648 Phil. 238
LEONARDO-DE CASTRO, J.:
Complainant Quijano rose from the ranks starting as accounting clerk in December 1967 until she became effective September 1, 1984, Manager-Agents Services Accounting Division (ASAD), vice Josefina Sioson.
ASAD, the specific unit in PAL charged with the processing, verification, reconciliation, and validation of all claims for commission filed by agents worldwide, is under the direct supervision and control of the Vice President-Comptroller, and within the scope of the audit program of the Vice President-Internal Audit & Control.
On May 5, 1989, an investigating committee chaired by Leslie W. Espino (hereinafter referred to as the Espino Committee) formally charged Quijano as Manager-ASAD in connection with the processing and payment of commission claims to Goldair Pty. Ltd. (Goldair for short) wherein PAL overpaid commissions to the latter amounting to several million Australian dollars during the period 1984-1987. Specifically, Quijano was charged as Manager-ASAD with the following:"Failure on the job and gross negligence resulting in loss of trust and confidence in that you failed to:
a. Exercise the necessary monitoring, control and supervision over your Senior Accounts Analyst to ensure that the latter was performing the basic duties and responsibilities of her job in checking and verifying the correctness and validity of the commission claims from Goldair.
b. Adopt and perform the necessary checks and verification procedures as demanded by your position in order to ensure that the commission claims of Goldair which you were approving for payment were correct and valid claims thus resulting in consistent substantial overpayments to Goldair over a period of more than three years.
c. Require or otherwise cause a final reconciliation of the remaining balance due as commission claims to Goldair for a particular month such that a claim for a particular month was never liquidated in a final amount and thus contributing to consistent overpayments to Goldair."
The Senior Accounts Analyst referred to in the charge was Dora Jane Prado Curammeng who was included as a respondent. Curammeng was specifically assigned to handle and process commissions of agents in, among others, the Australia Region, and Goldair was among the travel agents whose production reports and commission claims were handled by her. Curammeng was accused of failing to verify the completeness of the documents supporting the claims; to trace and match each ticket in the production report submitted by Goldair with the IATA, BSP and CTO sales report; and to perform a complete verification of the net/net amounts claimed in the production reports against the approved marketing arrangements. However, Curammeng had already resigned and became a resident of Canada at the time of the investigation conducted by the Espino Committee.
Pending further investigation, the Espino Committee placed Quijano under preventive suspension and at the same time required her to submit her answer to the charges. As directed, Quijano submitted her answer wherein, among others, she explained as follows:"My staff processes production reports submitted by both passenger and cargo agents. In 1984, they were only seven (7) people (with one on loan to Financial Analysis Division) and yet they process commission claims of an average of PHP four billion annually. My colleagues who are responsible for processing and recording gross passenger and cargo sales have around 51 people. Just the ratio of my staff to accounting sales staff, which is one to seven, would indicate the heavy load our unit experience.
I wish to emphasize however, that the staff assigned under my division have been selected on the basis of their judgment competence considering the very nature of marketing arrangements with agents are strictly private and confidential. Under the circumstances I have just mentioned, my staff's judgment and competence is heavily relied on particularly when random checking of commission claims for traffic documents and airway bills against sales reports is being performed by them. I also seek your appreciation of the work environment we are in and the intermittent conflicts we experience due to the pressure of prompt settlement of claims to agents and yet having the satisfaction that the processing procedures are adequate.
x x x x
May I reiterate to the Committee that when my staff informed me of their findings of double claims on the production reports for the months of October and November 1987, I followed this up with a representative of Goldair. On June 1988, I received a handwritten note from the representative of Goldair signed by its General Manager Aleco Papazoglou, a xerox copy of it is hereto attached as Annex "A". Mr. Papazoglou, in this note, guaranteed to me that he will undertake to collect any excessive payments on the agent fees from his agents and pay these to us afterwards.
At this point, I would like to emphasize that ASAD, before known as "Confidential Staff" under the Office of the VP-Comptroller, became a unit since 1976. Due to the confidential nature of its functions, the accounting procedures were not written. The procedures being performed by the staff were mainly practices handed down from their predecessors. Further, the procedures were tailored to adopt to the market environment of the country which were based on the approved marketing arrangements. But of course, there were inherent internal controls.
A final check whether accounting procedures being observed were appropriate in accordance with accounting standards, is the periodic examination of both our internal and external auditors.
During all these 4-1/2 years I have been with ASAD, I did not receive any feedback that there were weaknesses or lapses in accounting controls and procedures being followed.
In 1985, Cressop Mccormick & Paget made a study of the CMA's. They conducted an interview of all key personnel including me who were involved in handling CMA's. It was of course necessary for them to observe and evaluate the existing accounting procedures and controls. Their report, however, did not mention any adverse findings concerning my division.
In 1986, Sycip, Gorres, Velayo & Co. were engaged to look into the CMA functional specifications and to propose the best method of allocating commission expenses to flown revenues. To be able for them to render a report, it is, of course, necessary for them to delve into the reports we receive and the records we maintain. It is safe to surmise that they "walked through" our accounting procedures. No mention, however, of weaknesses on our accounting procedures and controls was made in their report.
Again, during the early part of 1987, all the production reports from Australia for the period April to September 1986 were borrowed and audited by Internal Audit and control. We apprised the auditor then of the various procedures we observed in processing these production reports. We did not receive any adverse feedback about their audit. Our confidence that the AMA's were properly enforced by Australian agents and that there were no irregularities committed were thus regained. We shifted our concentration to the other agents particularly those under Nett-Nett settlement arrangements and tried to recall any commission that should be disallowed.
In the middle of 1987, a special team from the Commission on Audit conducted a fraud audit and again, interviewed my staff and I on our accounting procedures. Incentive commission figures by agent by country were also furnished to them. I wasn't informed of any flaws in our accounting procedures and control nor existence of any fraud.
My division underwent scrutiny of three (3) prestigious consulting firms and of our own internal audit. I relied heavily on the absence of any unfavorable findings on accounting procedures and controls from them since their studies were quite extensive and lengthy. It is quite surprising at times why I am now asked how I could have failed to observe that certain accounting procedures were not being followed by my staff.
x x x x
Also, Internal Audit & Control made a regular audit in Australia in November, 1986 headed by no less than the Vice President-Internal Audit & Control. They did not discover any fraud nor report any questionable transaction on Passenger but on Cargo transaction only. If they, the auditors, did not find any discrepancy when their concentration is on Australia alone, how much more with us when our concentration is on the whole system? The production reports of Goldair was borrowed and assessed by the auditor before and after the regular audit."
The other members of the Espino Committee were Ricardo G. Paloma, then Senior Vice President-Strategic Planning & Corporate Services wrote a dissenting opinion to the Final Draft Majority Report in the following manner, to wit:"A new set of procedures was apparently installed by Romeo Ines and Josefina Sioson in April, 1984 (without any evident formal authorization by the Comptroller Dept.) upon receipt of Aleco Papazoglou's letter that automatic payment be made upon presentation of his production reports in Manila Gold Air gained immunity against any possibility of cross of their production reports: it was simply impossible to cross check the production reports against sales reports are not yet in by the time the hand carried production reports arrive in ASAD.
Upon assumption of office by Aida Quijano this new set of procedure was carried over. She was made to understand that these were the OFFICIAL PROCEDURES, contrary to the actual procedure which called for production reports being initially checked by PAL Melbourne during the 1981 to 1983 period. This initial check which had until them been handled by the Regional Office was combined with the secondary check and were all dumped on ASAD.
A mitigating factor in Quijano's favor is that UNSEEN HANDS designed or allowed this new procedures to be put in place. Ines, who became the VP Internal Audit should have known the prescribed procedures (or at the very least the actual practice during the period 1981 to 1983 when he was the VP Comptroller) and yet, did not alert her. Unknowingly, Quijano allowed the by-pass and the automatic payment of 80% upon presentation of production reports because Sioson assured her that was the procedure previously followed. Trustingly, she became a participant in this mess."
It should be noted that the Romeo Ines mentioned in the dissenting opinion is the same Romeo R. Ines who was one of the members of the Espino Committee and who was later named a respondent in the second Goldair charge, together with Chairman Espino. Romeo R. Ines was the VP-Comptroller for the period 1981-1983 and VP-Internal Audit for the period 1984-1987. While Josefina Sioson, as earlier shown, was the Manager-ASAD during the period 1981-1983 until she was replaced by Quijano on September 1, 1984. Incidentally, as found by respondent's witness Benigno Datoc, the Goldair fraud started in 1981 and continued until its discovery sometime in the latter part of 1987. And as of that year, Goldair had been PAL's agent for about seventeen (17) years already.
On July 2, 1990, another Administrative charge involving the same Goldair anomaly was filed, this time including Committee Chairman Leslie W. Espino and Committee Member Romeo R. Ines and several others, for "gross incompetence and inefficiency, negligence, imprudence, mismanagement, dereliction of duty, failure to observe and/or implement administrative and executive policies, and related acts or omissions." Pending the result of investigation by another committee chaired by Judge Martin S. Ocampo, the PAL Board of Directors suspended respondents Leslie W. Espino, Executive Vice-President and Chief Operating Officer; Ramon C. Lozon, Senior Vice-President-Finance; Romeo R. Ines, Vice President-Internal Audit & Control; Josefina Sioson, Manager-Staff Pricing; except respondents VP-Comptroller Robin C. Dui and Manager-ASAD Aida Quijano who were already suspended by the Espino Committee, and respondent Juan Yoga, former Regional Vice President-Australia who has already retired.
Meantime, PAL filed a civil case in Australia against Goldair seeking to recover AUD 11 million. Twice, Quijano went to Australia as witness for PAL. Thereafter, a settlement was reached whereby Goldair was to pay PAL a total of around AUD 7 million inclusive of court costs. A criminal case was nevertheless filed against Goldair's owner, Alexandro Papazoglou, by the Fraud Squad Victorian Police.
The Ocampo Committee having submitted its findings to the PAL Board of Directors, the latter, in a resolution dated January 18, 1991, considered respondents Leslie W. Espino, Ramon C. Lozon, Romeo R. Ines, Robin C. Dui, Josefina Sioson, and Aida M. Quijano, resigned from the service effective immediately, for loss of confidence and for acts inimical to the interest of the company.
The Board found as follows:"This is the extended Resolution.
The Goldair fraud has caused a total loss to PAL as of August 1990 in the amount of AUD 14.6 million (PHP 204 million). Goldair is a company that served then as the General Sales Agent of PAL in Australia against Goldair, a settlement was reached whereby Goldair was to pay PAL a total of around AUD 7 million inclusive of court costs. This settlement is said to be the most practical and realistic under the circumstances. A criminal case was nevertheless filed against Goldair's owner, Alexandro Papazoglou, by the Fraud Squad Victorian Police. Hearings are still going on.
According to the evidence received and evaluated by the investigating committee, PAL lost the above huge sum of money to Goldair as a result of false, padded, erroneous or irregular claims for commissions submitted by Goldair and unwittingly paid by PAL. The Agents Services Accounting Division (ASAD), one of the divisions under the Comptroller Department, is the specific unit in the company charged with the processing, verification, and validation of all claims for commissions filed by the company's agents worldwide (excluding the U.S. which is processed by the San Francisco Regional Office). Consequently, responsibility for the Goldair fraud has been attributed mainly to the failure of ASAD to properly process and validate Goldair's commission claims prior to payment.
Thus, the following lapses or irregularities were uncovered in the course of the investigations that have been conducted:
1. No adequate effort was exerted to see to it that the supporting documents (photocopies of tickets submitted and attached to the production report were complete). Neither was a verification or comparison made between the tickets and the production report.
2. The simple and basic step of verifying the names of the passengers and their ticket numbers against ticket numbers, even on a check basis, to see whether they were reported more than once was not accomplished. If done, double or multiple reporting of tickets could have been readily detected.
3. Validation of the correctness of prorate values, by performing the proration, was not undertaken.
4. No reconciliation was made of all the amounts due the agent for a particular month. Such reconciliation would have disclosed whether or not the account for a particular month could be closed.
5. Production reports were not cross-checked against sales report or flight coupon registers.
6. Superiors failed to adequately monitor the activities of their subordinates to ensure that the latter were performing their duties.
7. The policy that cash vouchers could be approved only by duly authorized persons was in several cases violated."
Resolving the case of Quijano, the Board said:
"The charge against Ms. Quijano is that:
Quijano was the Manager-ASAD (Agents Services Accounting Division) in 1984-87, and responsible for the final scrutiny of agents' Production Reports and final recommendation for payment of travel agents' commissions.
As Manager-ASAD from 1984 to 1987 (when the fraud was discovered), she failed to uncover or detect and report or grossly disregarded the fraud although the commissions vis-à-vis production were scandalously high.
Ms. Quijano claims that she relied heavily on Ms. Curammeng's judgment competence to perform her work, particularly the "completeness of the documents" check. She argues that if she were to do the completeness check herself, there would be no need for the analyst. This argument, however, wittingly or unwittingly, misconceives the nature of her job. Precisely, her basic role and duty as a manager was to make sure that the analysts in her division were performing the tasks assigned to them. But Ms. Quijano did not see to it that the completeness check was actually being performed by Ms. Curammeng. This lapse in control, contributed materially to the double, multiple and fictitious reporting of tickets, and double claims for commissions perpetrated by Goldair. Ms. Quijano was certainly not expected to personally do and perform the completeness check herself. But as manager, it was clearly incumbent upon her to see to it that this completeness check was being done by her subordinates competently and efficiently. Yet, Ms. Quijano even failed to adopt ways and means of keeping herself sufficiently informed of the activities of her staff members so as to prevent or at least discover at an early stage the fraud being perpetrated on a massive scale by Goldair against her company.
Her incompetence at her job is patent."
Her motion for reconsideration having been denied by the Board in a Resolution dated February 19, 1991, Quijano filed on March 25, 1991 the instant case against PAL for illegal suspension and illegal dismissal.
WHEREFORE, in conformity with the opinion above-expressed, judgment is hereby rendered dismissing the above-captioned case for lack of merit and, consequently, the respondent is absolved from any liability.
WHEREFORE, in view of all the foregoing considerations, the decision appealed from should be, as it is hereby, VACATED and SET ASIDE and another one entered, directing the Philippine Airlines, Inc., thru its responsible officials, to pay Aida M. Quijano her separation pay in accordance with its "Special Retirement & Separation Program" dated February 15, 1988, plus ten percent (10%) of the total amount by way of attorney's fee.
After due consideration of the Motion for Reconsideration filed by respondent-appellee on October 20, 1995, from the Decision of September 29, 1995, the Commission (Second Division) RESOLVED to deny the same for lack of merit.
That upon appointment of management committee, rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. (Underscoring supplied.)
IN VIEW THEREOF, the Motion for Suspension of Proceedings of petitioner is GRANTED.
WHEREFORE, in the light of the foregoing, and considering PAL's firm commitment to settle its outstanding obligations as well as the fact that its operations and its financial condition have been normalized and stabilized in conformity with the Amended and Restated Rehabilitation Plan exemplifying a successful corporate rehabilitation, the PAL's request to exit from rehabilitation is hereby GRANTED.
The PRR is likewise directed to furnish all creditors and parties concerned with copies of this Order at the expense of the Petitioner and submit proof of service thereof to the Commission, within fifteen (15) days from date of receipt of this Order.
ASSUMING ARGUENDO (WITHOUT ADMITTING) THAT THE EQUITABLE CONSIDERATIONS CITED BY THE NLRC DID EXIST, THE SAME CANNOT JUSTIFY THE AWARD OF SEPARATION PAY TO MRS. QUIJANO (despite the finding that she was legally suspended and thereafter legally dismissed) IN THE FACE OF OVERWHELMING EVIDENCE SUBMITTED BY PETITIONER WHICH CLEARLY SHOW THAT PHILIPPINE AIRLINES, INC. LOST SEVERAL MILLION AUSTRALIAN DOLLARS AS A RESULT OF THE FRAUD COMMITTED BY GOLDAIR AND THAT SAID FRAUD COULD ONLY HAVE BEEN MADE POSSIBLE BY MRS. QUIJANO'S PATENT MISMANAGEMENT AND GROSS INCOMPETENCE AS ASAD MANAGER IN FAILING TO DETECT THE IRREGULARITY. IN AWARDING SEPARATION PAY TO MRS. QUIJANO, THE NLRC COMMITTED A GRAVE ABUSE OF ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION.
An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.
Strictly speaking, however, it is not correct to say that there is no express justification for the grant of separation pay to lawfully dismissed employees other than the abstract consideration of equity. The reason is that our Constitution is replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub-topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with management, in the advancement of the national economy and the welfare of the people in general. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause.
x x x x
There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he has worked for some time with the company. For example, a subordinate who has irreconcilable policy or personal differences with his employer may be validly dismissed for demonstrated loss of confidence, which is an allowable ground. A working mother who has to be frequently absent because she has also to take care of her child may also be removed because of her poor attendance, this being another authorized ground. It is not the employee's fault if he does not have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy even if the separation is for cause.
But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the receipts of his sales. This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on the job is doubtless subject to dismissal but may be allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the situation is changed completely. This is not only inefficiency but immorality and the grant of separation pay would be entirely unjustified.
We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice.
Explicit in PLDT are two exceptions when the NLRC or the courts should not grant separation pay based on social justice¾serious misconduct (which is the first ground for dismissal under Art. 282) or acts that reflect on the moral character of the employee. What is unclear is whether the ruling likewise precludes the grant of separation pay when the employee is validly terminated from work on grounds laid down in Art. 282 of the Labor Code other than serious misconduct.
A recall of recent cases decided bearing on the issue reveals that when the termination is legally justified on any of the grounds under Art. 282, separation pay was not allowed. x x x.
x x x x
In all of the foregoing situations, the Court declined to grant termination pay because the causes for dismissal recognized under Art. 282 of the Labor Code were serious or grave in nature and attended by willful or wrongful intent or they reflected adversely on the moral character of the employees. We therefore find that in addition to serious misconduct, in dismissals based on other grounds under Art. 282 like willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer or his family, separation pay should not be conceded to the dismissed employee.
In analogous causes for termination like inefficiency, drug use, and others, the NLRC or the courts may opt to grant separation pay anchored on social justice in consideration of the length of service of the employee, the amount involved, whether the act is the first offense, the performance of the employee and the like, using the guideposts enunciated in PLDT on the propriety of the award of separation pay. (Emphases supplied.)
The Goldair fraud was found to have started in 1981. Private respondent became the Manager-ASAD only on September 1, 1984. The former Manager-ASAD from 1981 to August 1984 was Josefina Sioson.
ASAD is under the direct supervision and control of the Vice President-Comptroller and within the scope of the audit program of the Vice President-Internal Audit and Control. The VP-Comptroller for the period 1981 to 1983 and the VP-Internal Audit for the period 1984 to 1987 was Romeo Ines.
The accounting procedures and controls inherited by private respondent when she took over ASAD were subjected to the scrutiny of prestigious accounting firms like Cressop, McCormick & Paget in 1985, the Sycip, Gorres, Velayo & Co., Inc. in 1986, including a special team from the Commission on Audit in 1987 - all of which made no adverse findings concerning ASAD.
No less than the VP-Internal Audit made a regular audit in Australia in November 1986 and in the early part of 1987, by borrowing all production reports covering April to September 1986, but found no irregularities nor made any adverse feedback against ASAD.
Private respondent was the first to discover the overpayment of commission claims to Goldair in 1984 in rate differences in net/net settlement which, after her intervention, did not recur. She was also the one who first discovered the fraud in double and fictitious commission claims and promptly took action when she withheld all provisional payments due Goldair.
Even after the Goldair anomaly was discovered, private respondent could have availed of PAL's Special Retirement and Separation Program, but she stayed put and had gone twice to Australia, while under preventive suspension, to attend court proceedings as a witness for petitioner enabling the said company to recover and minimize its economic loss.
Private respondent has no derogatory record during the entire period of her employment with petitioner for more than two decades. She steadily rose from the ranks until she became the ASAD Manager.
In the dissenting opinion of Ricardo Paloma, Vice Chairman of the Espino Committee and PAL Senior VP Strategic Planning and Corporate Service, to the Final Draft Majority Report, he observed that "a mitigating factor in [private respondent's] favor is that UNSEEN HANDS designed or allowed this new procedures to be put in place. Ines, who became the VP Internal Audit should have known the prescribed procedures (or at the very least the actual practice during the period 1981 to 1983 when he was the VP Comptroller) and yet, did not alert her. Unknowingly, [private respondent] allowed the by-pass and the automatic payment of 80% upon presentation of production reports because Sioson assured her that was the procedure previously followed. Trusting, she became a participant in this mess."
Here, We grant petitioner separation pay equivalent to one-half (1/2) month's pay for every year of service. It should include regular allowances which he might have been receiving. We are not blind to the fact that he was not dismissed for any serious misconduct or to any act which would reflect on his moral character. We also recognize that his employment with PAL lasted for more or less a decade.
Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers are exempted from the coverage of this provision.