San Miguel Corporation vs. NLRC

An employee's dismissal is illegal where the employer fails to furnish the employee a written notice stating the particular acts or omissions constituting the grounds for dismissal and to afford him ample opportunity to be heard and to defend himself before dismissal is effected; the twin requirements of notice and hearing under Article 277(b) of the Labor Code, as amended, cannot be dispensed with without running afoul of the due process requirement of the 1987 Constitution. The employer's prerogative to discipline erring employees and to impose reasonable penalties, including dismissal, does not excuse non-compliance with these procedural requisites.

Fernando M. Almonicar had been employed by San Miguel Corporation since October 1, 1973, beginning as a Route Helper in the company's Beer Marketing Division, Cotabato Sales Office, Cotabato City, and rising through two promotions to the position of Route Salesman. Abdulkadil Dumamba was a fellow Route Salesman in the same sales office, and the two worked under a Regional Sales Manager, Romeo A. Reyes, and a sales supervisor, Ranulfo Mabacho. The employment relationship was governed by the Labor Code, as amended, which conditions lawful dismissal on both a substantive ground (Arts. 279, 281, 282–284) and the procedural requirements of notice and hearing (Art. 277[b]), implemented by Rule XIV, Book V of the Rules and Regulations Implementing the Labor Code.

Fernando M. Almonicar began working for San Miguel Corporation on October 1, 1973 as a Route Helper in the company's Beer Marketing Division, Cotabato Sales Office, Cotabato City. He was promoted twice during his employment and, by 1982, held the position of Route Salesman. Throughout that period he maintained a clean employment record.

At around 5:30 o'clock in the afternoon of February 22, 1982, after arriving from his day's work, Almonicar was approached at the Sales Office inside the company's warehouse in Cotabato City by Abdulkadil Dumamba, another company Route Salesman. In the presence of the company warehousemen, Dumamba asked Almonicar to transfer to his account 100 cases of empty regular beer bottles and 100 cases of empty Beer Grande bottles worth P3,340.00, which Dumamba claimed had been returned for cash refund by his customer but for which he did not have sufficient sales or collections. Finding nothing wrong with the proposition, it being then a common practice among salesmen whenever one of them lacked sufficient sales or collections to pay for the value of beer empties returned for cash refund, Almonicar agreed. He forthwith handed Dumamba P3,340.00 out of his own sales/collections, issued in the name of Dumamba's customer the corresponding cash refund invoice, and advised the warehouseman to reflect the returned beer empties in his Checker's Stock Report.

It turned out, however, that the beer empties had been returned not for cash refund but to be credited to the customer's account with the company. Dumamba issued a charge refund invoice to the customer, but this was not recorded in the customer's account ledger card because Dumamba did not include it in his sales report so as to make his transaction records appear in order. When a verification of the customer's account was made on February 25, 1982, the customer refused to sign the confirmation slip, claiming that it did not tally with his records. An inquiry followed, and the discrepancy was traced to Dumamba's failure to include in his report the charge refund invoice he had issued and to his misappropriation for personal use of the cash intended for the refund of the value of the empties, which cash Almonicar had extended out of his own sales/collections. This resulted in a recommendation for Dumamba's grounding until further investigation. An investigation was thereafter conducted sometime in March 1982 in connection with several acts of defalcation allegedly committed by Dumamba during 1982, one of which was the misappropriation of the P3,340.00 covered by the cash refund invoice Almonicar had issued. It was for the purpose of helping the company in its investigation against Dumamba, particularly with respect to that cash refund, as Regional Sales Manager Romeo A. Reyes, who conducted the investigation, made him understand, that Almonicar gave his statement in the early morning of March 4, 1982. As a result of the investigation, Dumamba was immediately grounded. Almonicar, on the other hand, was even recommended by the company's sales supervisor, Ranulfo Mabacho, for promotion to Salesman-in-Charge of the Midsayap (North Cotabato) Sales Office, and was likewise entrusted to act as Salesman-in-Charge of the Cotabato Sales Office whenever the regular salesman was absent.

On July 26, 1982, Almonicar received a letter dated July 21, 1982 from the Regional Manager advising him that, "after due investigation of your recent case, we have decided to separate you from service at the close of business on August 15, 1982." He immediately sought an explanation from the Regional Manager, who told him that the "decision" came from the company's head office in Manila. When the Regional Manager was asked for copies of the alleged "investigation" and "decision," the latter simply told him that the pertinent papers would be forwarded to the Ministry of Labor.

Almonicar then filed, on October 16, 1982, a complaint for illegal dismissal with the Labor Ministry's Regional Office No. 12 in Cotabato City against San Miguel Corporation and Regional Sales Manager Romeo A. Reyes. After efforts at conciliation failed, the case was indorsed for compulsory arbitration to the Executive Labor Arbiter in Cagayan de Oro City, where the parties, through their respective counsels, agreed at the hearing called on October 26, 1983 to submit the case for decision on the basis of their position papers and supporting evidence. Almonicar filed his position paper and supporting documents on January 23, 1984. Petitioner's counsel filed a Manifestation and Motion asking for an extension of twenty days from January 20, 1984 within which to file its position paper, and subsequently another motion asking for a final extension of twenty days from February 10, 1984, but the petitioner failed to file a position paper even up to the time the Executive Labor Arbiter rendered his decision on May 30, 1984.

The factual matters that proved decisive before the Supreme Court concerned the character of Almonicar's participation in the Dumamba investigation. The tenor of his statement, which was in the form of question and answer, indicated that it was being given in connection with the investigation of Dumamba's misappropriation of the money Almonicar had given for the refund of the empty bottles, and there was no indication in that statement that Almonicar was himself also under investigation. Dumamba's statement, by contrast, clearly stated that he was the subject of the investigation, being prefaced by a paragraph entitled "Preliminaries" which provided: "We are investigating you to shed light on reported beer empties that were retrieved from United Grocery, situated at Supermarket, Cotabato City, and it (sic) were not credited to the account of said outlet." That the company did not contemplate conducting an administrative proceeding against Almonicar was bolstered by the undisputed fact that he was allowed to continue with his regular duties after he gave his statement, and was even recommended for promotion some time before his sudden dismissal, in contrast to the immediate grounding of Dumamba.

• Grave Abuse of Discretion: Petitioner sought reversal of the NLRC's March 30, 1987 decision on the ground that the public respondents had gravely abused their discretion in holding private respondent to have been illegally terminated and in ordering his reinstatement with backwages.
• Erroneous Findings of Fact and New Evidence: On appeal to the NLRC, petitioner alleged that the Executive Labor Arbiter abused his discretion and erred in his findings of fact and conclusions of law by introducing for the first time evidence in refutation of private respondent's position paper.

• Reinstatement: On appeal to the NLRC, private respondent assailed the Executive Labor Arbiter's decision for not ordering his reinstatement, despite the finding that his dismissal was without basis and notwithstanding that no evidence whatsoever was shown that reinstatement was no longer possible.

• Procedural Due Process in Dismissal: Whether petitioner complied with the procedural requirements of the Labor Code, as amended — the twin requirements of notice and hearing — before it dismissed private respondent.
• Grave Abuse of Discretion — Illegal Termination and Reinstatement: Whether the NLRC gravely abused its discretion in holding that private respondent was illegally terminated and in ordering his reinstatement with backwages.
• Reliance on Position Papers: Whether the Executive Labor Arbiter gravely abused his discretion in basing his findings of fact and, consequently, his decision exclusively on private respondent's position paper.

• Procedural Due Process in Dismissal: No. Petitioner failed to furnish private respondent a written notice containing a statement of the causes for termination and to afford him ample opportunity to be heard and to defend himself, as mandated by Article 277(b) of the Labor Code, as amended.
• Grave Abuse of Discretion — Illegal Termination and Reinstatement: None. The NLRC's holding that private respondent was illegally terminated and its order of reinstatement with backwages were fully supported by the facts and the law.
• Reliance on Position Papers: None. Article 221 of the Labor Code renders the technical rules of evidence non-controlling in labor proceedings, and petitioner, despite two extensions, failed to file the position paper it had agreed to submit.

• Procedural Due Process in Dismissal: The Labor Code, as amended, imposes a two-fold requirement for lawful dismissal: a substantive ground under Articles 279, 281, and 282–284, and the procedural requisites of notice and hearing under Article 277(b), which directs that "the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires." Rule XIV, Book V of the Rules and Regulations Implementing the Labor Code implements this mandate: Section 1 requires that no worker be dismissed except for a just or authorized cause and after due process; Section 2 requires a written notice stating the particular acts or omissions constituting the grounds for dismissal; Section 5 grants the worker the right to answer the allegations within a reasonable period and to be afforded ample opportunity to be heard and to defend himself with the assistance of a representative; and Section 6 requires the employer to notify the worker in writing of the decision to dismiss, stating clearly the reasons therefor. The pleadings and annexes glaringly revealed a fatal lapse on petitioner's part: prior to the dismissal, no written notice was furnished and no opportunity to be heard and to defend himself was afforded. Private respondent was unexpectedly dismissed after giving his statement as a witness for the company in the investigation of Dumamba's alleged acts of defalcation, without even being investigated in connection with the violation attributed to him, much less notified that the company intended to dismiss him for it. His dismissal was therefore an afterthought: he was asked to make a statement in connection with the investigation against Dumamba, and when it subsequently became apparent to those in the head office in Manila that his act of issuing the invoice in the name of Dumamba's customer constituted a possible violation of company rules and regulations, he was unceremoniously meted the penalty of dismissal. The tenor of his statement, in question-and-answer form, showed that it was given in connection with the investigation of Dumamba's misappropriation, with no indication that he was himself under investigation, in contrast to Dumamba's statement, which was expressly prefaced by the words "We are investigating you." That no administrative proceeding against private respondent was contemplated was bolstered by the undisputed fact that he was allowed to continue with his regular duties after giving his statement and was even recommended for promotion before his sudden dismissal, while Dumamba was immediately grounded. The failure to afford due process was thus patent.

• Grave Abuse of Discretion — Illegal Termination and Reinstatement: No grave abuse of discretion could be attributed to the NLRC for holding that private respondent was illegally terminated and ordering his reinstatement with backwages, as such holding was fully supported by the facts and the law. The reinstatement ordered by the NLRC, in lieu of the payment of separation pay directed by the Labor Arbiter, was even made more imperative by the fact that private respondent was arbitrarily deprived of his employment at the early age of thirty-two, when he was just approaching the prime of his life, causing his family economic dislocation and untold hardship as he pursued his case through the years.

• Reliance on Position Papers: No grave abuse of discretion could be ascribed to the Executive Labor Arbiter for basing his findings of fact and, consequently, his decision exclusively on private respondent's position paper. The parties had agreed to submit the case for decision on the basis of their position papers, and in spite of the extension granted to it, petitioner failed to file its position paper, forcing the arbiter to decide the case without it. Moreover, Article 221 of the Labor Code provides that the technical rules of evidence are not controlling in proceedings before Labor Arbiters, allowing the latter to decide the case on the basis of the position papers and other documents submitted by the parties.

• Twin Requirements of Notice and Hearing in Employee Dismissal — Under the Labor Code, as amended, the requirements for the lawful dismissal of an employee are two-fold: the substantive and the procedural. The dismissal must be for a valid or authorized cause as provided by law (Arts. 279, 281, 282–284), and the rudimentary requirements of due process — notice and hearing — must also be observed before an employee may be dismissed (Art. 277[b]). One cannot go without the other, for otherwise the termination is, in the eyes of the law, illegal. The requirement of notice is intended to inform the employee of the employer's intent to dismiss and the reason for the proposed dismissal; the requirement of hearing affords the employee an opportunity to answer the charges against him and to defend himself before dismissal is effected. Neither requirement can be dispensed with without running afoul of the due process requirement of the 1987 Constitution. In this case, no written notice of the grounds for dismissal was furnished and no opportunity to be heard was afforded before the dismissal took effect, rendering the termination illegal.
• Dismissal as an Afterthought — A dismissal is procedurally defective where the employee is investigated and made to give a statement solely as a witness against another employee, is thereafter allowed to continue his regular duties and is even recommended for promotion, and is then suddenly dismissed on the basis of that same statement without any investigation of which he is the subject or any notice of the employer's intent to dismiss him. The Court characterized private respondent's dismissal in these terms, noting that his statement was in the form of question and answer given in connection with the investigation of Dumamba's misappropriation, with no indication that he was himself under investigation, in contrast to Dumamba's statement which was expressly prefaced by "We are investigating you."
• Non-Applicability of Technical Rules of Evidence in Labor Proceedings — Article 221 of the Labor Code provides that the technical rules of evidence are not controlling in proceedings before Labor Arbiters, who may decide the case on the basis of the position papers and other documents submitted by the parties. The Executive Labor Arbiter therefore committed no grave abuse of discretion in deciding the case exclusively on private respondent's position paper, where the parties had agreed to submit the case on that basis and petitioner failed to file its own position paper despite two extensions.
• Employer's Prerogative to Discipline — The employer's prerogative to instill discipline in his employees and to impose reasonable penalties, including dismissal, on erring employees pursuant to company rules and regulations is not disregarded, and an employer cannot be compelled to continue with the employment of workers guilty of acts of misfeasance or malfeasance whose continuance in the service is clearly inimical to his interests; the law, in protecting the rights of workers, authorizes neither the oppression nor the self-destruction of employers. This prerogative, however, does not excuse compliance with due process, which must be observed in effecting an employee's dismissal because dismissal affects not only the employee's position but also his means of livelihood and his dependents' sustenance.
• Reinstatement Where Dismissal Is Illegal — Where the dismissal is illegal, reinstatement is the appropriate relief, and it becomes even more imperative in lieu of the payment of separation pay where the employee was arbitrarily deprived of his employment at the early age of thirty-two, when he was just approaching the prime of his life, causing his family economic dislocation and untold hardship.
• Three-Year Cap on Backwages — An award of backwages to an illegally dismissed employee is fixed at three (3) years, without qualification or deduction, in line with current jurisprudence, even where the NLRC had originally computed backwages from the date of dismissal up to actual reinstatement.

• "Under the Labor Code, as amended, the requirements for the lawful dismissal of an employee by his employer are two-fold: the substantive and the procedural. Not only must the dismissal be for a valid or authorized cause as provided by law (Arts. 279, 281, 282-284), but the rudimentary requirements of due process — notice and hearing — must also be observed before an employee may be dismissed [Art. 277 (b).] One cannot go without the other, for otherwise the termination would, in the eyes of the law, be illegal." — This opening passage states the ratio decidendi of the decision, framing the entire analysis as a question of procedural compliance and establishing that substantive and procedural requirements are conjunctive, not alternative.
• "It is therefore apparent that private respondent's dismissal was an afterthought. He was asked to make a statement in connection with the investigation against Dumamba and when it became subsequently apparent to those in the head office in Manila that his act of issuing the invoice in the name of Dumamba's customer constituted a possible violation of company rules and regulations he was unceremoniously meted the penalty of dismissal." — This passage supplies the factual characterization on which the due process violation rests, distinguishing a statement given as a witness from one given as a respondent in an administrative investigation.
• "The twin requirements of notice and hearing constitute essential elements of due process in cases of employee dismissal: the requirement of notice is intended to inform the employee concerned of the employer's intent to dismiss and the reason for the proposed dismissal; upon the other hand, the requirement of hearing affords the employee an opportunity to answer his employer's charges against him and accordingly to defend himself therefrom before dismissal is effected. Neither of these two requirements can be dispensed with without running afoul of the due process requirement of the 1987 Constitution." — Quoted from Century Textile Mills, Inc., et al. vs. NLRC, et al., this is the canonical formulation of the twin-notice rule adopted by the Court and is the passage most frequently cited in subsequent dismissal cases.
• "But it must be emphasized nevertheless that due process must be observed in effecting an employee's dismissal. And rightfully so, because the dismissal of an employee affects not only his position but also his means of livelihood and his dependents' sustenance. The employee must be informed of the alleged violation and given an opportunity to be heard before he is dismissed. Strict adherence to the requirements set forth in the Labor Code, as amended, is essential." — This closing passage states the rationale for strict adherence to the procedural requisites and delimits the employer's disciplinary prerogative, which the Court expressly declined to diminish.

• Century Textile Mills, Inc., et al. vs. NLRC, et al., G.R. No. 77857, May 25, 1988 — The most recent authority relied upon by the Court; quoted at length for the proposition that the twin requirements of notice and hearing are essential elements of due process in employee dismissal and cannot be dispensed with without violating the 1987 Constitution.
• Manila Doctors Hospital vs. NLRC, G.R. No. 64897, February 28, 1985, 135 SCRA 262 — Cited in support of the rule that Article 221 of the Labor Code, which provides that technical rules of evidence are not controlling in proceedings before Labor Arbiters, allows the latter to decide the case on the basis of position papers and other documents submitted by the parties.
• Asiaworld Publishing House, Inc. vs. Ople, G.R. No. 56398, July 23, 1987, 152 SCRA 219 — Cited together with Manila Doctors Hospital for the same proposition on the non-control of technical rules of evidence in labor proceedings.
• Soco vs. Mercantile Corporation of Davao, G.R. Nos. 53364-65, March 16, 1987, 148 SCRA 526 — Cited to affirm the employer's prerogative to instill discipline in his employees and to impose reasonable penalties, including dismissal, on erring employees pursuant to company rules and regulations.
• Manila Trading & Supply Co. vs. Zulueta, 69 Phil. 485 (1940) — Cited for the established rule that an employer cannot be compelled to continue with the employment of workers guilty of acts of misfeasance or malfeasance whose continuance in the service is clearly inimical to his interests.
• San Miguel Brewery, Inc. vs. National Labor Union, 97 Phil. 378 (1955) — Cited together with Manila Trading & Supply Co. for the same rule on the employer's non-compellability to retain employees guilty of misfeasance or malfeasance.
• Colgate Palmolive Philippines vs. Ople, G.R. No. 73681, June 30, 1988 — Cited for the proposition that the law, in protecting the rights of workers, authorizes neither the oppression nor the self-destruction of employers.

• Article 277(b), Labor Code, as amended (formerly Article 278[b]) — Requires the employer to furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and to afford him ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. The Court found this provision violated because no written notice was furnished and no hearing was afforded before private respondent's dismissal.
• Articles 279, 281, and 282–284, Labor Code, as amended — Cited as the provisions enumerating the valid or authorized causes for termination, constituting the substantive requirement of a lawful dismissal that must accompany the procedural requirement of notice and hearing.
• Article 221, Labor Code — Provides that the technical rules of evidence are not controlling in proceedings before Labor Arbiters. Applied to sustain the Executive Labor Arbiter's decision based exclusively on private respondent's position paper, given the parties' agreement to submit the case on position papers and petitioner's failure to file its own despite extensions.
• Section 1, Rule XIV, Book V, Rules and Regulations Implementing the Labor Code — Provides that no worker shall be dismissed except for a just or authorized cause provided by law and after due process. Cited to establish the security of tenure and due process standard governing the dismissal.
• Section 2, Rule XIV, Book V, Rules and Regulations Implementing the Labor Code — Requires any employer seeking to dismiss a worker to furnish him a written notice stating the particular acts or omissions constituting the grounds for dismissal, and, in cases of abandonment of work, to serve the notice at the worker's last known address. Cited to show that no such notice was furnished to private respondent.
• Section 5, Rule XIV, Book V, Rules and Regulations Implementing the Labor Code — Provides that the worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt, and that the employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. Cited to show that no such opportunity was given.
• Section 6, Rule XIV, Book V, Rules and Regulations Implementing the Labor Code — Requires the employer to notify the worker in writing of a decision to dismiss him, stating clearly the reasons therefor. Cited as part of the procedural framework that petitioner failed to observe.
• Due process requirement, 1987 Constitution — Invoked through the quoted ruling in Century Textile Mills, Inc. vs. NLRC that neither of the twin requirements of notice and hearing can be dispensed with without running afoul of the due process requirement of the 1987 Constitution.

Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.