Case Digest: New Puerto & Lim v. Lopez & Gavan

G.R. No. 169999 : July 26, 2010




Petitioner New Puerto Commercial hired respondent Felix Gavan (Gavan) as a delivery panel driver on February 1, 1999 and respondent Rodel Lopez (Lopez) as roving salesman on October 12, 1999. Petitioner Richard Lim is the operations manager of New Puerto Commercial.

Under a rolling store scheme, petitioners assigned respondents to sell goods stocked in a van on cash or credit to the sari-sari stores of far-flung barangays and municipalities outside Puerto Princesa City, Palawan.Respondents were duty-bound to collect the accounts receivables and remit the same upon their return to petitioners store on a weekly basis.

On November 3, 2000, respondents filed a Complaintfor illegal dismissal and non-payment of monetary benefits against petitioners with the Regional Office of the Department of Labor and Employment in Puerto Princesa City.On November 20, 2000, a conciliation conference was held but the parties failed to reach an amicable settlement. As a result, the complaint was endorsed for compulsory arbitration at the Regional Arbitration Branch of the NLRC on February 13, 2001.

Previously or on November 28, 2000, petitioners sent respondents notices to explain why they should not be dismissed for gross misconduct based on (1) the alleged misappropriation of their sales collections, and (2) their absence without leave for more than a month.The notice also required respondents to appear before petitioners lawyer on December 2, 2000 to give their side with regard to the foregoing charges.Respondents refused to attend said hearing.

On December 6, 2000, petitioners filed a complaint for three counts of estafa before the prosecutor's office against respondents in connection with the alleged misappropriation of sales collections.

Thereafter, petitioners sent another set of notices to respondents on December 7, 2000 to attend a hearing on December 15, 2000 but respondents again refused to attend.On December 18, 2000, petitioners served notices of termination on respondents on the grounds of gross misconduct and absence without leave for more than one month.

On February 5, 2001, an information for the crime of estafa was filed by the city prosecutor against respondents with the Municipal Trial Court in Puerto Princesa City.

On August 29, 2002, Labor Arbiter Cresencio G. Ramos, Jr. rendered a Decisiondismissing the complaint for illegal dismissal but ordering petitioners to pay respondents proportionate 13thmonth pay.

On October 28, 2003, the NLRC rendered a Decision affirming the ruling of the Labor Arbiter. The CA, in its June 2, 2005 Decision, affirmed with modification the ruling of the NLRC. From this decision, only petitioners appealed.
Whether the Court of Appeals erred in construing that the investigation held by petitioners is an afterthought; and, 
Whether the Court of Appeals erred in awarding the sum of P30, 000.00 each to the respondents as nominal damages.


At the outset, we note that respondents did not appeal from the decision of the CA which found that, as to the issue of substantive due process, the dismissal was valid because it was based on just causes ( i.e., grave misconduct and loss of trust and confidence) due to respondents misappropriation of their sales collections.Thus, the only proper issue for our determination, as raised in the instant petition, is whether respondents were denied procedural due process justifying the award of nominal damages in accordance with the ruling in Agabon v. National Labor Relations Commission .


In termination proceedings of employees, procedural due process consists of the twin requirements of notice and hearing.The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second informs the employee of the employers decision to dismiss him.The requirement of a hearing is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.

As we explained in Perez v. Philippine Telegraph and Telephone Company:

An employees right to be heard in termination cases under Article 277 (b) as implemented by Section 2 (d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the charges against him and to submit evidence in support thereof.

A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy. To be heard does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings. Therefore, while the phrase ample opportunity to be heard [in Article 277 of the Labor Code] may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal trial-type hearing, although preferred, is not absolutely necessary to satisfy the employee's right to be heard.

In the instant case, the appellate court ruled that there are two conflicting versions of the events and that, in a petition for certiorari under Rule 65 of the Rules of Court, the courts are precluded from resolving factual issues. Consequently, the factual findings of the Labor Arbiter, as affirmed by the NLRC, that petitioners stopped reporting from work and misappropriated their sales collection are binding on the courts.However, the CA found that respondents were denied their right to procedural due process because the investigation held by petitioners was an afterthought considering that it was called after they had notice of the complaint filed before the labor office in Palawan.

Indeed, appellate courts accord the factual findings of the Labor Arbiter and the NLRC not only respect but also finality when supported by substantial evidence. The Court does not substitute its own judgment for that of the tribunal in determining where the weight of evidence lies or what evidence is credible.It is not for the Court to re-examine conflicting evidence, re-evaluate the credibility of the witnesses nor substitute the findings of fact of an administrative tribunal which has gained expertise in its specialized field.

However, while we agree with the CA that the labor tribunals factual determinations can no longer be disturbed for failure of respondents to show grave abuse of discretion on the part of the Labor Arbiter and NLRC, as in fact respondents effectively accepted these findings by their failure to appeal from the decision of the CA, we find that the appellate court misapprehended the import of these factual findings.For if it was duly established, as affirmed by the appellate court itself, that respondents failed to report for work starting from October 22, 2000 for respondent Lopez and October 28, 2000 for respondent Gavan, then at the time of the filing of the complaint with the labor office on November 3, 2000, respondents were not yet dismissed from employment.Prior to this point in time, there was, thus, no necessity to comply with the twin requirements of notice and hearing.

The mere fact that the notices were sent to respondents after the filing of the labor complaint does not, by itself, establish that the same was a mere afterthought.The surrounding circumstances of this case adequately explain why the requirements of procedural due process were satisfied only after the filing of the labor complaint.Sometime in the third week of October 2000, petitioners received information that respondents were not remitting their sales collections to the company.Thereafter, petitioners initiated an investigation by sending one of their trusted salesmen, Bagasala, in the route being serviced by respondents.To prevent a possible cover up, respondents were temporarily reassigned to a new route to service.Subsequently, respondents stopped reporting for work ( i.e., starting from October 22, 2000 for respondent Lopez and October 28, 2000 for respondent Gavan) after they got wind of the fact that they were being investigated for misappropriation of their sales collection, and, on November 3, 2000, respondents filed the subject illegal dismissal case to pre-empt the outcome of the ongoing investigation. On November 18, 2000, Bagasala returned from his month-long investigation in the far-flung areas previously serviced by respondents and reported that respondents indeed failed to remit P2, 257.03 in sales collections.As a result, on November 28, 2000, termination proceedings were commenced against respondents by sending notices to explain with a notice of hearing scheduled on December 2, 2000.As narrated earlier, respondents failed to give their side despite receipt of said notices.Petitioners sent another set of notices to respondents on December 7, 2000 to attend a hearing on December 15, 2000 but respondents again refused to attend.Thus, on December 18, 2000, petitioners served notices of termination on respondents for gross misconduct in misappropriating their sales collections and absence without leave for more than a month.

As can be seen, under the peculiar circumstances of this case, it cannot be concluded that the sending of the notices and setting of hearings were a mere afterthought because petitioners were still awaiting the report from Bagasala when respondents pre-empted the results of the ongoing investigation by filing the subject labor complaint. For this reason, there was sufficient compliance with the twin requirements of notice and hearing even if the notices were sent and the hearing conducted after the filing of the labor complaint. Thus, the award of nominal damages by the appellate court is improper.