CENTURY TEXTILE MILLS, INC. AND ALFREDO T. ESCAÑO, PETITIONERS, VS. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER FELIPE P. PATI, AND EDUARDO CALANGI, RESPONDENTS.

Century Textile Mills versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Century Textile Mills, Incorporated and its President and General Manager, Alfredo T. Escaño, against the National Labor Relations Commission, Labor Arbiter Felipe P. Pati, and Eduardo Calangi. The company asks the Supreme Court to set aside the Commission's ruling that Calangi, a machine operator in its Finishing Department, was illegally dismissed. The case matters because it fixes, in one clean statement, the twin requirements of notice and hearing that every employer must observe before dismissing an employee, and because it explains who may waive those rights — the employee alone, never his union.

Procedural History

Calangi filed a complaint for illegal dismissal with the Arbitration Branch of the then Ministry of Labor and Employment. The Labor Arbiter dismissed the complaint, finding the evidence against Calangi overwhelming and sufficient to justify dismissal, and noting that Calangi had failed to deny or controvert the charges. Calangi appealed to the National Labor Relations Commission, which reversed the Labor Arbiter. The Commission declared the dismissal illegal and ordered the company to reinstate Calangi to his former or equivalent position without loss of seniority and other benefits, with full backwages from 27 July 1983 until actual reinstatement. The company's motion for reconsideration was denied. A writ of execution later issued for backwages, thirteenth month pay, living allowance, and vacation and sick leave. The company then came to the Supreme Court on a petition for certiorari with a prayer for a preliminary injunction or restraining order. The Court issued a temporary restraining order, later gave due course to the petition, and directed the parties to submit their memoranda.

Facts

Eduardo Calangi had been employed at the Century Textile Mills factory since 13 December 1974, first as an apprentice and later as a machine operator in the Finishing Department. In the early hours of 4 June 1983, within company premises, a co-worker, Rodolfo Marin, saw another machine operator, Gatchie Torrena, mixing a substance into the pitcher of drinking water from which two supervisors, Melchor Meliton and Antonio Santos, regularly drank. Marin reported what he saw to Meliton before anyone drank from the pitcher. The supervisors took possession of the pitcher and filed a formal report with management. Chemists at the Philippine Constabulary Crime Laboratory at Camp Crame found formaldehyde, a toxic chemical, in the water.

In the police investigation that followed, Torrena confessed that Calangi had personally instructed him, and that he had agreed, to place formaldehyde in the pitcher. Torrena said they were moved by a desire to avenge themselves on Meliton and Santos, who had caused their suspension from work several times in the past. The company placed Torrena and Calangi under preventive suspension effective 10 June 1983, and on 27 July 1983 terminated Calangi's services. Criminal charges for attempted murder were also filed with the Office of the Provincial Fiscal of Rizal, but that complaint was later dismissed.

Calangi's complaint alleged that before his preventive suspension, neither the company nor any of its officers furnished him a copy of the charges, nor gave him the opportunity to answer and defend himself. The company answered that Calangi had been informed of the accusations and given the chance to answer but had kept silent throughout. It relied on a memorandum of its Personnel Manager dated 10 June 1983, which merely advised that Calangi and Torrena were under indefinite preventive suspension, cited a policy instruction of the New Labor Code as ground, and noted that the decision was reached after a meeting between the union and management.

Issues

• Whether or not private respondent Calangi was illegally dismissed from his job as machine operator.
• Whether or not, assuming illegal dismissal, the company may be ordered to reinstate Calangi to his former position with full backwages and without loss of seniority rights and other benefits, considering that such relief was not sought in his complaint.
• Whether or not the company may be ordered to pay actual damages in excess of what Calangi had claimed in his complaint.

Applicable Provisions

Article 278 of the Labor Code, as quoted in the decision, provides:

However, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity and legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.

This is the source of the twin requirements of notice and hearing, and of the rule that the burden of proving a valid cause of termination rests on the employer.

Section 2 of Rule XIV, Book V of the Rules and Regulations Implementing the Labor Code provides:

Notice of dismissal. Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal. In case of abandonment of work, the notice shall be served at the worker's last known address.

This fixes the content of the written notice: the particular acts or omissions constituting the ground for dismissal.

Section 5 of the same Rule provides:

Answer and hearing. The worker may answer the allegations stated against him in the notice of dismissal within a reasonable period from receipt of such notice. The employer shall afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires.

This establishes the employee's right to answer and to a hearing before dismissal is effected.

Section 6 of the same Rule provides:

Decision to dismiss. The employer shall immediately notify a worker in writing of a decision to dismiss him stating clearly the reasons therefor.

This requires a written notice of the decision itself, stating clearly the reasons.

Article 280 of the Labor Code, as amended, provides:

Security of Tenure. In case of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and to his back wages computed from the time his compensation was withheld from him up to the time of his reinstatement.

This supplies the consequences of illegal dismissal: reinstatement without loss of seniority rights and backwages.

Ruling

On the first issue, the Court sustained the Commission: Calangi was dismissed without just cause. The twin requirements of notice and hearing are essential elements of due process in dismissal cases. Notice informs the employee of the employer's intent to dismiss and the reason; hearing affords him the opportunity to answer and defend himself before dismissal is effected. Neither can be dispensed with without running afoul of the due process requirement of the 1987 Constitution. The record showed no hearing or gathering where Calangi was given a reasonable opportunity to confront his accusers and defend against the charges. The Personnel Manager's memorandum offered no helpful particulars. The company's prior consultation with the labor union was legally insufficient, because the rights to be informed beforehand and to be heard are personal to the employee. The union cannot waive them for him, and his silence was not an effective waiver. Notice and opportunity to be heard must be accorded even though the employee does not affirmatively demand them.

The Court also held that the finding of Calangi's participation in the alleged conspiracy could not rest solely on Torrena's unilateral declaration, a confession by a confirmed co-conspirator, which must be corroborated by other competent and convincing evidence. At the very least, the company should have confronted Calangi with Torrena's sworn statement, and the record did not show that it did. The burden of showing a just cause lay on the employer, and it was not discharged.

On the second issue, the Court held that reinstatement without loss of seniority rights and payment of backwages are the normal consequences of a finding of illegal dismissal, and together they make the dismissed employee whole. Calangi was entitled to both as a matter of right under Article 280, even though he had omitted to claim reinstatement in his complaint, for he is entitled to such relief as the facts alleged and proved warrant. The Court, however, declined to order actual reinstatement, believing the company should not be compelled to take back an employee who, at least in the minds of his employers, poses a significant threat to the lives and safety of company workers. It awarded separation pay in lieu of reinstatement, equal to one-half month's salary for every year of service, computed from 13 December 1974 until 10 June 1986, and three years of backwages without qualification or deduction.

Doctrine

First, the twin requirements of notice and hearing are essential elements of due process in employee dismissal. The employer must furnish a written notice stating the particular acts or omissions constituting the ground for dismissal, afford the worker ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires, and notify him in writing of the decision to dismiss stating clearly the reasons. Neither requirement may be dispensed with.

Second, the rights to be informed beforehand of the proposed dismissal and its reasons, and to be afforded an adequate opportunity to defend oneself, are personal to the employee. Consultation with or consent of the labor union is not a substitute for their observance. The employee may waive these rights, but the union cannot waive them for him, and mere silence is not an effective waiver.

Third, the burden of proving that the termination was for a valid or authorized cause rests on the employer. A finding of an employee's participation in a criminal conspiracy cannot rest solely on the unilateral declaration of a confirmed co-conspirator; it must be corroborated by other competent and convincing evidence.

Fourth, under Article 280, an employee unjustly dismissed is entitled as a matter of right to reinstatement without loss of seniority rights and to backwages, and may receive such relief as the facts alleged and proved warrant even if not expressly prayed for in the complaint. Where reinstatement will not serve the best interests of the parties, separation pay may be awarded in lieu of reinstatement.

Disposition

The petition for certiorari was dismissed; the Commission's decision was affirmed with the modification that the company pay Calangi three years of backwages without qualification or deduction and separation pay in lieu of reinstatement, computed at one-half month's salary for every year of service from 13 December 1974 until 10 June 1986, with no pronouncement as to costs.

Remember This

Memorize this line: notice and hearing are personal rights of the employee, and the union cannot waive them for him. Examiners use this case to test the twin requirements of due process in dismissal, the employer's burden of proof, and the rule that relief warranted by the facts may be granted even if not prayed for.