View full case

DISTRIBUTION v. JEFFREY E. SANTOS

FACTS:

The petitioner, a domestic corporation engaged in selling and distributing electrical products and equipment, employed the respondent as its company driver. The respondent, feeling constructively dismissed, filed a complaint against the petitioner. The respondent alleged that he was placed under preventive suspension and was subsequently not allowed to return to work without any justification.

The petitioner argued that there were missing electrical materials and products as revealed by a physical stock inventory. With the respondent and the warehouseman being the only ones with access to the warehouse, they demanded an explanation but received none. The petitioner then filed a criminal complaint for qualified theft and suspended the respondent.

The Labor Arbiter (LA) ruled in favor of the respondent, finding his dismissal to be illegal. The LA ordered the respondent's reinstatement and payment of backwages. The decision was affirmed by the National Labor Relations Commission (NLRC), but with a modification. The NLRC ordered the payment of separation pay instead of reinstatement.

Petitioner filed petitions for certiorari with the Court of Appeals (CA) and the Supreme Court, challenging the decisions of the LA and NLRC. The CA and the Supreme Court denied the petitions, upholding the LA's decision with modification by the NLRC.

The issues raised by the petitioner were whether the CA intruded into the right of the employer to dismiss an employee and whether the CA erred in not following Supreme Court decisions on the payment of nominal damages.

ISSUES:

  1. Whether the dismissal of the employee was made in accordance with the procedure set in the Labor Code.

  2. Whether the dismissal was for just or authorized cause.

  3. Whether the respondent was terminated from employment without procedural due process.

RULING:

  1. The dismissal did not comply with the proper procedure set in the Labor Code. The employer is therefore obligated to pay nominal damages to the employee as a penalty for not complying with the procedural requirements of due process.

  2. The employer failed to prove that the dismissal was for just and valid cause. The burden of proof rests upon the employer to show that the dismissal is for just and valid cause, and failure to do so would mean that the dismissal was illegal.

  3. The Court ruled that the respondent was indeed dismissed without procedural due process. The employer failed to provide the required two written notices before termination, specifically the notice informing the employee of the employer's decision to dismiss him. The employer also failed to conduct a hearing or conference where the employee could explain his defenses and present evidence in support, and to serve a written notice of termination indicating the justification for severance of employment. The argument of the employer that the employee abandoned his job was not substantiated. Therefore, the termination was deemed to be without proper procedural due process.

PRINCIPLES:

  • In illegal dismissal cases, two separate inquiries must be made: whether the dismissal was made in accordance with the procedure set in the Labor Code, and whether the dismissal was for just or authorized cause.

  • The burden of proof rests upon the employer to show that the dismissal is for just and valid cause. If doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.

  • Loss of trust and confidence is a just cause for dismissal, but two conditions must be satisfied: the employee must hold a position of trust and confidence, and there must be an act that justifies the loss of trust and confidence. For rank-and-file personnel, loss of trust and confidence requires proof of involvement in the alleged events, and mere uncorroborated assertions by the employer will not suffice.

  • The right of an employer to dismiss employees on the ground of loss of trust and confidence must not be exercised arbitrarily and without just cause. Loss of confidence must be supported by sufficient and clearly established facts.

  • In termination proceedings of employees, procedural due process consists of the twin requirements of notice and hearing.

  • The first written notice should contain specific causes or grounds for termination and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period.

  • A reasonable opportunity means a period of at least five (5) calendar days to give employees an opportunity to study the accusation against them, consult with a union representative or lawyer, gather data and evidence, and decide on their defenses.

  • The notice should contain a detailed narration of the facts and circumstances that will serve as the basis for the charge against the employees.

  • After the first notice, a hearing or conference should be conducted where employees can explain their defenses, present evidence, and rebut the evidence presented against them.

  • The hearing or conference can also be an opportunity for amicable settlement.

  • The notice of termination should indicate that all circumstances involving the charge have been considered and grounds have been established to justify severance of employment.