FIRST DIVISION

PEDRO T. SANTOS, JR., G.R. No. 170943

Petitioner,
Present:

PUNO, C.J., Chairperson,

CARPIO,
- versus - CORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.

PNOC EXPLORATION
CORPORATION,
Respondent. Promulgated:

September 23, 2008

x---------------------------------------------------x

DECISION
CORONA, J.:

This is a petition for review[1] of the September 22, 2005 decision[2] and
December 29, 2005 resolution[3] of the Court of Appeals in CA-G.R. SP No. 82482.

On December 23, 2002, respondent PNOC Exploration Corporation filed a

complaint for a sum of money against petitioner Pedro T. Santos, Jr. in the
Regional Trial Court of Pasig City, Branch 167. The complaint, docketed as Civil
Case No. 69262, sought to collect the amount of P698,502.10 representing
petitioners unpaid balance of the car loan [4] advanced to him by respondent when
he was still a member of its board of directors.

Personal service of summons to petitioner failed because he could not be

located in his last known address despite earnest efforts to do so. Subsequently, on
respondents motion, the trial court allowed service of summons by publication.

Respondent caused the publication of the summons in Remate, a newspaper

of general circulation in the Philippines, on May 20, 2003. Thereafter, respondent
submitted the affidavit of publication of the advertising manager of Remate [5] and
an affidavit of service of respondents employee [6] to the effect that he sent a copy
of the summons by registered mail to petitioners last known address.

When petitioner failed to file his answer within the prescribed period,
respondent moved that the case be set for the reception of its evidence ex parte.
The trial court granted the motion in an order dated September 11, 2003.

Respondent proceeded with the ex parte presentation and formal offer of its
evidence. Thereafter, the case was deemed submitted for decision on October 15,
2003.

On October 28, 2003, petitioner filed an Omnibus Motion for

Reconsideration and to Admit Attached Answer. He sought reconsideration of the
September 11, 2003 order, alleging that the affidavit of service submitted by
respondent failed to comply with Section 19, Rule 14 of the Rules of Court as it
was not executed by the clerk of court. He also claimed that he was denied due
process as he was not notified of the September 11, 2003 order. He prayed that
respondents evidence ex parte be stricken off the records and that his answer be
admitted.

Respondent naturally opposed the motion. It insisted that it complied with

the rules on service by publication. Moreover, pursuant to the September 11, 2003
order, petitioner was already deemed in default for failure to file an answer within
the prescribed period.

In an order dated February 6, 2004, the trial court denied petitioners motion
for reconsideration of the September 11, 2003 order. It held that the rules did not
require the affidavit of complementary service by registered mail to be executed by
the clerk of court. It also ruled that due process was observed as a copy of the
September 11, 2003 order was actually mailed to petitioner at his last known
address. It also denied the motion to admit petitioners answer because the same
was filed way beyond the reglementary period.

Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004
orders of the trial court in the Court of Appeals via a petition for certiorari. He
contended that the orders were issued with grave abuse of discretion. He imputed
the following errors to the trial court: taking cognizance of the case despite lack of
jurisdiction due to improper service of summons; failing to furnish him with copies
of its orders and processes, particularly the September 11, 2003 order, and
upholding technicality over equity and justice.

During the pendency of the petition in the Court of Appeals, the trial court
rendered its decision in Civil Case No. 69262. It ordered petitioner to
pay P698,502.10 plus legal interest and costs of suit.[7]
 Meanwhile, on September 22, 2005, the Court of Appeals rendered its
decision[8] sustaining the September 11, 2003 and February 6, 2004 orders of the
trial court and dismissing the petition. It denied reconsideration. [9] Thus, this
petition.

Petitioner essentially reiterates the grounds he raised in the Court of Appeals,

namely, lack of jurisdiction over his person due to improper service of summons,
failure of the trial court to furnish him with copies of its orders and processes
including the September 11, 2003 order and preference for technicality rather than
justice and equity. In particular, he claims that the rule on service by publication
under Section 14, Rule 14 of the Rules of Court applies only to actions in rem, not
actions in personam like a complaint for a sum of money. He also contends that the
affidavit of service of a copy of the summons should have been prepared by the
clerk of court, not respondents messenger.

The petition lacks merit.

PR OPRI ETY OF
SERVICE BY PUBLICATION

Section 14, Rule 14 (on Summons) of the Rules of Court provides:

SEC. 14. Service upon defendant whose identity or whereabouts are

unknown. In any action where the defendant is designated as an unknown
owner, or the like, or whenever his whereabouts are unknown and cannot be
ascertained by diligent inquiry, service may, by leave of court, be effected
upon him by publication in a newspaper of general circulation and in such
places and for such times as the court may order. (emphasis supplied)
 Since petitioner could not be personally served with summons despite
diligent efforts to locate his whereabouts, respondent sought and was granted leave
of court to effect service of summons upon him by publication in a newspaper of
general circulation. Thus, petitioner was properly served with summons by
publication.

Petitioner invokes the distinction between an action in rem and an action in

personam and claims that substituted service may be availed of only in an action in
rem. Petitioner is wrong. The in rem/in personam distinction was significant under
the old rule because it was silent as to the kind of action to which the rule was
applicable.[10]Because of this silence, the Court limited the application of the old
rule to in rem actions only.[11]

This has been changed. The present rule expressly states that it applies [i]n
any action where the defendant is designated as an unknown owner, or the like, or
whenever his whereabouts are unknown and cannot be ascertained by diligent
inquiry. Thus, it now applies to any action, whether in personam, in rem or quasi
in rem.[12]

Regarding the matter of the affidavit of service, the relevant portion of

Section 19,[13] Rule 14 of the Rules of Court simply speaks of the following:
an affidavit showing the deposit of a copy of the summons and order for
publication in the post office, postage prepaid, directed to the defendant by
registered mail to his last known address.

Service of summons by publication is proved by the affidavit of the printer,

his foreman or principal clerk, or of the editor, business or advertising manager of
the newspaper which published the summons. The service of summons
by publication is complemented by service of summons by registered mail to the
defendants last known address. This complementary service is evidenced by an
affidavit showing the deposit of a copy of the summons and order for publication
in the post office, postage prepaid, directed to the defendant by registered mail to
his last known address.

The rules, however, do not require that the affidavit of complementary

service be executed by the clerk of court. While the trial court ordinarily does the
mailing of copies of its orders and processes, the duty to make the complementary
service by registered mail is imposed on the party who resorts to service by
publication.

Moreover, even assuming that the service of summons was defective, the
trial court acquired jurisdiction over the person of petitioner by his own
voluntary appearance in the action against him. In this connection, Section 20,
Rule 14 of the Rules of Court states:

SEC. 20. Voluntary appearance. The defendants voluntary

appearance in the action shall be equivalent to service of summons. The
inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction
over the person of the defendant shall not be deemed a voluntary appearance.
(emphasis supplied)

Petitioner voluntarily appeared in the action when he filed the Omnibus

Motion for Reconsideration and to Admit Attached Answer. [14] This was
equivalent to service of summons and vested the trial court with jurisdiction over
the person of petitioner.

E NTITLE ME NT TO
NOTICE OF PROCEEDINGS
 The trial court allowed respondent to present its evidence ex parte on
account of petitioners failure to file his answer within the prescribed period.
Petitioner assails this action on the part of the trial court as well as the said courts
failure to furnish him with copies of orders and processes issued in the course of
the proceedings.

The effects of a defendants failure to file an answer within the time allowed
therefor are governed by Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of
the Rules of Court:

SEC. 3. Default; declaration of. If the defending party fails to answer

within the time allowed therefor, the court shall, upon motion of the claiming
party with notice to the defending party, and proof of such failure, declare
the defending party in default. Thereupon, the court shall proceed to render
judgment granting the claimant such relief as his pleading may warrant, unless the
court in its discretion requires the claimant to submit evidence. Such reception of
evidence may be delegated to the clerk of court.

SEC. 4. Effect of order of default. A party in default shall be entitled

to notice of subsequent proceedings but not to take part in the trial. (emphasis
supplied)

If the defendant fails to file his answer on time, he may be declared in

default upon motion of the plaintiff with notice to the said defendant. In case he is
declared in default, the court shall proceed to render judgment granting the plaintiff
such relief as his pleading may warrant, unless the court in its discretion requires
the plaintiff to submit evidence. The defaulting defendant may not take part in the
trial but shall be entitled to notice of subsequent proceedings.

In this case, even petitioner himself does not dispute that he failed to file his
answer on time. That was in fact why he had to file an Omnibus Motion for
Reconsideration and to Admit Attached Answer. But respondent moved only for
the ex parte presentation of evidence, not for the declaration of petitioner in
default. In its February 6, 2004 order, the trial court stated:

The disputed Order of September 11, 2003 allowing the presentation of

evidence ex-parte precisely ordered that despite and notwithstanding service of
summons by publication, no answer has been filed with the Court within the
required period and/or forthcoming.[] Effectively[,] that was a finding that the
defendant [that is, herein petitioner] was in default for failure to file an
answer or any responsive pleading within the period fixed in the publication as
precisely the defendant [could not] be found and for which reason, service of
summons by publication was ordered. It is simply illogical to notify the defendant
of the Order of September 11, 2003 simply on account of the reality that he was
no longer residing and/or found on his last known address and his whereabouts
unknown thus the publication of the summons. In other words, it was reasonable
to expect that the defendant will not receive any notice or order in his last known
address. Hence, [it was] impractical to send any notice or order to
him. Nonetheless, the record[s] will bear out that a copy of the order of
September 11, 2003 was mailed to the defendant at his last known address but
it was not claimed. (emphasis supplied)

As is readily apparent, the September 11, 2003 order did not limit itself to
permitting respondent to present its evidence ex parte but in effect issued an order
of default. But the trial court could not validly do that as an order of default can be
made only upon motion of the claiming party. [15] Since no motion to declare
petitioner in default was filed, no default order should have been issued.

To pursue the matter to its logical conclusion, if a party declared in default is

entitled to notice of subsequent proceedings, all the more should a party who has
not been declared in default be entitled to such notice. But what happens if the
residence or whereabouts of the defending party is not known or he cannot be
located? In such a case, there is obviously no way notice can be sent to him and
the notice requirement cannot apply to him. The law does not require that the
impossible be done.[16] Nemo tenetur ad impossibile. The law obliges no one to
perform an impossibility.[17] Laws and rules must be interpreted in a way that they
are in accordance with logic, common sense, reason and practicality.[18]

Hence, even if petitioner was not validly declared in default, he could not
reasonably demand that copies of orders and processes be furnished him. Be that as
it may, a copy of the September 11, 2003 order was nonetheless still mailed to
petitioner at his last known address but it was unclaimed.

CORRECTNESS OF
NON-ADMISSION OF ANSWER

Petitioner failed to file his answer within the required period. Indeed, he
would not have moved for the admission of his answer had he filed it on time.
Considering that the answer was belatedly filed, the trial court did not abuse its
discretion in denying its admission.

Petitioners plea for equity must fail in the face of the clear and express
language of the rules of procedure and of the September 11, 2003 order regarding
the period for filing the answer. Equity is available only in the absence of law, not
as its replacement.[19] Equity may be applied only in the absence of rules of
procedure, never in contravention thereof.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.
 RENATO C. CORONA

THIRD DIVISION

[G.R. No. 146703. November 18, 2004]

SUNRISE MANNING AGENCY, INC., petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION and RUEL ZARASPE, respondents.

DECISION
CARPIO MORALES, J.:

From the Court of Appeals Decision of August 4, 2000 and Resolution of January
11, 2001 denying petitioners Motion for Reconsideration thereof, the present Petition for
Review onCertiorari was lodged.
Private respondent Ruel Zaraspe was hired as Chief Cook of petitioners vessel
M.V. Nikolaos commencing on December 18, 1995.
On June 22, 1996, private respondents services were terminated.
By petitioners claim, private respondent had, from the start of his employment,
showed signs of deviant behavior. Mentioned by petitioner as undesirable acts of
private respondent involving insubordination, inefficiency and neglect of duty, and
theft, are as follows:

. . . his abrasive character was the subject of conversation as he would figure in near
violent confrontations with his fellow workers; that in January 1996, Chief Mate
Berdanilo caught him lying in bed in his cabin at lunch time and told him to get up
and make himself busy; that in the presence of twenty (20) other seamen, complainant
told to mind his own business and locked himself in his cabin; that when the Chief
Mate was informed of the incident, Master Captain Dimos told the Chief Mate to give
complainant time to adjust to his work environment; that complainant was caught
several times drinking beer even in the presence of the officers; that even his work
attitude deteriorated; that in February 1996, Chief Engineer Simiriotis caught him
roaming around the vessel and chatting when he was supposed to be cooking for the
crew; that when the Chief Engineer came closer to ask him if food was ready,
complainant smelled of liquor; that instead of answering, complainant threw a roll of
toilet paper at the Chief Engineers face; that it was learned that complainant had just
spent hours in the comfort room vomiting because of heavy drinking; that when the
Captain talked to complainant about his work attitude, he retorted that he was the
victim of all the incidents and it was the others who should be reprimanded; that
complainant left the vessel several times without permission in violation of a strictly
enforced rule; that when the Master of the vessel asked complainant why there was no
bread for breakfast, complainant retorted that he should look in the refrigerator as he
did not feel like cooking; that complainant was warned by the Master that anymore
insubordination will be dealt with severity; that for several weeks, packs of cigarettes
were reported missing and complainant who does the inventory of ship supplies
reported that the crew were consuming the missing cigarettes by exceeding their
consumption list; that during one inspection, the missing cigarettes were found in
complainants cabinet; that when asked on the spot, complainant merely replied that it
was a ploy by someone to discredit him but he would not specify; that the Master
started an investigation and it was gathered that complainant was responsible for the
pilferage; that the captain told complainant that he did not merely violate the rules but
committed a crime and was terminated; that complainant was terminated for cause for
violation of company rules and regulations, willful disobedience and insubordination
and willful breach of trust; that he was accorded due process of law; and that he is not
entitled to the unexpired portion of his contract and his other money claims. [1]

Petitioner claims that while it was initially lenient toward private respondent, he
subsequently committed intolerable offenses, the last of which was theft, thus
compelling the captain of the vessel to terminate his services on June 22, 1996.
Aggrieved by his dismissal, private respondent filed an illegal dismissal case with
the National Labor Relations Commission (NLRC). The case was assigned to Labor
Arbiter Edgardo M. Madriaga who, by decision of June 4, 1998, found the dismissal
legal and accordingly dismissed the complaint.
On appeal by private respondent, the NLRC, by Resolution of December 18, 1998,
reversed the Labor Arbiters decision. Petitioner filed a Motion for Reconsideration
which only raised the procedural issue of private respondents failure to serve it a copy
of his memorandum of appeal. This motion was denied by Resolution of June 22, 1999.
Petitioner thereupon filed on August 17, 1999 a petition for certiorari with the Court
of Appeals seeking to vacate the above-mentioned resolutions of the NLRC. By
Decision of August 4, 2000, the Court of Appeals affirmed the resolutions of the NLRC.
On the procedural issue, the appellate court held that private respondents failure to
furnish petitioner a copy of his memorandum of appeal was not a jurisdictional defect
that would bar the appeal as to render the Labor Arbiters decision final and executory.
On the merits, the same court held that petitioner failed to satisfy the burden of proving
that private respondent was terminated for a valid cause and in accordance with due
process:
As already pointed out by the NLRC, petitioner failed to present sufficient evidence to
prove that private respondent committed the imputed acts. Neither an affidavit nor
any piece of company record was submitted before the NLRC.

Verily, when there is no showing of a clear, valid, and legal cause for the termination
of employment, the law considers the matter as a case of illegal dismissal and the
burden is on the employer to prove that the termination was for valid and authorized
cause. (Valiant Machinery and Metal Corp. v. National Labor Relations Commission,
252 SCRA 369 [1996])

xxx

To be validly effected, the dismissal must observe the twin requirements of due
process notice and hearing. The employer has the burden of proving that the former
has been served with two notices: (1) one to apprise him of the particular acts or
omissions for which his dismissal is sought and (2) the other to inform him of his
employers decision to dismiss him. x x x In the case before us, the record is bereft
of any showing that formal notice of the charge was given to private respondent prior
to his dismissal.[2]

Petitioners Motion for Reconsideration of the appellate courts decision was denied
by Resolution of January 11, 2001, hence, the present petition.
In seeking the reversal of the challenged Decision and Resolution of the Court of
Appeals, petitioner argues that the NLRC resolutions are null and void, (1) the Labor
Arbiters decision having become final and executory because the reglementary period
was not stopped by private respondents appeal owing to his failure to serve a copy of
his memorandum of appeal upon petitioner, and (2) they having been rendered in
violation of petitioners right to due process as it was not given the opportunity to refute
private respondents allegations in his memorandum of appeal.
Public and private respondents do not deny that petitioner was not served a copy of
private respondents memorandum of appeal. What is disputed is the legal
consequence thereof.
In support of its position that by private respondents failure to serve a copy of his
memorandum upon petitioner, the running of the reglementary period to appeal was not
tolled, petitioner cites Section 3(a), Rule VI of the NLRC Rules of Procedure, viz:

Requisites for Perfection of Appeal. (a) The appeal shall be filed within the
reglementary period as provided in Section 1 of this Rule; shall be under oath with
proof of payment of the required appeal fee and the posting of a cash or surety bond
as provided in Section 5 of this Rule; shall be accompanied by a memorandum of
appeal xxx and proof of service on the party of such appeal.
A mere notice of appeal without complying with the other requisites aforestated shall
not stop the running of the period of perfecting an appeal. (Underscoring supplied)

Petitioners position does not lie. It has long been settled that mere failure to serve
a copy of a memorandum of appeal upon the opposing party does not bar the NLRC
from entertaining an appeal. In Pagdonsalan v. NLRC, this Court held:
[3]

The first issue raised herein is not of first impression. In J.D. Magpayo Customs
Brokerage v. NLRC (118 SCRA 646), this Court ruled that the appellant's failure to
furnish copy of his memorandum appeal to respondent is not a jurisdictional defect,
and does not justify dismissal of the appeal. Thus,

The failure to give a copy of the appeal to the adverse party was a mere formal lapse,
an excusable neglect. Time and again We have acted on petitions to review decisions
of the Court of Appeals even in the absence of proof of service of a copy thereof to the
Court of Appeals as required by Section 1 of Rule 45, Rules of Court. We act on the
petitions and simply require the petitioners to comply with the rule.

Jurisprudential support is not absent to sustain Our action. In Estrada vs. National
Labor Relations Commission, G.R. 57735, March 19, 1982, 112 SCRA 688, this
Court set aside the order of the NLRC which dismissed an appeal on the sole ground
that the appellant had not furnished the appellee a memorandum of appeal contrary to
the requirements of Article 223 of the New Labor Code and Section 9, Rule XIII of its
Implementing Rules and Regulations.

The same rule was reiterated in Carnation Phil. Employees Labor Union-FFW v.
NLRC (G.R. No. 64397, promulgated October 11, 1983). (Underscoring supplied)

As for petitioners claim that the NLRC resolutions are void for having been
rendered in violation of its right to due process, petitioner cites the case of Philippine
National Construction Corporation vs. NLRC wherein this Court held:
[4]

x x x It appears that petitioner was not a participant in the appeal interposed by private
respondents. Apparently, such non-participation was never petitioners choice as
the record is bereft of any indication that petitioner was ever informed or notified of
private respondents appeal. There is no proof that petitioner was furnished a copy of
private respondents Memorandum of Appeal, nor was it required to comment
thereon. No reference is made whatsoever in the NLRC Decision to any argument,
position or comment raised by petitioner in response to the appeal. That petitioner was
denied due process is well-substantiated. (Underscoring supplied)

This case is not analogous to the one at bar, however. For even if petitioner was not
furnished a copy of private respondents memorandum of appeal, it eventually became
a participant in the proceedings on appeal when it filed a motion for reconsideration of
the NLRC Decision, unlike the petitioner in Philippine National Construction.
More in point is the case of Estrada v. NLRC (cited in Pagdonsalan) where the
[5]

respondent-employer, who was likewise not furnished a copy of the memorandum of

appeal, filed a motion for reconsideration of the NLRC resolution. In ruling out denial of
due process, this Court held:
xxx

Neither can private respondent validly complain that it has been denied its right to due
process by having been allegedly deprived of the opportunity to answer petitioner's
appeal on account of the latter's failure to furnish the former with a copy of his
memorandum of appeal. Since the entire record of the case on appeal is open for
review by the NLRC, the absence of an answer or opposition to the appeal would not
really have a significant bearing on the adjudication of the case, as would otherwise
perhaps constitute a denial of private respondent's right to due process. Besides,
private respondent had already the opportunity to answer petitioner's appeal when he
filed a motion for reconsideration of the earlier decision of the NLRC. Significantly,
however, said respondent never touched on the merits of the case in his
aforementioned motion for reconsideration. Instead, it relied solely on
technicality to oppose petitioner's appeal which thereby reasonably creates the
impression that its case is weak as in fact it is. (Emphasis and underscoring
supplied)

Considering that the entire record of a case on appeal is open for review by the
NLRC, and that herein petitioner was afforded a fair opportunity to be heard when it filed
a motion for reconsideration after receiving a copy of the first NLRC resolution, it cannot
validly claim that it was deprived of due process. Petitioners assertion that its motion
solely questioned private respondents failure to serve a copy of his memorandum only[6]

strengthens the pararellism between the present case and Estrada and further
undermines its position. In limiting its motion for reconsideration to procedural issues,
petitioner effectively waived its opportunity to be heard on the merits of the case. It was
thus not deprived of its right to due process which this Court in Paat v. Court of
Appeals discoursed on as follows:
[7]

x x x Due process does not necessarily mean or require a hearing, but simply an
opportunity or right to be heard. One may be heard, not solely by verbal presentation
but also, and perhaps many times more creditably and practicable than oral argument,
through pleadings. In administrative proceedings moreover, technical rules of
procedure and evidence are not strictly applied; administrative process cannot be fully
equated with due process in its strict judicial sense. Indeed, deprivation of due
process cannot be successfully invoked where a party was given the chance to be
heard on his motion for reconsideration, as in the instant case, when private
respondents were undisputedly given the opportunity to present their side when they
filed a letter of reconsideration dated June 28, 1989 which was, however, denied in an
order of July 12, 1989 of Executive Director Baggayan. In Navarro III vs. Damasco,
we ruled that:

The essence of due process is simply an opportunity to be heard, or as applied to

administrative proceedings, an opportunity to explain one's side or an opportunity to
seek a reconsideration of the action or ruling complained of. A formal or trial type
hearing is not at all times and in all instances essential. The requirements are satisfied
when the parties are afforded fair and reasonable opportunity to explain their side of
the controversy at hand. What is frowned upon is the absolute lack of notice or
hearing. (Underscoring supplied)

WHEREFORE, the petition is DENIED.

Costs against petitioner.
SO ORDERED.
Panganiban, (Chairman), and Garcia, JJ., concur.
Sandoval-Gutierrez, J., no part. Chair of the CA Div. which rendered the assailed
Decision.
Corona, J., on leave.

[1]
Rollo at 37-39.
[2]
Id. at 42-43.
[3]
127 SCRA 463 (1984).
[4]
292 SCRA 266 (1998).
[5]
112 SCRA 688 (1982).
[6]
Rollo at 190.
[7]
266 SCRA 167 (1997).

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 106771 November 18, 1994

ALHAMBRA INDUSTRIES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and DANILO RUPISAN, respondents.

Hofilea, Guingona & Sedigo for petitioner.

Pedro T. Molo for private respondent.

BELLOSILLO, J.:

TODAY employment is no longer just an ordinary human activity. For most families the main source
of their livelihood, employment has now leveled off with property rights which no one may be
deprived of without due process of law.

Termination of employment is not anymore a mere cessation or severance of contractual relationship

but an economic phenomenon affecting members of the family. This explains why under the broad
principles of social justice the dismissal of employees is adequately protected by the laws of the
state. Hence, Art. 277, par. (b), of theLabor Code of the Philippines, as amended by Sec. 33, R.A.
6715, provides

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 causes 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. Any decision taken by the employer shall be without prejudice to the
right of the worker to contest the validity or legality of his dismissal by filing a
complaint with the regional branch of the National Labor Relations Commission. The
burden of proving that the termination was for a valid or authorized cause shall rest
on the employer. The Secretary of Labor and Employment may suspend the effects
of the termination pending resolution of the dispute in the event of a prima
facie finding by the appropriate official of the Department of Labor and Employment
before whom such dispute is pending that the termination may cause a serious labor
dispute or is in implementation of a mass lay-off.

Rule XIV, Book V, of the Omnibus Rules Implementing the Labor Code outlines the procedure for
termination of employment

Sec. 1. Security of tenure and due process. No worker shall be dismissed except
for a just or authorized cause provided by law and after due process.

Sec. 2. Notice of Dismissal. Any employer who seeks to dismiss a worker shall
furnish him a written notice stating the particular acts or omissions constituting the
grounds for his dismissal. In cases of abandonment of work, the notice shall be
served at the worker's last known address.
 xxx xxx xxx

Sec. 5. Answer and hearing. The worker may answer the allegations stated
against him in the notice of dismissal within a reasonable period from receipt of such
notice. The employer shall afford the worker ample opportunity to be heard and to
defend himself with the assistance of his representatives, if he so desires.

Sec. 6. Decision to dismiss. The employer shall immediately notify a worker in

writing of a decision to dismiss him stating clearly the reasons therefor.

Sec. 7. Right to contest dismissal. Any decision taken by the employer shall be
without prejudice to the right of the worker to contest the validity or legality of his
dismissal by filing a complaint with the Regional Branch of the Commission.

xxx xxx xxx

Sec. 11. Report on dismissal. The employer shall submit a monthly report to the
Regional Office having jurisdiction over the place of work all dismissals effected by
him during the month, specifying therein the names of the dismissed workers, the
reasons for their dismissal, the dates of commencement and termination of
employment, the positions last held by them and such other information as may be
required by the Ministry (Department) for policy guidance and statistical purposes.

We declared in Salaw v. NLRC 1

Under the Labor Code, as amended, the requirements for the lawful dismissal of an
employee by his employer are two-fold: the substantive and the procedural. Not only
must the dismissal be for a valid or authorized cause as provided by law (Articles
279, 281, 282-284, New Labor Code), but the rudimentary requirements of due
process notice and hearing must also be observed before an employee may be
dismissed. One does not suffice; without their concurrence, the termination would, in
the eyes of the law, be illegal (San Miguel Corporation v. NLRC, G.R. No. 78277,
May 12, 1989, 173 SCRA 314).

The inviolability of notice and hearing for a valid dismissal of an employee can not be
overemphasized. Those twin requirements constitute essential elements of due
process in cases of employee dismissal. The requirement of notice is intended to
inform the employee concerned of the employer's intent to dismiss him and the
reason for the proposed dismissal; on the other hand, the requirement of hearing
affords the employee the opportunity to answer his employer's charges against him
and accordingly to defend himself therefrom before dismissal is effected. Neither one
of these two requirements can be dispensed with without running afoul of the due
process requirement of the Constitution (Century Textile Mills, et al. v. NLRC, et al.,
No. 77859, May 25, 1988, 161 SCRA 528).

On 27 June 1987, petitioner Alhambra Industries, Inc. (ALHAMBRA for brevity), a Filipino cigar and
cigarette manufacturing and distribution company, employed private respondent Danilo C. Rupisan
as salesman on a six-month probationary basis. From 9-12 December 1989, ALHAMBRA conducted
a surprise audit of the records of Rupisan. He was then called to the Head Office on 3 January 1990
where alleged violations of company rules purportedly committed by him were brought to his
attention. On 8 January 1990, Rupisan was placed under a one-month preventive suspension for
serious violations of company policies, rules and regulations, as reflected in the results of the
surprise audit.

On 22 January 1990, Rupisan protested his suspension, reiterating vehement denial of the charges
against him and exposing the threat of termination at their meeting of 3 January 1990. He alleges
that as of
30 December 1989 the charges against him had become academic when he was given a clearance
of all his accountabilities.

On 6 February 1990, a day before the end of his suspension, ALHAMBRA wrote Rupisan terminating
his services effective 8 February 1990.

On 23 March 1990, Rupisan sued ALHAMBRA for illegal dismissal and unpaid wages or
commissions. The suit was later amended on 24 April 1990 to include charges of illegal suspension
and damages.

After trial, Labor Arbiter Donato G. Quinto, Jr., found that the termination of Rupisan was for a just
cause. 2However, he also ruled that there was a violation of Rupisan's right to due process, particularly
the failure of ALHAMBRA to furnish him copy of the audit report on which his dismissal was based.
Consequently, judgment was rendered directing ALHAMBRA to pay Rupisan P23,040.00 in backwages
covering the period 8 February to 19 November 1990, P600.00 in unpaid salary from 1-7 January 1990,
P2,650.00 for separation pay in lieu of reinstatement, and commissions for the sales generated in the
months of November and December 1989.

Both parties appealed to respondent National Labor Relations Commission which on 29 May 1992
affirmed the Labor Arbiter's findings of lack of due process but added that since Rupisan could have
explained fully the charges against him had he been given the chance to do so, his reinstatement
was instead ordered in lieu of separation pay.

In this extraordinary recourse under Rule 65 of the Rules of Court, ALHAMBRA seeks a declaration
that Rupisan was validly dismissed and, in any case, he should no longer be reinstated but paid
separation pay instead. In his comment, Rupisan also seeks payment of separation pay and no
longer reinstatement.

The crux of the controversy is whether respondent NLRC committed grave abuse of discretion in
sustaining the finding of the Labor Arbiter that Rupisan was illegally dismissed but directing at the
same time his reinstatement for the reason that he could have explained the charges had he been
given the opportunity to be heard. NLRC however appears to have skirted the issue on the existence
of a just cause for dismissal and disposed of the case only on the basis of absence of due process.

The error is consequential. A termination without just cause entitles a worker to reinstatement
regardless of whether he was accorded due process. On the other hand, termination of a worker for
cause, even without procedural due process, does not warrant reinstatement, but the employer
incurs liability for damages.

Since the Labor Arbiter found a valid ground for dismissal, taking into consideration the controverting
evidence of the parties, which finding was not set aside by NLRC, the latter was in grave error when
it directed reinstatement. Where, on the basis of the evidence of the opposing parties the validity of
the dismissal is determinable at the level of the Labor Arbiter, the latter should resolve that issue.
And if the Labor Arbiter finds just cause in the termination, reinstatement would no longer serve any
purpose. After all, a finding by the Labor Arbiter as to the validity of the ground for dismissal is much
more impartial and trustworthy than a determination by the employer who assumes the role of
accuser and judge at the same time.

To order reinstatement and compel the parties to start the procedure from step one would be
circuitous because almost invariably that same issue of validity of the ground of dismissal would be
brought back to the Labor Arbiter for adjudication. To avoid this runabout process, we laid down
in Wenphil Corporation v. NLRC 3 that an otherwise justly grounded termination without procedural due
process would only sanction payment of damages

The failure of petitioner to give private respondent the benefit of a hearing before he
was dismissed constitutes an infringement of his constitutional right to due process of
law and equal protection of the laws (BLTB Bus Co. v. Court of Appeals, 71 SCRA
470). The standards of due process in judicial as well as administrative proceedings
have long been established. In its bare minimum due process of law simply means
giving notice and opportunity to be heard before judgment is rendered (Lopez v.
Director of Lands, 47 Phil. 23) . . .

However, it is a matter of fact that when the private respondent

filed a complaint against petitioner he was afforded the right to an investigation by
the labor arbiter. He presented his position paper as did the petitioner . . . The labor
arbiter concluded that the dismissal of private respondent was for just cause . . . The
court is bound by this finding of the labor arbiter . . .

By the same token, the conclusion of the public respondent NLRC on appeal that
private respondent was not afforded due process before he was dismissed is binding
on this Court. Indeed, it is well-taken and supported by the records. However, it
cannot justify a ruling that private respondent should be reinstated with backwages
as the public respondent NLRC so decreed. Although belatedly, private respondent
was afforded due process before the labor arbiter wherein the just cause of his
dismissal had been established. With such finding, it would be arbitrary and unfair to
order his reinstatement with backwages.

The Court holds that the policy of ordering the reinstatement to the service of an
employee without loss of seniority and the payment of his wages during the period of
his separation until his actual reinstatement . . . when it appears he was not afforded
due process, although his dismissal was found to be for just and authorized cause in
an appropriate proceeding in the Ministry of Labor and Employment, should be
reexamined. It will be highly prejudicial to the interests of the employer to impose on
him the services of an employee who has been shown to be guilty of the charges that
warranted his dismissal from employment. Indeed, it will demoralize
the rank and file if the undeserving, if not undesirable, remains in the service . . .

However, the petitioner must nevertheless be held to account for failure to extend to
private respondent his right to an investigation before causing his dismissal. The rule
is explicit as above described. The dismissal of an employee must be for just or
authorized cause and after due process(Section 1, Rule XIV, Implementing
Regulations of the Labor Code). Petitioner committed an infraction of the second
requirement. Thus, it must be imposed a sanction for its failure to give a formal notice
and conduct an investigation as required by law before dismissing petitioner from the
employment. Considering the circumstances of this case petitioner must indemnify
the private respondent the amount of P1,000.00. The measure of this award depends
on the facts of each case and the gravity of the omission committed by the employer.
In the case at bench, the decision to dismiss Rupisan did not state the reason for his termination, in
disregard of Sec. 6, Rule XIV, Book V, of the Omnibus Rules. But, having been found guilty of
serious misconduct, 4 private respondent cannot demand reinstatement nor separation pay. However, he
is entitled to damages for petitioner's non-observance of procedural due process which is not only
required by statute but enshrined in the Constitution. For this purpose, the amount of P10,000.00 is
considered fair, reasonable and realistic. 5

WHEREFORE, the petition is GRANTED and the assailed decision of NLRC dated 29 May 1992
is SET ASIDE. The decision of Labor Arbiter Donato G. Quinto, Jr., dated 19 November 1990
is REINSTATED except as to the award of separation pay which is deleted. In addition, petitioner is
ordered to pay private respondent Danilo Rupisan P10,000.00 for having been denied procedural
due process.

SO ORDERED.

Padilla, Davide, Jr., Quiason and Kapunan, JJ., concur.

#Footnotes

1 G.R. No. 90786, 27 September 1991, 202 SCRA 7, 12.

2 The Labor Arbiter explained: "Complainant . . . admitted that (Alhambra) conducted

an audit for his accountabilities . . . but what (Rupisan) is insisting is that he was not
furnish(ed) a copy of this audit report and denies having committed the irregularities
imputed to have been committed by him. But complainant as shown in his position
paper, had admitted to have committed most of the charges leveled against him but
tried to justify the same . . ." As found by the arbiter, the charge of "(i)ncurring a cash
shortage in the amount of P7,416.88" was admitted by Rupisan explaining that "he
had reimbursable expenses" due from Alhambra. Further, the shortage is evident
from Rupisan's Accountability Report for the month of November and December
1989 he himself presented.

As to the charge that he "(k)ept company-owned stocks worth P9,856.93 in his

residence which were not reflected in the report of his stock accountabilities."
Rupisan alleged that the arrangement of allowing a salesman "to keep some stocks
at their residence without yet including the same in their report of stock accountability
. . . is a common and tolerated practice" since "it is oftentimes difficult to withdraw
stock from (Alhambra's) field bodega."

On the charge that "(h)e lost the original copies for collection of Invoices Nos. 7986
and 7990 in the total amount of P6,844.65," Rupisan retorted, "who is the person
who has never lost a thing?"

The charge that "(h)e over-reported in his account charge sales Invoices Nos. 85256
and 44488" was never disputed by Rupisan.

As regards the charges that "(h)e extended credit to V. Chan store for P22,542.00
per Invoice No. 7991 despite his knowledge that it still had an uncleared bounced
check with him in the amount of P15,000.00 and . . . to several stores for more than
30 days although he is aware that this is strictly prohibited under the company
policy," Rupisan claimed that these "have long been the practice in the company and
such were tolerated to (sic) by the management."

The Labor Arbiter then concluded that the charges find basis for termination under
Art. 282 of the Labor Code, specifically, the first charge is "fraud," the second and
third, are considered "neglect;" the fourth is "serious misconduct;" and, the last two
fall under "willful disobedience."

3 G.R. No. 80587, 8 February 1989, 170 SCRA 69, 74-76.

4 See Note 2.

5 See Reta v. NLRC, 27 May 1994.