G.R. No. 85919 . March 23, 1990.
JOSE A. TAN, JR., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and CARNATION PHILS., INC., respondents.

FACTS

Jose A. Tan, Jr., a territory salesman, was preventively suspended by Carnation Philippines, Inc. on April 26, 1984, pending an investigation into alleged irregularities in his sales area. After the 30-day suspension lapsed, the company refused to reinstate him. On June 23, 1984, Carnation sent Tan a letter requiring him to explain why he should not be terminated for cause, citing various acts such as falsifying sales orders, diverting stocks to unauthorized warehouses, and failing to account for returned goods. Tan repeatedly requested a copy of the audit report detailing these charges to prepare his defense, but the company refused to furnish it. He submitted an explanation on September 19, 1984, but had already received a termination letter dated August 20, 1984.
The Labor Arbiter found the dismissal illegal due to lack of due process and ordered Tan’s reinstatement with full backwages. The National Labor Relations Commission (NLRC) modified this decision, acknowledging the existence of just cause for dismissal but ruling that the termination was procedurally defective. The NLRC sustained the dismissal but awarded Tan separation pay as a penalty against the employer for the due process violation.

ISSUE

Whether the dismissal of Jose A. Tan, Jr. was valid, considering the alleged existence of just cause but a conceded denial of procedural due process.

RULING

The Supreme Court granted the petition, setting aside the NLRC decision and reinstating the Labor Arbiter’s ruling with modifications. The Court held that Tan was illegally dismissed for failure to accord him procedural due process. While the employer may have had grounds to dismiss based on alleged fraud and loss of confidence, the termination process was fatally flawed. Sections 2 and 5 of the Implementing Rules of Batas Pambansa Blg. 130 require the employer to furnish the worker a written notice stating the particular acts constituting the grounds for dismissal and to afford the worker ample opportunity to be heard and defend himself.
Here, Tan was denied adequate notice because Carnation refused to provide him a copy of the critical audit report that contained the specifics of the charges, despite his repeated requests. This prevented him from preparing an intelligent defense. Furthermore, the company dismissed him without even waiting for his submitted explanation. The law recognizes the employer’s right to dismiss for just cause but mandates strict compliance with due process requirements. The denial of this right rendered the dismissal illegal. Consequently, Tan was entitled to reinstatement with backwages. However, due to the evident loss of confidence and the likely impracticality of reinstatement, the Court awarded separation pay in lieu of reinstatement. He was granted backwages for three years and separation pay equivalent to one month’s salary for every year of service.