JOEL MENDOZA, PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, SAN MIGUEL CORPORATION, MAGNOLIA DIVISION AND CONRAD YUMAN III, RESPONDENTS.

Mendoza versus National Labor Relations Commission

The Case

This is a petition for certiorari brought by Joel Mendoza, a regular salesman of the Magnolia Division of San Miguel Corporation assigned to its Baguio Sales Office, against the National Labor Relations Commission, San Miguel Corporation and his regional sales supervisor Conrad Yumang the Third. Mendoza was dismissed for gross negligence after a company investigation into a vehicular accident involving his assigned delivery truck. He asks the Supreme Court to set aside the Commission's resolution dismissing his complaint for illegal dismissal. The case matters because it fixes the standard of due process in termination proceedings: not the letter of the company's own rules, but the substance of notice and an opportunity to be heard.

Procedural History

Mendoza filed a complaint for illegal dismissal with the labor arbiter. The labor arbiter ruled in his favor, declaring that he was illegally dismissed and ordering his reinstatement without loss of seniority rights, with backwages computed from the time they were withheld up to his reinstatement, plus ten percent of the total award as attorney's fees, and denying the company's counterclaim. San Miguel Corporation appealed to the National Labor Relations Commission, and Mendoza opposed the appeal. The Commission issued a resolution dismissing his complaint for lack of merit. Mendoza then came to the Supreme Court by petition for certiorari, alleging grave abuse of discretion amounting to lack or excess of jurisdiction.

Facts

On June 2, 1988, Mendoza submitted an accident report to Yumang, his regional sales supervisor. He claimed that on the evening of May 31, 1988, after leaving the sales office at about seven in the evening, he returned to a mini-mart along Marcos Highway to collect uncollected cash sales so that no short remittance would appear on his month-ending report. He said a companion, Nick Villabona, came along, that they looked for a missing freezer reportedly brought to the vicinity of Imelda Village in Baguio City, and that while maneuvering a right turn the left shoulder of the rain-softened road gave way, sending the truck down and turning it over on its left side, damaging a house and its kitchen.

Yumang made his own inquiries and found that the police traffic report placed the accident on June 1, 1988 at one o'clock in the early morning, not on the evening of May 31. He conducted a formal investigation on June 16, 1988. There Mendoza admitted that he had checked out at seven in the evening without the knowledge of Mr. Fragante, that after collecting nothing at the mini-mart he and Villabona watched basketball games, that he invited Villabona to drink at a place called Rock Session using the company unit, that they stayed until midnight, and that the accident happened after they gave two band members a ride home in the heavy rain. He confessed that he had reported it the other way because he was confused and afraid of the damage. He begged for consideration, saying he realized the gravity of his offense and knew a heavy penalty would be imposed.

On July 5, 1988, Mendoza was relieved of his duties as tetra salesman. On August 15, 1988, he was served a letter of termination finding him guilty of gross negligence and terminating his services effective at the closing of business hours of August 16, 1988. The company found three violations of its policy on employee conduct: driving under the influence of liquor, unauthorized use of the company vehicle, and damage to the company vehicle, which was a total wreck. The owners of the damaged house sought fifty thousand pesos in actual damages from the company.

Issues

• Whether or not the National Labor Relations Commission committed grave abuse of discretion in finding that Mendoza was afforded due process despite the absence of notice and hearing.
• Whether or not the Commission committed grave abuse of discretion in finding that the violations warranted dismissal despite the company's own disciplinary rules not prescribing that penalty.
• Whether or not the Commission committed grave abuse of discretion in finding that dismissal was warranted despite the alleged misapplication of the company's disciplinary rules.

Applicable Provisions

The decision rests on the constitutional and statutory guarantee of due process in termination, which the Court states in its own words rather than by article number. The governing principle, as the Court announces it, is this:

Entrenched in our labor laws is the right of an employee or laborer to due process before steps may be taken to effect the termination of his employment.

This is the standard against which the company investigation and the termination letter are measured.

The Court also states what due process requires in substance:

Due process contemplates freedom from arbitrariness. What it requires is fairness or justice; the substance rather than the form being paramount. When a party has been given the opportunity to be heard, then he was afforded due process.

This supplies the test for deciding whether the investigation satisfied the guarantee.

Ruling

On the first issue, the Court held that there was no grave abuse of discretion. Mendoza argued that Yumang's investigation was only meant to determine the truth about the accident, not his responsibility or any disciplinary action. The Court was not impressed. During the investigation Mendoza knew all along that his administrative responsibility to his superior was involved, as shown by his own statement begging that a heavy penalty not be imposed and saying he realized the gravity of his offense. In no uncertain terms he admitted the gravity of his offense and asked that a heavy penalty should not be imposed on him. The Court laid down the standard:

The rules laid down by the company for the investigation of an employee before his termination need not be observed to the letter. It is enough that there was due notice and a hearing before a judgment or resolution thereof is made.

On the second and third issues, the Court held that the penalty of dismissal was justified. Mendoza was not a first offender. Aside from the infractions found, he falsified the truth in his accident report to cover up his misdeeds. On previous occasions he violated company rules on pricing as a salesman in a way detrimental to his employer, and on one occasion he failed to remit collections, for which he was suspended for thirty days in 1986. The totality of the infractions justified dismissal. The Commission therefore did not commit grave abuse of discretion in reversing the labor arbiter and upholding the dismissal.

Doctrine

Before a regular employee may be dismissed, he must be given due notice and an opportunity to be heard. The company's own procedural rules need not be followed to the letter; it is enough that there was due notice and a hearing before the judgment or resolution was made. Due process contemplates freedom from arbitrariness; what it requires is fairness or justice, the substance rather than the form being paramount, and when a party has been given the opportunity to be heard, he was afforded due process. In fixing the penalty, the employer may consider the totality of the employee's infractions, including prior violations and a false report made to cover up misconduct, and that totality may justify dismissal even where a single violation might not.

Disposition

The petition was dismissed, without pronouncement as to costs, and the dismissal of Mendoza was upheld.

Remember This

Memorize the line that due process requires the substance rather than the form, so that company rules need not be observed to the letter as long as there was due notice and a hearing. Examiners use this case to test whether a student can distinguish procedural due process in termination from rigid compliance with an employer's internal rules, and to test the totality-of-infractions approach to the penalty.