G.R. No. 240184 - Musahamat Workers Labor Union-1-ALU vs. Musahamat Farms, Inc., Farm 1

Case Summary (G.R. No. 240184)

Petitioner

Musahamat Workers Labor Union-1-ALU, representing the five watchmen, filed the petition to challenge the Court of Appeals’ reversal of the Voluntary Arbitrator’s decision that had declared the dismissals illegal.

Respondent

Musahamat Farms, Inc. (Farm 1), the employer engaged in banana plantation and exportation, which conducted the investigation, issued preventive suspension notices and termination letters to the watchmen.

Key Dates

Feb 14, 2016: announcement of reassignment of watchmen to farm operations.
Feb 15, 2016: discovery that banana bunches were chopped in Block 6A and 7A.
Mar 3, 2016 (effective Mar 8–24): first notice of 15-day preventive suspension.
Mar 22, 2016: grievance meeting attended only by Ernesto.
Mar 23, 2016 (effective Mar 26–Apr 13): second 15-day preventive suspension notice.
Apr 12, 2016 (effective Apr 14): notices of termination issued.
Apr 15, 2016: second grievance conference where parties agreed to elevate issues.
Sep 28, 2016: Voluntary Arbitrator’s decision finding dismissal illegal.
Jan 22, 2018: Court of Appeals decision reversing the Voluntary Arbitrator.
May 31, 2018: Court of Appeals resolution denying reconsideration.
Jul 6, 2022: Supreme Court decision (subject of this summary).

Applicable Law and Constitutional Basis

Decision governed by the 1987 Philippine Constitution (decision date 2022), and statutory/administrative law: Presidential Decree No. 442 (Labor Code, as amended and renumbered — Articles formerly 279/282 now 294/297), and the Omnibus Rules Implementing the Labor Code (Section 2, Rule XXIII, Book V) concerning standards of due process in terminations. Relevant evidentiary principles concerning circumstantial evidence, the employer’s burden of proof in illegal dismissal cases, and the standard of substantial evidence were applied.

Procedural Posture

The Voluntary Arbitrator found the dismissals illegal and ordered reinstatement or, if reinstatement was infeasible, awards including backwages and separation pay. The employer sought review before the Court of Appeals, which reversed and upheld the dismissals. The union filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court to the Supreme Court, which partly granted relief by reinstating the Voluntary Arbitrator’s decision in material respects.

Facts

Following notice of reassignment on Feb 14, 2016, the watchmen allegedly protested the reassignment. On Feb 15, 2016, 260 banana plants were found chopped; no direct witness to the act was produced. The employer investigated and issued two preventive suspension notices that did not specify detailed charges; termination letters dated Apr 12, 2016 referenced a sworn affidavit identifying the watchmen as prime suspects. Affidavits by Anthony, Ranel, and Florentino (all executed July 19, 2016) later purported to establish that the watchmen were overheard plotting the chopping and that an alleged Feb 19, 2016 meeting occurred in which Ranel identified the watchmen.

Voluntary Arbitrator’s Findings

The Voluntary Arbitrator concluded the dismissals were illegal because the employer failed to discharge its burden of proving serious misconduct or loss of trust and confidence by substantial evidence. The arbitrator found the affidavits weak and uncorroborated, the supposed Feb 19 meeting unsupported by documents, and the preventive suspension notices deficient because they did not enumerate charges, thereby depriving the watchmen of a meaningful opportunity to be heard. Remedies ordered included reinstatement (with backwages) or, if reinstatement was impossible, separation pay, nominal damages, and attorney’s fees.

Court of Appeals’ Findings

The Court of Appeals reversed, finding that the Feb 19, 2016 meeting occurred and that the testimonies (including Ranel’s and Florentino’s) could constitute circumstantial evidence when combined with other facts such as the watchmen’s allegedly angry reaction to reassignment. The CA also held that respondent substantially complied with procedural requirements, treating the preventive suspension notices and subsequent grievance meetings as satisfying the twin-notice and hearing requirements.

Issues Presented

Whether the dismissal of the watchmen was for a just and valid cause (substantive requirement).
Whether procedural due process (twin written notices and opportunity to be heard) was observed.

Supreme Court Ruling — Substantive Requirement: No Just Cause

The Supreme Court found the dismissals lacked just cause. Core points in the Court’s analysis:

The employer bore the burden to prove the validity of the dismissal by substantial evidence.
Although circumstantial evidence can be used in labor cases (and the standard is lower than criminal proof beyond reasonable doubt), the affidavits relied upon were belated (dated July 19, 2016), were not referenced in the preventive suspension notices or termination letters in a manner consistent with an effective investigation, and failed to establish personal knowledge or acquaintance with the watchmen.
The alleged Feb 19 meeting—critical to linking what was allegedly overheard on Feb 14 to the watchmen—lacked documentary support (no invitation, attendance sheet, or minutes) and was inconsistent with the subsequent grievance meetings, where the employer declined to produce witnesses and the watchmen demanded confrontation. The absence of any indication in the grievance minutes that such identification had already occurred undermined the credibility of Ranel’s claim about positive identification.
Because the Feb 19 meeting claim was false or unsupported, the Court applied the falsus in uno, falsus in omnibus rationale to severely discount Ranel’s entire testimony and likewise disbelieved the corroborative part of Anthony’s testimony regarding that meeting.
With no direct evidence and no reliable chain of circumstantial evidence tying the watchmen to the chopping, the Court concluded respondent failed to establish serious misconduct or loss of trust and confidence by substantial evidence; therefore, the substantive ground for dismissal did not exist.

Supreme Court Ruling — Procedural Requirement: Due Process Substantially Observed

The Court held that procedural due process was substantially observed despite certain formal deficiencies in the preventive suspension notices. Key findings:

The twin-notice doctrine requires (1) a first written notice specifying the grounds for termination and giving reasonable opportunity to explain, and (2) a second written notice informing the employee of the employer’s decision to dismiss. The opportunity to be heard may be satisfied by an opportunity, not necessarily a formal adjudicatory hearing.
The first preventive suspension notice, though lacking particularity, sufficiently served the primary purpose of the initial notice by informing the watchmen that they were being investigated for the Feb 15 chopping incident and linking the event to the reassignment that concerned only the watchmen; hence, a reasonable employee could understand the risk to continued employment and prepare a defense.
Grievance meetings were held (March and April), and the watchmen were given opportunities to request presentation of witnesses and to submit defenses. The employer’s refusal to present witnesses at those meetings did not render the process constitutionally or administratively defective; confrontation of witnesses is not a required element of administrative company investigations as in criminal prosecutions.
Consequently, while the notices were not model in form, the Court found substantial compliance with procedural due process.

Remedies and Relief Ordered

Because the dismissals were illegal on substantive grounds but procedural due process was substantially observed, the Supreme Court:

Reversed and set aside the Court of Appeals insofar as it held the dismissals

Case Syllabus (G.R. No. 240184)

Case Caption, Decision and Panel

G.R. No. 240184; Decision dated July 06, 2022 by the Supreme Court, Third Division; opinion penned by Justice Caguioa.
Petition for Review on Certiorari filed under Rule 45 of the Rules of Court challenging: (a) the Decision dated January 22, 2018 and (b) the Resolution dated May 31, 2018 of the Court of Appeals (CA), Twenty-First Division, in CA-G.R. SP No. 07812-MIN.
The CA Decision had reversed the Decision dated September 28, 2016 of the Voluntary Arbitrator which had declared illegal the termination of five watchmen.

Parties and Roles

Petitioners: Musahamat Workers Labor Union-1-ALU (appearing on behalf of the five dismissed employees/watchmen).
Respondent: Musahamat Farms, Inc. Farm 1, a corporation in Davao City engaged in Cavendish banana plantation and exportation.
Individual employees dismissed (collectively referred to as the watchmen): Ernesto Suril, Jr. (also spelled Ernesto Surel, Jr. in parts of the record), Elvin Suril (also Elvin Surel), Jhonel Suril (also Jhonel Surel / Jhony Suril), Nanding Abana, and Nonito Cabillon (also Nonito Cabellon / "Monito" in parts of the rollo).
Voluntary Arbitrator: Napoleon U. Trillanes, Jr. (authored the September 28, 2016 decision).
Court of Appeals: Decision penned by Associate Justice Oscar V. Badelles with Associate Justices Romulo V. Borja and Tita Marilyn Payoyo-Villordon concurring.

Procedural Posture and Relief Sought

The Voluntary Arbitrator found the dismissals illegal and ordered reinstatement or, if reinstatement was not possible, awards including back wages, separation pay, nominal damages (P30,000), and attorney’s fees (10% of award).
Respondent moved for reconsideration of the Voluntary Arbitrator's decision; motion denied.
Respondent filed a Petition for Review under Rule 43 to the Court of Appeals which reversed the Voluntary Arbitrator, holding the dismissals valid and legal.
The Supreme Court review in this Rule 45 petition examined whether the CA erred in upholding the legality of dismissal on both substantive and procedural grounds.

Factual Background

The watchmen were employed by respondent to guard its banana plantation operations.
On February 14, 2016, Anthony R. Pablo (Anthony), respondent’s Security Officer, announced reassignment of all watchmen to farm/production operations effective February 15, 2016.
The watchmen purportedly protested loudly, asserting that they were "children of the landowners who leased their farms to [respondent]; hence, they should not be farm workers" and insisted they should not be assigned to production work.
On February 15, 2016, respondent discovered that several banana bunches were chopped down in Block 6A and Block 7A of HKJ 2 Farm; nobody actually witnessed the act.
Respondent initiated an investigation into the chopping incident.

Preventive Suspensions, Grievance Meetings and Termination Notices

March 3, 2016: respondent issued a notice of preventive suspension for 15 days effective March 8 to March 24, 2016, citing the February 15, 2016 incident and the reassignment of watchmen to production.
March 22, 2016: a grievance meeting was scheduled but only Ernest(o) attended.
March 23, 2016: respondent issued another notice of preventive suspension for an additional 15 regular working days effective March 26 to April 13, 2016.
April 12, 2016: after conclusion of the investigation, respondent issued notices of termination effective April 14, 2016, citing a sworn affidavit of a witness identifying the watchmen as prime suspects and charging offenses of malicious mischief, damage to property and industrial sabotage.
April 15, 2016: a second grievance conference was held where the parties agreed to elevate issues to a third party; petitioner repeatedly demanded presentation of the purported witnesses during grievance meetings but was told by management that witnesses/affidavits would be presented in another venue.

Witnesses, Affidavits and Documentary Timeline

Respondent relied primarily on affidavits of three individuals: Anthony (Security Officer), Ranel Alauya (Ranel), and Florentino; all three affidavits were dated July 19, 2016 and were the only affidavits of record.
Ranel and Florentino averred they overheard the watchmen on the evening of February 14, 2016 at Lawigan Beach speaking in vernacular about cutting down respondent’s banana trees as retaliation for reassignment; quoted vernacular statements and translations are contained in the record.
Ranel allegedly was invited to a meeting on February 19, 2016 at company premises where he purportedly positively identified the watchmen as the persons he overheard on February 14; Anthony’s affidavit corroborated a February 19, 2016 conference.
The notices of preventive suspension (March 3 and March 23) did not specify or attach the alleged affidavits; the notices simply referred to the ongoing investigation of the slashing incident and suspension pending investigation.
The notices of termination (April 12) referenced "a sworn affidavit of witness identified you as prime suspect" but did not name or attach such affidavit in the record; the only sworn affidavits on record post-dated the terminations (July 19, 2016) and therefore could not have been the documents referenced in the April 12 termination letters.

Positions of the Parties

Watchmen/Petitioner: Claimed they were not afforded due process and that respondent relied on mere hearsay; denied involvement and asserted lack of substantial evidence proving serious misconduct or loss of trust and confidence.
Respondent: Maintained that dismissal was legal for serious misconduct and loss of trust and confidence, relying on circumstantial evidence composed of witnesses’ statements, watchmen’s angry reaction to reassignment, and the alleged February 19, 2016 identification/conference.

Voluntary Arbitrator’s Findings and Relief

Found the dismissal illegal for lack of substantial evidence proving serious misconduct or loss of trust and confidence.
Held that respondent relied on mere affidavits from witnesses whose credibility and acquaintance with the watchmen were not established.
Expressly doubted the claimed February 19, 2016 meeting where Ranel allegedly positively identified the watchmen.
Found notices of preventive suspension inadequate to satisfy the twin notice requirements because they did not charge any offense or provide the enumeration of charges until the termination letter—thus depriving the watchmen of a meaningful opportunity to be heard on the specific charges.
Ordered reinstatement to present assignment/farm operations without loss of seniority and payment of back wages and benefits from date of termination until actual reinstatement; ordered attorney’s fee equivalent to ten percent (10%) of any amount received; alternatively, if reinstatement not possible, ordered back wages from April 15, 2016 to finality, separation pay of one month salary per year of service (with six months’ fraction counted as one year, reckoned from date respondent started farm operations where complainants were assigned), nominal damages of P30,000, and attorney’s fee of ten percent (10%) of total award.

Court of Appeals’ Findings and Rationale

Reversed the Voluntary Arbitrator and held that the dismissals were valid and legal.
Found that the February 19, 2016 meeting did occur and that Ranel positively identified the watchmen during that meeting.
Considered testimonies of Ranel and Florentino as circumstantial evidence that, together with other facts (such as the watchmen’s angry reaction after announcement of reass