PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, INC., Petitioner,

vs.

ANTONIO Q. TIAMSON, Respondent.

 

D E C I S I O N

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 company’s 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 company’s Clark-TMC Radio Room.3

The QCID, likewise, requested the Switching Network Division at PLDT’s Sampaloc National Toll Center to print the CAMA4 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 company’s 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 latter’s 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 company’s 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 Signaling 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 Company’s 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 PLDT’s Clark-TMC. He averred that Busa’s 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 Memo13dated October 5, 1994, terminating Tiamson’s 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 attorney’s 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 Tiamson’s 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 NLRC’s 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 attorney’s 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 DISMISSEDwhile 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 herebyREINSTATED in its fullness and without modifications.

SO ORDERED.17

The CA held that Busa’s 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 Busa’s 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 Busa’s 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 Resolution20 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 Busa’s 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, Busa’s sworn statement had been corroborated by the printout of the CAMA tapes (which disclosed that during the respondent’s August 1, 1994 duty, three fraudulent calls to Saudi Arabia were illegally made),25 as well as Cayanan’s sworn statement implicating the respondent.26

The petitioner submits that the respondent’s 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 Busa’s statement was uncorroborated and hearsay for lack of cross-examination. He insists that Busa could not have seen him make illegal connections since the latter’s 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 employer’s case succeeds or fails on the strength of its evidence and not on the weakness of the employee’s 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 employee’s 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 complainant’s participation in illegal overseas connection. Complainant also failed to refute respondent’s 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 Company’s 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 their dismissal 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 respondent’s 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 respondent’s tour of duty.

The respondent disputes the admissibility of Busa’s 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 Busa’s 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 respondent’s 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.

MGG MARINE SERVICES, INC. and/or DOROTEO C. GARLAN and CESAR ROTILO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and ELIZABETH A. MOLINA, respondents.

D E C I S I O N

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.

PHILIPPINE SAVINGS BANK, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and VICTORIA T. CENTENO, respondents.

D E C I S I O N

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 onFebruary 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.

RAYCOR AIRCONTROL SYSTEMS, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND ROLANDO LAYA, et al., respondents.

D E C I S I O N

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 namesof 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

assigneddoes 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

x x x x x x x x x

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.

WALLEM MARITIME SERVICES, INC., and WALLEM SHIP MANAGEMENT, LTD., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and ELIZABETH INDUCTIVO, respondents.

D E C I S I O N

BELLOSILLO, J.:

WALLEM MARITIME SERVICES, INC. and WALLEM SHIP MANAGEMENT LTD. in this petition for certiorari assail for having been rendered with grave abuse of discretion the 30

June 1997 Resolution of the National Labor Relations Commission dismissing their appeal for lack of merit, as well as its 29 August 1997 Resolution denying reconsideration thereof. [1]

Sometime in May 1993, Pan-Fil Co. Inc., as manning and crewing agent in the Philippines of Wallem Ship Management Ltd. (WALLEM MANAGEMENT), hired Faustino Inductivo as utilityman for "MT Rowan," a vessel owned and operated by WALLEM MANAGEMENT, a Hongkong based shipping company. The employment contract of Faustino Inductivo was good for ten (10) months with a compensation of US$360.00 monthly basic salary, US$201.00 fixed monthly overtime pay, and a monthly vacation leave with pay for six (6) days. As was the standard procedure, Faustino Inductivo underwent pre-employment medical examination and was found by his employer's doctors to be physically fit for work. So, on 13 May 1993, he was told to board as he did the "MT Rowan."

In November 1993 Wallem Maritime Services, Inc. (WALLEM SERVICES) took over as WALLEM MANAGEMENT's manning and crewing agent in the Philippines. Faustino Inductivo, who was advised of the takeover, opted to remain on the vessel and to continue his employment under the manning agency of WALLEM SERVICES. Barely two (2) months before the expiration of his employment contract, or on 17 January 1994, he was discharged from the vessel. His Seaman's Book[2] and Wages Account[3]indicated that the cause of the discharge was "mutual consent, on completion of 8 months and 5 days." Accordingly, he disembarked in Hong Kong, travelled to Manila alone and then returned to his hometown in Nueva Ecija.

On 19 January 1994, two (2) days after his arrival in the Philippines, he was hospitalized at the Yamsuan Medical Clinic in Gapan, Nueva Ecija, after complaining of occasional coughing and chest pains.The clinical diagnosis was pneumonities, bilateral. As his condition worsened, Faustino Inductivo was rushed to the Lung Center of the Philippines where a mass was found on his right lung and another on his right neck. His doctor advised him to undergo biopsy treatment, but since he was scared he requested to go on medication at home instead. Two (2) days thereafter, Faustino Inductivo returned to the hospital, this time at the De Ocampo Memorial Medical Center. Dr. Alfredo Sales, his attending physician, found on examination the presence of water in his lungs causing shortness of breath. For insufficiency of medical facilities, however, he was transferred to the Makati Medical Center where his doctor finally abandoned all hopes for his recovery as his disease was already in its advanced stage. He succumbed to his illness on 23 April 1994 and the autopsy report showed as cause of death disseminated intravascular coagulations, septecalmia, pulmonary congestion and multiple intestinal obstruction secondary to multiple adhesions.[4]

Before Faustino Inductivo's death, or sometime in February 1994, herein private respondent Elizabeth Inductivo went to petitioners to claim the balance of her husbands leave

wages. She also inquired about his sickness benefits as he was then very sick. Petitioners however informed her that her husband was not entitled to sickness benefits because he was not sick at the time he was "offsigned" from the vessel; he was "offsigned" from the vessel on "mutual consent" and not on medical grounds; and since he failed to advise or notify petitioners in writing within seventy-two (72) hours of his alleged sickness, his right to claim sickness benefits was deemed forfeited. Consequently, at the instance of Faustino Inductivo, private respondent filed an affidavit-complaint against petitioners for the payment of sickness and insurance benefits. After Faustino Inductivo died his complaint was amended by private respondent to include death benefits.

On 24 September 1996 the Labor Arbiter[5] rendered a decision in favor of private respondent ordering petitioners to pay complainant, for herself and in her capacity as guardian of her two (2) minor children, as follows: US$50,000.00 as death benefits; US$14,000.00 as childrens allowances; and US$1,000.00 as burial expenses.

On appeal the NLRC sustained the Labor Arbiter. In its Resolution of 30 June 1997 the NLRC held in part -

It may be true that the deceased failed to report to respondent Wallem Maritime within seventy two hours after arrival in the Philippines but it could not be denied also that the deceased was sick when he arrived. Human mind dictates that a medical consultation at the nearest clinic is necessary before anything else. The wife could not immediately advise the respondent due to the situation of her deceased husband x x x x The allegation of the complainant that her husband was repatriated upon petition of the crew due to the deteriorating physical condition of Faustino Inductivo, was not denied by respondent.The defense of the latter that the repatriation of the deceased was by mutual consent and not discharged medically deserves scant consideration. It is to be emphasized that the illness was contracted during the deceased's employment on board "MT Rowan." Suffice it to say that the death of Faustino Inductivo is compensable under the circumstances.

Their motion for reconsideration having been denied by the NLRC in its Resolution of 29 August 1997, petitioners are now before us imputing grave abuse of discretion on the part of the NLRC in: (a) totally disregarding the evidence on record; (b) ignoring and disregarding the existing law and jurisprudence on the matter; and, (c) affirming in toto the Labor Arbiters award of death compensation in favor of private respondent.

The pivotal issue to be resolved is whether the death of Faustino Inductivo is compensable as to entitle his wife and children to claim death benefits. Petitioners insist that it is not compensable for two (2) principal reasons: first, Faustino Inductivo was offsigned from the vessel "MT Rowan" based on "mutual consent" and not on medical grounds, and the cancer which caused his death was not contracted during his employment but was a pre-existing condition; and second, Faustino Inductivo failed to comply with the mandatory seventy-two

(72)-hour reporting requirement prescribed by the POEA standard employment contract, and therefore his right to claim benefits was deemed forfeited.

Petitioners would want to impress upon this Court that Faustino Inductivo was still in good health when he disembarked from "MT Rowan," as shown in his Seaman's Book indicating that the cause of his discharge was "mutual consent in writing" and not on medical grounds.

We disagree. From all indications, Faustino Inductivo was already in a deteriorating physical condition when he left the vessel. This is the only plausible reason why with barely two (2) months away from the expiration of his employment contract he was all of a sudden and with no rational explanation discharged from the vessel. This conclusion is buttressed by the events that transpired immediately upon his arrival in the Philippines, i.e., he was hospitalized two (2) days later and died three (3) months after.

Thus, as succinctly observed by the Labor Arbiter -

While it's true that the seaman was offsigned from the vessel by mutual consent, what could have been the compelling reason why only less than two (2) months away before the expiration of his employment contract, he decided to disembark. Then there is the question about the true state of his health at the time he disembarked. The puzzle of course is why two (2) days upon his disembarkation complainants husband lapsed into his ordeal immediately serious at the onset without any sign of relief until his last breath barely three months thereafter.

It is indeed unthinkable that the deceased seaman at the homestretch of his voyage would suddenly seek the end of his employment for no reason at all. There is only one logical explanation for this given the circumstances that took place immediately after disembarkation. Complainants husband was already seriously ill when he (was) discharged from the vessel. This conclusion is supported by the fact that barely two (2) days upon his arrival in the Philippines, he was rushed to a local medical clinic for some serious symptoms. There being no relief after six (6) days of medical attendance, the late seaman was transferred to the Lung Center of the Philippines. Again, as there was likewise no relief obtained the family was constrained to seek further work-outs in two (2) other hospitals, the last of which was at the Makati Medical Center where all clinical procedures and work-outs were ruled out as of no consequence since the deceaseds condition at the time was already irreversible.

There is likewise no merit in petitioners theory that Faustino Inductivo died of cancer which was pre-existing and could not have been contracted during the eight (8)-month period of his employment at the vessel. Primarily, both the Death Certificate[6] and Autopsy Report of Faustino Inductivo never mentioned that the cause of death was cancer. What was mentioned was "septicemia," if we go by the Death Certificate, and "disseminated

intravascular coagulations, septecalmia, pulmonary congestion, multiple intestinal obstruction secondary to multiple adhesions," if we refer to the autopsy report. Ostensibly, cancer was not in the list.

Indeed, there was never any categorical or conclusive finding that Faustino Inductivo was afflicted with cancer. Petitioners extensive discussion in support of their "cancer theory" is nothing more than mere speculations cloaked in medical gibberish.

Moreover, we agree with private respondent that opinions of petitioners doctors to this effect should not be given evidentiary weight as they are palpably self-serving and biased in favor of petitioners, and certainly could not be considered independent. These medical opinions cannot prevail over the entries in the Death Certificate and Autopsy Report.

Furthermore, before Faustino Inductivo was made to sign the employment contract with petitioners he was required to undergo, as a matter of procedure, medical examinations and was declared fit to work by no less than petitioners' doctors. Petitioners cannot now be heard to claim that at the time Faustino Inductivo was employed by them he was afflicted with a serious disease, and that the medical examination conducted on the deceased seaman was not exploratory in nature such that his disease was not detected in the first instance. Being the employer, petitioners had all the opportunity to pre-qualify, screen and choose their applicants and determine whether they were medically, psychologically and mentally fit for the job upon employment. The moment they have chosen an applicant they are deemed to have subjected him to the required pre-qualification standards.

But even assuming that the ailment of Faustino Inductivo was contracted prior to his employment on board "MT Rowan," this is not a drawback to the compensability of the disease. It is not required that the employment be the sole factor in the growth, development or acceleration of the illness to entitle the claimant to the benefits provided therefor. It is enough that the employment had contributed, even in a small degree, to the development of the disease and in bringing about his death.

It is indeed safe to presume that, at the very least, the nature of Faustino Inductivos employment had contributed to the aggravation of his illness - if indeed it was pre-existing at the time of his employment - and therefore it is but just that he be duly compensated for it. It cannot be denied that there was at least a reasonable connection between his job and his lung infection, which eventually developed into septicemia and ultimately caused his death. As a utilityman on board the vessel, he was exposed to harsh sea weather, chemical irritants, dusts, etc., all of which invariably contributed to his illness.

Neither is it necessary, in order to recover compensation, that the employee must have been in perfect condition or health at the time he contracted the disease. Every workingman brings with him to his employment certain infirmities, and while the employer is not the

insurer of the health of the employees, he takes them as he finds them and assumes the risk of liability. If the disease is the proximate cause of the employees death for which compensation is sought, the previous physical condition of the employee is unimportant and recovery may be had therefor independent of any pre-existing disease. [7]

On the alleged failure of private respondent to comply with the seventy-two (72)-hour reporting requirement, the POEA Standard Employment Contract Governing the Employment of All Filipino Seamen on Board Ocean Going Vessel,[8] provides in part -

x x x x the seaman shall submit himself to a post-employment medical examination by the company-designated physician within three working days upon his return, except when he is physically incapacitatedto do so, in which case a written notice to the agency within the same period is deemed as compliance. Failure of the seaman to comply with the mandatory requirement shall result in his forfeiture of the right to claim the above benefits (underscoring supplied).

Admittedly, Faustino Inductivo did not subject himself to post-employment medical examination within three (3) days from his return to the Philippines, as required by the above provision of the POEA standard employment contract. But such requirement is not absolute and admits of an exception, i.e., when the seaman is physically incapacitated from complying with the requirement. Indeed, for a man who was terminally ill and in need of urgent medical attention one could not reasonably expect that he would immediately resort to and avail of the required medical examination, assuming that he was still capable of submitting himself to such examination at that time. It is quite understandable that his immediate desire was to be with his family in Nueva Ecija whom he knew would take care of him. Surely, under the circumstances, we cannot deny him, or his surviving heirs after his death, the right to claim benefits under the law.

Similarly, neither could private respondent Elizabeth Inductivo be expected to have thought of, much less had the leisure of time to travel all the way to Manila, to notify petitioners of her husbands condition. Her primary concern then was to take care of her husband who was at the brink of death.

At any rate, it appears that in early February 1994 private respondent went to petitioners to claim the balance of her husbands leave wages. She then informed petitioners of the condition of her husband as well as his confinement in a hospital, and inquired about the sickness benefits she intended to claim. This was more than sufficient actual notice to petitioners.

It is relevant to state that the POEA standard employment contract is designed primarily for the protection and benefit of Filipino seamen in the pursuit of their employment on board ocean-going vessels.Its provisions must, therefore, be construed and applied fairly,

reasonably and liberally in favor or for the benefit of the seamen and their dependents. Only then can its beneficent provisions be fully carried into effect.

Finally, petitioner WALLEM SERVICES as manning agent is jointly and severally liable with its principal, WALLEM MANAGEMENT, for the claims of the heirs of Faustino Inductivo in accordance with Sec. 1, Rule II of the POEA Rules and Regulations.[9]

WHEREFORE, the petition is DISMISSED. The assailed Resolutions of public respondent National Labor Relations Commission dated 30 June 1997 and 29 August 1997, respectively dismissing petitioners appeal for lack of merit and denying reconsideration thereof, are AFFIRMED. Petitioners are ordered to pay, jointly and severally, the following amounts to private respondent for herself and in her capacity as guardian of her two (2) minor children: US$50,000.00 as death benefits; US$14,000.00 as children's allowances; and US$1,000.00 as burial expenses. Costs against petitioners.

SO ORDERED.

[G.R. No. 117582. December 23, 1996]

CONRADO SAMILLANO and MYRNA V. SAMILLANO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, DAN-AGSA DAKBAYAN BROADCASTING CORPORATION RADIO STATION DXDD, MSGR. JESUS DOSADO and SIMPLICIA NERI, respondents.

D E C I S I O N

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.

STOLT-NIELSEN MARINE SERVICES (PHILS.) INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION and MEYNARDO J. HERNANDEZ, respondent.

D E C I S I O N

ROMERO, J.:

Private respondent Meynardo J. Hernandez was hired by petitioner Stolt-Nielsen Marine Services (Phils.) Inc. (STOLT-NIELSEN, for short) as radio officer on board M/T Stolt Condor for a period of ten months. He boarded the vessel on January 20, 1990.

On April 26, 1990, the ship captain ordered private respondent to carry the baggage of crew member Lito Loveria who was being repatriated. He refused to obey the order out of fear in view of the utterance of said crew member "makakasaksak ako" and also because he did not perceive such task as one of his duties as radio officer. As a result of such refusal, private respondent was ordered to disembark on April 30, 1990 and was himself repatriated on May 15, 1990. He was paid his salaries and wages only up to May 16, 1990.

On June 21, 1990, private respondent filed before public respondent POEA a complaint for illegal dismissal and breach of contract praying for, among other things, payment of salaries, wages, overtime and other benefits due him for the unexpired portion of the contract which was six (6) months and three (3) days.

Petitioner STOLT-NIELSEN in its answer alleged that on April 26, 1990, private respondent refused to follow the "request" of the master of the vessel to explain to Lolito Loveria the

reason for the latter's repatriation and to assist him in carrying his baggage, all in violation of Article XXIV, Section 1 of the Collective Bargaining Agreement (CBA) and the POEA Standard Contract. Hence, private respondent, after being afforded the opportunity to explain his side, was dismissed for gross insubordination and serious misconduct.

In reply, he denied that the master of the vessel requested him to explain to Loveria the reason for the latter's repatriation.

Thereafter, POEA Administrator Jose N. Sarmiento rendered an award in favor of private respondent, as follows:

"The issue to be resolved is whether or not complainant was illegally dismissed.

We rule in the affirmative.

Record shows that on April 26, 1990, complainant was directed by the master of the vessel to carry the luggage of an outgoing seaman offshore. Complainant, however, refused to obey the said order, hence, his dismissal from his employment.

Evaluating the reason for complainant's dismissal, we find the penalty imposed too severe considering the violation committed. To our mind, a warning would have been sufficient since this was the first offense committed. Moreover, as a radio officer, it is not one of his official duties to carry the luggage of outgoing seaman.

In the light of the foregoing, we hold that complainant's dismissal due to the aforesaid incident arbitrary, whimsical and contrary to human nature and experience, hence, not justified.Accordingly, he is entitled to his salaries for the unexpired portion of his contract computed as follows:

1. Remaining portion of his contract - 6 months & 3 days

2. Basic salary - US$1,024.00

3. Fixed Overtime - 420.00 [1]

Total US$1,434.00

4. Salary/day = ($1,434/30 days) = US$47.8/day

5. Salary for 3 days - ($47.8 x 3) = US$143.4

6. Salary for 6 months - ($1,434 x 6) = US$8,604.00

7. Salary for the unexpired portion of his contract(basic salary + fixed O.T.)for 6 months and 3 days(US$8,604 + 143.4) = US$8,747.40

Complainant's claim for day's leave with pay for the unexpired portion of the contract is hereby denied since the same is only given during actual service.

The claim for damages is hereby denied for want of jurisdiction.

Complainant is however entitled to five (5%) percent of the total award as and by way of attorney's fees.

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered ordering respondent to pay complainant the following or its peso equivalent at the time of payment:

1. EIGHT THOUSAND SEVEN HUNDRED FORTY SEVEN & 40/100 US DOLLARS (US$8,747.40) or its peso equivalent at the time of payment, as salaries for the unexpired portion of his contract.

2. Five percent (5%) of the total award as and by way of attorney's fees.

All other claims are hereby DENIED for lack of merit.

SO ORDERED."[2]

Aggrieved, petitioner Stolt-Nielsen appealed to the National Labor Relations Commission (NLRC).

The NLRC, in a resolution[3] dated November 27, 1992, concurred with the POEA Administrator in ruling that private respondent, having been illegally dismissed, was, therefore, entitled to the monetary award. It further stated that private respondent's duty as a radio officer or radio operator does not include the carrying of the luggage of any seaman or explaining to said seaman the reason for his repatriation. Thus, concluded the NLRC, his termination on this ground was not proper and, therefore, he had every right to the monetary award. The NLRC likewise granted private respondent's claim for fixed overtime pay and attorney's fees.

Petitioner, having moved for reconsideration without success, is before this Court on certiorari.

The issues posed for resolution in this case are: (a) whether private respondent was legally dismissed on the ground of gross insubordination and serious misconduct; and (b) whether private respondent was entitled to the award of overtime pay.

With respect to the first issue, petitioner Stolt-Nielsen emphasizes how "(e)mployment on board ocean-going vessels is totally different from land-based ones in that in the former strict and faithful compliance of all lawful commands and orders of the master or captain of the vessel is of paramount and crucial importance." Petitioner then cites Part I, Section A (2) of the POEA Standard Employment Contract which provides:

"2. The seaman binds himself to the following:

'a. To faithfully comply with and observe the terms and conditions of this contract, violation of which shall be subject to disciplinary action pursuant to appendix 2 of this crew contract.

xxx xxx xxx

d. To be obedient to the lawful commands of the master or any person who shall succeed him.'"

It likewise adverts to Article XXIV, Section 1 of the CBA, viz:

"Authority of the Master

Section 1. It is understood and agreed that nothing contained in this is intended or shall be construed so as to restrict in any way the superiority of the Master or prevent the  obedience of any member of the crew to any lawful order of any superior officer." (Underscoring ours)

Petitioner contends that since the captain's order to assist the crew member who was being repatriated in carrying his baggage is lawful, private respondent's refusal to obey the command is willful, thus warranting his dismissal.

Article 282 of the Labor Code provides in part:

"Art. 282. Termination by Employer. An employer may terminate an employment for any of the following causes: a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

xxx xxx xxx

Willful disobedience of the employer's lawful orders, as a just cause for the dismissal of an employee, envisages the concurrence of at least two (2) requisites: the employee's assailed conduct must have been willful or intentional, the willfulness being characterized by a "wrongful and perverse attitude"; and the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.[4]

The Court agrees that by virtue of the aforementioned CBA and POEA Standard Contract provisions cited by petitioner, private respondent is indeed bound to obey the lawful commands of the captain of the ship, but only as long as these pertain to his duties. The order to carry the luggage of a crew member, while being lawful, is not part of the duties of a radio officer. Assuming arguendo that lawful commands of a ship captain are supposed to be obeyed by the complement of a ship, private respondent's so-called "act of disobedience" does not warrant the supreme penalty of dismissal.

In Gold City Integrated Port Services, Inc. v. NLRC,[5] the Court ruled:

"x x x We believe that not every case of insubordination or willful disobedience by an employee of a lawful work-connected order of the employer or its representative is

reasonably penalized with dismissal.For one thing, Article 282 (a) refers to "serious misconduct or willful disobedience - - -". There must be reasonable proportionality between, on the one hand, the willful disobedience by the employee and, on the other hand, the penalty imposed therefor. x x x"

In instant case, the POEA found that private respondent's actuation which led to his dismissal was the first and only act of disobedience during his service with the petitioner.Furthermore, examination of the circumstances surrounding private respondent's disobedience shows that the repatriated seaman's utterance of "makakasaksak ako" so instilled fear in private respondent that he was deterred from carrying out the order of the captain. Hence, his act could not be rightfully characterized as one motivated by a "wrongful and perverse attitude." Besides, said incident posed no serious or substantial danger to the well-being of his other co-employees or of the general public doing business with petitioner employer. Neither did such behavior threaten substantial prejudice to the business of his employer.

In light of the foregoing, we agree with the NLRC that termination of the private respondent's services was a disproportionately heavy penalty.

Coming to the second issue involving the award of overtime pay, the NLRC in its assailed resolution states:

"Anent the overtime pay, complainant alleged that he is entitled thereto as the same is a fixed overtime pay. The respondents failed to controvert said allegations. In short, the complainant's claim for overtime pay was undisputed and for this reason, the grant of this claim must be upheld."[6]

Petitioner, on the other hand, cites this Court's pronouncement in Cagampan v. NLRC,[7] thus:

"As regards the question of overtime pay, the NLRC cannot be faulted for disallowing the payment of said pay because it merely straightened out the distorted interpretation asserted by petitioners and defined the correct interpretation of the provision on overtime pay embodied in the contract conformably with settled doctrines on the matter. Notably, the NLRC ruling on the disallowance of overtime pay is ably supported by the fact that petitioners never produced any proof of actual performance of overtime work.

Petitioners have conveniently adopted the view that the "guaranteed or fixed overtime pay of 30% of the basic salary per month" embodied in their employment contract should be awarded to them as part of a "package benefit." They have theorized that even without sufficient evidence of actual rendition of overtime work, they would automatically be entitled to overtime pay. Their theory is erroneous for being illogical and unrealistic. Their thinking even runs counter to the intention behind the provision. The contract provision means that

the fixed overtime pay of 30% would be the basis for computing the overtime pay if and when overtime work would be rendered. Simply stated, the rendition of overtime work and the submission of sufficient proof that said work was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable."

Petitioner's argument is well taken. A close scrutiny of the computation of the monetary award[8] shows that the award for overtime was for the remaining six (6) months and three (3) days of private respondent's contract at which time he was no longer rendering services as he had already been repatriated. In light of our aforequoted ruling in Cagampan v. NLRC, said award for overtime should be, as it is hereby, disallowed for being unjustified.

WHEREFORE, the decision of the NLRC is hereby AFFIRMED with the modification that the award for overtime pay should be DELETED.

SO ORDERED.

[G.R. No. 110494. November 18, 1996]

REY O. GARCIA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Second Division, composed of HON. EDNA BONTO-PEREZ as Presiding Commissioner, HON. ROGELIO RAYALA, as Ponente Commissioner and HON. DOMINGO H. ZAPANTA as Commissioner, and MAHAL KONG PILIPINAS, INC., respondents.

D E C I S I O N

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.

ARSENIO P. LUMIQUED vs. Honorable APOLINIO G. EXEVEAThere is no law, whether the Civil Service Act or the Administrative Code of 1987, which provides that a respondent in an administrative case should be assisted by counsel in order that the proceedings therein is considered valid. Not only, that, petitioner herein was given the opportunity several times to engage the services of a lawyer to assist him but he confidently informed the investigators that he could protect himself.

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 aboutP116,000.00 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.

ATIENZA V COMELEC

This petition is an offshoot of two earlier cases already resolved by the Court involving a leadership dispute within a political party. In this case, the petitioners question their expulsion from that party and assail the validity of the election of new party leaders conducted by the respondents.

Statement of the Facts and the Case

 

For a better understanding of the controversy, a brief recall of the preceding events is in order.

 

On July 5, 2005 respondent Franklin M. Drilon (Drilon), as erstwhile president of the Liberal Party (LP), announced his partys withdrawal of support for the administration of President Gloria Macapagal-Arroyo. But petitioner Jose L. Atienza, Jr. (Atienza), LP Chairman, and a number of party members denounced Drilons move, claiming that he made the announcement without consulting his party.

 

On March 2, 2006 petitioner Atienza hosted a party conference to supposedly discuss local autonomy and party matters but, when convened, the assembly proceeded to declare all positions in the LPs ruling body vacant and elected new officers, with Atienza as LP president. Respondent Drilon immediately filed a petition[1] with the Commission on Elections (COMELEC) to nullify the elections. He claimed that it was illegal considering that the partys electing bodies, the National Executive Council (NECO) and the National Political Council (NAPOLCO), were not properly convened. Drilon also claimed that under the amended LP Constitution,[2] party officers were elected to a fixed three-year term that was yet to end on November 30, 2007.

 

On the other hand, petitioner Atienza claimed that the majority of the LPs NECO and NAPOLCO attended the March 2, 2006 assembly. The election of new officers on that occasion could be likened to people power, wherein the LP majority removed respondent Drilon as president by direct action. Atienza also said that the amendments[3] to the original LP Constitution, or the Salonga Constitution, giving LP officers a fixed three-year term, had not been properly ratified. Consequently, the term of Drilon and the other officers already ended on July 24, 2006.

On October 13, 2006, the COMELEC issued a resolution,[4] partially granting respondent Drilons petition. It annulled the March 2, 2006 elections and ordered the holding of a new election under COMELEC supervision. It held that the election of petitioner Atienza and the others with him was invalid since the electing assembly did not convene in accordance with the Salonga Constitution. But, since the amendments to the Salonga Constitution had not been properly ratified, Drilons term may be deemed to have ended.Thus, he held the position of LP president in a holdover capacity until new officers were elected.

 

Both sides of the dispute came to this Court to challenge the COMELEC rulings. On April 17, 2007 a divided Court issued a resolution,[5] granting respondent Drilons petition and denying that of petitioner Atienza. The Court held, through the majority, that the COMELEC had jurisdiction over the intra-party leadership dispute; that the Salonga Constitution had been validly amended; and that, as a consequence, respondent Drilons term as LP president was to end only on November 30, 2007.

 

Subsequently, the LP held a NECO meeting to elect new party leaders before respondent Drilons term expired. Fifty-nine NECO members out of the 87 who were supposedly qualified to vote attended. Before the election, however, several persons associated with petitioner Atienza sought to clarify their membership status and raised issues regarding the composition of the NECO. Eventually, that meeting installed respondent Manuel A. Roxas II (Roxas) as the new LP president.

 

On January 11, 2008 petitioners Atienza, Matias V. Defensor, Jr., Rodolfo G. Valencia, Danilo E. Suarez, Solomon R. Chungalao, Salvacion Zaldivar-Perez, Harlin Cast-Abayon, Melvin G. Macusi, and Eleazar P. Quinto, filed a petition for mandatory and prohibitory injunction[6] before the COMELEC against respondents Roxas, Drilon and J.R. Nereus O. Acosta, the party secretary general. Atienza, et al. sought to enjoin Roxas from assuming the presidency of the LP, claiming that the NECO assembly which elected him was invalidly convened. They questioned the existence of a quorum and claimed that the NECO composition ought to have been based on a list appearing in the partys 60th Anniversary Souvenir Program. Both Atienza and Drilon adopted that list as common exhibit in the earlier cases and it showed that the NECO had 103 members.

 

Petitioners Atienza, et al. also complained that Atienza, the incumbent party chairman, was not invited to the NECO meeting and that some members, like petitioner Defensor, were given the status of guests during the meeting. Atienzas allies allegedly raised these issues but respondent Drilon arbitrarily thumbed them down and railroaded the proceedings. He suspended the meeting and moved it to another room, where Roxas was elected without notice to Atienzas allies.

 

On the other hand, respondents Roxas, et al. claimed that Roxas election as LP president faithfully complied with the provisions of the amended LP Constitution. The partys 60thAnniversary Souvenir Program could not be used for determining the NECO members because supervening events changed the bodys number and composition. Some NECO members had died, voluntarily resigned, or had gone on leave after accepting positions in the government. Others had lost their re-election bid or did not run in the May 2007 elections, making them ineligible to serve as NECO members. LP members who got elected to public office also became part of the NECO. Certain persons of national stature also

became NECO members upon respondent Drilons nomination, a privilege granted the LP president under the amended LP Constitution. In other words, the NECO membership was not fixed or static; it changed due to supervening circumstances.

 

Respondents Roxas, et al. also claimed that the party deemed petitioners Atienza, Zaldivar-Perez, and Cast-Abayon resigned for holding the illegal election of LP officers on March 2, 2006. This was pursuant to a March 14, 2006 NAPOLCO resolution that NECO subsequently ratified. Meanwhile, certain NECO members, like petitioners Defensor,Valencia, and Suarez, forfeited their party membership when they ran under other political parties during the May 2007 elections. They were dropped from the roster of LP members.

 

On June 18, 2009 the COMELEC issued the assailed resolution denying petitioners Atienza, et al.s petition. It noted that the May 2007 elections necessarily changed the composition of the NECO since the amended LP Constitution explicitly made incumbent senators, members of the House of Representatives, governors and mayors members of that body. That some lost or won these positions in the May 2007 elections affected the NECO membership. Petitioners failed to prove that the NECO which elected Roxas as LP president was not properly convened.

 

As for the validity of petitioners Atienza, et al.s expulsion as LP members, the COMELEC observed that this was a membership issue that related to disciplinary action within the political party. The COMELEC treated it as an internal party matter that was beyond its jurisdiction to resolve.

 

Without filing a motion for reconsideration of the COMELEC resolution, petitioners Atienza, et al. filed this petition for certiorari under Rule 65.

 

The Issues Presented

 

Respondents Roxas, et al. raise the following threshold issues:

 

1. Whether or not the LP, which was not impleaded in the case, is an indispensable party; and

 

2. Whether or not petitioners Atienza, et al., as ousted LP members, have the requisite legal standing to question Roxas election.

 

Petitioners Atienza, et al., on the other hand, raise the following issues:

 

3. Whether or not the COMELEC gravely abused its discretion when it upheld the NECO membership that elected respondent Roxas as LP president;

 

4. Whether or not the COMELEC gravely abused its discretion when it resolved the issue concerning the validity of the NECO meeting without first resolving the issue concerning the expulsion of Atienza, et al. from the party; and

 

5. Whether or not respondents Roxas, et al. violated petitioners Atienza, et al.s constitutional right to due process by the latters expulsion from the party.

 

 

The Courts Ruling

 

One. Respondents Roxas, et al. assert that the Court should dismiss the petition for failure of petitioners Atienza, et al. to implead the LP as an indispensable party. Roxas,et al. point out that, since the petition seeks the issuance of a writ of mandatory injunction against the NECO, the controversy could not be adjudicated with finality without making the LP a party to the case.[7]

 

But petitioners Atienza, et al.s causes of action in this case consist in respondents Roxas, et al.s disenfranchisement of Atienza, et al. from the election of party leaders and in the illegal election of Roxas as party president. Atienza, et al. were supposedly excluded from the elections by a series of despotic acts of Roxas, et al., who controlled the proceedings. Among these acts are Atienza, et al.s expulsion from the party, their exclusion from the NECO, and respondent Drilons railroading of election proceedings. Atienza,et al. attributed all these illegal and prejudicial acts to Roxas, et al.

 

Since no wrong had been imputed to the LP nor had some affirmative relief been sought from it, the LP is not an indispensable party. Petitioners Atienza, et al.s prayer for the undoing of respondents Roxas, et al.s acts and the reconvening of the NECO are directed against Roxas, et al.

 

Two. Respondents Roxas, et al. also claim that petitioners Atienza, et al. have no legal standing to question the election of Roxas as LP president because they are no longer LP members, having been validly expelled from the party or having joined other political parties.[8] As non-members, they have no stake in the outcome of the action.

 

But, as the Court held in David v. Macapagal-Arroyo,[9] legal standing in suits is governed by the real parties-in-interest rule under Section 2, Rule 3 of the Rules of Court.This states that every action must be prosecuted or defended in the name of the real party-in-interest. And real party-in-interest is one who stands to be benefited or injured by the judgment in the suit or the party entitled to the avails of the suit. In other words, the plaintiffs standing is based on his own right to the relief sought. In raising petitioners Atienza,et al.s lack of standing as a threshold issue, respondents Roxas, et al. would have the Court hypothetically assume the truth of the allegations in the petition.

 

Here, it is precisely petitioners Atienza, et al.s allegations that respondents Roxas, et al. deprived them of their rights as LP members by summarily excluding them from the LP roster and not allowing them to take part in the election of its officers and that not all who sat in the NECO were in the correct list of NECO members. If Atienza, et al.s allegations were correct, they would have been irregularly expelled from the party and the election of officers, void. Further, they would be entitled to recognition as members of good standing and to the holding of a new election of officers using the correct list of NECO members. To this extent, therefore, Atienza, et al. who want to take part in another election would stand to be benefited or prejudiced by the Courts decision in this case. Consequently, they have legal standing to pursue this petition.

 

Three. In assailing respondent Roxas election as LP president, petitioners Atienza, et al. claim that the NECO members allowed to take part in that election should have been limited to those in the list of NECO members appearing in the partys 60th Anniversary Souvenir Program. Atienza, et al. allege that respondent Drilon, as holdover LP president, adopted that list in the earlier cases before the COMELEC and it should thus bind respondents Roxas, et al. The Courts decision in the earlier cases, said Atienza, et al., anointed that list for the next party election. Thus, Roxas, et al. in effect defied the Courts ruling when they removed Atienza as party chairman and changed the NECOs composition. [10]

 

But the list of NECO members appearing in the partys 60th Anniversary Souvenir Program was drawn before the May 2007 elections. After the 2007 elections, changes in the NECO membership had to be redrawn to comply with what the amended LP Constitution required. Respondent Drilon adopted the souvenir program as common exhibit in the earlier cases only to prove that the NECO, which supposedly elected Atienza as new LP president on March 2, 2006, had been improperly convened. It cannot be regarded as an immutable list, given the nature and character of the NECO membership.

 

Nothing in the Courts resolution in the earlier cases implies that the NECO membership should be pegged to the partys 60th Anniversary Souvenir Program. There would have been no basis for such a position. The amended LP Constitution did not intend the NECO membership to be permanent. Its Section 27[11] provides that the NECO shall include all

incumbent senators, members of the House of Representatives, governors, and mayors who were LP members in good standing for at least six months. It follows from this that with the national and local elections taking place in May 2007, the number and composition of the NECO would have to yield to changes brought about by the elections.

 

Former NECO members who lost the offices that entitled them to membership had to be dropped. Newly elected ones who gained the privilege because of their offices had to come in. Furthermore, former NECO members who passed away, resigned from the party, or went on leave could not be expected to remain part of the NECO that convened and held elections on November 26, 2007. In addition, Section 27 of the amended LP Constitution expressly authorized the party president to nominate persons of national stature to the NECO. Thus, petitioners Atienza, et al. cannot validly object to the admission of 12 NECO members nominated by respondent Drilon when he was LP president. Even if this move could be regarded as respondents Roxas, et al.s way of ensuring their election as party officers, there was certainly nothing irregular about the act under the amended LP Constitution.

 

The NECO was validly convened in accordance with the amended LP Constitution. Respondents Roxas, et al. explained in details how they arrived at the NECO composition for the purpose of electing the party leaders.[12] The explanation is logical and consistent with party rules. Consequently, the COMELEC did not gravely abuse its discretion when it upheld the composition of the NECO that elected Roxas as LP president.

 

Petitioner Atienza claims that the Courts resolution in the earlier cases recognized his right as party chairman with a term, like respondent Drilon, that would last up to November 30, 2007 and that, therefore, his ouster from that position violated the Courts resolution. But the Courts resolution in the earlier cases did not preclude the party from disciplining Atienza under Sections 29[13] and 46[14] of the amended LP Constitution. The party could very well remove him or any officer for cause as it saw fit.

 

Four. Petitioners Atienza, et al. lament that the COMELEC selectively exercised its jurisdiction when it ruled on the composition of the NECO but refused to delve into the

legality of their expulsion from the party. The two issues, they said, weigh heavily on the leadership controversy involved in the case. The previous rulings of the Court, they claim, categorically upheld the jurisdiction of the COMELEC over intra-party leadership disputes. [15]

 

But, as respondents Roxas, et al. point out, the key issue in this case is not the validity of the expulsion of petitioners Atienza, et al. from the party, but the legitimacy of the NECO assembly that elected respondent Roxas as LP president. Given the COMELECs finding as upheld by this Court that the membership of the NECO in question complied with the LP Constitution, the resolution of the issue of whether or not the party validly expelled petitioners cannot affect the election of officers that the NECO held.

 

While petitioners Atienza, et al. claim that the majority of LP members belong to their faction, they did not specify who these members were and how their numbers could possibly affect the composition of the NECO and the outcome of its election of party leaders. Atienza, et al. has not bothered to assail the individual qualifications of the NECO members who voted for Roxas. Nor did Atienza, et al. present proof that the NECO had no quorum when it then assembled. In other words, the claims of Atienza, et al. were totally unsupported by evidence.

 

Consequently, petitioners Atienza, et al. cannot claim that their expulsion from the party impacts on the party leadership issue or on the election of respondent Roxas as president so that it was indispensable for the COMELEC to adjudicate such claim. Under the circumstances, the validity or invalidity of Atienza, et al.s expulsion was purely a membership issue that had to be settled within the party. It is an internal party matter over which the COMELEC has no jurisdiction.

 

What is more, some of petitioner Atienzas allies raised objections before the NECO assembly regarding the status of members from their faction. Still, the NECO proceeded with the election, implying that its membership, whose composition has been upheld, voted out those objections.

 

The COMELECs jurisdiction over intra-party disputes is limited. It does not have blanket authority to resolve any and all controversies involving political parties. Political parties are generally free to conduct their activities without interference from the state. The COMELEC may intervene in disputes internal to a party only when necessary to the discharge of its constitutional functions.

The COMELECs jurisdiction over intra-party leadership disputes has already been settled by the Court. The Court ruled in Kalaw v. Commission on Elections[16] that the COMELECs powers and functions under Section 2, Article IX-C of the Constitution, include the ascertainment of the identity of the political party and its legitimate officers responsible for its acts. The Court also declared in another case[17] that the COMELECs power to register political parties necessarily involved the determination of the persons who must act on its behalf. Thus, the COMELEC may resolve an intra-party leadership dispute, in a proper case brought before it, as an incident of its power to register political parties.

 

The validity of respondent Roxas election as LP president is a leadership issue that the COMELEC had to settle. Under the amended LP Constitution, the LP president is the issuing authority for certificates of nomination of party candidates for all national elective positions. It is also the LP president who can authorize other LP officers to issue certificates of nomination for candidates to local elective posts.[18] In simple terms, it is the LP president who certifies the official standard bearer of the party.

The law also grants a registered political party certain rights and privileges that will redound to the benefit of its official candidates. It imposes, too, legal obligations upon registered political parties that have to be carried out through their leaders. The resolution of the leadership issue is thus particularly significant in ensuring the peaceful and orderly conduct of the elections.[19]

 

Five. Petitioners Atienza, et al. argue that their expulsion from the party is not a simple issue of party membership or discipline; it involves a violation of their constitutionally-protected right to due process of law. They claim that the NAPOLCO and the NECO should have first summoned them to a hearing before summarily expelling them from the party. According to Atienza, et al., proceedings on party discipline are the equivalent of administrative proceedings[20] and are, therefore, covered by the due process requirements laid down in Ang Tibay v. Court of Industrial Relations.[21]

 

But the requirements of administrative due process do not apply to the internal affairs of political parties. The due process standards set in Ang Tibay cover only administrative bodies created by the state and through which certain governmental acts or functions are performed. An administrative agency or instrumentality contemplates an authority to which the state delegates governmental power for the performance of a state function. [22] The constitutional limitations that generally apply to the exercise of the states powers thus, apply too, to administrative bodies.

 

The constitutional limitations on the exercise of the states powers are found in Article III of the Constitution or the Bill of Rights. The Bill of Rights, which guarantees against the taking of life, property, or liberty without due process under Section 1 is generally a limitation on the states powers in relation to the rights of its citizens. The right to due process is meant to protect ordinary citizens against arbitrary government action, but not from acts committed by private individuals or entities. In the latter case, the specific statutes that provide reliefs from such private acts apply. The right to due process guards against unwarranted encroachment by the state into the fundamental rights of its citizens and cannot be invoked in private controversies involving private parties.[23]

 

Although political parties play an important role in our democratic set-up as an intermediary between the state and its citizens, it is still a private organization, not a state instrument. The discipline of members by a political party does not involve the right to life, liberty or property within the meaning of the due process clause. An individual has no vested right, as against the state, to be accepted or to prevent his removal by a political party. The only rights, if any, that party members may have, in relation to other party members, correspond to those that may have been freely agreed upon among themselves through their charter, which is a contract among the party members. Members whose rights under their charter may have been violated have recourse to courts of law for the enforcement of those rights, but not as a due process issue against the government or any of its agencies.

 

But even when recourse to courts of law may be made, courts will ordinarily not interfere in membership and disciplinary matters within a political party. A political party is free to

conduct its internal affairs, pursuant to its constitutionally-protected right to free association. In Sinaca v. Mula,[24] the Court said that judicial restraint in internal party matters serves the public interest by allowing the political processes to operate without undue interference. It is also consistent with the state policy of allowing a free and open party system to evolve, according to the free choice of the people. [25]

 

To conclude, the COMELEC did not gravely abuse its discretion when it upheld Roxas election as LP president but refused to rule on the validity of Atienza, et al.s expulsion from the party. While the question of party leadership has implications on the COMELECs performance of its functions under Section 2, Article IX-C of the Constitution, the same cannot be said of the issue pertaining to Atienza, et al.s expulsion from the LP. Such expulsion is for the moment an issue of party membership and discipline, in which the COMELEC cannot intervene, given the limited scope of its power over political parties.

 

WHEREFORE, the Court DISMISSES the petition and UPHOLDS the Resolution of the Commission on Elections dated June 18, 2009 in COMELEC Case SPP 08-001.

 

SO ORDERED.

The meaning and scope of equal protection; when the classification of the subjects of legislation   valid?

In City of Manila v. Laguio, Jr.,[17] this Court expounded the meaning and scope of equal protection, thus:Equal protection requires that all persons or things similarly situated should be treated alike, both as to rights conferred and responsibilities imposed. Similar subjects, in other words, should not be treated differently, so as to give undue favor to some and unjustly discriminate against others. The guarantee means that no person or class of persons shall be denied the same protection of laws which is enjoyed by other persons or other classes in like circumstances. The “equal protection of the laws is a pledge of the protection of equal laws.” It limits governmental discrimination. The equal

protection clause extends to artificial persons but only insofar as their property is concerned.

x x x x

Legislative bodies are allowed to classify the subjects of legislation. If the classification is reasonable, the law may operate only on some and not all of the people without violating the equal protection clause. The classification must, as an indispensable requisite, not be arbitrary. To be valid, it must conform to the following requirements:

  1) It must be based on substantial distinctions.

2)  It must be germane to the purposes of the law.

3)  It must not be limited to existing conditions only.

4)  It must apply equally to all members of the class

CAYAT

68 Phil. 12 (1939) 

68 Phil. 12 – Political Law – Constitutional Law – Equal Protection – Requisites of a Valid Classification – Bar from Drinking Gin

In 1937, there exists a law (Act 1639) which bars native non-Christians from drinking gin or any other liquor outside of their customary alcoholic drinks. Cayat, a native of the Cordillera, was caught with an A-1-1 gin in violation of this Act. He was then charged and sentenced to pay P5.00 and to be imprisoned in case of insolvency. Cayat admitted his guilt but he challenged the constitutionality of the said Act. He averred, among others, that it violated his right to equal protection afforded by the constitution. He said this an attempt to treat them with discrimination or “mark them as inferior or less capable race and less entitled” will meet with their instant challenge. The law sought to distinguish and classify native non-Christians from Christians.

ISSUE: Whether or not the said Act violates the equal protection clause.

HELD: No. The SC ruled that Act 1639 is valid for it met the requisites of a reasonable classification. The SC emphasized that it is not enough that the members of a group have the characteristics that distinguish them from others. The classification must, as an indispensable requisite, not be arbitrary. The requisites to be complied with are;

(1) must rest on substantial distinctions;

(2) must be germane to the purposes of the law;

(3) must not be limited to existing conditions only; and

(4) must apply equally to all members of the same class.

Act No. 1639 satisfies these requirements. The classification rests on real or substantial, not merely imaginary or whimsical, distinctions. It is not based upon “accident of birth or parentage.” The law, then, does not seek to mark the non-Christian tribes as “an inferior or less capable race.” On the contrary, all measures thus far adopted in the promotion of the public policy towards them rest upon a recognition of their inherent right to equality in the enjoyment of those privileges now enjoyed by their Christian brothers. But as there can be no true equality before the law, if there is, in fact, no equality in education, the government has endeavored, by appropriate measures, to raise their culture and civilization and secure for them the benefits of their progress, with the ultimate end in view of placing them with their Christian brothers on the basis of true equality.

Facts/Issue: Accused Cayat, a native of Baguio, Benguet, Mountain Province, and a member of the non-Christian tribes, was found guilty of violating sections 2 and 3 of Act No. 1639 for having acquired and possessed one bottle of A-1-1 gin, an intoxicating liquor, which is not a native wine. The law made it unlawful for any native of the Philippines who is a member of a non-Christian tribe within the meaning of Act 1397 to buy, receive, have in his possession, or drink any ardent spirits, ale, beer, wine or intoxicating liquors of any kind, other than the so-called native wines and liquors which the members of such tribes have been accustomed to prior to the passage of the law. Cayat challenges the constitutionality of Act 1639 on the grounds that it is discriminatory and denies the equal protection of the laws, violates due process clause, and is an improper exercise of police power. Held: It is an established principle of constitutional law that the guaranty of the equal protection of the laws is not violated by a legislation based on reasonable classification. (1) must rest on substantial distinctions; (2) must be germane to the purposes of the law; (3) must not be limited to existing conditions only; and (4) must apply equally to all members of the same class. 

Act No. 1639 satisfies these requirements. The classification rests on real or substantial, not merely imaginary or whimsical distinctions. It is not based upon “accident of birth or parentage,” as counsel for the appellant asserts, but upon the degree of civilization and culture. “The term ‘non-Christian tribes’ refers, not to religious belief but in a way, to the geographical area and more directly, to natives of the Philippine Islands of a low grade of civilization, usually living in tribal relationship apart from settled communities.” (Rubi vs. Provincial Board of Mindora, supra.) This distinction is unquestionably reasonable, for the Act was intended to meet the peculiar conditions existing in the non-Christian tribes. The prohibition enshrined in Act 1397 is designed to insure peace and order in and among non-Christian tribes. It applies equally to all members of the class evident from perusal thereof. That it may be unfair in its operation against a certain number of non-Christians by reason of their degree of culture, is not an argument against the equality of its application.