G.R. No. 86595. April 17, 1989.
PHILIPPINES NATIONAL CONSTRUCTION CORPORATION TOLLWAYS DIVISION, EDUARDO OLAGUER and CESAR D. TEMPLO, petitioners, vs. THE NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION) and ARNULFO H. MACASAET, respondents.

FACTS

Petitioner PNCC dismissed private respondent Arnulfo Macasaet, manager of its OMEECS department, on June 25, 1987, for alleged serious misconduct and dishonesty related to the handling of a cash advance for radio license renewals and overstocking of supplies. Macasaet was placed under preventive suspension upon receipt of the notice of charge and was terminated without being afforded a formal investigation or hearing to defend himself. The Labor Arbiter found the dismissal procedurally defective due to this denial of due process but opined there might have been a lawful cause for dismissal based on an affidavit from a subordinate, Jose Baltazar, regarding the lapsed radio licenses.
On appeal, the NLRC modified the Labor Arbiter’s decision. It found that the Labor Arbiter gravely abused his discretion by relying on Baltazar’s affidavit without giving Macasaet an opportunity to rebut it, constituting another layer of procedural denial. The NLRC also examined the merits, noting Macasaet’s explanation that the increased payment for the licenses was due to NTC fee adjustments and a corporate name change, not penalties from misappropriation. It found the charge of dishonesty unproven and suggested the dismissal was motivated by managerial discord following a change in PNCC presidency.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in ruling that Macasaet was illegally dismissed and in awarding him backwages and separation pay.

RULING

The Supreme Court dismissed the petition, upholding the NLRC’s decision. The legal logic centers on the indispensable requirement of procedural due process in employee termination. The Court affirmed that the right to dismiss must be exercised without being oppressive or abusive. The twin requirements of notice and hearing are essential elements of due process; notice informs the employee of the charges and intended dismissal, while a hearing affords the opportunity to answer and defend. PNCC’s failure to conduct an investigation after the notice of charge constituted a clear denial of this fundamental right, rendering the dismissal illegal from the outset.
The NLRC correctly ruled that such a procedural defect invalidates the dismissal “even if the employer may have had some justifiable grounds.” Furthermore, the Court found the NLRC’s factual determination—that the alleged misconduct was unsubstantiated and, at worst, constituted simple negligence insufficient to warrant dismissal—to be supported by evidence. Given the strained relations, the award of separation pay in lieu of reinstatement, plus backwages from the date of dismissal until the NLRC decision, was deemed proper and in line with jurisprudence. The NLRC’s decision was thus not tainted with grave abuse of discretion but was a correct application of labor law on due process and illegal dismissal.