Sugarsteel Industrial, Inc. and Mr. Ben Yapjoco vs. Victor Albina, Vicente Uy and Alex Velasquez

In a special civil action for certiorari, the Court of Appeals may pass upon the evidence and review the NLRC's factual findings when they are not supported by substantial evidence, because an NLRC decision not supported by substantial evidence is tainted with grave abuse of discretion. Dismissal for neglect under Article 282(b) of the Labor Code requires the negligence to be both gross and habitual; a single or isolated act of negligence does not constitute just cause.

Sugarsteel Industrial, Inc. employed Victor Albina, Vicente Uy, and Alex Velasquez as kettleman, assistant kettleman, and inspector, respectively; Ben Yapjoco was its manager. The employment relationship and the Labor Code's rules on appeals from the Labor Arbiter to the NLRC under Article 223 and on dismissal for gross and habitual neglect under Article 282(b) provide the statutory backdrop for the dispute.

At around 4:00 a.m. on August 16, 1996, a clog-up occurred at the kettle sheet guide of Sugarsteel Industrial, Inc. Victor Albina, Vicente Uy, and Alex Velasquez, who were employed as kettleman, assistant kettleman, and inspector, respectively, were on duty in their assigned areas. Twenty (20) GI sheets were clogged inside the kettle, causing damage to the company. On the same day, Ben S. Yapjoco, the company's manager, issued a memorandum requiring all three employees to submit written explanations on the incident and why no action should be taken against them for gross negligence. The employees submitted their respective explanations.

On August 20, 1996, Yapjoco issued another memorandum informing the employees to attend a conference in connection with the incident. On August 26, 1996, individual notices of suspension were sent to them pending final decision. On August 29, 1996, Yapjoco sent individual notices of termination to all three employees, stating that after management conducted an investigation, they were found guilty of gross neglect of duty and were terminated from employment.

After their termination, the employees filed a complaint for illegal dismissal before the Regional Arbitration Branch of the NLRC in Cebu City. The employer did not refute the employees' claim that the incident was their first offense and presented no evidence of habitual neglect, such as employment or personnel records showing prior offenses or repeated failures during their employment. The Labor Arbiter found the employees guilty of gross negligence, but the Court of Appeals found that the employer did not establish gross and habitual neglect.

• Scope of Certiorari: Petitioners argued that the Court of Appeals gravely abused its discretion by disregarding the factual findings of the Labor Arbiter that the NLRC affirmed; such findings, being supported by substantial evidence, were binding and conclusive on the Court of Appeals.
• Limited Review: Petitioners maintained that review of NLRC decisions through certiorari was confined to determining issues of want or excess of jurisdiction and grave abuse of discretion amounting to lack or excess of jurisdiction.
• Error of Judgment: Petitioners argued that certiorari required a clear showing that the respondent court or officer exercising judicial or quasi-judicial functions committed an error of jurisdiction, because an error of judgment was not necessarily grave abuse of discretion.
• Excess of Jurisdiction: Petitioners contended that the Court of Appeals exceeded its jurisdiction in making its own findings after re-assessing the facts and the sufficiency of the evidence presented to the Labor Arbiter.

• CA's Certiorari Power: Respondents maintained the contrary, arguing that the Court of Appeals did not exceed its jurisdiction and could review the NLRC's factual findings in a special civil action for certiorari.
• Grave Abuse of Discretion: Respondents averred in their petition for certiorari before the Court of Appeals that the NLRC committed grave abuse of discretion in affirming in toto the Labor Arbiter's decision declaring the dismissal valid on the ground of gross negligence.
• Illegal Dismissal: Respondents maintained that they had been illegally dismissed because the employer failed to establish gross and habitual neglect.

• CA Certiorari Review: Whether the Court of Appeals departed from well-settled rules on what findings it could review on certiorari when it reviewed and reversed the NLRC's factual findings.
• Article 223 Grounds: Whether the NLRC correctly dismissed the respondents' appeal for failure to comply with Article 223 of the Labor Code.
• Illegal Dismissal: Whether the respondents were illegally dismissed for lack of substantial evidence of gross and habitual neglect.
• Clerical Error: Whether the Court of Appeals' error in citing a different docket number in its dispositive portion invalidated its decision.

• CA Certiorari Review: No. The Court of Appeals did not exceed its jurisdiction; in a special civil action for certiorari, it may pass upon the evidence when necessary to resolve factual issues, especially where the NLRC's factual findings are not supported by substantial evidence.
• Article 223 Grounds: No. The NLRC's dismissal of the appeal on a too literal interpretation of Article 223 was arbitrary; the ground invoked reasonably fell under paragraphs (a) and (d) of the provision.
• Illegal Dismissal: Yes. The dismissal was illegal because the employer failed to prove gross and habitual neglect under Article 282(b) of the Labor Code; a single or isolated act of negligence is not just cause.
• Clerical Error: No. The wrong docket number was a clerical, not substantial, error and did not invalidate the Court of Appeals' decision.

• CA Certiorari Review: The certiorari proceeding is confined to the correction of acts rendered without jurisdiction, in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction. The Court of Appeals, however, is not barred from reviewing evidence. Its power to pass upon the evidence flows from its original jurisdiction over the special civil action for certiorari, by which it may grant the writ to correct errors of jurisdiction on the part of the NLRC when the latter's factual findings are not supported by the evidence on record; when the grant of the writ is necessary to do substantial justice or prevent a substantial wrong; when the findings of the NLRC contradict those of the Labor Arbiter; or when the grant of the writ is necessary to arrive at a just decision. The factual findings of the NLRC are accorded great respect and finality only when they rest on substantial evidence. Any decision by the NLRC that is not supported by substantial evidence is tainted with grave abuse of discretion. Comity toward labor tribunals does not preclude the Court of Appeals from reviewing and disregarding factual findings upon a clear showing of capricious, whimsical, or arbitrary disregard of evidence or of circumstances of considerable importance. Here, the Court of Appeals reviewed the evidence and found that the NLRC's affirmance did not accord with the evidence and the applicable law; that review was within its certiorari jurisdiction.
• Article 223 Grounds: Article 223 of the Labor Code allows an appeal from the Labor Arbiter to the NLRC only on the following grounds: (a) prima facie evidence of abuse of discretion on the part of the Labor Arbiter; (b) the decision, order, or award was secured through fraud or coercion, including graft and corruption; (c) the appeal is made purely on questions of law; and (d) serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. The NLRC dismissed the employees' appeal because the stated ground—that the decision was not supported by evidence and was contrary to the facts obtaining—was not expressly enumerated. The Court of Appeals correctly held that this was too literal an interpretation. The ground invoked reasonably fell under either paragraph (a) or paragraph (d). Dismissing the appeal on that basis preferred form and technicality over substance and justice, and the NLRC thereby acted arbitrarily, inconsistent with the constitutional mandate for the protection to labor.
• Illegal Dismissal: The employer bears the burden to show that the dismissal was for a just and valid cause. Article 282(b) of the Labor Code requires the negligence to be gross and habitual. Gross negligence is the want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally, with a conscious indifference to consequences insofar as other persons may be affected. Habitual neglect connotes repeated failure to perform one's duties for a period of time, depending upon the circumstances. A single or isolated act of negligence does not constitute a just cause for dismissal. The Labor Arbiter found gross negligence, but the employer did not refute the employees' claim that the incident was their first offense and did not present evidence to establish habitual neglect, such as employment or personnel records indicative of their service and personnel histories. The just cause to dismiss was therefore not established by substantial evidence, and the failure to discharge the employer's burden meant that the dismissal was illegal.
• Clerical Error: The Court of Appeals' dispositive portion cited NLRC NCR Case No. 00-11-07903-94 and NLRC NCR Case No. 00-11-08208-94 as the rulings being reversed and set aside, instead of the correct docket number, NLRC Case No. V-000391-98 (RAB Case No. VIM0-1292-96). The error was limited to the reference to a different docket number. The Court of Appeals correctly stated the dates of the assailed NLRC decision and resolution, December 23, 1998 and May 8, 2000, respectively, and the date of termination, August 29, 1996. The error was clerical, not substantial, and did not invalidate the decision.

• Certiorari review of NLRC factual findings — In a special civil action for certiorari, the Court of Appeals' inquiry is generally limited to whether the NLRC acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction. However, the Court of Appeals may pass upon the evidence and review the NLRC's factual findings when they are not supported by substantial evidence, when the NLRC's findings contradict those of the Labor Arbiter, when necessary to do substantial justice or prevent a substantial wrong, or when necessary to arrive at a just decision. The power flows from the Court of Appeals' original jurisdiction over the special civil action for certiorari. Applied here, the Court of Appeals properly reviewed the evidence and reversed the NLRC.
• Substantial evidence and grave abuse of discretion — The factual findings of the NLRC are accorded great respect and finality only when they rest on substantial evidence. Any decision by the NLRC that is not supported by substantial evidence is tainted with grave abuse of discretion. Applied here, the NLRC's affirmance of the Labor Arbiter's ruling lacked substantial evidence on the issue of just cause.
• Liberal construction of Article 223 appeal grounds — The grounds for appeal under Article 223 of the Labor Code should not be interpreted so literally as to defeat substantial justice. A ground that the Labor Arbiter's decision is not supported by evidence and is contrary to the facts obtaining may reasonably fall under abuse of discretion or serious errors in findings of fact. Applied here, the NLRC's dismissal of the appeal on a literal reading of Article 223 was arbitrary.
• Gross and habitual neglect as just cause — Under Article 282(b) of the Labor Code, the negligence must be both gross and habitual to warrant dismissal. Gross negligence is the want of even slight care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally, with a conscious indifference to consequences insofar as other persons may be affected. Habitual neglect connotes repeated failure to perform one's duties for a period of time, depending upon the circumstances. A single or isolated act of negligence does not constitute just cause for dismissal. Applied here, the employer failed to prove both gross and habitual neglect.
• Employer's burden in illegal dismissal — The employer bears the burden to show that the dismissal was for a just and valid cause. Failure to discharge that burden necessarily means that the dismissal was illegal. Applied here, the employer did not present sufficient evidence of habitual neglect, so the dismissal was illegal.
• Clerical error does not invalidate a decision — A clerical error in the docket number cited in the dispositive portion does not invalidate the decision where the substance of the ruling and the relevant dates are correctly stated. Applied here, the Court of Appeals' reference to a wrong docket number was clerical and not substantial.

• "The power of the CA to pass upon the evidence flows from its original jurisdiction over the special civil action for certiorari, by which it can grant the writ of certiorari to correct errors of jurisdiction on the part of the NLRC should the latter's factual findings be not supported by the evidence on record; or when the granting of the writ of certiorari is necessary to do substantial justice or to prevent a substantial wrong; or when the findings of the NLRC contradict those of the LA; or when the granting of the writ of certiorari is necessary to arrive at a just decision in the case." — This passage states the scope of the Court of Appeals' factual review in a certiorari action against the NLRC and is central to the ruling that the Court of Appeals did not exceed its jurisdiction.
• "The premise is that any decision by the NLRC that is not supported by substantial evidence is a decision definitely tainted with grave abuse of discretion." — This passage links the lack of substantial evidence to grave abuse of discretion and justifies the Court of Appeals' corrective review.
• "In order to warrant the dismissal of the employee for just cause, Article 282 (b) of the Labor Code requires the negligence to be gross and habitual. Gross negligence is the want of even slight care, acting or omitting to act in a situation where there is duty to act, not inadvertently but willfully and intentionally, with a conscious indifference to consequences insofar as other persons may be affected." — This passage defines gross negligence and states the statutory requirement that negligence be both gross and habitual.
• "Obviously, a single or isolated act of negligence does not constitute a just cause for the dismissal of the employee." — This passage states the rule that an isolated act of negligence cannot support dismissal and is the basis for finding the dismissal illegal.

• Univac Development, Inc. vs. Soriano, G.R. No. 182072, June 19, 2013, 699 SCRA 88, 97-98 — Followed for the rule that the Court of Appeals is given the power to pass upon the evidence, if necessary, to resolve factual issues, without contravening the immutability of judgments; the power flows from its original certiorari jurisdiction.
• Empire Insurance Company vs. NLRC, G.R. No. 121879, August 14, 1998, 294 SCRA 263, 269-270 — Cited for the general rule that certiorari in labor litigation ascertains only whether the NLRC acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction.
• INC Shipmanagement, Inc. vs. Moradas, G.R. No. 178564, January 15, 2014, 713 SCRA 475, 502 — Cited for the premise that any decision by the NLRC not supported by substantial evidence is tainted with grave abuse of discretion.
• Narkis Trading Corporation vs. Buenavista, G.R. No. 182018, October 10, 2012, 683 SCRA 406, 422 — Cited for the rule that comity toward labor tribunals does not preclude the Court of Appeals from reviewing factual findings upon a clear showing of capricious, whimsical, or arbitrary disregard of evidence.
• Pagdonsalan vs. National Labor Relations Commission, No. L-63701, January 11, 1984, 127 SCRA 463, 467 — Cited for the principle that dismissing an appeal on a technicality, contrary to the liberal construction of the Labor Code, is inconsistent with the constitutional mandate for the protection to labor.
• Nissan Motors Phils., Inc. vs. Angela, G.R. No. 164181, September 14, 2011, 657 SCRA 520, 532 — Cited for the rule that the employer bears the burden to show that the dismissal was for a just and valid cause.
• National Labor Relations Commission vs. Salgarino, G.R. No. 164376, July 31, 2006, 497 SCRA 361, 383, citing Royal Crown Internationale vs. National Labor Relations Commission, G.R. No. 78085, October 16, 1989, 178 SCRA 569, 578 — Cited for the rule that the employer's failure to discharge its burden of proof necessarily means that the dismissal was illegal.
• Sanchez vs. Republic, G.R. No. 172885, October 9, 2009, 603 SCRA 229, 237 — Cited for the definition of gross negligence as the want of even slight care, acting or omitting to act with a duty to act, not inadvertently but willfully and intentionally, with conscious indifference to consequences.
• Abel vs. Philex Mining Corporation, G.R. No. 178976, July 31, 2009, 594 SCRA 683, 696-697 — Cited for the definition of habitual neglect as repeated failure to perform one's duties for a period of time, depending upon the circumstances.
• St. Luke's Medical Center, Inc. vs. Nolario, G.R. No. 152166, October 20, 2010, 634 SCRA 67, 78 — Cited for the rule that a single or isolated act of negligence does not constitute a just cause for dismissal.

• Article 223, Labor Code (renumbered Article 229 per DOLE Advisory No. 01, Series of 2015) — Provides the exclusive grounds for appeal from the Labor Arbiter to the NLRC. The Court held that the NLRC's literal interpretation of the provision was arbitrary because the respondents' ground reasonably fell under paragraphs (a) and (d), and dismissing the appeal on that basis preferred form over substance.
• Article 282(b), Labor Code — Provides that gross and habitual neglect of duties is a just cause for termination. The Court held that the employer failed to prove both gross and habitual neglect; a single or isolated act of negligence is not sufficient.

Leonardo-De Castro (Acting Chairperson), Perlas-Bernabe, and Caguioa, JJ., concurred. Sereno, C.J., was on leave.