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Prof. Joselito Guianan Chan's The Labor Code of the Philippines, Annotated, Labor Relations, Volume II of a 3-Volume Series 2017 Edition, 5th Revised Edition,
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[G.R. NO. 169494 : March 14, 2007]




Before this Court is a Petition for Review on Certiorari assailing the April 29, 2005 Decision1 of the Court of Appeals and Resolution of August 25, 20052 in CA-G.R. SP No. 85159.

The assailed Decision reversed the finding of the National Labor Relations Commission (NLRC) and that of the Labor Arbiter that, except for respondents Jesus P. Quiambao (Quiambao) and Geraldine M. Palermo (Palermo), the other respondents were validly dismissed from employment for their various infractions of the Code of Conduct of petitioner Cabalen Management Co., Inc. (the company). The assailed Resolution, on the other hand, denied petitioners' motion for reconsideration.

Prior to their dismissal, respondents Quiambao, Palermo, Rochelle B. De Leon and Jocelyn B. Deang were working as dining supervisor, cashier, receptionist, and kitchen supervisor, respectively, while respondents Jessebel G. Obien, Edgar E. De Guzman, Rodel B. Pangilinan, William F. Lacson, Vizier Inocencio and Vincent Edward C. Mapua were waiters at the company's Cabalen restaurant, Quad, Glorietta branch.

On September 4, 2001, respondents received a memorandum placing each one of them on preventive suspension for 30 days without pay and ordering them to explain within 48 hours reported violations of the company's Code of Conduct.

In compliance with the memorandum, respondents filed their written explanations, denying or refuting the charges against them.

On October 4, 2001, respondents, with the exception of Quiambao and Palermo, were served with notices of dismissal after petitioners adjudged them guilty of the charges.

The dismissal of respondents was based on the statements of two witnesses, Henry dela Vega Balen (Balen) and Roderick Malana (Malana), their co-employees, that they had connived with one another in pocketing tips which were intended for the group, serving food or drinks without receipts or with tampered ones, and committing like forms of stealing, resulting in losses or damages to the company.

An audit report dated September 19, 2001 on the company's accountable forms and on incidents of missing bar order slips (OS), swapping of dining and bar OS, unrecorded bar OS issuance, and excessive cancellation of OS and official receipts, was also considered as evidence against respondents.

As for Quiambao and Palermo, while they were directed to immediately report to the Human Resources Department (HRD), they were allegedly not given any assignments.

Respondents thus filed three separate cases3 against herein petitioners, the company and Adriano Jr. Corporation, together with the Cabalen restaurant at the Glorietta, for illegal dismissal and illegal suspension, with claims for 13th month pay, sick and vacation leaves, monthly allowances, weekly tip, monthly signed chit, unpaid salaries, moral and exemplary damages, attorney's fees, and regularization for respondents Palermo, Pangilinan, Lacson, Deang and De Guzman. The complaints were later amended to implead herein individual petitioners as respondents.

Labor Arbiter Virginia T. Luyas-Azarraga, finding that the evidence presented by petitioners had sufficiently proved the charges against respondents Lacson, De Leon, Deang, Pangilinan, De Guzman and Obien, held, by Decision of November 27, 2002,4 that they were validly dismissed from the service.

With respect to respondents Quiambao and Palermo, however, the Labor Arbiter ordered petitioners to reinstate them to their previous positions "under the same terms and conditions prevailing as of September 4, 2001, but without backwages."5 The two were accordingly directed to return to work within 48 hours from receipt of the decision. All other claims, except for the proportionate 13th month pay for 2001, were dismissed for lack of merit.

The complaints of Inocencio and Mapua, who failed to sign the position paper for the complainants, were dismissed for lack of interest.

By Resolution of September 30, 2003,6 the NLRC affirmed the Labor Arbiter's decision. In upholding the Labor Arbiter's findings and conclusions, the Commission found well-taken the observation that, stripped of herein respondents' attacks on the persons of herein individual petitioners, respondents had presented no material allegation or evidence to controvert the charges against them.

Respondents filed a motion for reconsideration of the NLRC resolution, with a supplemental manifestation7 from respondent Quiambao that he was not reinstated to his previous position, as ordered by the Labor Arbiter, but was instead assigned to the company's head office in a "floating status," and that on April 21, 2003, he was served a Notice of Termination of Service because the company was said to be losing heavily and had to retrench to avoid closure.

Respondents' motion for reconsideration was denied by the NLRC by Resolution of April 28, 2004 for lack of merit.8

On respondents' petition for certiorari, 9 the Court of Appeals, by Decision of April 29, 2005, reversed and set aside the NLRC decision and resolution.

The appellate court found the statements of petitioners' witnesses bereft of probative value, there being no clear showing when, where, to and before whom those statements were made, aside from the fact that they were not sworn to before a notary public.

As for the audit report of September 19, 2001, the appellate court noted that it failed to state that respondents were responsible for the reported irregularities; and that the procedures on valid dismissals laid down by the Labor Code and the company's Code of Conduct were not religiously followed.

Passing on the status of employment of respondents Palermo, Pangilinan, Lacson, Deang and De Guzman who were hired from August 1997 to January 1999, the appellate court held that having served the company for more than a year, they should be considered regular employees, their positions as cashier, receptionist, and waiters being reasonably necessary to the company's usual business.

The appellate court held, however, that the award of moral and exemplary damages, attorney's fees and costs of suit was not in accord with law and jurisprudence in the absence of proof that the dismissal was attended by fraud or bad faith.

Petitioners were thus ordered to reinstate respondents to their former positions without loss of seniority rights and other privileges and to pay them their full back wages, allowances, and other benefits computed from the time their compensation was withheld up to the time of their actual reinstatement.

WHEREFORE, the petition is granted, and the resolutions of the public respondent NLRC dated September 30, 2003 and April 28, 2004 are hereby reversed and set aside. Accordingly, petitioners are ordered reinstated to their respective former positions without loss of seniority rights and other privileges, and to their full backwages, inclusive of allowances, and to their other benefits or monetary equivalent computed from the time their compensation was withheld from them up to the time of their actual reinstatement.

No pronouncement as to the costs.10

Their Motion for Reconsideration having been denied by the appellate court, petitioners lodged the present petition which hinges on the sufficiency of evidence of a valid dismissal.

Amid these conflicting findings, which circumstance is a recognized exception11 to the general rule that only questions of law may be entertained in a Petition for Review on Certiorari, 12 this Court is constrained to re-examine the sufficiency of the evidence proffered by petitioners in dismissing respondents.

It is a well-established rule that the employer has the burden of proving a valid dismissal of an employee,13 for which two requisites must concur: (a) the dismissal must be for any of the causes expressed in the Labor Code;14 and (b) the employee must be accorded due process, basic of which is the opportunity to be heard and to defend himself.15

To establish a just or authorized cause for dismissal, substantial evidence16 or "such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion" is required.17 Further required is that an employee sought to be dismissed must be served two written notices before the termination of his employment. The first notice must apprise him of the particular acts or omissions upon which his dismissal is grounded; the second, to inform him of the employer's decision to terminate his employment.18 While the failure of the employer to comply with these notice requirements does not make the dismissal illegal as long as a just or authorized cause has been proved, it renders the employer liable for payment of damages because of the violation of the worker's right to statutory due process.19

Section 3 of Rule V of the New Rules of Procedure of the NLRC,20 which governs the proceedings before the Labor Arbiter, provides:

Section 3. Submission of Position Papers/Memorandum. - Should the parties fail to agree upon an amicable settlement, either in whole or in part, during the conferences, the Labor Arbiter shall issue an order stating therein the matters taken up and agreed upon during the conferences and directing the parties to simultaneously file their respective verified position papers.

These verified position papers shall cover only those claims and causes of action raised in the complaint excluding those that may have been amicably settled, and shall be accompanied by all supporting documents including the affidavits of their respective witnesses which shall take the place of the latter's direct testimony. The parties shall thereafter not be allowed to allege facts, or present evidence to prove facts, not referred to and any cause or causes of action not included in the complaint or position papers, affidavits and other documents . . . (Emphasis and underscoring supplied)cralawlibrary

Section 9 of the same Rule states that "proceedings before a Labor Arbiter shall be non-litigious in nature" and that "subject to the requirements of due process, the technicalities of law and procedure and the rules obtaining in the courts of law shall not strictly apply thereto." It is sufficient that the documents submitted by the parties have a bearing on the issue at hand and support the positions taken by them.21

In light of the afore-quoted provisions, there was no necessity for the statements of Balen and Malana to be sworn to before a notary public or that the said witnesses be presented in person before the Labor Arbiter. For the statements to be of probative value, however, they must measure up to basic evidentiary requirements.22

In IBM Philippines, Inc. v. NLRC,23 this Court clarified that the liberality in administrative procedure "does not go so far as to justify orders without a basis in evidence having rational probative value." And in Uichico v. National Labor Relations Commission,24 it held:

x x x It is true that administrative and quasi-judicial bodies like the NLRC are not bound by technical rules of procedure in the adjudication of cases. However, this procedural rule should not be construed as a license to disregard certain fundamental evidentiary rules. While the rules of evidence prevailing in courts of law or equity are not controlling in the proceedings before the NLRC, the evidence presented before it must at least have a modicum of admissibility for it to be given some probative value. x x x. (Emphasis and underscoring supplied)cralawlibrary

In the instant case, only photocopies25 of the statements of Balen and Malana form part of the records despite petitioners' reliance thereon to prove respondents' purported transgressions. Jarcia Machine Shop and Auto Supply, Inc. v. NLRC26 held that the unsigned photocopies of daily time records (DTRs), which were presented by the therein employer to show that its employee was neglectful of his duties, were of "doubtful or dubious probative value."27

Indeed, the DTRs annexed to the present petition would tend to establish private respondent's neglectful attitude towards his work duties as shown by repeated and habitual absences and tardiness and propensity for working undertime for the year 1992. But the problem with these DTRs is that they are neither originals nor certified true copies. They are plain photocopies of the originals, if the latter do exist. More importantly, they are not even signed by private respondent nor by any of the employer's representatives x x x.

Likewise, although Balen and Malana's statements bore their signatures, they are wanting in material particulars, the most glaring of which are the dates of execution.28 Understandably, respondents objected to their admission, they claiming that the statements were presented only after their cases for illegal dismissal were filed before the Labor Arbiter.29

In Balen's statement, his name was hand printed on the first page thereof on the space provided therefor, but the spaces intended for the date and the witnesses were left blank.

The purported transcript of Malana's 15-page question-and-answer testimony, on the other hand, while bearing his hand printed name and signature at the top rightmost margin of the first page and on every page thereafter, merely indicated the person making the inquiry with the initials "TLG." While the initials may have referred to Theresa L. Gaddi, manager of the HRD,30 this point was never clarified by petitioners, hence, it remains in the realm of speculation and surmises. Neither were the omissions as to date and other particulars rectified. The appellate court's discrediting of the statements as bereft of rational probative value upon which a decision or order may properly be based is thus well-taken.

Respecting the audit report, petitioners posit that the therein mentioned documented incidents-bases of faulting respondents were so numerous to have been incurred in the normal course of business. It added that the statements of Balen and Malana regarding the alleged wrongdoings of respondents who had possession of the accountable forms were corroborated by the audit report.

It bears noting that while the audit report covered a 20-month period (January 2000 to August 31, 2001), respondents had served only partly in the restaurant's Glorietta branch due to the company's practice of rotating employees every so often. For that matter, respondents Quiambao and Obien were assigned to the same branch in March and August of 2000, respectively; Deang and Lacson, in October 2000; De Leon in April 2001; and De Guzman in June 2001 only.31 Respondents' alleged involvement in the reported irregularities moreover appeared to be incongruent with the company's awarding them of certificates32 of commendation, recognition or appreciation for their invaluable service during the same period.

Petitioners' contention that the number of cancelled OS and receipts and the incidents of swapping dining OS with bar OS were beyond the normal course of business deserves scant attention, petitioners not having established the average figures in the ordinary course of its business.

All told, neither the statements of Balen and Malana nor the audit report could support a valid ground for dismissal.

It also does not help petitioners' cause that they failed to follow rudiments of due process and even the rules laid down in their own Code of Conduct. Section 2 of Rule XIV of the Omnibus Rules Implementing the Labor Code33 specifically provides, as follows:

Section 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:

1. 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 to said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel, if the employee so desires, is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him; andcralawlibrary

(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.

x x x x (Underscoring supplied)cralawlibrary

The foregoing provision has been interpreted to mean that the written notice to the employees who stand to lose their employment must specify the particular acts or omissions constituting the grounds for their dismissal.34 The rule ensures that the employees are able to answer the charges and to defend themselves from imputed wrongdoings before their dismissals are ordered.

A review of the charges in the Notice to Explain and Suspension of September 4, 2001 shows that most, if not all, were couched in general terms. Thus, respondents Quiambao and Obien were charged with "negligence in the performance of duties resulting to losses or damages amounting to more than P5,000.00" and "involvement in stealing in any form." On the other hand, Palermo, Lacson and De Leon were charged with "issuing /serving food or drinks without corresponding receipts or [with] tampered receipts" and "stealing in any form," while Pangilinan and De Guzman were charged with "pocketing tips intended for the group" and "stealing in any form." The charges against Deang, meanwhile, consisted of "withholding information on administrative or legal cases" and "stealing in any form."

Precisely because of petitioners' failure to sufficiently state the acts or omissions constituting the alleged transgressions that respondent Obien asked to be clarified of the charges against her.35 Because of the vagueness of the charges, it followed that respondents could only issue a general denial.

The Corrective Action Report (CARE) furnished each of the respondents in accordance with the company's Code of Conduct was not any better. It did not contain the date/s when the alleged infractions were committed,36 the person/s who reported the same for investigation, or the signatures of the employees' immediate supervisors.

Petitioners did not even heed their own procedures on disciplinary actions. The only facts extant in the records are that respondents were issued above-said CARE Forms asking them to explain their alleged infractions within 48 hours; and they subsequently received notices of dismissal after they submitted their written explanations. There is, however, nothing to show that before their dismissal, respondents were informed of their immediate supervisors' decision to terminate their services, or that they were thereafter invited to an administrative investigation before the HRD manager or officer who is tasked to conduct the investigation in the presence of the employees' immediate supervisor/s and the witnesses, if necessary, as provided under Section IV of the company's Code of Conduct.37

No record of any administrative investigation proceeding, which under the company's rules, was to be "minuted," had also been presented. Hence, only petitioners' allegation that the statements of the witnesses were taken as part of the administrative investigation is before this Court. Allegations without proof do not deserve consideration.

Finally, on the dismissal of Quiambao allegedly on the ground of business losses, it was incumbent upon petitioners to prove it by substantial evidence. It did not, however. In fact, Quiambao presented documents to disprove the validity of his retrenchment on that ground. For petitioners' failure to discharge its burden then, this Court is constrained to hold that respondent Quiambao's dismissal was not valid.

WHEREFORE, the Petition is DENIED. The challenged Decision of the Court of Appeals is AFFIRMED.



1 Rollo, pp. 37-51; CA rollo, pp. 473 - 486. Penned by Justice Jose L. Sabio, then chairperson of the CA 17th Division, and concurred in by Justices Noel G. Tijam and Mariflor P. Punzalan Castillo.

2 Id. at 503-506.

3 The case of respondents Quiambao, Palermo, Lacson, De Leon, Deang, Inocencio and Mapua was docketed as NLRC NCR Case No. 30-09-04409-01; that filed by respondents Gozun, Pangilinan and De Guzman as NLRC NCR Case No. 30-09-04412-01; and the case of Jessebel G. Obien as NLRC NCR Case No. 30-11-05279-01. On October 26, 2001, Gozun withdrew his complaint after he "was taken back to work" by petitioner, LA record, p. 13. The three cases were consolidated on November 21, 2001, LA record, p. 15.

4 Rollo, pp. 74-86; LA record, pp. 219-231.

5 LA record, p. 229.

6 Rollo, pp. 88-97. Penned by NLRC Second Division Presiding Commissioner Raul T. Aquino and concurred in by Commissioners Victoriano R. Calaycay and Angelita A. Gacutan. NLRC record, pp. 47-56.

7 Id. at 522-527; id. at 58-64.

8 Id. at 99-100; id. at 246-247.

9 Docketed as CA-G.R. SP No. 85159, rollo, pp. 159-215; CA rollo, pp. 2-58.

10 CA rollo, p. 485.

11 Molina v. Pacific Plans, Inc., G.R. No. 165476, March 10, 2006, 484 SCRA 498, 517, citing Diamond Motors Corporation v. Court of Appeals, 462 Phil. 452, 458 (2003); Asuncion v. NLRC, 414 Phil. 329, 336 (2001).

12 Rule 45, Sec.1 of the Rules of Court.

13 Heavylift Manila, Inc. v. Court of Appeals, G.R. No. 154410, October 20, 2005, 473 SCRA 541, 550; ACD Investigation Security Agency, Inc. v. Daquera, G.R. No. 147473, March 30, 2004, 426 SCRA 494, 499, citing Bolinao Security and Investigation Service, Inc. v. Toston, G.R. No. 139135, January 26, 2004, 421 SCRA 406, 407; Sy v. Court of Appeals, 446 Phil. 404, 417 (2003).

14 The Labor Code provides the valid causes for dismissal, as follows:

ART. 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 his duties;

(b) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

(c) Commission of the 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

(d) Other causes analogous to the foregoing.

ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the law'

Art. 284. Disease as a ground for termination. - An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees . . .

15 Loadstar Shipping Co., Inc. v. Mesano, 455 Phil. 936, 943 (2003), citing Cruz v. National Labor Relations Commission, 381 Phil. 775, 789 (2000).

16 Philemploy Services and Resources, Inc. v. Rodriguez, G.R. No. 152616, March 31, 2006, 486 SCRA 302, 314; Millares v. Philippine Long Distance Telephone Co., Inc., G.R. No. 154078, May 6, 2005, 458 SCRA 102, 109; PASUDECO v. NLRC, 339 Phil. 120, 135 (1997).

17 Philippine Long Distance Telephone Company, Inc. v. Tiamson, G.R. NOS. 164684-85, November 11, 2005, 474 SCRA 761, 771; Salvador v. Philippine Mining Services Corporation, 443 Phil. 878, 888-889 (2003); Madlos v. NLRC, 324 Phil. 498, 510 (1996).

18 Loadstar v. Mesano, supra.

19 Philemploy Services and Resources, Inc. v. Rodriguez, supra at 318, citing Agabon v. NLRC, G.R. No. 158693, November 17, 2004, 442 SCRA 573, 616-617; Business Services of the Future Today, Inc. v. Court of Appeals, G.R. No. 157133, January 30, 2006, 480 SCRA 571, 579; Jaka Food Processing Corporation v. Pacot, G.R. No. 151378, March 28, 2005, 454 SCRA 119, 127.

20 As amended by Resolution 3-99, series of 1999.

21 Cañete Jr. v. National Labor Relations Commission, 374 Phil. 272, 278 (1999).

22 Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, 334 Phil. 84, 92 (1997).

23 365 Phil. 137, 147-148 (1999).

24 G.R. No. 121434, June 2, 1997, 273 SCRA 35, 44-45 (1997).

25 Annexes "1" and "2" to herein Respondents' Position Paper, rollo, pp. 344-360; LA record, pp. 143-159. The originals do not appear even in the records of the labor arbiter and the NLRC.

26 Supra note 22 at 91.

27 Id. at 93.

28 Ibid.

29 Reply to herein Petitioners' Position Paper before the labor arbiter, p. 3; rollo, pp. 395-408; id. at 199.

30 These initials likewise appeared in the CARE reports of some respondents.

31 Culled from the Sinumpaang Salaysay of respondents, rollo, pp. 273, 279, 308, 322, 298 and 304.

32 Petitioners conferred upon Quiambao a Certificate of Appreciation for "5 years of invaluable commitment, dedication and service to the company" on August 9, 2000 (rollo, p. 276) while Palermo was honored with a Certificate of Recognition as "Model Employee for the 2nd quarter of 1001" on August 14, 2001 (id. at 292). On June 10, 2001, Pangilinan was given a Certificate of Recognition for being "employee of the month" (id. at 318).

33 The same provisions are embodied in Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code.

34 Eastern Overseas Employment Center, Inc. v. Bea, G.R. No. 143023, November 29, 2005, 476 SCRA 384, 390; Roquero v. Philippine Airlines, 449 Phil. 437, 444 (2003).

35 Explanation of Obien dated September 4, 2001, rollo, p. 285.

36 Those of Guzman and Deang did not indicate the date of their alleged infractions.

37 Annex "I" to petitioners' Position Paper; rollo, pp. 328-334; LA record, pp. 126-133.


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