G.R. No. L-69870 & G.R. No. 70295 November 29, 1988
NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ, petitioners, vs. THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS COMMISSION, MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND EUGENIA C. CREDO, respondents. EUGENIA C. CREDO, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES CORPORATION AND ARTURO L. PEREZ, respondents.

FACTS

Eugenia C. Credo, an employee of the National Service Corporation (NASECO) since 1975 and later its Chief of Property and Records, was administratively charged in November 1983 for alleged discourtesy and failure to follow a superior’s instructions. On November 7, 1983, after a meeting with management, she was placed on a 15-day “forced leave.” Before this leave expired, Credo filed a complaint for lack of due process. While she was on leave, NASECO’s Committee on Personnel Affairs deliberated on past infractions and resolved on November 22, 1983, that she had committed several offenses, recommending her termination.
On December 1, 1983, Credo was called to a meeting, informed of the charges (which the committee had already adjudicated days prior), and asked to explain. Due to her alleged failure to explain, she was handed a Notice of Termination dated November 24, 1983, effective December 1, 1983. She subsequently filed a supplemental complaint for illegal dismissal. The Labor Arbiter dismissed her complaint but awarded separation pay. Both parties appealed to the NLRC, which ordered her reinstatement with six months’ backwages. Both parties filed motions for reconsideration, which were denied, leading to these consolidated petitions for certiorari.

ISSUE

The primary issue is whether Eugenia C. Credo was illegally dismissed, specifically focusing on whether NASECO complied with the procedural and substantive due process requirements for termination under the Labor Code.

RULING

The Supreme Court ruled that Credo was illegally dismissed. Procedurally, NASECO violated the twin-notice requirement under the Labor Code’s implementing rules. The law mandates that an employer must furnish the employee with a written notice stating the specific grounds for termination and give the employee ample opportunity to be heard and defend herself. The Court found that NASECO’s process was fatally flawed. The committee’s resolution finding Credo guilty was made on November 22, 1983, before she was formally given notice of the charges and a hearing on December 1, 1983. This rendered the subsequent hearing a mere formality, as the decision to terminate had already been made. This constituted a denial of procedural due process.
Substantively, the Court found that NASECO failed to prove by substantial evidence that Credo’s dismissal was for a just cause. The alleged infractions were not convincingly established. Furthermore, the Court noted that management had previously tolerated or condoned some of her past behavior by not taking earlier decisive action, which weakened the claim that her recent acts warranted the ultimate penalty of dismissal. The power to dismiss is a prerogative of management, but it must be exercised within the bounds of law and equity, with the employer carrying the burden of proof. NASECO did not meet this burden. Consequently, the NLRC’s finding of illegal dismissal was upheld. However, the Court modified the NLRC’s award. Citing the precedent set in Wenphil Corporation v. NLRC, where an employer fails to observe due process but the dismissal is for a just cause, separation pay may be awarded in lieu of reinstatement. The Court found the relationship between Credo and NASECO