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KING OF KINGS TRANSPORT v. SANTIAGO O. MAMAC

FACTS:

Petitioner King of Kings Transport, Inc. (KKTI) is a corporation engaged in public transportation. Respondent Santiago O. Mamac was hired as a bus conductor of Don Mariano Transit Corporation (DMTC). The DMTC employees formed a union called "Damayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers Union." Pending the certification election in DMTC, KKTI was incorporated and many DMTC employees were transferred to KKTI. The KKTI employees later organized the "Kaisahan ng mga Kawani sa King of Kings" (KKKK) and respondent was elected as the KKKK president. KKTI required respondent to submit a "Conductor's Trip Report" after each trip, indicating the ticket opening and closing for the day. If an irregularity is found, an "Irregularity Report" is issued and the employee is asked to explain. Respondent submitted an explanation for an irregularity in his October 28, 2001 report, stating that it was unintentional due to a bus windshield smashing incident. KKTI subsequently terminated respondent's employment on November 26, 2001, citing the October 28, 2001 irregularity as well as other alleged offenses since 1999. Respondent filed a complaint for illegal dismissal, among other money claims, alleging that his dismissal was intended to suppress union activities and was done without due process. The Labor Arbiter dismissed the complaint, but the NLRC modified the decision, ordering KKTI to indemnify respondent for failure to comply with due process. The CA affirmed the NLRC's ruling and awarded full backwages and 13th-month pay to respondent. KKTI now appeals the decision.

ISSUES:

  1. Whether petitioner KKTI complied with the procedural requirements of due process in terminating respondent's employment.

  2. Whether the termination of respondent's employment was based on a just cause.

  3. Whether the employer complied with the due process requirements in terminating the employment of the employee.

  4. Whether the employee is entitled to receive the 13th-month pay benefit.

RULING:

  1. The Court held that petitioner KKTI did not comply with the procedural requirements of due process in terminating respondent's employment. The written notice charging the employee with specific causes or grounds for termination was not provided, as required by Art. 277 of the Labor Code. Verbal appraisal of the charges against the employee does not fulfill the first notice requirement.

  2. The Court upheld the ruling of the labor arbiter and the NLRC that the termination of respondent's employment was based on a "just cause." This issue was not at dispute in this case.

  3. The employer failed to comply with the due process requirements in terminating the employment of the employee. The first notice requirement was completely disregarded by the employer, and even assuming that an Irregularity Report was furnished, it did not comply with the requirements of the law. Additionally, no hearing was conducted despite the employee's written explanation. As a result, the employer is sanctioned to pay the employee thirty thousand pesos (PhP 30,000) as damages for non-compliance with due process requirements.

  4. The employee is not entitled to receive the 13th-month pay benefit. The employee admitted that he was paid on commission only, and this fact is supported by his pay slips. Thus, he is excluded from receiving the 13th-month pay benefit.

PRINCIPLES:

  • Due process under the Labor Code involves substantive and procedural aspects.

  • The procedural aspect of due process in terminating employment includes providing a written notice specifying the grounds for termination, giving the employee an opportunity to explain his side, conducting a hearing or conference, and serving a written notice of termination indicating the grounds for severance of employment.

  • The first written notice should contain specific causes or grounds for termination, provide a reasonable opportunity for the employee to prepare his defense, and include a detailed narration of the facts and circumstances surrounding the charge.

  • Consultations or conferences are not a substitute for the actual observance of notice and hearing in complying with the procedural requirements of due process in termination cases.

  • Termination of employment without compliance with due process requirements entitles the employee to nominal damages.

  • The first notice requirement must be observed by the employer in termination cases.

  • The notice to the employee must contain a specific description of the charges against him/her, including the company rule or policy violated and the grounds for termination.

  • A hearing must be conducted to allow the employee to clarify and present evidence in support of their defense.

  • Failure to comply with due process requirements in termination cases may result in the employer being sanctioned to pay damages.

  • The 13th-month pay benefit does not apply to employees who are paid on purely commission basis, except when they are paid on a piece-rate basis.