Case Summary (G.R. No. 191008)
Applicable Law and Constitutional Basis
Constitutional framework: The decision is governed by the 1987 Philippine Constitution (applicable because the decision date is after 1990).
Statutory and jurisprudential authorities cited: Labor Code provisions on dismissal (Article 282(c) as cited in the record), applicable standards on substantive and procedural due process in termination cases, and controlling precedents cited in the record (e.g., Cruz v. Court of Appeals; Salaw v. NLRC; Agabon v. NLRC; Perez v. Philippine Telegraph and Telephone Company).
Procedural History of the Labor Case
Petitioner filed a complaint for illegal dismissal and underpayment of wages after termination. The Labor Arbiter dismissed the complaint, finding that petitioner’s dismissal was justified by loss of trust and confidence and that wage payments were correct. The NLRC reversed the Labor Arbiter, concluding that respondent’s evidence was insufficient to justify termination, that petitioner was not advised of the right to counsel and was not afforded an adequate opportunity to confront vital witnesses, and awarded relief. The Court of Appeals reversed the NLRC, finding just cause for dismissal based on prima facie evidence and affidavits supporting the criminal charge, but found procedural due process incomplete and awarded nominal damages (P30,000). The matter then proceeded to the Supreme Court for review.
Petitioner's Defense and Allegations
Petitioner denied the smuggling allegation in a handwritten explanation (in the Visayan dialect) in response to the show-cause notice and asserted that the criminal charges were fabricated. He claimed the filing of criminal cases arose after he reported loss of his original pay slip and alleged pressure to execute an affidavit limiting the use of the pay slip. Petitioner further denied any admission to the security guard and disputed the sufficiency of respondents’ evidence.
Labor Arbiter and NLRC Findings (as recorded)
The Labor Arbiter upheld the termination, finding that a truck driver occupies a position of trust and confidence with respect to company goods and that theft of company property is a breach of that trust. The NLRC, however, concluded that respondent’s evidence was insufficient (noting the absence of an affidavit by the security guard who allegedly witnessed the act and questioning whether petitioner was afforded counsel or a proper hearing) and set aside the Labor Arbiter’s decision.
Court of Appeals Findings (as recorded)
The appellate court found that respondent had established just cause for dismissal based on loss of trust and confidence. It relied on affidavits of supervisory personnel (Patrocinio Borja and Zalde Tare) and considered the result of the preliminary investigation supporting the criminal charge as sufficient to show prima facie guilt. The appellate court observed that a subsequent criminal acquittal does not automatically preclude an administrative determination of acts inimical to the employer’s interest. Nonetheless, the appellate court determined that petitioner was not fully afforded procedural due process (citing Agabon v. NLRC) and therefore awarded nominal damages.
Supreme Court’s Analysis — Substantive Due Process
The Supreme Court, as reported in the record, concluded that respondent’s loss of trust and confidence based on petitioner’s attempted smuggling of scrap iron, together with prior unauthorized selling of company cartons, constituted just cause for termination. The Court explained that loss of trust and confidence under Article 282(c) requires a willful breach of trust (intentional, knowing, and purposeful, without justifiable excuse), must be supported by substantial evidence, and must be work-related, demonstrating unfitness to continue employment. The Court emphasized that even non-managerial employees may occupy positions of responsibility that warrant this ground for dismissal when entrusted with handling and protection of employer property; a company driver assigned a specific vehicle was found to be in such a position.
Supreme Court’s Analysis — Evidentiary Basis
The Court found that respondent’s charge was supported by substantial evidence in the form of affidavits and statements by company personnel. The record, contrary to the NLRC’s observation, showed that the security guard (Gerardo Luega) executed a statement regarding the attempted removal of scrap iron, and that the affidavits attached to the criminal complaint and the supervisory statements provided an adequate factual basis for the employer’s loss of trust determination. The Court regarded petitioner’s allegation of a frame-up (in connection with his lost pay slip) as not credible on the record.
Supreme Court’s Analysis — Procedural Due Process
The Court addressed procedural due process separately from substantive due process. It noted that procedural due process in termination cases requires an opportunity to be heard before judgment, but further explained through citation of Perez v. Philippine Telegraph and Telephone Company that due process does not rigidly mandate a formal hearing. The Court reiterated that an employee may be afforded a full opportunity to respond and defend through written explanations (letters, memoranda, affidavits, position papers) and by offering evidence (company records, sworn statements), and that such methods can satisfy the right to be heard. The Court indicated disagreement with the appellate court’s conclusion that procedural due process was not observed, and relied on the principle that the employer’s procedures, when affording a meaningful chance to respond by written or other acceptabl
Case Syllabus (G.R. No. 191008)
Facts of the Case
- Petitioner Quirico Lopez was hired by respondent Alturas Group of Companies in 1997 as a truck driver.
- Sometime in November 2007, petitioner was allegedly caught by respondent’s security guard attempting to smuggle out of company premises 60 kilos of scrap iron worth P840 aboard respondent’s Isuzu Cargo Aluminum Van, Plate Number PHP 271, a vehicle then assigned to him.
- When questioned, petitioner allegedly admitted to the security guard that he was taking out the scrap iron consisting of lift springs from which he would make axes.
- Petitioner received a Show Cause Notice dated December 5, 2007 issued by respondent company’s Human Resource Department Manager and submitted a handwritten explanation in the Visayan dialect denying the allegations.
- Respondent found petitioner’s explanation unsatisfactory and terminated his employment by Notice of Termination effective December 14, 2007 on the grounds of loss of trust and confidence and violation of company rules and regulations.
- Respondent’s termination decision took into account the result of an internal investigation showing prior unauthorized selling of company cartons by petitioner, allegedly in conspiracy with one Maritess Alaba, prompting respondent to file criminal charges for Qualified Theft before the Regional Trial Court of Bohol; respondent also earlier filed another criminal case for Qualified Theft arising from the theft of the scrap iron.
Petitioner’s Allegations and Claims
- Petitioner filed a complaint for illegal dismissal and underpayment of wages against respondent company.
- He claimed the smuggling charge was fabricated to justify his illegal dismissal.
- Petitioner alleged the fabrication was motivated by his having reported the loss of the original copy of his pay slip; he claimed respondent construed this as preparatory to a labor complaint for underpayment.
- He further alleged he was forced into executing an affidavit stipulating that if the pay slip was found, it could not be used in any proceedings between them.
- Regarding the underpayment claim, petitioner contested the correctness of wages and benefits but the Labor Arbiter found wage payments to be correct based on records.
Labor Arbiter Proceedings and Ruling (Decision dated June 30, 2008)
- The Labor Arbiter held that the pendency of the criminal case did not warrant suspension of the labor proceedings.
- The Labor Arbiter found petitioner’s dismissal to be justified: petitioner held a position of trust and confidence as a truck driver and his act of stealing company property constituted a violation of that trust.
- On the underpayment charge, the Labor Arbiter concluded that petitioner had been paid the correct wages and benefits mandated by law.
- The Labor Arbiter dismissed petitioner’s complaint.
NLRC Proceedings and Ruling (NLRC Fourth Division, Decision dated December 22, 2008)
- On appeal, the NLRC set aside the Labor Arbiter’s Decision.
- The NLRC found respondent’s evidence insufficient to warrant termination of petitioner’s services.
- It observed that petitioner’s alleged admission was belied by his vehement denial and noted the security guard alleged to have witnessed the asportation, Gerardo Luega, did not execute an affidavit in support of the allegation.
- Citing Salaw v. NLRC, the NLRC held petitioner should have been afforded, or at least advised of, the right to counsel.
- The NLRC emphasized that any evaluation based only on the explanation to the show-cause letter and any so-called investigation without confrontation of vital witnesses did not suffice.
Respondent’s Motion for Reconsideration and Appeal
- Respondent’s motion for reconsideration of the NLRC decision was denied by Resolution dated April 30, 2009.
- Respondent appealed the NLRC decision to the Court of Appeals.
Court of Appeals Proceedings and Report (Report dated December 18, 2009)
- The Court of Appeals reversed the NLRC ruling.
- It held respondent company was justified in terminating petitioner’s employment on the ground of loss of trust and confidence.
- The appellate court relied on affidavits of Patrocinio Borja and Zalde Tare, supervisor and junior supervisor, respectively, of respondent’s Supermarket Motorpool, to establish the alleged smuggling.
- The Court of Appeals stated that the evidence supporting the criminal charge, found after preliminary investigation, was sufficient to show prima facie guilt, which constitutes just cause for dismissal based on loss of trust and confidence.
- The appellate court declared that petitioner’s subsequent acquittal in the criminal case “did not automatically preclude a determination that he is guilty of acts inimical to the employer’s interest resulting in loss of trust and confidence.”
- Although the Court of Appeals found just cause for dismissal, it concluded that respondent failed to fully observe procedural due process by not giving petitioner a proper hearing and an opportunity to defend his side.
- Invoking Agabon v. NLRC, the Court of Appeals ordered respondent to pay petitioner nominal damages of P30,000.00 for the procedural due process deficiency.
- The Court of Appeals modified the NLRC decision accordingly: it upheld the dismissal but awarded P30,000.00 nominal damages.
Present Petition and Issues Brought to the Supreme Court
- The Court of Appeals’ modified disposition resulted in the present petition for review on certiorari to the Supreme Court.
- The Supreme Court delineated that dismissals have two facets: (1) the legality of the act of dismissal (substantive due process), and (2) the legality of the manner of dismissal (procedural due process).
- Central issues for the Supreme Court’s consideration included whether respondent had just cause to dismiss petitioner for loss of trust and confidence, and whether procedural due process was observed in the dismissal.
Supreme Court Analysis — Substantive Due Process (Loss of Trust and Confidence)
- The Supreme Court found that responden