corporation.

Both the Labor Arbiter and the

respondent NLRC gave credence to the
evidence of the private respondent that he
was illegally dismissed. We are not free to
tamper with their calibration of the weight of
evidence in the absence of a clear showing
SECOND DIVISION that it is arbitrary and bereft of any rational
basis.
[G.R. No. 116813. November 24, 1995]
2. ID.; ID.; PENALTY OF DISMISSAL; TOO
MAGNOLIA CORPORATION AND MR. HARSH. — The penalty of dismissal would be
NATHANIEL E. ORILLAZAREA, SALES too harsh and disproportionate to the
MANAGER, Petitioners, v. NATIONAL offense committed by private respondent,
LABOR RELATIONS COMMISSION AND considering his clean record of ten long
MR. ROMEO A. VESTIL, Respondents. years of continuous and faithful service to
the company. The numerous awards
received by private respondent show how
SYLLABUS well he has served the company. While an
employer has an inherent right to discipline
its employees, we have always held that this
1. LABOR AND SOCIAL LEGISLATION; right must always be exercised humanely
TERMINATION OF EMPLOYMENT; BURDEN and the penalty it must impose must be
OF PROVING THAT THE TERMINATION IS commensurate to the offense involved and
FOR A VALID OR AUTHORIZED CAUSE to the degree of its infraction. Social justice
RESTS ON THE EMPLOYER. — It is well should be a living reality and not a mere
settled that the burden of proving that the high level abstraction in the fundamental law
termination of an employee is for a valid or of the land.chanroblesvirtuallawlibrary
authorized cause rests on the employer. In
the case at bar, the petitioners failed to 3. ID.; NEW RULES OF PROCEDURE OF THE
present substantial evidence to justify the NATIONAL LABOR RELATIONS
dismissal of private Respondent. They did COMMISSION; SECTION 3 RULE V
not present as witness the persons who THEREOF; NOT COMPLIED WITH IN THE
conducted the routine confirmation. Neither CASE AT BAR. — The New Rules of
did they submit their affidavits. The only Procedure of the NLRC prohibit parties from
evidence they offered are the handwritten making new allegations or cause of action
notes and certifications from alleged not included in the complaint or position
representatives of the outlets denying that papers, affidavits and other documents. In
they received the promotional items the instant case, private respondent raised
reported in private respondent’s Daily the issue of unfair labor practice only after
Product Incentive Report. These notes and the parties have submitted their respective
certifications are, however, entitled to little position papers. Thus, the Labor Arbiter and
weight for they were not sworn to and their the NLRC gravely abused their discretion in
authors do not appear to have been taking cognizance of such issue. In Manebo
presented in the proceedings a quo. On the v. NLRC, we held: ". . . while it is true that
other hand, private respondent proved that the Rules of the NLRC must be liberally
the free gallons of ice cream were actually construed and that the NLRC is not bound by
received by persons though not by those the technicalities of law and procedure, the
made the notes and certifications. These Labor Arbiters and the NLRC itself must not
recipients of the incentive products be the first to arbitrarily disregard specific
confirmed in an Inter-Office Memorandum provisions of the Rules which are precisely
that they indeed received free gallons of ice intended to assist the parties in obtaining
cream from private respondent in line with just, expeditious and inexpensive settlement
the company’s promotional scheme. The of labor disputes. One such provision is
records also show that the delay in the Section 3, Rule V of the New Rules of
remittance of the check paid by Cindy’s Procedure of the NLRC which requires the
Bakeshop was satisfactorily explained by submission of verified position papers within
private Respondent. The delay cannot be fifteen days from the date of the last
attributed to private respondent but to his conference, with proof of service thereof on
helper, Remigio Silva, and to a third man, the other parties. The position papers ‘shall
Ronnie Silva. Ronnie Silva collected the cover only those claims and causes of action
payment of Cindy’s Bakeshop in the raised in the complaint excluding those that
afternoon of February 21, 1992, a Friday. may have been amicably settled, and shall
On the next working day, which was a be accompanied by all supporting
Monday, Ronnie Silva did not report for documents including the affidavits of their
work. He remitted the check to private respective witnesses which shall take the
respondent only on February 26, 1992. Upon place of the latter’s testimony.’ After the
receipt of the check, private respondent submission thereof, the parties ‘shall . . . not
immediately turned it over to the petitioner be allowed to allege facts, or present

1
evidence to prove facts, not referred to and performance in North Luzon
any cause or causes of action not included in Area.chanroblesvirtuallawlibrary
the complaint or position papers, affidavits
and other document.’" We need only add December 1989 — He was given a
that the procedural error of the public commendation letter by the National Sales
respondent resulted in its ruling condemning Manager — Mr. Jaime A. To, for his Record
petitioners of unfair labor practice. A finding Breaking Sales.
of an unfair labor practice is not to be taken
lightly for the Labor Code has again March 1990 — He was given a
criminalized these practices. Article 247 commendation letter by the National Sales
unequivocally provides that." . . unfair labor Manager — Mr. Jaime A. To, for his Record
practices are not only violations of the civil Breaking Sales.
rights of both labor and management but
are also criminal offenses against the state January 1990 — He was given a plague of
which shall be subject to prosecution and recognition for his extraordinary
punishment . . ." Petitioners cannot be found achievement in opening new outlets, for
guilty of unfair labor practice on the basis of hard work, dedication and excellence
an allegation sneaked in the Reply of the exhibited, for valuable share in the
private Respondent. Due process bars such attainment of 1989 sales objectives in
an approach. surpassing 1988 objectives and surpassing
1988 performance by 14.3% thereby
4. REMEDIAL LAW; CIVIL PROCEDURE; contributing substantially to the growth and
REPLY; PURPOSE. — The purpose of a reply profitability of the company.
is to deny or allege facts in denial of new
matters alleged by way of defense in the January 1991 — He was given a certificate
answer. It is not the office or function of a of recognition for his valuable contribution to
reply to set up or introduce a new cause of the achievement of an all time High Record
action or to amend or amplify the complaint. Breaking Sales.chanrobles.com : virtual
lawlibrary

May 1991 — Her was given a certificate of

DECISION achievement for his extraordinary
performance in opening new outlets, control
of damage and account receivables.
PUNO, J.:
— For his hard work and dedication
exhibited, thus, exceeded his sales objective
This is a special civil action for the month of April, 1991, thereby
for certiorari under Rule 65 of the Revised contributing to the growth and profitability
Rules of Court to review the Resolutions of of the company.
the National Labor Relations Commission
dated April 21, 1994 and June 29, 1994, 1 November 1991 — He was given again a
which, among others, ruled that petitioners certificate of achievement for his
illegally dismissed private respondent extraordinary performance in opening new
Romeo A. Vestil.chanroblesvirtual|awlibrary outlets, control of damages, and account
receivables for the month of October, 1991."
Private respondent was a route salesman of 2
petitioner Magnolia Corporation assigned in
its Sales Office in Angeles City, Pampanga. In 1992, petitioner corporation launched a
He has faithfully served petitioners for ten "Special Dealer Incentive Promo" to increase
(10) years as borne by the numerous its sales volume. In this promotional
awards bestowed on him by said company, scheme, the dealer is entitled to receive free
viz:jgc:chanrobles.com.ph ice cream products consisting of one gallon
or two half-gallon regular ice cream for
"1986 — Awarded as 1986 Salesman of the every P4,000.00 worth of ice cream
Year — Tetra Route Category; National purchased from the route salesman, and an
Level. additional half-gallon regular ice cream for
every P2,000.00 worth of ice cream
1987 — Promoted as Ice Cream Salesmen. purchased in excess of P4,000.00. 3

1988 — He was given an award of On March 10 and 11, 1992, private

achievement for his exceptional performance respondent reported in his Daily Product
and valuable share in the achievement of Incentive Report that the following outlets
the 1988 sales objective which exceeded received free ice cream products as
budget by 6% and last year’s performance incentive under the said promotional
(1987) by 27%. scheme, viz:chanrob1es virtual 1aw library

July 1989 — Achieved the highest FDS sales Invoice No. Date Outlet Incentive Amount

2
 declared guilty of unfair labor practice for
Product violating Article 248 of the Labor Code which
prohibits employers from interfering,
123051 3-11-92 Edith Bakeshop 2 half- restraining or coercing employees in the
gallon P4,732.50 exercise of their right to self-organization.

123053 3-11-92 Arnel & Sally 2 half-gallon FURTHER, respondents have dismissed
P4,067.25 complainant without valid cause and
therefore respondents are directed to
123052 3-11-92 A.T. Food Mart 2 half-gallon reinstate complainant to his former position
P5,015.25 with full backwages even pending appeal
and without loss of any benefits accruing
122897 3-10-92 Gomez 2 half-gallon before and during the pendency of the
P4,988.50 instant case until actual reinstatement.

122898 3-10-92 Morales Store 2 half-gallon Considering the fact that the dismissal of
P8,053.75 complainant is tainted with malice, ill-will or
bad faith, complainant is entitled to the sum
However, during the routine confirmation of Three Hundred Thousand (P3,000.00)
conducted by the petitioner corporation, Pesos as moral damages to assuage the
representatives from these outlets denied wounded feelings and besmirched reputation
having received the incentive products. 4 of complainant. To set as an example to
obviate the repetition of the same to
The petitioner corporation also discovered similarly situated employees, the sum of
that private respondent had delayed One Hundred Thousand (1,000.00) Pesos is
remitting the check in the amount of hereby awarded as exemplary damages.
P10,533.30 paid by Cindy’s Bakeshop for its
purchases made on February 21, 1992. The Finally the sum of 10% of all sums owing to
payment was made on February 21, 1992, complainant is hereby awarded as attorney’s
but it was remitted only on February 27, fees." 9chanroblesvirtuallawlibrary
1992. 5chanroblesvirtuallawlibrary
The petitioners appealed to the NLRC. In its
The petitioner corporation conducted an Resolution dated April 21, 1994, the NLRC
investigation where private respondent was affirmed the Decision of the Labor Arbiter
asked to explain the aforementioned but deleted the awards of moral and
irregularities. Thereafter, petitioner exemplary damages and attorney’s fees. 10
corporation found private respondent guilty Petitioners’ Motion for Reconsideration was
of misappropriation and withholding of denied in a Resolution dated June 29, 1994.
company funds, amounting to breach of 11
trust and serious misconduct. It terminated
private respondent’s services. 6 Hence, the present Petition alleging
that:jgc:chanrobles.com.ph
Private respondent filed with the NLRC a
complaint for illegal dismissal against "The respondent NLRC committed grave
petitioner corporation and its sales manager, abuse of discretion in finding that the
Nathaniel E. Orillazarea. Conciliation dismissal of private respondent was without
proceedings were held before Labor Arbiter a just and valid cause and that petitioners
Ariel C. Santos. As the parties failed to reach are guilty of unfair labor practice thereby
an amicable settlement, the parties were entitling, private respondent to backwages
ordered to file their position papers. Private and damages." 12
respondent also filed a Reply to the
company’s position paper. The petition raise two issues:chanrob1es
virtual 1aw library
In his Reply, private respondent charged the
petitioner corporation with unfair labor 1. Whether or not private respondent was
practice for the first time. Private validly dismissed; and
respondent alleged that this dismissal was
intended to bust the union being formed by 2. Whether or not petitioner Magnolia
its sales personnel headed by him. 7 The Corporation is guilty of unfair labor practice.
petitioners did not file any rejoinder to
Reply. 8 The petitioner corporation asserts that
private respondent was validly dismissed. It
On November 26, 1992, Labor Arbiter Ariel is alleged that private respondent made it
C. Santos rendered a Decision, the appear in his Daily Product Incentive Report
dispositive portion of which that several outlets received free ice cream
reads:chanroblesvirtual|awlibrary products from him so he could obtain free
gallons of ice cream for his own personal
"WHEREFORE, respondent are hereby use. 13 It is also alleged that private

3
respondent misappropriated or withheld the remittance of the check paid by Cindy’s
amount paid by Cindy’s Bakeshop when he Bakeshop was satisfactorily explained by
failed to remit the check to the company on private Respondent. The delay cannot be
time. 14 These acts allegedly constitute attributed to private respondent but to his
serious misconduct and breach of trust helper, Remigio Silva, and to a third man,
which justify the dismissal of Ronnie Silva. Ronnie Silva collected the
private Respondent. payment of Cindy’s Bakeshop in the
afternoon of February 21, 1992, a Friday.
We reject this contention. On the next working day, which was a
Monday, Ronnie Silva did not report for
Article 282 of the Labor code authorizes the work. He remitted the check to private
employer to terminate the services of an respondent only on February 26, 1992. Upon
employee for just cause, receipt of the check, private respondent
thus:chanroblesvirtuallawlibrary immediately turned it over to the petitioner
corporation. 19chanroblesvirtuallawlibrary
"Art. 282. Termination by employer. — An
employer may terminate an employment for Both the Labor Arbiter and the respondent
any of the following causes:chanrob1es NLRC gave credence to the evidence of the
virtual 1aw library private respondent that he was illegally
dismissed. We are not free to tamper with
(a) Serious misconduct or willful their calibration of the weight of evidence in
disobedience by the employee of the lawful the absence of a clear showing that it is
orders of his employer or representative in arbitrary and bereft of any rational basis.
connection with his work;
To be sure, even if the petitioners’
x              x              x allegations were true, the penalty of
dismissal would be too harsh and
disproportionate to the offense committed
(c) Fraud or willful breach by the employee by private respondent, considering his clean
of the trust reposed in him by his employer record of ten long years of continuous and
or duly authorized representative; faithful service to the company. The
numerous awards received by private
x       x       x" respondent 20 show how well he has served
the company. While an employer has an
It is well settled that the burden of proving inherent right to discipline its employees, we
that the termination of an employee is for a have always held that this right must always
valid or authorized cause rests on the be exercised humanely and the penalty it
employer. 15chanroblesvirtuallawlibrary must impose must be commensurate to the
offense involved and to the degree of its
In the case at bar, the petitioners failed to infraction. 21 Social justice should be a
present substantial evidence to justify the living reality and not a mere high level
dismissal of private Respondent. They did abstraction in the fundamental law of the
not present as witness the persons who land.
conducted the routine confirmation. Neither
did they submit their affidavits. The only We now come to the second issue of
evidence they offered are the handwritten whether the petitioners committed unfair
notes and certifications from alleged labor practice. The Labor Arbiter
representatives of the outlets denying that ruled:jgc:chanrobles.com.ph
they received the promotional items
reported in private respondent’s Daily "Anent the first issue, complainant alleged in
Product Incentive Report. 16 These notes his Reply to Respondent’ Position Paper filed
and certifications are, however, entitled to on October 23, 1992 that respondents are
little weight for they were not sworn to and guilty of acts constituting unfair labor
their authors do not appear to have been practice when the latter was engaged in
presented in the proceedings a quo. union-busting activities. Complainant cited
the incident when Mr. Jaime To, National
On the other hand, private respondent Sales Manager of respondent company
proved that the free gallons of ice cream approached complainant and prodded him
were actually received by persons though into dissociating himself from joining a
not by those made the notes and group of salesmen forming a Sales Union.
certifications. These recipients of the Coupled with the previous act was the
incentive products confirmed in an Inter- break-up of the union in its formative stage
Office Memorandum 17 that they indeed when elected union officers like salesman
received free gallons of ice cream from Manuel Guevarra was promoted by
private respondent in line with the respondents to Regional Sales Manager, a
company’s promotional scheme. 18 certain Manny Dabu, A Union Director was
promoted to regular sales representative
The records also show that the delay in the and so with Mr. Fred

4
Valencia.chanrobles.com : virtual lawlibrary order stating therein the matters taken up
and agreed upon during the conferences and
This grievous charge of acts constituting directing the parties to simultaneously file
Unfair Labor Practice was never denied nor their respective verified position
rebutted by respondents and under the rules papers.chanroblesvirtuallawlibrary
of Evidence, it is deemed admitted." 22
These verified position papers shall cover
The respondent NLRC affirmed this ruling in only those claims and causes of action
the following wise:jgc:chanrobles.com.ph raised in the complaint excluding those that
may have been amicably settled, and shall
"Substantial evidence applies where the be accompanied by all supporting
issues have been joined and therefore documents including the affidavits of their
should be weighed and associated with other respective witnesses which shall take the
circumstances of the case, not when the place of the latter’s direct testimony. The
material allegations are not denied and parties shall thereafter not be allowed to
therefore deemed admitted. It should be allege facts, or present evidence to prove
noted that respondents-appellants had not facts, not referred to and any cause or
denied or much less refuted the charges and causes of action not included in the
allegations of Unfair Labor Practice. They complaint or position papers, affidavits and
simply ignored or avoided the factual issue other documents. Unless otherwise
by curtly alleging that the failure to accede requested in writing by both parties to
to the request of Jaime To from organizing a submit simultaneously their position
union for salesmen . . . (is) of no moment papers/memorandum with the supporting
and untenable." 23 documents and affidavits within fifteen (15)
calendar days from the date of the last
Apparently, the public respondent relied conference, with proof of having furnished
upon Rule 9 Section 1 of the Revised Rules each other with copies thereof." (Emphasis
of Court which provides that material supplied)
averments in the complaint, other than
those as to the amount of damages, shall be Clearly, the New Rules of Procedure of the
deemed admitted when not specifically NLRC prohibit parties from making new
denied. 24 Under this rule, when a party allegations or cause of action not included in
fails to specifically deny a material allegation the complaint or position papers, affidavits
in the complaint, he is deemed to have and other documents. In the instant case,
admitted such allegation and no evidence private respondent raised the issue of unfair
will be required to prove the same. Hence, labor practice only after the parties have
the public respondent concluded that the submitted their respective position papers.
petitioners’ failure to dispute private Thus, the Labor Arbiter and the NLRC
respondent’s allegations in its Reply to their gravely abused their discretion in taking
position paper amounts to an admission of cognizance of such issue. In Manebo v.
the facts alleged therein. NLRC, 26 we held:jgc:chanrobles.com.ph

We do not agree. ". . . while it is true that the Rules of the

NLRC must be liberally construed and that
The petitioners cannot be deemed to have the NLRC is not bound by the technicalities
admitted private respondent’s allegation of of law and procedure, the Labor Arbiters and
unfair labor practice in his Reply. Petitioners the NLRC itself must not be the first to
were under no obligation to file a rejoinder arbitrarily disregard specific provisions of the
to private respondent’s Reply to their Rules which are precisely intended to assist
position paper. The purpose of a reply is to the parties in obtaining just, expeditious and
deny or allege facts in denial of new matters inexpensive settlement of labor disputes.
alleged by way of defense in the answer. It One such provision is Section 3, Rule V of
is not the office or function of a reply to set the New Rules of Procedure of the NLRC
up or introduce a new cause of action or to which requires the submission of verified
amend or amplify the complaint. 25 Private position papers within fifteen days from the
respondent improperly raised the issue of date of the last conference, with proof of
unfair labor practice in his Reply since service thereof on the other parties. The
parties are not allowed to amend their cause position papers ‘shall cover only those
of action or allege a new and additional claims and causes of action raised in the
cause of action in a reply. Section 3 Rule V complaint excluding those that may have
of the New Rules of Procedure of the NLRC been amicably settled, and shall be
provides:jgc:chanrobles.com.ph accompanied by all supporting documents
including the affidavits of their respective
"Section 3. Submission of Position witnesses which shall take the place of the
Papers/Memorandum. — Should the parties latter’s testimony.’ After the submission
fail to agree upon an amicable settlement, thereof, the parties ‘shall . . . not be allowed
either in whole or in part, during the to allege facts, or present evidence to prove
conferences, the Labor Arbiter shall issue an facts, not referred to and any cause or

5
causes of action not included in the
complaint or position papers, affidavits and
other document.’" chanrobles.com : virtual
lawlibrary

We need only add that the procedural error

of the public respondent resulted in its ruling
condemning petitioners of unfair labor
practice. A finding of an unfair labor practice
is not to be taken lightly for the Labor Code
has again criminalized these practices.
Article 247 unequivocally provides that." . .
unfair labor practices are not only violations
of the civil rights of both labor and
management but are also criminal offenses
against the state which shall be subject to
prosecution and punishment . . ." Petitioners
cannot be found guilty of unfair labor
practice on the basis of an allegation
sneaked in the Reply of the
private Respondent. Due process bars such
an approach.

IN VIEW WHEREOF, the Resolutions dated

April 21, 1994 and June 24, 1994 of the
respondent NLRC are AFFIRMED with the
modification that the portion finding
petitioners guilty of unfair labor practice is
SET ASIDE. No costs.

SO ORDERED.