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[ GR No. 109714, Dec 15, 1997 ]



347 Phil. 521


[ G.R. No. 109714, December 15, 1997 ]



This petition for certiorari  with prayer for the issuance of a temporary restraining order and/or injunction seeks to annul the decision of public respondent National Labor Relations Commission (NLRC) dated March 3, 1989[1] and resolution dated December 18, 1992,2 directing petitioner Better Building, Inc. to reinstate private respondents Halim Ysmael and Eliseo Feliciano to their former positions without loss of seniority rights and benefits and to pay them backwages.

Private respondent Halim Ysmael (Ysmael) was hired as a Sales Manager by petitioner Better Building, Inc. (BBI) on March 16, 1985. In addition to his monthly salary, he was given the free use of the company car, free gasoline and commission from sales. Private respondent Eliseo Feliciano (Feliciano), on the other hand, was employed as Chief Supervisor by the petitioner since January 1966.

On May 3, 1988, petitioner, through its Assistant General Manager, Leda A. Beverford, showed to private respondents a memorandum regarding their termination from employment effective the same day, to wit:

"MEMO TO    :            Guard On Duty

FROM                          :            The Asst. General Manager

DATE                          :            May 03, 1988



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Please be advised that Mr. Halim Ysmael and Mr. Eliseo Feliciano have been terminated from their employment with our company as of the end of office hours today May 3, 1988.

For the above reason they are not allowed to enter our premises.

For your strict compliance.

Unable to accept petitioner's drastic action, on May 6, 1988, private respondents filed a complaint against BBI for illegal dismissal.3

On March 3, 1989, Labor Arbiter Daisy G. Cauton-Barcelona rendered a decision, the dispositive portion of which reads:

"WHEREFORE, judgment is hereby ordered declaring that the complainants dismissal is illegal as discussed above hence, ordering the respondents to reinstate them to their former positions with full backwages and without loss of seniority and other benefits.

Ordering further to pay the complainants their salary differentials computed from November 1, 1986 up to the time of actual reinstatement.

And, to pay complainant Halim Ysmael moral and exemplary damages in the amount of P100,000 and P50,000 respectively.

With costs and attorneys fees against the respondents.

Except for the reduction of the damages awarded by the Labor Arbiter, the said decision was affirmed by the NLRC,5 to wit:
"WHEREFORE, premises considered, the decision appealed from is hereby modified insofar as the awards of moral and exemplary damages are concerned which are reduced to P50,000 and P20,000 respectively.

In all other respects, the decision of the Labor Arbiter below is affirmed.

Petitioner, not satisfied with the decision, has filed the instant petition for certiorari alleging that the NLRC gravely abused its discretion amounting to lack or excess of jurisdiction when it rendered the decision of March 3, 1989 and the resolution of December 11, 1992.

On September 4, 1996, this Court resolved to dismiss the case against private respondent Ysmael by virtue of the compromise agreement entered into between him and the petitioner.6 Hence, the resolution of this case will only affect private respondent Feliciano.

Petitioner argues that the private respondent was validly dismissed for engaging in the same line of business as that of his employer (petitioner). Thus, his act of engaging in a business in direct competition with his employer was, not only an act of disloyalty, but more specifically a willful breach of trust and confidence.

In termination of employment cases, we have consistently held that two requisites must concur to constitute a valid dismissal: (a) the dismissal must be for any of the causes expressed in Art. 282 of the Labor Code, and (b) the employee must be accorded due process, the elements of which are the opportunity to be heard and defend himself.7

First, on the substantive aspect, petitioner contends that private respondent was dismissed from his employment for engaging in business in direct competition with its line of service.8 Hence, said conduct constitutes a willful breach of trust which is justifiable cause for termination of employment.9

We sustain BBI.

Deeply entrenched in our jurisprudence is the doctrine that an employer can terminate the services of an employee only for valid and just causes which must be supported by clear and convincing evidence.10 The employer has the burden of proving that the dismissal was indeed for a valid and just cause.11

In the case at bar, petitioner has clearly established private respondent's culpability by convincing evidence. First, it was never disputed that private respondent established another corporation, Reachout General Services, engaged in the maintenance/janitorial service, the same line of business as that of petitioner. In this regard, private respondent failed to adduce substantial evidence to disprove this allegation.

Second, as Chief Supervisor of the petitioner, it was his duty to promote and offer the services of the petitioner to prospective clients; however, instead of so doing, private respondent offered the services of his own company to various clients, to the detriment of the petitioner. Notably, private respondent even had the temerity to induce two of BBI's prominent clients, namely the United States Embassy and San Miguel Corporation, to transfer their respective service contracts to Reachout General Services, his own corporation.

Third, private respondent's disloyalty became more conspicuous when he hired as the employees of Reachout General Services the former employees of the petitioner. Clearly, this act has undercut petitioner's business.

Finally, we cannot help but notice that in all the pleadings submitted by the private respondent, he never discussed nor refuted the charge against him by the petitioner. By his silence, we conclude that he was indeed guilty of disloyalty to his employer. In fact, the records are devoid of any evidence to controvert the evidence presented by the petitioner regarding his alleged disloyalty. Such omission only strengthens the petitioner's claim.

While we find that private respondent was dismissed for cause, the same was, however, effected without the requirements of due process.

In this jurisdiction, we have consistently ruled that in terminating an employee, it is essential that the twin requirements of notice and hearing must be observed.12 The written notice apprises the employee of the particular acts or omissions for which his dismissal is sought and at the same informs the employee concerned of the employer's decision to dismiss him.

In the case at bar, the record is bereft of any showing that private respondent was given notice of the charge against him. Nor was he ever given the opportunity under the circumstances to answer the charge; his termination was quick, swift and sudden.

Interestingly, when this issue was brought up, all the petitioner could state in its Reply was:
"Even if there was a notice to explain and notice of termination given to the private respondents, the petitioner was already convinced at that time that the private respondents were already engaged in disloyal acts. The result would be the same - dismissal."13
Evidently, the decision to dismiss respondent was merely based on the fact that petitioner was already convinced at the time that the private respondents were engaged in disloyal acts. As regards the procedural aspect, the failure to observe the twin requirements of notice and hearing taints the dismissal with illegality.

In fine, we find that there was basis for petitioner's loss of trust and confidence in private respondent. For an employer cannot be compelled to retain in his service an employee who is guilty of acts inimical to its interest.14 A company has the right to dismiss its employees as a measure of protection.15 Corollarily, proof beyond reasonable doubt of an employee's misconduct is not required in dismissing an employee on the ground of loss of trust and confidence.16 The quantum of proof required, being only substantial evidence,17 we are convinced that there was an actual breach of trust committed by private respondent which was ample basis for petitioner's loss of trust and confidence in him. We, therefore, hold that private respondent's dismissal was for a just and valid cause. However, the manner of terminating his employment was done in complete disregard of the necessary procedural safeguards. A man's job being a property right duly protected by our laws, for depriving private respondent the right to defend himself, petitioner is liable for damages consistent with Article 32 of the Civil Code, which provides:
"ART. 32. Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages:

x x x      x x x      x x x

(6) The right against deprivation of property without due process of law;

x x x      x x x      x x x."

In this regard, the damages shall be in the form of nominal damages18 for the award is not for the purpose of penalizing the petitioner but to vindicate or recognize private respondent's right to procedural due process which was violated by the petitioner.

WHEREFORE, in view of the foregoing, the assailed decision of the NLRC and its accompanying resolution are hereby SET ASIDE and ANNULLED. However, for failure to observe procedural due process in effecting the dismissal, petitioner shall pay to the private respondent P5,000.00 as nominal damages. No costs.

Narvasa, C.J., (Chairman), Melo, and Francisco, JJ., concur.
Panganiban, J., see concurring and dissenting opinion.

[1] Annex "A" of the Petition, Rollo, pp. 26-37.

[2] Annex "B" of the Petition, Rollo, pp. 38-43.

[3] Annex "F" of the Petition, Rollo, pp. 63-66.

[4] Rollo, p. 37.

[5] Ibid., p. 48.

[6] Id., p. 181.

[7] Oania v. NLRC, 244 SCRA 688 (1995); AHSI Philippines, Inc. v. Court of Appeals, 257 SCRA 319 (1996); Ranises v. NLRC, 261 SCRA 371 (1996).

[8] Ibid., pp. 10-18.

[9] Art. 282 (c) of Labor Code.

[10] PLDT v. NLRC, G.R. No. 99030, July 31, 1997.

[11] Molave Tours Corporation v. NLRC, 250 SCRA 325 (1995); Pacific Timber Export Corporation v. NLRC, 224 SCRA 860 (1993).

[12] Wallem Maritime Service, Inc. v. NLRC, 263 SCRA 174 (1996); Marcelo v. NLRC, 240 SCRA 782 (1995).

[13] Rollo, p. 154.

[14] San Miguel Corp. v. Deputy Minister of Labor and Employment, 145 SCRA 196 (1986).

[15] Dole Philippines, Inc. v. NLRC, 123 SCRA 673 (1983).

[16] Vallende v. NLRC, 245 SCRA 662 (1995).

[17] Villarama v. NLRC, 236 SCRA 287 (1994).

[18] ART 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.



To justify the dismissal of an employee, the employer has the burden of proving two things: (1) that the termination was due to a valid and just cause as provided by law; and (2) that the dismissed employee was accorded due process, i.e. notice and opportunity to be heard prior to dismissal.

In the case at bar, I concur with Mme. Justice Flerida Ruth P. Romero that:

1. There was a valid just cause to dismiss Respondent Eliseo Feliciano for willful breach of trust a ground for termination of employment under Art. 282 (c) of the labor Code; and

2. Petitioner-employer failed to accord respondent-employee his constitutional right to due process.

However, I respectfully dissent from the majority's ruling that the violation of private respondent's right to due process entitles him only to a simple or nominal damages and nothing else.

Wenphil's Factual Milieu Not Identical to Present Case

I am fully aware that in along line of cases starting with Wenphil Corporation vs. NLRC, [1] the Court has held that where there is just cause for an employee's dismissal but the employer fails to follow the requirement of procedural due process, the employee is not entitled to backwages and reinstatement (or separation pay in case reinstatement is no longer feasible) or other benefits. Instead, he is granted an indemnity (or penalty or damages) ranging from P1,000, [2] to as much as P10,000, [3] depending on the circumstances of the case and the gravity of the employer's omission.

Since the, Wenphil was perfunctorily applied in most subsequent cases [4] whenever due process was violated (although just cause was duly proved) without regard to the peculiar factual milieu of such cases. Hence, indemnity or damages became an easy substitute for due process.

Be it remembered, however, that in Wenphil, the facts were such as to show the impracticality, if not awkwardness, of observing the procedure laid down by law for terminating employment. There, the employee involved, who appeared to have a violent temper, caused trouble during office hours. In an altercation with a co-employee, he "slapped [the latters's] cap, stepped on his foot and picked up the ice scooper and brandished it against the latter". When summoned by the assistant manager, the employee "shouted and uttered profane words" instead of giving an explanation. Under the circumstances obtaining, swift action was necessary to preserve order and discipline as well as to safeguard the customers' confidence in the employer's business a fast food chain catering to the general public where courtesy is a prized virtue.

In most of the succeeding cases, however, there was ample opportunity for the employer to observe the requisites of due process. There were no exigencies that called for immediate response. And yet, there was instant invocation of Wenphil and the brushing aside of due process.

Due Process Blatantly Disregarded Here

In the present case, petitioner could have given prior notice and hearing to private respondent. But the former flagrantly disregarded the employee's right. Private respondent was not even furnished the basic notice of discharge. Worse, he was not given any chance at all to present his defense. No due consideration was given the wrenching fact that Feliciano had already been in petitioner's employ for more then twenty (20) years. All that he was simply shown was a memorandum not even addressed to him but to the guard on duty Which advised that private respondent should thenceforth not be allowed entry to the company's premises due to his termination. A more blatant disregard of due process is simply inconceivable.

While in Kwikway Engineering Works vs. NLRC [5] and Pepsi-Cola Bottling Co, vs. NLRC [6], the Court in elegant language declared the failure to observe due process to be a violation of the Constitution itself and, in no uncertain terms, condemned the judgement of dismissal reached by management in its absence as "void and non-existent," we have continued to impose upon the erring employer the simplistic penalty of paying indemnity to the illegally dismissed employee. True, in some cases, the amount of indemnity or damages has been increased to P5,000[7] and to as much as P10,000, as in Reta vs. NLRC [8] where the employee was given his walking papers and forced to leave his ship in a foreign port. Still, I believe that the infringement of the right to due process deserves a stiffer penalty. The price that the Court has set is too insignificant, too niggardly, and sometimes even too late a sanction for the violation of a sacred right. To this prevailing rule of granting only indemnity and nothing else, I have already expressed my reservations in the earlier case of MGG Marine Services, Inc. vs. NLRC[9] which, unfortunately, was not the proper vehicle for a radical modification of the doctrine. With all due respect, I now submit that the application of this indemnity-only doctrine, which has effectively watered down respect for due process to meaningless lip service, must be modified.

Employer Liable for Separation Pay and Indemnity

Hence, I propose that as a rule where due process is violated, the dismissal should still be condemned as illegal even if the cause for the termination is legally justified. And the employer should be made to pay not only indemnity or nominal damages but likewise separation pay. I would concede that reinstatement will no longer be proper, because there is just and valid cause for dismissal, and thus, it would be unconscionable to force an employer to retain the erring employee in his service. This would be derogatory to the discipline and management prerogatives of the employer. I would also concede against payment of backwages, because a worker who commits a malfeasance or any act giving rise to loss of trust and confidence necessarily forfeits his right to continue working in the same company. Consequently, he is not entitled to wages for the period in which he did not render any service.

In fact, the Court veered towards this rule when in Worldwide Papermills, Inc. vs. NLRC, [10] it deemed the grant of separation pay as "equitable, even if the employee's termination of employment was justified." The employee therein was, within a span of almost six years, repeatedly admonished, warned and suspended for incurring excessive unauthorized absences. Such conduct, we said, undoubtedly constitutes gross and habitual neglect of duties, a ground for termination of an employment under Art. 282 of the Labor Code. Prior to his dismissal, he was still required to explain why no disciplinary action should be imposed upon him for his excessive absences without official leave. But in terminating his services, the company did not afford him any hearing. For this infraction of the due process requirements, the employer was ordered to indemnify the dismissed employee in the amount of P5,000. In addition, it granted separation pay of one-half month salary for every year of service. After this award of separation pay plus indemnity in Worldwide, the Court in subsequent cases, reverted to the indiscriminate application of the indemnity-only ruling in Wenphil.

Separation Pay Not a Reward To Employee, but a Penalty for Employer's Disregard of Due Process

I must stress, though, that the grant of separation pay to the dismissed employee is not so much to reward him despite the valid cause of his separation, but to impose an additional penalty to the employer for palpable disregard of a basic constitutional right. This is the only way to emphasize to employers the extreme importance of due process in our democratic system. It is so sacred a right that it cannot be taken for granted or glossed over in a cavalier fashion. To hold otherwise, as by simply imposing an indemnity of minimal amount, would be to allow a virtual purchase of a fundamental right by rich and powerful, thereby enabling them to stifle a constitutional right granted in favor of the poor and the marginalized.

It may be asked: If the employee is guilty anyway, what difference would it make if he is fired with or without due process? By the same token, it may be asked if in the end, after due hearing, a criminal offender is found guilty anyway, why not just penalize him immediately and dispense with the trouble and expense of trial? The absurdity of such argument is too apparent to deserve further discourse.

Denial of due Process A Denial of Justice

In the final analysis, what is involved here is not simply amounts of monetary award, whether insignificant or substantial, whether termed as indemnity, penalty, damages or separation pay. Neither is it merely a matter of respect for workers' right or adequate protection of labor. The bottom line is really the constitutionally granted right to due process. And due process is the very essence of justice itself. Where the rule of law is the bedrock of our free society, justice is its very lifeblood. Denial of due process is thus no less than denial of justice itself.

Contrary to popular misimpression, justice is dispensed not just by the courts and quasi-judicial bodies like public respondent here. The administration of justice begins with each of us, in our everyday dealings with one another and, as in this case, in the employers' affording their employees the right to be heard. If we, as people and as individuals, cannot or will not deign to act with justice and render unto everyone his or her due in little, everyday things, can we honestly hope and seriously expect to do so when it involves monumental, life-or-death issues? Unless each one is committed to a faithful observance of day-to-day fundamental rights, our ideal of a just society can never be approximated, not to say attained.


In sum, I believe that where there is a valid cause for termination but due process is absent, the dismissal should still be branded as illegal. However, the employer cannot be forced to reinstate the employee as the latter has proven himself to be unfit for the job. In lieu of reinstatement, separation pay should be granted. Likewise, no backwages are due, because the employee did not deserve to continue working. Instead, indemnity or nominal damages should be paid. Nominal damages and separation pay in this instance are not rewards for the employee; rather, they are sanctions for the deprivation of due process. I should add that the employer will have the burden of proving why procedural due process could not be afforded the employee.

On the other hand, where the employer can prove that, under the peculiar circumstances of the case, there was no opportunity to comply with due process requirements, or to do so would be impractical or gravely adverse to the employer, then the dismissal would not be illegal and no award can properly be granted. Nevertheless, as a measure of compassion, the employee could be given a nominal sum depending on the circumstances.

WHEREFORE, I vote to PARTIALLY GRANT the petition. Private Respondent Eliseo Feliciano should be AWARDED (1) separation pay equivalent to one-half month pay for every year of service, plus (2) nominal damages or indemnity of P5,000.

[1] 170 SCRA 69, February 8, 1989, per Gancayco, J.

[2] In Wenphil Corp. vs. NLRC, Ibid.; Sampaguita Garments Corp. vs. NLRC, 233 SCRA 260, June 17, 1994; Villarama vs. NLRC, 236 SCRA 280, September 2, 1994; Rubberworld (Phils.), Inc. vs. NLRC, 183 SCRA 421, March 21, 1990; Kwikway Engineering Works vs. NLRC, 195 SCRA 526, March 22, 1991, and several other cases.

[3] In Reta vs. NLRC, 232 SCRA 613, May 27, 1994; and Alhambra Industries, Inc. vs. NLRC, 238 SCRA 232, November 18, 1994.

[4] Seahorse Maritime Corp. vs. NLRC, 173 SCRA 390, May 15, 1989; Rubberworld (Phils.), Inc, vs. NLRC, supra; Cariño vs. NLRC, 185 SCRA 177, May 8, 1990; Great Pacific Life Assurance Corp. vs. NLRC, 187 SCRA 694, July 23, 1990; Cathedral School of Technology vs. NLRC, 214 SCRA 551, October 13, 1992; Aurelio vs. NLRC, 221 SCRA 432, April 12, 1993; Sampaguita Garments Corp. vs. NLRC, 233 SCRA 260, June 17, 1994; Villarama vs. NLRC, supra, Manuel vs. N.C. Construction Supply, G.R. No. 127533, November 28, 1997.

[5] Kwikway, supra, per Medialdea, J.

[6] 210 SCRA 277, June 23, 1992, per Gutierrez Jr., J.

[7] In Cariño vs. NLRC, supra; MGG Marine Services, Inc. vs. NLRC, 259 SCRA 664, July 29, 1996.

[8] Supra.

[9] Supra, note 18, p. 679.

[10] 244 SCRA 125, May 12, 1995, per Padilla, J.