Republic of the
KING OF KINGS TRANSPORT, G.R. No. 166208
INC., CLAIRE DELA FUENTE,
and MELISSA LIM, Present:
QUISUMBING, J., Chairperson,
- versus - TINGA, and
VELASCO, JR., JJ.
D E C I S I O N
VELASCO, JR., J.:
Is a verbal appraisal of the charges
against the employee a breach of the procedural due process? This is the main issue to be resolved in this
plea for review under Rule 45 of the
Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela Fuente and Melissa Lim.
Mamac was hired as bus conductor of Don Mariano Transit Corporation (DMTC) on
The KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was registered with DOLE. Respondent was elected KKKK president.
Respondent was required to accomplish a “Conductor’s Trip Report” and submit it to the company after each trip. As a background, this report indicates the ticket opening and closing for the particular day of duty. After submission, the company audits the reports. Once an irregularity is discovered, the company issues an “Irregularity Report” against the employee, indicating the nature and details of the irregularity. Thereafter, the concerned employee is asked to explain the incident by making a written statement or counter-affidavit at the back of the same Irregularity Report. After considering the explanation of the employee, the company then makes a determination of whether to accept the explanation or impose upon the employee a penalty for committing an infraction. That decision shall be stated on said Irregularity Report and will be furnished to the employee.
Upon audit of the
respondent appealed to the National Labor Relations Commission (NLRC). On
WHEREFORE, the decision dated
The other findings are AFFIRMED.
Respondent moved for reconsideration
but it was denied through the
Thereafter, respondent filed a Petition for Certiorari before the CA urging the nullification of the NLRC Decision and Resolution.
The Ruling of the Court of Appeals
Affirming the NLRC, the CA held that there was just cause for respondent’s dismissal. It ruled that respondent’s act in “declaring sold tickets as returned tickets x x x constituted fraud or acts of dishonesty justifying his dismissal.”
Also, the appellate court sustained the finding that petitioners failed to comply with the required procedural due process prior to respondent’s termination. However, following the doctrine in Serrano v. NLRC, it modified the award of PhP 10,000 as indemnification by awarding full backwages from the time respondent’s employment was terminated until finality of the decision.
Moreover, the CA held that respondent is entitled to the 13th-month pay benefit.
Hence, we have this petition.
Petitioner raises the following assignment of errors for our consideration:
Whether the Honorable Court of Appeals erred in awarding in favor of the complainant/private respondent, full back wages, despite the denial of his petition for certiorari.
Whether the Honorable Court of Appeals erred in ruling that KKTI did not comply with the requirements of procedural due process before dismissing the services of the complainant/private respondent.
Whether the Honorable Court of Appeals rendered an incorrect decision in that [sic] it awarded in favor of the complaint/private respondent, 13th month pay benefits contrary to PD 851.
The Court’s Ruling
The petition is partly meritorious.
The disposition of the first assigned error depends on whether petitioner KKTI complied with the due process requirements in terminating respondent’s employment; thus, it shall be discussed secondly.
Non-compliance with the Due Process Requirements
Due process under the Labor Code involves two aspects: first, substantive––the valid and authorized causes of termination of employment under the Labor Code; and second, procedural––the manner of dismissal. In the present case, the CA affirmed the findings of the labor arbiter and the NLRC that the termination of employment of respondent was based on a “just cause.” This ruling is not at issue in this case. The question to be determined is whether the procedural requirements were complied with.
Art. 277 of the Labor Code provides the manner of termination of employment, thus:
Art. 277. Miscellaneous Provisions.––x x x
(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.
Accordingly, the implementing rule of the aforesaid provision states:
SEC. 2. Standards of due process; requirements of notice.––In all cases of termination of employment, the following standards of due process shall be substantially observed:
(a) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.
(b) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him.
(c) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. 
In case of termination, the foregoing notices shall be served on the employee’s last known address.
To clarify, the following should be considered in terminating the services of employees:
(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. “Reasonable opportunity” under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement.
(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment.
In the instant case, KKTI admits that it had failed to provide respondent with a “charge sheet.” However, it maintains that it had substantially complied with the rules, claiming that “respondent would not have issued a written explanation had he not been informed of the charges against him.”
We are not convinced.
First, respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal appraisal of the charges against an employee does not comply with the first notice requirement. In Pepsi Cola Bottling Co. v. NLRC, the Court held that consultations or conferences are not a substitute for the actual observance of notice and hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano, the Court, sanctioning the employer for disregarding the due process requirements, held that the employee’s written explanation did not excuse the fact that there was a complete absence of the first notice.
Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report notifying him of his offense, such would not comply with the requirements of the law. We observe from the irregularity reports against respondent for his other offenses that such contained merely a general description of the charges against him. The reports did not even state a company rule or policy that the employee had allegedly violated. Likewise, there is no mention of any of the grounds for termination of employment under Art. 282 of the Labor Code. Thus, KKTI’s “standard” charge sheet is not sufficient notice to the employee.
Third, no hearing was conducted.
Regardless of respondent’s written explanation, a hearing was still
necessary in order for him to clarify and present evidence in support of his
defense. Moreover, respondent made the
letter merely to explain the circumstances relating to the irregularity in his
Sanction for Non-compliance with Due Process Requirements
As stated earlier, after a finding that petitioners failed to comply with the due process requirements, the CA awarded full backwages in favor of respondent in accordance with the doctrine in Serrano v. NLRC. However, the doctrine in Serrano had already been abandoned in Agabon v. NLRC by ruling that if the dismissal is done without due process, the employer should indemnify the employee with nominal damages.
Thus, for non-compliance with the due process requirements in the termination of respondent’s employment, petitioner KKTI is sanctioned to pay respondent the amount of thirty thousand pesos (PhP 30,000) as damages.
Thirteenth (13th)-Month Pay
Section 3 of the Rules Implementing Presidential Decree No. 851 provides the exceptions in the coverage of the payment of the 13th-month benefit. The provision states:
SEC. 3. Employers covered.––The Decree shall apply to all employers except to:
x x x x
e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned.
Petitioner KKTI maintains that respondent was paid on purely commission basis; thus, the latter is not entitled to receive the 13th-month pay benefit. However, applying the ruling in Philippine Agricultural Commercial and Industrial Workers Union v. NLRC, the CA held that respondent is entitled to the said benefit.
It was erroneous for the CA to apply the case of Philippine Agricultural Commercial and Industrial Workers Union. Notably in the said case, it was established that the drivers and conductors praying for 13th- month pay were not paid purely on commission. Instead, they were receiving a commission in addition to a fixed or guaranteed wage or salary. Thus, the Court held that bus drivers and conductors who are paid a fixed or guaranteed minimum wage in case their commission be less than the statutory minimum, and commissions only in case where they are over and above the statutory minimum, are entitled to a 13th-month pay equivalent to one-twelfth of their total earnings during the calendar year.
On the other hand, in his Complaint, respondent admitted that he was paid on commission only. Moreover, this fact is supported by his pay slips which indicated the varying amount of commissions he was receiving each trip. Thus, he was excluded from receiving the 13th-month pay benefit.
WHEREFORE, the petition is PARTLY GRANTED and the September 16, 2004 Decision of the CA is MODIFIED by deleting the award of backwages and 13th-month pay. Instead, petitioner KKTI is ordered to indemnify respondent the amount of thirty thousand pesos (PhP 30,000) as nominal damages for failure to comply with the due process requirements in terminating the employment of respondent.
PRESBITERO J. VELASCO, JR.
LEONARDO A. QUISUMBING
ANTONIO T. CARPIO CONCHITA CARPIO MORALES
Associate Justice Associate Justice
DANTE O. TINGA
A T T E S T A T I O N
I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
LEONARDO A. QUISUMBING
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
 Rollo, pp. 59-72. The Decision was penned by Associate Justice Delilah Vidallon-Magtolis and concurred in by Associate Justices Eliezer R. Delos Santos and Arturo D. Brion.
 Records, pp. 58-63.
 Rollo, p. 115.
 Rollo, p. 207; original in capital letters.
 Agabon v. National Labor Relations
Commission, GR No. 158693,
 The same provision is also found in Section 2(d) of Rule I of Book VI of the Omnibus Rules Implementing the Labor Code.
 Omnibus Rules Implementing the Labor Code, Book V, Rule XXIII.
 Ruffy v. National Labor Relations
Commission, GR No. 84193,
 Rollo, p. 212.
 Supra note 10
 Supra note 12, at 617.
 “Requiring All Employers to Pay Their Employees a 13th-Month Pay (13th-Month Pay Law),” (1976).
 Records, pp. 2-3.