46.

PLDT VS TIAMZON, 474 SCRA 761

DECISION

CALLEJO, SR., J.:

Being questioned in this petition for review on certiorari is the Decision[1] of the Court of Appeals

(CA) dated April 16, 2004 in CA-G.R. SP Nos. 51855 and 52247, and the Resolution dated July 27, 2004

denying the motion for reconsideration thereof.

On April 16, 1986, the Philippine Long Distance Telephone Company, Inc. (PLDT) employed Antonio Q.

Tiamson as a Radio Technician II (JG4). He was assigned at the companys North Luzon Toll Network

Division, Clark Transmission Maintenance Center (Clark-TMC) in Pampanga. After the expiration of the

probationary period, he was extended regular appointment for the same position.
In a Letter[2] dated July 29, 1994, Anthony Dy Dee, the President of the Angeles City Telephone
System and Datelcom Corporation, informed PLDT of his complaint against its employees assigned in
Clark-TMC, stating therein that he suspected them to be in cohorts with the local subscribers in effecting
illegal overseas calls. Acting on the letter-complaint, PLDT immediately dispatched a team of inspectors
and investigators from its Quality Control and Inspection Department (QCID) and Security Division to
conduct surveillance operations in the area. On August 2, 1994, Vidal Busa, a radio technician, was
caught in flagrante delicto while monitoring an illegally connected overseas call using the radio facilities
of the companys Clark-TMC Radio Room.[3]

The QCID, likewise, requested the Switching Network Division at PLDTs Sampaloc National Toll
Center to print the CAMA[4] tape recording of all long distance calls originating from the PLDT Clark
Exchange Traffic
for the period of July 29 to August 2, 1994. The printout revealed that a total of 469 fraudulent overseas
and local calls were connected and completed at the PLDT Clark-TMC Radio Room for the said period.
Three overseas calls to Saudi Arabia made on August 1, 1994 were imputed to Tiamson who appeared to
be on duty from 10:00 p.m. to 6:00 a.m.[5]
 The QCID conducted its initial investigation on August 2, 1994, where Busa readily admitted his
involvement in the illegal connection of overseas calls. In his sworn statement, he specifically named Arnel
Cayanan, his Shift Supervisor, Antonio Tiamson and Paul Cruzada, both radio technicians, as the other
employees actively engaged in the illegal practice. He stated that he knew about this because whenever he
would relieve them from their tour of duty, he would see that the circuit was engaged.[6]

On August 3, 1994, during a confrontation between Busa and Tiamson, the former reiterated his
earlier statement that the latter was involved in the illegal act of connecting overseas calls. [7] For his part,
Tiamson admitted that he knew how to make an overseas call using the companys radio equipment and that
he learned how to do so through hands-on experimentation and intensive reading of operating manuals. He,
however, denied having actually made an illegal connection of overseas calls. He declared that he knew of
the wrongdoings of Busa and even disconnected the latters overseas telephone calls whenever he (Tiamson)
was on duty. Tiamson claimed that he failed to report the actuations of Busa because the latter was his
supervisor and was afraid to antagonize him.[8]

On August 5, 1994, there was another confrontation proceeding between Busa, Tiamson, Cruzada
and Cayanan. In their sworn statements, Busa and Cruzada testified that, sometimes when they relieve
Cayanan from his duty, they would discover an illegal connection and an on-going conversation in the
line.[9] Tiamson maintained that he disconnected the illegal calls of Busa, while Cayanan implicated his
subordinates.

The QCID recommended that administrative action for serious misconduct be instituted against the
said employees. Consequently, the company issued to Tiamson an Inter-Office Memorandum dated August
12, 1994, charging him with violation of the companys disciplinary rules and regulations. He was, likewise,
required to explain within 72 hours why he should not be dismissed, thus:

Investigation of the complaint indicated hereunder disclosed that:

1. Complainant Mr. Anthony Dy, President DATELCOM Corp.

2. The decrease of toll revenue for DATELCOM Angeles/Mabalacat Exchange due to

fraudulent overseas call scam was complained and notified by Mr. A. Dy to Mrs. B. G.
Gendrano Clark Exchange Division Head on July 26, 1994.

3. The complainant requested assistance to NBI and PLDT QCI to apprehend the
personnel responsible for the illegal connection.
 4. A clue was provided by Mr. Anthony Dy that the illegal overseas call was coming
from Clark-TMC through taped and equipment monitoring.

5. In the QCI investigation, you were implicated by your fellow Radio Technician Mr.
Vidal C. Busa as involved in the case. You admitted you know how to operate the
Lenkurt 26600 Signalling Test Set to initiate a call but denied doing it for personal gain
or interest but you failed to report the anomaly to your superior as one of your
supervisors was involved in the fraudulent case.

The acts described above are in violation of the Companys rules and regulations
and is punishable with dismissal from the service.

In view of the above, please explain in writing within 72 hours from receipt hereof
why you should not be dismissed from the service for the acts described above. You may
elect to be heard if you so desire. [10]

Meanwhile, Tiamson was placed under preventive suspension on August 16, 1994.[11]

On August 18, 1994, Tiamson submitted his written explanation denying any participation in the
illegal activities at PLDTs Clark-TMC. He averred that Busas statement against him was malicious and
untrue and that he was the one relieving Busa from his tour of duty and not the other way around. He
insisted that on August 1, 1994, his tour of duty was from 6:00 a.m. to 10:00 p.m.[12]

PLDT found his explanation unsatisfactory and inadequate in substance. Thus, it issued an Inter-
Office Memo[13] dated October 5, 1994, terminating Tiamsons employment effective October 7, 1994 on
the ground of serious misconduct and/or fraud.

Tiamson filed a complaint against PLDT for illegal suspension, illegal dismissal, damages and
other monetary claims, docketed as NLRC Case No. RAB-III-07-6414-95.

The Labor Arbiter resolved the case in favor of Tiamson:

WHEREFORE, premises considered, judgment is hereby rendered declaring

respondent PLDT guilty of illegal dismissal and it is hereby ordered to reinstate
complainant to his former position without loss of seniority rights and with full backwages
reckoned from the date of his dismissal up to his actual or payroll reinstatement at the
option of the respondent, which as of this date is in the amount of Three Hundred Seventy-
Two Thousand Eight Hundred Twenty-Five and 32/100 (P372,825.32) Pesos.

Further, respondent is ordered to pay complainant attorneys fee in the amount of

Thirty-Seven Thousand Two Hundred Eighty-Two and 53/100 (P37,282.53) Pesos.
 The claims for moral and exemplary damages are dismissed for lack of evidence.

SO ORDERED.[14]

The Labor Arbiter declared that the complainant could not have made any illegal connection on

August 1, 1994 from 10:00 p.m. to 6:00 a.m. because he was off-duty.

PLDT elevated the case to the National Labor Relations Commission (NLRC). On August 31, 1998,

the NLRC ruled that while there was just cause for Tiamsons dismissal, the penalty of dismissal was too

harsh. Hence, the NLRC ordered that Tiamson be reinstated to his former position without loss of seniority

rights, but without backwages.[15]

Both parties moved to reconsider the decision, but the NLRC denied the motions for lack of
merit.[16]

PLDT filed a petition for certiorari before the CA, assailing the NLRCs order of reinstatement
despite a categorical finding that Tiamson was guilty of illegal connection of overseas calls. The petition
was docketed as CA-G.R. SP No. 51855. Tiamson filed a similar petition, assailing the deletion of the
award of backwages and attorneys fees. This was docketed as CA-G.R. SP No. 52247. The CA, thereafter,
ordered the consolidation of the two petitions.

On April 16, 2004, the CA reinstated the decision of the Labor Arbiter, thus:

WHEREFORE, the petition by the PLDT under CA-G.R. SP No. 51855

is DENIED DUE COURSE and DISMISSED while the petition by Antonio Tiamson
under CA-G.R. SP No. 52247 is GIVEN DUE COURSE and GRANTED, and the
Decision dated October 15, 1997 of the Labor Arbiter which was set aside by the NLRC,
is hereby REINSTATED in its fullness and without modifications.

SO ORDERED.[17]

The CA held that Busas sworn statement was not worthy of credence, a mere afterthought, the

contents of which were seriously flawed. The appellate court found it difficult to believe Busas assertion
that, on several occasions when he came to relieve the respondent, a circuit was in use which the latter

would turn off before leaving. In this regard, the appellate court noted that Busas work shift preceded that

of the respondent, such that it would be impossible for him to see the respondent make an illegal

connection.[18]

The CA likewise opined that the respondent was denied due process when he was not apprised of

nor given the opportunity to confute the charge that during his duty on August 1, 1994, three overseas calls

to Saudi Arabia were recorded in the CAMA tape.[19]

The petitioner timely filed a motion for reconsideration, which the CA denied in its

Resolution[20] dated July 27, 2004.

The petitioner now comes before this Court, alleging that:

THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN REINSTATING THE

DECISION OF THE ARBITER A QUO AS SAID DECISION WAS NOT IN ACCORD
WITH LAW AND CONTRARY TO THE EVIDENCE ON RECORD.[21]

The petitioner submits that it has presented more than substantial evidence to prove that the

respondent was involved in the illegal connection of overseas calls. The petitioner avers that the CA erred

in holding that Busas sworn statement was not credible. According to the CA, it would have been impossible

for Busa to see the respondent making an illegal connection since his tour of duty preceded that of the

respondent. The petitioner, however, asserts that there was a rotation of the employees tour of duty such

that, at times, it was Busa who would take over from the respondent; hence, Busa had the occasion to

personally see the respondent connecting illegal calls. In support of this, the petitioner proffers the copy of

logbook entries from July 13 to August 3, 1994, which was attached to its Memorandum of Appeal filed
with the NLRC. The logbook shows that on several occasions, it was Busa who took over from the

respondent.[22]

The petitioner further asserts that the respondent failed to show that Busa was actuated and impelled

by improper motive and bad faith in executing his sworn statement.[23] The records show that Busa, from

the very start, had categorically and unequivocally named the respondent as one of those engaged in the

illegal connection of overseas calls.[24] Moreover, Busas sworn statement had been corroborated by the

printout of the CAMA tapes (which disclosed that during the respondents August 1, 1994 duty, three

fraudulent calls to Saudi Arabia were illegally made),[25] as well as Cayanans sworn statement implicating

the respondent.[26]

The petitioner submits that the respondents offense was serious in character and merits the penalty

of dismissal from employment. It contends that the respondent was accorded the full measure of due process

before he was dismissed: he was given a notice which apprised him of the charge against him and required

him to explain why he should not be dismissed, and later, a notice of termination. The petitioner claims that

the Labor Code simply requires that the employee be given a written notice containing a statement of the

causes of termination. It insists that the printout of the recording of the CAMA tapes showing that three

illegal connections were made on August 1, 1994 is a mere evidentiary matter that need not be mentioned

in the notice.[27]

For his part, the respondent avers that Busas statement was uncorroborated and hearsay for lack of

cross-examination. He insists that Busa could not have seen him make illegal connections since the latters

shift came before his.[28]

 The petitioner replies that an affidavit may be admissible even if the witness is not presented during

trial because technical rules are not strictly followed in proceedings before the Labor Arbiter and the

NLRC.[29]

The petition has no merit.

It is a settled rule that factual findings of labor officials, who are deemed to have acquired expertise

in matters within their respective jurisdictions, are generally accorded not only respect but even

finality.[30] Moreover, in a petition for review on certiorari under Rule 45, the Supreme Court reviews only

errors of law and not errors of facts.[31]However, where there is divergence in the findings and conclusions

of the NLRC, on the one hand, from those of the Labor Arbiter and the Court of Appeals, on the other, the

Court is constrained to examine the evidence.[32]

In termination cases, the burden of proof rests upon the employer to show that the dismissal is for

just and valid cause; failure to do so would necessarily mean that the dismissal was illegal. [33] The

employers case succeeds or fails on the strength of its evidence and not on the weakness of the employees

defense. If doubt exists between the evidence presented by the employer and the employee, the scales of

justice must be tilted in favor of the latter.[34] Moreover, the quantum of proof required in determining the

legality of an employees dismissal is only substantial evidence. Substantial evidence is more than a mere

scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support a

conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.[35]

In this case, the appellate court ruled for respondent Tiamson, ratiocinating as follows:

The issues posed by both parties involve the evaluation of the findings of facts by
the agencies a quo. While the general rule is that factual issues could not be properly raised
and considered in a petition for certiorari, it however admits of this exception that
a disharmony between the factual findings of the Labor Arbiter and those of the NLRC
opens the door to review thereof by the Supreme Court (Asuncion vs. National Labor
Relations Commission, 362 SCRA 56), including, of course, the Court of Appeals.

The crux of both petitions is whether the NLRC with its findings quoted below,
was correct in setting aside the disposition of the Labor Arbiter:

We disagree that respondent failed to present evidence linking

complainant to the illegal connection scam. As pointed out by the respondent,
co-employee Busa and Cayanan in the course of their investigation implicated
complainants participation in illegal overseas connection. Complainant also
failed to refute respondents evidence that on August 1, 1994, while he was on
duty, three (3) overseas calls to Saudi Arabia were recorded in cama tape (Annex
4, p. 30, records).

However, we consider the penalty of dismissal too harsh considering that

respondent imposed a sixty (60)-day suspension on Paul Cruzada, a co-employee
of complainant who submitted (sic) culpability. For where a lesser punitive
penalty would suffice, the supreme penalty of dismissal should be visited (Almira
vs. B.F. Goodrich, 58 SCRA 120). Under the circumstances, reinstatement but
without backwages is appropriate (pp. 39-40, Rollo)

Our review of the records reveals that among the three employees who issued sworn
statements, namely, Busa, Cayanan and Cruzada, it was only Busa who directly implicated
Tiamson and it was done inexplicably only in his second sworn statement. It does not
inspire credence as it comes as an afterthought and the contents are seriously flawed on
material points. Looming large is the claim of Busa that on several occasions when he came
to relieve Tiamson, he observed that his circuit was logged on and in use, and Tiamson
would then put it off before leaving. This is a canard because the shift of Busa was from
1:00 p.m. to 6:00 a.m. and of course ahead of the 6:00 a.m. to 2:00 p.m. shift of Tiamson
who came in as his reliever. Their tours of duty was in the converse order of what Busa
claimed, and so he spoke with a forked tongue when he stated that Tiamson at the preceding
shift had his circuit logged on and switched this off when he left.

A no less important point is the undisputed fact that Tiamson was not given the
opportunity to confute the charge that on August 1, 1994 while he was on duty, three (3)
overseas calls to Saudi Arabia were recorded in the cama tape. This was not indicated in
the memorandum sent to him on August 12, 1994, the full text of which reads:

August 12, 1994

TO : MR. ANTONIO Q. TIAMSON Radio Tech II Clark TMC

FROM : Division Head, North Luzon Toll Network
SUBJECT: ADMINISTRATIVE CASE
---------------------------------------------
Investigation of the complaint indicated hereunder disclosed that:

1. Complainant Mr. Anthony Dy, President DATELCOM Corp.

2. The decrease of toll revenue for DATELCOM Angeles/Mabalacat

Exchange due to fraudulent overseas call scam was complained and notified by
 Mr. A. Dy to Mrs. H. G. Gendrano Clark Exchange Division Head on July 26,
1994.

3. The complainant requested assistance to NBI and PLDT QCI to

apprehend the personnel responsible for the illegal connection.

4. A clue was provided by Mr. Anthony Dy that the illegal overseas call
was coming from Clark-TMC through taped and equipment monitoring.

5. In the QCI investigation, you were implicated by your fellow Radio Technician
Mr. Vidal C. Busa as involved in the case. You admitted you know how to operate
the Lenkurt 26600 Signalling Test Set to initiate a call but denied doing it for
personal gain or interest but you failed to report the anomaly to your superior as
one of your supervisors was involved in the fraudulent case.

The acts described above are in violation of the Companys rules and regulations
and is punishable with dismissal from the service.

In view of the above, please explain in writing within 72 hours from receipt
hereof why you should not be dismissed from the service for the acts described
above. You may elect to be heard if you so desire.

Please be informed also that you will be placed under preventive suspension
which will take effect on August 16, 1994 pending resolution of the case.

If no written explanation is received from you within the said period of 72 hours,
this case will be decided on the basis of the evidence on hand. (p. 227, Rollo)

(SGD.)
ARMANDO A. ABESAMIS

Procedural due process requires that an employee be apprised of the charge against
him, given reasonable time to answer the same, allowed ample opportunity to be heard and
defend himself, and assisted by a representative if the employee so desires (Concorde Hotel
vs. Court of Appeals, 362 SCRA 583; underlining supplied). Procedural due process
requires that the employer serve the employees to be dismissed two (2) written notices
before the termination of their employment is effected: (a) the first, to apprise them of the
particular acts or omission for which theirdismissal is sought; and (b) second, to inform
them of the decision of the employer that they are being dismissed (Perpetual Help Credit
Cooperative, Inc. vs. Faburada, 366 SCRA 693; underlining supplied). The Labor Arbiter,
therefore, was correct in ruling that Tiamson was indeed illegally dismissed from his
employment.[36]

The petitioner maintains that contrary to the findings and conclusions of the appellate court, it has

established through substantial evidence that there was just cause for the respondents dismissal. To bolster

such contention, the petitioner adduces the following documentary evidences: (1) the sworn statements of
Vidal Busa specifically implicating the respondent;

(2) the sworn statement of Arnel Cayanan; and (3) the printout of the CAMA tape, recording the

unauthorized overseas calls originating from Clark-TMC during the respondents tour of duty.

The respondent disputes the admissibility of Busas sworn statements for being hearsay since the

latter was not presented for cross-examination. This argument, however, is not persuasive because the rules

of evidence are not strictly observed in proceedings before administrative bodies like the NLRC where

decisions may be reached on the basis of position papers only.[37]

The Court agrees with the contentions of the respondent and the findings and rulings of the CA.

The petitioner indeed failed to adduce substantial evidence to prove that the dismissal of the

respondent was for a just cause. In his first sworn statement, Busa implicated the respondent in the illegal

connections of overseas calls in this manner:

T 25 - Bukod sa iyo, sinu-sino pa sa mga kasamahan mo ang tinuruan ni Mr. Cayanan ng

sistemang ito?
S - Sina Antonio Tiamson at Paul Cruzada na pawang mga Radio Technicians din.

T 26 - Ang ibig mo sabihin, ginagawa din nina Mr. Tiamson at Cruzada

ang magpa-patch ng mga tawag sa abroad o overseas?
S - Opo.

T 27 - Paano mo naman nasisiguro ito?

S - Nakikita ko po.

T 28 - Paano mo naman nakita samantalang magka-iba ang tour of duty

ninyo?
S - Pag nag-relyebo kami ay naaabutan kong naka-engage ang circuit at pag tinanong ko
ay sinasabi nga nilang may tawag sila at kasalukuyang nag-uusap ang magkabilang
parties.[38]

During the confrontation between Busa and the respondent, the former likewise made the following

statements:
 T 3 - Ayon sa iyo, ginagawa rin ni Mr. Tiamson ang magku-kunekta ng mga illegal na
tawag overseas sa pamamagitan ng pag-gamit ng inyong Radio Equipment. Tama
ba ito?
S - Tama po, Sir.

T 4 - Paano mo nalaman na ginagawa rin ni Mr. Tiamson ito?

S - Dahil nakikita ko siyang nagkukunekta at ilang beses ko ring nadatnan kapag nag-
relyebo kami na gumagana ang circuit na ang ibig sabihin ay may nag-uusap. At
bago siya aalis ay inilalagay niya sa normal position ang linyang ginamit niya.

T 5 - Kailan pa ito gingawa ni Mr. Tiamson kung natatandaan mo pa?

S - Sa natatandaan ko ginagawa niya ito magmula noong 1992 pa.

T 6 - Ayon pa rin sa iyo, alam din ni Mr. Tiamson na ginagawa rin ni Mr. Cayanan itong
mga illegal activities na ito. Paano mo nasabi na alam ni Mr. Tiamson itong
ginagawa ni Mr. Cayanan
S - Kasi magkakasama kami at kaming apat lang nina Mr. Cayanan, Mr.Tiamson, Mr.
Cruzada at ako ang nakaka-alam niyang operation na iyan.[39]

On the other hand, during the confrontation among all four employees implicated in the matter,

Cayanan testified that he was aware that his subordinates were engaged in illegal activities. However, he

failed to specifically mention who these subordinates were.[40]

Although admissible in evidence, affidavits being self-serving must be received with caution. This

is because the adverse party is not afforded any opportunity to test their veracity. [41] By themselves,

generalized and pro forma affidavits cannot constitute relevant evidence which a reasonable mind may

accept as adequate.[42] There must be some other relevant evidence to corroborate such affidavits.

On this point, the petitioner submits that the printout of the CAMA tapes corroborated Busas sworn

statement. A perusal of the printout, however, shows that it is not authenticated by the proper officer of the

company. Moreover, the name of the respondent and the other annotations in the said printout are

handwritten and unsigned.

 The ruling in Asuncion v. National Labor Relations Commission[43] is instructive on how such

document should be treated. In that case, the employer submitted a handwritten listing and computer

printouts to establish the charges against the employee. The handwritten listing was not signed, and while

there was a computer-generated listing, the entries of time and other annotations therein were also

handwritten and unsigned. The Court ruled that the handwritten listing and unsigned computer printouts

were unauthenticated, hence, unreliable. Mere self-serving evidence (of which the listing and printouts are

of that nature) should be rejected as evidence without any rational probative value even in administrative

proceedings.[44]

Thus, in Uichico v. National Labor Relations Commission,[45] the Court elucidated the extent of the

liberality of procedure in administrative actions:

It is true that administrative and quasi-judicial bodies like the NLRC are not bound
by the 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 the courts of law or equity are not
controlling in 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. [46]

The decisions of this Court, while adhering to a liberal view in the conduct of proceedings before

administrative agencies, have nonetheless consistently required some proof of authenticity or reliability as

a condition for the admission of documents.[47] Absent any such proof of authenticity, the printout of the

CAMA tape should be considered inadmissible, hence, without any probative weight.

To conclude, the petitioner has not established by substantial evidence that there was just cause for

the respondents termination from his employment. The sworn statements of Busa and Cayanan alone are

not sufficient to establish that the respondent was guilty of serious misconduct. In light of such finding,

there is no need to delve into whether or not the respondent was afforded due process when he was

dismissed by the petitioner.

 WHEREFORE, premises considered, the petition is DENIED DUE COURSE. The Decision of

the Court of Appeals dated April 16, 2004, and its Resolution dated July 27, 2004 in CA-G.R. SP Nos.

51855 and 52247 are AFFIRMED.

SO ORDERED.

47. MGG MARINE SERVICES VS NLRC, 259 SCRA 664

DECISION
PANGANIBAN, J.:

To justify fully the dismissal of an employee, the employer as a rule must prove (a) that the termination
was due to a just cause and (b) that the employee was afforded due process prior to dismissal. Does the
violation by a comptroller-finance officer of explicit instructions from senior management on how the
available liquid resources of the company are to be controlled and disbursed, such violation resulting in the
collapse of the company's cash flow constitute loss of trust and confidence sufficient to justify termination
of such management officer? Where the presence of just cause is shown, what is the consequence of the
non-observance of due process? Is an internal audit sufficient compliance with the due process
requirement? These are the questions that confronted this Court in resolving this petition
for certiorari assailing the Resolution[1] of the National Labor Relations Commission (NLRC),[2]which
affirmed in toto the decision of the Labor Arbiter[3] dated December 21, 1992.
After due deliberation and consultation of the petition, the comments filed by the Solicitor General
and the private respondent as well as the reply thereto, the Court gave due course to the petition and
considered the case submitted for resolution, without requiring the parties to submit the memoranda.

The Facts

Private respondent was initially employed by the MGG Marine Services, Inc. (MGG) on July 1, 1988.
On March 25, 1990, the president of MGG, petitioner Doroteo C. Garlan, went to the United States
for a brief sojourn. On March 1, 1990, before his departure, he appointed private respondent as comptroller
and the over-all supervisor, concurrently with her then position as financial officer. As comptroller, private
respondent was tasked to hold in trust for the company corporate funds to pay its obligations as authorized
by the president and the board of directors. Petitioner Garlan instructed private respondent to pay the
company's obligations as they fell due. Ma. Lourdes G. Unson, vice-president of MGG who also traveled
to the United States, left with private respondent 79 prepared and pre-signed checks, 16 in blank and 63
with specific amounts on them, with corresponding vouchers containing the amount of debts due and the
names of the creditors. Private respondent was specifically told to pay only the creditors mentioned in the
cash vouchers and to place on each of the 16 blank checks the amount stated in the corresponding check
voucher. The said checks were made payable to private respondent, who upon withdrawal of the money
from the bank, was to pay the same to the creditors.
 At the time the aforementioned officers left for abroad, the company had about P1.5 million in its bank
account. The total amount payable to the creditors as appearing in the check vouchers corresponding to the
16 blank checks was P224,131.50. All payments of the company were programmed in accordance with its
plans and budget for the purpose of maintaining the optimal level of cash reserve.
When the corporate officers returned from their trip in June 1990, they were dismayed to learn that the
company's deposits in the bank was reduced to only P5,720.00. It turned out that private respondent
disobeyed the instructions given her not to pay more than what was specified in check vouchers. She
increased the amounts she wrote on the blank checks so that instead of paying only P224,131.50 as
budgeted, she withdrew from the bank an aggregate sum of P1,515,823.00. Likewise, she paid some
creditors who were not specified in the cash vouchers. When the company had to pay an obligation of
P15,000.00 on June 7, 1990, private respondent could only withdraw P5,720.00.
In her pleadings, private respondent did not give a satisfactory explanation as to why she violated the
instruction given her except to claim that she did not profit by a single centavo from the withdrawals which
she paid to company creditors.
MGG filed estafa charges against private respondent which were however dismissed.
On November 12, 1990, MGG terminated private respondent's employment for loss of trust and
confidence. She then filed a complaint for illegal dismissal against MGG and its officers.
In a decision dated December 21, 1992, the Labor Arbiter held that: (1) the dismissal was illegal; (2)
MGG should pay private respondent (a) separation pay equivalent to one month's salary for every year of
service, it appearing that strained relations between the parties rendered reinstatement impractical; (b)
thirteenth month pay in the amount of P16,083.32; (c) overtime pay in the amount of P21,977.52; (d) unpaid
salary in the amount of P31,166.66; (e) moral damages in the amount of P50,000.00 for the wrongful and
malicious dismissal in bad faith; and (f) attorneys fees.[4]
The Labor Arbiter noted:

In the case at bar, except for their bare self-serving allegation that the complainant had allegedly
misappropriated corporate funds, no proof whatsoever was adduced by respondents and not even a
scintilla of evidence was presented to show that the complainant had in fact defrauded the company to the
tune of more than a million pesos. The complainant on the other hand successfully defended herself from
said accusations by proving that she was in fact authorized to disburse the corporate funds in question for
the purpose of settling the companys various accounts with its different creditors. Significantly,
respondents made no claim at all that a single centavo went to the pocket of complainant. Moreover, the
complaint for estafa filed against the complainant was dismissed by Asst. City Prosecutor Eudoxia T.
Gualberto in a resolution dated September 30, 1991 and a subsequent motion for reconsideration of said
dismissal was denied by the City Prosecutor of Manila.[5]

MGG appealed the Labor Arbiters decision to NLRC. In a Resolution dated February 28, 1994, NLRC
dismissed the appeal and affirmed in toto the appealed decision.
Hence this petition for certiorari.

The Issues

The issues in this case are:

(1) Was there lawful cause for the dismissal of private respondent?
 (2) Did petitioners comply with the procedural requirements for valid dismissal? and
(3) Were petitioners accorded due process at the hearing before the Labor Arbiter?

The First Issue:

Loss of Trust and Confidence in the Employee

MGG asserts that it was legally justified in dismissing private respondent on the ground of loss of trust
and confidence.
We find that there is basis for MGGs loss of trust and confidence in private respondent, who does not
deny that she entered on the blank checks amounts in excess of what had been provided for in the cash
vouchers, and made payments to creditors other than those specified in said vouchers. In his decision, the
Labor Arbiter said that the herein petitioners (respondents therein) filed a position paper explaining the
basis of such loss of confidence and defining the damage wrought by private respondent Molina, thus:5a

For their part, respondents filed a position paper stating that from the time complainant was appointed as
liquidation officer up to her designation as comptroller of the company, she was tasked to hold in trust
corporate funds; that in March 1990 when respondent Doroteo Garlan left for the United States,
complainant was instructed to take care of the financial requirements of the company and to disburse
amounts payable to creditors as they became due and payable; that respondent corporation through its
vice-president, Ma. Lourdes Unson prepared several check vouchers with the corresponding blank checks
with the amounts reflected on the check vouchers; that said checks were made payable to complainant for
her to facilitate the drawing of cash from the drawee banks so that cash vouchers would then be used in
paying creditors; that complainant disbursed corporate funds not as instructed but with unexplained
misappropriation or the blank checks that were supposed to have been filled up with amounts reflected on
the corresponding check vouchers were intercolated (sic) with amounts different and more than she was
instructed to place; that an audit was made and it was discovered that complainant was able to draw,
with the use of falsified checks the amount of P1,515,823.00, instead of the amount of P224,131.50 or an
excess of P1,291,691.50, which amount remains unexplained up to the present; that complainant was
asked to explain the over-drawing of corporate funds but she has failed and in fact refused to submit any
explanations; (Italics supplied)

This was buttressed by the affidavit of petitioners witness Renato Jose O. Unson, who explained the
limits of Molinas authority as well as the cash flow damage that her violations thereof caused the
company:5b

(7) Before MGGs senior management left for abroad last March 25, 1990, being a small company with
limited resources, senior management set up a very strict budget so that its company obligations would be
met and paid as they fell due. Molina was informed of the purpose of senior management in setting up a
strict budget and implementation thru the issuance of various checks;

(8) Thus, several checks including eleven (11) blank checks with their corresponding check vouchers
specifying the amount to be placed and the purpose for which the funds were to be used were left with
Molina who enjoyed complete trust and confidence from senior management. Molina knew that she was
under very strict and specific instructions to fill in the blank checks with amounts only in accordance with
the corresponding check vouchers and to disburse said funds in accordance with the purpose indicated in
the respective check voucher.

Thus Molina knew that she had no authority to fill in the blank checks with amounts different from that as
instructed. She also knew that she had no authority to disburse funds to purposes different from that
indicated in the individual check vouchers;

(9) All the time that senior management was abroad, senior management was constantly in touch with
Molina thru overseas phone calls. In fact, during the first two weeks (from March 25, 1990) management
called up Molina at least seven times.

Up to the time of arrival sometime June, 1990. Molina consistently informed senior management that
everything was normal and that the business, its operations, funds; collections and accounts were in
accordance with plans and the budget.

xxx xxx xxx

(12) A corresponding company audit was conducted wherein Molina was further allowed to explain her
actuations. It was then discovered that by taking advantage of the blank checks, she was able to withdraw
amounts in excess of instructions.

In fact, within the short period from March 27, 1990 to April 6, 1990 (senior management left March 25,
1990) Molina withdrew close to P1,000,000.00 pesos in excess of that instructed her by already encashing
six (6) of the blank checks with amounts in excess of those instructed her.

MGGs funds, were so depleted that Molina on June 7, 1990, could not withdraw the amount she was
authorized, that is, even if she was instructed to put the amount of P15,000.00 in the blank check, Molina
only placed and withdrew the amount of P5,720.00 only;

In all, Molina without any authority whatsoever, by placing in the blank checks amounts in excess of
what she was specifically instructed, withdrew about P1,282,411.00 thereby creating liability and causing
damage and prejudice to MGG. It should be noted that these excess amounts were part of the unbudgeted
and unappropriated corporate funds which only senior management had the right to withdraw or cause to
withdraw;

(13) In short, Molinas authority was limited to the physical withdrawal of MGGs budgeted and
appropriated funds from the bank as indicated in the checks/check vouchers and to disburse said funds in
accordance with specific instructions given her;

The above instructions of senior management were not denied by Molina in her testimony before said
Arbiter:5c
Q. - When they left for the U.S. did they leave you any vouchers?
Miss Molina
A. - They left me vouchers and my guideline (sic) are here (producing a list with the date therein
March 27 consisting of 8 pages). They left me this one as my guidelines (sic) is supported
by 79 checks, 16 blank checks and 63 with the amount.
Q. - And these 16 blank checks that you mentioned these were left with you with attached checks?
 A. - Yes, sir.
Summing the prejudice caused by private respondent, petitioners allege as follows in their
Petition[6]before us:

x x x While private respondent was authorized to withdraw from company coffers approximately
P200,000.00, by filling-in the checks amounts in excess of those mentioned in the check vouchers, she
was able to withdraw approximately P1.4 million thereby abruptly reducing the companys reserve funds
by as much as P1.2 million (TSN, June 9, 1992, pp. 43- 44). Thus, when the senior officers returned from
the United States, they were surprised to find out that the companys reserve funds have significantly
dwindled to such an extent that private respondent on June 7, 1990, could not withdraw the amount she
was authorized, that is, even if she was instructed to put the amount of P15,000.00 in blank check, Molina
could only place and withdraw the amount of P5,720.00. (par. 12, Affidavit of Atty. Unson dated March
26, 1992; Annex D hereof). Obviously, by June 7, 1990, the companys reserve funds have been reduced
to a measly P5,720.00 by reason of the over-withdrawal of private respondent.

Bearing in mind the purposes and objectives of setting-up the reserve fund, it is respectfully maintained
that the abrupt reduction thereof from P1.4 million pesos to the measly sum P5,720.00 in a span of three
(3) months from March to June 7, 1990, brought untold miseries on petitioner MGG. Petitioner found its
checks bouncing one after the other. It failed to meet its financial obligations to its preferred creditors. It
had to source financial resources elsewhere in order to pay its due and demandable debts, not to mention
its obligations to its employees.

It is, therefore, incorrect for public respondent NLRC to rule that private respondents act of over-
withdrawing from the companys reserve funds did not cause any damage or prejudice unto petitioner
MGG.

The Labor Arbiter labored under the wrong impression that private respondent was dismissed merely
because she embezzled company funds saying that "x x x except for their bare self-serving allegation that
the complainant (private respondent herein) had allegedly misappropriated corporate funds, no proof
whatsoever was adduced by respondents (petitioner herein) and not even a scintilla of evidence was
presented to show that the complainant had in fact defrauded the company to the tune of more than a million
pesos (supra). The NLRC, also falling into the same error as the Labor Arbiter, said:

x x x the complainant had shown to Our satisfaction that in the questioned transactions, she never
defrauded the company as the monies so defrayed were used to settle various corporate accounts x x x.[7]

The NLRC and the Labor Arbiter did not realize that the acts of private respondent complained of had
placed the company in great jeopardy and disturbed its financial stability, thereby causing it real and actual
damage.[8]
Indeed, private respondents disobedience and precipitated actions caused great damage to the
companys cash flow. In the harsh world of business, cash flow is as important as and oftentimes, even more
critical than profitability. So long as an enterprise has enough liquidity (cash) to pay its workers, requisition
fuel, meet office rentals, maintain its equipment and satisfy its life-line creditors within tolerable limits, it
will survive and bridge better days for its recovery. But once it fails to pay such bills because its liquid
resources are improvidently used and disbursed, as private respondent did in the instant case, it runs the all-
too-real risk of immediate collapse. No wonder, petitioners were rightfully aghast when upon their return
from abroad, they discovered that their treasury was almost completely drained, with a measly P5,720.00
remaining.
 Private respondent took it upon herself to disburse the company funds in amounts and for purposes of
her own discretion, and in disregard of the program and plans of the company.She arrogated to herself the
combined powers of the management and the board of directors of the company.
An employer cannot be compelled to retain an employee who is guilty of acts inimical to the interests
of the employer.[9] A company has the right to dismiss its employees if only as a measure of self-
protection.[10] This is all the more true in the case of supervisors or personnel occupying positions of
responsibility.[11]
In the instant case, let it be remembered that the private respondent is not an ordinary rank-and-file
employee. She is the Comptroller-Finance Officer who unarguably violated her duty of controlling cash
flow and specific instructions on how the very limited cash of the company was to be spent. It would be
extremely oppressive and cruel to require petitioners to retain in their innermost sanctum of management
an officer (not just a rank-and-file employee) who has admitted not only violating specific instructions but
also to being completely unreliable and untrustworthy in the discharge of her duty to safeguard the cash
flow of the company.
That the complaint for estafa filed by MGG against private respondent was dismissed is also of no
moment. The rule is that an employees acquittal in a criminal case does not preclude a finding that he has
been guilty of acts inimical to the employers interest.[12]
Corollarily, proof beyond reasonable doubt of an employees misconduct is not required in dismissing
and employee on the ground of loss of trust and confidence. The quantum of proof required is only
substantial evidence.[13] In the case before us, there was an admitted, actual and real breach of duty
committed by private respondent, which was the basis of MGGs loss of trust and confidence in her.
While it is true that initially during the proceedings before the labor tribunals, petitioners were also
faulting Molina for estafa, in addition to loss of confidence, they have abandoned misappropriation, in the
instant petition, as a ground for dismissal (since the criminal complaint against her was dismissed) and
instead relied on the second ground, namely, loss of confidence resulting from her disobedience and
unfaithfulness in the discharge of her duties which we hold as sufficient cause for her dismissal under the
circumstances.

The Second Issue: Procedural Due Process

To constitute a completely valid and faultless dismissal, it is well-settled that the employer must show
not only sufficient ground therefor but it must also prove that it observed procedural due process by giving
the employee two notices: one, of the intention to dismiss, indicating therein his acts or omissions
complained against, and two, notice of the decision to dismiss; and an opportunity to answer and rebut the
charges against him, in between such notices.

The twin requirements of notice and hearing constitute essential elements of due process in cases of
employee dismissal: the requirement of notice is intended to inform the employee concerned of the
employers 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 employers charges against him
accordingly to defend himself therefrom before dismissal is effected. Neither of these two requirements
can be dispensed with without running afoul of the due process requirement of the 1987 Constitution.[14]

In the case before us, the petitioners found out about the excess withdrawals when an audit was
conducted. The record is devoid of any showing that private respondent was given notice of the charges
against her. Neither was she given a hearing or opportunity to present her defense. The only allegation of
petitioners was that she was asked questions about her withdrawals during the audit. But these are too scant
and too bare to amount to due process. There was no indication of the nature and the type of questions
asked, the process of the supposed inquiry, the time and opportunity given for her defense, and the degree
of explanation allowed her.
When this issue was brought up by the Solicitor General in his Comment, all that the petitioners could
say in their Reply was:

There is no dispute that private respondent Molina was audited upon arrival of the senior management
from the United States and that she herself admits that she was asked questions and was allowed to
explain her side (pp. 28-18 (sic), TSN, July 26, 1991).[15]

Plainly, this is not sufficient compliance with due process. An audit cannot take the place of the twin
requirements of notices and hearing. At the very least, petitioners failed to show they followed these
requirements.

There is also no showing that the requirements of due process were adequately met by the petitioners.

The law requires that the employer must furnish the worker sought to be dismissed with two (2) written
notices before termination of employment can be legally effected: (1) notice which apprises the employee
of the particular acts or omissions for which his dismissal is sought; and (2) the subsequent notice which
informs the employee of the employers decision to dismiss him. (Sec. 13, BP 130; Sec. 2-6 Rule XIV,
Book V, Rules and Regulations Implementing the Labor Code as amended). Failure to comply with the
requirements taints the dismissal with illegality. This procedure is mandatory; in the absence of which,
any judgment reached by management is void and inexistent (Tingson, Jr. v. NLRC, 185 SCRA 498
[1990]; National Service Corp. v. NLRC, 168 SCRA 122 [1988]; Ruffy v. NLRC, 182 SCRA 365
[1990]).[16]

This failure to show due process taints the dismissal. This does not mean however that the private
respondent would be entitled to backwages or reinstatement or even separation pay.[17] Under prevailing
jurisprudence, she is entitled only to indemnity or damages, the amount of which depends on the peculiar
circumstances of each case.[18]
In Wenphil Corporation vs. NLRC, et al.[19], which is the leading example of these indemnity cases,
the private respondent had an altercation with a co-employee, as a result of which both were suspended the
following morning, and in the afternoon of the same day private respondent was dismissed. In justifying
his dismissal, the Court held:

The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of
seniority and the payment of his wages during the period of his separation until his actual reinstatement
but not exceeding three (3) years without qualification or deduction, when it appears he was not afforded
due process, although his dismissal was found to be for just and authorized cause in an appropriate
proceedings in the Ministry of Labor and Employment, should be re-examined. It will be highly
prejudicial to the interests of the employer to impose on him the services of an employee who has been
shown to be guilty of the charges that warranted his dismissal from employment. Indeed, it will
demoralize the rank and file if the undeserving, if not undesirable, remains in the service.

Thus in the present case, where the private respondent, who appears to be of violent temper, caused
trouble during office hours and even defied his superiors as they tried to pacify him, should not be
rewarded with re-employment and back wages. It may encourage him to do even worse and will render a
mockery of the rules of discipline that employees are required to observe. Under the circumstances the
dismissal of the private respondent for just cause should be maintained. He has no right to return to his
former employer.

However, the petitioner must nevertheless be held to account for failure to extend to private respondent
his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The
dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed
an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a
formal notice and conduct an investigation as required by law before dismissing petitioner from
employment. Considering the circumstances of this case petitioner must indemnify the private respondent
the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of
the omission committed by the employer.

In Rubberworld (Phils.) Inc. et al. vs. NLRC, et al.[20] the employer was also ordered to pay the private
respondent P1,000.00 as indemnification for (petitioners) failure to observe the requirements of due process
prior to termination of private respondents employment for just cause. Following this doctrine, the Court
in Aurelio vs. NLRC, et al.[21] ruled that where there was a valid ground to dismiss an employee but there
was non-observance of due process x x x only a sanction must be imposed upon the employer x x x and
that the NLRC erred when it awarded separation pay x x x.
In Reta vs. NLRC, et al.,[22] the award was raised to P10,000.00 considering that petitioner was given
his walking papers and forced to leave his ship in a foreign port x x x. The said sum of P10,000.00 was
considered fair, reasonable and realistic in Alhambra Industries Inc. vs. NLRC et al.,[23] the Court adding
that termination of a worker for cause, even without procedural due process, does not warrant reinstatement,
but the employer incurs liability for damages.[24]
In striking down the claim for backwages and separation pay where just cause is clearly shown, the
Court, through Mr. Justice Florenz D. Regalado in Cathedral School of Technology vs. NLRC, et al.,
(supra), said:

x x x (B)ackwages are granted on the basis of equity for earnings which a worker or employee has lost
due to his illegal dismissal, where private respondents dismissal is for just cause, as is the case herein,
there is no factual or legal basis to order payment of backwages; otherwise, private respondent would be
unjustly enriching herself at the expense of petitioners. Where the employees dismissal was for a just
cause, it would be neither fair nor just to allow the employee to recover something he has not earned or
could not have earned.

Neither can there be an award for separation pay. In Cosmopolitan Funeral Homes, Inc. vs. Maalat, et
al., we reiterated the categorical abandonment of the doctrine that employees dismissed for cause are
entitled to separation pay on the ground of social and compassionate justice. x x x (citations omitted.)

In the instant case, following the jurisprudence firmly established in the aforecited cases, she is entitled
to indemnity of P1,000.00.

The Third Issue:

Due Process at the Labor Arbiters Forum

 Petitioners maintained that they were denied due process when the Labor Arbiter considered the case
submitted for resolution notwithstanding the fact that petitioners had manifested their intention to present
additional evidence.
We do not agree.
Petitioners first asked to be allowed to present additional evidence at the hearing on June 9, 1992 but
they manifested that the documents they intended to present were not then available. The Labor Arbiter
allowed petitioners to present the documents at the next hearing, July 7, 1994. As that next hearing day was
declared a special non-working holiday, the case was reset to August 4, 1992. Inasmuch as the counsel for
petitioners had to attend to another urgent matter on August 4, 1992, he failed to appear at the hearing,
although he filed a motion for postponement. The Labor Arbiter denied the motion and issued an order
considering the case as submitted for resolution. On motion for reconsideration of petitioners, the Labor
Arbiter reset the case for the reception of additional evidence on October 30, 1992. Petitioners again failed
to appear on said date, prompting the Labor Arbiter to consider the case submitted for resolution.
Under the foregoing circumstances we cannot say that the Labor Arbiter abused his discretion in
considering the case submitted for resolution on October 30, 1992. There is no denial of due process where
the party was given an opportunity to present his case, which he did not take advantage of.
That being the case, the claim of private respondent for thirteenth month pay (P16,083.32), overtime
pay (P21,977.56), and unpaid salary (P31,166.66) stands unrebutted.

Refutation of Mr. Justice Punos Dissent

The dissenting opinion of Mr. Justice Reynato S. Puno contends that there is substantial evidence on
record to justify the factual finding of the Arbiter and the NLRC, and thus faults the majority with a
deviation from the age-old rule that we accord the highest consideration to the factual findings of labor
arbiters especially when they are affirmed by the NLRC.
There is no such deviation. The labor tribunals, as stated earlier, found the private respondents
dismissal unjustified because the complainant had shown to Our satisfaction that in the questioned
transactions, she never defrauded the company as the monies so defrayed were used to settle various
corporate accounts x x x[25] and none of such monies went to her private pocket. This is correct and if that
is all that private respondent was faulted with, we would have supported the tribunal a quo all the way. But,
to repeat, we are not finding her guilty of any dishonesty. We find that her ill-considered, imprudent and
precipitate acts of misusing the very limited cash of the company, in violation of her inherent duties as
Comptroller/Finance Officer and of the specific instructions of top management caused the near collapse
of the company. We are not reversing the factual findings that private respondent was NOT guilty of any
fraud.But based on the facts as found by the arbiter and the respondent Commission and borne out by the
records, viz., (a) petitioners position paper before the labor arbiter, (b) affidavit of witness Renato Unson,
(c) admissions of private respondent during her testimony before the labor arbiter, and (d) pertinent
allegations in the petition before us, we conclude that there is more than sufficient basis for the companys
loss of trust and confidence in private respondent. Even Mr. Justice Puno concedes that (and we quote him)
there is no doubt that private respondent entered on the blank checks amounts in excess of what had been
specified in the cash vouchers and she also made payments to creditors other than those named in said
vouchers. This critical fact, conceded by our esteemed colleague, was altogether ignored by the respondent
Commission and the arbiter. In short, we used the same facts brought out before the lower tribunals in
arriving at our conclusion of law a conclusion such tribunals ought to have made also.
 Our dissenting colleague also maintains that private respondent had authority to make the above-
described alterations in the checks and in paying creditors other than those named in the vouchers, in the
absence of specific instructions. His contention lacks basis. Such instructions, aside from having been
presented in petitioners position paper before the arbiter as well as through the testimony of witness Renato
Unson, were also expressly admitted by respondent Molina in her testimony as quoted in the dissent when
she produced her guideline 8 pages long on how the 79 checks, 16 blank checks and 63 with amounts were
to be spent/used.
And even assuming arguendo that there were no specific written instructions, still, Molina was not a
mere clerk but a high corporate officer whose primary and usual duty is/was to control corporate
funds. While in hindsight it is easy to blame petitioners for not documenting their instructions as insisted
by the dissent, it is however not difficult to understand that ordinary business activities are performed in
the normal course without anticipation nor foreknowledge of litigation, often with dispatch and usually with
a minimum of documentation. Considering that the matter of paying off creditors subject to the constraints
of the companys available funds is a fairly routine business activity and part and parcel of the normal job
functions of a comptroller or finance officer, and considering further that blank checks and supporting
vouchers which were all in writing had been prepared in advance, specific detailed written instructions on
what to do with them would have been appropriate only for a non-thinking clerk and would have been
unusual in fact, even insulting for such comptroller-finance officer. But the immutable fact is that such
instructions were in fact documented. And that notwithstanding, respondent Molina still acted imprudently
and contrary to those instructions.
Mr. Justice Puno also argues that there is no evidence to support petitioners claims of bouncing checks
as a result of Molinas acts. But the majoritys ruling is NOT based at all on such claims of bouncing checks,
but on the precipitate acts of the comptroller which jeopardized the cash flow of the company. Where a
companys current cash resources are not enough to pay off all current liabilities and obligations, it is the
fundamental role of a comptroller/finance officer, even in the total absence of specific instructions, to
allocate available funds to the most critical and immediate needs and to see to it that there are funds left
over to enable the company to continue operations. Where available funds are not sufficient to meet all
obligations, it is a most basic rule in management to adhere to an order of priorities in the settlement of
accounts. In such situation, payment of lower-priority obligations must necessarily be postponed. For
instance, paying office rentals in advance is not objectionable per se, since such obligation must be paid
anyway. But where such advance payment prevents the company from discharging more pressing
obligations like payment of wages, it is precipitate and ill-considered. And where the actuations of a
comptroller/finance officer, instead of keeping the company afloat, almost shipwrecks it upon the shoals of
illiquidity and bankruptcy, there is certainly a cause for loss of trust and confidence in the ability and
judgment of said comptroller/finance officer.
Lastly, we pass sub silencio Mr. Justice Punos submission for the Court to re-examine the NLRCs
ruling on strained relations. In view of our holding that there was just cause for the dismissal, such NLRC
ruling is now clearly irrelevant in this Decision.

Summation

IN SUM, we rule that the dismissal of private respondent had substantial basis. But because petitioners
have failed to show strict observance of due process they should, in accordance with prevailing
jurisprudence, pay indemnity of P1,000.00. In addition, they should also pay private respondent the
unrebutted claims for thirteenth month pay, overtime pay and unpaid salary. So too, we delete the award of
moral damages and attorneys fees in the absence of proof of bad faith and malice on the part of petitioners.
 WHEREFORE, the petition is partially GRANTED. The dismissal of private respondent is deemed
with just cause. The assailed Resolution is hereby SET ASIDE and ANNULLED.Instead, petitioners are
ordered to pay to private respondent the following sums, viz., (a) indemnity of P1,000.00, (b) thirteenth
month pay of P16,083.32, (c) overtime pay of P21,977.56 and (d) unpaid salary of P31,166.66.
SO ORDERED.

48. PHILIPPINE SAVINGS BANK VS NLRC, 261 SCRA 409

DECISION
MENDOZA, J.:

This is a petition for certiorari to annul the decision of the National Labor Relations Commission in
NLRC Case No. RB-IV-2-1554-85, affirming the decision of the Labor Arbiter, which found petitioner
guilty of illegal dismissal, and the resolution of the NLRC denying reconsideration.
The facts are as follows:
Private respondent Victoria T. Centeno started, as a bank teller of petitioner Philippine Savings Bank,
on November 3, 1965. Through the years she was promoted, becoming on February 4, 1985, assistant
cashier of petitioners Taytay branch, at a salary of P2,672.00 a month.
From September 17, 1984 to November 15, 1984, private respondent was acting branch cashier,
substituting for Mrs. Victoria Ubaa, who had gone on maternity leave. As acting branch cashier, private
respondent was in charge of the cash in the vault and the preparation of the daily cash proof sheet, which
was a daily record of the cash in the vault and was used as basis in determining the starting balance on the
next banking day.
On November 16, 1984, Mrs. Victoria Ubaa reported back to work. Before turning over the cash to
Mrs. Ubaa, private respondent Centeno deposited P356,400.00 in the Metropolitan Bank and Trust Co.
(Metrobank). However, what appeared as amount deposited in the November 16, 1984 cash proof and batch
sheets of the cashier and clearing clerk, was P371,400.00, and not P356,400.00 as shown in the Metrobank
passbook. Petitioner later charged that private respondent falsified the deposit slip and made it appear that
she had deposited P371,400.00 when actually she had deposited only P356,400.00.
On December 18, 1984, the branch accounting clerk, Lolita Oliveros, discovered a discrepancy
between the cash deposit recorded (P371,400.00) in the cash proof and batch sheets and the deposit actually
made (P356,400.00) as reflected in the Metrobank passbook. She called the attention of the clearing clerk,
Alberto C. Jose, to the matter. They reviewed the records and found that what had been attached to the debit
ticket of Jose was a deposit slip for P356,400.00, and not for P371,400.00.
An audit team reviewed the account of the branch and found a P15,000.00 shortage incurred
on November 16, 1984, the day private respondent turned over her accountability to Mrs. Ubaa after the
latters maternity leave.
A committee was formed to investigate the shortage. Private respondent, the branch manager, Eladio
C. Laurena, the cashier, Victoria N. Ubaa, the clearing clerk, Alberto C. Jose, and two other employees
were called to the investigation. The committee found private respondent accountable for the
shortage.[1] Hence, on January 7, 1985, private respondent was given a memorandum which stated:

In connection with the shortage of P15,000.00 at Taytay Branch which has been recently discovered by
the Auditing Department which shortage appears to have been deliberately perpetuated through
falsifications of various documents, all of which appear to have been done by you, you are hereby
required to submit your explanation within seventy two (72) hours from receipt of this memo why no
administrative and/or disciplinary action shall be taken against you.

In the meantime, you are hereby preventively suspended for a period of thirty (30) days effective January
8, 1985. (Emphasis added)

The manager, cashier, clearing clerk and a teller, were also given show-cause memoranda, but only
private respondent was placed under preventive suspension.
All those required to show cause filed their respective answers, except private respondent. Instead she
requested the banks vice-president, Antonio Viray, on January 15, 1985, to give her until January 18,
1985 within which to file her answer on the ground that she needed to consult her lawyer. Her request was
granted but private respondent nonetheless failed to answer the charges against her.
On February 4, 1985, private respondent was dismissed by the bank. The memorandum to her read:

Memorandum

To : MS. VICTORIA T. CENTENO

Assistant Cashier
Taytay Branch

* * * * * * * * * * * * * * * * * * * * * * * ** * * * * * * * * * * *

This is in connection with the shortage of P15,000.00 at Taytay Branch which was incurred while you
were in charge of the vault. Immediately after the discovery of the shortage, through the memorandum of
the undersigned dated January 7, 1985 addressed to you, we required you to explain within seventy two
(72) hours from receipt of said memo why no administrative and/or disciplinary action should be taken
against you. Despite the lapse of the extension period you requested within which to submit your
explanation, and up this date, you have not submitted your explanation.

After carefully evaluating the evidence presented and considering your failure to explain the shortage
which tantamounts to admission of guilt, we have no alternative but to conclude, as we hereby conclude,
that you were the one who misappropriated the shortage of P15,000.00. You have therefore forfeited the
confidence that the Bank has reposed on you as an officer.

IN VIEW OF THE FOREGOING, Management hereby dismisses you FOR CAUSE effective
immediately with forfeiture of all benefits. The Bank reserves the right to take such actions it may deem
necessary for the recovery of the P15,000.00. (Emphasis added)

Private respondent sued petitioner for illegal dismissal before the Labor Arbiter. Aside from claiming
that her dismissal was without basis, she claimed that she was denied due process because she had not been
informed of the specific acts for which she was dismissed. She claimed that during her 19 years of service
in petitioner bank, she never [played] fast and loose with bank funds.
Petitioner alleged that private respondent was dismissed for loss of trust and confidence as a result of
the shortage, which, according to petitioner, she tried to conceal by falsifying the banks cash proof sheet
and the tellers vale. Petitioner claimed that private respondent was accorded due process prior to her
dismissal.
 On September 15, 1988, the Labor Arbiter found petitioner guilty of having illegally dismissed private
respondent and of denying her due process. Accordingly the Labor Arbiter ordered:

WHEREFORE, responsive to the foregoing, judgment is as it is hereby entered in favor of complainant

and against respondent:

1. Considering the termination of complainant illegal;

2. Ordering respondent to reinstate complainant to her former position or equivalent position with full
backwages from the time of her unlawful termination and until actually reinstated without loss of
seniority rights and other privileges appertaining to her position;

3. Ordering respondent to pay complainant moral and exemplary damages in the amounts of Fifty
Thousand Pesos (P50,000.00) and Ten Thousand Pesos (P10,000.00), respectively; and,

4. Ordering respondent to pay complainant attorneys fees equivalent to ten (10%) per cent of the total
award.

SO ORDERED.

On appeal, the NLRC affirmed with modification thus:

PREMISES CONSIDERED, the Decision of September 15, 1988 is hereby MODIFIED with the deletion
of awards representing moral/exemplary damages and attorneys fees. However, the award of backwages
and other benefits shall not exceed three (3) years as laid down by the Supreme Court. Respondent is
hereby directed to pay complainant backwages in the amount of NINETY SIX THOUSAND ONE
HUNDRED NINETY TWO PESOS (P96,192.00) and/or other benefits due. The other findings stand
AFFIRMED.

SO ORDERED.

Both parties moved for reconsideration, but their motions were denied by the NLRC in its resolution
on July 8, 1993.
Hence this petition. Petitioner claims that the NLRC gravely abused its discretion in:

a) holding that private respondent Centeno was denied due process of law prior to her dismissal; and

b) failing to fully discuss all the six (6) assigned errors raised by the petitioner in its appeal by ignoring:

1) the valid ground wherein petitioner based its termination of the service of private respondent, and that
is loss of confidence;

2) the specific circumstances that led the petitioner to lose its trust and confidence on private respondent;
and

3) the applicable settled law and jurisprudence that the private respondent, having been validly dismissed,
is not entitled to reinstatement and backwages.
 First. Contrary to the finding of the Labor Arbiter and the NLRC, private respondent was notified of
the charge against her through a memorandum sent to her on January 7, 1985.Indeed she knew the reason
for the show-cause order because before that, she and other employees had been asked to attend an
investigation. The law requires that the employer must furnish the worker sought to be dismissed with two
(2) written notices before termination may be validly effected: first, a notice apprising the employee of the
particular acts or omission for which his dismissal is sought and, second, a subsequent notice informing the
employee of the decision to dismiss him.[2] In accordance with this requirement, private respondent was
given the required notices, on January 7, 1985 and then on February 4, 1985.
The NLRC ruled that an investigation should have been conducted prior to private respondents
dismissal. As already noted, however, private respondent was informed of the charges against her and given
an opportunity to answer the charges. Upon her request, she was given until January 18, 1985 within which
to file her answer. But she failed to file her answer. Of course she later tried to explain that she did not find
it necessary to do so because there was, after all, no ground for any action against [her] . . . and [she] did
not feel obligated, therefore, to dispute the action which was baseless and unfounded. [3] Furthermore, she
claimed she thought the Committee had prejudged the case against her.[4]
Whatever her reason might have been, the fact is that petitioner waived the right to be heard in an
investigation. Due process is not violated where a person is not heard because he has chosen not to give his
side of the case. If he chooses to be silent when he has a right to speak, he cannot later be heard to complain
that he was silenced.[5] Private respondent having chosen not to answer, should not be allowed to turn the
tables on her employer and claim that she was denied due process. Indeed, the requirement of due process
is satisfied when a fair and reasonable opportunity to explain his side of the controversy is afforded the
party. A formal or trial-type hearing is not at all times and in all circumstances essential, especially when
the employee chooses not to speak.[6] Under the circumstance of this case, it is too much to require petitioner
to hear private respondent before the latter can be dismissed.
Happily, no liability was imposed on petitioner by either the Labor Arbiter or the NLRC despite the
finding that petitioner had denied private respondent due process. Accordingly, all that we need to do in
this case is to record our finding that petitioner fully complied with its duty under the law to accord due
process to private respondent.
Second. Petitioner also claims that the NLRC gravely abused its discretion in not passing upon three
(3) errors assigned by it on appeal.
We find the contention without merit. In affirming the Labor Arbiter, the NLRC found the evidence
supporting the Labor Arbiters factual findings to be substantial and for this reason apparently found it
unnecessary to make a separate discussion. Factual findings of administrative agencies are generally
accorded respect and even finality in this Court if they are supported by substantial evidence.[7]
Petitioner makes a reconstruction of the facts which, according to it, shows how the shortage incurred
on November 16, 1984 was concealed. The reconstruction is as follows:

A) During the turn-over of the cash in vault by Mrs. Victoria Centeno to Mrs. Victoria Ubaa, after
counting the cash in vault, no formal recording of how much cash was actually turned over was
done.However, from the Cash Proof in November 16, 1984, it could be reconstructed and determined
whether there is a shortage or not by the following figures:

Cash Balance, Nov. 15 84 P589,572.02

Deduct: Cash Vales of

Tellers at start of
banking day

Pico of Teller No. 1 P19,207.06

Pico of Teller No. 2 P21,666.21

Pico of Teller No. 3 P21,995.25 [P 62,868.52]

Balance: Paper Bills & Coins P536,703.50

Deduct: Deposit with Metrobank P356,400.00

Balance that should have been

turned over P170,303.50

Additional Vale-Coins-Teller 3 P 11.00

Balance P170,292.50

Add: Sorted Paper Bills turned

over by the tellers to the

cashiers:

Teller No. 1 P100,000.00

Teller No. 1 P 40,000.00

Teller No. 2 P147,200.00

[P 46,202.64] [P333,402.64]

CORRECT CASH BALANCE

November 16, 1984 P503,695.14

Cash Balance per Cash

Proof November 16, 1984 P488,695.14

SHORTAGE P 15,000.00

B) The above P15,000.00 shortage was covered up in two (2) ways or stages:

First: In the original or untampered cash proof, the deposit to Metrobank was written originally
as P371,400.00 instead of the actual deposit of P356,400.00. The writing of the
 P371,400.00 deposit to Metrobank was based on a deposit slip for P371,400.00 given to
Mrs. Victoria Ubaa by Mrs. Victoria Centeno. The same deposit slip for P371,400.00
was also given to Mr. Alberto Jose, the Clearing clerk, who used the same to enter the
P371,400.00 deposit with Metrobank in the Batch Sheet, as well as in the preparation of
the Debit and Credit Tickets. The P15,000.00 shortage, which is the difference between
P371,400.00 and P356,400.00 was therefore concealed in the P371,400.00 deposit to
Metrobank, which actually and truly was for P356,400.00 only.

Second: When the genuine deposit slip to Metrobank for P356,400.00 was placed in the Cash Proof
file and the spurious deposit slip for P371,400.00 was removed by whoever was
responsible for the shortage, the cashproof will NOT BE BALANCED, so that the second
step was to ADD P15,000.00 to the P11.00 cash vale of Teller No. 3 to make it appear as
if the vale was for P15,011.00.In this way, the cash proof will again be balanced, since
the decrease of P15,000.00 in deposit with Metrobank from P371,400.00 to P356,400.00
was shifted to the P15,011.00 vale which was actually P11.00 only.

Though the P371,400.00 deposit slip is now missing, the insertion of the P15,000.00 in the vale of Teller
No. 3 is very apparent, since the duplicate vale in the possession of the Teller has not been tampered and
remains as P11.00. Incidentally, it had not missed the petitioners attention also that, by force of habit,
Teller No. 3 was accustomed to placing a hyphen across the centavo figures in her Tellers vales when
there was no centavo entry thereon; the added figures amounting to P15,000.00 on the other hand did not
contain such a hyphen in the centavo of the vale, leading us to believe that the addition of P15,000.00
could not have been made by the Teller concerned. (Affidavit of Norberto Robleza dated 09 October
1985, pp. 4-6)

Loss of trust and confidence is a cause for dismissing an employee who is entrusted with fiducial
matters, or with the custody, handling or care and protection of the employers property. [8] There is no
dispute about this. But the employer must clearly and convincingly establish the facts and incidents upon
which its loss of confidence in the employee may be fairly made to rest, otherwise, the dismissal will be
rendered illegal.[9]
Petitioners claim is that although private respondent deposited only P356,400.00 in the Metrobank,
she filled up a deposit slip showing the deposit to be P371,400.00 and this amount was recorded in the cash
proof sheet and batch sheet for November 16, 1984. But there is no evidence to show this. The falsified
deposit slip allegedly made by private respondent was not presented. Petitioner claimed it was missing. But
as private respondent testified the amount of P356,400.00 which she deposited was recorded in the
Metrobank passbook. She gave this passbook to Mrs. Ubaa on November 16, 1984. Yet the supposed
discrepancy was not noticed by Mrs. Ubaa in preparing the cash proof sheet and the debit sheet who
recorded P371,400.00 as having been deposited in Metrobank. Petitioners allegation that Ms. Centeno
misled the cashier and the clearing clerk into recording P371,400.00 cannot therefore be given credence.
Indeed, private respondent denied that she gave Mrs. Ubaa a falsified deposit slip showing a deposit
of P371,400.00 because after the Metrobank picked up the deposit she made, private respondent handed to
Mrs. Ubaa the deposit slip of P356,400.00 together with the cash proof sheet of November 15, 1984 and
the key to the vault.[10] Besides, Mrs. Ubaa as already stated, had the passbook. She could not have failed
to notice that the amount deposited was P356,400.00 and not P371,400.00 as the bank now claims it was
made to understand on November 16, 1984.
Petitioner claims that the party responsible for concealing the shortage altered the tellers vale and made
it appear that the vale of Teller 3 (Antonette Reyes) was P15,011.00 when the fact was that it was only for
P11.00 as shown in the duplicate vale in the possession of Reyes. This claim is subject to two
objections. First, it was not shown that private respondent had custody of the vale or, if she had access to
the document, that private respondent was the only one who had such access to it, so as to make her the
only possible author of the alteration.Second, the fact that the altered vale of Teller 3 in the possession of
the bank was not in the tellers customary way of recording does not necessarily mean that the vale she had
was the authentic vale while that given to the clearing clerk was falsified. She could have altered her usual
practice of recording.
It is noteworthy that the shortage was incurred on the day (November 16, 1984) the branch regular
cashier, Mrs. Victoria Ubaa, reported for work. It was she in fact who prepared the cash proof sheet. The
alteration in the cash proof sheet on that day could not have been made by private respondent. As an NBI
handwriting expert stated under cross examination:
WITNESS
A The supplemental report is also an answer to the first. The requested analysis should center on
the handwritings of the two (2) persons, Mrs. Victoria Ubaa and Mrs. Victoria Centeno. In
my first report dated December 3, 1985 my findings are as follows: The no. 1 states that
there are existing fundamental differences between the questioned handwritings or figures
appearing on the questioned document and the standard handwritings/figures appearing on
the standard documents marked as SV-1 thru SV-9 and those standards were the
handwritings of one Victoria Ubaa.The result of which is that the questioned handwritings
and the standard handwritings were not written by one and the same person. And then in
statement that the submitted standards, signatures under the specimen named Victoria
Centeno any findings whether Victoria Centeno or not is the writer of the questioned
handwritings, so I made the supplemental report to make a definite answer that all the figures
and handwritings appearing on the cash proof sheet which is being questioned were not
written by Victoria Centeno to answer this phrase. (Emphasis supplied)
Furthermore, the cash proof sheet and the vale were kept in the banks vault, the key to which was held
only by Mrs. Ubaa, as cashier of the bank.[11] Any alteration in the documents by private respondent or by
any party could, therefore, have easily been discovered by the cashier.
Petitioner further claims that private respondents accounting method did not correctly reflect the bills
from previous banking days and that taking into account all the entries, the amount not reflected was
equivalent to the shortage. This contention is without merit. While the accounting method adopted by
private respondent was different from the method used by Mrs. Ubaa, private respondents method was
nonetheless an acceptable bank procedure according to Mr. Robleza, petitioners own witness.[12] The
method adopted by private respondent was accurate, otherwise it could not have been allowed by the bank.
Indeed private respondent was acting cashier for two months, from September 17, 1984 to November
15, 1984. During that period no shortage was ever reported. At the time the cash in the vault was turned
over to Mrs. Ubaa, it was counted and the failure to record its amount at that time can only mean one thing:
that the cash turned over to Mrs. Ubaa corresponded with the amount recorded in the cash proof sheet on
November 15, 1984.
Private respondent had faithfully served petitioner bank for 19 years. Starting as a bank teller, she
steadily rose to the position of assistant branch cashier. Considering this fact, petitioner should have been
more careful in determining liability for the loss rather than merely relying on what it calls circumstantial
evidence of guilt. The fact that only private respondent did not answer the charge when required in the
memorandum of petitioner is not an indication of her guilt. While we recognize that petitioner has a
wide latitude in dismissing a bank officer,nonetheless, the evidence on which it acts must be substantial.
As the dismissal of private respondent is illegal, she is entitled to reinstatement to her former position
without loss of seniority rights and to the payment to her of backwages.[13] The NLRC correctly limited the
award of backwages to three years, consistent with the rule at the time of private respondents
dismissal.[14] R.A. No. 6715, which amended Art. 279 of the Labor Code, awarding full backwages to
illegally dismissed employees, cannot be retroactively applied to dismissals taking place before its
effectivity on March 21, 1989.[15]
WHEREFORE, the petition is DISMISSED.
SO ORDERED.

49. RAYCOR AIR CONTROL VS NLRC, 261 SCRA 589

DECISION
PANGANIBAN, J.:

Were private respondents, employed by petitioner in its business of installing airconditioning systems
in buildings, project employees or regular employees? And were their dismissals "due to (petitioner's)
present business status" and effective the day following receipt of notice legal? Where both the petitioner
and the respondents fail to present sufficient and convincing evidence to prove their respective claims, how
should the case be decided?
This Court answers the foregoing questions in resolving this petition for certiorari assailing the
Decision[1] promulgated November 29, 1993 by the National Labor Relations Commission,[2] which set
aside and reversed the decision of the labor arbiter[3] dated 22 January 1993, as well as the subsequent order
of respondent Commission denying petitioner's motion for reconsideration.

The Facts
Petitioner's sole line of business is installing airconditioning systems in the buildings of its clients. In
connection with such installation work, petitioner hired private respondents Roberto Fulgencio, Rolando
Laya, Florencio Espina, Romulo Magpili, Ramil Hernandez, Wilfredo Brun, Eduardo Reyes, Crisostomo
Donompili, Angelito Realingo, Hernan Delima, Jaime Calipayan, Jorge Cipriano, Carlito de Guzman,
Susano Atienza, and Gerardo de Guzman, who worked in various capacities as tinsmith, leadman, aircon
mechanic, installer, welder and painter.Private respondents insist that they had been regular employees all
along, but petitioner maintains that they were project employees who were assigned to work on specific
projects of petitioner, and that the nature of petitioner's business -- mere installation (not manufacturing) of
aircon systems and equipment in buildings of its clients -- prevented petitioner from hiring private
respondents as regular employees. As found by the labor arbiter, their average length of service with
petitioner exceeded one year, with some ranging from two to six years (but private respondents claim much
longer tenures, some allegedly exceeding ten years).
In 1991, private respondent Laya and fourteen other employees of petitioner filed NLRC NCR Case
No. 00-03-02080-92 for their "regularization". This case, was dismissed on May 20, 1992 for want of cause
of action.[4]
On different dates in 1992, they were served with uniformly-worded notices of "Termination of
Employment" by petitioner "due to our present business status", which terminations were to be effective
the day following the date of receipt of the notices. Private respondents felt they were given their walking
papers after they refused to sign a "Contract Employment" providing for, among others, a fixed period of
employment which "automatically terminates without necessity of further notice" or even earlier at
petitioner's sole discretion.
 Because of the termination, private respondents filed three cases of illegal dismissal against petitioner,
alleging that the reason given for the termination of their employment was not one of the valid grounds
therefor under the Labor Code. They also claimed that the termination was without benefit of due process.
The three separate cases filed by private respondents against petitioner, docketed as NLRC-NCR 00-
03-05930-92, NLRC NCR 00-05-02789-92, and NLRC NCR 00-07-03699-92, were subsequently
consolidated. The parties were given opportunity to file their respective memoranda and other supplemental
pleadings before the labor arbiter.
On January 22, 1993, the Labor Arbiter issued his decision dismissing the complaints for lack of
merit. He reasoned that the evidence showed that the individual complainants (private respondents) were
project employees within the meaning of Policy Instructions No. 20 (series of 1977) [5] of the Department
of Labor and Employment, having been assigned to work on specific projects involving the installation of
air-conditioning units as covered by contracts between their employer and the latter's clients. Necessarily,
the installation of airconditioning systems "must come to a halt as projects come and go", and "(o)f
consequence, the [petitioner] cannot hire workers in perpetuity. And as project employees, private
respondents would not be entitled to termination pay, separation pay, holiday premium pay, etc.; and neither
is the employer required to secure a clearance from the Secretary of Labor in connection with such
termination.
Private respondents appealed to the respondent NLRC, which in its November 29,
1993 Decision reversed the arbiter and found private respondents to have been regular employees illegally
dismissed. The respondent Commission made the following four-paragraph disquisition:

"From the above rules, it can easily be- gleaned that complainants belong to a work pool from which the
respondent company drew its manpower requirements. This is buttressed by the fact that many of the
complainants have been employed for long periods of time already.

We doubt respondent's assertion that complainants were really assigned to different projects. The
'Contract Employment' which it submitted (see pp. 32-38, record) purporting to show particular projects
are not reliable nay even appears to have been contrived. The names of the projects clearly appear to have
been recently typewritten. In the 'Contract Employment' submitted by complainants (see p. 65, record), no
such name of project appears. Verily, complainants were non-project employees.

Anent the dismissal of complainants, suffice it to state that the same was capricious and whimsical as
shown by the vague reason proffered by respondent for said dismissal which is 'due to our present
business states' (should read 'status') is undoubtedly not one of the valid causes for termination of an
employment. We are thus inclined to give credence to complainants' allegation that they were eased out of
work for their refusal to sign the one-sided 'Contract Employment.'

The fact that complainants were dismissed merely to spite them is made more manifest by respondent's
failure to make a report of dismissal or secure a clearance from the Department of Labor (see pp. 196 and
197, record) as required under P.I. No. 20 and their publication of an advertisement for replacements for
the same positions held by complainants (see p. 298, record). Even assuming that complainants were
project employees, their unceremonious dismissal coupled with the attempt to replace them via the
newspaper advertisement entitles them to reinstatement with backwages under P.I., No. 20."

The dispositive portion followed immediately and read:

"WHEREFORE, the appealed Decision is hereby SET ASIDE and a new one entered ordering respondent
to:
1. Immediately reinstate complainants (private respondents) to their former positions without loss of
seniority rights and privileges; and

2. Pay them full backwages from the time they were dismissed up to the time they are actually reinstated."

Petitioner's motion for reconsideration was denied by public respondent on February 23, 1994 for lack
of merit. Hence, this petition.

Issues
Petitioner charges public respondent NLRC with grave abuse of discretion in finding private
respondents to have been non-project employees and illegally dismissed, and in ordering their reinstatement
with full backwages.
For clarity's sake, let us re-state the pivotal questions involved in the instant case as follows: whether
private respondents were project employees or regular (non-project) employees, and whether or not they
were legally dismissed.
In support of its petition, petitioner reiterates the same points it raised before the tribunals below: that
it is engaged solely in the business of installation of airconditioning units or systems in the buildings of its
clients. It has no permanent clients with continuous projects where its workers could be assigned; neither
is it a manufacturing firm. Most of its projects last from two to three months. (The foregoing matters were
never controverted by private respondents.) Thus, for petitioner, work is "not done in perpetuity but
necessarily comes to a halt when the installation of airconditioning units is completed."
On the basis of the foregoing, petitioner asserts that it could not have hired private respondents as
anything other than project employees. It further insists that "(a)t the incipience of hiring, private
respondents were appraised (sic) that their work consisted only in the installation of airconditioning units
and that as soon as the installation is completed, their work ceases and that they have to wait for another
installation projects (sic)." In other words, their work was co-terminous with the duration of the project,
and was not continuous or uninterrupted as claimed by them. Petitioner also claims that the private
respondents signed project contracts of employment indicating the names of the projects or buildings they
are working on. And when between projects, there project employees were free to work elsewhere with
other establishments.
Private respondents controverted these assertions of petitioner, claiming that they had
worked continuously for petitioner for several years, some of them as long as ten years, and thus, by
operation of law had become regular employees.

The Court's Ruling

Ordinarily, the findings made by the NLRC are entitled to great respect and are even clothed with
finality and deemed binding on this Court, except that when such findings are contrary to those of the labor
arbiter, this Court may choose to re-examine the same, as we hereby do in this case nor.

The First Issue: Project Employees or Regular Employees?

 An Unfounded Conclusion

We scoured the assailed Decision for any trace of arbitrariness, capriciousness or grave abuse of
discretion, and noted that the respondent Commission first cited the facts of the case, then quoted part of
the arbiter's disquisition along with relevant portions of Policy Instructions No. 20, after which it
immediately leapt to the conclusion that "(F)rom the above rules, it can easily be gleaned that complainants
belong to a work pool from which the respondent company drew its manpower requirements. This is
buttressed by the fact that many of the complainants have been employed for long periods of time
already." (underscoring supplied) By reason of such "finding", respondent NLRC concluded that private
respondents were regular (not project) employees, but failed to indicate the basis for such finding and
conclusion. For our part, we combed the Decision in search of such basis. However, repeated scrutiny of
the provisions of Policy Instructions No. 20 pertaining to work pools merely raised further questions.
"Members of a work pool from which a construction company draws its project employees, if
considered employees of the construction company while in the work pool, are non-project employees or
employees for an idefinite period. If they are employed in a particular project, the completion of the project
or of any phase thereof will not mean severance of employer-employee relationship.
However, if the workers in the workpool are free to leave anytime and offer their services to other
employers then they are project employees employed by a construction company in a particular project or
in a phase thereof."
A careful reading of the aforequoted and preceding provisions establishes the fact that project employees
may or may not be members of a workpool, (that is, the employer may or may not have formed a work
pool at all), and in turn, members of a work pool could be either project employees or regular
employees. In the instant case, respondent NLRC did not indicate how private respondents came to be
considered members of a work pool as distinguished from ordinary (non-work pool) employees. It did not
establish that a work pool existed in the first place. Neither did it make any finding as to whether the herein
private respondents were indeed free to leave anytime and offer their services to other employers, as
vigorously contended by petitioner, despite the fact that such a determination would have been critical in
defining the precise nature of private respondents' employment. Clearly, the NLRC's conclusion of regular
employment has no factual support and is thus unacceptable.

Conclusion Based on Unwarranted Assumption of Bad Faith

Immediately thereafter, respondent Commission determined -- without sufficient basis -- that

complainants were non-project employees. We quote:

"We doubt respondent's (petitioner's) assertion that complainants (private respondents) were really
assigned to different projects. The "Contract Employment" which it submitted (see pp. 32-38, record)
purporting to show particular pojects are not reliable nay even appears to have been contrived. The names
of the projects clearly appear to have been recently typewritten. In the 'Contract Employment' submitted
by complainants (see p. 65, record), no such name of project appears. Verily, complainants were non-
project employees." (underscoring supplied)

The basis for respondent NLRC's statement that the contracts were contrived was the fact that the
names of projects clearly appeared to have been typed in only after the contracts had been
prepared. However, our examination of the contracts (presented by petitioner as Annexes "A", "B", "B-1",
"C", "D", "E" and "F"[6] to its Position Paper dated July 30, 1992 filed with the labor arbiter) did not lead
inexorably to the conclusion that these were "contrived". Said Annexes were photocopies of photocopies
of the original "Contract Employments",[7] and the names of projects had been typed onto these
photocopies, meaning that the originals of said contracts probably did not indicate the project names. But
this alone did not automatically or necessarily mean that petitioner had committed any falsehood or fraud,
or had any intent to deceive or impose upon the tribunals below, because the names of the projects could
have been typed/filled in good faith, nunc pro tunc, in order to supply the data which ought to have been
indicated in the originals at the time those were issued, but which for some reason or other were omitted. In
short, the names of projects could have been filled in simply in order to make the contracts speak the truth
more clearly or completely. Notably, no reason was advanced for not according the petitioner the
presumption of good faith. Respondent NLRC, then, made an unwarranted assumption that bad faith and
fraudulent intent attended the filling in of the project names in said Annexes. In any event, it can be easily
and clearly established with the use of the naked eye that the dates and durations of the projects and/or work
assignments had been typed into the original contracts, and therefore, petitioner's failure to indicate in the
originals of the contracts the name(s) of the project(s) to which private respondents were assigned does not
necessarily mean that they could not have been project employees. (Incidentally, we should make mention
here that what is or is not stated in a contract does not control nor change the Juridical nature of an
employment relationship since the same is determined and fixed by law. As a matter of fact, we note that
there is no requirement in Policy Instructions No. 20 that project employees should be
issued written contracts of employment, let alone that a written contract should indicate the name of the
project to which the employee concerned is being assigned.)

Statutory Basis for Determining Nature of Employment

The parties and their respective counsel, as well as respondent Commission and the Solicitor General,
should have re-read and carefully studied ALU-TUCP vs. National Labor Relations Commission,[8] which
is highly instructional on this question:

"The law on the matter is Article 280 of the Labor Code which reads in full:

'Article 280. Regular and Casual Employment -- The provisions of the written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is seasonal in nature and
the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided,
That, any employee who has rendered at least one year of service, whether such service is continuous or
broken, shall be considered a regular employee with respect to the activity in which he is employed and
his employment shall continue while such activity exists.' xxx

xxxxxxxxx

x x x For, as is evident from the provisions of Article 280 of the Labor Code, quoted earlier, the principal
test for determining whether particular employees are properly characterized as 'project employees' as
distinguished from 'regular employees,' is whether or not the 'project employees' were assigned to carry
out a 'specific project or undertaking,' the duration (and scope) of which were specified at the time the
employees were engaged for that project. (underscoring ours)

In the realm of business and industry, we note that 'project' could refer to x x x a particular job or
undertaking that is within the regular or usual business of the employer company, but which is distinct
and separate, and identifiable as such, from the other undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times. The typical example of this x x x type
of project is a particular construction job or project of a construction company. A construction company
ordinarily carried out two or more discrete identifiable construction projects: e.g., a twenty-five.story
hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo
City. Employees who are hired for the carrying out of one of these separate projects, the scope and
duration of which has been determined and made known to the employees at the time of employment, are
properly treated as 'project employees,' and their services may be lawfully terminated at completion of the
project."

The same decision goes on to say:[9]

"x x x The simple fact that the employment of petitioners as project employees had gone beyond one (1)
year, does not detract from, or legally dissolve, their status as project employees. The second paragraph of
Article 280 of the Labor Code, quoted above, providing that an employee who has served for at least one
(1) year, shall be considered a regular employee, relates to casual employees, not to project employees.

In the case of Mercado, Sr. vs. National Labor Relations Commission (201 SCRA 332 [1991]), this Court
ruled that the proviso in the second paragraph of Article 280 relates only to casual employees and is not
applicable to those who fall within the definition of said Article's first paragraph, i.e.. project
employees. x x x"

Incidentally, we should mention that both respondent Commission and the Solicitor General were in
error in concluding based on private respondents' claimed length of employment (allegedly for over ten
years) that they were regular employees. Sad to state, the Solicitor General in his arguments tried to "force-
fit" private respondents into the "regular employee" category and completedly disregarded the critical
distinctions set forth in ALU-TUCP and earlier cases.

Inconclusive Evidence

Based on the foregoing considerations, it is patent that, in the instant case, there needs to be a finding
as to whether or not the duration and scope of the project or projects were determined or specified and made
known to herein private respondents at the time of their engagement. The labor arbiter tried to do this,
relying heavily on the "Contract(s) Employment" presented in petitioner's Annexes as well as on private
respondents' own Annex "A"[10] attached to their Position Paper, and citing the fact that the said contracts
of employment indicated the duration of the projects to which the private respondents had been
assigned. He then held that "(t)here is no denial that complainants were assigned to work in these
projects,"[11] and concluded that they were indeed project employees.
But the arbiter completed ignored the fact that all the "Contract(s) Employment" presented in evidence
by both petitioner and private respondents had been signed only by petitioner's president and general
manager, Luis F. Ortega, but not by the employees concerned, who had precisely refused to sign them. The
said contracts therefore could in no wise be deemed conclusive evidence. Thus, private respondents faulted
the labor arbiter for giving credence and probative value to said contracts. Besides, they claimed, only seven
contracts in all were presented in evidence, pertaining to seven individual employees, while there are fifteen
employees involved in the complaints. Moreover, these contracts, purportedly issued either in July or
December of 1991, except for one dated May 1992), were all one-shot contracts of short duration, the
longest being for about five months. Now, inasmuch as petitioner had not denied nor rebutted private
respondents' allegations that they had each worked several years for the petitioner, the obvious question is,
why didn't petitioner produce in evidence similar contracts for all the other years that private respondents
had worked as project employees? To these points, petitioner offered no explanation whatsoever.

Failure to Discharge Burden of Proof

For that matter, it seems self-evident to this Court that, even if the contracts presented by petitioner
had been signed by the employees concerned, still, they would not constitute conclusive proof of petitioner's
claim. After all, in the usual scheme of things, contract terms are normally dictated by the employer and
simply acceded to and accepted by the employee, who may be desperate for work and therefore in no
position to bargain freely or negotiate terms to his liking.
In any event, petitioner in this case undoubtedly could have presented additional evidence to buttress
its claim. For instance, petitioner could have presented copies of its contracts with its clients, to show the
time, duration and scope of past installation projects. The data from these contracts could then have been
correlated to the data which could be found in petitioner's payroll records for, let us say, the past three years
or so,[12] to show that private respondents had been working intermittently as and when they were assigned
to said projects, and that their compensation had been computed on the basis of such work. But petitioner
did not produce such additional evidence, and we find that it failed to discharge its burden of proof.
It is not so much that this Court cannot appreciate petitioner's contentions about the nature of its
business and its inability to maintain a large workforce on its permanent payroll. Private respondents have
admitted that petitioner is engaged only in the installation (not manufacture) of aircon systems or units in
buildings, and since such a line of business would obviously be highly (if not wholly) dependent on the
availability of buildings or projects requiring such installation services, which factor no businessman, no
matter how savvy, can accurately forecast from year to year, it can be easily surmised that petitioner, aware
that its revenues and income would be unpredictable, would always try to keep its overhead costs to a
minimum, and would naturally want to engage workers on a per-project or per-building basis only, retaining
very few employees (if any) on its permanent payroll. It would also have been more than glad if its
employees found other employment elsewhere, in between projects. To our mind, it appears rather unlikely
that petitioner would keep private respondents -- all fifteen of them -- continuously on its permanent payroll
for, say, ten or twelve years, knowing fully well that there would be periods (of uncertain duration) when
no project can be had. To illustrate, let us assume that private respondents (who were each making
about P118.00 to P119.50 per day in 1991) were paid only P100.00 per day. If the fifteen were, as they
claimed, regular employees entitled to their wages regardless of whether or not they were assigned to work
on any project, the overhead for their salaries alone -- computed at P100.00/day for 30 days in a month --
would come to no less than P45,000.00 a month, or P540,000.00 a year, not counting 13th month pay,
Christmas bonus, SSS/Medicare premium payments, sick leaves and service incentives leaves, and so
forth. Even if petitioner may have been able to afford such overhead costs, it certainly does not make
business sense for it or anyone else to do so, and is in every sense contrary to human nature, not to mention
common business practice. On this score alone, we believe that petitioner could have made out a strong
case. Which is why we have difficulty understanding its failure to present clear and convincing evidence
on this point, it being doctrinal that in illegal dismissal cases, the employer always has the burden of
proof.[13]
 Petitioner's problem of weak evidence was further compounded by certain documentary evidence in
the records below which controverted petitioner's position, or, at the very least, tended to confuse rather
than clarify matters. For instance, we noted that in their Memorandum of Appeal dated February 17, 1993
filed with the respondent Commission, herein private respondents had attached as annexes thereto the
following documents:
1. As Annex "B" thereof, a Certification dated January 28, 1992, signed by one Flora P. Perez,
Administrative/Accountant of Raycor, certifying that "x x x Mr. Roberto B. Fulgencio (one of
the private respondents) has been connected with the undersigned corporation (Raycor) from
August 22, 1986 to May 18, 1991 and September 01, 1990 to January 25, 1992 as Aircon
Installer";
2. As Annex "C" thereof, a Certification dated May 7, 1985, signed by Luis F. Ortega, President
and General Manager of herein petitioner corporation, to the effect that "x x x Mr. Jaime
Calipayan(another one of the private respondents) has been connected with the undersigned
corporation from June 18, 1982 up to present as a Mechanical Installer ; and
3. As Annex "D" thereof, a Certification dated June 06, 1991, likewise signed by Luis G. Ortega,
president and general manager of Raycor, certifying that "x x x Mr. Susano A. Atienza (still
another of the private respondents) has been connected with the undersigned corporation from
October 10, 1983 up to present as Aircon Mechanic/Technician".
Understandably, private respondents made big capital out of these certifications. But, while petitioner
failed utterly to offer rebutting evidence, still and all, we are not prepared to conclude on the basis of these
certifications alone that private respondents were indeed regular employees. First of all, said certifications
refer only to three out of the fifteen private respondents, so what could be true of them may not necessarily
apply with respect to the other twelve. Moreover, the certifications do not categorically state that the three
employees had been permanent employees of Raycor. In other words, they do not necessarily overturn
petitioner's contention that private respondents were project employees, since it is still possible to read the
documents a saying that the named employees were working as project employees during the periods
therein specified. This is especially so since the said certifications were prepared by non-lawyers who in all
likelihood were not aware of the potential legal implications and ramifications of what were ostensibly
innocuous certifications. As held in one recent case, "x x x it is however not difficult to understand that
ordinary business activities are performed in the normal course without anticipation nor foreknowledge of
litigation, often with dispatch and usually with a minimum of documentation.[14] Nonetheless, all things
considered, the certifications, issued by petitioner itself, tend to put its claims in serious doubt.
The situation was still further aggravated by the manner in which petitioner dismissed private
respondents. As found by respondent Commission, the reason given for the dismissals, i.e., "due to our
present business status," is vague, to say the least, and unarguably is not one of the valid or just causes
provided by law for termination of an employment, whatever its classification. But more significantly -- if
indeed private respondents were project employees, there would have been no need to terminate them by
sending them notices of termination, inasmuch as their employment ceases "as a result of the completion
of the project or any phase thereof in which they are employed," per Policy Instruction No. 20 itself. Thus,
if petitioner resorted to such dismissals, there is the unavoidable inference that petitioner regarded the
private respondents as regular employees after all. But again, this is inconclusive, since the notices of
termination were signed, and in all likelihood prepared, by the president and general manager of petitioner,
probably sans any legal advice or awareness of the implications of such a move.
All the aforesaid conflicting data have the net effect of casting doubt upon and clouding the real nature
of the private respondents' employment status. And we are mandated by law to resolve all doubts in favor
of labor. For which reason, we hereby hold that private respondents were regular employees of the
petitioner.
 Having arrived at basically the same results as respondent NLRC with respect to private respondents'
employment status, did this Court waste its time and effort in re-examining the instant case? The answer is
in the negative, this Court cannot affirm a decision or judgment based on erroneous findings and
conclusions, for justice can never be adequately dispensed to all parties if a judgment is not grounded on
the truth.

Second Issue: Terminations Illegal

On the second issue of alleged illegality of the subject dismissals, we agree with respondent
Commission when it held, as mentioned above, that "the same was capricious and whimsical as shown by
the vague reason proffered by respondent for said dismissal which is 'due to our present business states'
(should read 'status') is undoubtedly not one of the valid causes for termination of an employment." True
indeed, for neither trhe Labor Code nor Policy Instructions No. 20 allows termination on such ground. Even
Art. 283 of the Labor Code as amended, which treats of retrenchments and closures due to business losses,
requires that the employer first serve written notice on the workers and the Department of Labor at least
one month before the intended date thereof; and in certain cases, separation pay must be paid. And it cannot
be denied that in the instant case, petitioner did not afford them due process thru the twin requirements of
notice and hearing,[15] as the terminations took effect the day following receipt of the notices of
termination. Ineluctably, the said terminations are not in accordance with law and therefore illegal.
On top of that, there is evidence of the bad faith of petitioner in terminating the private
respondents. Petitioner placed an ad[16] in the classified ads section of the People's Journal, sometime in
June 1992[17] which read:

"WANTED IMMEDIATELY
MECHANICAL INSTALLERS
TINSMITHS
WELDERS/PIPEFITTERS

APPLY IN PERSON:
RAYCOR AIR CONTROL
SYSTEMS, INC.
RM 306 20TH CENTURY BLDG.
632 SHAW BLVD., MAND.
METRO MANILA"
Unmistakably, petitioner, in placing the ad, must have had at least one project, maybe more, "in the
pipeline" at that time, and was clearly in need of replacements for private respondents whom it had just
fired. Thus, the dismissals could hardly have been due to a valid cause, not even due to petitioner's alleged
"present business status". On this count as well, the dismissals were illegal.
And lastly, we should mention that an order for reinstatement with payment of backwages must be
based on the correct premises. This point is best illustrated by considering the last ratiocination utilized by
public respondent: "Even assuming that complainants were project employees, their unceremonious
dismissal coupled with the attempt to replace them via the newspaper advertisement entitles them to
reinstatement with backwages under P.I. No. 20." There is a world of difference between reinstatement as
project employees and reinstatement as regular employees, but the difference was obviously lost on the
respondent NLRC.
 Conclusion
We reiterate that this Court waded through the records of this case searching for solid evidence upon
which to decide the case either way. But all told, neither party managed to make out a clear case. Therefore,
considering that in illegal dismissal cases, the employer always has the burden of proof, and considering
further that the law mandates that all doubts, uncertainties, ambiguities, and insufficiencies be resolved in
favor of labor, we perforce rule against petitioner and in favor of private respondents.
WHEREFORE, the foregoing considered, the assailed Decision is hereby SET ASIDE and a new one
rendered holding that petitioner had failed to discharge its burden of proof in the instant case and
therefore ORDERING the reinstatement of private respondents as regular employees of petitioner, without
loss of seniority rights and privileges and with payment of backwages from the day they were dismissed up
to the time they are actually reinstated. No costs.
SO ORDERED.
50. WALLEM MARITIME SERVICES VS. NLRC, 263 SCRA 174

DECISION
ROMERO, J.:

This petition for certiorari seeks to annul and set aside the Resolution[1] of the National Labor
Relations Commission (NLRC) affirming the Decision[2] of the Philippine Overseas Employment
Administration (POEA) which disposed of POEA Case No. (M)89-09-865 as follows:

WHEREFORE, in view of the foregoing, respondents Wallem Maritime Services, Inc. and Wallem
Shipmanagement Ltd. are hereby ordered jointly and severally, to pay complainant the following in
Philippine currency at the prevailing rate of exchange at the time of payment:

a) THREE HUNDRED THREE US DOLLARS

(US$303.00) representing salary for the month of June 1989;

b) THREE THOUSAND FIFTY FOUR US DOLLARS

(US$3,054.00) representing salaries for the unexpired portion of the contract (July-
December 1989); and

c) ONE HUNDRED SIX & 50/100 US DOLLARS

(US$106.50) or five percent (5%) of the total award as and by way of attorneys fees.

The claim against Prudential Guarantee and Assurance Inc. is dismissed for lack of merit.

SO ORDERED.

Private respondent Joselito V. Macatuno was hired by Wallem Shipmanagement Limited thru its local
manning agent, Wallem Maritime Services, Inc., as an able-bodied seaman on board the M/T Fortuna, a
vessel of Liberian registry. Pursuant to the contract of employment, private respondent was employed for
ten (10) months covering the period February 26, 1989 until December 26, 1989 with a monthly salary of
two hundred seventy-six US dollars (US $276); hourly overtime rate of one dollar and seventy-two cents
(US $1.72), and a monthly tanker allowance of one hundred twenty-seven dollars and sixty cents (US
$127.60), with six (6) days leave with pay for each month.
On June 24, 1989, while the vessel was berthed at the port of Kawasaki, Japan, an altercation took
place between private respondent and fellow Filipino crew member, Julius E. Gurimbao, on the one hand,
and a cadet/apprentice officer of the same nationality as the captain of the vessel on the other hand. The
master entered the incident in the tankers logbook.
As a consequence, private respondent and Gurimbao were repatriated to the Philippines where they
lost no time in lodging separate complaints for illegal dismissal with the POEA.[3]According to the affidavit
private respondent executed before a POEA administering officer, the following facts led to the filing of
the complaint.
At about 5:50 a.m. of June 24, 1989, private respondent was on duty along with Gurimbao, checking
the manifold of the vessel and looking for oil leakages, when a cadet/apprentice who was of the same
nationality as the vessels captain (Singh), approached them. He ordered Gurimbao to use a shovel in
draining the water which, mixed with oil and dirt, had accumulated at the rear portion of the upper deck of
the vessel.
Gurimbao explained to the cadet/apprentice that throwing dirty and oily water overboard was
prohibited by the laws of Japan; in fact, port authorities were roaming and checking the sanitary conditions
of the port. The cadet/apprentice got mad and, shouting, ordered Gurimbao to get a hose and siphon off the
water. To avoid trouble, Gurimbao used a shovel in throwing the dirty water into the sea.
Having finished his job, Gurimbao complained to private respondent about the improper and
unauthorized act of the cadet/apprentice. The two went to the cadet/apprentice who was idly standing in a
corner. They reminded him that as a mere apprentice and not an officer of the vessel, he had no right
whatsoever to order around any member of the crew. However, the cadet/apprentice reacted violently -
shouting invectives and gesturing as if challenging the two to a fight. To prevent him from intimidating
them, private respondent pushed twice the cadet/apprentices chest while Gurimbao mildly hit his
arm. Frantic and shouting, the cadet/apprentice ran to the captain who happened to witness the incident
from the cabins window.
The captain summoned private respondent and Gurimbao. With their bosun (head of the deck crew),
they went to the captains cabin. The captain told them to pack up their things as their services were being
terminated. They would disembark at the next port, the Port of Ube, from where they would be flown home
to the Philippines, the repatriation expenses to be shouldered by them. The two attempted to explain their
side of the incident but the captain ignored them and firmly told them to go home.
Before disembarking, they were entrusted by the bosun with a letter of their fellow crew members,
addressed to Capt. Dio, attesting to their innocence. At the Port of Ube, an agent of the company handed
them their plane tickets and accompanied them the following day to the Fukoka Airport where they boarded
a Cathay Pacific airplane bound for Manila.
A few days after their arrival in Manila or on July 1, 1989, the two gave the letter to Capt. Dio and
conferred with him and Mr. James Nichols. The latter told private respondent that they could not secure a
reimbursement of their repatriation expenses nor could they get their salaries for the month of June. Private
respondent, in a letter addressed to Capt. Dio, asked for a reconsideration of their dismissal but the latter
did not respond. Frustrated, private respondent sought the assistance of a lawyer who wrote Wallem a
demand letter dated August 28, 1989but the same was ignored.[4]
Petitioners, defending their position, alleged that the incident was not the first infraction committed by
the two. As shown by the logbook, on June 19, 1989, while the vessel was docked in Batangas, they left it
during working hours without asking permission. For this offense, they were given a warning. On June 27,
1989 (sic), while the vessel was anchored at the Port of Kawasaki, Japan, they assaulted the officer on watch
for the day, Mr. V.S. Sason. The three were mustered and it was found that Sason was attacked with a
spanner without provacition (sic). The two were severely warned that they will be dealt according to the
rules and regulation of their contact of employment (sic). When the vessel was about to sail that day, the
two went ashore inspite of the warning given them. They were arrested by Japanese authorities but the
vessels departure was delayed for five (5) hours. The agency in Manila was informed that their wages
should be settled after deducting recoveries or fines and air fare. Their dismissal from the service was also
recommended.[5]
In his aforementioned decision of September 14, 1990 finding private respondents dismissal to be
illegal, POEA Deputy Administrator Manuel G. Imson held:

We find complainants dismissal to be without just and valid cause. We cannot give much weight and
credence to the certified true copy of the official logbook (Annex 1, answer) because the alleged entries
therein were only handpicked and copied from the official logbook of the vessel M/V Fortuna. There is no
way of verifying the truth of these entries and whether they actually appear in the log entries for the
specific dates mentioned. The pages in the official logbook where these entries appear should have been
the ones reproduced to give the same a taint of credence. Moreover, no documentary evidence was
submitted to support the alleged official logbook, like the Masters report and the police report or any
report by the Japanese authorities by reason of their arrest. Finally, the copy of the alleged official
logbook was not properly authenticated. The authentication is necessary specially so since this document
is the only piece of evidence submitted by respondents.

Granting that the entries in the logbook are true, a perusal thereof will readily show that complainant was
not afforded due process. The warnings allegedly given to complainant were not submitted in
evidence. Likewise, no investigation report was presented to prove that complainant was given the
opportunity to air his side of the incident.

It is also noteworthy to mention that complainant was able to describe with particularity the
circumstances which led to his misunderstanding with the cadet/apprentice and which we believe is not
sufficient to warrant his dismissal.[6]

As stated above, the NLRC affirmed the decision of the POEA, adopting as its own the latters findings
and conclusions. Hence, the instant petition contending that both the POEA and the NLRC gravely abused
their discretion in finding that private respondent was illegally terminated from his employment.
As with G.R. No. 107865, where herein petitioners likewise questioned the NLRC decision affirming
that of POEA Case No. (M) 88-11-1078 finding the dismissal from employment of Gurimbao to be
illegal,[7] the Court sees no merit in the instant petition.
An employer may dismiss or lay off an employee only for just and authorized causes enumerated in
Articles 282 and 283 of the Labor Code. However, this basic and normal prerogative of an employer is
subject to regulation by the State in the exercise of its paramount police power inasmuch as the preservation
of lives of citizens, as well as their means of livelihood, is a basic duty of the State more vital them the
preservation of corporate profits.[8] Ones employment, profession, trade or calling is a property right within
the protection of the constitutional guaranty of due process of law.[9]
We agree with petitioners that the ship captains logbook is a vital evidence as Article 612 of the Code
of Commerce requires him to keep a record of the decisions he had adopted as the vessels head. Thus,
in Haverton Shipping Ltd. v. NLRC,[10] the Court held that a copy of an official entry in the logbook is
legally binding and serves as an exception to the hearsay rule.
 However, the Haverton Shipping ruling does not find unqualified application in the case at bar. In said
case, an investigation of the incident which led to the seamans dismissal was conducted before he was
dismissed.[11] Consequently, the facts appearing in the logbook were supported by the facts gathered at the
investigation. In this case, because no investigation was conducted by the ship captain before repatriating
private respondent, the contents of the logbook have to be duly identified and authenticated lest an injustice
result from a blind adoption of such contents which merely serve as prima facie evidence of the incident in
question.[12]
Moreover, what was presented in the Haverton Shipping case was a copy of the official entry from the
logbook itself. In this case, petitioners did not submit as evidence to the POEA the logbook itself, or even
authenticated copies of pertinent pages thereof, which could have been easily xeroxed or photocopied
considering the present technology on reproduction of documents.[13] What was offered in evidence was
merely a typewritten collation of excerpts from what could be the logbook[14] because by their format, they
could have been lifted from other records kept in the vessel in accordance with Article 612 of the Code of
Commerce.[15]
Furthermore, the alleged entry in the logbook states, as regards the June 27, 1989 (sic) incident, as
follows:

KAWASAKI KAWASAKI This is to place on record that at the time, date

27.6.89 and place mentioned Mr. J.V. MACATUNO (Sr. No. 147) and
Mr. J.E. GURIMBAO
(Sr No. 156) attacked
and assaulted apprentice
officer Mr. V.S.
SASON while on
duty. All three were
mustered and it was
found that Mr. SASON
was attacked with a
spanner without
provacition (sic). Both
the seaman (sic) have
been severely warned
that they will be dealt
according to the rules
and regulation of their
contract of
employment.[16]
Under the Table of Offenses and Corresponding Administrative Penalties appended to the contract of
employment entered into by petitioners and private respondent, the offense described by the logbook entry
may well fall under insubordination and may constitute assaulting a superior officer with the use of deadly
weapon punishable with dismissal[17] if the victim is indeed a superior officer. However, an apprentice
officer cannot be considered a superior officer. An apprentice is a person bound in the form of law to a
master, to learn from him his art, trade, or business, and to serve him during the time of his
apprenticeship.[18] In other words, Mr. V.S. Sason was merely a learner or a trainee and not a regular officer
on board M/T Fortuna.
In this regard, it should be clarified that this Court does not tolerate nor sanction assault in any
form. Physical violence against anyone at any time and any place is reprehensible.However, in cases such
as this, where a persons livelihood is at stake, strict interpretation of the contract of employment in favor
of the worker must be observed to affirm the constitutional provision on protection to labor.
Moreover, the aforequoted entry in the logbook is so sketchy that, unsupported by other evidence, it
leaves so many questions unanswered. Although private respondent candidly admitted in his affidavit
having hit Sason on the chest twice, he did not admit using a spanner. The conflicting versions of the
incident rendered it impossible to determine whether it was private respondent or Gurimbao who wielded
said tool. In the absence of a more detailed narration in the logbook entry of the circumstances surrounding
the alleged assault, the same cannot constitute a valid justification to terminate private respondents
employment.[19]
Hence, as the typewritten excerpts from the logbook were the only pieces of evidence presented by
petitioners to support the dismissal of private respondent, have no probative value at all, petitioners cause
must fail. Their failure to discharge the onus probandi properly may have no other result than a finding that
the dismissal of private respondent is unjustified.[20]
Petitioners failure to substantiate the grounds for a valid dismissal was aggravated by the manner by
which the employment of private respondent was terminated. It must be borne in mind that the right of an
employer to dismiss an employee is to be distinguished from and should not be confused with the manner
in which such right is exercised. Dismissal from employment must not be effected abusively and
oppressively as it affects ones person and property. Thus, Batas Pambansa Blg. 130, amending paragraph
(b) of Article 278 of the Labor Code, imposed as a condition sine qua non that any termination of
employment under the grounds provided in Article 283 must be done only after notice and formal
investigation have been accorded the supposed errant worker.[21]
That the workers involved in the incident were mustered or convened thereafter by the captain is
inconsequential. It is insufficient compliance with the law which requires, as a vital component of due
process, observance of the twin requirements of notice and hearing before dismissing an employee. As
regards the notice requirement, the Court has stated:

On the issue of due process . . ., the law requires the employer to furnish the worker whose employment is
sought to be terminated a written notice containing a statement of the cause or causes for termination and
shall afford him ample opportunity to be heard and to defend himself with the assistance of a
representative. Specifically, the employer must furnish the worker with two (2) written notices before
termination of employment can be legally effected: (a) notice which apprises the employee of the
particular acts or omissions for which his dismissal is sought; and (b) the subsequent notice which
informs the employee of the employers decision to dismiss him. (Underscoring supplied.)[22]

Neither is the ship captains having witnessed the altercation an excuse for dispensing with the notice
and hearing requirements. Serving notice to private respondent under the circumstances cannot be regarded
as an absurdity and superfluity.[23]
ON ALL THE FOREGOING CONSIDERATIONS, the petition at bar is DISMISSED and the
Resolution of respondent National Labor Relations Commission is hereby AFFIRMED in toto.
SO ORDERED.

51. SAMILLANO VS NLRC, 265 SCRA 788

DECISION
PADILLA, J.:
 This petition for certiorari under Rule 65 of the Rules of Court refers to two (2) cases filed by
petitioner-spouses Conrado and Myrna Samillano against private respondents Dan-ag sa Dakbayan
Broadcasting Corporation-Radio Station DXDD and/or Msgr. Jesus Dosado and/or Simplicia Neri,
Chairman of the Board and Manager respectively of said respondent corporation.
The first case, filed by petitioner-spouses on 8 February 1991, is a complaint for illegal demotion while
the second complaint filed on 20 May 1991 is for illegal dismissal, payment of backwages, commissions
and other monetary claims.
The two (2) complaints before Regional Arbitration Branch No. 10, Cagayan de Oro City of the
National Labor Relations Commission (NLRC) docketed as NLRC RAB Case Nos. 10-03-00195 and 10-
06-00371-91 were later consolidated since they involve the same parties and issues.
The undisputed facts of the two (2) cases are as follows:
1. Petitioner-spouses Conrado and Myrna Samillano were hired by private respondents on 1
October 1981 and 1 August 1983 respectively;
2. On 2 October 1990, Conrado Samillano was transferred to the Technical Department as an
SSB Operator from his previous position as Traffic Supervisor of private respondent
corporation. On the same day, his wife Myrna V. Samillano was transferred to the AM
Production Department from her position as cashier of respondent corporation;
3. As a result of the transfers, the petitioner-spouses filed the complaint for illegal demotion
contending that the transfers resulted in loss of commissions and violated their security of
tenure;
4. On 20 May 1991, petitioner-spouses filed the complaint for illegal dismissal contending that
private respondents terminated their employment on 23 April 1991 without any lawful cause;
5. Private respondents relied on allegations that petitioner-spouses misappropriated funds of the
radio station and committed acts of insubordination which resulted in loss of trust and
confidence, upon which their dismissals were based;
6. In a supplemental position paper, herein petitioners contended that their demotion and
subsequent dismissal were retaliatory acts of private respondents for their having reported
violations by private respondents of labor laws particularly underpayment/nonpayment of
salaries and other benefits;
Labor Arbiter Noel Augusto S. Magbanua, to whom the cases were assigned, found that sometime in
July 1989, the Department of Labor and Employment conducted an inspection of the premises of private
respondent corporation and initially found deficiencies in wages and other benefits given to employees.
It was further determined that in March or April 1990, private respondents conducted meetings with
their employees seeking a compromise of the unpaid benefits. Some employees executed waivers of further
claims against private respondents. Herein petitioners refused to sign said waivers.
The labor arbiter formulated the following issues for resolution:[1]

1) whether complainants demotion and subsequent termination of employment were retaliatory acts for
complainants having allegedly reported respondents violations of labor laws,

2) whether complainants demotions were illegal; and

3) whether complainants terminations from employment were illegal.

 The labor arbiter resolved the first two (2) issues in the negative. He declared that no evidence was
presented to show that the demotions of petitioners were linked to their reporting of alleged violations by
private respondents of the Labor Code.
The labor arbiter further upheld managements prerogative, in the absence of bad faith, to protect its
rights in relation to the alleged offenses committed by petitioners. The demotions of petitioners were
therefore upheld.
With respect to the dismissal of petitioners from employment, however, the labor arbiter found that
the alleged misappropriations of funds committed by petitioners were not adequately substantiated. Hence,
the dismissal of petitioners was declared illegal.
The labor arbiter ruled however that instead of reinstatement, it would be for the best interest of the
parties considering the strained relations between them, to award petitioners separation pay equivalent to
one (1) month salary for every year of service. Full backwages were not awarded based on findings that
petitioners acted in an arrogant and uncooperative manner during the investigation of their case which could
be a possible reason why private respondents were not able to prove the formers involvement in the financial
irregularities subject of this case.[2] Only six (6) months backwages were awarded to each of the
complainants (herein petitioners).
Finally, the labor arbiter denied petitioners claims for unpaid commissions for lack of evidence.
Appeal by private respodnents to the NLRC was dismissed on 9 February 1994 for their failure to
properly perfect their appeal. The NLRC found that private respondents had filed their notice of appeal
without attaching thereto their appeal memorandum as required by Section 3 Rule VI of the Rules of
Procedure of the NLRC. There was therefore failure to perfect the appeal within the reglementary period
of ten (10) days from receipt of the assailed labor arbiters decision.
On 30 June 1994, the NLRC reinstated the appeal based on findings that while the notice of appeal
and appeal memorandum were received by the NLRC on 15 July 1993 and 20 July 1993 respectively, or
way beyond the period for appeal which expired on 3 July 1993, both pleadings were, however, actually
mailed on 2 July 1993 as evidenced by Registry Receipt No. 77 of the Tangub Post Office.[3]
On the merits of the appeal, the NLRC ruled that private respondents have substantiated their claim of
having lost trust and confidence in petitioners due to serious irregularities in the performance of their duties.
The NLRC held that, contrary to the findings of the labor arbiter, an audit report submitted by a certain
Domeciano Adaya dated 17 September 1990 showed substantial evidence of petitioners involvement in
irregularities including misappropriations of funds, non-turnover of collections and misuse of funds for
personal purposes. The NLRC relied on reports made by Janice Poncianos, the Finance Department
Business Head of respondent corporations radio station addressed to the station manager as well as the
report of the station manager to the chairman of the board of respondent corporation on the alleged acts of
herein petitioners.[4]
Based on the above findings, the NLRC set aside the assailed decision and ruled that petitioners were
validly dismissed. However, private respondents were ordered to indemnify petitioners the amount
of P2,000.00 each for violation of the latters right to due process. The NLRC agreed with the petitioners
that there was no formal investigation wherein the latter were given the chance to defend themselves against
the charges levelled against them.[5]
In their petition before this Court, it is argued by petitioners that:

1. The NLRC gravely abused its discretion in holding that the dismissals of herein petitioners were valid;
and
2. The NLRC gravely abused its discretion in merely imposing a sanction on private respondents for
violation of petitioners right to due process.[6]

Before ruling on the merits of this petition, the Court takes notice of a peculiar circumstance regarding
the appeal of the private respondents from the decision of the labor arbiter.
In the resolution reinstating private respondents appeal, the NLRC found that the notice of appeal and
memorandum on appeal were received on 15 July 1993 and 20 July 1993respectively. The reason for
reinstating the appeal was the finding that both pleadings were actually mailed on 2 July 1993 as evidenced
by Registry Receipt No. 77 postmarked on the same date at the Tangub City Post Office.
It is unexplained however why two (2) pleadings mailed together using a single registry receipt and
presumably contained in one (1) envelope would be received on two (2) different dates. It should be pointed
out that in the motion for reconsideration of the resolution dismissing the appeal, herein private respondents
averred mailing only the notice of appeal and a postal money order to cover appeal fees on 2 July l993. Be
that as it may, the Court shall proceed to resolve this case on the merits despite the possible technicality of
the appeal being filed late with the NLRC. The NLRC is however reminded to be more accurate in recording
the dates of mailing and receipt of pleadings filed before it since this is essential in the speedy and correct
disposition of cases.
Petitioners do not dispute before this Court the validity of their re-assignments. It is clear that the re-
assignments were a valid exercise of management prerogative pending investigation of the alleged
irregularities. The purpose of the re-assignments is no different from that of preventive suspension which
private respondents could likewise have validly imposed on petitioners; to protect the employers property
pending investigation of the alleged malfeasance or misfeasance committed by the employee.[7]
In the present case, the labor arbiter correctly held that there is no evidence to show that the transfer
of petitioners to other positions and the subsequent termination of their employment were retaliatory acts
of private respondents for petitioners reporting of the alleged violations by private respondents of the Labor
Code.
The legality of petitioners dismissal would be determined based on whether or not private respondents
have proved the basis for loss of trust and confidence upon which the dismissals are based.
In China City Restaurant Corporation v. NLRC[8] the Court held thus:
For loss of trust and confidence to be a valid ground for the dismissal of employees, it must be
substantial and not arbitrary, whimsical, capricious or concocted.
Irregularities or malpractices should not be allowed to escape the scrutiny of this
Court. Solicitude for the protection of the rights of the working class are of prime
importance. Although this is not a license to disregard the rights of management, still the Court
must be wary of the ploys of management to get rid of employees it considers as undesirable.
The NLRC based its decision upholding petitioners dismissal on the conclusion that the irregularities
involving petitioners were more than sufficient to make out a case of loss of trust and confidence. [9]
Said irregularities allegedly involving petitioners were enumerated in An Updated Report dated 17
August 1990 submitted by the Finance Department Business Head Janice Procianos and various letter-
memos to petitioners as well as the audit report dated 17 September 1990 submitted by Domeciano Adaya.
But petitioners correctly argue that the above-mentioned documents do not provide enough basis for
termination of their employment based on loss of trust and confidence.
The Adaya audit report in part reads:
 I am suggesting with a request that the above-mentioned observations be reviewed and
confirmed by the Station Accountant, Bookkeeper, Collector and Cashier or Cash Custodian in
my presence in fairness to everyone before I give conclusion, implication or opinion to these
observations. They may also give comments or raise objections, if any. The comments or
objections may be made orally or in writing.
In this connection, as I dont have line authority over the personnel concerned may I request you
to ask them to review and confirm by observations.
There is no evidence to show that herein private respondents undertook to review and/or confirm the
observations contained in the audit report as recommended by the audit report itself.
On the contrary, even in their comment on the petition filed with this Court, which respondents later
adopted as their memorandum, the dismissal of herein petitioners is justified mainly on the basis of said
audit report submitted by Domeciano Adaya.[10]
It is, however, clear from the above-quoted portion of the audit report that the findings contained
therein do not categorically find herein petitioners guilty of committing irregularities. The clear import of
the said audit report is that further investigation and verification would be necessary to pinpoint the source
of the irregularities.
There is thus no evidence on record to show that any further investigation and verification were done
by private respondents. What is apparent is that petitioners were made to answer charges of misconduct
based on suspicions which lacked adequate basis.
While the law and this Court recognize the right of an employer to dismiss an employee based on loss
of trust and confidence, the formers evidence must clearly and convincingly establish the facts upon which
the loss of trust and confidence in the employee is based.[11]
In the present case, the unsubstantiated suspicions and baseless conclusions of private respondents do
not provide legal justification for dismissing herein petitioners. The doubt in this case should be resolved
in favor of labor pursuant to the social justice policy of labor laws and the Constitution.
Finally, on petitioners right to due process, we uphold the NLRC findings that no formal investigation
was conducted prior to dismissal of petitioners. Private respondents thus failed to adequately comply with
the requirement that an employee should be given the opportunity to be heard and to defend himself before
he is dismissed. In San Antonio v. NLRC,[12] the Court stated that Proper compliance with the twin
requirements of notice and hearing are conditions sine qua non before a dismissal may be validly effected.
x x x Any procedural shortcut, that effectively allows an employer to assume the roles of both accuser and
judge at the same time, should not be countenanced. (emphasis supplied).
In the present case, the notices/memoranda to petitioners requiring explanations/answers to the charges
against them were plainly meant to provide a semblance of compliance with the due process requirement
which the NLRC correctly ruled to be inadequate.
The Court will not be deceived by schemes to circumvent the requirements of law and the
Constitution. For failure to fully comply with the requirements of due process, private respondents should,
as a matter of course, indemnify the petitioners but we refrain from awarding damages on this score since
we are awarding separation pay and backwages due to petitioners illegal dismissal.
The above-finding that petitioners were illegally dismissed normally requires that they be reinstated
to their former or equivalent positions with full backwages. In this case, however, the relationships between
petitioners and private respondents have undoubtedly become very strained, hence, separation pay in lieu
of reinstatement is proper.[13] However, as a consequence of petitioners illegal dismisal, full backwages
from date of dismissal to the finality of this decision are due the petitioners in line with the ruling in the
Bustamante case.[14]
WHEREFORE, the decision appealed from is hereby SET ASIDE and a new one entered:

1. DECLARING the dismissal from employment of petitioners NULL and VOID;

2. ORDERING private respondents to pay petitioners separation pay at the rate of ONE-HALF (1/2)
MONTH salary for every year of service; and

3. ORDERING private respondents to pay petitioners full backwages from date of illegal dismissal to the
finality of this decision.

SO ORDERED.

52. STOLT-NIELSEN VS NLRC, 264 SCRA 307

DECISION
ROMERO, J.:

Before us is a special civil action for certiorari filed by the petitioner seeking to annul the decision of
the labor arbiter and the resolution of the National Labor Relations Commission (NLRC) (Third Division,
Quezon City) finding that petitioner illegally dismissed private respondent Renato Siojo from his
employment. The labor arbiter ordered petitioner to pay Siojo the unexpired portion of his contract
equivalent to three months salaries and attorneys fees. On appeal, the NLRC affirmed the decision of the
labor arbiter and later dismissed petitioners motion for reconsideration.
The relevant facts are as follows:
Sometime in January 1994, private respondent Renato Siojo was hired as a Second Officer of Stolt
Falcon, a vessel of petitioner Stolt-Nielsen Marine Services, Inc., for a period of nine months with a basic
salary of US$1,024.00. He boarded the vessel on February 22, 1994, and immediately commenced to
discharge his duties and responsibilities as Second Officer. After working for just two months, however, he
was sent home and it was only upon his arrival in Manila that he learned of the reason for his termination.
For its part, petitioner claimed that after a month on board the Stolt Falcon, Siojo started committing
acts of gross insubordination towards his superiors by refusing to communicate with them with regard to
navigation, safety, and cargo. He also allegedly failed to acknowledge or relay to the relieving
personnel/officer any bride night order and wilfully refused to take part in cargo operations. Furthermore,
on at least three occasions, he refused to wear his safety hat during mooring and unmooring, in violation of
the companys safety procedures.
It was also alleged that Siojo refused to follow instructions given by the Chief Officer regarding cargo
operations and did not read the Cargo Safety Data Sheets, such that , on one occasion, he blew the lines
against a closed shore connection valve resulting in the spillage of 100 litters of cargo into the deck air
compressor tank.
Thus, on March 28, 1994, Siojo was summoned to explain his attitude to the master of the vessel. He,
however, allegedly became very agitated and rude, stating that he should not be made to sign any
statement. Convinced that Siojos acts of insubordination and hostile attitude were prejudicial to the safety
and operations of the vessel, and finding that he failed to perform his duty as deck officer as confirmed by
his unsatisfactory ratings, his superiors recommended his discharge.
On the other hand, Siojo insisted that all the acts imputed to him were fabricated by petitioner in order
to avoid its liability for his illegal dismissal. In support of his allegations, Siojo submitted photocopies of
the ships logbook for the period March 25 to April 11, 1994, showing that there was no report of any offense
or violation of company rules he had supposedly committed. He pointed out that the logbook had no entries
of the infractions he allegedly committed on March 27 and 28, 1994, respectively.
On June 21, 1996, Labor Arbiter Manuel Caday ruled that Siojo was dismissed without just cause and
without being accorded due process. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of the
complainant illegal and ordering respondent Stolt Nielsen Marine Services, Inc. to pay the corresponding
salaries for the unexpired portion of his contract but not exceeding the equivalent of three (3) months
salaries or in the amount of $3,072.00 which under the current peso dollar exchange rate is equivalent to
P80,486.40.

For having been compelled to hire services of counsel to prosecute his valid and just claims, the
respondent is further ordered to pay the complainant (sic), the equivalent of 10% of the recoverable award
in this case.

All other claims are hereby dismissed for lack of merit.

SO ORDERED.[1]

Aggrieved by the labor arbiters decision, petitioner appealed to the NLRC. The latter denied the appeal
for lack of merit and affirmed the decision of the labor arbiter. The NLRC likewise denied petitioners
motion for reconsideration.
Hence, this petition for certiorari.
Petitioner claims that the labor arbiter and the NLRC committed grave abuse of discretion in not
considering its evidence and in finding that Siojo was illegally dismissed.
On the labor arbiters and NLRCs appreciation of the facts, it is worth reiterating the well-entrenched
rule that when the conclusions of the labor arbiter are sufficiently corroborated by the evidence on record,
the same should be respected by appellate tribunals since he is in a better position to assess and evaluate
the credibility of the contending parties.[2] Moreover, it should be noted that factual issues are not a proper
subject for certiorari, as the power of the Supreme Court to review labor cases is limited to the issue of
jurisdiction and grave abuse of discretion.[3]
In the case at bar, the findings of the labor arbiter Siojo was dismissed without just cause and without
being accorded due process is supported by the facts and evidence on record. In support of his denial of the
infractions he allegedly committed, Siojo presented in evidence photocopies of the ships official logbook
entries for the period March 25 to April 11, 1994. Such entries failed to reflect any of the infractions
allegedly committed by Siojo; neither did they contain any statement regarding the investigation
supposedly conducted on board the vessel.
Petitioners evidence, on the other hand, consisting of the notice of investigation and notice of
termination which were authenticated by the Honorary Consulate General of the Philippines in Rotterdam,
Netherlands, appear to be irrelevant. The date of the authentication appeared as 3/5/94 which the labor
arbiter read as March 5, 1994. He correctly disregarded such evidence since it is obvious that said notices
were authenticated even before the dates of the alleged infractions, that is, from March 26 to 28, 1994.
Petitioner explained that the date 3/5/94 actualy stands for May 3, 1994, as it is customary in European
countries to write dates in numbers with the first digit representing the day and the second digit, the
month. In any case, the Philippine Consul General in Rotterdam would not have authenticated the
documents if they were indeed anomalous or irregular.
On this point, it should be observed that the entries in official records made in the performance of his
duty by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined
by law, are prima facie evidence of the facts therein stated. This means that such evidence is satisfactory
only if they are uncontradicted by contrary evidence. In the case at bar, the employee refuted the
authenticity of the notices of investigation and termination, presenting for his part photocopies of certain
pages of the vessels logbook showing that there was, in fact, no record of the violations he was accused of.
Furthermore, the labor arbiters finding that 3/5/94 meant March 5, 1994, not May 3, 1994, is logical
since the documents were authenticated by Philippine consular officials whose customary manner of writing
dates in numbers is by making the first digit represent the month, the second digit the day, and the last digits
the year. Second, petitioner could have presented other evidence to support its allegation that the documents
were indeed authenticated on May 3, 1994, but it did not. It is a basic rule in evidence that each party must
prove his affirmative allegation.[4] While technical rules are not strictly followed in the NLRC, this does
not mean that the rules on proving allegations are entirely dispensed with. Bare allegations are not enough;
these must be supported by substantial evidence at the very least.
Petitioner further asserts that even assuming that Siojo was not afforded the opportunity to explain his
side, his discharge was not thereby rendered illegal since there was just cause for his removal, that is, gross
insubordination. In support of this argument, petitioner relies on the ruling in Wenphil Corp. vs. NLRC[5],
as reiterated in Cathedral School of Technology vs. NLRC,[6] where it was held that an employee who was
dismissed for just cause but was not given an notice and hearing is not entitled to reinstatement and back
wages. In such case, the employer should be made to pay an indemnity for his failure to observe the
requirements of due process.
The rule is well established that in termination cases, the burden of proving just and valid cause for
dismissing an employee rests on the employer and his failure to do so shall result in a finding that the
dismissal is unjustified.[7] In the present case, petitioner failed to prove by substantial evidence that Siojo
indeed committed acts of insubordination which would warrant his dismissal. Its reliance on Wenphilis,
therefore, misplaced since in that case, there was just cause for the employees dismissal.

Article 277 of the Labor Code provides, inter alia:

(a) xxx xxx xxx"

"(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 and 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 causes for termination and shall afford
the latter ample opportunity to be heard and to defend himself with 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. xxx

In particular, Rule XXIII , Book V of the Omnibus Rules Implementing the Labor Code states:
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:

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 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; and

(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.

xxx xxx xxx."

In sum, to effect a completely valid and unassailable dismissal, the employer must show not only
sufficient ground therefore, but must also prove that procedural due process had been observed by giving
the employee two notices.[8] In this, petitioner was remiss, hence, it should suffer the consequences.
WHEREFORE, premises considered, the instant petition is DISMISSED. Accordingly, the decision
of the labor arbiter dated June 21, 1996, and the resolution of the NLRC dated November 14, 1996, are
hereby AFFIRMED with the MODIFICATION that petitioner is ordered to pay private respondent Siojo
his salary for the entire unexpired portion of the employment contract, that is, one thousand twenty-four
US dollars ($1,024.00) multiplied by seven months, for a total of seven thousand one hundred sixty-eight
US dollars (US$7,168.00), or its equivalent in Philippine pesos plus interest and attorneys fees. No
pronouncement as to costs.
SO ORDERED.

53. GARCIA VS NLRC, 264 SCRA 261

DECISION
KAPUNAN, J.:

Sometime in September, 1990, petitioner Rey O. Garcia was hired by private respondent Mahal Kong
Pilipinas, Inc. (MKPI) to review and edit articles, news items, literary contributions, essays, manuscripts,
and other features to be published in the Say Magazine and other publications owned by private respondent.
On March 16, 1992, petitioners employment was terminated. At that time, he was allegedly receiving
a monthly salary of Eight Thousand Pesos (P8,000.00). Consequently, petitioner filed a complaint for
illegal dismissal against private respondent with the National Labor Relations Commission (NLRC). The
same was docketed as NLRC NCR-00-04-02249-92.
Summons were thereafter duly served on private respondent to appear for a mandatory conference to
be held on April 29, 1992.
 On the appointed date, private respondent, represented by Necy Avecilla, sought a postponement of
the conference. The motion was granted and the date for the conference was reset to May 8, 1992.
On May 8, 1992, private respondent failed to appear prompting the Labor Arbiter to again reset the
date of the conference to May 27, 1992 with a warning that failure to appear and to submit its position paper
on the said date will be deemed a waiver of its right to be heard and to present its evidence.
On May 27, 1992, both parties appeared. Petitioner filed an amended complaint, a copy of which was
served on private respondent in open court. By mutual agreement of the parties, the filing of their respective
position papers as well as the next hearing was scheduled on June 9, 1992.
On said date, private respondent again failed to attend. It, however, filed a letter requesting for the
postponement of the hearing. Petitioner vigorously objected and instead moved that private respondent be
declared in default and that he be allowed to present his evidence ex parte. Said motion was granted and
petitioner was given one (1) week to submit his position paper and documentary evidence after which the
case was to be considered submitted for decision.
On June 11, 1992, petitioner filed his position paper.
On June 15, 1992, private respondent, through a letter from Marilou L. Bocobo, requested Labor
Arbiter Nieves V. de Castro for time to answer petitioners allegations. The letter-request, found to be merely
dilatory, was denied.
On August 13, 1992, Labor Arbiter Nieves V. de Castro rendered a decision, the decretal portion of
which reads:
WHEREFORE, respondent is hereby directed to reinstate complainant to his former position
effective August 16, 1992 with full backwages of P24,000.00 (from March 16, 1992 to August
15, 1992) and all other benefits complainant was receiving prior to his termination with notice
to respondent that reinstatement order is immediately executory even pending appeal.
SO ORDERED.[1]
On September 10, 1992, private respondent received a copy of the said decision. However, instead of
filing an appeal therefrom, private respondent, through its company president Michael G. Say, wrote yet
another letter to the labor arbiter expressing surprise and disappointment over an allegedly erroneous
decision. The letter reads in full:
DATE : 10 September 1992
TO : HON. NIEVES DE CASTRO
FROM : MAHAL KONG PILIPINAS, INC.
RE : MANIFESTATION
_________________________________________________________________________
________
This is in response to the notice of judgement we have received this day, from your good
office, with decision dated August 13, 1992.
Your decision regarding the reinstating of Mr. Rey Garcia in the company is surprising and
appaling (sic). We would like to call your attention to a gross error of judgment.
1. It is not true that the complainants contract with MAHAL KONG PILIPINAS, INC. took
(in) effect in September, 1990. But he used to be the contractor for editing of MAHAL
KONG PILIPINAS FOUNDATION, INC., a separate entity from MAHAL KONG
PILIPINAS, INC.
 His editing contract with Mahal Kong Pilipinas, Inc. only started last October of 1991.
2. Mahal Kong Pilipinas, Inc. had already closed its office at 2nd Floor Silvertree Bldg., San
Miguel Ave., Cor. Shaw Blvd., Pasig, M.M.
3. It is not our intention to delay the position paper. It is just that we have been very busy
(in) during the past months closing the office.
4. True, the complainant acted as the editor-in-chief of Say Magazine. The magazine is
under contract with him as editor-in-chief wherein we pay him per issue. Regarding the
books, he only acted as its honorary editor-in-chief, meaning only in name.
5. You stated ... dismissal from employment ... How can he be dismissed from employment
when he was not even employed by the company. Again, I would like to remind you that
Mr. Rey Garcia is only a contractor, whom we contracted to do the magazine editing for
us. He was not directly under us.
6. How can we reinstate the complainant when there is no more SAY MAGAZINE. The
magazine has been shut down last March, 1992.
We believe that Mr. Garcia is only doing this to extort money from us. I hope you will not
allow yourself to be his instrument in this wrongdoing.

Thank you very much.

Sincerely yours,

(SGD.)
MICHAEL G. SAY
Chief Executive Officer[2]
As aforestated, no appeal was filed from the said decision, hence, the same became final and
executory. Accordingly, a writ of execution was issued on November 13, 1992.
Subsequently, private respondent filed a motion to quash the writ of execution but the same was not
acted upon.
On November 25, 1992, private respondent filed a petition for preliminary injunction with
respondent NLRC.
On January 14, 1993, respondent NLRC issued a resolution disposing thusly:
NLRC NCR IC No. 00319-92 (NLRC NCR CASE No. 00-04-02249-92) entitled Mahal Kong
Pilipinas Inc. and Michael Say vs. Hon. de Castro, Rene Masilungan and Rey Garcia---
CONSIDERING the petition filed by petitioner on November 25, 1992, the oral report of the
Labor Arbiter assigned in this case, and the records of the main case (NLRC NCR Case No. 00-
04-02249-92), the Commission (Second Division) RESOLVED to treat the letter of Michael
Say, Chief Executive Officer of Mahal Kong Pilipinas, Inc., received by the Docket Section,
National Capital Region, NLRC, on September 10, 1992, (as an appeal) which shall be resolved,
in relation to the subject petition, by the said Division.[3]
Petitioner moved for a reconsideration of the said resolution contending that the subject decision had
long become final and executory.
On March 10, 1993, respondent NLRC issued a resolution ruling thusly:
 WHEREFORE, premises considered, the decision dated August 13, 1992 is vacated and set
aside and the writ of execution is hereby declared quashed. Thus, a new decision is hereby
rendered remanding the case for reception of evidence with dispatch.
SO ORDERED.[4]
Obviously aggrieved, petitioner filed the instant petition predicated on the following assignment of
errors, viz:
A
PUBLIC RESPONDENTS ACTED IN GRAVE ABUSE OF DISCRETION, AMOUNTING TO
LACK OF JURISDICTION IN TREATING UNVERIFIED LETTER OF PRIVATE
RESPONDENTS CHIEF EXECUTIVE OFFICER, MICHAEL G. SAY, AS AN APPEAL BY
SAID RESPONDENT FROM THE DECISION, DATED AUGUST 13, 1992 RENDERED BY
LABOR ARBITER NIEVES V. DE CASTRO;
B
PUBLIC RESPONDENTS ACTED WITH GRAVE ABUSE OF DISCRETION, AMOUNTING
TO A VIRTUAL REFUSAL TO PERFORM THE DUTY ENJOINED OR TO ACT AT ALL IN
CONTEMPLATION OF LAW, WHEN IT EXERCISED ITS POWER OF REVIEW IN AN
ARBITRARY OR DESPOTIC MANNER TO THE PREJUDICE OF PETITIONER IN
FAVORABLY ACTING ON PRIVATE RESPONDENTS APPEAL DESPITE NON-POSTING
OF THE REQUISITE CASH OR SURETY BONDS; and
C
PUBLIC RESPONDENTS ACTED IN AN ARBITRARY AND DESPOTIC EXERCISE OF
POWER IN REMANDING THE CASE TO THE LABOR ARBITER.[5]
The assignment of errors boils down to the lone issue of whether or not respondent NLRC acted with
grave abuse of discretion or in excess of jurisdiction in treating the letter of Michael G. Say as an appeal
from the labor arbiters decision of August 13, 1992.
We rule that it did. In blatant disregard for the rule mandating strict and rigorous compliance with the
reglementary period for appeals, respondent NLRC took cognizance of a mere letter from private
respondents president expressing disappointment over what was perceived to be an appalling judgment of
Labor Arbiter de Castro and treated said letter as private respondents appeal from the said decision.
The first paragraph of Article 223 of the Labor Code, as amended by R.A. 6715, provides:
ART. 223. Appeal.-- Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the
following grounds:

(a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;

(b) If the decision, order or award was secured through fraud or coercion, including graft and corruption;

(c) If made purely on questions of law; and

(d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or
injury to the appellant.
 Similarly, Section 3(a), Rule VI of the New Rules of Procedure of the NLRC provides:
Section 3. Requisites for Perfection of Appeal.- (a) The appeal shall be filed within the
reglementary period as provided in Section 1 of this Rule; shall be under oath with proof of
payment of the required appeal fee and the posting of a cash or surety bond as provided in
Section 5 of this Rule; shall be accompanied by a memorandum of appeal which shall state the
grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement
of the date when the appellant received the appealed decision, order or award and proof of
service on the other party of such appeal.
A mere notice of appeal without complying with the other requisites aforestated shall not stop
the running of the period for perfecting an appeal.
Clearly therefore, the perfection of an appeal in the manner and within the period prescribed by law is
not only mandatory but also jurisdictional.[6] Failure to conform with the rules regarding appeal will
certainly render the judgment final and executory, hence, unappealable.
In the case at bar, records bear out that private respondent did not comply with the foregoing mandatory
rules on appeals. After receiving a copy of the decision, private respondent through its president, wrote the
labor arbiter who rendered the decision and expressed dismay over the judgment. No appeal was taken
therefrom within ten (10) days from September 10, 1992, the date private respondent received a copy of
such judgment. Neither was a cash or surety bond posted by the private respondent. For even assuming for
the sake of argument that the letter is a valid notice of appeal, the lack of a cash or surety bond is fatal to
the appeal. The judgment in question involves a monetary award, and in cases where the judgment involves
a monetary award, the second paragraph of Article 223 of the Labor Code, as amended by R.A. 6715,
provides that the appeal by the employer may be perfected only upon the posting of a cash or surety bond
issued by a reputable bonding company duly accredited by the NLRC in the amount equivalent to the
monetary award in the judgment appealed from.
Clearly, respondent NLRC committed grave abuse of discretion and lack of jurisdiction in treating the
letter of private respondents president as an appeal from the judgment of the labor arbiter. In the words of
the Solicitor General in his comment, the foregoing observations were summed up as follows:
The plain letter sent by private respondent to Labor Arbiter Nieves de Castro is certainly not a
notice of appeal. The letter was not under oath, let alone accompanied by a memorandum of
appeal. It was nothing more than an expression of disappointment over what was perceived as
an appalling judgment of Labor Arbiter de Castro. It did not even seek any affirmative
relief. Worse, there is no indication that petitioner was furnished with a copy of said
letter. Likewise, there was no proof that the required appeal fee and cash or surety bond was
paid and/or posted at the time the letter was received by the Labor Arbiter. The statutory
provision regarding an appeal instituted before NLRC uses the word shall which indicates that
the requirements therein recited are mandatory, and non-observance thereof is fatal to ones
cause. These requirements, being mandatory in character, cannot be waived. Thus, NLRCs
ruling that private respondents letter be treated as a notice of appeal is invalid. It is contrary to
law. Indeed, for private respondents failure to comply with the mandatory requirements of a
valid appeal, the Labor Arbiters Decision has attained finality. Nothing more can be done to
revive or reopen the proceedings a quo. The Labor Arbiter, therefore correctly acted in granting
a writ of execution.[7]
One final note. Private respondents asseveration that it has been denied due process is likewise
untenable. The essence of due process is simply an opportunity to be heard,[8] or as applied to administrative
proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of the action
or ruling complained of.[9] What the law prohibits is absolute absence of the opportunity to be heard, hence,
a party cannot feign denial of due process where he had been afforded the opportunity to present his side. In
the case at bar, private respondent was given ample opportunity to do just that on April 29, 1992, May 8,
1992, May 27, 1992 and June 9, 1992.
Prescinding from the foregoing, respondent NLRC evidently acted with grave abuse of discretion and
lack of jurisdiction in treating the September 10, 1992 letter of Michael G. Say, president of private
respondent, as an appeal and in consequently remanding the case to the labor arbiter for reception of
evidence.
WHEREFORE, the petition for certiorari is GRANTED. The NLRC Resolutions dated January 14,
1993 and March 10, 1993 are hereby SET ASIDE and the Decision of the Labor Arbiter dated August 13,
1992 is DECLARED to have become final and executory. Costs against private respondent.
SO ORDERED.
54. LUMIQUED VS EXENEA, 282 SCRA 125

DECISION
ROMERO, J.:

Does the due process clause encompass the right to be assisted by counsel during an
administrative inquiry?
Arsenio P. Lumiqued was the Regional Director of the Department of Agrarian Reform
Cordillera Autonomous Region (DAR-CAR) until President Fidel V. Ramos dismissed him from
that position pursuant to Administrative Order No. 52 dated May 12, 1993. In view of Lumiqueds
death on May 19, 1994, his heirs instituted this petition for certiorari and mandamus, questioning
such order.
The dismissal was the aftermath of three complaints filed by DAR-CAR Regional Cashier and
private respondent Jeannette Obar-Zamudio with the Board of Discipline of the DAR. The first
affidavit-complaint dated November 16, 1989,[1] charged Lumiqued with malversation through
falsification of official documents. From May to September 1989, Lumiqued allegedly committed
at least 93 counts of falsification by padding gasoline receipts. He even submitted a vulcanizing
shop receipt worth P550.00 for gasoline bought from the shop, and another receipt for P660.00 for
a single vulcanizing job. With the use of falsified receipts, Lumiqued claimed and was reimbursed
the sum of P44,172.46. Private respondent added that Lumiqued seldom made field trips and
preferred to stay in the office, making it impossible for him to consume the nearly 120 liters of
gasoline he claimed everyday.
In her second affidavit-complaint dated November 22, 1989,[2] private respondent accused
Lumiqued with violation of Commission on Audit (COA) rules and regulations, alleging that during
the months of April, May, July, August, September and October, 1989, he made unliquidated cash
advances in the total amount of P116,000.00. Lumiqued purportedly defrauded the government by
deliberately concealing his unliquidated cash advances through the falsification of accounting
entries in order not to reflect on `Cash advances of other officials under code 8-70-600 of
accounting rules.
The third affidavit-complaint dated December 15, 1989,[3] charged Lumiqued with oppression
and harassment. According to private respondent, her two previous complaints prompted Lumiqued
to retaliate by relieving her from her post as Regional Cashier without just cause.
The three affidavit-complaints were referred in due course to the Department of Justice (DOJ)
for appropriate action. On May 20, 1992, Acting Justice Secretary Eduardo G. Montenegro issued
Department Order No. 145 creating a committee to investigate the complaints against Lumiqued.
The order appointed Regional State Prosecutor Apolinario Exevea as committee chairman with
City Prosecutor Erdolfo Balajadia and Provincial Prosecutor Felix Cabading as members. They
were mandated to conduct an investigation within thirty days from receipt of the order, and to
submit their report and recommendation within fifteen days from its conclusion.
The investigating committee accordingly issued a subpoena directing Lumiqued to submit his
counter-affidavit on or before June 17, 1992. Lumiqued, however, filed instead an urgent motion
to defer submission of his counter-affidavit pending actual receipt of two of private respondents
complaints. The committee granted the motion and gave him a five-day extension.
In his counter-affidavit dated June 23, 1992,[4] Lumiqued alleged, inter alia, that the cases
were filed against him to extort money from innocent public servants like him, and were initiated
by private respondent in connivance with a certain Benedict Ballug of Tarlac and a certain Benigno
Aquino III. He claimed that the apparent weakness of the charge was bolstered by private
respondents execution of an affidavit of desistance.[5]
Lumiqued admitted that his average daily gasoline consumption was 108.45 liters. He
submitted, however, that such consumption was warranted as it was the aggregate consumption of
the five service vehicles issued under his name and intended for the use of the Office of the Regional
Director of the DAR. He added that the receipts which were issued beyond his region were made
in the course of his travels to Ifugao Province, the DAR Central Office in Diliman, Quezon City,
and Laguna, where he attended a seminar. Because these receipts were merely turned over to him
by drivers for reimbursement, it was not his obligation but that of auditors and accountants to
determine whether they were falsified. He affixed his signature on the receipts only to signify that
the same were validly issued by the establishments concerned in order that official transactions of
the DAR-CAR could be carried out.
Explaining why a vulcanizing shop issued a gasoline receipt, Lumiqued said that he and his
companions were cruising along Santa Fe, Nueva Vizcaya on their way to Ifugao when their service
vehicle ran out of gas. Since it was almost midnight, they sought the help of the owner of a
vulcanizing shop who readily furnished them with the gasoline they needed. The vulcanizing shop
issued its own receipt so that they could reimburse the cost of the gasoline. Domingo Lucero, the
owner of said vulcanizing shop, corroborated this explanation in an affidavit dated June 25,
1990.[6] With respect to the accusation that he sought reimbursement in the amount of P660.00 for
one vulcanizing job, Lumiqued submitted that the amount was actually only P6.60. Any error
committed in posting the amount in the books of the Regional Office was not his personal error or
accountability.
To refute private respondents allegation that he violated COA rules and regulations in
incurring unliquidated cash advances in the amount of P116,000.00, Lumiqued presented a
certification[7] of DAR-CAR Administrative Officer Deogracias F. Almora that he had no
outstanding cash advances on record as of December 31, 1989.
In disputing the charges of oppression and harassment against him, Lumiqued contended that
private respondent was not terminated from the service but was merely relieved of her duties due
to her prolonged absences. While admitting that private respondent filed the required applications
for leave of absence, Lumiqued claimed that the exigency of the service necessitated disapproval
of her application for leave of absence. He allegedly rejected her second application for leave of
absence in view of her failure to file the same immediately with the head office or upon her return
to work. He also asserted that no medical certificate supported her application for leave of absence.
In the same counter-affidavit, Lumiqued also claimed that private respondent was corrupt and
dishonest because a COA examination revealed that her cash accountabilities from June 22 to
November 23, 1989, were short by P30,406.87. Although private respondent immediately returned
 the amount on January 18, 1990, the day following the completion of the cash examination,
Lumiqued claimed that she should be relieved from her duties and assigned to jobs that would not
require handling of cash and money matters.
Committee hearings on the complaints were conducted on July 3 and 10, 1992, but Lumiqued
was not assisted by counsel. On the second hearing date, he moved for its resetting to July 17, 1992,
to enable him to employ the services of counsel. The committee granted the motion, but neither
Lumiqued nor his counsel appeared on the date he himself had chosen, so the committee deemed
the case submitted for resolution.
On August 12, 1992, Lumiqued filed an urgent motion for additional hearing,[8] alleging that
he suffered a stroke on July 10, 1992. The motion was forwarded to the Office of the State
Prosecutor apparently because the investigation had already been terminated. In an order dated
September 7, 1992,[9] State Prosecutor Zoila C. Montero denied the motion, viz:

The medical certificate given show(s) that respondent was discharged from the Sacred Heart Hospital on
July 17, 1992, the date of the hearing, which date was upon the request of respondent (Lumiqued). The
records do not disclose that respondent advised the Investigating committee of his confinement and
inability to attend despite his discharge, either by himself or thru counsel. The records likewise do not
show that efforts were exerted to notify the Committee of respondents condition on any reasonable date
after July 17, 1992. It is herein noted that as early as June 23, 1992, respondent was already being assisted
by counsel.

Moreover an evaluation of the counter-affidavit submitted reveal(s) the sufficiency, completeness and
thoroughness of the counter-affidavit together with the documentary evidence annexed thereto, such that a
judicious determination of the case based on the pleadings submitted is already possible.

Moreover, considering that the complaint-affidavit was filed as far back as November 16, 1989 yet,
justice can not be delayed much longer.

Following the conclusion of the hearings, the investigating committee rendered a report dated
July 31, 1992,[10] finding Lumiqued liable for all the charges against him. It made the following
findings:

After a thorough evaluation of the evidences (sic) submitted by the parties, this committee finds the
evidence submitted by the complainant sufficient to establish the guilt of the respondent for Gross
Dishonesty and Grave Misconduct.

That most of the gasoline receipts used by the respondent in claiming for the reimbursement of his
gasoline expenses were falsified is clearly established by the 15 Certified Xerox Copies of the duplicate
receipts (Annexes G-1 to G-15) and the certifications issued by the different gasoline stations where the
respondent purchased gasoline. Annexes `G-1 to `G-15 show that the actual average purchase made by
the respondent is about 8.46 liters only at a purchase price of P50.00, in contrast to the receipts used by
the respondent which reflects an average of 108.45 liters at a purchase price of P550.00. Here, the greed
of the respondent is made manifest by his act of claiming reimbursements of more than 10 times the value
of what he actually spends. While only 15 of the gasoline receipts were ascertained to have been falsified,
the motive, the pattern and the scheme employed by the respondent in defrauding the government has,
nevertheless, been established.

That the gasoline receipts have been falsified was not rebutted by the respondent. In fact, he had in effect
admitted that he had been claiming for the payment of an average consumption of 108.45 liters/day by
justifying that this was being used by the 4 vehicles issued to his office. Besides he also admitted having
signed the receipts.

Respondents act in defrauding the government of a considerable sum of money by falsifying receipts
constitutes not only Dishonesty of a high degree but also a criminal offense for Malversation through
Falsification of Official Documents.

This committee likewise finds that the respondent have (sic) unliquidated cash advances in the year 1989
which is in violation of established office and auditing rules. His cash advances totalling to
about P116,000.00 were properly documented. The requests for obligation of allotments and the vouchers
covering the amounts were all signed by him. The mere certification issued by the Administrative Officer
of the DAR-CAR cannot therefore rebut these concrete evidences (sic).

On the third complaint, this committee likewise believes that the respondents act in relieving the
complainant of her functions as a Regional Cashier on December 1, 1989 was an act of harassment. It is
noted that this was done barely two weeks after the complainant filed charges against her (sic). The
recommendation of Jose G. Medina of the Commission on Audit came only on May 11, 1990 or almost
six months after the respondents order relieving the complainant was issued. His act in harassing a
subordinate employee in retaliation to a complaint she filed constitute(s) Gross Misconduct on the part of
the respondent who is a head of office.

The affidavits of Joseph In-uyay and Josefina Guting are of no help to the respondent. In fact, this only
show(s) that he is capable of giving bribes if only to have the cases against him dismissed. He could not
have given a certain Benigno Aquino III the sum of P10,000.00 for any other purpose.

Accordingly, the investigating committee recommended Lumiqueds dismissal or removal

from office, without prejudice to the filing of the appropriate criminal charges against him.
Acting on the report and recommendation, former Justice Secretary Franklin M. Drilon
adopted the same in his Memorandum to President Fidel V. Ramos dated October 22, 1992. He
added that the filing of the affidavit of desistance[11] would not prevent the issuance of a resolution
on the matter considering that what was at stake was not only the violation of complainants (herein
private respondents) personal rights but also the competence and fitness of the respondent
(Lumiqued) to remain in public office. He opined that, in fact, the evidence on record could call for
a punitive action against the respondent on the initiative of the DAR.
On December 17, 1992, Lumiqued filed a motion for reconsideration of the findings of the
Committee with the DOJ.[12] Undersecretary Ramon S. Esguerra indorsed the motion to the
investigating committee.[13] In a letter dated April 1, 1993, the three-member investigating
committee informed Undersecretary Esguerra that the committee had no more authority to act on
the same (motion for reconsideration) considering that the matter has already been forwarded to
the Office of the President and that their authority under Department Order No. 145 ceased when
they transmitted their report to the DOJ.[14] Concurring with this view, Undersecretary Esguerra
informed Lumiqued that the investigating committee could no longer act on his motion for
reconsideration. He added that the motion was also prematurely filed because the Office of the
President (OP) had yet to act on Secretary Drilons recommendation.[15]
On May 12, 1993, President Fidel V. Ramos himself issued Administrative Order No. 52 (A.O.
No. 52),[16] finding Lumiqued administratively liable for dishonesty in the alteration of fifteen
gasoline receipts, and dismissing him from the service, with forfeiture of his retirement and other
benefits. Thus:
That the receipts were merely turned over to him by his drivers and that the auditor and accountant of the
DAR-CAR should be the ones to be held liable is untenable. The receipts in question were signed by
respondent for the purpose of attesting that those receipts were validly issued by the commercial
establishments and were properly disbursed and used in the official business for which it was intended.

This Office is not about to shift the blame for all these to the drivers employed by the DAR-CAR as
respondent would want us to do.

The OP, however, found that the charges of oppression and harassment, as well as that of
incurring unliquidated cash advances, were not satisfactorily established.
In a petition for appeal[17] addressed to President Ramos, Lumiqued prayed that A.O. No. 52
be reconsidered and that he be reinstated to his former position with all the benefits accorded to
him by law and existing rules and regulations. This petition was basically premised on the affidavit
dated May 27, 1993, of a certain Dwight L. Lumiqued, a former driver of the DAR-CAR, who
confessed to having authored the falsification of gasoline receipts and attested to petitioner
Lumiqueds being an honest man who had no premonition that the receipts he (Dwight) turned over
to him were altered.[18]
Treating the petition for appeal as a motion for the reconsideration of A.O. No. 52, the OP,
through Senior Deputy Executive Secretary Leonardo A. Quisumbing, denied the same on August
31, 1993.
Undaunted, Lumiqued filed a second motion for reconsideration, alleging, among other things,
that he was denied the constitutional right to counsel during the hearing.[19] On May 19,
1994,[20] however, before his motion could be resolved, Lumiqued died. On September 28,
1994,[21] Secretary Quisumbing denied the second motion for reconsideration for lack of merit.
Hence, the instant petition for certiorari and mandamus praying for the reversal of the Report
and Recommendation of the Investigating Committee, the October 22, 1992, Memorandum of then
Justice Secretary Drilon, A.O. No. 52 issued by President Ramos, and the orders of Secretary
Quisumbing. In a nutshell, it prays for the payment of retirement benefits and other benefits
accorded to deceased Arsenio Lumiqued by law, payable to his heirs; and the backwages from the
period he was dismissed from service up to the time of his death on May 19, 1994.[22]
Petitioners fault the investigating committee for its failure to inform Lumiqued of his right to
counsel during the hearing. They maintain that his right to counsel could not be waived unless the
waiver was in writing and in the presence of counsel. They assert that the committee should have
suspended the hearing and granted Lumiqued a reasonable time within which to secure a counsel
of his own. If suspension was not possible, the committee should have appointed a counsel de
oficio to assist him.
These arguments are untenable and misplaced. The right to counsel, which cannot be waived
unless the waiver is in writing and in the presence of counsel, is a right afforded a suspect or an
accused during custodial investigation.[23] It is not an absolute right and may, thus, be invoked or
rejected in a criminal proceeding and, with more reason, in an administrative inquiry. In the case
at bar, petitioners invoke the right of an accused in criminal proceedings to have competent and
independent counsel of his own choice. Lumiqued, however, was not accused of any crime in the
proceedings below. The investigation conducted by the committee created by Department Order
No. 145 was for the purpose of determining if he could be held administratively liable under the
law for the complaints filed against him. The order issued by Acting Secretary of Justice
Montenegro states thus:
In the interest of the public service and pursuant to the provisions of existing laws, a Committee to
conduct the formal investigation of the administrative complaint for oppression, dishonesty, disgraceful
and immoral conduct, being notoriously undesirable and conduct prejudicial to the best interest of the
service against Mr. ARSENIO P. LUMIQUED, Regional Director, Department of Agrarian Reform,
Cordillera Autonomous Region, is hereby created x x x.[24]

As such, the hearing conducted by the investigating committee was not part of a criminal
prosecution. This was even made more pronounced when, after finding Lumiqued administratively
liable, it hinted at the filing of criminal case for malversation through falsification of public
documents in its report and recommendation.
Petitioners misconception on the nature of the investigation [25] conducted against Lumiqued
appears to have been engendered by the fact that the DOJ conducted it. While it is true that under
the Administrative Code of 1987, the DOJ shall administer the criminal justice system in
accordance with the accepted processes thereof consisting in the investigation of the crimes,
prosecution of offenders and administration of the correctional system,[26] conducting criminal
investigations is not its sole function. By its power to perform such other functions as may be
provided by law, [27] prosecutors may be called upon to conduct administrative investigations.
Accordingly, the investigating committee created by Department Order No. 145 was duty-bound
to conduct the administrative investigation in accordance with the rules therefor.
While investigations conducted by an administrative body may at times be akin to a criminal
proceeding, the fact remains that under existing laws, a party in an administrative inquiry may or
may not be assisted by counsel, irrespective of the nature of the charges and of the respondents
capacity to represent himself and no duty rests on such a body to furnish the person being
investigated with counsel.[28] In an administrative proceeding such as the one that transpired below,
a respondent (such as Lumiqued) has the option of engaging the services of counsel or not. This is
clear from the provisions of Section 32, Article VII of Republic Act No. 2260[29] (otherwise known
as the Civil Service Act) and Section 39, paragraph 2, Rule XIV (on discipline) of the Omnibus
Rules Implementing Book V of Executive Order No. 292[30] (otherwise known as the
Administrative Code of 1987). Excerpts from the transcript of stenographic notes of the hearings
attended by Lumiqued[31] clearly show that he was confident of his capacity and so opted to
represent himself. Thus, the right to counsel is not imperative in administrative investigations
because such inquiries are conducted merely to determine whether there are facts that merit
disciplinary measures against erring public officers and employees, with the purpose of maintaining
the dignity of government service.
Furthermore, petitioners reliance on Resolution No. 94-0521 of the Civil Service Commission
on the Uniform Procedure in the Conduct of Administrative Investigation stating that a respondent
in an administrative complaint must be informed of his right to the assistance of a counsel of his
choice,[32] is inappropriate. In the first place, this resolution is applicable only to cases brought
before the Civil Service Commission.[33]Secondly, said resolution, which is dated January 25, 1994,
took effect fifteen days following its publication in a newspaper of general circulation, [34] much
later than the July 1992 hearings of the investigating committee created by Department Order No.
145. Thirdly, the same committee was not remiss in the matter of reminding Lumiqued of his right
to counsel. Thus at the July 3, 1992, hearing, Lumiqued was repeatedly appraised of his option to
secure services of counsel:
RSP EXEVEA:
This is an administrative case against Director Lumiqued. Director Lumiqued is
present. The complainant is present, Janet Obar-Zamudio. Complainant has just been
 furnished with a copy of the counter-affidavit of the respondent. Do you have a
counsel, Director?
DIR. LUMIQUED:
I did not bring anybody, Sir, because when I went to see him, he told me, Sir, that he
has already set a hearing, morning and afternoon today.
RSP EXEVEA:
So, we will proceed with the hearing even without your counsel? You are willing to
proceed with the hearing even without your counsel?
DIR. LUMIQUED:
Yes, I am confident . . .
CP BALAJADIA:
You are confident that you will be able to represent yourself?
DIR. LUMIQUED:
That is my concern.[35] (Underscoring supplied)
In the course of private respondents damaging testimony, the investigating committee once
again reminded Lumiqued of his need for a counsel. Thus:
CP BALAJADIA:
Q. (To Director Lumiqued) You really wish to go through with this even without your
counsel?
DIRECTOR LUMIQUED:
A. I think so, Sir.
CP BALAJADIA:
Let us make it of record that we have been warning you to proceed with the assistance
of counsel but you said that you can take care of yourself so we have no other
alternative but to proceed.[36](Underscoring supplied)
Thereafter, the following colloquies transpired:
CP BALAJADIA:
We will suspend in the meantime that we are waiting for the supplemental affidavit
you are going to present to us. Do you have any request from the panel of
investigators, Director Lumiqued?
DIRECTOR LUMIQUED:
I was not able to bring a lawyer since the lawyer I requested to assist me and was the
one who prepared my counter-affidavit is already engaged for a hearing and according
to him he is engaged for the whole month of July.
RSP EXEVEA:
We cannot wait . . .
CP BALAJADIA:
Why dont you engage the services of another counsel. The charges against you are
quite serious. We are not saying you are guilty already. We are just apprehensive that
you will go through this investigation without a counsel. We would like you to be
protected legally in the course of this investigation. Why dont you get the services of
another counsel. There are plenty here in Baguio...
DIRECTOR LUMIQUED:
I will try to see, Sir . . .
CP BALAJADIA:
Please select your date now, we are only given one month to finish the investigation,
Director Lumiqued.
RSP EXEVEA:
We will not entertain any postponement. With or without counsel, we will proceed.
CP BALAJADIA:
Madam Witness, will you please submit the document which we asked for and
Director Lumiqued, if you have other witnesses, please bring them but reduce their
testimonies in affidavit form so that we can expedite with the proceedings.[37]
At the hearing scheduled for July 10, 1992, Lumiqued still did not avail of the services of
counsel. Pertinent excerpts from said hearing follow:
FISCAL BALAJADIA:
I notice also Mr. Chairman that the respondent is not being represented by a counsel.
The last time he was asked to invite his lawyer in this investigation. May we know if
he has a lawyer to represent him in this investigation?
DIR. LUMIQUED:
There is none Sir because when I went to my lawyer, he told me that he had set a case
also at 9:30 in the other court and he told me if there is a possibility of having this
case postponed anytime next week, probably Wednesday so we will have good time
(sic) of presenting the affidavit.
FISCAL BALAJADIA:
Are you moving for a postponement Director? May I throw this to the panel. The
charges in this case are quite serious and he should be given a chance to the assistance
of a counsel/lawyer.
RSP EXEVEA:
And is (sic) appearing that the supplemental-affidavit has been furnished him only
now and this has several documents attached to it so I think we could grant him one
last postponement considering that he has already asked for an extension.
DIR. LUMIQUED:
Furthermore Sir, I am now being bothered by my heart ailment.[38]
 The hearing was reset to July 17, 1992, the date when Lumiqued was released from the
hospital. Prior to said date, however, Lumiqued did not inform the committee of his
confinement. Consequently, because the hearing could not push through on said date, and
Lumiqued had already submitted his counter-affidavit, the committee decided to wind up the
proceedings. This did not mean, however, that Lumiqued was short-changed in his right to due
process.
Lumiqued, a Regional Director of a major department in the executive branch of the
government, graduated from the University of the Philippines (Los Baos) with the degree of
Bachelor of Science major in Agriculture, was a recipient of various scholarships and grants, and
underwent training seminars both here and abroad.[39] Hence, he could have defended himself if
need be, without the help of counsel, if truth were on his side. This, apparently, was the thought he
entertained during the hearings he was able to attend. In his statement, That is my concern, one
could detect that it had been uttered testily, if not exasperatedly, because of the doubt or skepticism
implicit in the question, You are confident that you will be able to represent yourself? despite his
having positively asserted earlier, Yes, I am confident. He was obviously convinced that he could
ably represent himself. Beyond repeatedly reminding him that he could avail himself of counsel
and as often receiving the reply that he is confident of his ability to defend himself, the investigating
committee could not do more. One can lead a horse to water but cannot make him drink.
The right to counsel is not indispensable to due process unless required by the Constitution or
the law. In Nera v. Auditor General,[40] the Court said:

x x x. There is nothing in the Constitution that says that a party in a non-criminal proceeding is entitled to
be represented by counsel and that, without such representation, he shall not be bound by such
proceedings. The assistance of lawyers, while desirable, is not indispensable. The legal profession was not
engrafted in the due process clause such that without the participation of its members, the safeguard is
deemed ignored or violated. The ordinary citizen is not that helpless that he cannot validly act at all
except only with a lawyer at his side.

In administrative proceedings, the essence of due process is simply the opportunity to explain
ones side. One may be heard, not solely by verbal presentation but also, and perhaps even much
more creditably as it is more practicable than oral arguments, through pleadings.[41] An actual
hearing is not always an indispensable aspect of due process.[42] As long as a party was given the
opportunity to defend his interests in due course, he cannot be said to have been denied due process
of law, for this opportunity to be heard is the very essence of due process. [43] Moreover, this
constitutional mandate is deemed satisfied if a person is granted an opportunity to seek
reconsideration of the action or ruling complained of.[44] Lumiqueds appeal and his subsequent
filing of motions for reconsideration cured whatever irregularity attended the proceedings
conducted by the committee.[45]
The constitutional provision on due process safeguards life, liberty and property.[46] In the
early case of Cornejo v. Gabriel and Provincial Board of Rizal [47] the Court held that a public office
is not property within the sense of the constitutional guarantee of due process of law for it is a
public trust or agency. This jurisprudential pronoucement has been enshrined in the 1987
Constitution under Article XI, Section 1 on accountability of public officers, as follows:

Section 1. Public office is a public trust. Public officers and employees must at all times be accountable to
the people, serve them with utmost responsibility, integrity, loyalty, and efficiency, act with patriotism
and justice, and lead modest lives.
 When the dispute concerns ones constitutional right to security of tenure, however, public
office is deemed analogous to property in a limited sense; hence, the right to due process could
rightfully be invoked. Nonetheless, the right to security of tenure is not absolute. Of equal weight
is the countervailing mandate of the Constitution that all public officers and employees must serve
with responsibility, integrity, loyalty and efficiency.[48] In this case, it has been clearly shown that
Lumiqued did not live up to this constitutional precept.
The committees findings pinning culpability for the charges of dishonesty and grave
misconduct upon Lumiqued were not, as shown above, fraught with procedural mischief. Its
conclusions were founded on the evidence presented and evaluated as facts. Well-settled in our
jurisdiction is the doctrine that findings of fact of administrative agencies must be respected as long
as they are supported by substantial evidence, even if such evidence is not overwhelming or
preponderant.[49] The quantum of proof necessary for a finding of guilt in administrative cases is
only substantial evidence or such relevant evidence as a reasonable mind might accept as adequate
to support a conclusion.[50]
Consequently, the adoption by Secretary Drilon and the OP of the committees
recommendation of dismissal may not in any way be deemed tainted with arbitrariness amounting
to grave abuse of discretion. Government officials are presumed to perform their functions with
regularity. Strong evidence is not necessary to rebut that presumption,[51] which petitioners have
not successfully disputed in the instant case.
Dishonesty is a grave offense penalized by dismissal under Section 23 of Rule XIV of the
Omnibus Rules Implementing Book V of the Administrative Code of 1987. Under Section 9 of the
same Rule, the penalty of dismissal carries with it cancellation of eligibility, forfeiture of leave
credits and retirement benefits, and the disqualification for reemployment in the government
service. The instant petition, which is aimed primarily at the payment of retirement benefits and
other benefits plus backwages from the time of Lumiqueds dismissal until his demise, must,
therefore, fail.
WHEREFORE, the instant petition for certiorari and mandamus is hereby DISMISSED and
Administrative Order No. 52 of the Office of the President is AFFIRMED. Costs against
petitioners.
SO ORDERED.