[G.R. No. 190436. January 16, 2012.] NORMAN YABUT, petitioner, vs.

MANILA ELECTRIC COMPANY and MANUEL M. LOPEZ, respondents.

DECISION

REYES, J :
p

Before us is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure which assails the Decision 1 dated August 10, 2009 and Resolution 2 dated November 26, 2009 of the Court of Appeals (CA) in the case docketed as CA-G.R. SP No. 96789, entitled "Manila Electric Company (Meralco) and Manuel M. Lopez

v. Norman Yabut and National Labor Relations Commission."

The Facts This case stems from a complaint for illegal dismissal and monetary claims filed by herein petitioner Norman Yabut (Yabut) against respondents Manila Electric Company (Meralco) and Meralco officer Manuel M. Lopez (Lopez). The petitioner had worked with Meralco from February 1989 until his dismissal from employment on February 5, 2004. At the time of said dismissal, he was assigned at the Meralco Malabon Branch Office as a Branch Field Representative tasked, among other things, to conduct surveys on service applications, test electric meters, investigate consumer-applicants' records of Violations of Contract (VOC) and perform such other duties and functions as may be required by his superior. The circumstances antecedent to his dismissal are as follows: On October 4, 2003, Meralco's Inspection Office issued a memorandum 3 addressed to Meralco's InvestigationLegal Office, informing it of an illegal service connection at the petitioner's residence, particularly at No. 17 Earth Street, Meralco Village 8, Batia, Bocaue, Bulacan. The Inspection Office claimed discovering shunting wires installed on the meter base for Service Identification Number (SIN) 708668501, registered under petitioner Yabut's name. These wires allegedly allowed power transmission to the petitioner's residence despite the fact that Meralco had earlier disconnected his electrical service due to his failure to pay his electric bills.
CASTDI

Given this report, Meralco's Head of Investigation-Litigation Office issued to the petitioner a notice 4 dated November 3, 2003, received by the petitioner's wife on the same day and with pertinent portions that read:
Please report to our Mr. Rodolfo C. Serra of the Investigation-Litigation at 8th Floor, Lopez Building, Meralco Center, Ortigas Avenue, Pasig City onNovember 11, 2003, at 9:00 a.m. as the Inspection had found your disconnected electric service with SIN No. 708668501 directly connected by a shunting wire to energize your empty meter base. If proven true, such act constitutes dishonesty in violation of Section 7 (3) of the Company Code on Employee Discipline and/or serious misconduct or an act analogous to fraud or commission of a crime under Article 282 (a) and (e) of the Labor Code of the Philippines. In this investigation, you are entitled to be assisted by a counsel or an authorized union representative. You are also allowed to present evidence and material witnesses to testify in your favor.

Should you fail to appear on the aforementioned date, we shall take it to mean that you are waiving your right to present your side and refute the aforesaid charge and evidence against you. If you appear alone, we shall take it to mean that you are waiving your right to be represented by such counsel or union representative. 5

The offense under Section 7 (3) of Meralco's Company Code on Employee Discipline referred to in the aforequoted notice is with penalty of dismissal on the first offense and is defined as follows:
SECTION 7.Dishonesty. The following acts shall constitute violation of this Section: xxx xxx xxx 3)Directly or indirectly tampering with electric meters or metering installations of the Company or the installation of any device, with the purpose of defrauding the Company. xxx xxx xxx
6

In the course of the company's investigations, the petitioner presented his sworn statement 7 which was executed with the assistance of Jose Tullo, the Chief Steward and Vice President of Meralco's supervisory union First Line Association of Meralco Supervisory Employees (FLAMES). Yabut admitted being the registered customer of Meralco at No. 17 Earth Street, Meralco Village 8, Batia, Bocaue, Bulacan. The petitioner claimed that his electrical service was disconnected sometime in July 2003 for unpaid electric bills. On October 3, 2003, between 10:00 o'clock and 10:30 o'clock in the morning, he was informed by his wife that Meralco discovered shunting wires on their meter base during an inspection. The petitioner nonetheless claimed that at about 8:00 o'clock in the morning of the same day, prior to his wife's notice upon him of the inspection, he had already given to an officemate the amount of P8,432.35 and requested that the same be paid to Meralco to cover his outstanding electric bills. The amount of P8,432.35 plus P1,540 as service deposit was then paid for the petitioner's account on October 3, 2003 at about 9:30 o'clock in the morning.
HAEDCT

Yabut denied knowing the person who installed the discovered shunting wires. While he did not always go home to their house in Bulacan as there were times when he stayed in his sister's residence in Malabon, the petitioner confirmed that he was regularly in his Bulacan house. His residence had electricity even prior to the full settlement of his outstanding bills through a connection made to the line of his neighbor Jojo Clemente. Photographs taken during Meralco's inspection of Yabut's residence were also presented to and identified by Yabut. He confirmed that the inspected meter base was installed within his lot's premises. Claiming that he had been obtaining electricity from a neighbor, he argued that shunting wires in his meter base could have caused an electrical malfunction. As to Meralco's allegation that Yabut's wife had admitted the petitioner's authorship of the illegal connection, Yabut denied knowing of such admission. Meralco's Litigation Investigation Office summarized the results of Meralco's findings in a memorandum 8 dated December 30, 2003. It indicated that Yabut's electric service was disconnected on April 3, 2003 for account delinquency. Notwithstanding the disconnection and the fact that Meralco's service had not been reconnected, Yabut's meter registered electric consumption. The memorandum included the following findings:
While Yabut denied responsibility about the illegal connection, the pictures taken specifically showing the shunted wires on the meter base and his wife's admission that he was the one responsible are sufficient proofs of his guilt. We give credit to the admission of his wife as she did it with spontaneity without force or intimidation in our part. His alibi that he seldom stayed in his house is controverted by his admission that within the period in question from July to October 3, 2003, he stayed home for 24 times. It is surprising that, being a field representative who has knowledge about illegal connection, it

escaped from his attention the said illegal connection when it could easily be detected since his metering point is installed in front of his house. We are not inclined to believe that he resorted to flying connection as it is apparent that at the time his electric service was disconnected in April, 2003, the Balagtas Branch found his service to have registered KWHR consumption from 1555 to 2194 for a total of 639 KWHR indicating that although his electric service was disconnected, it continued to register electricity. Moreover, the burden of proof is upon him to present to us the one responsible but he failed to do so. In the absence of such proof, it is concluded that he, being the registered customer and a resident, was the one who installed the illegal connection purposely to alleviate the sickly condition of his wife and two children. 9
cTESIa

In view of these findings, respondent Meralco, through its Senior Assistant Vice President for Human Resources Administration R. A. Sapitula, issued on February 4, 2004 a notice of dismissal 10 addressed to the petitioner. The notice cites violation of Section 7, paragraph 3 of Meralco's Company Code on Employee Discipline and Article 282 (a), (c), (d) and (e) of the Labor Code of the Philippines as bases for the dismissal. The pertinent portions of the notice read:
Administrative investigation duly conducted by Legal established that on October 3, 2003, acting on a tip that you are resorting to illegal service connection, the Company's Inspection Squad 7 team found two (2) shunting wires in an energized empty meter base installed at your residence at #17 Earth Street, Meralco Village, Batia, Bocaue, Bulacan. Your wife admitted that you were the one who installed the shunted wires on your meter base to have power because she and your two children were sick. The illegal connection enabled you to defraud the company by consuming unregistered electricity which makes you liable for violation of Section 7, par. 3 of the Company Code on Employee Discipline, defined as "(d)irectly or indirectly tampering with electric meters or metering installations of the Company or the installation of any device, with the purpose of defrauding the Company," penalized therein with dismissal from the service. Under Article 282 of the Labor Code of the Philippines, the termination of your employment in Meralco is justified on the following grounds: "(a) Serious misconduct . . . by the employee . . . in connection with his work; "(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or representative; "(d) Commission of a crime or offense by the employee against . . . his employer; and "(e) Other causes analogous to the foregoing." Based on the foregoing, Management is constrained to dismiss you for cause from the service and employ of the Company, as you are hereby so dismissed effective February 5, 2004, with forfeiture of all rights and privileges.

Aggrieved by the decision of the management, Yabut filed with the National Labor Relations Commission (NLRC) a complaint 11 for illegal dismissal and money claims against Meralco and Lopez. The Ruling of the Labor Arbiter On December 28, 2004, Labor Arbiter Antonio R. Macam rendered his Decision, 12 declaring the petitioner illegally dismissed from the service and hence, entitled to reinstatement plus backwages and attorney's fees. The dispositive portion of his decision reads:
caHASI

WHEREFORE, premises all considered, judgment is hereby rendered, as follows: 1.Declaring the dismissal of complainant as illegal; 2.Ordering respondents to reinstate complainant to his former position without loss of seniority rights and privileges, immediately upon receipt of this decision, either physically or in the payroll, at the option of the respondent;

3.Ordering the respondents to pay complainant his full backwages from date of dismissal up to actual reinstatement, partially computed as follows: Backwages = [P]240,420.00 13th Mo. Pay = 24,042.00 _____________________ Total [P]264,462.00 4.Ordering respondents to pay complainant attorney's fees equivalent to 10% of his monetary award. All other claims are dismissed for lack of merit. SO ORDERED.
13

The labor arbiter observed that there was no clear and direct evidence to prove that Yabut performed the shunting of his metering installation. Furthermore, the act imputed upon Yabut was not related to the performance of his duties as a Meralco employee, but as a customer of the company's electric business. Finally, it was ruled that Meralco failed to observe the twin requirements of due process in termination cases. The records are bereft of any evidence showing that the petitioner was apprised of the particular acts or omissions for which his dismissal was then sought. Unsatisfied, the respondents appealed from the decision of the labor arbiter to the NLRC. The Ruling of the NLRC On March 31, 2006, the NLRC rendered its Resolution 15 dismissing the herein respondents' appeal for lack of merit. Subsequently, the NLRC denied for lack of merit the respondents' motion for reconsideration via a Resolution 16 dated August 28, 2006. This prompted the respondents to file a petition for certiorari with the CA.
EHScCA

14

The Ruling of the CA On August 10, 2009, the CA rendered the now assailed Decision 17 reversing the rulings of the NLRC. In finding the petitioner's dismissal lawful, the appellate court attributed unto Yabut authorship of the meter tampering and illegal use of electricity acts which it regarded as serious misconduct. The Court observed:
The Court notes that the meter base is located inside respondent Yabut's premises. Manila Electric Company vs. Court of Appeals said ". . . Metro Concast should bear the responsibility for the tampering of the facilities within its compound, which was totally under its supervision and control. Being within its control, any resultant breach in the integrity of the equipment is indeed attributable to it." 18 (citation omitted)

The court also ruled that the petitioner's right to due process was not violated, as he was served the required notices and given sufficient opportunity to be heard. In view of these, the CA annulled and set aside the NLRC's resolutions via its decision, the dispositive portion of which reads: WHEREFORE, the petition is granted. The resolutions dated March 31, 2006 and August 28, 2006 are annulled and set aside. SO ORDERED.
19

Yabut's motion for reconsideration was denied by the CA via a Resolution dated November 26, 2009. the present petition. The Issue

20

Hence,

The issue for this Court's determination is: Whether or not the CA committed an error of law in annulling and setting aside the resolutions of the NLRC that declared the herein petitioner illegally dismissed by the respondents. The petitioner asserts that he was dismissed from employment without a valid cause, and that due process prior to his termination was not observed by the respondents.
DHcESI

This Court's Ruling After study, this Court finds the petition devoid of merit. The dismissal of the petitioner was founded on just causes under Article 282 of the Labor Code of the Philippines. Article 279 of the Labor Code of the Philippines provides that "(i)n cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. . . ." The just causes are enumerated in Article 282, which provides:
Article 282.Termination by employer. An employer may terminate an employment for any of the following causes: (a)Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b)Gross and habitual neglect by the employee of his duties; (c)Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d)Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e)Other causes analogous to the foregoing.

The requirement for a just cause was satisfied in this case. We note that the petitioner's employment was terminated by the herein respondents for violation of Section 7, par. 3 of Meralco's Company Code on Employee Discipline, and for the existence of just cause under Article 282 (a), (c), (d) and (e) of the Labor Code. The petitioner's violation of the company rules was evident. While he denies any involvement in the installation of the shunting wires which Meralco discovered, it is significant that said SIN 708668501 is registered under his name, and its meter base is situated within the premises of his property. Said meter registered electric consumption during the time his electric service was officially disconnected by Meralco. It was the petitioner and his family who could have benefited from the illegal connection, being the residents of the area covered by the service. His claim that he failed to know or even notice the shunted wires fails to persuade as we consider the meter located in the front of his house, the nature of his work as branch field representative, his long-time employment with Meralco and his familiarity with illegal connections of this kind.
IaHCAD

The logical conclusion that may be deduced from these attending circumstances is that the petitioner was a party, or at the very least, one who agreed to the installation of the shunted wires, and who also benefited from the illegal connection at the expense of his employer-company. In sustaining the CA's findings, we consider the rule that in administrative and quasi-judicial proceedings, as in proceedings before the NLRC which had original jurisdiction over the complaint for illegal dismissal, the quantum of proof necessary is substantial evidence or such relevant evidence as a reasonable mind may accept as adequate to support a conclusion. 21 Significantly, "(t)ampering with electric meters or metering installations of the Company or the installation of any device, with the purpose of defrauding the Company" is classified as an act of dishonesty from Meralco employees, expressly prohibited under company rules. It is reasonable that its commission is classified as a severe act of dishonesty, punishable by dismissal even on its first commission, given the nature and gravity of the offense and the fact that it is a grave wrong directed against their employer. To reiterate, Article 282 (a) provides that an employer may terminate an employment because of an employee's serious misconduct, a cause that was present in this case in view of the petitioner's violation of his employer's code of conduct. Misconduct is defined as the "transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment." For serious misconduct to justify dismissal, the following requisites must be present: (a) it must be serious; (b) it must relate to the performance of the employee's duties; and (c) it must show that the employee has become unfit to continue working for the employer. 22 In reviewing the CA's Decision, we again consider the petitioner's duties and powers as a Meralco employee. And we conclude that he committed a serious misconduct. Installation of shunting wires is without doubt a serious wrong as it demonstrates an act that is willful or deliberate, pursued solely to wrongfully obtain electric power through unlawful means. The act clearly relates to the petitioner's performance of his duties given his position as branch field representative who is equipped with knowledge on meter operations, and who has the duty to test electric meters and handle customers' violations of contract. Instead of protecting the company's interest, the petitioner himself used his knowledge to illegally obtain electric power from Meralco. His involvement in this incident deems him no longer fit to continue performing his functions for respondentcompany. While the installation of the shunted wires benefited the herein petitioner as a customer of Meralco, his act cannot be fully severed from his status as the respondent's employee. As correctly observed by the CA, "(i)t is an offense against the Company Code of Employee Discipline. As a field representative, he is knowledgeable on the mechanics of meter and metering installation." 23 The dismissal is also justified as the act imputed upon the petitioner qualifies as "fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative" under Article 282 (c) of the Labor Code. While the petitioner contests this ground by denying that his position is one of trust and confidence, it is undisputed that at the time of his dismissal, he was holding a supervisory position after he rose from the ranks since commencement of his employment with Meralco. As a supervisor with duty and power that included testing of service meters and investigation of violations of contract of customers, his position can be treated as one of trust and confidence, requiring a high degree of honesty as compared with ordinary rank-and-file employees. This Court declared inThe Coca-Cola Export Corporation v. Gacayan: 24
TDESCa

Law and jurisprudence have long recognized the right of employers to dismiss employees by reason of loss of trust and confidence. More so, in the case of supervisors or personnel occupying positions of responsibility, loss of trust justifies termination. Loss of confidence as a just cause for termination of employment is premised from the fact that an employee concerned holds a position of trust and confidence. This situation holds where a person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employer's property. But, in order to constitute a just cause for dismissal, the act complained of must be "work-related" such as would show the employee concerned to be unfit to continue working for the employer. 25(citations omitted)

In this case, the acts complained of were clearly work-related because they related to matters the petitioner handled as branch field representative. Taking into account the results of its investigations, Meralco cannot be expected to trust Yabut to properly perform his functions and to meet the demands of his job. His dishonesty, involvement in theft and tampering of electric meters clearly prejudice respondent Meralco, since he failed to perform the duties which he was expected to perform. Considering the foregoing, this Court agrees that there were just causes for the petitioner's dismissal. We emphasize that dismissal of a dishonest employee is to the best interest not only of the management but also of labor. As a measure of self-protection against acts inimical to its interest, a company has the right to dismiss its erring employees. An employer cannot be compelled to continue employing an employee guilty of acts inimical to the employer's interest, justifying loss of confidence in him. 26 The requirements of procedural due process were satisfied. On the matter of procedural due process, it is well-settled that notice and hearing constitute the essential elements of due process in the dismissal of employees. The employer must furnish the employee with two written notices before termination of employment can be legally effected. The first apprises the employee of the particular acts or omissions for which dismissal is sought. The second informs the employee of the employer's decision to dismiss him. With regard to the requirement of a hearing, the essence of due process lies simply in an opportunity to be heard, and not that an actual hearing should always and indispensably be held. 27 These requirements were satisfied in this case. The first required notice was dated November 3, 2003, sufficiently notifying the petitioner of the particular acts being imputed against him, as well as the applicable law and the company rules considered to have been violated. Notably, in his sworn statement dated November 17, 2003, the petitioner admitted receiving Meralco's notice of investigation dated November 3, 2003, to wit:
SHTEaA

37.T. Natanggap mo ba yong notice ng investigation na may petsang November 3, 2003 na personally na ipinadala namin sa iyo sa bahay mo na may numerong 17 Earth St., Meralco Village 8, Batia, Bocaue, Bulacan? S.Opo. 38.T. Ipinapakita ko sa iyo ang isang notice ng investigation na may petsang November 3, 2003 na naka-addressed (sic) sa isang Mr. Norman C. Yabut ng17 Earth Street, Meralco Village 8, Batia, Bocaue, Bulacan at ang may lagda ay si Atty. J.R.T. Albarico, head ng InvestigationLitigation ng Meralco. Dito sa nasabing notice ay may nakalagay sa ibaba nareceived by Salvacio (sic) M. Yabut na may kanyang pirma, at nakalagay din ang date na 11/03/03 at ang nakalagay sa relationship ay wife. Ano ang masasabi mo tungkol sa bagay na ito . S.Ito po yong notice ng investigation na aking natanggap at ang nakatanggap nito ay ang aking misis na si Maria Salvacion Yabut. 28

On November 17, 2003, Meralco conducted a hearing on the charges against the petitioner. During said time, the petitioner was accorded the right to air his side and present his defenses on the charges against him. Significantly, a high-ranking officer of the supervisory union of Meralco assisted him during the said investigation. His sworn statement 29 that forms part of the case records even listed the matters that were raised during the investigation. Finally, Meralco served a notice of dismissal dated February 4, 2004 upon the petitioner. Such notice notified the latter of the company's decision to dismiss him from employment on the grounds clearly discussed therein.

WHEREFORE, in view of the foregoing, the petition for review on certiorari is hereby DENIED. The assailed Decision dated August 10, 2009 and Resolution dated November 26, 2009 of the CA in CA-G.R. SP No. 96789 are hereby AFFIRMED. SO ORDERED.

Carpio, Perez, Sereno and Perlas-Bernabe, * JJ., concur.

[G.R. No. 175558. February 8, 2012.] SKIPPERS UNITED PACIFIC, INC. and SKIPPERS MARITIME SERVICES, INC., LTD., petitioners, vs. NATHANIEL DOZA, NAPOLEON DE GRACIA, ISIDRO L. LATA, and CHARLIE APROSTA, respondents.

DECISION

CARPIO, J :
p

The Case This is a Petition for Review under Rule 45 assailing the 5 July 2006 Decision Resolution 2 of the Court of Appeals in CA-G.R. SP No. 88148. 3
1

and 7 November 2006

This arose from consolidated labor case 4 filed by seafarers Napoleon De Gracia (De Gracia), Isidro L. Lata (Lata), Charlie Aprosta (Aprosta), and Nathaniel Doza (Doza) against local manning agency Skippers United Pacific, Inc. and its foreign principal, Skippers Maritime Services, Inc., Ltd. (Skippers) for unremitted home allotment for the month of December 1998, salaries for the unexpired portion of their employment contracts, moral damages, exemplary damages, and attorney's fees. Skippers, on the other hand, answered with a claim for reimbursement of De Gracia, Aprosta and Lata's repatriation expenses, as well as award of moral damages and attorney's fees. De Gracia, Lata, Aprosta and Doza's (De Gracia, et al.) claims were dismissed by the Labor Arbiter for lack of merit. 5 The Labor Arbiter also dismissed Skippers' claims. 6 De Gracia, et al. appealed 7 the Labor Arbiter's decision with the National Labor Relations Commission (NLRC), but the First Division of the NLRC dismissed the appeal for lack of merit. 8 Doza, et al.'s Motion for Reconsideration was likewise denied by the NLRC, 9 so they filed a Petition for Certiorari with the Court of Appeals (CA). 10 The CA granted the petition, reversed the Labor Arbiter and NLRC Decisions, and awarded to De Gracia, Lata and Aprosta their unremitted home allotment, three months salary each representing the unexpired portion of their employment contracts and attorney's fees. 11 No award was given to Doza for lack of factual basis. 12The CA denied Skippers' Motion for Partial Reconsideration. 13 Hence, this Petition. The Facts Skippers United Pacific, Inc. deployed, in behalf of Skippers, De Gracia, Lata, and Aprosta to work on board the vessel MV Wisdom Star, under the following terms and conditions:
Name: Napoleon O. De Gracia

Position: 3rd Engineer Contract Duration: 10 months Basic Monthly Salary: US$800.00 Contract Date: 17 July 1998 Name: Isidro L. Lata
ETCcSa

14

Position: 4th Engineer Contract Duration: 12 months Basic Monthly Salary: US$600.00 Contract Date: 17 April 1998 Name: Charlie A. Aprosta Position: Third Officer Contract Duration: 12 months Basic Monthly Salary: US$600.00 Contract Date: 17 April 1998
16 15

Paragraph 2 of all the employment contracts stated that: "The terms and conditions of the Revised Employment Contract Governing the Employment of All Seafarers approved per Department Order No. 33 and Memorandum Circular No. 55, both series of 1996 shall be strictly and faithfully observed." 17 No employment contract was submitted for Nathaniel Doza. De Gracia, et al., claimed that Skippers failed to remit their respective allotments for almost five months, compelling them to air their grievances with the Romanian Seafarers Free Union. 18 On 16 December 1998, ITF Inspector Adrian Mihalcioiu of the Romanian Seafarers Union sent Captain Savvas of Cosmos Shipping a fax letter, relaying the complaints of his crew, namely: home allotment delay, unpaid salaries (only advances), late provisions, lack of laundry services (only one washing machine), and lack of maintenance of the vessel (perforated and unrepaired deck). 19 To date, however, Skippers only failed to remit the home allotment for the month of December 1998. 20 On 28 January 1999, De Gracia, et al. were unceremoniously discharged from MV Wisdom Stars and immediately repatriated. 21 Upon arrival in the Philippines, De Gracia, et al. filed a complaint for illegal dismissal with the Labor Arbiter on 4 April 1999 and prayed for payment of their home allotment for the month of December 1998, salaries for the unexpired portion of their contracts, moral damages, exemplary damages, and attorney's fees. 22 Skippers, on the other hand, claims that at around 2:00 a.m. on 3 December 1998, De Gracia, smelling strongly of alcohol, went to the cabin of Gabriel Oleszek, Master of MV Wisdom Stars, and was rude, shouting noisily to the master. 23 De Gracia left the master's cabin after a few minutes and was heard shouting very loudly somewhere down the corridors. 24 This incident was evidenced by the Captain's Report sent via telex to Skippers on said date. 25 Skippers also claims that at 12:00 noon on 22 January 1999, four Filipino seafarers, namely Aprosta, De Gracia, Lata and Doza, arrived in the master's cabin and demanded immediate repatriation because they were not satisfied with the ship. 26 De Gracia, et al. threatened that they may become crazy any moment and

demanded for all outstanding payments due to them. 27 This is evidenced by a telex of Cosmoship MV Wisdom to Skippers, which however bears conflicting dates of 22 January 1998 and 22 January 1999. 28 Skippers also claims that, due to the disembarkation of De Gracia, et al., 17 other seafarers disembarked under abnormal circumstances. 29 For this reason, it was suggested that Polish seafarers be utilized instead of Filipino seamen. 30 This is again evidenced by a fax of Cosmoship MV Wisdom to Skippers, which bears conflicting dates of 24 January 1998 and 24 January 1999. 31 Skippers, in its Position Paper, admitted non-payment of home allotment for the month of December 1998, but prayed for the offsetting of such amount with the repatriation expenses in the following manner: 32
SeafarerRepatriation ExpenseHome AllotmentBalance De GraciaUS$1,340.00US$900.00US$440.00 AprostaUS$1,340.00US$600.00US$740.00 LataUS$1,340.00US$600.00US$740.00

Since De Gracia, et al., pre-terminated their contracts, Skippers claims they are liable for their repatriation expenses 33 in accordance with Section 19 (G) of Philippine Overseas Employment Administration (POEA) Memorandum Circular No. 55, series of 1996 which states:
G.A seaman who requests for early termination of his contract shall be liable for his repatriation cost as well as the transportation cost of his replacement. The employer may, in case of compassionate grounds, assume the transportation cost of the seafarer's replacement.

Skippers also prayed for payment of moral damages and attorney's fees.

34

The Decision of the Labor Arbiter The Labor Arbiter rendered his Decision on 18 February 2002, with its dispositive portion declaring:
WHEREFORE, judgment is hereby rendered dismissing herein action for lack of merit. Respondents' claim for reimbursement of the expenses they incurred in the repatriation of complainant Nathaniel Doza is likewise dismissed. SO ORDERED.
35
cDCEHa

The Labor Arbiter dismissed De Gracia, et al.'s complaint for illegal dismissal because the seafarers voluntarily pre-terminated their employment contracts by demanding for immediate repatriation due to dissatisfaction with the ship. 36 The Labor Arbiter held that such voluntary pre-termination of employment contract is akin to resignation, 37 a form of termination by employee of his employment contract under Article 285 of the Labor Code. The Labor Arbiter gave weight and credibility to the telex of the master of the vessel to Skippers, claiming that De Gracia, et al. demanded for immediate repatriation. 38 Due to the absence of illegal dismissal, De Gracia, et al.'s claim for salaries representing the unexpired portion of their employment contracts was dismissed. 39 The Labor Arbiter also dismissed De Gracia et al.'s claim for home allotment for December 1998. 40 The Labor Arbiter explained that payment for home allotment is "in the nature of extraordinary money where the burden of proof is shifted to the worker who must prove he is entitled to such monetary benefit." 41 Since De Gracia, et al., were not able to prove their entitlement to home allotment, such claim was dismissed. 42

Lastly, Skippers' claim for reimbursement of repatriation expenses was likewise denied, since Article 19 (G) of POEA Memorandum Circular No. 55, Series of 1996 allows the employer, in case the seafarer voluntarily preterminates his contract, to assume the repatriation cost of the seafarer on compassionate grounds. 43 The Decision of the NLRC The NLRC, on 28 October 2002, dismissed De Gracia, et al.'s appeal for lack of merit and affirmed the Labor Arbiter's decision. 44 The NLRC considered De Gracia, et al.'s claim for home allotment for December 1998 unsubstantiated, since home allotment is a benefit which De Gracia, et al., must prove their entitlement to. 45 The NLRC also denied the claim for illegal dismissal because De Gracia, et al., were not able to refute the telex received by Skippers from the vessel's master that De Gracia, et al., voluntarily pre-terminated their contracts and demanded immediate repatriation due to their dissatisfaction with the ship's operations. 46 The Decision of the Court of Appeals The CA, on 5 July 2006, granted De Gracia, et al.'s petition and reversed the decisions of the Labor Arbiter and NLRC, its dispositive portion reading as follows:
WHEREFORE, the instant petition for certiorari is GRANTED. The Resolution dated October 28, 2002 and the Order dated August 31, 2004 rendered by the public respondent NLRC are ANNULLED and SET ASIDE. Let another judgment be entered holding private respondents jointly and severally liable to petitioners for the payment of: 1.Unremitted home allotment pay for the month of December, 1998 or the equivalent thereof in Philippine pesos: a.De Gracia = US$900.00 b.Lata = US$600.00 c.Aprosta = US$600.00 2.Salary for the unexpired portion of the employment contract or for 3 months for every year of the unexpired term, whichever is less, or the equivalent thereof in Philippine pesos: a.De Gracia = US$2,400.00 b.Lata = US$1,800.00 c.Aprosta = US$1,800.00 3.Attorney's fees and litigation expenses equivalent to 10% of the total claims. SO ORDERED.
47

The CA declared the Labor Arbiter and NLRC to have committed grave abuse of discretion when they relied upon the telex message of the captain of the vessel stating that De Gracia, et al., voluntarily pre-terminated their contracts and demanded immediate repatriation. 48 The telex message was "a self-serving document that does not satisfy the requirement of substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify the conclusion that petitioners indeed voluntarily demanded their immediate repatriation." 49 For this reason, the repatriation of De Gracia, et al., prior to the expiration of their contracts showed they were illegally dismissed from employment. 50
DaIACS

In addition, the failure to remit home allotment pay was effectively admitted by Skippers, and prayed to be offset from the repatriation expenses. 51 Since there is no proof that De Gracia, et al., voluntarily preterminated their contracts, the repatriation expenses are for the account of Skippers, and cannot be offset with the home allotment pay for December 1998. 52 No relief was granted to Doza due to lack of factual basis to support his petition. 53 Attorney's fees equivalent to 10% of the total claims was granted since it involved an action for recovery of wages or where the employee was forced to litigate and incur expenses to protect his rights and interest. 54 The Issues Skippers, in its Petition for Review on Certiorari, assigned the following errors in the CA Decision:
a)The Court of Appeals seriously erred in not giving due credence to the master's telex message showing that the respondents voluntarily requested to be repatriated. b)The Court of Appeals seriously erred in finding petitioners liable to pay backwages and the alleged unremitted home allotment pay despite the finding of the Labor Arbiter and the NLRC that the claims are baseless. c)The Court of Appeals seriously erred in awarding attorney's fees in favor of respondents despite its findings that the facts attending in this case do not support the claim for moral and exemplary damages. 55

The Ruling of this Court We deny the petition and affirm the CA Decision, but modify the award. For a worker's dismissal to be considered valid, it must comply with both procedural and substantive due process. The legality of the manner of dismissal constitutes procedural due process, while the legality of the act of dismissal constitutes substantive due process. 56 Procedural due process in dismissal cases consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second notice informs the employee of the employer's decision to dismiss him. Before the issuance of the second notice, the requirement of a hearing must be complied with by giving the worker an opportunity to be heard. It is not necessary that an actual hearing be conducted. 57 Substantive due process, on the other hand, requires that dismissal by the employer be made under a just or authorized cause under Articles 282 to 284 of the Labor Code. In this case, there was no written notice furnished to De Gracia, et al., regarding the cause of their dismissal. Cosmoship furnished a written notice (telex) to Skippers, the local manning agency, claiming that De Gracia, et al., were repatriated because the latter voluntarily pre-terminated their contracts. This telex was given credibility and weight by the Labor Arbiter and NLRC in deciding that there was pre-termination of the employment contract "akin to resignation" and no illegal dismissal. However, as correctly ruled by the CA, the telex message is "a biased and self-serving document that does not satisfy the requirement of substantial evidence." If, indeed, De Gracia, et al., voluntarily pre-terminated their contracts, then De Gracia, et al., should have submitted their written resignations. Article 285 of the Labor Code recognizes termination by the employee of the employment contract by "serving written notice on the employer at least one (1) month in advance." Given that provision, the law contemplates

the requirement of a written notice of resignation. In the absence of a written resignation, it is safe to presume that the employer terminated the seafarers. In addition, the telex message relied upon by the Labor Arbiter and NLRC bore conflicting dates of 22 January 1998 and 22 January 1999, giving doubt to the veracity and authenticity of the document. In 22 January 1998, De Gracia, et al., were not even employed yet by the foreign principal. For these reasons, the dismissal of De Gracia, et al., was illegal. On the issue of home allotment pay, Skippers effectively admitted non-remittance of home allotment pay for the month of December 1998 in its Position Paper. Skippers sought the repatriation expenses to be offset with the home allotment pay. However, since De Gracia, et al.'s dismissal was illegal, their repatriation expenses were for the account of Skippers and could not be offset with the home allotment pay. Contrary to the claim of the Labor Arbiter and NLRC that the home allotment pay is in "the nature of extraordinary money where the burden of proof is shifted to the worker who must prove he is entitled to such monetary benefit," Section 8 of POEA Memorandum Circular No. 55, series of 1996, states that the allotment actually constitutes at least eighty percent (80%) of the seafarer's salary:
ScCDET

The seafarer is required to make an allotment which is payable once a month to his designated allottee in the Philippines through any authorized Philippine bank. The master/employer/agency shall provide the seafarer with facilities to do so at no expense to the seafarer. The allotment shall be at least eighty percent (80%) of the seafarer's monthly basic salary including backwages, if any. (Emphasis supplied)

Paragraph 2 of the employment contracts of De Gracia, Lata and Aprosta incorporated the provisions of above Memorandum Circular No. 55, series of 1996, in the employment contracts. Since said memorandum states that home allotment of seafarers actually constitutes at least eighty percent (80%) of their salary, home allotment pay is not in the nature of an extraordinary money or benefit, but should actually be considered as salary which should be paid for services rendered. For this reason, such non-remittance of home allotment pay should be considered as unpaid salaries, and Skippers shall be liable to pay the home allotment pay of De Gracia, et al., for the month of December 1998. Damages As admitted by Skippers in its Position Paper, the home allotment pay for December 1998 due to De Gracia, Lata and Aprosta is:
SeafarerHome Allotment Pay
De GraciaUS$900.00 AprostaUS$600.00 LataUS$600.00

The monthly salary of De Gracia, according to his employment contract, is only US$800.00. However, since Skippers admitted in its Position Paper a higher home allotment pay for De Gracia, we award the higher amount of home allotment pay for De Gracia in the amount of US$900.00. Since the home allotment pay can be considered as unpaid salaries, the peso equivalent of the dollar amount should be computed using the prevailing rate at the time of termination since it was due and demandable to De Gracia, et al., on 28 January 1999. Section 10 of Republic Act No. 8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of employment contracts:

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

The Migrant Workers Act provides that salaries for the unexpired portion of the employment contract or three (3) months for every year of the unexpired term, whichever is less, shall be awarded to the overseas Filipino worker, in cases of illegal dismissal. However, in 24 March 2009, Serrano v. Gallant Maritime Services and Marlow Navigation Co., Inc., 58 the Court, in an En Banc Decision, declared unconstitutional the clause "or for three months for every year of the unexpired term, whichever is less" and awarded the entire unexpired portion of the employment contract to the overseas Filipino worker. On 8 March 2010, however, Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act, and once again reiterated the provision of awarding the unexpired portion of the employment contract or three (3) months for every year of the unexpired term, whichever is less. Nevertheless, since the termination occurred on January 1999 before the passage of the amendatory RA 10022, we shall apply RA 8042, as unamended, without touching on the constitutionality of Section 7 of RA 10022. The declaration in March 2009 of the unconstitutionality of the clause "or for three months for every year of the unexpired term, whichever is less" in RA 8042 shall be given retroactive effect to the termination that occurred in January 1999 because an unconstitutional clause in the law confers no rights, imposes no duties and affords no protection. The unconstitutional provision is inoperative, as if it was not passed into law at all. 59 As such, we compute the claims as follows:
Seafarer Contract Contract Repatriation Unexpired Monthly Total TermDateDateTermSalaryClaims De Gracia10 months17 Jul. 199828 Jan. 19993 months & US$800US$2933.34 20 days Lata12 months17 Apr. 199828 Jan. 19992 months & US$600US$1600 20 days Aprosta12 months17 Apr. 199828 Jan. 19992 months & US$600US$1600 20 days

Given the above computation, we modify the CA's imposition of award, and grant to De Gracia, et al., salaries representing the unexpired portion of their contracts, instead of salaries for three (3) months. Article 2219 of the Civil Code of the Philippines provides for recovery of moral damages in certain cases:
Art. 2219.Moral damages may be recovered in the following and analogous cases: (1)A criminal offense resulting in physical injuries;
HTDAac

(2)Quasi-delicts causing physical injuries;

(3)Seduction, abduction, rape, or other lascivious acts; (4)Adultery or concubinage; (5)Illegal or arbitrary detention or arrest;

(6)Illegal search; (7)Libel, slander or any other form of defamation; (8)Malicious prosecution; (9)Acts mentioned in Article 309; (10)Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named.

Article 2229 of the Civil Code, on the other hand, provides for recovery of exemplary damages:
Art. 2229.Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.

In this case, we agree with the CA in not awarding moral and exemplary damages for lack of factual basis. Lastly, Article 2208 of the Civil Code provides for recovery of attorney's fees and expenses of litigation:
Art. 2208.In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1)When exemplary damages are awarded; (2)When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3)In criminal cases of malicious prosecution against the plaintiff; (4)In case of a clearly unfounded civil action or proceeding against the plaintiff; (5)Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6)In actions for legal support; (7)In actions for the recovery of wages of household helpers, laborers and skilled workers; (8)In actions for indemnity under workmen's compensation and employer's liability laws; (9)In a separate civil action to recover civil liability arising from a crime; (10)When at least double judicial costs are awarded; (11)In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. In all cases, the attorney's fees and expenses of litigation must be reasonable.

Article 111 of the Labor Code provides for a maximum award of attorney's fees in cases of recovery of wages:
Art. 111.Attorney's fees. a.In cases of unlawful withholding of wages, the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of wages recovered.
cHaDIA

b.It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney's fees which exceed ten percent of the amount of wages recovered.

Since De Gracia, et al., had to secure the services of the lawyer to recover their unpaid salaries and protect their interest, we agree with the CA's imposition of attorney's fees in the amount of ten percent (10%) of the total claims. WHEREFORE, we AFFIRM the Decision of the Court of Appeals dated 5 July 2006 with MODIFICATION. Petitioners Skippers United Pacific, Inc. and Skippers Maritime Services, Inc., Ltd. are jointly and severally liable for payment of the following: 1)Unremitted home allotment pay for the month of December 1998 in its equivalent rate in Philippine Pesos at the time of termination on 28 January 1999: a.De Gracia = US$900.00 b.Lata = US$600.00 c.Aprosta = US$600.00 2)Salary for the unexpired portion of the employment contract or its current equivalent in Philippine Pesos: a.De Gracia = US$2,933.34 b.Lata = US$1,600.00 c.Aprosta = US$1,600.00 3)Attorney's fees and litigation expenses equivalent to 10% of the total claims. SO ORDERED.

Brion, Perez, Sereno and Reyes, JJ., concur.

[G.R. No. 173012. June 13, 2012.] DOLORES T. ESGUERRA, petitioner, vs. VALLE VERDE COUNTRY CLUB, INC. and ERNESTO VILLALUNA, respondents.

DECISION

BRION, J :
p

Before this Court is a petition for review on certiorari, 1 filed by petitioner Dolores T. Esguerra (Esguerra), from the February 7, 2006 decision 2 and the June 2, 2006 resolution 3 of the Court of Appeals (CA) in CA-G.R. SP No. 85012, ruling that Esguerra had been validly dismissed from her employment with respondent Valle Verde Country Club, Inc. (Valle Verde). Valle Verde terminated Esguerra's employment for loss of trust and confidence in the custody of cash sales. FACTUAL BACKGROUND On April 1, 1978, Valle Verde hired Esguerra as Head Food Checker. In 1999, she was promoted to Cost Control Supervisor. 4 On January 15, 2000, the Couples for Christ held a seminar at the country club. Esguerra was tasked to oversee the seminar held in the two function rooms theBallroom and the Tanay Room. The arrangement was that the food shall be served in the form of pre-paid buffet, while the drinks shall be paid in a "pay as you order" basis. 5 The Valle Verde Management found out the following day that only the proceeds from the Tanay Room had been remitted to the accounting department. There were also unauthorized charges of food on the account of Judge Rodolfo Bonifacio, one of the participants. To resolve the issue, Valle Verde conducted an investigation; the employees who were assigned in the two function rooms were summoned and made to explain, in writing, what had transpired. 6
ISCHET

On March 6, 2000, Valle Verde sent a memorandum to Esguerra requiring her to show cause as to why no disciplinary action should be taken against her for the non-remittance of the Ballroom's sales. Esguerra was placed under preventive suspension with pay, pending investigation. 7 In her letter-response, Esguerra denied having committed any misappropriation. She explained that it had been her daughter (who was assigned as a food checker) who lost the money. 8 To settle the matter, Esguerra paid the unaccounted amount as soon as her daughter informed her about it. Esguerra also explained the unauthorized charging of food on Judge Bonifacio's account. She alleged that Judge Bonifacio took pity on her and told her to take home some food and to charge it on his account. Valle Verde found Esguerra's explanation unsatisfactory and, on July 26, 2000, issued a second memorandum terminating Esguerra's employment. 9 THE LABOR ARBITER'S RULING Esguerra filed a complaint 10 with the National Labor Relations Commission (NLRC) for illegal dismissal. In her April 5, 2002 decision, Labor Arbiter Marita V. Padolina dismissed the complaint for lack of merit, but ordered Valle Verde to pay Esguerra 13th month pay in the amount of P2,016.66, rice subsidy in the amount of P1,100.00, and ten percent (10%) attorney's fees in the amount of P311.66. 11 THE NLRC'S RULING Esguerra appealed the case to the NLRC. 12 In its December 27, 2002 decision, the NLRC modified the decision and only awarded P143,000.00 as separation pay, equivalent to one-half (1/2) month for every year of service, 13 after taking into account Esguerra's long years of service and absence of previous derogatory records. Esguerra filed a partial motion for reconsideration, 14 while Valle Verde filed its own motion for reconsideration. 15 In its March 31, 2004 resolution, the NLRC denied Esguerra's motion, but granted Valle

Verde's motion. Thus, it set aside its December 27, 2002 decision and affirmed the April 5, 2002 decision of the labor arbiter. THE CA RULING Aggrieved, Esguerra elevated her case to the CA via a Rule 65 petition for certiorari. In its February 7, 2006 decision, the CA denied Esguerra's petition for certiorari. It found that the NLRC did not commit any grave abuse of discretion in finding that Esguerra was validly dismissed from employment for loss of trust and confidence, and that her length of service cannot be counted in her favor.
IcDESA

Esguerra filed the present petition after the CA denied

16

her motion for reconsideration.

17

THE PETITION Esguerra argues that the appellate court erred in ruling that she had been validly dismissed on the ground of loss of trust and confidence. She alleges that she was only a regular employee and did not occupy a supervisory position vested with trust and confidence. Esguerra also questions the manner of dismissal since Valle Verde failed to comply with procedural requirements. THE ISSUE The core issue boils down to whether the CA erred in affirming the NLRC's decision and resolution. OUR RULING The petition is without merit. "Under the Labor Code, the requirements for the lawful dismissal of an employee are two-fold[:] the substantive and the procedural aspects. Not only must the dismissal be for a just or authorized cause, the rudimentary requirements of due process notice and hearing must, likewise, be observed . . . . Without the concurrence of the two, the termination would . . . be illegal[;] employment is a property right of which one cannot be deprived of without due process." 18

There was valid notice and hearing

We fail to find any irregularities in the service of notice to Esguerra. The memorandum dated March 6, 2000 19 informed her of the charges, and clearly directed her to show cause, in writing, why no disciplinary action should be imposed against her. Esguerra's allegation that the notice was insufficient since it failed to contain any intention to terminate her is incorrect.
AIDcTE

In Perez v. Philippine Telegraph and Telephone Company, two-notice rule in dismissing an employee:

20

the Court underscored the significance of the

To meet the requirements of due process in the dismissal of an employee, an employer must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination and giving to said employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employer's decision to dismiss the employee. [emphases and italics ours]. 21

Contrary to Esguerra's allegation, the law does not require that an intention to terminate one's employment should be included in the first notice. It is enough that employees are properly apprised of the charges brought against them so they can properly prepare their defenses; it is only during the second notice that the intention to terminate one's employment should be explicitly stated.

There is also no basis to question the absence of a proper hearing. In Perez, the Court provided the following guiding principles in connection with the hearing requirement in dismissal cases:
a)"ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way. b)a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it. c)the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference" requirement in the implementing rules and regulations. 22

In sum, the existence of an actual, formal "trial-type" hearing, although preferred, is not absolutely necessary to satisfy the employee's right to be heard. Esguerra was able to present her defenses; and only upon proper consideration of it did Valle Verde send the second memorandum terminating her employment. Since Valle Verde complied with the two-notice requirement, no procedural defect exists in Esguerra's termination.
cTDaEH

Esguerra occupied a position of trust and confidence

We now dwell on the substantive aspect of Esguerra's dismissal. We have held that there are two (2) classes of positions of trust the first class consists of managerial employees, or those vested with the power to lay down management policies; and the second class consists of cashiers, auditors, property custodians or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. 23 Esguerra held the position of Cost Control Supervisor and had the duty to remit to the accounting department the cash sales proceeds from every transaction she was assigned to. 24 This is not a routine task that a regular employee may perform; it is related to the handling of business expenditures or finances. For this reason, Esguerra occupies a position of trust and confidence a position enumerated in the second class of positions of trust. Any breach of the trust imposed upon her can be a valid cause for dismissal. In Jardine Davies, Inc. v. National Labor Relations Commission, 25 we held that loss of confidence as a just cause for termination of employment can be invoked when an employee holds a position of responsibility, trust and confidence. In order to constitute a just cause for dismissal, the act complained of must be related to the performance of the duties of the dismissed employee and must show that he or she is unfit to continue working for the employer for violation of the trust reposed in him or her. We find no merit in the allegation that it was Esguerra's daughter who should be held liable. She had no custody of the cash sales since it was not part of her duties as a food checker. It was Esguerra's responsibility to account for the cash proceeds; in case of problems, she should have promptly reported it, regardless of who was at fault. Instead, she settled the unaccounted amount only after the accounting department informed her about the discrepancy, almost one month following the incident. Esguerra's failure to make the proper report reflects on her irresponsibility in the custody of cash for which she was accountable, it was her duty to account for the sales proceeds, and she should have known about the missing amount immediately after the event.
aSIDCT

We cannot favorably consider Esguerra's explanation about the unauthorized charging on Judge Bonifacio's account. It is highly unethical for an employee to bring home food intended to be sold to customers. At any rate, her explanation is self-serving and cannot be believed; the numerous written testimonies of the other coworkers never even mentioned it. WHEREFORE, we hereby DENY the petition for lack of merit. Costs against Dolores T. Esguerra.

SO ORDERED.

Carpio, Perez, Sereno and Reyes, JJ., concur.

[G.R. No. 185335. June 13, 2012.] PRUDENTIAL GUARANTEE AND ASSURANCE EMPLOYEE LABOR UNION and SANDY T. VALLOTA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, PRUDENTIAL GUARANTEE AND ASSURANCE, INC., and/or JOCELYN RETIZOS, respondents.

DECISION

MENDOZA, J :
p

This is a petition for review on certiorari under Rule 45 filed by petitioners Prudential Guarantee and Assurance Employee Labor Union (Union) and Sandy T. Vallota(Vallota) seeking to set aside the September 16, 2008 Decision 1 and November 10, 2008 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP No. 102699. The Facts Vallota commenced his employment with respondent Prudential Guarantee and Assurance, Inc. (PGAI) on May 16, 1995 as a Junior Programmer assigned to the Electronic Data Processing (EDP) Department. He reported directly to Gerald Dy Victory, then head of the EDP, until his replacement by respondent Jocelyn Retizos(Retizos) sometime in 1997. In August of 2005, Vallota was elected to the Board of Directors of the Union. On November 11, 2005, PGAI's Human Resource Manager, Atty. Joaquin R. Rillo (Atty. Rillo), invited Union President, Mike Apostol (Apostol) to his office. Atty. Rillo informed Apostol that PGAI was going to conduct an on-the-spot security check in the Information and Technology (IT) Department. Atty. Rillo also requested that Union representatives witness the inspection to which Apostol agreed.
TDAHCS

The inspection team proceeded to the IT Department, and the EDP head, through PGAI network administrator Angelo Gutierrez (Gutierrez), initiated the spot check of IT Department computers, beginning with the one assigned to Vallota. After exploring the contents of all the folders and subfolders in the "My Documents" folder, Gutierrez apparently did not find anything unusual with Vallota's computer and said "Wala naman, saan dito?" Retizos insisted, "Nandyan yan," and took over the inspection until she found a folder named "MAA." She then exclaimed, "Heto oh! Ano to? Bakit may MAA dito?" Retizos asked Vallota, "Are you working for MAA?"Vallota replied, "Hindi po, MAA mutual life po yan na makikita po sa internet." Gutierrez saved a copy of the contents of the MAA folder in a floppy disk. 3 Sensing that Vallota was being singled out, Apostol insisted that all the computers in the IT Department, including that of Retizos, be also subjected to a spot security check. Later, at Retizos' office, and in the presence of Atty. Rillo, Vallota was informed that Retizos and Atty. Rillo would print the files found in his computer under the folder "MAA." Vallota did not object. After the files were printed, Vallota and the Union Secretary were asked to sign each page of the printout. Vallota, however, was not given a copy of the printed file.

On November 14, 2005, Vallota received a memorandum 4 directing him to explain within 72 hours why highly confidential files were stored in his computer. The case was assigned Reference No. AC-05-02. The same memorandum also informed him that he was being placed under preventive suspension for 30 days effective upon receipt of the said notice. A second memorandum, 5 also dated November 14, 2005, notified Vallota of the extension of his preventive suspension for another 30 days, in view of the fact that the management needed more time to evaluate the administrative case against him. Vallota responded in writing on November 21, 2005. 6 Three days later, on November 24, 2005, PGAI sent him another memorandum 7 requesting further details on some of the matters he raised in his response. In a letter 8 dated December 6, 2005, Vallota requested a conference, to be attended by a Union representative and counsel. In reply, PGAI sent Vallota another memorandum 9 dated December 7, 2005, which, among others, set a new deadline for Vallota to submit his reply and evidence in his defense. In compliance with the deadline set, Vallota submitted his reply-memorandum outlining his response to the charges.
10

dated December 12, 2005,

Meanwhile, the Union sent a letter 11 to PGAI President Philip K. Rico (Rico) requesting that a grievance committee be convened and that the contents of the computers of other IT personnel be similarly produced. The request for the convening of a grievance committee was ignored. On December 21, 2005, Vallota was given a notice of termination of his employment effective January 10, 2006 on the ground of loss of trust and confidence. The decision (AC-05-02) was embodied in a memorandum 12 dated December 21, 2005. Thus, the petitioners filed a complaint for illegal dismissal with claims for full backwages, moral and exemplary damages, and attorney's fees. The case was docketed as NLRC-NCR Case No. 00-01-00387-06. On March 31, 2006, Labor Arbiter Aliman D. Mangandog (LA) rendered a decision the dispositive portion of which reads:
13

in favor of the petitioners,

WHEREFORE, the foregoing premises considered, judgment is hereby rendered, declaring the dismissal of complainant Vallota illegal and holding the respondents for the following:
EHCcIT

1.to reinstate complainant Vallota to his former position without loss of benefits and seniority rights. 2.to pay complainant Vallota full backwages from the time of his dismissal until actual reinstatement partially computed as of this date amount[ing] to P60,856.00 (P18,400/mo. x 3 mos. & 8 days). 3.to pay complainant's attorney's fee equivalent to 10% of the total monetary award. SO ORDERED.
14

The LA held that PGAI failed to meet its burden of evidence, and the conflicting claims of the parties were resolved in favor of Vallota for failure of PGAI to adduce substantial evidence to support its claim. The LA further held that the dismissal was not commensurate to the misconduct complained of, especially considering that it was Vallota's first offense. 15 On the matter of the blank gate pass stored in Vallota's computer, the LA found as satisfactory his explanation that Joseph Tolentino (Tolentino), a PGAI employee, requested him, from time to time, to print a gate pass whenever he had to bring tools outside of the company premises. The LA cited Vallota's argument that "it is quite odd [that] despite the fact that the gate pass form was admitted by the respondents in [their] Reply as their exclusive property, complainant's possession of the same was not considered . . . Possession of Company property without authorization." 16

The LA further found that the respondents were not able to establish that Vallota used company property for his personal benefit. Nothing on record could show that he made an attempt to defraud his employer. With regard to the charge that, without authorization, he misused or removed company documents, the LA opined that if this were true, the respondents should have conducted a thorough investigation to determine the liable persons. 17 Finally, the LA ruled that Vallota was denied due process since the respondents refused to conduct a hearing, despite Vallota's request, to thresh out the matters raised by him in his memoranda. 18 The respondents filed their Memorandum of Appeal NCR CA No. 049107-06(7).
19

dated May 19, 2006. The case was docketed as NLRC

On June 30, 2006, the National Labor Relations Commission (NLRC) issued its Resolution 20 dismissing the appeal on the ground that the respondents failed to submit a certificate of non-forum shopping in accordance with the Rules of Procedure of the NLRC. The respondents filed their Motion for Reconsideration
21

dated July 17, 2006,

22

which the Union opposed.

On October 31, 2007, the NLRC granted the respondents' motion for reconsideration and reversed and set aside the decision of the LA. 23 The dispositive portion of the resolution reads:
WHEREFORE, premises considered, respondents' Motion for Reconsideration from the Resolution of June 30, 2006 is GRANTED. The appealed decision is hereby REVERSED and SET ASIDE. However, respondent is hereby ordered to pay complainant financial assistance equivalent to one-half (1/2) month pay for every year of service or . . . the amount of ninety two thousand pesos (P92,000.00.) P18,400 x10 yrs.=P92,000.00 2 SO ORDERED.

STDEcA

The NLRC reasoned out that the respondents had submitted substantial and sufficient evidence to prove that there existed grounds for the PGAI to lose trust and confidence in Vallota. The NLRC also found grave abuse of discretion on the part of the LA to disregard the affidavits of Tolentino, Retizos and Allan Unson, as the LA himself did not set a hearing for the purpose of cross-examining the said witnesses or verifying the statements made in their affidavits. As reflected in the decretal portion, although the NLRC ruled that the dismissal was valid, it still directed the respondents to grant Vallota financial assistance of one-half (1/2) month pay for every year of his ten (10) years of service. 24 The petitioners moved for a reconsideration resolution 26 dated December 28, 2007.
25

of the decision, but their motion was denied in a

Dejected, the petitioners filed a petition for certiorari 27 with the CA which was docketed as CA-G.R. SP. No. 102699. On September 16, 2008, the CA denied the petition for lack of merit, and sustained the award of the NLRC. The petitioners' motion for reconsideration was denied in a resolution dated November 10, 2008. Hence, this petition.

ISSUES The petitioners raise the following issues:

I WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN GIVING LIBERALITY TO PRIVATE RESPONDENTS['] FOUR BLATANT VIOLATIONS OF THE NLRC RULES OF PROCEDURE. II WHETHER OR NOT THE HONORABLE COURT OF APPEALS GROSSLY MISAPPRECIATED THE FACT THAT NO SUBSTANTIAL EVIDENCE EXIST[S] TO JUSTIFY THE DISMISSAL OF PETITIONER VALLOTA. 28
cHSIDa

RULING OF THE COURT First, the allegation of grave abuse of discretion is misplaced, as this is an issue appropriate for a petition for certiorari under Rule 65, not a petition for review oncertiorari under Rule 45. There is no question that grave abuse of discretion or errors of jurisdiction may be corrected only by the special civil action of certiorari. Such special remedy does not avail in instances of error of judgment which can be corrected by appeal or by a petition for review. Because the petitioners availed of the remedy under Rule 45, recourse to Rule 65 cannot be allowed either as an add-on or as a substitute for appeal. 29 Regarding illegal dismissal, the core issues to be resolved here are: (1) whether Vallota was validly dismissed on the ground of loss of trust and confidence; and (2) whether the requirements of procedural due process for termination were observed.

Whether the petitioner was validly dismissed on the ground of loss of trust and confidence
The Court's discussion in Mabeza v. National Labor Relations Commission
30

is instructive:

ISAcHD

Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for terminating their employees. Such a vague, all-encompassing pretext as loss of confidence, if unqualifiedly given the seal of approval by this Court, could readily reduce to barren form the words of the constitutional guarantee of security of tenure. Having this in mind, loss of confidence should ideally apply only to cases involving employees occupying positions of trust and confidence or to those situations where the employee is routinely charged with the care and custody of the employer's money or property. To the first class belong managerial employees, i.e., those vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions; and to the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. Evidently, an ordinary chambermaid who has to sign out for linen and other hotel property from the property custodian each day and who has to account for each and every towel or bedsheet utilized by the hotel's guests at the end of her shift would not fall under any of these two classes of employees for which loss of confidence, if ably supported by evidence, would normally apply. Illustrating this distinction, this Court, in Marina Port Services, Inc. vs. NLRC, has stated that: To be sure, every employee must enjoy some degree of trust and confidence from the employer as that is one reason why he was employed in the first place. One certainly does not employ a person he distrusts. Indeed, even the lowly janitor must enjoy that trust and

confidence in some measure if only because he is the one who opens the office in the morning and closes it at night and in this sense is entrusted with the care or protection of the employer's property. The keys he holds are the symbol of that trust and confidence. By the same token, the security guard must also be considered as enjoying the trust and confidence of his employer, whose property he is safeguarding. Like the janitor, he has access to this property. He too, is charged with its care and protection. Notably, however, and like the janitor again, he is entrusted only with the physical task of protecting that property. The employer's trust and confidence in him is limited to that ministerial function. He is not entrusted, in the Labor Arbiter's words, 'with the duties of safekeeping and safeguarding company policies, management instructions, and company secrets such as operation devices.' He is not privy to these confidential matters, which are shared only in the higher echelons of management. It is the persons on such levels who, because they discharge these sensitive duties, may be considered holding positions of trust and confidence. The security guard does not belong in such category. More importantly, we have repeatedly held that loss of confidence should not be simulated in order to justify what would otherwise be, under the provisions of law, an illegal dismissal. "It should not be used as a subterfuge for causes which are illegal, improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith." 31
IHaSED

(Citations omitted. Emphases supplied.)

In Bristol Myers Squibb (Phils.), Inc. v. Baban, ground of loss of trust and confidence:

32

the Court discussed the requisites for a valid dismissal on the

It is clear that Article 282(c) of the Labor Code allows an employer to terminate the services of an employee for loss of trust and confidence. The right of employers to dismiss employees by reason of loss of trust and confidence is well established in jurisprudence. The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must be one holding a position of trust and confidence. Verily, We must first determine if respondent holds such a position. There are two (2) classes of positions of trust. The first class consists of managerial employees. They are defined as those vested with the powers or prerogatives to lay down management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions. The second class consists of cashiers, auditors, property custodians, etc. They are defined as those who in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. xxx xxx xxx The second requisite is that there must be an act that would justify the loss of trust and confidence. Loss of trust and confidence to be a valid cause for dismissal must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established but proof beyond reasonable doubt is not necessary. 33 (Citations omitted. Emphases supplied.)

Thus, the first question to be addressed is whether Vallota held a position of trust and confidence. In previous cases, the following positions were classified under the second class of holders of positions of trust and confidence: a pharmaceutical company's district manager employed to handle pharmaceutical products for distribution to medical practitioners and sale to drug outlets, 34 a bank manager, 35 and an employee tasked with purchasing supplies and equipment. 36 The position of a contract claims assistant tasked with monitoring

enforcement of contracts involving large sums of money was also classified to be analogous to this second class of holders of positions of trust and confidence. 37 Vallota was employed by PGAI as a Junior Programmer assigned to the EDP Department. His functions included the following:
Installation of PGAI System
38

on all designated branches.

Development of internal programs as required by the organization. Handling and maintenance of all programs as per advise. Conduct[s] operation training on PGAI systems on all PGAI branches. Generates and handles renewal list of all applicable lines. Generates and produces renewal notice of all lines as required. Generates paid premium production of all agents. Generates outstanding production reports of all agents. Generates report on top account executive per I.T. supervisor instruction. Generates and handle[s] data on top agents per AE premium production. Handles and maintains uploading system, accounting data per advise, account receivable system, motor car policy system, claims motor car system, check disbursement system, cash call system, R.I. outgoing and incoming system, facultative systems. All other task[s] as may be assigned to him from time to time.
39
ECaTDc

Based on the standards set by previous jurisprudence, Vallota's position as Junior Programmer is analogous to the second class of positions of trust and confidence. Though he did not physically handle money or property, he became privy to confidential data or information by the nature of his functions. At a time when the most sensitive of information is found not printed on paper but stored on hard drives and servers, an employee who handles or has access to data in electronic form naturally becomes the unwilling recipient of confidential information.
HEDSIc

Having addressed the nature of his position, the next question is whether the act complained of justified the loss of trust and confidence of Vallota's employer so as to constitute a valid cause for dismissal. It must, thus, be determined whether the alleged basis for dismissal was based on clearly established facts. The act alleged to have caused the loss of trust and confidence of PGAI in Vallota was the presence in his computer's hard drive of a folder named "MAA" allegedly containing files with information on MAA Mutual Life Philippines, a domestic corporation selling life insurance policies to the buying public, and files relating to PGAI's internal affairs:
1.MAA Mutualife Philippines, Inc. prospectus consisting of five (5) pages 2.MAA Mutualife Philippines, Inc. corporate profile consisting of six (6) pages 3.PGAI client's (sic) questionnaire consisting of five (5) pages

4.PGAI values and strategy 5.PGAI Client Servising (sic): Proposed Service Standard consisting of seven (7) pages 6.PGAI Marketing Department Division consisting of twenty (20) pages 6.1Marketing Department present set-up 6.2Present Table of Organization 6.3How is the market evolving? How does it affect PGAI? 6.4The strategy of change 6.5Segmentation 6.6Proposed Table of Organization 6.7Proposed PGA Super Branch 6.7.aObjectives
TECIHD

6.7.bAccounts to be service 6.8Proposed Chart for the Retail Division 6.8.aDual Objective 6.9Marketing Administration 6.10Analysis of Statistics 6.11Proposed Corporate Accounts Servicing Division 6.11.aFacts 6.11.b2003 and 2004 Dealership Production Statistics 6.11.c2003-2004 Budget Analysis 7.PGAI Marketing Division: An Analysis & Proposed Solution consisting of seven (7) pages 8.PGAI Customer Service Commitment consisting of six (6) pages 9.PGAI Gate Pass Form
40

Following such discovery, Vallota was charged with the following violations of Company Rules on Company Property:
1.Possession of company property without authorization; 2.Securing or obtaining Prudential materials or supplies fraudulently;

3.Using Company equipment, property, or material to perform or create something for personal gain or purpose; and 4.Misuse or removal from company premises without proper authorization of Prudential records or confidential information of any nature. 41

Vallota and the Union argue, among others, that (1) the respondents failed to prove by substantial evidence that Vallota's position did not allow him to access confidential information and that the data found in his computer had been used for his personal gain; (2) Vallota did not deliberately get the files from other departments; instead, such files were acquired in the process of fixing diskettes and printing information as requested by his co-employees; (3) no evidence was presented to prove that Vallota sold or was about to sell corporate documents to MAA Mutual Life Corporation or to any company; and (4) the respondents' refusal to convene a grievance machinery was a clear abuse of management prerogative. 42 The respondents, on the other hand, counter that Vallota admitted ownership of the files found in his computer. They also argue that it was the Data Center Technical Support Staff, and not the Junior Programmer, who handled recovery/fixing/printing of files of the nature of those found in Vallota's possession; that it was a remote possibility that the Junior Programmer would be directly requested to assist employees, since the Methods Analyst would have been the designee for such task; that Vallota's functions as Junior Programmer did not include matters relating to web development; that under standard IT procedure and company practice, the employees who requested assistance from the IT Department were required to fill up a Job Request Form (JRF), which was then submitted for prior approval by the IT Head; that Retizos, as IT Head, could not recall signing or approving any request pertaining to the recovered PGAI files; that Vallota could not produce a single JRF when he was asked to do so and explained the lack of JRFs by stating that such file repairs, file recovery, or printing jobs were merely "little favors" and that such were considered as company "practice"; and that he, however, refused to reveal the names of the employees who had sought assistance in the fixing/printing/recovery of the PGAI files. 43
cEITCA

The respondents aver that Vallota also had in his computer the PGAI Gate Pass Form template, 44 a company property that could not be copied, stored, or reproduced without company permission. They also claim that Vallota was guilty of using company equipment, property or material to perform or create something for personal gain or purpose. MAA files, alleged to be highly confidential and sensitive, were found in Vallota's computer which he explained were downloaded from the MAA website outside of company premises merely for information. Upon searching the MAA website, however, they (respondents) did not find any of the said files. They also found that the MAA website was accessible only to certain users and was not open to the public as claimed by Vallota. Given all of these, the respondents concluded that Vallota's possession of the PGAI and MAA files appeared to be part of a plan to take advantage of the said documents for personal gain.45 While the law and this Court recognize the right of an employer to dismiss an employee based on loss of trust and confidence, the evidence of the employer must clearly and convincingly establish the facts upon which the loss of trust and confidence in the employee is based. 46 To be a valid ground for dismissal, loss of trust and confidence must be based on a willful breach of trust and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.47 It must rest on substantial grounds and not on the employer's arbitrariness, whims, caprices or suspicion; otherwise, the employee would remain eternally at the mercy of the employer. 48 Further, in order to constitute a just cause for dismissal, the act complained of must be work-related and show that the employee concerned is unfit to continue working for the employer. 49 Such ground for dismissal has never been intended to afford an occasion for abuse because of its subjective nature. 50 It must also be remembered that in illegal dismissal cases like the one at bench, the burden of proof is upon the employer to show that the employee's termination from service is for a just and valid cause. 51 The

employer's case succeeds or fails on the strength of its evidence and not the weakness of that adduced by the employee, 52 in keeping with the principle that the scales of justice should be tilted in favor of the latter in case of doubt in the evidence presented by them. 53 Often described as more than a mere scintilla, 54 the quantum of proof is substantial evidence which is understood as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other equally reasonable minds might conceivably opine otherwise. 55 Failure of the employer to discharge the foregoing onus would mean that the dismissal is not justified and, therefore, illegal. 56
TADCSE

In this case, there was no other evidence presented to prove fraud in the manner of securing or obtaining the files found in Vallota's computer. In fact, aside from the presence of these files in Vallota's hard drive, there was no other evidence to prove any gross misconduct on his part. There was no proof either that the presence of such files was part of an attempt to defraud his employer or to use the files for a purpose other than that for which they were intended. If anything, the presence of the files reveals some degree of carelessness or neglect in his failure to delete them, but it is an extremely farfetched conclusion bordering on paranoia to state that it is part of a larger conspiracy involving corporate espionage. Moreover, contrary to the respondents' allegations, the MAA files found in Vallota's computer, the prospectus and corporate profile, are not sensitive corporate documents. These are documents routinely made available to the public, and serve as means to inform the public about the company and to disseminate information about the products it sells or the services it provides, in order that potential clients may make a sound and informed decision whether or not to purchase or avail of such goods and services. If anything, the presence of the files would merely merit the development of some suspicion on the part of the employer, but should not amount to a loss of trust and confidence such as to justify the termination of his employment. Such act is not of the same class, degree or gravity as the acts that have been held to be of such character. While Vallota's act or omission may have been done carelessly, it falls short of the standard required for termination of employment. It does not manifest either that the employee concerned is unfit to continue working for his employer. Termination of employment is a drastic measure reserved for the most serious of offenses. When the act complained of is not so grave as to result in a complete loss of trust and confidence, a lower penalty such as censure, warning, or even suspension, would be more circumspect. This is of particular significance here where during Vallota's ten years of service to PGAI, not once was he ever warned or reprimanded for such printing services.
HcDATC

Whether the procedural due process requirements for termination were observed
The petitioners allege that Vallota was denied due process of law, as the records of the case clearly show that his request for an administrative hearing was denied without reason by PGAI. Citing Rule 1, Section 2 (d) of the Implementing Rules of Book VI of the Labor Code, the petitioners argue that a hearing or conference must be conducted to afford the employee an opportunity to respond to the charge, and to present or rebut evidence presented against him. The petitioners are of the position that the unjustified refusal of PGAI to conduct a hearing violated the said provision of the Rules implementing the Labor Code, as well as Vallota's right to defend himself before an impartial investigating body. 57 The Court explained the concept of the opportunity to be heard in the case of Perez v. Philippine Telegraph and Telephone Company: 58
After receiving the first notice apprising him of the charges against him, the employee may submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company records (such as his 201 file and daily

time records) and the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel.He may also ask the employer to provide him copy of records material to his defense. His written explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes 59 or where company rules or practice requires an actual hearing as part of employment pretermination procedure. To this extent, we refine the decisions we have rendered so far on this point of law. This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code reasonably implements the "ample opportunity to be heard" standard under Article 277(b) of the Labor Code without unduly restricting the language of the law or excessively burdening the employer. This not only respects the power vested in the Secretary of Labor and Employment to promulgate rules and regulations that will lay down the guidelines for the implementation of Article 277(b). More importantly, this is faithful to the mandate of Article 4 of the Labor Code that "[a]ll doubts in the implementation and interpretation of the provisions of [the Labor Code], including its implementing rules and regulations shall be resolved in favor of labor." In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases: (a)"ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way. (b)a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it. (c)the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference" requirement in the implementing rules and regulations.
HTcDEa

(Emphasis original. Underscoring supplied.)

60

In this case, the two-notice requirement was complied with. By the petitioners' own admission, PGAI issued to Vallota a written Notice of Charges & Preventive Suspension (Ref. No. AC-05-02) dated November 14, 2005. After an exchange of memoranda, PGAI then informed Vallota of his dismissal in its decision dated December 21, 2005. Given, however, that the petitioners expressly requested a conference or a convening of a grievance committee, following the Court's ruling in the Perez case, which was later cited in the recent case of Lopez v. Alturas Group of Companies, 61 such formal hearing became mandatory. After PGAI failed to affirmatively respond to such request, it follows that the hearing requirement was not complied with and, therefore, Vallota was denied his right to procedural due process. In light of the above discussion, Vallota is entitled to reinstatement and backwages, reckoned from the date he was illegally dismissed until the finality of this decision in accordance with jurisprudence. 62 In view of the strained relations between Vallota and PGAI, however, it is not in the best interest of the parties, nor is it advisable or practical to order reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. It must be stressed, however, that an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement, which are separate and distinct. In Golden Ace Builders v. Tagle, 63 it was written:

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages.
HAcaCS

The normal consequences of respondents' illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to payment of backwages. (emphasis, italics and underscoring supplied)

Velasco v. National Labor Relations Commission, emphasizes:

The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may likewise be awarded if the employee decides not to be reinstated. (Emphasis in the original; italics supplied) Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. 64 (Emphasis, underscoring and comments in the original.)

This has been the consistent ruling in the award of separation pay to illegally dismissed employees in lieu of reinstatement, in addition to the award of backwages. Finally, Vallota, having been compelled to litigate in order to seek redress, is entitled, as he had prayed early on, to the award of attorney's fees equivalent to 10% of the total monetary award.
IATHaS

WHEREFORE, the petition is GRANTED. The September 16, 2008 Decision and November 10, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 102699 areREVERSED and SET ASIDE, and the Decision of the Labor Arbiter dated March 31, 2006 is REINSTATED but MODIFIED to the effect that, in addition to backwages, petitioner Sandy T. Vallota is entitled to be awarded separation pay equivalent to one (1) month salary for every year of service in lieu of reinstatement. SO ORDERED.

Peralta, * Abad, Villarama, Jr. ** and Perlas-Bernabe, JJ., concur.

[G.R. No. 174893. July 11, 2012.] FLORDELIZA MARIA REYES-RAYEL, petitioner, vs. PHILIPPINE LUEN THAI HOLDINGS, CORPORATION/L&T INTERNATIONAL GROUP PHILIPPINES, INC., respondents.

DECISION

DEL CASTILLO, J :
p

The law is fair and just to both labor and management. Thus, while the Constitution accords an employee security of tenure, it abhors oppression to an employer who cannot be compelled to retain the employee whose continued employment would be patently inimical to its interest. This Petition for Review on Certiorari 1 assails the July 18, 2006 Decision 2 of the Court of Appeals (CA) in CAG.R. SP No. 86937, which (1) reserved the National Labor Relations Commission (NLRC) March 23, 2004 Resolution 3 and in effect, its July 21, 2004 4 Resolution as well, (2) declared petitioner Flordeliza Maria ReyesRayel's (petitioner) dismissal from employment valid, and (3) ordered respondents Philippine Luen Thai Holdings, Corp. (PLTHC)/L&T International Group Phils., Inc. (L&T) (respondents) to pay petitioner an amount equivalent to three months salary pursuant to the termination provision of the employment contract.

Factual Antecedents
In February 2000, PLTHC hired petitioner as Corporate Human Resources (CHR) Director for Manufacturing for its subsidiary/affiliate company, L&T. In the employment contract, 5 petitioner was tasked to perform functions in relation to administration, recruitment, benefits, audit/compliance, policy development/structure, project plan, and such other works as may be assigned by her immediate superior, Frank Sauceda (Sauceda), PLTHC's Corporate Director for Human Resources. On September 6, 2001, petitioner received a Prerequisite Notice 6 from Sauceda and the Corporate Legal Counsel of PLTHC, Ma. Lorelie T. Edles (Edles), which reads:
This has reference to your failure to perform in accordance with management directives in various instances, which collectively have resulted in loss of confidence in your capability to promote the interests of the Company.
ICacDE

The most deleterious to the Company has been your pronouncements against the Human Resource Information System (HRIS) or HR2 Program, a corporate initiative that is at the core and is crucial to the enhancement of personnel management for the global operations of the Company. On numerous occasions, in the presence of colleagues and subordinates, you made statements that serve to undermine the Company's efforts at pursuing the HR2 Program. You ought to have realized that when leveled by an officer of your rank, no less than a Director of the Corporate Human Resources Division, such remarks are highly inflammatory and their negative impact is magnified. Just as flagrant is your inability to incite collaboration and harmony within the Corporate Human Resources Division. Instead, colleagues and subordinates complain of your negative attitude towards the Company, its officers and people. You have established notoriety for your temper and have alienated most members of your division. You ought to have realized that when exhibited by an officer of your rank, no less than a Director of the Corporate Human Resources Division, poor interpersonal skills and the lack of moral suasion are extremely damaging. The foregoing have, in fact, manifested in your own unsatisfactory performance rating, and in the departure of promising employees who could not work with you. In view of the above, we afford you the opportunity to submit your written reply to this memorandum within forty-eight (48) hours from its receipt. Failure to so submit shall be construed as waiver of your right to be heard. Consequently, the Company shall immediately decide on this matter. xxx xxx xxx
7

In petitioner's written response 8 dated September 10, 2001, she explained that her alleged failure to perform management directives could be attributed to the lack of effective communication with her superiors due to malfunctioning email system. This caused her to miss certain directives coming from her superiors and

likewise, for her superiors to overlook the reports she was submitting. She denied uttering negative comments about the HR2 Program and instead claimed to have intimated her support for it. She further denied causing disharmony in her division. Petitioner emphasized that in June 2001, she received a relatively good rating of 80.2% in her overall performance appraisal 9 which meant that she displayed dependable work level performance as well as good corporate relationship with her superiors and subordinates. In a Termination Notice 10 dated September 12, 2001, respondents, through Sauceda and Edles, dismissed petitioner from the service for loss of confidence on her ability to promote the interests of the company. This led petitioner to file a Complaint 11 for illegal dismissal, payment of separation pay, 13th month pay, moral and exemplary damages, attorney's fees, and other unpaid company benefits against respondents and its officers, namely, Sauceda, Edles and Willie Tan (Tan), the Executive Vice-President of PLTHC.
DEacIT

Proceedings before the Labor Arbiter

In her Position Paper, 12 petitioner argued that her dismissal was without valid or just cause and was effected without due process. According to her, the causes for her dismissal as stated in the Prerequisite Notice and Notice of Termination are not proper grounds for termination under the Labor Code and the same do not even pertain to any willful violation of the company's code of discipline or any other company policy. Even the alleged loss of confidence was not supported by any evidence of wrongdoing on her part. She likewise claimed that due process was not observed since she was not afforded a hearing, investigation and right to appeal as per company procedure for disciplining employees. Furthermore, respondents were guilty of violating the termination provision under the employment contract which stipulated that employment after probationary period shall be terminated by giving the employee a three-month notice in writing or by paying three months salary in lieu of notice. Petitioner also accused respondents of having acted in bad faith by subjecting her to public humiliation and embarrassment when she was ordered to immediately turn over the company car, vacate her office and remove all her belongings on the same day she received the termination notice, in full view of all the other employees. Respondents, on the other hand, claimed that they have a wide discretion in dismissing petitioner as she was occupying a managerial position. They claimed in their Position Paper 13 that petitioner's inefficiency and lackadaisical attitude in performing her work were just and valid grounds for termination. In the same token, her gross and habitual neglect of duties were enough bases for respondents to lose all their confidence in petitioner's ability to perform her job satisfactorily. Also, petitioner was accorded due process as she was furnished with two notices the first requiring her to explain why she should not be terminated, and the second apprising her of the management's decision to terminate her from employment.
IEHaSc

Further in their Reply 14 to petitioner's position paper, respondents enumerated the various instances which manifested petitioner's poor work attitude and dismal performance, to wit: 1) her failure to perform in accordance with management directives such as when she unreasonably delayed the hiring of a Human Rights and Compliance Manager; failed to establish communication with superiors and co-workers; failed to regularly update Sauceda of the progress of her work; requested for reimbursement of unauthorized expenditures; and, gave orders contrary to policy on the computation of legal and holiday pay; 2) her negative pronouncements against the company's program in the presence of colleagues and subordinates; 3) her inability to incite collaboration and harmony within her department; 4) her negative attitude towards the company, its officers and employees; and 5) her low performance appraisal rating which is unacceptable for a top level personnel like herself. Exchange of emails, affidavits and other documents were presented to provide proof of incidents which gave rise to these allegations. Respondents also asserted that the procedure laid down in the company's code of discipline, which provided for the mandatory requirements of notice, hearing/investigation and right to appeal, only applies to rank and file, supervisory, junior managerial and department managerial employees and not to petitioner, a CHR Director, who plays a key role in these termination proceedings. Further, the three-month notice for termination, as written in the employment contract, is only necessary when there is no just cause for the employee's dismissal and, therefore, not applicable to petitioner. Respondents then disputed

petitioner's money claims and also sought the dropping of Sauceda, Edles and Tan from the complaint for not being real parties in interest. In her rejoinder, 15 petitioner stood firm on her conviction that she was dismissed without valid cause by presenting documentary evidence of her good performance. Further, she insisted that she was dismissed for reasons different from those mentioned in the Prerequisite Notice and Notice of Termination, both of which did not state gross and habitual neglect of duties as a ground. She also construed respondents' act of offering her a settlement or compensation right after her termination as their acknowledgement of the illegal act they committed against her. Moreover, petitioner argued that the company policies on procedural due process apply to all its employees, whether rank and file or managerial. In a Decision 16 dated October 21, 2002, the Labor Arbiter declared petitioner to have been illegally dismissed. It was held that petitioner cannot be charged with undermining the HR2 Program of the company since evidence was presented to show that she was already divested of duties relative to this program. Also, respondents' accusation that petitioner caused disharmony among colleagues and subordinates has no merit as there was ample proof that petitioner was in constant communication with her co-workers through official channels and email. Further, the Labor Arbiter theorized that petitioner's performance rating demonstrated a passing or satisfactory grade and therefore could not be a sufficient and legitimate basis to terminate her for loss of trust and confidence. Moreover, petitioner cannot be dismissed based merely on these vague offenses but only for specific offenses which, under the company's code of conduct, merit the penalty of outright dismissal. The dispositive portion of the Decision reads:
CTcSIA

WHEREFORE, premises considered, judgment is hereby rendered declaring that complainant was illegally dismissed by respondent corporation, and the latter is hereby directed to reinstate complainant to her former position and pay her full backwages and benefits computed below, as follows:
A. Backwages September 12, 2001 to October 21, 2002 1. Salaries and Wages P80,000 x 13.30 months 2. 13th month pay P1,064,000.00 / 12 3. VL P80,000 / 26 x 10 days = 34,102.56 P1,186,769.23 B. Attorney's Fees (10%) 118,676.92 P1,305,446.15 =========== = 88,666.67 = P1,064,000.00

SO ORDERED.

17

Proceedings before the National Labor Relations Commission

Respondents appealed to the NLRC. 18 For her part, petitioner filed before the Labor Arbiter a Motion for Recomputation 19 of the awards. This motion was, however, denied in an Order 20 dated March 17, 2003 on the ground that petitioner could challenge any disposition made only by way of an appeal within the reglementary period and not through a motion.
SEHTIc

In a Decision 21 dated August 20, 2003, the NLRC found merit in respondents' appeal. To the NLRC, respondents have sufficiently established the validity of petitioner's dismissal on the ground of loss of trust and confidence through the various emails, affidavits and other documents attached to the records. Specifically, respondents have proven that petitioner failed to recruit a Human Rights and Compliance Manager, ignored company policies, failed to effectively communicate with her superiors and subordinates, and displayed ineptitude in her work as a director and in her relationship with her co-workers. These showed that there exist enough bases for respondents to lose the trust they had reposed on petitioner, who, as a managerial employee, was expected to possess exemplary work attitude. The NLRC, however, noted that the employment contract specifically provided for payment of three months salary in lieu of the stipulated three-month notice in case of termination, thus:
IN LIGHT OF THE FOREGOING PREMISES, the decision appealed from is hereby MODIFIED, to declare the dismissal of complainant legal but to order respondent[s] to pay complainant the sum of P240,000.00 representing three months salary as expressed in complainant's contract of employment. All other claims are DISMISSED for lack of merit. SO ORDERED.
22

Petitioner filed a Motion for Reconsideration 23 which was granted by the NLRC. In a Resolution 24 dated March 23, 2004, the NLRC concluded that petitioner was not afforded due process as she was not given the opportunity to refute the charges against her through an investigation and an appeal at the company level. Thus, respondents failed to establish the truthfulness of the allegations against her as to support the validity of the dismissal. The NLRC also agreed with petitioner's claim that she was subjected to humiliation on the day of her termination. Consequently, the NLRC declared petitioner's dismissal as illegal and thus reinstated the Labor Arbiter's Decision with modification that respondents be ordered to pay petitioner separation pay in lieu of reinstatement due to the strained relation between the parties. In a Resolution
25

dated July 21, 2004, the NLRC resolved to dismiss respondents' motion for reconsideration.

Proceedings before the Court of Appeals

Respondents thus filed with the CA a Petition for Certiorari with Urgent Motion for Issuance of Temporary Restraining Order (TRO) or Writ of Preliminary Injunction. 26 Petitioner then filed her Comment 27 thereto. Subsequently, the CA denied respondents' prayer for TRO in a Resolution 28 dated February 15, 2005. On July 18, 2006, the CA rendered a Decision 29 finding merit in the petition. The CA found sufficient evidence to support the dismissal of petitioner on the ground of loss of trust and confidence. It regarded petitioner's 80.2% performance rating as below par and hence, declared that she cannot merely rely on the same in holding on to her position as CHR Director, a highly sensitive and demanding post. Also, despite the opportunity to improve, petitioner continued to display poor work attitude, dismal performance and rancorous and abusive behavior towards co-workers as gleaned from the various emails and affidavits of her superiors and other employees. These circumstances, taken together, constitute sufficient cause for respondents to lose confidence in petitioner's ability to continue in her job and to promote the interest of the company.
CaEATI

Moreover, the CA did not subscribe to petitioner's allegation that she was denied due process. On the contrary, said court found that she was adequately notified of the charges against her through the show cause notice which clearly stated the instances that served as sufficient bases for the loss of trust and confidence, to wit: her failure to perform in accordance with management directives and her actions of undermining company

goals and causing disharmony among her co-workers. After finding her written response to be unsatisfactory, petitioner was likewise properly notified of the company's decision to terminate her services. Clearly, respondents observed the requirements of procedural due process. Nevertheless, respondents, in effecting the dismissal, should have paid petitioner her salary for three months as provided for in the employment contract. For its failure to do so, the CA ordered respondents to pay petitioner three months salary in accordance with their contractual undertaking. The dispositive portion of the CA Decision states:
WHEREFORE, the Resolution of the National Labor Relations Commission dated March 23, 2004 is REVERSED. [Respondents] are hereby ordered to pay [petitioner] the amount corresponding to three [months] salary pursuant to the termination provision of the employment contract. SO ORDERED.
30

Petitioner's Motion for Reconsideration

31

was denied in the CA Resolution Issues

32

dated October 4, 2006.

Hence, the present petition raising the following issues:

I.WHETHER . . . THE COURT OF APPEALS COMMITTED AN ERROR WHEN IT REVERSED THE DECISION OF THE NLRC ON CERTIORARI DESPITE THE FACT THAT THE NLRC DID NOT COMMIT GRAVE ABUSE OF DISCRETION WHEN IT AFFIRMED THE FACTUAL FINDINGS OF THE LABOR ARBITER THAT PETITIONER WAS ILLEGALLY DISMISSED FROM HER EMPLOYMENT BY RESPONDENTS. II.WHETHER . . . THE ALLEGED VALID OR JUST CAUSE FOR TERMINATION OF PETITIONER FROM HER EMPLOYMENT WAS PROVEN AND ESTABLISHED BY SUBSTANTIAL EVIDENCE ON RECORD. III.WHETHER . . . RESPONDENTS DEPRIVED PETITIONER OF HER RIGHT TO DUE PROCESS WHEN RESPONDENTS DISMISSED PETITIONER WITHOUT CONDUCTING ANY INVESTIGATION TO DETERMINE THE VERACITY AND TRUTHFULNESS OF THE ALLEGATIONS AGAINST PETITIONER IN VIOLATION OF RESPONDENTS' OWN COMPANY POLICIES. 33
aCIHcD

Petitioner posits that there is no substantial evidence to establish valid grounds for her dismissal since various emails from her superiors illustrating her accomplishments and commendations, as well as her "good" overall performance rating negate loss of trust and confidence. She also insists that she was not afforded due process at the company level. She claims that she was not properly informed of the offenses charged against her due to the vagueness of the terms written in the termination notices and that no investigation and hearing was conducted as required by company policy. Our Ruling The petition is devoid of merit. The Court finds no cogent reason to depart from the ruling of the CA that petitioner was validly dismissed.

There exists a valid ground for petitioner's termination from employment.

Jurisprudence provides that an employer has a distinct prerogative and wider latitude of discretion in dismissing a managerial personnel who performs functions which by their nature require the employer's full trust and confidence. 34 As distinguished from a rank and file personnel, mere existence of a basis for believing that a managerial employee has breached the trust of the employer justifies dismissal. 35 "[L]oss of confidence as a ground for dismissal does not require proof beyond reasonable doubt as the law requires only that there be at least some basis to justify it." 36

Petitioner, in the present case, was L&T's CHR Director for Manufacturing. As such, she was directly responsible for managing her own departmental staff. It is therefore without question that the CHR Director for Manufacturing is a managerial position saddled with great responsibility. Because of this, petitioner must enjoy the full trust and confidence of her superiors. Not only that, she ought to know that she is "bound by more exacting work ethics" 37 and should live up to this high standard of responsibility. However, petitioner delivered dismal performance and displayed poor work attitude which constitute sufficient reasons for an employer to terminate an employee on the ground of loss of trust and confidence. Respondents also impute upon petitioner gross negligence and incompetence which are likewise justifiable grounds for dismissal. 38 The burden of proving that the termination was for a valid cause lies on the employer. 39 Here, respondents were able to overcome this burden as the evidence presented clearly support the validity of petitioner's dismissal. First, records show that petitioner indeed unreasonably failed to effectively communicate with her immediate superior. There was an apparent neglect in her obligation to maintain constant communication with Sauceda in order to ensure that her work is up to par. This is evident from the various emails 40 showing that she failed to update Sauceda on the progress of her important assignments on several occasions. While petitioner explained in her written reply to the Prerequisite Notice that such failure to communicate was due to the company's computer system breakdown, respondents however were able to negate this as they have shown that the computer virus which affected the company's system only damaged some email addresses of certain employees which did not include that of Sauceda's. On the other hand, petitioner failed to present any concrete proof that the said computer virus also damaged Sauceda's email account as to effectively disrupt their regular communication. Moreover, we agree with respondents' stance that petitioner could still reach Sauceda through other means of communication and should not completely rely on the web.
EcHAaS

Second, the affidavits of petitioner's co-workers revealed her negative attitude and unprofessional behavior towards them and the company. In her affidavit, 41 Agnes Suzette Pasustento, L&T's Manager for the Corporate Communications Department, attested to petitioner's "badmouthing" of Sauceda in one of their meetings abroad and of discussing with her about filing a labor case against the company. Also, in the affidavits of Rizza S. Esplana 42 (Sauceda's Executive Assistant), Cynthia Yiguez 43 (Corporate Human Resources Manager of an affiliate of L&T), and Ana Wilma Arreza 44 (Human Resources and Administration Division Manager of an affiliate of L&T), they narrated several instances which demonstrated petitioner's notoriously bad temper. They all described her to have an "irrational" behavior and "superior and condescending" attitude in the workplace. Unfortunately for petitioner, these sworn statements which notably remain uncontroverted and unrefuted, militate against her innocence and strengthen the adverse averments against her. 45 It is well to state that as a CHR Director tasked to efficiently manage the company's human resource team and practically being considered the "face" of the Human Resource, petitioner should exhibit utmost concern for her employer's interest. She should likewise establish not only credibility but also respect from co-workers which can only be attained if she demonstrates maturity and professionalism in the discharge of her duties. She is also expected to act as a role model who displays uprightness both in her own behavior and in her dealings with others. The third and most important is petitioner's display of inefficiency and ineptitude in her job as a CHR Director. In the affidavit 46 of Ornida B. Calma, Chief Accountant of L&T's affiliate company, petitioner, on two occasions, gave wrong information regarding issues on leave and holiday pay which generated confusion among employees in the computation of salaries and wages. Due to the nature of her functions, petitioner is expected to have strong working knowledge of labor laws and regulations to help shed light on issues and questions regarding the same instead of complicating them. Petitioner obviously failed in this respect. No wonder she received a less than par performance in her performance evaluation conducted in June 2001, contrary to her assertion that an 80.2% rating illustrates good and dependable work performance. As can be gleaned in the performance appraisal form, petitioner received deficient marks and low ratings on areas of problem solving and decision making, interpersonal relationships, planning and organization, project management and integrity notwithstanding an overall passing grade. As aptly remarked by the CA, these low marks revealed the "degree of [petitioner's] work handicap" and should have served as a notice for her to

improve on her job. However, she appeared complacent and remained lax in her duties and this naturally resulted to respondents' loss of confidence in her managerial abilities. Taking all these circumstances collectively, the Court is convinced that respondents have sufficient and valid reasons in terminating the services of petitioner as her continued employment would be patently inimical to respondents' interest. An employer "has the right to regulate, according to its discretion and best judgment, all aspects of employment, including work assignment, working methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers." 47 "[S]o long as they are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements," 48 the exercise of this management prerogative must be upheld. Anent petitioner's imputation of bad faith upon respondents, the same deserves no credence. That she was publicly embarrassed when she was coerced by Sauceda and Edles to vacate her office, return the company car and take all her personal belongings on the day she was dismissed, are all mere allegations not substantiated by proof. And since it is hornbook rule that he who alleges must prove, we could not therefore conclude that her termination was tainted with any malice or bad faith without any sufficient basis to substantiate this bare allegation. Moreover, we are more inclined to believe that respondents' offer of settlement immediately after petitioner's termination was more of a generous offer of financial assistance rather than an indication of ill-motive on respondents' part.
DTEcSa

Petitioner was accorded due process.

Petitioner insists that she was not properly apprised of the specific grounds for her termination as to give her a reasonable opportunity to explain. This is because the Prerequisite Notice and Notice of Termination did not mention any valid or authorized cause for dismissal but rather merely contained general allegations and vague terms. We have examined the Prerequisite Notice and contrary to petitioner's assertion, find the same to be free from any ambiguity. The said notice properly advised petitioner to explain through a written response her failure to perform in accordance with management directives, which deficiency resulted in the company's loss of confidence in her capability to promote its interest. As correctly explained by the CA, the notice cited specific incidents from various instances which showed petitioner's "repeated failure to comply with work directives, her inclination to make negative remarks about company goals and her difficult personality," that have collectively contributed to the company's loss of trust and confidence in her. Indeed, these specified acts, in addition to her low performance rating, demonstrated petitioner's neglect of duty and incompetence which support the termination for loss of trust and confidence. Neither can there be any denial of due process due to the absence of a hearing or investigation at the company level. It has been held in a plethora of cases that due process requirement is met when there is simply an opportunity to be heard and to explain one's side even if no hearing is conducted. 49 In the case of Perez v. Philippine Telegraph and Telephone Company, 50 this Court pronounced that an employee may be afforded ample opportunity to be heard by means of any method, verbal or written, whether in a hearing, conference or some other fair, just and reasonable way, in that:
SIDEaA

xxx xxx xxx After receiving the first notice apprising him of the charges against him, the employee may submit a written explanation (which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like relevant company records (such as his 201 file and daily time records) and the sworn statements of his witnesses. For this purpose, he may prepare his explanation personally or with the assistance of a representative or counsel. He may also ask the employer to provide him copy of records material to his defense. His written explanation may also include a request that a formal hearing or conference be held. In such a case, the conduct of a formal

hearing or conference becomes mandatory, just as it is where there exist substantial evidentiary disputes or where company rules or practice requires an actual hearing as part of employment pretermination procedure. To this extent, we refine the decisions we have rendered so far on this point of law. xxx xxx xxx In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases: (a)'ample opportunity to be heard' means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way. (b)a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it. (c)the 'ample opportunity to be heard' standard in the Labor Code prevails over the 'hearing or conference' requirement in the implementing rules and regulations. 51

In this case, petitioner's written response to the Prerequisite Notice provided her with an avenue to explain and defend her side and thus served the purpose of due process. That there was no hearing, investigation or right to appeal, which petitioner opined to be a violation of company policies, is of no moment since the records is bereft of any showing that there is an existing company policy that requires these procedures with respect to the termination of a CHR Director like petitioner or that company practice calls for the same. There was also no request for a formal hearing on the part of petitioner. As she was served with a notice apprising her of the charges against her, and also a subsequent notice informing her of the management's decision to terminate her services after respondents found her written response to the first notice unsatisfactory, petitioner was clearly afforded her right to due process. WHEREFORE, the petition is DENIED. The assailed Decision dated July 18, 2006 of the Court of Appeals in CA-G.R. SP No. 86937 is AFFIRMED.
EaCSHI

SO ORDERED.

Leonardo-de Castro, *Brion,

**

Villarama, Jr. and Perlas-Bernabe, ***JJ., concur.

[G.R. No. 193789. September 19, 2012.] ALEX Q. NARANJO, DONNALYN DE GUZMAN, RONALD V. CRUZ, ROSEMARIE P. PIMENTEL, and ROWENA B. BARDAJE, petitioners, vs. BIOMEDICA HEALTH CARE, INC. and CARINA "KAREN" J. MOTOL, respondents.

DECISION

VELASCO, JR., J :
p

The Case This Petition for Review on Certiorari under Rule 45 seeks to annul the June 25, 2010 1 Decision and September 20, 2010 2 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 108205, finding that petitioners were validly dismissed. The CA Decision overturned the Decision dated November 21, 2008 3 of the National Labor Relations Commission (NLRC) and reinstated the Decision dated March 31, 2008 4 of Labor Arbiter Ligerio V. Ancheta. The Facts Respondent Biomedica Health Care, Inc. (Biomedica) was, during the material period, engaged in the distribution of medical equipment. Respondent Carina "Karen" J. Motol (Motol) was then its President. Petitioners were former employees of Biomedica holding the following positions:
Alex Q. Naranjo (Naranjo) Ronald Allan V. Cruz (Cruz) Rowena B. Bardaje (Bardaje) Donnalyn De Guzman (De Guzman) Rosemarie P. Pimentel (Pimentel) - Liaison Officer - Service Engineer - Administration Clerk - Sales Representative - Accounting Clerk 5

On November 7, 2006, which happened to be Motol's birthday, petitioners with two (2) other employees, Alberto Angeles (Angeles) and Rodolfo Casimiro (Casimiro) were all absent for various personal reasons. De Guzman was allegedly absent due to loose bowel movement, 6 Pimentel for an ophthalmology checkup, 7 Bardaje due to migraine, 8 Cruz for not feeling well, 9 and Naranjo because he had to attend a meeting at his child's school. 10 Notably, these are the same employees who filed a letter-complaint dated October 31, 2006 11 addressed to Director Lourdes M. Transmonte, National Director, National Capital Region-Department of Labor and Employment (DOLE) against Biomedica for lack of salary increases, failure to remit Social Security System and Pag-IBIG contributions, and violation of the minimum wage law, among other grievances. Per available records, the complaint has not been acted upon. Later that day, petitioners reported for work after receiving text messages for them to proceed to Biomedica. They were, however, refused entry and told to start looking for another workplace. 12 The next day, November 8, 2006, petitioners allegedly came in for work but were not allowed to enter the premises. 13 Motol purportedly informed petitioners, using foul language, to just find other employment. Correspondingly, on November 9, 2006, Biomedica issued a notice of preventive suspension and notices to explain within 24 hours (Notices) 14 to petitioners. In the Notices, Biomedica accused the petitioners of having conducted an illegal strike and were accordingly directed to explain why they should not be held guilty of and dismissed for violating the company policy against illegal strikes under Article XI, Category Four, Sections 6, 8, 12, 18 and 25 of the Company Policy. The individual notice reads:
EDHCSI

Subject: Notice of Preventive Suspension & Notice to explain within 24 hours Effective upon receipt hereof, you are placed under preventive suspension for willfully organizing and/or engaging in illegal strike on November 7, 2006. Your said illegal act-in conspiracy with your other co-employees, paralyzed the company operation on that day and resulted to undue damage and

prejudice to the company and is direct violation of Article XI, Category Four Sections 6, 8, 12, 18 & 25 of our Company Policy, which if found guilty, you will be meted a penalty of dismissal. Please explain in writing within 24 hours from receipt hereof why you should not be held guilty of violating the company policy considering further that you committed and timed such act during the birthday of our Company president.

On November 15, 2006, petitioners were required to proceed to the Biomedica office where they were each served their Notices. 15 Only Angeles and Casimiro submitted their written explanation for their absence wherein they alleged that petitioners forced them to go on a "mass leave" while asking Biomedica for forgiveness for their actions. On November 20, 2006, petitioners filed a Complaint with the NLRC for constructive dismissal and nonpayment of salaries, overtime pay, 13th month pay as well as non-remittance of SSS, Pag-IBIG and Philhealth contributions as well as loan payments. The case was docketed as Case No. 00-09597-06. Thereafter, Biomedica served Notices of Termination on petitioners. All dated November 29, 2006, notices uniformly stated:
16

the

We regret to inform you that since you did not submit the written letter of explanation as requested in your preventive suspension notice dated November 9, 2006, under Article XI, Category Four, Sections 6, 8, 12, 18 and 25 you are hereby dismissed from service effective immediately.

On March 31, 2008, the Labor Arbiter issued a Decision,

17

the dispositive portion of which reads:

WHEREFORE, the foregoing premises considered, judgment is hereby rendered dismissing for lack of merit the instant complaint for illegal dismissal. However, the respondents are hereby ORDERED, jointly and severally, to pay the complainants the following: Unpaid salary for the period 08-15 November 2006; Pro-rated 13th month pay for 2006; and Service Incentive Leave for 2006 (except for complainant Bardaje). From the monetary award given to complainant Naranjo, the amount of PhP4,750.00 shall be deducted. From the monetary award given to complainant Pimentel, the amount of PhP4,500.00 shall be deducted. A detailed computation of the monetary awards, as of the date of this Decision, is embodied in Annex "A" which is hereby made an integral part hereof. SO ORDERED.
18

The Labor Arbiter found that, indeed, petitioners engaged in a mass leave akin to a strike. He added that, assuming that petitioners were not aware of the company policies on illegal strikes, such mass leave can sufficiently be deemed as serious misconduct under Art. 282 of the Labor Code. Thus, the Labor Arbiter concluded that petitioners were validly dismissed.

Petitioners appealed the Labor Arbiter's Decision to the NLRC which rendered a modificatory Decision dated November 21, 2008. 19 Unlike the Labor Arbiter, the NLRC found and so declared petitioners to have been illegally dismissed and disposed as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered modifying the assailed Decision dated April 11, 2008 [sic]; 20 (a)DECLARING the Complainants to have been illegally dismissed for lack of just cause; (b)ORDERING Respondents to pay separation pay in lieu of reinstatement and payment of backwages computed on the basis of one (1) month pay for every year of service up to the date of complainants illegal dismissal; (c)ORDERING the respondents to pay complainant De Guzman and Cruz their unpaid commission on the basis of their sale for year 2005-2006; (d)Sustaining the monetary award as stated in the Decision dated April 11, 2008; (e)ORDERING the respondents to pay attorney's fees in the amount of 10% of the total award of monetary claims. All other claims and counterclaims are dismissed for lack of factual and legal basis. SO ORDERED.
21

Thereafter, Biomedica moved but was denied reconsideration per the NLRC's Resolution dated January 30, 2009. 22
HIAEaC

From the Decision and Resolution of the NLRC, Biomedica appealed the case to the CA which rendered the assailed Decision dated June 25, 2010, the dispositive portion of which reads:
WHEREFORE, premises considered, the assailed Decision and Resolution of public respondent National Labor Relations Commission (NLRC) dated November 21, 2008 and January 30, 2009 respectively in NLRC NCR CN 00-11-09597-06 are hereby ANNULLED and SET ASIDE. Decision of the labor arbiter is hereby REINSTATED. SO ORDERED.
23

In its assailed Resolution dated September 20, 2010, the CA denied petitioners' Motion for Reconsideration. The CA ruled that, indeed, petitioners staged a mass leave in violation of company policy. This fact, coupled with their refusal to explain their actions, constituted serious misconduct that would justify their dismissal. Hence, the instant appeal.
The Issues I. The Court of Appeals, with all due respect, gravely erred in concluding facts in the case which were neither rebutted nor proved as to its truthfulness. II.

The Court of Appeals, with all due respect, gravely erred in ruling that grave abuse of discretion was committed by the NLRC and by reason of the same, it upheld the Decision of the Labor Arbiter stating that petitioners were not illegally dismissed. III. The Court of Appeals, with all due respect, gravely erred in ruling that grave abuse of discretion was committed by the NLRC and by reason of the same, it upheld the Decision of the Labor Arbiter in relation to petitioners['] money claims. 24

The Court's Ruling This petition is meritorious. Petitioners were illegally dismissed The fundamental law of the land guarantees security of tenure, thus:
Sec. 3.The State shall afford full protection to labor . . . . . . . They shall be entitled to security of tenure, humane conditions of work and a living wage.
25

...

On the other hand, the Labor Code promotes the right of the worker to security of tenure protecting them against illegal dismissal:
ARTICLE 279.Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. 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.

It bears pointing out that in the dismissal of an employee, the law requires that due process be observed. Such due process requirement is two-fold, procedural and substantive, that is, "the termination of employment must be based on a just or authorized cause of dismissal and the dismissal must be effected after due notice and hearing." 26 In the instant case, petitioners were not afforded both procedural and substantive due process. Petitioners were not afforded procedural due process Art. 277 (b) of the Labor Code contains the procedural due process requirements in the dismissal of an employee:
Art. 277.Miscellaneous Provisions. . . . (b)Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause without prejudice to the requirement of notice under Article 283 of this Code, 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 in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a

complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.

On the other hand, Rule XIII, Book V, Sec. 2 I (a) of the Implementing Rules and Regulations of the Labor Code states:
EAaHTI

SEC. 2.Standards of due process; requirements of notice. In all cases of termination of employment, the following standards of due process shall be substantially observed: I.For termination of employment based on just causes as defined in Article 282 of the Code: (a)A written notice served on the employee specifying the ground or grounds for termination, and giving said employeereasonable opportunity within which to explain his side. (b)A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him. (c)A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. (Emphasis supplied.)

Thus, the Court elaborated in King of Kings Transport, Inc. v. Mamac 27 that a mere general description of the charges against an employee by the employer is insufficient to comply with the above provisions of the law:
. . . Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. xxx xxx xxx . . . We observe from the irregularity reports against respondent for his other offenses that such contained merely a general description of the charges against him. The reports did not even state a company rule or policy that the employee had allegedly violated. Likewise, there is no mention of any of the grounds for termination of employment under Art. 282 of the Labor Code. Thus, KKTI's "standard" charge sheet is not sufficient notice to the employee. (Emphasis supplied.)

In the instant case, the notice specifying the grounds for termination dated November 9, 2006 states:
Effective upon receipt hereof, you are placed under preventive suspension for willfully organizing and/or engaging in illegal strike on November 7, 2006. Your said illegal act-in conspiracy with your other co-employees, paralyzed the company operation on that day and resulted to undue damage and prejudice to the company and is direct violation of Article XI, Category Four Sections 6, 8, 12, 18 & 25 of our Company Policy, which if found guilty, you will be meted a penalty of dismissal. Please explain in writing within 24 hours from receipt hereof why you should not be held guilty of violating the company policy considering further that you committed and timed such act during the birthday of our Company president. 28

Clearly, petitioners were charged with conducting an illegal strike, not a mass leave, without specifying the exact acts that the company considers as constituting an illegal strike or violative of company policies. Such allegation falls short of the requirement in King of Kings Transport, Inc. of "a detailed narration of the facts

and circumstances that will serve as basis for the charge against the employees." A bare mention of an "illegal strike" will not suffice. Further, while Biomedica cites the provisions of the company policy which petitioners purportedly violated, it failed to quote said provisions in the notice so petitioners can be adequately informed of the nature of the charges against them and intelligently file their explanation and defenses to said accusations. The notice is bare of such description of the company policies. Moreover, it is incumbent upon respondent company to show that petitioners were duly informed of said company policies at the time of their employment and were given copies of these policies. No such proof was presented by respondents. There was even no mention at all that such requirement was met. Worse, respondent Biomedica did not even quote or reproduce the company policies referred to in the notice as pointed out by the CA stating:
It must be noted that the company policy which the petitioner was referring to was not quoted or reproduced in the petition, a copy of which is not also appended in the petition, as such we cannot determine the veracity of the existence of said policy. 29

Without a copy of the company policy being presented in the CA or the contents of the pertinent policies being quoted in the pleadings, there is no way by which one can determine whether or not there was, indeed, a violation of said company policies. Moreover, the period of 24 hours allotted to petitioners to answer the notice was severely insufficient and in violation of the implementing rules of the Labor Code. Under the implementing rule of Art. 277, an employee should be given "reasonable opportunity" to file a response to the notice. King of Kings Transport, Inc.elucidates in this wise:
AHcaDC

To clarify, the following should be considered in terminating the services of employees: (1)The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. 30 (Emphasis supplied.)

Following King of Kings Transport, Inc., the notice sent out by Biomedica in an attempt to comply with the first notice of the due process requirements of the law was severely deficient. In addition, Biomedica did not set the charges against petitioners for hearing or conference in accordance with Sec. 2, Book V, Rule XIII of the Implementing Rules and Regulations of the Labor Code and in line with ruling in King of Kings Transport, Inc., where the Court explained:
(2)After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement. 31

While petitioners did not submit any written explanation to the charges, it is incumbent for Biomedica to set the matter for hearing or conference to hear the defenses and receive evidence of the employees. More

importantly, Biomedica is duty-bound to exert efforts, during said hearing or conference, to hammer out a settlement of its differences with petitioners. These prescriptions Biomedica failed to satisfy. Lastly, Biomedica again deviated from the dictated contents of a written notice of termination as laid down in Sec. 2, Book V, Rule XIII of the Implementing Rules that it should embody the facts and circumstances to support the grounds justifying the termination. As amplified in King of Kings Transport, Inc.:
(3)After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment. 32

The November 26, 2006 Notice of Termination issued by Biomedica miserably failed to satisfy the requisite contents of a valid notice of termination, as it simply mentioned the failure of petitioners to submit their respective written explanations without discussing the facts and circumstances to support the alleged violations of Secs. 6, 8, 12, 18 and 25 of Category Four, Art. XI of the alleged company rules. All told, Biomedica made mincemeat of the due process requirements under the Implementing Rules and the King of Kings Transport, Inc. ruling by simply not following any of their dictates, to the extreme prejudice of petitioners. Petitioners were denied substantive due process In any event, petitioners were also not afforded substantive due process, that is, they were illegally dismissed. The just causes for the dismissal of an employee are exclusively found in Art. 282 (a) of the Labor Code, which states:
ARTICLE 282.Termination by employer. An employer may terminate an employment for any of the following causes: (a)Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work.

It was on this ground that the CA upheld the dismissal of petitioners from their employment. Serious misconduct, as a justifying ground for the dismissal of an employee, has been explained in Aliviado v. Procter & Gamble, Phils., Inc.: 33
Misconduct has been defined as improper or wrong conduct; the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, unlawful in character implying wrongful intent and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial and unimportant. To be a just cause for dismissal, such misconduct (a) must be serious; (b) must relate to the performance of the employee's duties; and (c) must show that the employee has become unfit to continue working for the employer.
AacCIT

Clearly, to justify the dismissal of an employee on the ground of serious misconduct, the employer must first establish that the employee is guilty of improper conduct, that the employee violated an existing and valid company rule or regulation, or that the employee is guilty of a wrongdoing. In the instant case, Biomedica failed to even establish that petitioners indeed violated company rules, failing to even present a copy of the rules and to prove that petitioners were made aware of such regulations. In fact, from the records of the case, Biomedica has failed to prove that petitioners are guilty of a wrongdoing that is punishable with termination from employment. Art. 277 (b) of the Labor Code states, "The burden of proving that the termination was for a valid or authorized cause shall rest on the employer." In the instant case, Biomedica failed to overcome such

burden. As will be shown, petitioners' absence on November 7, 2006 cannot be considered a mass leave, much less a strike and, thus, cannot justify their dismissal from employment. Petitioners did not stage a mass leave The accusation is for engaging in a mass leave tantamount to an illegal strike. The term "Mass Leave" has been left undefined by the Labor Code. Plainly, the legislature intended that the term's ordinary sense be used. "Mass" is defined as "participated in, attended by, or affecting a large number of individuals; having a large-scale character." 34 While the term "Leave" is defined as "an authorized absence or vacation from duty or employment usually with pay." 35 Thus, the phrase "mass leave" may refer to a simultaneous availment of authorized leave benefits by a large number of employees in a company. It is undeniable that going on leave or absenting one's self from work for personal reasons when they have leave benefits available is an employee's right. In Davao Integrated Port Stevedoring Services v. Abarquez, 36 the Court acknowledged sick leave benefits as a legitimate economic benefit of an employee, carrying a purpose that is at once legal as it is practical:
Sick leave benefits, like other economic benefits stipulated in the CBA such as maternity leave and vacation leave benefits, among others, are by their nature, intended to be replacements for regular income which otherwise would not be earned because an employee is not working during the period of said leaves. They are non-contributory in nature, in the sense that the employees contribute nothing to the operation of the benefits. By their nature, upon agreement of the parties, they are intended to alleviate the economic condition of the workers.

In addition to sick leave, the company, as a policy or practice or as agreed to in a CBA, grants vacation leave to employees. Lastly, even the Labor Code grants a service incentive leave of 5 days to employees. Moreover, the company or the CBA lays down the procedure in the availment of the vacation leave, sick leave or service incentive leave. In the factual milieu at bar, Biomedica did not submit a copy of the CBA or a company memorandum or circular showing the authorized sick or vacation leaves which petitioners can avail of. Neither is there any document to show the procedure by which such leaves can be enjoyed. Absent such pertinent documentary evidence, the Court can only conclude that the availment of petitioners of their respective leaves on November 7, 2006 was authorized, valid and in accordance with the company or CBA rules on entitlement to and availment of such leaves. The contention of Biomedica that the enjoyment of said leaves is in reality an illegal strike does not hold water in the absence of strong controverting proof to overturn the presumption that "a person is innocent of . . . wrong." 37 Thus, the individual leaves of absence taken by the petitioners are not such absences that can be regarded as an illegal mass action. Moreover, a mass leave involves a large number of people or in this case, workers. Here, the five (5) petitioners were absent on November 7, 2006. The records are bereft of any evidence to establish how many workers are employed in Biomedica. There is no evidence on record that 5 employees constitute a substantial number of employees of Biomedica. And, as earlier stated, it is incumbent upon Biomedica to prove that petitioners were dismissed for just causes, this includes the duty to prove that the leave was large-scale in character and unauthorized. This, Biomedica failed to prove. Having failed to show that there was a mass leave, the Court concludes that there were only individual availment of their leaves by petitioners and they cannot be held guilty of any wrongdoing, much less anything to justify their dismissal from employment. On this ground alone, the petition must be granted.

Petitioners did not go on strike Granting for the sake of argument that the absence of the 5 petitioners on November 7, 2006 is considered a mass leave, still, their actions cannot be considered a strike. Art. 212 (o) of the Labor Code defines a strike as "any temporary stoppage of work by the concerted action of employees as a result of any industrial or labor dispute."
CHDAaS

"Concerted" is defined as "mutually contrived or planned" or "performed in unison." 38 In the case at bar, the 5 petitioners went on leave for various reasons. Petitioners were in different places on November 7, 2006 to attend to their personal needs or affairs. They did not go to the company premises to petition Biomedica for their grievance. To demonstrate their good faith in availing their leaves, petitions reported for work and were at the company premises in the afternoon after they received text messages asking them to do so. This shows that there was NO intent to go on strike. Unfortunately, they were barred from entering the premises and were told to look for new jobs. Surely the absence of petitioners in the morning of November 7, 2006 cannot in any way be construed as a concerted action, as their absences are presumed to be for valid causes, in good faith, and in the exercise of their right to avail themselves of CBA or company benefits. Moreover, Biomedica did not prove that the individual absences can be considered as "temporary stoppage of work." Biomedica's allegation that the mass leave "paralyzed the company operation on that day" has remained unproved. It is erroneous, therefore, to liken the alleged mass leave to an illegal strike much less to terminate petitioners' services for it. Notably, the CA still ruled that petitioners went on strike as evidenced by the explanation letters of Angeles and Casimiro sent by Biomedica. They stated in the letters that they, along with petitioners, agreed to go on leave on the birthday on Motol to stress their demands against the company. These statements do not deserve much weight and credit. Sec. 11 (c) of the 2011 NLRC Rules of Procedure relevantly provides:
SECTION 11.SUBMISSION OF POSITION PAPER AND REPLY. . . . xxx xxx xxx c)The position papers of the parties shall cover only those claims and causes of action stated in the complaint or amended complaint, accompanied by all supporting documents, including the affidavits of witnesses, which shall take the place of their direct testimony , excluding those that may have been amicably settled. (Emphasis supplied.)

In the instant case, the CA accepted as evidence the explanation letters issued by Angeles and Casimiro when these are not notarized. While notarization may seem to be an inconsequential requirement considering that the Labor Arbiter and the NLRC are not strictly bound by technical rules of evidence, however, mere explanation letters submitted to the company that the authors issued even before the case was filed before the NLRC cannot be accepted as direct testimony of the authors. The requirement that the direct testimony can be contained in an affidavit is to ensure that the affiant swore under oath before an administering officer that the statements in the affidavit are true. The affiant knows that he or she can be charged criminally for perjury under solemn affirmation or at least he or she is bound to his or her oath. Thus, the affidavits or sworn statements of these employees should have been presented. At the very least, the workers should have been summoned to testify on such letters. Ergo, these letters cannot be the sole basis for the finding that petitioners conducted a strike against Biomedica and for the termination of their employment. Lastly, the explanation letters cannot overcome the clear and categorical statements made by the petitioners in their verified positions papers. As between the verified statements of petitioners and the unsworn letters of Angeles and Casimiro, clearly, the former must prevail and are entitled to great weight and value.

Finally, it cannot be overemphasized that in case of doubt, a case should be resolved in favor of labor. As aptly stated in Century Canning Corporation v. Ramil: 39
. . . Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal justification for dismissing employees. In case of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of labor laws and the Constitution.

Biomedica has failed to adduce substantial evidence to prove that petitioners' dismissal from their employment was for a just or authorized cause. The conclusion is inescapable that petitioners were illegally dismissed. Dismissal is not the proper penalty But setting aside from the nonce the facts established above, the most pivotal argument against the dismissal of petitioners is that the penalty of dismissal from employment cannot be imposed even if we assume that petitioners went on an illegal strike. It has not been shown that petitioners are officers of the Union. On this issue, the NLRC correctly cited Gold City Integrated Port Service, Inc. v. NLRC, 40 wherein We ruled that: "An ordinary striking worker cannot be terminated for mere participation in an illegal strike. There must be proof that he committed illegal acts during a strike." In the instant case, Biomedica has not alleged, let alone, proved the commission by petitioners of any illegal act during the alleged mass leave. There being none, the mere fact that petitioners conducted an illegal strike cannot be a legal basis for their dismissal.
DTISaH

Petitioners are entitled to separation pay in lieu of reinstatement, backwages and nominal damages Given the illegality of their dismissal, petitioners are entitled to reinstatement and backwages as provided in Art. 279 of the Labor Code, which states:
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.

Thus, the Court ruled in Golden Ace Builders v. Talde,

41

Philippines:

citing Macasero v. Southern Industrial Gases

42

Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages. The normal consequences of respondents' illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to payment of backwages. (Emphasis supplied.)

Petitioners were absent from work on Motol's birthday. Respondent Motol, in the course of denying entry to them on November 8, 2006, uttered harsh, degrading and bad words. Petitioners were terminated in swift fashion and in gross violation of their right to due process revealing that they are no longer wanted in the company. The convergence of these facts coupled with the filing by petitioners of their complaint with the

DOLE shows a relationship governed by antipathy and antagonism as to justify the award of separation pay in lieu of reinstatement. Thus, in addition to backwages, owing to the strained relations between the parties, separation pay in lieu of reinstatement would be proper. In Golden Ace Builders, We explained why:
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence substantial evidence to show that the relationship between the employer and the employee is indeed strained as a necessary consequence of the judicial controversy. 43

And in line with prevailing jurisprudence, 44 petitioners are entitled to nominal damages in the amount of PhP30,000 each for Biomedica's violation of procedural due process. WHEREFORE, the Decision dated June 25, 2010 and the Resolution dated September 20, 2010 of the CA in CA-G.R. SP No. 108205 are hereby REVERSED and SET ASIDE. The Decision dated November 21, 2008 of the NLRC in NLRC LAC No. 08-002836-08 is hereby REINSTATED with MODIFICATION. As modified, the November 21, 2008 NLRC Decision shall read, as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered modifying the assailed Decision [of the Labor Arbiter] dated [March 31, 2008]; (a)DECLARING the Complainants to have been illegally dismissed for lack of just cause; (b)ORDERING Respondents jointly and solidarily to pay Complainants separation pay in lieu of reinstatement computed on the basis of one (1) month pay for every year of service from date of employment up to November 29, 2006 (the date of complainants illegal dismissal); (c)ORDERING Respondents jointly and solidarily to pay Complainants backwages from November 29, 2006 up to the finality of this Decision; (d)ORDERING the Respondents jointly and solidarily to pay Complainants the following: 1.Unpaid salary for the period 08-15 November 2006; 2.Pro-rated 13th month pay for 2006; 3.Service Incentive Leave for 2006 (except for complainant Bardaje); 4.Unpaid commissions based on their sales for the years 2005 and 2006; and 5.Nominal damages in the amount of PhP30,000 each. (e)ORDERING the Respondents jointly and solidarily to pay Complainants attorney's fees in the amount of 10% off the total award of monetary claims. All other claims and counterclaims are dismissed for lack of factual and legal basis.
SECcAI

The NLRC is ordered to recompute the monetary awards due to petitioners based on the aforelisted dispositions deducting from the awards to Naranjo and Pimentel their cash advances of PhP4,750.00 and PhP4,500.00, respectively.

SO ORDERED.

No costs. SO ORDERED.

Peralta, Abad, Perez * and Mendoza, JJ., concur.

[G.R. No. 143384. February 4, 2005.] DR. ERNESTO I. MAQUILING, petitioner, vs. PHILIPPINE TUBERCULOSIS SOCIETY, INC., respondent.

DECISION

TINGA, J :
p

Before this Court is a Petition for Review on Certiorari of the Decision 1 of the Court of Appeals dated 28 March 2000 and its Resolution dated 22 May 2000, which reversed the decision of the National Labor Relations Commission (NLRC) dated 15 December 1997 2 and that of the Labor Arbiter dated 16 September 1993, 3 which both found the dismissal from service of Dr. Ernesto I. Maquiling (Dr. Maquiling) illegal. The factual antecedents are as follows: On 16 April 1968, petitioner Dr. Maquiling was employed by respondent Philippine Tuberculosis Society, Inc. (PTS). On 8 June 1991, Dr. Maquiling, then earning a monthly salary of thirteen thousand nine hundred pesos (P13,900.00) was dismissed from service as Deputy Executive Director after serving PTS for twenty-three (23) years. Dr. Maquiling filed a complaint against PTS for reinstatement or, in the alternative, for payment of full backwages and separation pay in accordance withArticle 279 of the Labor Code, as well as moral damages in the amount of five hundred thousand pesos (P500,000.00) and exemplary damages in the amount of one hundred thousand pesos (P100,000.00). 4 The complaint was assigned to Labor Arbiter Salimathar V. Nambi. After PTS failed to appear despite having requested for several postponements, Dr. Maquiling was allowed to present his evidence ex parte consisting of his testimony on direct examination and documentary proof. On 31 August 1992, Dr. Maquiling moved for submission of the case for resolution, which motion was granted. 5 The records disclose that Dr. Maquiling received a memo dated 2 April 1991 from the PTS OIC-Executive Director Andres B. Soriano (Soriano) directing him to submit within five (5) days from notice a written explanation on the following matters:
ADaSEH

1.The delayed GSIS remittances; 2.The reported deficit of P7.3 million appearing in our financial statement for 1990; 3.The expenses you approved and incurred in connection with the Dale Carnegie and Silva Mind Control Seminar;

4.The P3.7 million miscellaneous expenses appearing in our financial statement; and 5.Your reasons for renewing our service contract with Ultra.
6

Dr. Maquiling submitted his explanatory letter dated 11 April 1991 inviting attention to PTS Finance Manager's Report. On 15 April 1991, Dr. Maquiling had a thirty (30) minute conversation with Soriano at the latter's instance. No further related proceedings were undertaken before Dr. Maquiling received a letter-notice dated 8 June 1991 informing him that the PTS Executive Committee approved Soriano's findings and recommendations calling for his dismissal effective immediately, without any retirement benefits. 7 Despite Soriano's instruction for him not to report for work, Dr. Maquiling manifested, through a letter to the OIC-Executive Director, his intention to continue performing his duties as Deputy Executive Director. Dr. Maquiling continued to report for work at the PTS daily. In the meantime, he elevated his case to the PTS Board of Directors through a memorandum dated 28 June 1991 which sought to point out the illegality of his dismissal from office and prayed for a resolution upholding his position. 8 On 17 July 1991, Dr. Maquiling, protesting non-payment of his salary for the period of 15 July 1991, wrote the OIC Finance Department and formally demanded the release of his earned wages. PTS reacted through Soriano by informing Dr. Maquiling that there are no wages forthcoming inasmuch as the latter's service had been terminated for cause since 7 June 1991. 9 In an effort to exhaust the remedies within PTS, Dr. Maquiling wrote the President of PTS a letter dated 5 August 1991 saying, among others: my counsels agree with me that if your Board does not act on my 28 June 1991 Memorandum within fifteen (15) days from receipt of this letter, such omission will mean a confirmation of Soriano's notice of my alleged termination from the service a dismissal which is referable to the proper outside forum." 10 Receiving no response from the PTS, Dr. Maquiling stopped reporting for work at the PTS in the last week of September 1991. Then, on 10 October 1991, Dr. Maquiling filed his complaint with the Labor Arbiter. After considering the evidence adduced by the parties, the Labor Arbiter rendered a decision ordering PTS to immediately reinstate Dr. Maquiling to the position of Deputy Executive Director or its equivalent in rank and pay, without loss of seniority rights inclusive of all benefits attached to said position at the time of his dismissal, and to pay Dr. Maquiling backwages computed from the time of his dismissal on 7 June 1991 until his actual reinstatement but not to exceed three (3) years at the rate of thirteen thousand nine hundred pesos (P13,900.00) per month or three hundred seventy-eight thousand seven hundred seventy-five pesos (P378,775.00). 11 He likewise ordered PTS to pay Dr. Maquiling five hundred thousand pesos (P500,000.00) as moral damages and one hundred thousand pesos (P100,000.00) as exemplary damages and to pay attorney's fees equivalent to ten (10%) percent of the total amount due the complainant. Upon appeal by PTS to the NLRC, the Commission upheld the decision of the labor arbiter and dismissed the appeal. 12 However, PTS appealed the decision to the Court of Appeals which reversed the decisions of the NLRC and Labor Arbiter by ordering the dismissal of the complaint and declaring that his dismissal from employment as legal and valid. It, however, ordered PTS to pay Dr. Maquiling the amount of ten thousand pesos (P10,000.00) as damages or indemnity for violation of his right to procedural due process and separation pay in the amount of one hundred fifty-nine thousand eight hundred fifty pesos (P159,850.00) in the interest of social justice. 13 Hence, this petition for review on certiorari. Dr. Maquiling argues that the appellate court should have applied the case of Serrano v. NLRC 14 which was decided on 27 January 2000 since the assailed decision of the appellate court was promulgated subsequently on 28 March 2000. He avers that PTS must pay him full backwages from the time his employment was terminated on 7 June 1991 up to the time the decision becomes final. 15 In addition to backwages, he also prays that he be awarded separation pay for every year of service, at the rate of one month pay for every year

of service, 16 as well as thirteenth month pay, sick leave and vacation leave and all monetary benefits including moral damages and attorney's fees. 17 Further, Dr. Maquiling points out that the appellate court gravely abused its discretion by changing the rules on pleadings before the administrative body since it considered the position paper of PTS though unverified. 18 PTS should have considered the twenty-three (23) years of service of petitioner19 and should not have ruled that the dismissal from service of Dr. Maquiling was for just cause. 20 He further contends that the appellate court did not show any degree of clarity of causal connection between Dr. Maquiling's acts and the supposed damage to PTS. 21 Moreover, Dr. Maquiling raised in his petition that the appellate court, which agreed with the findings of the labor arbiter and the NLRC that the twin requirements of notice and hearing are wanting, erred in adopting an abandoned doctrine by merely imposing a fine of ten thousand pesos (P10,000.00) against PTS and in disregarding the present doctrine on termination of employment and monetary benefits accorded by law to Dr. Maquiling, and in concluding with grave abuse of discretion that the dismissal of Dr. Maquiling, who had served PTS for twenty-three (23) years, was for just cause. 22 In its Comment 23 dated 9 October 2000, PTS contends that the dismissal of Dr. Maquiling was based on a just cause, supported as it was by the evidence, law and jurisprudence. The termination of Dr. Maquiling's employment was allegedly due to loss of trust and confidence. 24 It avers that for gross mismanagement, for acts inimical to the interest of PTS, and also for reason that PTS has lost its trust and confidence in him, PTS terminated his services without any retirement benefit. 25 PTS, however, alleges that it complied with the two-notice rule required for termination of employment. According to PTS, the first notice was sent by Soriano to Dr. Maquiling by means of confidential memorandum 26 dated 2 April 1991 requiring him to explain in writing, within five days from notice, the matters stated therein. Dr. Maquiling honored the first notice by submitting on 11 April 1991 a written reply to Soriano. The second notice which allegedly informed Dr. Maquiling of the decision to terminate his employment, stating reasons therefor, was sent to him by Soriano on 8 June 1991. 27 A review of the factual milieu of the instant labor controversy and the jurisprudence on the subject leads us to modify the assailed decision of the appellate court. We agree with the appellate court that Dr. Maquiling was dismissed from employment for just cause consisting of loss of trust and confidence. The records reveal that he was Deputy Executive Director of PTS, a responsible position, at the time of his dismissal. The following defines the extent of the power and responsibility attached to the position he occupied:
1.Directs, supervises, coordinates, and controls the general administrative, finance and regional operations of PTS. 2.Formulates and executes plans and policies for operations activities under his charge. 3.Signs corresponden[ce] and other documents relative to operational activities under his charge, within specified limits.

4.Authorizes the hiring, promotion, transfer and termination of all PTS personnel below the supervisory level in accordance with the policies prescribed by the Board of Directors.
CaDEAT

5.Reports regularly to the Executive Director on the individual operations and activities of departments and branches under his charge. 6.Executes and administers directives issued by the Executive Director.

7.Assists the Executive Director in the preparation of the [annual] budget and operational plan of the Society. 8.Prepares and submits reports required by the Board of Directors, government entities and other interested parties. 9.Performs related functions as may be assigned by the Executive Director.
28

PTS imputes the delayed GSIS remittances to Dr. Maquiling's failure to follow his duties as prescribed by law. The records disclose that Dr. Maquiling was aware of the problem but he failed to give priority thereto. This non-remittance was partially brought about by a Guideline on the Releasing of Checks he issued, which placed the GSIS account as a last priority. 29 The security of workers' compensation was undermined by his act which patently transgressed the constitutional injunction that workers should be afforded full protection in their employment. Subsumed in said mandate is the protection of the right to workmen's compensation to which a lowly worker may be entitled. To rule otherwise would frustrate the policy that the State shall promote and develop a tax-exempt employees' compensation program whereby employees and their dependents, in the event of work-connected disability or death, may promptly secure adequate income benefit, and medical or related benefits. 30 On the other hand, we are inclined to attribute the P7.3 million deficit in PTS' 1990 financial statements to Dr. Maquiling's failure to consider the realities of the financial condition of the institution. Dr. Maquiling even aggravated such omission by insisting on the salary increase of both managerial and non-managerial personnel despite the financial conundrum that puzzles the future fiscal stability of PTS. The records show that he made representations during the Board meeting that sufficient funds existed to meet the salary upgrading despite the presence of financial strains. 31 Such a course of action falls short of his responsibility to safeguard the financial stability of the institution he leads. Said responsibility cannot be outweighed by any magnanimous motive for the institutional existence will be rendered illusory if the very foundation of its financial stability will be ignored. We are solicitous of the primordial goal sought to be achieved by Dr. Maquiling but the wisdom of the timing is questionable. The renewal of the Ultra Clean contract with the PTS for janitorial services also evinces a bad managerial move on the part of Dr. Maquiling. By reason of the contract, PTS was dragged into a labor controversy for illegal dismissal which eventually made it liable for backwages and differentials to employees of Ultra Clean. 32Worse is the renewal of the said contract despite the unsatisfactory performance of Ultra Clean without the approval of the Board or the Executive Committee or any subsequent request for its ratification. The unnecessary expending of funds in the administration and operation of PTS is evidently an act of mismanagement which could bring PTS to severe financial distress. These acts if committed by a responsible officer wither the trust and confidence lodged in him by his superior and may serve as a valid and sufficient basis to impose disciplinary sanctions to an erring employee which may even result to dismissal from employment if the gravity of the offense warrants as in the instant case. Recent decisions of this Court distinguish the treatment of managerial from that of rank-and-file personnel insofar as the application of the doctrine of loss of trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question and that mere uncorroborated assertions and accusations by the employer will not suffice. 33 But as regards a managerial employee, mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. 34 After careful perusal of the factual backdrop of the case, we rule that Dr. Maquiling was indeed validly dismissed for just cause. However, PTS was remiss in its duty to observe procedural due process in effecting the dismissal of Dr. Maquiling.

Under this second requirement, two notices must be sent to the employee who is the subject of an investigation for acts which may warrant his eventual dismissal from employment. The notices required before an employee may be validly dismissed are: (a) a written notice served on the employee specifying the grounds for termination and giving the employee reasonable opportunity to explain his/her side; (b) a hearing or conference wherein the employee, with the assistance of counsel if so desired, is given opportunity to respond to the charge, present his evidence or rebut evidence presented against him/her; and (c) written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify termination. 35 The twin requirements of notice and hearing constitute elements of due process in cases of employee's 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. 36 Clearly, the first notice must inform outright the employee that an investigation will be conducted on the charges particularized therein which, if proven, will result to his dismissal. Such notice must not only contain a plain statement of the charges of malfeasance or misfeasance but must categorically state the effect on his employment if the charges are proven to be true. This notice will afford the employee an opportunity to avail all defenses and exhaust all remedies to refute the allegations hurled against him for what is at stake is his very life and limb his employment. Otherwise, the employee may just disregard the notice as a warning without any disastrous consequence to be anticipated. Absent such statement, the first notice falls short of the requirement of due process. One's work is everything, thus, it is not too exacting to impose this strict requirement on the part of the employer before the dismissal process be validly effected. This is in consonance with the rule that all doubts in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, shall be resolved in favor of labor. 37 It is worthy to note that the Labor Arbiter, the NLRC and the Court of Appeals all agree in concluding that procedural due process in the instant case was not observed. As revealed by the evidence on record, a confidential memorandum FN dated 2 April 1991 was sent to Dr. Maquiling by Soriano requiring him to explain in writing the matters contained therein. The text of the memorandum reads as follows:
cHEATI

02 April 1991 CONFIDENTIAL MEMORANDUM FOR: DR. ERNESTO I. MAQUILING Pursuant to the directive of the Board of Directors issued in its meeting on March 25, 1991, you are hereby instructed to report and explain in writing to this office, within five (5) days from notice hereof, on the following matters: 1.The delayed GSIS remittances; 2.The reported deficit of P7.3 million appearing in our financial statement for 1990; 3.The expenses you approved and incurred in connection with the Dale Carnegie and Silva Mind Control Seminar; 4.The P3.7 million miscellaneous expenses appearing in our financial statement; and 5.Your reasons for renewing our service contract with Ultra. For immediate compliance.

(SGD.) ATTY. ANDRES B. SORIANO OIC-Executive Director

On 11 April 1991, Dr. Maquiling submitted his written reply. The second notice which informs Dr. Maquiling of the decision to terminate his employment was sent to him on 8 June 1991. It must be noted that the first notice dated 2 April 1991 is a mere instruction to explain the matters enumerated therein. It did not apprise Dr. Maquiling of any investigation to be conducted or being conducted that will warrant his dismissal from service if found guilty of charges specified therein. Thus, such notice fell short of the requirement of law that an employee must be afforded the benefit of the two-notice rule in dismissal cases that will allow the employee to substantiate the charges specified in the notice with full knowledge at the outset that the investigation to be conducted may result in his dismissal or suspension from employment. Dr. Maquiling invokes our ruling in Serrano as basis for appropriate relief. The Serrano ruling awarded full backwages and separation pay to the employee who was dismissed for just cause but without the observance of the procedural due process requirement. However, in Agabon v. NLRC, 38 this Court modified the Serranoruling and awarded nominal damages in the amount of thirty thousand pesos (P30,000.00) including holiday pay, service incentive leave and thirteenth month pay to the petitioners in the said case. This case clarified the criticisms and answered the questions created by the Serrano ruling. The Agabon doctrine enunciates the rule that if the dismissal is for just cause but statutory due process was not observed, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be held liable for non-compliance with the procedural requirements of due process. 39

Where the dismissal is for just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights. The indemnity to be imposed should be stiffer to discourage the abhorrent practice of "dismiss now, pay later," which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. 40 The violation of the petitioners' right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. 41 Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at thirty thousand pesos (P30,000.00). We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this right granted to employees under the Labor Code and its Implementing Rules. 42 It may be also argued that actual or compensatory damages may be recovered in employment termination cases. Actual or compensatory damages are not available as a matter of right to an employee dismissed for just cause but denied statutory due process. The award must be based on clear factual and legal bases and correspond to such pecuniary loss suffered by the employee as duly proven. Evidently, there is less degree of discretion to award actual or compensatory damages.
aDSHIC

In the instant case, the records fail to show that Dr. Maquiling suffered pecuniary loss by reason of his dismissal from service. It must be noted that he was dismissed for just cause but the procedural aspect of dismissal was not complied with. Such non-compliance did not automatically result to any pecuniary loss. Any such loss must be proved by Dr. Maquiling to be entitled to an award for actual damages. Besides, the two-

notice rule was not at all disregarded although it was observed defectively by PTS. Thus, actual damages may not be awarded. Neither will an award for moral damages nor exemplary damages prosper. The instant controversy fails to show that the dismissal of the employee was attended by bad faith, fraud, or was done in a manner contrary to morals, good customs or public policy, or that the employer committed an act oppressive to labor to warrant an award for moral damages. Exemplary damages may avail if the dismissal was effected in a wanton, oppressive or malevolent manner to warrant an award for exemplary damages. Hence, Dr. Maquiling shall only be entitled to an award for nominal damages. On the other hand, Dr. Maquiling argues that PTS should have considered his twenty-three (23) years of service in the institution before he was dismissed from service. Such ratiocination is not quite convincing. The jurisprudential law 43 is not bereft of cases which disregarded length of service of an employee for breach of trust and confidence. Although length of service may be considered in reaching a decision in employment termination cases, the same alone is not controlling for other considerations must be taken into account such as the nature of the position he was holding, performance of an employee, quality of work, character and work attitude. Worth stressing is the fact that Dr. Maquiling is holding a managerial position being a Deputy Executive Director. Hence, trust and confidence is an essential factor in determining his eligibility to continue holding his position. The crucial nature of his position in PTS is exacting as to such qualification which cannot be outweighed by any length of service he earned. WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals dated 28 March 2000 is hereby MODIFIED pursuant to the Agabon ruling as the latest jurisprudential rule on the matter. For the dismissal from employment of Dr. Maquiling with a just cause but without observing procedural due process, PTS is ORDERED to pay Dr. Maquiling nominal damages in the amount of thirty thousand pesos (P30,000.00). No costs.
aDcEIH

SO ORDERED.

Puno, Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.

[G.R. No. 165282. October 5, 2005.] ELECTRO SYSTEM INDUSTRIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NOEL BALTAZAR A. SUMACULUB, respondents.

DECISION

YNARES-SANTIAGO, J :
p

This petition for review on certiorari assails the May 12, 2004 Decision 1 of the Court of Appeals in CA-G.R. SP No. 69572, declaring that petitioner Electro System Industries Corporation did not comply with the statutory due process requirements in terminating the employment of private respondent Noel Baltazar A. Sumaculub. Likewise questioned is the September 13, 2004 Resolution 2 denying petitioner's motion for reconsideration. The antecedent facts show that on March 17, 1994, private respondent was employed as driver of petitioner with a monthly salary of P5,700.00. During said employment, he figured in three vehicular accidents by reason of negligence. Specifically, while private respondent was driving a company car on April 18, 1997, he hit a

motorcross bike driven by Gilbert Pea; on December 13, 1997, he bumped the rear portion of a Toyota Corolla car driven by Amelia Flores; and on August 7, 1998, he crashed into a Kalayaan Flyover post in Makati, Metro Manila. Petitioner thus incurred expenses in settling the damages caused by said mishaps. On August 10, 1998, private respondent was dismissed by petitioner for repeated violation of company rules against reckless driving of company vehicles. 3 The former filed an illegal termination case before the Labor Arbiter which declared that the dismissal of private respondent is invalid. 4 Said decision was affirmed by the National Labor Relations Commission (NLRC). 5 On appeal, the Court of Appeals ruled that the termination of private respondent is valid because there exists a just cause to dismiss him from employment. However, it declared that petitioner failed to comply with the requisite statutory due process in terminating private respondent. Hence, petitioner was ordered to pay backwages from the date of the dismissal until finality of the decision. The decretal portion thereof, reads:
WHEREFORE, the petition is partly GRANTED, declaring that there is just cause for the private respondent's dismissal. However, since such dismissal is rendered ineffectual, the private respondent is entitled to, and petitioner is DIRECTED to pay him, backwages from the time of the latter's termination until the finality of this decision.
ATcaID

Let this case be REMANDED to the Labor Arbiter for computation of the backwages. SO ORDERED.
6

Petitioner's motion for reconsideration was denied in a resolution dated September 13, 2004. Hence, the instant petition.

The issue to be resolved is whether petitioner observed the twin notice rule in dismissing private respondent. The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d), of the Omnibus Rules Implementing the Labor Code:
(d)In all cases of termination of employment, the following standards of due process shall be substantially observed: For termination of employment based on just causes as defined in Article 282 of the Labor Code: (i)A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. (ii)A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him. (iii)A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

In dismissing an employee, the employer has the burden of proving that the former worker has been served two notices: (1) one to apprise him of the particular acts or omissions for which his dismissal is sought, and (2) the other to inform him of his employer's decision to dismiss him. 8 In Tan v. NLRC, 9 it was held that the first notice must state that dismissal is sought for the act or omission charged against the employee, otherwise, the notice cannot be considered sufficient compliance with the rules.
SICDAa

Also, in Maquiling v. Philippine Tuberculosis Society, Inc., 10 it was stressed that the first notice must inform outright the employee that an investigation will be conducted on the charges particularized therein which, if proven, will result to his dismissal. Such notice must not only contain a plain statement of the charges of malfeasance or misfeasance but must categorically state the effect on his employment if the charges are proven to be true. The rationale for this rule was explained by the Court as follows:
This notice will afford the employee an opportunity to avail all defenses and exhaust all remedies to refute the allegations hurled against him for what is at stake is his very life and limb his employment. Otherwise, the employee may just disregard the notice as a warning without any disastrous consequence to be anticipated. Absent such statement, the first notice falls short of the requirement of due process. One's work is everything, thus, it is not too exacting to impose this strict requirement on the part of the employer before the dismissal process be validly effected. This is in consonance with the rule that all doubts in the implementation and interpretation of the provisions of the Labor Code, including its implementing rules and regulations, shall be resolved in favor of labor.

In the instant case, the first notice issued by petitioner fell short of the requirement of the law because it merely referred to the section of the company rule allegedly violated by private respondent. The notice failed to specify the penalty for the charges which is dismissal, and to indicate the precise act or omission which constituted as the ground for which dismissal is sought. The full text of the notice reads:
You are hereby notified to appear for an administrative investigation scheduled on 10 August 1998 due to violation of Rule 34 of Company Rules & Regulation that occurred on 07 August 1998. This is the third time that you have committed offense of similar nature. You are enjoined to attend this meeting.
11

There is no showing that private respondent was actually served with the required two notices. The first notice did not bear the signature of private respondent. In the second notice, there was a notation that private respondent refused to sign. This notation is not sufficient proof that petitioner attempted to serve the second notice to private respondent. In sum, other than petitioner's bare assertions that private respondent was furnished with copies of the notices and that he attended the hearing on the charges, it presented no other proof to establish the same. Mere allegation is not equivalent to proof or evidence. 12 Clearly therefore, petitioner was not able to discharge the burden of proving compliance with the employee's right to statutory due process in termination proceedings. However, petitioner should not be made to pay private respondent's backwages. In Agabon v. National Labor Relations Commission, 13 it was held that where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for violation of his statutory rights. Thus, applying Agabon, the Court, in Central Luzon Conference Corporation of Seventh Day Adventist Church, Inc. v. Court of Appeals, 14 modified the decision of the Court of Appeals by awarding P30,000.00 to an employee who was dismissed for just cause but was not afforded due process. As explained by the Court:
The violation of the petitioners' right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances ( Savellano v. Northwest Airlines, G.R. No. 151783, 8 July 2003, 405 SCRA 416). Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules.
cCSEaA

Conformably, the award of backwages in the present case should be deleted. Instead, private respondent should be indemnified in the amount of P30,000.00 as nominal damages which we consider as appropriate under the circumstances. WHEREFORE, the May 12, 2004 Decision and the September 13, 2004 Resolution of the Court of Appeals in CA-G.R. SP No. 69572, which declared that petitioner Electro System Industries Corporation did not comply with the statutory due process requirements in terminating the employment of private respondent Noel Baltazar A. Sumaculub, are AFFIRMED with the MODIFICATION that the award of backwages is deleted. Petitioner is ordered to pay private respondent Noel Baltazar A. Sumaculub nominal damages in the amount of P30,000.00. No costs. SO ORDERED.

Davide, Jr., C.J., Quisumbing, Carpio and Azcuna, JJ., concur.