe, JJ., concur.