The Case

This is a petition for review^[1] of the Court of Appeals' Decision^[2] dated 21 January 2004 and Resolution dated 9 September 2004 in CA-G.R. SP No. 75125. The Court of Appeals reversed the Decision^[3] dated 29 May 2002 and Resolution dated 29 October 2002 of the National Labor Relations Commission (NLRC).

The Antecedent Facts

The facts, as summarized by the Labor Arbiter and adopted by the NLRC and the Court of Appeals, are as follows:

In his position paper, complainant [Inocencio B. Berbano, Jr.] alleged that he was hired by the respondent Philippine Long Distance [Telephone] Company (PLDT, for brevity) on June 1, 1988 as Engineering Assistant. After his probationary period of three months, he was issued an appointment letter with a status of a regular employee of respondent. After several promotions, complainant finally held the position of Computer Assistant M-2 on June 16, 1993 in the Sampaloc Exchange Department/Operation and Maintenance Center of the respondent. Although his function is "Computer Assistant M-2," complainant further alleges that he performed the functions of a Specialist for EWSD who was responsible for handling, operations and maintenance of the whole EWSD Network handling network database, fault clearance, database modification alarm monitoring, traffic routing, trunk administration, password and tariff administration and others.

Being trained as EW[S]D OMC Specialist, complainant claims that respondent expected him to have "depth of understanding" in continuous painstaking research and study. Thus, he initiated a study of "hi-tech EWSD Switching Equipment," a part of which is the software installation of various subscriber service features and control operation. It is at this time that complainant tapped his brother-in-law's number (911-8234) without the latter's knowledge and installed service features in it for study. Such service features included:

1. Security Code
2. Conference Call Three (Three-way calling)
3. Abbreviated Dialing
4. Hot Line Delayed
5. Call Diversion Immediate
6. Call Diversion Don't Answer
7. Call Hold
8. Non-Changeable

Later, on April 21, 1994, complainant learned that the phone number 911-8234 is under investigation by the Quality Control Inspection Office due to the unauthorized installation of service features thereto. Complainant admitted that he was responsible for such installation for purposes of study and testing.

Formal investigation ensued on April 22, 1994 and subsequently, on July 6, 1994, complainant received a Memorandum from the Department Head of the Sampaloc Exchange asking him to explain within 72 hours upon receipt why an [a]dministrative [a]ction should not be taken against complainant regarding the matter of the unauthorized installations mentioned at the phone number 911-8234.

On July 11, 1994, complainant submitted a written explanation claiming that the aforementioned installation of service features was for purposes of study and research.

Finding unacceptable the complainant's explanation, respondent PLDT dismissed complainant from the service effective August 16, 1994.

On the other hand, respondent submits that upon discovery of the installation of service features to the phone number 911-8234 without the authorization and approval of the respondent, and after investigation, complainant readily admitted having programmed the said features and that this installation was without prior authorization. Respondent's position paper further avers that having worked as [a] Computer Assistant, complainant took advantage of his position and his access to respondent company's computer to favor his brother-in-law's telephone by irregularly providing it with special features. Such special features included the following:

1. Push Button
2. Test Call Only
3. Malicious Call Identification
4. Non-chargeable (Calls to subscriber with this class of service are free of charge for the caller)
5. Three-way Calling (Allows a third party to be linked to an existing call)
6. Call Hold
7. Abbreviated dialing 90 numbers
8. Hotline delay
9. Pin Code
10. Call Diversion Immediate
11. Call Diversion to Fixed Announcement
12. Traffic Restr. Class Act Auth. (Authorization to activate traffic restriction classes)
13. Call Diversion Don't Answer (Authorization to enter a destination no. for call diversion on no answer)
14. Traffic Restriction Class 1
15. Abbreviated Dial Number Mod. Auth. (Authorization for subs controlled entry and and modification of abbreviated nos.)
16. Call Diversion Immediate (Modification Authorization)
17. Hotline Delay Mod. Auth.(Modification Authorization)

Respondent also found complainant's explanation that the installment was for testing purposes, unmeritorious and unjustified considering that said special features were only deleted upon discovery, two months after their installations. Further, testings, according to the respondent company's rules should only last for one day.^[4]

On 28 September 1998, the Labor Arbiter^[5] rendered a Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the reinstatement of the complainant to his previous position of Computer Assistant M-2 without loss of seniority rights. Furthermore, respondent is hereby ordered to pay to the complainant the amount of FIVE HUNDRED THIRTY SEVEN THOUSAND FOUR HUNDRED TWENTY PESOS (P537,420.00) representing the backwages of the complainant from the time that he was terminated in August 1994 up to the present, minus any possible income earned elsewhere since complainant's dismissal. The equivalent ten (10%) percent attorney's fees of the total award in the amount of P53,742.00 is also granted.

SO ORDERED.^[6]

On 29 May 2002, the NLRC rendered a Decision reversing that of the Labor Arbiter, with the following dispositive portion:

WHEREFORE, premises considered, the assailed decision is hereby reversed and set aside. Respondents are adjudged not guilty of illegal dismissal. Accordingly, the award of backwages and attorney's fees is hereby deleted from the decision.

SO ORDERED.^[7]

On 15 August 2002, Berbano filed a Motion for Reconsideration, but this was denied by the NLRC in its Resolution dated 29 October 2002.^[8]

The Court of Appeals' Ruling

Berbano filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure. On 21 January 2004, the Court of Appeals rendered judgment granting the petition and reversing the NLRC decision. We quote the dispositive portion of the Court of Appeals' decision below.

WHEREFORE, premises considered, the petition is GRANTED. The decision of the public respondent NLRC promulgated on May 29, 2002 is REVERSED and SET ASIDE and the decision dated September 28, 1998 of the Honorable Labor Arbiter Romulus S. Prota[s]io is hereby REINSTATED in all respect. Private respondent PLDT is ordered to pay the backwages to which the petitioner is entitled from January 15, 2003, the date of his dismissal, until his actual reinstatement.

SO ORDERED.^[9]

PLDT filed a Motion for Reconsideration, but this was denied by the Court of Appeals in its Resolution of 9 September 2004.^[10]

Hence, this appeal.


Petitioner PLDT raises the following issues for our consideration:

1. Whether the Court of Appeals erred in reversing the NLRC decision despite its finding that respondent committed the infraction that caused his dismissal;
   
   
2. Whether the Court of Appeals erred in ordering petitioner to pay respondent backwages and attorney's fees;
   
   
3. Whether respondent Inocencio Berbano, Jr. was denied due process of law; and
   
   
4. Whether the Court of Appeals had jurisdiction over the Petition for Certiorari filed by respondent.
   

The Court's Ruling

We find the appeal without merit.

On whether the Court of Appeals had jurisdiction
over the Petition for Certiorari filed by respondent

We first consider the issue on jurisdiction raised by petitioner. Petitioner contends that the NLRC Decision dated 29 May 2002 was received by respondent on 29 June 2002; hence, respondent had only ten (10) days, or up to 09 July 2002, to file a motion for reconsideration of the NLRC decision. Without a motion for reconsideration timely filed, the NLRC decision would become final and executory, pursuant to Section 2, paragraphs (a), (b) and (c) of Rule VIII [now Section 14 of Rule VII] of the New Rules of Procedure of the NLRC. Petitioner claims that when respondent filed a motion for reconsideration of the NLRC decision on 15 August 2002, which was beyond the 10-day reglementary period imposed by law, the decision was already final and executory. Consequently, the Court of Appeals had no jurisdiction over the petition for certiorari (assailing the NLRC decision) filed by respondent on 10 February 2003.

The New Rules of Procedure of the NLRC mandate that a motion for reconsideration of the NLRC decision must be filed within 10 calendar days from receipt of said decision, otherwise, the decision shall become final and executory.^[11] A motion for reconsideration of the NLRC decision must be filed before the remedy of a petition for certiorari may be availed of, to enable the commission to pass upon and correct its mistakes without the intervention of the courts.^[12] Failure to file a motion for reconsideration of the decision is a procedural defect that generally warrants a dismissal of the petition for certiorari.^[13] However, in Surima v. NLRC,^[14] we held that despite procedural lapses, fundamental consideration of substantial justice may warrant this Court to decide a case on the merits rather than dismiss it on a technicality. In so doing, we exercise our prerogative in labor cases that no undue sympathy is to be accorded to any claim of procedural misstep, the idea being that our power must be exercised according to justice and equity and substantial merits of the controversy.^[15] In the instant case, we are persuaded that the rigid rules of procedure must give way to the demands of substantial justice, and that the case must be decided on the merits. Moreover, the petition filed with the Court of Appeals sought the issuance of a writ of certiorari which is a prerogative writ, not demandable as a matter of right, but issued in the exercise of judicial discretion.^[16] Thus, the Court of Appeals committed no error when it admitted the petition for certiorari filed by respondent, and had jurisdiction over said petition.

On whether the Court of Appeals erred in reversing
the NLRC decision despite its finding that respondent
committed the infraction that caused his dismissal

Petitioner contends that the Court of Appeals erred when it found respondent to have committed an infraction, i.e., programming and installing special features in his (respondent's) brother-in-law's telephone line without prior authorization from petitioner, but nonetheless ruled that the infraction was not serious enough to warrant respondent's dismissal from service. Petitioner also asserts that, contrary to respondent's claim, due process was observed in the dismissal of respondent.

Well-settled is the rule that no employee shall be validly dismissed from employment without the observance of substantive and procedural due process. The minimum standards of due process are prescribed under Article 277(b) of the Labor Code of the Philippines (Labor Code) to wit:

Art. 277. Miscellaneous Provisions.--

x x x

(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the cause for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires, in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. x x x

The above provision is implemented by Section 2, Rule XXIII of Book V of the Omnibus Rules Implementing the Labor Code, which states:

Section 2. Standards of due process: requirements of notice.-- In all cases of termination of employment, the following standards of due process shall be substantially observed:

I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. x x x.

Thus, dismissal from service of an employee is valid if the following requirements are complied with: (a) substantive due process which requires that the ground for dismissal is one of the just or authorized causes enumerated in the Labor Code, and (b) procedural due process which requires that the employee be given an opportunity to be heard and defend himself.^[17] The employee must be furnished two written notices -- the first notice apprises the employee of the particular act or omission for which his dismissal is sought, and the second notice informs the employee of the employer's decision to dismiss him.^[18]

In this case, petitioner formally notified respondent of the complaint against him through an inter-office memorandum dated 6 July 1994. The memorandum enumerated the service features allegedly installed by respondent in his brother-in-law's telephone line (911-8234), and stated the acts of the respondent complained of, viz:

You readily admitted to QCI that subscriber of subject telephone is your brother-in-law and that you installed the features claiming it was for testing purposes.

Records show that subject telephone was temporarily disconnected last March 24, 1994 for non-payment, reconnect order was faxed to Data Control Unit of OMCC at 1:30PM. In the process of reconnection at OMCC, subject telephone was found already working.^[19]

In the same memorandum, petitioner asked respondent to explain within 72 hours upon receipt thereof why an administrative action should not be imposed against him.^[20] On 11 July 1994, respondent submitted his "written explanation" or reply to the complaint against him.^[21] More than a month thereafter, or on 9 August 1994, petitioner issued another inter-office memorandum informing respondent that his act of installing special features in his brother-in-law's telephone line without authorization from petitioner constituted "gross misconduct" and was "grossly violative of existing company rules and regulations," hence, warranting his termination from service.^[22] Clearly, petitioner complied with the requirement of procedural due process.

As regards substantial due process, the grounds for termination of employment must be based on just or authorized causes. Article 282 of the Labor Code enumerates the just causes for termination of employment by the employer, to wit:

Art. 282. Termination by employer. --An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and

(e) Other causes analogous to the foregoing. (Emphasis supplied)

The notice of termination sent by petitioner to respondent indicated that the latter was dismissed from service due to unauthorized installation of service features in his brother-in-law's telephone line, which allegedly constituted gross misconduct. Thus, we are left with the issue on whether the said unauthorized act of the respondent constitutes a serious misconduct which warrants dismissal from service under Article 282(a) of the Labor Code.

Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment.^[23] Ordinary misconduct would not justify the termination of services of the employee as the Labor Code is explicit that the misconduct must be serious.^[24] To be serious, the misconduct must be of such grave and aggravated character and not merely trivial and unimportant.^[25] Such misconduct, however serious, must nevertheless be in connection with the employee's work to constitute just cause for his separation.^[26] As amplified by jurisprudence, misconduct, to be a just cause for dismissal, must (a) be serious; (b) relate to the performance of the employee's duties; and (c) show that the employee has become unfit to continue working for the employer.^[27] Moreover, in National Labor Relations Commission v. Salgarino,^[28] this Court stressed that "[i]n order to constitute serious misconduct which will warrant the dismissal of an employee under paragraph (a) of Article 282 of the Labor Code, it is not sufficient that the act or conduct complained of has violated some established rules or policies. It is equally important and required that the act or conduct must have been performed with wrongful intent."

We believe that the misconduct of respondent is not of serious nature as to warrant respondent's dismissal from service. The records of this case are bereft of any showing that the alleged misconduct was performed by respondent with wrongful intent. On the contrary, respondent readily admitted having installed the service features in his brother-in-law's telephone line for purposes of study and research which could have benefitted petitioner. Respondent explained the installation of the service features in the "written explanation" he sent to petitioner as follows:

x x x

There had been a time on that period where I conducted special study on service features of EWSD. It includes testing the integrity of its actual operation in all digital exchanges connected to our OMC.

During which [sic] I conducted my study of these features for Cubao there was no available test number at OMC for code "911" and "912". So to complete my study I decided to use the number 9118234 at home temporarily and remove those features after the test.^[29]

Moreover, as pointed out by the appellate court, respondent's misconduct did not result in any economic loss on the part of petitioner since the service features were not yet available in the market at the time respondent caused its unauthorized installation.

We also note that respondent's dedicated service to petitioner for almost six (6) years, prior to his commission of the misconduct, is apparent from the records. His employment was untainted with any irregularity. He had been promoted several times, and had been chosen by petitioner on several occasions to attend various trainings to improve his craft. He conducted advance research based on his training background and technical expertise, and had even compiled a service feature manual which served as quick reference guide of his colleagues for inquiries regarding "subscriber operation of special (or service) features."^[30]

Based on the foregoing, we consider respondent's offense to be a simple misconduct which does not merit termination of his employment. The penalty of dismissal from service is not commensurate to respondent's offense. Although petitioner, as an employer, has the right to discipline its erring employees, exercise of such right should be tempered with compassion and understanding. The magnitude of the infraction committed by an employee must be weighed and equated with the penalty prescribed and must be commensurate thereto, in view of the gravity of the penalty of dismissal or termination from the service.^[31] The employer should bear in mind that in termination cases, what is at stake is not simply the employee's job or position but his very livelihood.

On whether the Court of Appeals erred in ordering
petitioner to pay respondent backwages and attorney's fees

Since respondent was illegally dismissed, he is entitled to reinstatement without loss of seniority rights, and to payment of backwages. Article 279 of the Labor Code, as amended by Section 34 of Rep. Act No. 6715, provides as follows:

Art. 279. Security of Tenure. -- In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

Thus, an illegally dismissed employee is entitled to the twin reliefs of (a) either reinstatement or separation pay, if reinstatement is no longer viable, and (b) backwages.^[32] These reliefs are given to alleviate the economic damage suffered by the illegally dismissed employee.^[33]

Finally, we find no error in the award of attorney's fees. In San Miguel Corporation v. Aballa,^[34] we held that in actions for recovery of wages or where an employee was forced to litigate and thus incur expenses to protect his rights and interests, a maximum of 10% of the total monetary award by way of attorney's fees is justifiable under Article 111 of the Labor Code;^[35] Section 8, Rule VIII of Book III of the Omnibus Rules Implementing the Labor Code;^[36] and paragraph 7, Article 2208 of the Civil Code.^[37] The award of attorney's fees is proper and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. There need only be a showing that the lawful wages were not paid accordingly.^[38]

WHEREFORE, we DENY the petition. We AFFIRM the Court of Appeals' Decision dated 21 January 2004 in CA-G.R. SP No. 75125.

SO ORDERED .

Leonardo-De Castro^*, Brion, Del Castillo, and Abad, JJ., concur.

---

^* Designated additional member per Special Order No. 776.

^[1] Under Rule 45 of the 1997 Rules of Civil Procedure.

^[2] Rollo, pp. 28-35. Penned by Associate Justice Eugenio S. Labitoria, with Associate JusticesMercedes Gozo-Dadole and Rosmari D. Carandang, concurring.

^[3] Id. at 37-47. Penned by Commissioner Angelita A. Gacutan, with Presiding Commissioner Raul T. Aquino and Commissioner Victoriano R. Calaycay, concurring.

^[4] Rollo, pp. 29-31, 38-40 and 48-52.

^[5] Labor Arbiter Romulus S. Protasio.

^[6] Rollo, p. 61.

^[7] Id. at 46-47.

^[8] CA rollo, pp. 106-107.

^[9] Rollo, p. 35.

^[10] Id. at 36.

^[11] Sections 14 and 15 of Rule VII of the New Rules of Procedure of the NLRC provide:

Section 14. Finality of Decision of the Commission and Entry of Judgment. - (a) Finality of the Decisions, Resolutions or Orders of the Commission. Except as provided in Rule XI, Section 9, the decisions, resolutions or orders of the Commission/Division shall become executory after ten (10) calendar days from receipt of the same.

(b) Entry of Judgment. - Upon the expiration of the ten (10) calendar day period provided in paragraph (a) of this section, the decision/resolution/order shall, as far as practicable, be entered in a book of entries of judgment. x x x

Section 15. Motions for Reconsideration - Motion for reconsideration of any decision/resolution/order of the Commission shall not be entertained except when based on palpable or patent errors, provided that the motion is under oath and filed within ten (10) calendar days from receipt of decision/resolution/order, with proof of service that a copy of the same has been furnished, within the reglementary period, the adverse party, and provided further, that only one such motion from the same party shall be entertained.

^[12] Philippine Long Distance Telephone Company, Inc. v. Imperial, G.R. No. 149379, 15 June 2006, 490 SCRA 673, 687-688, citing Philippine National Construction Corporation v. NLRC,315 Phil. 746 (1995).

^[13] Id. citing Labudahon v. NLRC, G.R. No. 112206, 11 December 1995, 251 SCRA 129.

^[14] 353 Phil. 461, 469 (1998).

^[15] Id.

^[16] Philippine Long Distance Telephone Company, Inc. v. Imperial, supra, citing Nayve v. Court of Appeals, 446 Phil. 473 (2003).

^[17] AMA Computer College-East Rizal v. Ignacio, G.R. No. 178520, 23 June 2009.

^[18] Id. citing Concorde Hotel v. Court of Appeals, 414 Phil. 897, 908 (2001).

^[19] Rollo, p. 283.

^[20] Id.

^[21] Id. at 286.

^[22] Id. at 285.

^[23] Fujitsu Computer Products Corporation of the Philippines v. Court of Appeals , 494 Phil. 697, 725 (2005), and AMA Computer College-East Rizal v. Ignacio, supra note 17.

^[24] Philippine National Bank v. Velasco, G.R. No. 166096, 11 September 2008, 564 SCRA 512, 530.

^[25] Fujitsu Computer Products Corporation of the Philippines v. Court of Appeals, supra.

^[26] Id., citing Samson v. National Labor Relations Commission, 386 Phil. 669 (2000).

^[27] Philippine National Bank v. Velasco, supra citing Philippine Aeolus Automotive United Corporation v. National Labor Relations Commission, 387 Phil. 250 (2000).

^[28] G.R. No. 164376, 31 July 2006, 497 SCRA 361, 376.

^[29] Rollo, p. 287.

^[30] Based on statements in the Position Paper submitted by respondent to the Labor Arbiter, which were not denied by petitioner. Rollo, p. 56.

^[31] AMA Computer College-East Rizal v. Ignacio, supra note 17.

^[32] Art. 279. Security of Tenure. -- x x x An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation is withheld from him up to the time of his actual reinstatement.

^[33] St. Michael's Institute v. Santos, 422 Phil. 723, 736 (2001).

^[34] G.R. No. 149011, 28 June 2005, 461 SCRA 392, 432.

^[35] Art. 111. Attorney's fees -- (a) In cases of unlawful withholding of wages the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of wages recovered. x x x

^[36] Sec. 8. Attorney's fees. -- Attorney's fees in any judicial or administrative proceedings for the recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.

^[37] Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

x x x

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;
x x x

^[38] San Miguel Corporation v. Aballa, supra note 34, at 433.