SAN MIGUEL CORPORATION, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, EXECUTIVE LABOR ARBITER ILDEFONSO AGBUYA AND FERNANDO M. ALMONICAR, RESPONDENTS.

Under the Labor Code, as amended, the requirements for the lawful
dismissal of an employee by his
employer are two-fold:  the substantive
and the procedural.  Not only must the
dismissal be for a valid or authorized cause as provided by law [Arts. 279, 281, 282-284], but the
rudimentary requirements of due process — notice and hearing — must also be
observed before an employee may be dismissed [Art. 277(b).] One cannot go
without the other, for otherwise
the termination would, in the eyes of the law, be illegal.

The resolution of the instant case hinges on the determination of
whether or not petitioner had complied with the procedural requirements before
it dismissed private respondent.

The antecedents of this case, as summarized with particularity by
the Solicitor General, are as follows:

1.  Private respondent,
Fernando M. Almonicar, had been an employee of the
petitioner corporation for almost ten years preceding his termination on August 15, 1982.  He started working for the petitioner on October 1, 1973 as Route Helper in the Company’s Beer Marketing
Division, Cotabato Sales Office, Cotabato City;
and since then, he was promoted twice before his elevation to his last position
of Route Salesman.

2.  During his period of
employment, Almonicar had a clean record until at
around 5:30 o’clock in the afternoon
of February 22, 1982, after
arriving from his day’s work, he was approached at the Sales Office inside the
company’s warehouse in Cotabato
City by another company Route
Salesman named Abdulkadil Dumamba.  Then and there, in the
presence of the company warehousemen. 
Dumamba requested Almonicar
if the latter could transfer to his account the 100 cases of empty regular beer
bottles and 100 cases of empty Beer Grande bottles worth P3,340.00, which were
returned allegedly for cash refund by Dumamba’s
customer, but that Dumamba did not have sufficient
sales/collections for the refund.

3.  Finding nothing wrong
with Dumamba’s proposition, as in fact, it was then a
common practice among salesmen whenever one of them did not have sufficient
sales/collection to pay for the value of beer empties returned for cash
refund.  Almonicar
agreed to the proposition.  Forthwith, Almonicar handed to Dumamba the
P3,340.00 out of
his sales/collections, and issued in the name of Dumamba’s
customer the corresponding cash refund invoice (Annex “B”,
Petition).  Whereupon, Almonicar advised the warehouseman to reflect in his
Checker’s Stock Report said returned beer empties.

4.  It turned out, however,
that the beer empties were returned not for
cash refund, but to be credited to customer’s account with the
petitioner company.  For which, Dumamba
issued to the customer a charge
refund invoice (Annex “A”, Petition), but which was not recorded in
the latter’s account ledger card because Dumamba did
not include it in his sales report to make his transaction records appear to
be in order.

5.  Consequently, when a verification was made on February 25, 1982, of the account of Dumamba’s
customer, the latter refused to sign the confirmation slip (Annex “C”,
Petition) of his account with the petitioner company, claiming that the same
did not tally with his record.  As a
result, an inquiry was conducted
wherein it was found out that the discrepancy lies in Dumamba’s
failure to include in his report the charge refund invoice he issued for the
return of said beer empties, and
the misappropriation for his personal use [of] the cash intended for the refund
of the value thereof which was extended to him by Almonicar
out of the latter’s
sales/collections.  This,
resulted in the recommendation for the grounding of Dumamba until further investigation (Annex “D”, Petition).

6.  Thereafter, an
investigation was conducted sometime in March 1982 in connection with several
acts of defalcation allegedly committed by Dumamba
during the year 1982, one of which
was the misappropriation of the P3.340.00 covered by a cash refund invoice
issued by Almonicar.

7.  It was for the purpose of
helping the Company in the investigation against Dumamba,
particularly with respect to above-mentioned cash refund, as he was made to
understand by Regional Sales Manager Romeo A. Reyes who conducted the
investigation, that Almonicar gave his statement
(Annex “F”, Petition) in the early morning of March 4, 1982.

8.  As a result of said
investigation, Dumamba was immediately grounded.  Almonicar on the
other hand was even recommended by the company’s sales supervisor, Ranulfo Mabacho, for promotion to Salesman-in-Charge of the Midsayap (North Cotabato)
Sales Office.  He was likewise entrusted
to act as Salesman-in-Charge of the Cotabato Sales
Office whenever the regular salesman was absent.

9.  However, to Almonicar’s shock and astonishment, he received on July 26,
1982, a letter dated July 21, 1982 from their Regional Manager, advising him
that, “after due investigation of your recent case, we have decided to
separate you from service at the close of business on August 15, 1982.”

10.  Immediately, Almonicar sought an explanation from the Regional Manager
but the latter told him that the “decision” came from the company’s
head office in Manila.  However, when the Regional Manager was asked
for copies of the alleged “investigation” and “decision”,
the latter simply told him that the
pertinent papers will be forwarded to the Ministry of Labor.

11.  This prompted Almonicar to file on October 16, 1982 a complaint for
illegal dismissal with the Labor Ministry’s Regional Office No. 12 in Cotabato City against the herein petitioner and Regional
Sales Manager Romeo A. Reyes.

12.  After efforts of
conciliation with the Labor’s Regional Office in Cotabato
City failed, the case was indorsed for compulsory arbitration to the Executive
Labor Arbiter in Cagayan
de Oro City, wherein the parties, through their
respective counsels, agreed at the hearing called on October 26, 1983 to submit
their case for decision on the bases of their position papers and supporting
evidence.

13.  Pursuant thereto,
complainant Almonicar (herein private respondent)
duly filed his position paper and supporting documents on January 23, 1984. 
Anent the respondent (herein petitioner), its counsel filed a
Manifestation and Motion asking for an extension of twenty (20) days from Jan.
20, 1984 within which to file its position paper.  Subsequently, another motion was filed asking for a final extension of twenty (20)
days from February 10, 1984 within which to file its position paper, but the
petitioner failed to file even until Executive Labor Arbiter rendered his
decision (Annex “G”, Petition) on May 30, 1984 finding private respondent’s dismissal to be without basis
and, therefore, entitled to full back wages with all fringe benefits
from the time of his termination up to the promulgation of the decision.  However, since private respondent’s
reinstatement was no longer feasible, he was awarded a separation pay
corresponding to his ten (10) years of service at 1/2 month pay for every year
of service based on his last
salary.  In addition, petitioner
was ordered to pay private respondent’s counsel 10% of the total award.

14.  From the foregoing decision, both parties
appealed to the respondent Commission. 
In its appeal, petitioner alleged that the Executive Labor Arbiter
abused his discretion and erred in his findings of fact and conclusion of law
by introducing for the first time evidence in refutation of private respondent’s position paper.  For his part, private respondent assailed
the Executive Labor Arbiter’s decision for not ordering his reinstatement,
despite the finding that his dismissal was without basis and no evidence
whatsoever was shown that this was no longer possible.

15.  The respondent Commission,
which apparently overlooked private respondent’s appeal and was misled into
appreciating petitioner’s evidence presented for the first time on appeal,
promulgated on December 10, 1985 a decision (Annex “J”, Petition), finding private respondent guilty of the
offense imputed to him.  However,
considering his ten (10) years of unblemished record with the company, he was
awarded a separation of 1/2 month’s pay for every year of service, instead of reinstatement, without back wages.

16.  So that, on a Motion for Reconsideration
(Annex “K”, Petition) filed by private respondent, the
respondent Commission rectified its errors by reversing and setting aside its
previous decision of December 10, 1985 and instead, promulgated on March 30,
1987 another decision (Annex “L”, Petition) the dispositive
portion of which reads:

WHEREFORE, premises considered the respondents are hereby ordered
to reinstate complainant to his former
position with full backwages with all of the benefits
legal and by contract and without loss of seniority rights and other
privileges, computed from the date of
his dismissal up to his actual reinstatement.  Consequently, respondent is directed to show proof of immediate
compliance to the mandate of the decision after ten (10) days from
receipt of this Resolution.  [Rollo, pp. 121-128.]

Without seeking
reconsideration of the NLRC’s decision of March
30, 1987, petitioner
filed the instant petition seeking the reversal of said decision on the ground
that public respondents had gravely abused their discretion.

The Court finds the
petition unmeritorious.

The pleadings filed by
petitioner and the annexes to its petition glaringly reveal a fatal lapse on its part — the failure, prior to private respondent’s
dismissal, to furnish him written notice and to afford him the opportunity to
be heard and to defend himself as mandated by the
Labor Code, as amended.  Thus, the code
provides that “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”
[Art. 277(b); formerly, Art. 278 (b).] In implementation of this requirement,
the amended rules and regulations promulgated by the Secretary of Labor
provides:

Sec. 1. 
Security of tenure and due process.  No worker shall be dismissed except for a
just or authorized cause provided by law and after due process.

Sec. 2. 
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
cases of abandonment of work, the notice shall be served at the worker’s last
known address.

*        *           *

Sec. 5. 
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.

Sec. 6. 
Decision to dismiss.  The employer shall immediately notify a
worker in writing of a decision to dismiss him stating clearly the reasons therefor.

*        *           *

[Rule XIV, Book V, Rules and Implementing the Labor Code;
underscoring supplied.]

In the instant case, after giving his statement as witness for the company in connection with
the investigation on the alleged acts of defalcation committed by Dumamba, private respondent was unexpectedly dismissed,
without even being investigated in connection with the violation attributed to
him, much less notified that the company intended to dismiss him for the
alleged violation.

It is therefore apparent
that private respondent’s dismissal was an afterthought.  He was asked to make a statement in connection with the investigation against Dumamba and when it became subsequently apparent to those
in the head office in Manila that his act of issuing the invoice in the name of Dumamba’s
customer constituted a possible violation of company rules and
regulations he was unceremoniously meted the penalty of dismissal.  Even the tenor of his statement [Annex
“F”, Petition; Rollo, pp. 30-32], which was
in the form of question and
answer, indicates that it was being given in connection with the investigation
of Dumamba’s misappropriation of the money given by
the private respondent for the refund of the empty bottles.  There is no indication in said statement that private respondent was also under
investigation.  In contrast, Dumamba’s statement [Annex “E”, Petition; Rollo, pp. 27-29)
clearly stated that he was the subject of the investigation.  Thus, it was prefaced by a paragraph entitled
“Preliminaries”, which provides:

We are investigating you to shed light
on reported beer empties that were retrieved from United Grocery, situated at SuperMarket, Cotabato
City, and it (sic) were not
credited to the account of said outlet. . . . [Rollo, p. 27;
underscoring supplied.]

Moreover, that the
company did not contemplate conducting an administrative proceeding against private respondent was bolstered by the
undisputed fact that he was allowed to continue with his regular duties after
he gave his statement, and even recommended for promotion some time before his sudden dismissal,
contrasted with the immediate grounding of Dumamba.  The failure of petitioner to afford private
respondent due process, as required by the Labor Code, in effecting his
termination, is thus patent.

No grave abuse of
discretion could therefore be attributed to the NLRC for holding that
private respondent was illegally terminated and ordering his reinstatement with
backwages, as such was fully supported by the facts
and the law.  The reinstatement of private
respondent, as ordered by the NLRC, in lieu of the payment of separation pay, as directed by the Labor Arbiter, is
even made more imperative by the fact that he was arbitrarily deprived of his
employment at the early age of thirty-two (32) when he was just approaching the
prime of his life, causing his family economic dislocation and untold hardship as he pursued his case through the years.

Neither can grave abuse
of discretion be ascribed to the Executive Labor Arbiter for basing his findings of fact and, consequently, his decision exclusively on private
respondent’s position paper.  It will be
recalled that the parties agreed to submit the case for decision on the basis of
their position papers and that in spite of the extension granted it, petitioner
failed to file its position paper, forcing the arbiter to decide the case
without it.  Moreover, Art. 221 of the
Labor Code, which provides that the technical rules of evidence are not
controlling in proceedings before Labor Arbiters, allows the latter to decide
the case on the basis of position papers and other documents submitted by the
parties [Manila Doctors Hospital v. NLRC, G.R. No. 64897, February 28, 1985,
135 SCRA 262; Asiaworld Publishing House, Inc. v. Ople, G.R. No. 56398, July 23, 1987, 152 SCRA 219.]

No grave abuse of discretion warranting the issuance of the
corrective writ of certiorari having been established, the dismissal of
the petition is in order.

A final
word.  While the Court finds no cogent reason to set
aside the NLRC’s decision, We are not, however, disregarding or in any way diminishing the employer’s
prerogative to instill discipline in his employees and to impose reasonable
penalties, including dismissal, on erring employees pursuant to company rules
and regulations [Soco v. Mercantile Corporation of Davao, G.R. Nos. 53364-65, March 16, 1987, 148 SCRA 526.]
Neither is the Court deviating from the established rules that an employer
cannot be compelled to continue with the employment of workers guilty of acts
of misfeasance or malfeasance, and whose continuance in the service of the
employer is clearly inimical to his interests, and that the law, in protecting
the rights of workers, authorizes neither the oppression nor self-destruction
of employers [Manila Trading & Supply Co. v. Zulueta,
69 Phil. 485 (1940); San Miguel Brewery, Inc. v. National Labor Union,
97 Phil. 378 (1955); Colgate Palmolive Philippines v. Ople, G.R. No. 73681, June 30, 1988.] But it must be
emphasized nevertheless that due process must be observed in effecting an
employee’s dismissal.  And
rightfully so, because the dismissal of an employee affects not only his
position but also his means of livelihood and his dependents’ sustenance.  The employee must be informed of the alleged
violation and given an opportunity to be heard before he is dismissed.  Strict adherence to the requirements set forth
in the Labor Code, as amended, is essential. 
Thus, the Court in the recent case of Century Textile Mills,
Inc., et al. v. NLRC, et al.
[G.R. No. 77857, May 25, 1988]
stated:

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 employer’s 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 employer’s charges
against him and 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.

WHEREFORE, the instant petition is hereby DISMISSED and
the decision of the NLRC dated March
30, 1987 is AFFIRMED with the modification that the award of backwages is fixed at three (3) years, without
qualification or deduction, in line with current jurisprudence.  The temporary restraining order issued by the
Court on May 20, 1987 is
LIFTED and SET ASIDE.  This decision is
IMMEDIATELY EXECUTORY.

SO ORDERED.

Fernan, C.J., Gutierrez, Jr.,
Feliciano, and Bidin,
JJ., concur.