G.R. No. 120474 - Naguit, Jr. vs. National Labor Relations Commission

Petitioner Aniceto W. Naguit, Jr. was employed by Manila Electric Company (MERALCO) since August 11, 1959, serving as Administrative Officer of the Sta. Cruz, Laguna Branch.
After 32 years of service, petitioner was dismissed on June 13, 1991, for alleged violations of company rules.

On June 5, 1987, petitioner informed his supervisor, Sofronio Ortega, Jr., that he intended to do overtime work on the following Saturday, June 6, 1987, and then travel to Pagbilao, Quezon to accompany his wife, who was a principal sponsor at a family wedding.
On June 6, 1987, petitioner arrived at the Sta. Cruz office at 7:50 a.m. and, by approximately 8:33 a.m., proceeded to his field assignment—to conduct a supervisory survey on the re-sequencing of customer account numbers at Magdalena and Luisiana, Laguna, and to supervise MERALCO’s “Operation FC” aimed at apprehending customers with illegally connected service.
At noon, petitioner, together with co-employee Fidel Cabuhat (who served as his driver), proceeded to Pagbilao, Quezon.
An Overtime Notice and corresponding Timesheet, prepared on June 8, 1987, recorded that petitioner worked from 8:00 a.m. to 5:00 p.m. for June 6 and 7, 1987; petitioner subsequently corrected the document by erasing the entries for June 7, which was approved by his supervisor.

As custodian of the petty cash fund, petitioner released a sum of P192.00 to Cabuhat as meal allowance and jeep rental expense, which was evidenced through a petty cash voucher.
Despite knowing that Cabuhat did not actually render the claimed field work on June 6, 1987, petitioner processed and approved the payment based on the voucher bearing the signature of the branch head.

On February 20, 1990, petitioner received a letter from MERALCO’s Legal and Investigation Staff alleging that he had caused reimbursement of transportation expenses for work not rendered and that he left his assignment without proper permission.
Administrative hearings were conducted on February 27, 1990, and July 16, 1990, where petitioner, having waived his right to counsel, gave sworn statements denying the charges.
Evidence against petitioner included:

Sworn statements of Cabuhat (co-accused), Olivia Borda (billings clerk), and several customers of MERALCO.
Testimonies alleging that petitioner had induced Cabuhat to falsify time cards and manipulate petty cash vouchers to mask non-rendered work.

Lauro J. Sillesa of MERALCO’s Special Presidential Committee found petitioner guilty of falsifying time cards under Section 7, Paragraph 7, and of encouraging another employee to commit a violation of the company discipline rules under Section 6, Paragraph 24.
The Committee’s memorandum detailed that on June 6, 1987, petitioner made it appear that he rendered a full day’s work despite having intended to leave for Pagbilao after concluding his assigned task.
On June 13, 1991, petitioner was formally notified of his dismissal “for cause” due to the alleged falsification and inducement to commit further violations, with forfeiture of all rights and privileges.

Petitioner filed a complaint on August 27, 1991 with the NLRC Sub-Regional Arbitration Branch No. IV of San Pablo City, alleging illegal dismissal and seeking reinstatement, backwages, damages, and attorney’s fees.
The Labor Arbiter issued a decision on April 7, 1993, ruling in favor of petitioner, ordering his reinstatement along with two-year backwages and attorney’s fees (10% of the monetary award), and dismissing other claims.
MERALCO appealed the decision on grounds including abuse of discretion, misapplication of material facts and law, impossibility of reinstatement, and unwarranted attorney’s fees.

On November 28, 1994, the NLRC Third Division reversed the Labor Arbiter’s decision and dismissed the complaint.
Petitioner subsequently filed a petition for certiorari under Rule 65 of the Revised Rules of Court, challenging the NLRC resolution on the basis that:

The factual findings did not support the conclusions drawn by the NLRC.
The NLRC committed grave abuse of discretion by making findings unsupported by law or facts—specifically, misclassifying petitioner’s status as non-field personnel and attributing rank dishonesty.

The main dispute centered on whether petitioner’s dismissal was valid and if the conduct attributed to him (alleged falsification and negligence in validating overtime/expense claims) indeed warranted dismissal or should be mitigated.

The Court credited petitioner with good faith regarding the handling of the overtime notice, emphasizing that management policy provided certain leeway for field assignments, even for office personnel when assigned to such tasks.
However, petitioner was held accountable for his negligence as custodian of the petty cash fund—thereby breaching trust by processing payments without due diligence.
Acknowledging petitioner’s long and unblemished service record (32 years) and the fact that he had not reached the retirement age (60 years) at dismissal, the Court held that the dismissal was too severe a penalty.
Consequently, while the Labor Arbiter’s specific order for reinstatement became functus officio (given that reinstatement was no longer practicable), the dismissal also served as a sufficient punishment.
The Court set aside the November 28, 1994 Decision and the March 28, 1995 Resolution of the NLRC, and ordered MERALCO to pay petitioner his retirement benefits computed from the inception of his service up to the age of 60, consistent with its retirement plan.

Whether petitioner’s dismissal for alleged falsification of time cards and inducing another employee to commit a violation was valid under the evidence presented, in light of his role as an Administrative Officer and the company policy applicable to employees on field assignment.

Whether the affidavits of Fidel Cabuhat, which were not subjected to cross-examination during the administrative hearings, should be deemed inadmissible as hearsay and whether their inclusion constituted grave abuse of discretion by the NLRC.

Given petitioner’s long service record and the peculiar circumstances regarding the overtime work and petty cash voucher processing, whether the appropriate remedy should be reinstatement with backwages or a modified award that recognizes his entitlement to retirement benefits while considering his misconduct.