Title
Alhambra Industries, Inc. vs. National Labor Relations Commission
Case
G.R. No. 106771
Decision Date
Nov 18, 1994
Employee dismissed for just cause but employer violated procedural due process; awarded damages, no reinstatement or separation pay.

Case Summary (G.R. No. 106771)

Material Facts

  • Rupisan was hired by Alhambra on 27 June 1987 as a salesman on a six-month probationary basis.
  • A surprise audit of Rupisan’s records was conducted from 9–12 December 1989. He was summoned to the Head Office on 3 January 1990 to answer alleged violations disclosed by the audit.
  • On 8 January 1990 Rupisan was placed under a one-month preventive suspension for alleged serious violations of company policies. On 22 January 1990 he protested the suspension and denied the charges, asserting a prior clearance of accountabilities as of 30 December 1989.
  • On 6 February 1990 Alhambra wrote to Rupisan terminating his services effective 8 February 1990.
  • Rupisan filed suit on 23 March 1990 for illegal dismissal and unpaid wages/commissions, later amended to add illegal suspension and damages.

Labor Arbiter Findings and Relief

  • The Labor Arbiter found that, on the merits, the dismissal was for just cause, identifying multiple charges (cash shortage, keeping company stocks at residence not reflected in reports, loss of original invoice copies, over-reporting, extension of credit contrary to policy) which he categorized under fraud, neglect, serious misconduct, and willful disobedience.
  • The Labor Arbiter, however, also found a procedural due process violation: Alhambra failed to furnish Rupisan a copy of the audit report on which the dismissal was based and the decision to dismiss did not state the reasons as required by Sec. 6, Rule XIV, Book V, Omnibus Rules.
  • The Labor Arbiter awarded backwages (8 February–19 November 1990, P23,040.00), unpaid salary (1–7 January 1990, P600.00), separation pay in lieu of reinstatement (P2,650.00), and commissions for November–December 1989.

NLRC Disposition on Appeal

  • The NLRC affirmed the Labor Arbiter’s finding of lack of due process.
  • Contrary to the Labor Arbiter, the NLRC ordered reinstatement in lieu of separation pay on the ground that, had Rupisan been afforded the opportunity to be heard, he could have fully explained the charges.

Issue Presented

Whether the NLRC committed grave abuse of discretion in sustaining the Labor Arbiter’s finding of lack of due process but directing reinstatement rather than applying the proper remedy where the dismissal was found to be for just cause.

Governing Legal Principles and Precedents

  • Security of tenure and the twin due process requirements (notice and hearing) are constitutionally protected and statutorily mandated; both substantive cause and procedural due process must be considered in dismissal cases. (Cited authorities: Salaw v. NLRC; San Miguel Corporation v. NLRC; Century Textile Mills v. NLRC.)
  • The Labor Code/Omnibus Rules require written notice stating particular acts/omissions (Sec. 2), opportunity to answer and be heard (Sec. 5), and written notification of decision to dismiss stating reasons (Sec. 6). The burden of proving that termination was for a valid cause rests on the employer.
  • Jurisprudence establishes the remedial distinction: a termination without just or authorized cause entitles the worker to reinstatement; a termination for just cause but without procedural due process does not ordinarily permit reinstatement but gives rise to employer liability for damages for denial of due process (Wenphil Corporation v. NLRC; BLTB Bus Co. v. Court of Appeals; Lopez v. Director of Lands; Reta v. NLRC).

Court’s Analysis and Reasoning

  • The Supreme Court observed that the NLRC effectively disregarded the Labor Arbiter’s finding that the dismissal was supported by just cause. Where the validity of dismissal is determinable at the Labor Arbiter level, that finding should be respected rather than requiring the parties to restart administrative procedures.
  • The Court reiterated the legal distinction: if dismissal is without just cause, reinstatement is the appropriate relief regardless of procedural observance; if dismissal is for just cause, reinstatement is inappropriate even if due process was defective—the appropriate sanction is damages for procedural violation.
  • The Court found it consequential error for the NLRC to order reinstatement when the Labor Arbiter had already made a considered, evidence-based finding of just cause. Reinstatement would be prejudicial to the employer and demoralizing to the workforce when the employee
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