CHAPTER VII: DUE PROCESS OF LAW NO.

G.R. No. L-52364 March 25, 1983

RICARDO VALLADOLID, petitioner,
vs.
HON. AMADO G. INCIONG, Deputy Minister of Labor, and COPACABANA APARTMENT-
HOTEL, respondents.

G.R. No.L-53349 March 25, 1983

J.R.M. & CO., INC. as owner and operator of Copacabana Apartment-Hotel petitioners,

vs.
HON. AMADO G. INCIONG, as Deputy Minister of Labor,HON. FRANCISCO L. ESTRELLA, as
Regional Director of the National Capital Region, Ministry of Labor, nd RICARDO
VALLADOLID, respondents.

Daniel Co for petitioner Ricardo Valadolid.

The Solicitor General for respondents.

Vicente V. Ocampo & Antonio V. de Ocampo for J.R.M. & Co., Inc.

MELENCIO-HERRERA, J.:

The Order dated December 26, 1979 of the Deputy Minister of Labor affirming the Order of May 2,
1979 for reinstatement without backwages issued by Regional Director Francisco L. Estrella in Case
No. R4-STF-2-1316-79 entitled, "Ricardo C. Valladolid, Jr. vs. Copacabana Apartment-Hotel," is
being assailed by the parties in these petitions.

J. R. M. & Co., Inc. (hereinafter referred to as JRM), as petitioner in G.R. No. 53349, is also the
respondent in G.R. No. 52364 named therein as Copacabana Apartment-Hotel. JRM originally
owned and operated not only Copacabana but also Tropicana Apartment-Hotel. The principal
stockholders of JRM were the brothers Joseph, Manuel, Vicente and Roman, all surnamed Yu. Upon
the death of Joseph on October 12, 1975, although both Copacabana and Tropicana continued
technically as owned by JRM, the controlling (70%) interest in Copacabana was lodged in the
surviving heirs of Joseph, with brothers Manuel and Roman having a 15% interest each. JRM was
placed under the management of the heirs of Joseph. The brothers Manuel, Roman and Vicente
were allowed 100% equity interest in Tropicana, which was operated separately from JRM.
Eventually, Tropicana and Copacabana became competing businesses.

Ricardo Valladolid, petitioner in G.R. No. 52364 and respondent in G.R. No. 53349, after the death
of Joseph, was employed by JRM in 1977 as a telephone switchboard operator. He was
subsequently transferred to the position of clerk-collector by Mrs. Lourdes T. Yu, President of JRM.

According to the affidavit of Daniel T. Yu, Executive Vice-President, attached to the position paper
submitted by JRM before the Regional Director, the transfer was motivated by the fact:

xxx xxx xxx

That as such switchboard operator numerous telephone conversations and

communications relating to business and confidential matters were intercepted and
relayed to Tropicana Apartment-Hotel, a competitor;

That to confirm suspicion on Ricardo Valladolid as the person responsible for said
interception and relay, Mrs. Lourdes T. Yu, President of JRM & Co., Inc. sent him on
an errand to Manila Hotel to bring flowers on the occasion of Wedding Anniversary of
Mr. & Mrs. Yu Hong Ty. Matters which Mrs. Lourdes Yu told him in confidence and
admonitions not to tell anyone, reached Tropicana people;

xxx xxx xxx  1

Page 1 of 5
CHAPTER VII: DUE PROCESS OF LAW NO. 8

The affidavit further disclosed:

xxx xxx xxx

That while serving in his capacity as clerk/collector, copies of Accounts Receivables,

reach Tropicana Management although said copies were not referred to them;

That conferred (sic) on numerous confidential matters taken in the office of

Copacabana Apartment-Hotel reached Tropicana Apartment-Hotel;

That to finally and fully confirmed suspicions that Ricardo Valladolid was the person
responsible for the aforementioned disclosures, a plan for the entrapment was
conceived by the management of Copacabana Apartment- Hotel;

That on November 9, 1979, pursuance of said plan, a cash voucher for P500,000.00
supposedly in payment for representation expenses to myself with the corresponding
check were prepared and issued respectively by Juan V. Bermudo, Apartment-Hotel
Manager, who thereafter called Ricardo Valladolid and asked the latter to bring the
said cash voucher and check to my room which he did; few minutes later I came
down to the office and asked Mr. Ricardo Valladolid to prepare the corresponding
deposit slip to Pacific Banking Corporation for said check;

That thereafter, the aforementioned cash voucher, corresponding check and deposit
slip were kept in the hotel vault with no other person other than myself, Juan
Bermudo and Ricardo Valladolid having any knowledge of preparation and existence
thereof;

That unknown to Ricardo Villadolid, the aforementioned check, cash voucher and
deposit slip were cancelled;

That on December 4, 1978, Mr. Manuel Yu Chua, came to Copacabana Apartment-

Hotel as minority stockholder of the latter, vehemently demanding for an accounting
of Copacabana books;

That he strongly charged that information reached him that I received a disbursement
of P500,000.00 from Copacabana Apartment-Hotel as representation expenses in
my capacity as Executive Vice-President thereof;

That at this juncture, I brought out the cancelled cash voucher, check and deposit
slip with mouth agape Manuel Yu Chua, could do nothing else but admit that in fact,
his informer within Copacabana Apartment-Hotel was no other than Mr. Ricardo C.
Villadolid;

That I then informed Manuel Yu Chua, that under the circumstances, I could no
longer repose any trust whatsoever on Ricardo Valladolid and requested him to take
the latter to Tropicana Apartment-Hotel and just swap him with someone else; Mr.
Manuel Yu Chua directed me to tell Valladolid to see him;

That after few days, Ricardo Valladolid came back and told me that Manuel Yu Chua
has no place for him at Tropicana Apartment-Hotel; in this conversation, Ricardo
Valladolid apologized for having betrayed the trust that we had reposed on him,
especially after Mrs. Lourdes T. Yu had told him to stay impartial; that he then having
done this for Manuel Yu Chua, the latter could not even accept him in Tropicana
Apartment-Hotel;

xxx xxx xxx  2

The entrapment scheme was corroborated by the affidavits of Sofia Mo. Gianan, External Auditor of
J.R.M. & Co., Inc., and Juan V. Bermudo, Copacabana Apartment-Hotel Manager, which affidavits
formed part of JRM's position paper filed before the agency below.   The cancelled Cash Voucher,
3

the uncashed check, and the unused deposit slip, all in the respective amounts of P500,000.00 were
also attached to the same position paper as Exhibits "4", "5" and "6".

Page 2 of 5
CHAPTER VII: DUE PROCESS OF LAW NO. 8

On December 29, 1978, or after the entrapment scheme had been effected, Valladolid filed a written
request for a five (5) day vacation leave starting December 30, 1978 with the Manager of
Copacabana, stating therein that he would report for work on January 5, 1979.   He did not report for
4

work on January 5 but sent a telegram from Bicol on January 8, 1979 requesting for 15 days sick
leave as he was confined for flu at the Dr. Estrellado Clinic.   On January 23, 1979, Valladolid's wife
5

allegedly called up JRM informing the company through its accountant, Eddie Escueta, that her
husband was still sick and requested for 30 days sick leave, which was allegedly granted. This was
denied by JRM.

Valladolid reported for work on February 16, 1979. The Executive Vice- President, Mr. Daniel Yu,
allegedly refused to admit him and instead asked him to resign. JRM maintains that Valladolid left
the office that same day and never returned, because he was reprimanded for his unauthorized
absences.

On February 22, 1979, Valladolid filed a Complaint for Illegal Dismissal with vacation and sick leave
pay. 6

On February 24, 1979, JRM sent a letter to Valladolid signed by Daniel T. Yu, advising him of his
preventive suspension effective February 26, 1979 preparatory to the termination of his services 10
days from receipt of a copy of the application for clearance to dismiss him. The grounds given were:
(1) Willful Breach of Trust for having divulged, in various instances, confidential business matters to
competitors of the company; and (2) Gross Neglect of Duty for having been absent without leave or
notice for more than 25 days, to the detriment of the company.  7

On February 28, 1979, JRM filed said application for clearance with the Ministry of Labor.   The
8

application for clearance and Valladolid's complaint for Illegal Dismissal were consolidated and
docketed as R4-STF-2-1316-79. The parties submitted their respective position papers and
documentary evidence. On May 2, 1979, the Regional Director issued the following challenged
Order:

WHEREFORE, premises considered, the application for clearance with preventive

suspension is hereby denied. Respondent is hereby ordered to reinstate complainant
to his former position without backwages and without loss of seniority rights. Let the
time this case was pending be considered as complainant's suspension for his
absences.

The claim for vacation sick leave pay is dismissed for failure to substantiate the
same.

Valladolid appealed the foregoing order to the Minister of Labor seeking modification of the same,
praying for the award of backwages from the time he was illegally dismissed on February 16, 1979
to the date of his actual reinstatement. JRM also appealed the said Order.

On December 26, 1979, the Deputy Minister of Labor, in a succinct Order, dismissed both appeals
after finding "no sufficient justification or valid reason to alter, modify, much less reverse the Order
appealed from."

On January 21, 1980, Valladolid filed a Petition for certiorari with this Court, docketed as G.R. No.
52364, praying for a modification of the Order of December 26, 1979 of the Deputy Minister of Labor
so as to grant him backwages. This Court resolved. on February 4, 1980, to give due course to the
petition, and required the parties to submit simultaneous memoranda.

On March 12, 1980, JRM also filed a petition for certiorari with this Court assailing that same Order.
This Court gave due course to the petition and consolidated the same with G.R. No. 52364.
Thereafter, the parties filed their respective memoranda.

The non-award of backwages is the only issue being raised by Valladolid claiming that the Orders in
question are contrary to law and evidence, and were issued arbitrarily and capriciously with grave
abuse of discretion, amounting to excess or lack of jurisdiction.

JRM, on the other hand, assails the said Orders on the following grounds:

Page 3 of 5
CHAPTER VII: DUE PROCESS OF LAW NO. 8

That respondent Deputy Minister of Labor committed grave abuse of discretion when
in his questioned order in effect sustained the finding of respondent Regional
Director that there is no evidence to support the dismissal of private respondent.

II

That respondent Deputy Minister Amado Inciong and Regional Director Francisco
Estrella committed grave abuse of discretion when they arbitrarily failed to consider
in their respective orders under review, established jurisprudence.

III

That respondent Regional Director committed grave abuse of discretion when he

held that preventive suspension is equivalent to dismissal.

IV

That the order of respondent Hon. Amado Inciong was a capricious and whimsical
exercise of judgment when it failed to state the facts and conclusion of law upon
which it is based.

That respondent Regional Director Francisco Estrella acted in excess of his

jurisdiction when, without any statutory authority or transcending beyond his
jurisdiction, he absolutely disregarded procedural requirement in the hearing of the
present controversy, thus depriving petitioner of its right to due process.

Valladolid, in his affidavit dated March 29, 1979, denied having committed any breach of trust.   In
9

corroboration, he presented the affidavits of Mr. Manuel Yu dated March 20, 1979 and March 29,
1979, wherein the latter stated that Valladolid was "one of Copacabana's most hard-working and
efficient employees;" that Valladolid's work is "mere routinary collection and clerical in nature which
do not involve trust (or) confidential business or trade secrets which he may 'divulge' to other
companies."  10

On this issue, the Regional Director ruled that "there is no evidence on record that Valladolid
furnished copies of receivables or divulged confidential business matters to Mr. Manuel Yu and the
'Tropicana People' including the P500,000.00 'entrapment scheme.'"

That finding is not supported by the records. The affidavits attached to petitioner's position paper
adequately show that JRM did not act on mere suspicion but on the contrary, acted prudently when it
first transferred Valladolid from switchboard operator where he could eavesdrop on telephone
conversations, to a less crucial position of clerk-collector. But even in the latter capacity, JRM's fears
were confirmed as shown by the entrapment scheme. Manuel Yu's certification as to Valladolid's
trustworthiness cannot be given much weight not only because it was disproved by the entrapment
contrived but more so because even Manuel Yu himself refused to employ him at Tropicana when
Daniel Yu had suggested that Tropicana absorb Valladolid because JRM had lost confidence in the
latter. And although Manuel Yu, who owns 15% of the equity holding of Copacabana, and being a
member of the Board of Directors of JRM had a right to know the business standing of said
establishment, there is basis to believe that he would not have been able to pinpoint the particular
"disbursement" of P500,000.00, if the same had not been leaked out to him.

Loss of confidence is a valid ground for dismissing an employee. Proof beyond reasonable doubt of
the employee's misconduct is not required, it being sufficient that there is some basis for the same or
that the employer has reasonable ground to believe that the employee is responsible for the
misconduct and his participation therein renders him unworthy of the trust and confidence demanded
of his position.   However, as this was Valladolid's first offense, as found by the Regional Director,
11

dismissal from the service is too harsh a punishment, considering that he had not been previously
admonished, warned or suspended for any misdemeanor. Besides as clerk-collector, he need not be
given access to facts relative to the business of Copacabana, which, if divulged to Tropicana would
be to the former's prejudice.

Page 4 of 5
CHAPTER VII: DUE PROCESS OF LAW NO. 8

Moreover, we find basis for the finding of the Regional Director that Valladolid was terminated
without prior clearance. J.R.M. sent a memorandum to Valladolid on February 24, 1979 advising him
of his preventive suspension effective February 26, 1979 pending approval of the application for
clearance to dismiss him. The clearance application was filed on February 28, 1979. However, even
prior to that date, or on February 22, 1979, Valladolid had already filed a complaint for Illegal
Dismissal. This shows that Valladolid was indeed refused admittance on February 16, 1979 when he
reported back to work, so that he was practically dismissed before he was formally notified of his
suspension leading to his dismissal, in violation of the requirement of Section 3, Rule XIV, Book V,
Rules & Regulation Implementing the Labor Code.   And as provided in Section 2 of the same Rule,
12

any dismissal without prior clearance shall be "conclusively presumed to be termination of

employment without a just cause."

JRM cannot claim that it was deprived of due process considering that applications for clearance
have to be summarily investigated and a decision required to be rendered within ten (10) days from
the filing of the opposition   As this Court had occasion to hold there is no violation of due process
13

where the Regional Director merely required the submission of position papers and resolved the
case summarily thereafter.  14

Nor is the questioned Order of the Deputy Minister of Labor violative of Section 9, Article X of the
Constitution, which requires a statement of the facts and the conclusions of law upon which it is
based. That prescription applies to decisions of Courts of record. The Ministry of Labor is an
administrative body with quasi-judicial functions. Section 5, Rule XIII, Book V, Ibid, states that
proceedings in the NLRC shall be non-litigious and summary in nature without regard to legal
technicalities obtaining in courts of law. As the Deputy Minister was in full accord with the findings of
fact and the conclusions of law drawn from those facts by the Regional Director, there was no
necessity of discussing anew the issues raised therein.

JRM admits that Valladolid requested for leave for 5 days from December 30, 1978, and thereafter
for 15 days, but denies that he notified the company of his absences subsequent to this. The
Regional Director ruled that the absences of Valladolid were unauthorized but did not amount to
gross neglect of duty or abandonment of work which requires deliberate refusal to resume
employment or a clear showing in terms of specific circumstances that the worker does not intend to
report for work. We agree. But as Valladolid had been AWOL, no error was committed by
respondent Regional Director in ordering his reinstatement without backwages.  16

WHEREFORE, both Petitions for certiorari are hereby denied. No costs.

SO ORDERED.

Page 5 of 5