Baguio Country Club Corporation vs. NLRC

Quasi-judicial bodies may adopt summary procedures, but they cannot ignore the fundamental requirements of due process; a labor arbiter who decides on a position paper not served on the opposing party and disregards sworn statements already in the records commits grave abuse of discretion, and the NLRC cannot affirm such a decision.

Baguio Country Club Corporation employed Jimmy Sajonas as a bartender; the club’s workers were organized under the ALU. Under the administrative framework then in place, applications for clearance to terminate employment were filed with the Ministry of Labor, which processed them through conciliation and, if unresolved, compulsory arbitration before a labor arbiter. The case therefore arose within the Ministry’s quasi-judicial machinery, where summary procedures were authorized but remained subject to due process.

Baguio Country Club Corporation employed Jimmy Sajonas as a bartender. On August 6, 1978, at about 10:30 in the morning, Bernadette Saliquio, a waitress of the Baguio Country Club, served two glasses of orange juice to the maid and children of Mrs. Solon. Bartender Sajonas pocketed the P7.00 cash payment for the juice and used Chit No. 183100, signed by Dr. Lodzinski for two bottles of beer, to cover the order of orange juice, which was changed to two beers; one chit was thus used twice. Alma Jean Quisadol, a checker who corroborated Saliquio and who mentioned an earlier anomaly involving four loaves of raisin bread, was threatened several days later by Sajonas for reporting the incident to management. Cristina Rico, a nutritionist, corroborated the utterance of the threat “papatayin.” An information for estafa was filed in Criminal Case No. 40292 of the Baguio City Court, while the case for grave threats was dismissed for having prescribed, although the office of the City Fiscal concluded that Sajonas indeed uttered threatening remarks.

On August 18, 1978, Baguio Country Club filed with the Ministry of Labor office at Baguio City an application for clearance to terminate Sajonas for willful breach of trust, telling lies in an investigation, taking money paid by customers, threatening a fellow employee, committing dishonesty against guests, and committing four violations of club rules and regulations. On August 28, 1978, Sajonas filed his opposition alleging that his dismissal was without justifiable grounds and would contravene his constitutional right to security of tenure. After a notice of investigation was issued, the case was referred to a conciliator, who recommended Sajonas’ preventive suspension. The Regional Director suspended Sajonas and indorsed the case for compulsory arbitration to Labor Arbiter Benigno Ayson.

During the conciliation process, Baguio Country Club submitted a position paper accompanied by copies of the application to terminate employment and the sworn statements of witnesses taken during the investigation of the alleged anomalies. Sajonas did not submit any position paper; no position paper was served on the club or its counsel, and the only document he submitted was a short two-paragraph opposition. After the conciliator’s recommendation, the case was indorsed to the labor arbiter. Sajonas did not appear at the arbitration proceedings and did not present any position paper, leaving some union members to speak for him; allegedly because Sajonas had promised to quietly resign, the club merely adopted the position paper filed during conciliation. The labor arbiter then allowed a last-minute position paper of Sajonas to be filed, without requiring a copy to be served on Baguio Country Club and without affording it an opportunity to refute or rebut the contents, and forthwith decided the case.

The labor arbiter concluded that there was no document or statement of evidence value to support the enumerated violations and denied the application for clearance. The club’s position paper, however, had adopted the investigations enclosed with the application to terminate as part of the position paper, and these formed part of the records of the Ministry of Labor. Instead of calling for the records submitted to the conciliator in the same Baguio office, the arbiter denied the application on the ground that all that was before him was a position paper with mere quotations about an investigation conducted by Major Pagala. On appeal, the club urged that the sworn statements ignored by the labor arbiter should be considered. The NLRC rejected the affidavits of witnesses, the information for estafa, and the fiscal’s resolution on the complaint for grave threats on the ground that evidence cannot be submitted for the first time on appeal.

Sajonas denied that he promised to resign and contended that the criminal proceedings were an afterthought to harass the poor laborer. The labor arbiter found insufficiency of evidence, and the NLRC affirmed. The Supreme Court, however, found that the records established the August 6, 1978 incident and the threats, and it noted that Sajonas had been working as a bartender for a hotel in Pangasinan since March 1979 and was about to be promoted to a hotel in Manila in November 1979.

• Due Process Violation: Petitioner argued that it was denied due process because its evidence was not considered by both the labor arbiter and the NLRC, rendering their decisions contrary to the facts and the applicable law.
• Right to Rebut Position Paper: Petitioner maintained that since the case was decided on the basis of position papers, it had a right to be served a copy of Sajonas’ position paper admitted and considered by the arbiter and an opportunity to introduce evidence to refute it.
• Administrative Due Process: Petitioner argued that while an administrative tribunal possessed of quasi-judicial powers is free from the rigidity of certain procedural requirements, it cannot entirely ignore or disregard the fundamental and essential requirements of due process.
• Records Already Submitted: Petitioner stressed that its position paper adopted the investigations enclosed with the application to terminate as part of the position paper, and these were part of the records of the Ministry of Labor.
• Evidence on Appeal: Petitioner argued on appeal that the sworn statements ignored by the labor arbiter should be considered by the NLRC.
• Loss of Trust and Confidence: Petitioner argued that the loss of trust and confidence and the wedge driven into Sajonas’ relationship with both management and his co-employees warranted the grant of clearance to terminate his employment.
• Grave Abuse of Discretion: Petitioner charged the public respondents with grave abuse of discretion for having rendered an unlawful, unconstitutional, and unprecedented decision.

• No Due Process Violation: Public respondents argued that it was of no moment that petitioner was not furnished a copy of Sajonas’ position paper because petitioner was already apprised of Sajonas’ position during the conciliation stage, having been furnished his opposition, and could not feign ignorance.
• Evidence on Appeal: The NLRC rejected the affidavits of witnesses, the information for estafa, and the fiscal’s resolution on grave threats on the ground that evidence cannot be submitted for the first time on appeal.
• Denial of Resignation: Sajonas denied that he promised to resign and contended that the criminal proceedings were an afterthought to harass the poor laborer.

• Due Process: Whether Baguio Country Club was denied due process when the labor arbiter and the NLRC failed to consider its evidence and decided on a position paper not served on it.
• Grave Abuse of Discretion: Whether the NLRC committed grave abuse of discretion in affirming the labor arbiter’s irregular and one-sided procedure and decision.
• Clearance to Terminate: Whether the evidence established loss of trust and confidence and a wedge in the employment relationship warranting clearance to terminate Sajonas.

• Due Process: Yes. The summary procedures used were too summary to satisfy justice and fair play; petitioner had the right to be served a copy of Sajonas’ position paper and an opportunity to refute it, and the labor arbiter ignored sworn statements already in the records.
• Grave Abuse of Discretion: Yes. The NLRC affirmed an irregular and one-sided procedure and a decision contrary to the facts, unfair, and unjust.
• Clearance to Terminate: Yes. Loss of trust and confidence and the wedge driven into Sajonas’ relationship with management and his co-employees warranted clearance to terminate his employment.

• Due Process: The Court found merit in the petition because the summary procedures used by the public respondents were too summary to satisfy the requirements of justice and fair play. The labor arbiter allowed Sajonas’ last-minute position paper to be filed without requiring a copy to be served on Baguio Country Club and without affording it an opportunity to refute or rebut the contents, and then forthwith decided the case. Since the case was decided on the basis of position papers, the club had a right to be served a copy of the position paper admitted and considered by the arbiter and an opportunity to introduce evidence to refute it. The public respondents’ argument that the club already knew Sajonas’ position from the conciliation stage was erroneous. The labor arbiter also ignored the club’s position paper, which had adopted the investigations enclosed with the application to terminate as part of the position paper; these were part of the records of the Ministry of Labor. Instead of calling for the records submitted to the conciliator in the same Baguio office, the arbiter denied the application on the ground that all that was before him was a position paper with mere quotations about an investigation. The NLRC could have corrected the error by ordering the elevation of the entire records of the case with the affidavits earlier submitted as part of the position paper but completely ignored by the labor arbiter, or at the very least by remanding the case to the labor arbiter consonant with administrative due process. It was a denial of elementary principles of fair play for the Commission not to have done so. While an administrative tribunal possessed of quasi-judicial powers is free from the rigidity of certain procedural requirements, it cannot in justiciable cases entirely ignore or disregard the fundamental and essential requirements of due process, as held in Serrano vs. PSC and Singco vs. COMELEC. The Court will reverse or modify an administrative decision where the rights of a party were prejudiced because the administrative findings, conclusions, or decisions are in violation of constitutional provisions, in excess of statutory authority or jurisdiction, made upon irregular procedure, vitiated by fraud, imposition or mistake, not supported by substantial evidence adduced at the hearing or contained in the records or disclosed to the parties, or arbitrary, capricious, or issued with grave abuse of discretion. Evidence is the means, sanctioned by rules, of ascertaining in a judicial or quasi-judicial proceeding the truth respecting a matter of fact, and the statutory grant of power to use summary procedures should heighten a concern for due process.

• Grave Abuse of Discretion: The NLRC committed grave abuse of discretion when it affirmed the irregular and one-sided procedure adopted by the labor arbiter in arriving at his finding of insufficiency of evidence and when it decided to uphold a decision not only contrary to the facts but obviously unfair and unjust. The Commission may not have committed grave abuse of discretion when it rejected the affidavits of witnesses, the information for estafa, and the fiscal’s resolution on grave threats on the ground that evidence cannot be submitted for the first time on appeal. However, it was a denial of elementary principles of fair play for the Commission not to have ordered the elevation of the entire records of the case with the affidavits earlier submitted as part of the position paper but completely ignored by the labor arbiter, or at the very least to have remanded the case to the labor arbiter. The Court has never hesitated to exercise its corrective powers and reverse labor ministry decisions where the ministry or a labor tribunal has sustained irregular procedures and, through the invocation of summary methods, including rules on appeal, has affirmed an order which tolerates a violation of due process.

• Clearance to Terminate: From the records which formed part of the position paper submitted to the labor arbiter and those raised on appeal to the Commission, the following were established. At about 10:30 in the morning of August 6, 1978, Bernadette Saliquio, a waitress of the Baguio Country Club, served two glasses of orange juice to the maid and children of Mrs. Solon. Bartender Jimmy Sajonas pocketed the cash payment of P7.00 for the juice and utilized Chit No. 183100, signed by Dr. Lodzinski for two bottles of beer, to cover the order of orange juice which was changed to two beers; one chit was used twice. Alma Jean Quisadol, checker, corroborated Saliquio, mentioned an earlier anomaly involving four loaves of raisin bread, and was threatened several days later by Sajonas for reporting the incident to management. Cristina Rico, nutritionist, corroborated the utterance of the threat “papatayin.” An information for estafa was filed in Criminal Case No. 40292 of the Baguio City Court, while the case for grave threats, where the office of the City Fiscal arrived at the conclusion that Sajonas indeed uttered threatening remarks, was dismissed for having prescribed. The loss of trust and confidence and the wedge driven into Sajonas’ relationship with both management and his co-employees warranted the grant of clearance to terminate his employment. The Court likewise noted that Sajonas had been working as a bartender for a hotel in Pangasinan since March 1979 and was about to be promoted to a hotel in Manila in November 1979.

• Administrative Due Process in Quasi-Judicial Proceedings — Administrative tribunals exercising quasi-judicial powers are not bound by the rigidity of certain procedural requirements, but they cannot entirely ignore or disregard the fundamental and essential requirements of due process in justiciable cases. In this case, the labor arbiter decided on a position paper not served on the employer and ignored sworn statements already in the records; the NLRC affirmed, violating due process.
• Grave Abuse of Discretion in Labor Cases — The Supreme Court will reverse or modify an administrative decision where the rights of a party were prejudiced because the findings, conclusions, or decisions violate constitutional provisions, are in excess of statutory authority or jurisdiction, are made upon irregular procedure, are vitiated by fraud, imposition, or mistake, are not supported by substantial evidence adduced at the hearing or contained in the records or disclosed to the parties, or are arbitrary, capricious, or issued with grave abuse of discretion. Applied: the NLRC affirmed an irregular and one-sided procedure and a decision contrary to the facts.
• Loss of Trust and Confidence as Just Cause — Loss of trust and confidence and a wedge driven into the employee’s relationship with management and co-employees may warrant clearance to terminate employment. Applied: Sajonas pocketed a customer’s payment, used a chit twice, and threatened a co-employee; the fiscal found he uttered threats, and an estafa information was filed.
• Evidence in Quasi-Judicial Proceedings — Evidence is the means, sanctioned by rules, of ascertaining in a judicial or quasi-judicial proceeding the truth respecting a matter of fact; its object is to establish the truth by the use of perceptive and reasoning faculties. The statutory grant of power to use summary procedures should heighten concern for due process. Applied: the labor arbiter should have considered the records rather than deciding on an incomplete record.

• "The summary procedures used by the public respondents were too summary to satisfy the requirements of justice and fair play." — This states the ratio decidendi on the due process violation, framing the procedural defect as a failure of justice and fair play rather than a mere technical lapse.
• "Since the case was decided on the basis of position papers, the petitioner had a right to be served a copy of the respondent's position paper admitted and considered by the arbiter and an opportunity to introduce evidence to refute it." — This defines the specific due process right violated when the labor arbiter decided on a position paper not served on the opposing party.
• "while an administrative tribunal possesed of quasi-judicial powers is free from the rigidity of certain procedural requirements, it does not mean that it can in justiciable cases coming before it entirely ignore or disregard the fundamental and essential requirements of due process." — This is the canonical formulation of administrative due process applied to quasi-judicial labor proceedings, quoted from petitioner’s argument and adopted by the Court.
• "We agree with the petitioner that the loss of trust and confidence and the wedge driven into the relationship of the private respondent with both management and his co-employees warrant the grant of clearance to terminate his employment." — This states the substantive basis for granting the clearance despite the procedural violation, tying loss of trust and confidence to the established acts of dishonesty and threats.

• Serrano vs. PSC, 24 SCRA 867 — Cited for the rule that an administrative tribunal possessed of quasi-judicial powers, though free from the rigidity of certain procedural requirements, cannot entirely ignore or disregard the fundamental and essential requirements of due process.
• Singco vs. COMELEC, 101 SCRA 420 — Cited to the same effect on administrative due process in quasi-judicial proceedings.
• Pajo vs. Ago, 108 Phil.; Castaneda vs. Court of Appeals, 26 SCRA 186; Manuel vs. Villena, 37 SCRA 745; Asprec vs. Itchon, 16 SCRA 921; Garcia vs. Executive Secretary, 6 SCRA 1; Air Manila vs. Balatbat, 38 SCRA 489; Sichangco vs. Board of Commissioners, 94 SCRA 61 — Cited collectively for the grounds on which the Supreme Court will reverse or modify an administrative decision, including irregular procedure and findings not supported by substantial evidence in the records.

• Section 1, Rule 128 — Defines evidence as the means, sanctioned by rules, of ascertaining in a judicial or quasi-judicial proceeding the truth respecting a matter of fact. The Court invoked it to remind labor arbiters that summary procedures do not dispense with the duty to ascertain truth from the records; the labor arbiter should have considered the sworn statements and records already before the Ministry.

Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez, and Relova, JJ., concurred.