G.R. No. 79182 - PNOC-Energy Development Corp. vs. National Labor Relations Commission

Case Summary (G.R. No. 79182)

Factual Background

Private respondent Danilo Mercado was employed by petitioner PNOC-EDC beginning August 13, 1979 and worked at its Cebu office before transfer to Palimpinon, Dumaguete on September 5, 1984. On April 12, 1985 he was ordered to purchase nipa shingles for P1,680.00; the company alleged Mercado paid only P1,000.00 and appropriated P680.00. The company also alleged Mercado failed to report a P70.00 discount and on March 28, 1985 appropriated P8.66 from a P28.66 payment for rubber stamps. PNOC-EDC additionally charged Mercado with unapproved absences on June 5 and June 15, 1985. Mercado was dismissed June 30, 1985. His last salary was P1,585.00 basic plus P800.00 living allowance.

Proceedings Before the Labor Arbiter

On September 23, 1985 Mercado filed a complaint for illegal dismissal, retirement benefits, separation pay, unpaid wages and related claims before the NLRC Regional Arbitration Branch No. VII, docketed as Case No. RAB-VII-0556-85. Mercado filed a position paper December 16, 1985. Petitioner filed a Position Paper/Motion to Dismiss on January 15, 1986 asserting lack of jurisdiction. The Labor Arbiter, after considering the submissions and evidence, rendered a decision dated April 30, 1986 ordering reinstatement and awarding monetary relief.

Labor Arbiter's Disposition

The Labor Arbiter ordered: (one) the reinstatement of complainant with full back wages from the date of dismissal until actual reinstatement without loss of seniority; (two) payment of P10,000.00 representing Mercado's personal share of his savings account with respondents; (three) payment of P30,000.00 moral damages, P20,000.00 exemplary damages and P5,000.00 attorney's fees; and (four) payment of P792.50 as proportionate thirteenth month pay for 1985. The decision directed respondents to deposit the awarded amounts with the arbitration office within ten days.

Appeal to the NLRC and Its Resolution

Petitioner appealed from the Labor Arbiter's decision to the National Labor Relations Commission. The NLRC, Third Division, affirmed the Labor Arbiter's decision by Resolution dated July 3, 1987 and dismissed the appeal for lack of merit. Petitioner then brought the present petition for certiorari to this Court.

Issues Presented to the Supreme Court

Petitioner framed two primary issues: first, whether employment matters affecting PNOC-EDC, as a government-owned and controlled corporation, fell within the jurisdiction of the Labor Arbiter and the NLRC; and second, assuming jurisdiction, whether the Labor Arbiter and the NLRC were justified in ordering reinstatement, payment of savings and proportionate thirteenth month pay, and the award of moral, exemplary damages and attorney's fees.

Petitioner's Contentions

Petitioner maintained that PNOC-EDC was wholly owned and controlled by the Government and therefore governed by the Civil Service Law under Section 1, Article XII-B of the 1973 Constitution and relevant presidential decrees, notably Presidential Decree No. 807 and Article 277 of Presidential Decree No. 442, as amended, which placed its employees under Civil Service jurisdiction rather than the Labor Code. Petitioner argued that because the Labor Arbiter rendered his decision while the 1973 Constitution was in force, that decision and the NLRC's jurisdictional exercise were null and void. Petitioner further contended that the Labor Arbiter had decided the case principally on position papers, thereby denying due process.

Private Respondent's Contentions

Private respondent Danilo Mercado countered that petitioner never seriously questioned the factual findings of the Labor Arbiter but limited its objection to lack of NLRC jurisdiction, as evidenced by its Motion for Reconsideration and/or Appeal filed July 28, 1986. Mercado argued that the submission of position papers and subsequent motions satisfied due process and that petitioner failed to contradict the Labor Arbiter's factual findings or supporting evidence.

The Court's Ruling

The Supreme Court denied the petition and affirmed the NLRC Resolution dated July 3, 1987, with modification of the damage awards. The Court reduced the award for moral damages to P10,000.00 and exemplary damages to P5,000.00. The Decision was penned by Justice Paras with concurrence by Justices Melencio-Herrera (Chairman), Padilla, and Regalado; Justice Sarmiento was on leave.

Legal Basis and Reasoning on Jurisdiction

The Court applied the rule that the controlling constitutional framework is the Constitution in force at the time of the challenged decision; because the NLRC promulgated its resolution on July 3, 1987, the Court applied the 1987 Constitution. The Court relied on its prior holding in PNOC-EDC vs. Leogardo, 175 SCRA 26 (July 5, 1989), that the test for Civil Service coverage of government-owned or controlled corporations is the manner of their creation. Corporations created by special charters are subject to Civil Service provisions; corporations incorporated under the General Corporation Law are not. Because PNOC-EDC was incorporated under the General Corporation Law, its employees fell within the coverage of the Labor Code and the jurisdiction of the Labor Arbiter and the NLRC. The Court also cited NASECO v. NLRC, G.R. No. 69870, 168 SCRA 122 (1988), in support of applying the Constitution effective at the time of decision.

Legal Basis and Reasoning on Due Process and Evidence

The Court held that the submission of position papers and the filing of a motion for reconsideration satisfied due process requirements. The absence of oral testimony did not amount to denial of opportunity to be heard where parties had an opportunity to present their positions in writing, as recognized in Odin Security Agency vs. De la Serna, 182 SCRA 472, and where a motion for reconsideration cured any procedural irregularity, as in T.H. Valderama and Sons, Inc. vs. Drilon, 181 SCRA 308. The Court emphasized the limited scope of judicial review over administrative findings, conferring respect and finality upon findings of

Case Syllabus (G.R. No. 79182)

Parties and Procedural Posture

PNOC-ENERGY DEVELOPMENT CORPORATION was the petitioner before the Supreme Court seeking certiorari to set aside an administrative resolution.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION) was the respondent whose Resolution dated July 3, 1987 affirmed a Labor Arbiter decision.
DANILO MERCADO was the private respondent and complainant in the underlying NLRC proceedings.
The petition challenged the NLRC resolution that affirmed the Labor Arbiter Vito J. Minoria decision in Case No. RAB-VII-0556-85, dated April 30, 1986.
The Supreme Court entertained the petition and ultimately rendered judgment denying the petition with modifications to damages.

Key Factual Allegations

Danilo Mercado was first employed on August 13, 1979 and served in various clerk positions until his transfer to Palimpinon, Dumaguete on September 5, 1984.
Mercado was dismissed on June 30, 1985 and his last pay consisted of a basic salary of P1,585.00 plus a P800.00 living allowance.
The employer alleged that on April 12, 1985 Mercado purchased 1,400 nipa shingles for P1,680.00, paid only P1,000.00, and appropriated P680.00.
The employer also alleged that Mercado failed to report a P70.00 discount from the supplier and, on March 28, 1985, appropriated P8.66 from a P28.66 rubber stamp transaction.
The employer further alleged that Mercado committed unauthorized absences on June 5 and June 15, 1985.

Procedural History

Danilo Mercado filed a complaint for illegal dismissal and related claims on September 23, 1985 before the NLRC Regional Arbitration Branch No. VII, docketed as Case No. RAB-VII-0556-85.
PNOC-EDC filed a Position Paper/Motion to Dismiss on January 15, 1986 asserting lack of NLRC jurisdiction.
The Labor Arbiter rendered a decision on April 30, 1986 ordering reinstatement and awarding various monetary claims.
The NLRC affirmed the Labor Arbiter decision in a Resolution dated July 3, 1987.
PNOC-EDC filed a petition for certiorari before the Supreme Court challenging the NLRC resolution, and the Supreme Court issued the present decision denying the petition with specified modifications to damages.

Issues Presented

Whether the NLRC and Labor Arbiter had jurisdiction over employment matters affecting PNOC-EDC as a government-owned and controlled corporation.
Whether the Labor Arbiter and the NLRC were justified in ordering reinstatement and awarding payment of savings, proportionate 13th month pay, damages, and attorney's fees.
Whether reliance upon position papers and the absence of more formal hearing procedures violated due process.

Contentions of Parties

PNOC-EDC contended that it was wholly government-owned and controlled and thus its employees were governed by the Civil Service Law under the 1973 Constitution, P.D. No. 807, and P.D. No. 442, so the NLRC had no jurisdiction.
PNOC-EDC further argued that the Labor Arbiter decided the case on position papers in violation of due process and that the decision was therefore void.
Danilo Mercado contended that the petitioning employer limited its challenge to jurisdiction and did not dispute the Labor Arbiter's factual findings.
Danilo Mercado also maintained that the opportunity to submit position papers and the filing of motions for reconsideration satisfied due process.

Statutory Framework

The decision discussed the coverage of the 1973 Constitution provision that "The Civil Servic