G.R. No. 97652 -53 October 19, 1999
JOSE H. RUTAQUIO and ERLINDA F. VILLAREAL, petitioners, vs. THE HON. NATIONAL LABOR RELATIONS COMMISSION (Third Division), THE HON. LABOR ARBITER, AMBROCIO B. SISON, RURAL BANK OF BALER, INC., and FLORDELIZA S. CARPIO, respondents.

FACTS

Petitioners Jose H. Rutaquio (Savings Bookkeeper) and Erlinda F. Villareal (Cashier) were employees of respondent Rural Bank of Baler, Inc. On September 15, 1989, the bank’s auditors recommended their reprimand for negligence, citing a cash overage of P7,730.65 under Villareal’s custody and a one-week delay in posting transactions by Rutaquio. On September 29, 1989, the bank’s President, Flordeliza Carpio, issued a resolution requiring their immediate resignation. The petitioners questioned this as illegal dismissal on October 1, 1989. On October 3, 1989, the President formally dismissed them, citing for Rutaquio: fines from the Central Bank for late reports, unbalanced books, and delayed entries; and for Villareal: an unaccounted P10,000.00 check (later recovered) and the cash overage. The petitioners filed an Answer on October 5, 1989, explaining the overage resulted from transactions recorded on subsequent banking days and requesting a hearing. Separate complaints for illegal dismissal were filed before the Labor Arbiter. The Labor Arbiter ruled the dismissals were illegal due to lack of just cause and procedural due process, ordering reinstatement with full backwages. The NLRC reversed this, finding the dismissals valid for loss of trust and confidence. The petitioners filed this Petition for Certiorari.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in ruling that the dismissal of petitioners Jose H. Rutaquio and Erlinda F. Villareal was for a just cause and with due process.

RULING

The Supreme Court GRANTED the petition. The NLRC committed grave abuse of discretion. The dismissals were illegal for lack of just cause and failure to observe procedural due process.
On just cause: The grounds for dismissal (negligence, loss of trust and confidence) were not substantiated by clear and convincing evidence. The cash overage was sufficiently explained by the petitioners as arising from normal banking delays in recording, not misappropriation. The alleged lost check was fully recovered. The fines imposed by the Central Bank pertained to periods before Rutaquio assumed his position or were not directly proven to be solely his fault. The employer failed to establish that the acts constituted willful neglect or breach of trust essential for dismissal.
On due process: The employer failed to comply with the twin-notice requirement. The letter of September 29, 1989, was a demand for resignation, not a notice to explain. The notice of dismissal on October 3, 1989, was issued without granting the petitioners the opportunity for a hearing they explicitly requested on October 5, 1989. This denied them their right to defend themselves.
The Court AFFIRMED the Labor Arbiter’s finding of illegal dismissal but MODIFIED the award. Petitioners were granted full backwages from dismissal until the finality of the decision, separation pay (one month for every year of service) in lieu of reinstatement due to strained relations, and attorney’s fees equivalent to ten percent of the total award.