NASIPIT LUMBER COMPANY, INC., PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, EXECUTIVE LABOR ARBITER ILDEFONSO G. AGBUYA AND JUANITO COLLADO, RESPONDENTS.   

Petitioner Nasipit Lumber Company, Inc.
(NALCO for brevity) is a domestic corporation organized and existing under the
laws of the Philippines.  It is engaged in the business of logging,
lumber manufacturing and wood processing with field offices at Nasipit, Agusan del Norte.

Private respondent Juanito Collado was employed by petitioner as a security guard on September 9, 1970.  He was assigned as 1st Sergeant of the NALCO
Security Force at Nasipit.  In the course of Collado’s
employment or on August 20, 1976,
four (4) crates of lawanit boards containing 1,000
panels were stolen from petitioner’s premises, particularly the crating section
of the Philippine Wallboard Corporation, a NALCO affiliate.

Collado was implicated in the theft and
was thereafter placed under preventive suspension.  On September
8, 1976, NALCO filed a petition (application)
for clearance to dismiss Collado with the Regional
Office No. X of the Department of Labor in Cagayan de
Oro City.^[1]
On September 15, 1976, Collado filed an opposition to said application for
clearance to dismiss.  The case was set
for hearing the following day, September 16, but Collado,
despite notice, failed to appear.  Hence,
NALCO was allowed to present evidence ex-parte.

On October 12, 1976,
the application for clearance to dismiss was approved in an order issued by
Regional Office No. X Officer-in-Charge Roy V. Seneres.^[2]
The order was based on the investigation report of the head of the Agusan Provincial Labor Office.  Collado filed a
motion for the reconsideration of said order on the ground that he was not
given an opportunity to rebut the false findings or adduce evidence in his
favor.  He further denied participation
in the theft.^[3]

On December 7, 1976,
the said Officer-in-Charge, through a subordinate, certified the case to the
Executive Labor Arbiter for compulsory arbitration.^[4]
Notice and summons were issued.  NALCO
and Collado were then required to submit their
respective position papers under pain of a default judgment.^[5]
After a perusal of the records, Executive Labor Arbiter Ildefonso
G. Agbuya returned the case to the Regional Director
of Regional Office No. X in Cagayan de Oro City for whatever appropriate action he may deem
fit.  A portion of the order dated February 25, 1977 of said Executive
Labor Arbiter reads:

“From all indications, we find that the Motion for
Reconsideration should be treated as an appeal to (sic) the Order of Roy V. Seneres, dated 12
October 1976, and as such it should be elevated to the Secretary of
Labor.  Besides, we also fear that if we
take cognizance of this case, perhaps, we might reverse the order of the
Regional Director which, to our thinking, would only create a disturbance to
the harmonious relation existing between our two offices.  x x
x.”^[6]

Consequently, the case was elevated to the Secretary of
Labor.  On June 7, 1978, Acting Secretary of Labor Amado G. Inciong issued an order
affirming the order of Officer-in-Charge Roy V. Seneres
thereby granting petitioner’s application for clearance to dismiss Collado.^[7]

Instead of resorting to this Court on a petition for certiorari,^[8]
on October 9, 1978, Collado filed a complaint before the Butuan
District Labor Office, Butuan
City, for unjust dismissal and
reinstatement with backwages and benefits.^[9]
Without going to specifics, Collado averred therein
that his termination from employment “was unfounded, unjust and illegal,
based as it was on uncorroborated and malicious suspicion, insinuation and
hearsay, and characterized by harassment.”

NALCO filed a motion to dismiss the complaint.  It alleged that in view of Acting Secretary Inciong’s aforesaid order, Collado
did not have any sufficient cause of action and therefore his complaint was a
nuisance.^[10]
In its position paper, NALCO added that because Acting Secretary Inciong’s order had become final and executory,
the issue of illegal dismissal had also become res
judicata.^[11]

The case having been certified for compulsory arbitration, on January 29, 1979, Executive Labor
Arbiter Ildefonso G. Agbuya
rendered a decision ordering NALCO to reinstate Collado
to his former position without backwages and
without loss of seniority rights “provided he has the necessary papers required
of the service as security guard.”^[12]

In his decision, the said labor arbiter stated that while NALCO
complied with the requirements of law when it obtained a clearance to
terminate, he could not discount the possibility that NALCO “knew or at
least suspected that there was something wrong with the manner in which the
investigation was conducted” by the head of the Butuan
District Labor Office whose report was the basis of the approval of the
clearance application.^[13]
He conceded that NALCO acted in good faith in terminating Collado’s
employment and that it was NALCO’s prerogative to
terminate such employment to protect its business interests.  However, he was constrained to arrive at said
conclusion ordering the reinstatement of Collado
because of the order of the Nasipit municipal judge
in Criminal Case No. 2236 finding that there was nothing in the testimony of
the prosecution witness to establish the probable guilt of Collado
who should therefore be dropped from the complaint for qualified theft.  He also took into consideration the
certification of the Agusan del
Norte provincial fiscal showing that Collado had also
been dropped from the complaint in Criminal Case No. 1127.

Both parties appealed to the National Labor Relations Commission
(NLRC).  NALCO asked for the reversal and
revocation of the decision of the Executive Labor Arbiter while Collado prayed for a modification of the appealed decision
to include backwages and benefits in addition to
reinstatement.

On May 30, 1980,
the NLRC First Division^[14]
rendered a decision modifying the Executive Labor Arbiter’s decision by
ordering Collado’s reinstatement to his former position
with two (2) years backwages without qualification
and loss of seniority rights.^[15]
It agreed with the findings and conclusions of the Executive Labor Arbiter with
respect to the dropping of Collado from the criminal
cases but it ruled that the rights of Collado to backwages were not precluded by the finding that his
termination was effected in good faith. 
On the issue of res judicata, the NLRC said:

“We cannot subscribe to the arguments of the
respondent-appellant that the order of the OIC of Region X which was
subsequently approved by then Acting Secretary Amado
G. Inciong has become the law of the case.  Res judicata cannot be validly invoked in this case because
the granting of the application for clearance which although admittedly was
secured with all the formalities required by law, did not resolve the case on
its merits.  Records show that on September 16, 1976 the application to
terminate was scheduled for investigation before the Provincial Labor
Office.  Petitioner Collado
who was then the respondent in this case failed to appear although he was
properly notified of the scheduled investigation.  On September
22, 1976, the Head of the Agusan
Provincial Office submitted its investigation report recommending the approval
of the application to terminate Juanito Collado without affording him another chance to be heard
and defend his side.  It is very clear
that the investigation conducted by the Provincial Labor Office was hastily
done and vitiated with infirmities.  What
it should have done is to give the respondent (Collado)
another chance to defend his case considering the gravity of the offense
imputed against him which if proved would cause him his only means of
livelihood.”^[16]

NALCO filed the instant petition for certiorari and
prohibition with prayer for the issuance of a writ of preliminary injunction
and/or a restraining order, seeking to annul the NLRC decision and to prohibit
its execution.  It imputed to the NLRC
lack or excess of jurisdiction and grave and patent abuse of discretion
amounting to lack of jurisdiction in overturning the final decision of the
Acting Secretary of Labor thereby denigrating the time-honored doctrine of bar
by former judgment or res judicata.  It assailed Collado’s
reinstatement as improper inasmuch as the employer-employee relations of the
parties had been legally severed by the approval of the clearance to dismiss.

This Court dismissed the petition for lack of merit.^[17]
Upon receipt of the dismissal resolution, NALCO filed an urgent motion for
reconsideration based on the following grounds: 
(a) it has a valid and meritorious cause of action due to the NLRC’s violation of the principle of res
judicata; (b) the occurrence of a supervening
event consisting of the remand of the records of the approved clearance to
dismiss for execution and/or appropriate action, 49 days after the promulgation
of the herein questioned NLRC decision; (c) the NLRC not only disregarded the
final and executory decision of the Acting Secretary
of Labor but also the pronouncements of this Court on the curative effects of
appeals in labor cases wherein the issue of denial of procedural due process
had been raised; and (d) should the NLRC decision become final, a confusing
situation of two diametrically opposed decisions on the same issue of dismissal,
would arise.

Understandably, Collado opposed the
motion for reconsideration.  On the other
hand, the Solicitor General, appearing for public respondents, filed a
manifestation and motion recommending that the urgent motion for
reconsideration be granted.  He stated
therein that the NLRC gravely abused tits discretion because:  (a) all the elements of res
judicata are present in this case; (b) the merits
of Collado’s dismissal had been litigated in the
first case and Collado was therefore estopped from attacking the final decision of the Acting
Secretary of Labor either in the original action or in a new and subsequent
action; (c) not only the “formal aspect” in the application for
clearance to terminate was involved in the first case as the merits thereof were
fully taken into consideration; and (d) to allow a distinction between the two
cases would result in splitting a cause of action which would ultimately breed
multiplicity of suits.

On the strength of the Solicitor General’s manifestation and
motion, the Court reconsidered the dismissal resolution and gave due course to
the instant petition for certiorari and prohibition.^[18]

The two principal issues presented to this Court for adjudication
are the applicability of the principle of res judicata and the legality of Collado’s
reinstatement with backwages and without loss of
seniority rights.

On the first issue, we hold that this is one of the cases wherein
the pronouncement of this Court thru Justice Vicente Abad
Santos in Razon vs. Inciong^[19]
applies.  The Court stated therein that
the principle of res judicata
may not be invoked in labor relations proceedings considering that Section 5,
Rule XIII, Book V of the Rules and Regulations Implementing the Labor Code
provides that such proceedings are “non-litigious and summary in nature
without regard to legal technicalities obtaining in courts of law.” Said
pronouncement is in consonance with the jurisprudential dictum that the
doctrine of res judicata
applies only to judicial or quasi-judicial proceedings and not to the exercise
of administrative powers.^[20]

The requirement of a clearance to terminate employment was a
creation of the Department of Labor to carry out the Labor Code provisions on
security of tenure and termination of employment.  The proceeding subsequent to the filing of an
application for clearance to terminate employment was outlined in Book V, Rule
XIV of the Rules and Regulations Implementing the Labor Code.  The fact that said rule allowed a procedure
for the approval of the clearance with or without the opposition of the
employee concerned (Secs. 7 & 8), demonstrates
the non-litigious and summary nature of the proceeding.  The clearance requirement was therefore
necessary only as an expeditious shield against arbitrary dismissals without
the knowledge and supervision of the Department of Labor.  Hence, a duly approved clearance implied that
the dismissal was legal or for cause (Sec. 2).

But even while said clearance was a requirement, employees who
faced dismissal still contested said applications not only through oppositions
thereto but by filing separate complaints for illegal dismissal.  Usually, the investigation on the application
and the hearing on the complaint for illegal dismissal were conducted simultaneously.  What makes the present case unusual is that
the employee filed the complaint for illegal dismissal only after the Acting
Secretary of Labor had affirmed the approval of the application to terminate
his employment.  Nonetheless, we are
unprepared to rule that such action of the Acting Secretary of Labor barred Collado from filing the complaint for illegal
dismissal.  If ever, the most that can be
attributed against Collado is laches
for his failure to question seasonably the Acting Secretary of Labor’s affirmance of the approval of the clearance to
terminate.  However, to count such laches against Collado would be
prejudicial to his rights as a laborer.

Be that as it may, the possibility that there would be two
conflicting decisions on the issue of Collado’s
dismissal may now be considered academic. 
The requirement of a written clearance from the Department prior to
termination was abolished by the enactment of Batas Pambansa
Blg. 130 in 1981. 
Dismissal proceedings are now confined within the establishments.  The NLRC or the labor arbiter steps in only
if the said decision is contested by the employee.^[21]

On the legality of Collado’s dismissal,
we hold that the NLRC abused its discretion in directing his reinstatement with
two (2) years backwages.  The relation between petitioner and Collado is now strained by the latter’s violation of the
trust and confidence reposed on him as a member of the security force, a
position impressed with a high degree of trust.^[22]
Proof beyond reasonable doubt of an employee’s misconduct is not required when
loss of confidence is the ground for dismissal. 
It is sufficient if the employer has “some basis” to lose
confidence or that the employer has reasonable ground to believe or to
entertain the moral conviction that the employee concerned is responsible for
the misconduct and that the nature of his participation therein rendered him
absolutely unworthy of the trust and confidence demanded by his position.^[23]

In this case, petitioner supported its application for clearance
to terminate Collado’s employment with sworn
statements implicating him in the theft.^[24]
Such sworn statements are sufficient to warrant the dismissal.  On the other hand, the dropping of the
qualified theft charges against Collado is not
binding upon a labor tribunal.^[25]
The sensitivity of Collado’s job as a security guard vis-a-vis the cause of his dismissal cost him his right to
be rehired to the same position. 
Reinstatement is not proper where termination of employment was due to
breach of trust and confidence.^[26]

We are aware of Collado’s almost six
years of service to the petitioner as well as the hardships resulting from the
loss of his job.  Compassion dictates us
to grant him separation pay as financial assistance but we are bound by the
ruling of the Court en banc in Philippine Long Distance Telephone
Company v. NLRC^[27]
that henceforth separation pay shall be allowed as a measure of social justice
only in those instances where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral character.

 WHEREFORE, the
decision of the NLRC is hereby reversed and set aside.  Juanito Collado’s dismissal from employment is hereby declared
valid.  No costs.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin, and Cortes, JJ., concur.

^[1] STF-ROX Case No. A-078-76; Rollo,
pp. 35-38.

^[2] Rollo, p. 58.

^[3] Rollo, pp. 59-62.

^[4] Rollo, p. 64.

^[5] Rollo, p. 63.

^[6] Rollo, p. 67.

^[7] Rollo, p. 34.

^[8]
Appeal to the Office of the President was eliminated by the promulgation on May 1, 1978 of Presidential Decree No.
1367.  On May 29, 1978, P.D. No. 1391 further delimited appeals to
the NLRC.

^[9]
ROX Arbitration Case No. 561-78; Rollo, pp.
69-70.

^[10] Rollo, p. 71.

^[11] Rollo, p. 75.

^[12] Rollo, pp. 77-83.

^[13] Rollo, p. 82.

^[14]
Diego P. Atienza,
presiding commissioner and Geronimo Q. Quadra and Cleto
T. Villatuya, commissioners.

^[15] Rollo, p. 32.

^[16] Rollo, pp. 30-31.

^[17] Rollo, p. 125.

^[18] Rollo, p. 185.

^[19]
G.R. No. 51809, December 19, 1980,
101 SCRA 738, 742.

^[20] 50 C.J.S. 27 citing Empire Star Mines Co. vs. California
Employment Commission, 168 P.2d 686.

^[21]
Rule XIV, Book V, Omnibus Rules Implementing the Labor Code.

^[22] Rollo, p. 24.

^[23] Citytrust Finance Corporation vs. NLRC, G.R. No.
75740, January 15, 1988,
157 SCRA 87, 94.

^[24] Rollo, pp. 39-54.

^[25] Zamboanga City Water District vs. Bartolome, G.R. No. 66766, December 20, 1985, 140 SCRA 432
citing Sea-Land Service, Inc. vs. NLRC, G.R. No. 68212, May 24, 1985,
136 SCRA 544, 547-548.

^[26] University of the East vs. NLRC, G.R. No. 71065, November 22, 1985, 140 SCRA 296.

^[27]
G.R. No. 80609, August 23, 1988.