However, petitioner's dismissal, albeit for a valid and just cause, failed to adhere to the two-notice rule which requires a previous notice to the employee of the act or omission for which his dismissal is sought requiring him to explain his side within a reasonable period and a subsequent notice to the employee of the employer's decision to dismiss him. Without the required notice, the dismissal even for just cause under Article 282 of the Labor Code, is considered ineffectual, and, consistent with the doctrine laid down in Serrano v. NLRC, petitioners could not be considered terminated from employment until final determination of the legality of their dismissal for cause. They should then be paid their salaries for the period when they were not considered effectively terminated.

The sanction for the non-compliance of respondent Amadeo Fishing Corporation with the two-notice rule is the payment of full backwages, including allowances and other benefits, to the employee computed from the time period of dismissal up to the time of the final determination of this case. Thus, the NLRC committed error in awarding P10,000.00 to each of the dismissed employees, herein petitioners, instead of the full backwages prayed for. [25]

The petitioners filed a motion for reconsideration of the said ruling, which the appellate court denied, hence, this petition.

The petitioners claim that '

THE COURT OF APPEALS ERRED IN FINDING THAT THE TWO-NOTICE RULE REQUIRED BEFORE AN EMPLOYEE'S DISMISSAL ON VALID AND LEGAL GROUNDS COULD BE EFFECTUAL, WAS NOT OBSERVED BY PETITIONERS. [26]

The petitioners maintain that contrary to the ruling of the CA, they adhered to the two-notice rule in dismissing the private respondents. As found by the Labor Arbiter, petitioner Ymbong as Personnel Manager issued a Memorandum dated March 10, 1998 for the private respondents to explain in writing, or in person, why no drastic disciplinary action should be meted against them for such a grave offense as reported by the guard. They insist
that an immediate confrontation between the parties took place, with the respondents explaining that the 'fish were their fish allowance, and later on stating that the fish was personally caught by them (Cobit or Bira-bira). Moreover, the private respondents refused to receive the memorandum. According to the petitioners, these opportunities given to the private respondents were enough to explain their side; after all, the essence of due process in administrative proceedings is simply an opportunity to explain one's side or an opportunity to seek reconsideration of the action or ruling complained of. Moreover, with the private respondents' stern defiance of company rules and continued refusal to receive the Memorandum of March 10, 1998, no amount of assistance the petitioner company offered would be acceptable to them. They assert that petitioner Ymbong even suggested that they could secure the help of a literate friend who could explain to them the implications of the memorandum, but the private respondents insisted in refusing to receive the same. Considering further that respondent Naces was twice cited for drunkenness immediately prior to the vessel's departure, and once for leaving the vessel without proper permission, petitioners had no other recourse but to terminate their services. In so doing, the security of the business and the safety of the petitioners' fishing boat and crew members in the open seas were safeguarded and a possible take-over of the boats in the high seas was averted.

The private respondents, on the other hand, assert that the CA correctly held that they were denied due process. They refused to accept the Memorandum dated March 10, 1998 issued by respondent Ymbong because they could not comprehend the same as it was written in the English language. They allege that the 24 hours within which to explain and answer the charges was most unreasonable, as they still had to look for someone to interpret the memorandum for them.

The private respondents further insist that no investigation was ever conducted by the petitioners to substantiate their claim that the private respondents were stealing fish. Although they did not have the necessary gate pass at the time they were about to bring the fish outside the company premises, it does not necessarily follow that they stole the same and that
they deliberately violated the company policy against 'cobit. They insist that they were able to adequately explain to the guard on duty, as well as to the personnel manager, that they previously had a gate pass for the said fish, but it was severely soaked and damaged when private respondent Nierra accidentally washed it in his working pants with the gate pass in it. They insist that the least the petitioners could have done was to conduct an investigation to determine the veracity of the private respondents' statements. They further allege that the petitioners could have easily ascertained from the officer in charge of the issuance of the gate pass as to whether the private respondents were, indeed, previously given one for the fish. Instead, the petitioners arbitrarily dismissed the private respondents, and worse, petitioner Odango even mauled respondent Nierra.

The private respondents further allege that the petitioners' excuse for the outright dismissal was based on the ground that they had been charged with theft, but they could have easily been preventively suspended pending the investigation of the case. They stress that they were illegally dismissed, and that they were entitled to either reinstatement or separation pay, or, if reinstatement is no longer viable, that they be paid backwages.

The only issue in this case is whether the private respondents were illegally dismissed from employment.

It is settled that this Court is not a trier of facts, a rule which applies with greater force in labor cases, where the findings of fact of the NLRC are accorded respect and even finality, as long as supported by substantial evidence from which an independent evaluation of the facts may be made. [27] In this case, the Labor Arbiter, the NLRC, and the CA were unanimous in ruling that the private respondents were dismissed for cause, and the Court finds no reason to reverse such findings.

In general, management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations. [28] In this case, there is no dispute that the private respondents were aware of the company policy requiring a gate pass for all fish that would be taken out of the premises. If, indeed, it were true that respondent Nierra previously had a gate pass, which he claimed was destroyed, he could have just as easily gotten a new one. Moreover, there was no mention of this allegation in the Spot Report prepared by the guard
on duty; the private respondents insisted that the fish was part of their fish allowance. As found by the NLRC:

The policy was clear that anything to be brought outside needed a gatepass and the reasons advanced by the complainants that these were their fishcatch [sic] as part of their food allowance did not convincingly exempt them from complying with respondents' standing regulation. The wisdom of said policy is not challenged, as it is clearly for the protection of the interest of the respondents and there has not been any argument offered that it has been formulated to harass anyone, complainants included. It is clearly within respondents' prerogative to enforce reasonable rules and regulations such as its rule at bar. The right to enforce this policy, and the concomitant right to impose sanction to the violators
thereof is respected. This right is distinct from the criminal liability that attaches to a finding of guilt or insufficiency of evidence to warrant conviction of qualified theft then in the regular courts of law. Complainants violated a reasonable company rule and regulation, and were meted the consequence of dismissal. [29]

As borne out by the records, respondent Naces had already twice been reprimanded: once for taking 15 kilos of fish without permission and selling the same to an outsider; [30] and again for being under the influence of liquor and leaving the vessel without proper permission from the supervisor. [31] Considering these previous infractions and the fact that one of the private respondents was on liquor, petitioner Odango had the right to be concerned about the actuations of the private respondents. Loss of confidence can be a ground for dismissing an employee when there is basis for the same or when the employer has reasonable ground to believe, if not entertain, the moral conviction that the employee is responsible for the misconduct and that the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position. [32]

Article 282 [33] of the Labor Code of the Philippines provides that an employer may terminate an employee based on fraud or willful breach of the trust reposed in him by his employer or duly-authorized representative. This is premised on the fact that an employee concerned holds a position of trust and confidence. This situation holds where an employee or official of the company is entrusted with responsibility involving delicate matters, such as the custody, handling or care of the employer's property. In the case of company personnel occupying such positions of responsibility, the Court has repeatedly held that loss of trust and confidence justifies termination. [34] Indeed, an employee's acquittal in a criminal case does not automatically preclude a determination that he has been guilty of acts inimical to the employer's interest resulting in loss of trust and confidence. [35]

While the private respondents were dismissed for cause, the CA correctly held that the petitioners failed to observe the two-notice rule under Article 277(b) [36] of the Labor Code in dismissing them from employment.

In Pastor Austria v. NLRC, [37] the Court explained the purposes of the two notices to be given to the respondent employee:

The first notice, which may be considered as the proper charge, serves to apprise the employee of the particular acts or omissions for which his dismissal is sought. The second notice on the other hand seeks to inform the employee of the employer's decision to dismiss him. This decision, however, must come only after the employee is given a reasonable period from receipt of the first notice within which to answer the charge and ample opportunity to be heard and defend himself with the assistance of a representative if he so desires. This is in consonance with the express provision of the law on the protection to labor and the broader dictates of procedural due process. Non-compliance therewith is fatal because these requirements are conditions sine qua non before dismissal may be validly effected. [38]

Thus, the petitioners' claim that the private respondents were properly notified of their termination is unavailing. The employer's compliance with the second requirement (the notice of termination) does not cure the initial defect of the absence of the proper written charge required by law. [39]

When the dismissal is not motivated by bad faith, or where the petitioners-officers have not acted in wanton, oppressive or malevolent manner, there can be no judgment against them for moral or exemplary damages. In the same vein, the individual petitioners may not be held solidarily liable with the petitioner corporation, since there is no showing that petitioners Odango and Ymbong had a direct hand in the dismissal of the private respondents, enough to attribute to them (petitioners) a patently unlawful act while acting for the corporation. [40]