VOL.

201, SEPTEMBER 11, 1991 487

PNOC-Energy Development Corp. vs. NLRC
*
G.R. No. 79182. September 11, 1991,

PNOC-ENERGY DEVELOPMENT
CORPORATION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION (Third Division) and
DANILO MERCADO, respondents.

Corporation Law; Civil Service Law; Jurisdiction;

Doctrine that employees of government-owned and/or
controlled corporations whether created by special law or
formed as subsidiaries under the General Corporation Law
are governed by the Civil Service Law and not by the Labor
Code has been supplanted by the present Constitution.—
This issue has already been laid to rest in the case of PNOC-
EDC vs. Leogardo, 175 SCRA 26 (July 5, 1989), involving
the same petitioner and the same issue, where this Court
ruled that the doctrine that employees of government
government-owned and/or controlled corporations, whether
created by special law or formed as subsidiaries under the
General Corporation law are governed by the Civil Service
Law and not by the Labor Code, has been supplanted by the
present Constitution,
Same; Same; Same; Same; Presently, the test in
determining whether a government-owned or controlled
corporation is subject to the

________________
 * SECOND DIVISION.

488

488 SUPREME COURT REPORTS ANNOTATED

PNOC-Energy Development Corp. vs. NLRC

Civil Service Law is the manner of its creation.—”Thus,

under the present state of the law, the test in determining
whether a government-owned or controlled corporation is
subject to the Civil Service Law is the manner of its creation,
such that government corporations created by special charter
are subject to its provisions while those incorporated under
the General Corporation Law are not within its coverage.”
Same; Same; Same; Same; The PNOC-EDC having
been incorporated under the General Corporation Law was
held to be a governmentowned or controlled corporation
whose employees are subject to the provisions of the Labor
Code.—Specifically, the PNOC-EDC having been
incorporated under the General Corporation Law was held to
be a government-owned or controlled corporation whose
employees are subject to the provisions of the Labor Code.
Remedial Law; Due Process; There is no denial of due
process where the party submitted its position paper and
filed its motion for reconsideration.—lndisputably, the
requirements of due process are satisfied when the parties are
given an opportunity to submit position papers. What the
fundamental law abhors is not the absence of previous notice
but rather the absolute lack of opportunity to ventilate a
party’s side. There is no denial of due process where the
party submitted its position paper and filed its motion for
reconsideration (Odin Security Agency vs. De la Serna, 182
SCRA 472 [February 21, 1990]). Petitioner’s subsequent
Motion for Reconsideration and/or Appeal has the effect of
curing whatever irregularity might have been committed in
the proceedings below.
Same; Evidence; Findings of administrative agencies
which have acquired expertise because their jurisdiction is
confined to specific matters are accorded not only respect but
even finality.—Furthermore, it has been consistently held
that findings of administrative agencies which have acquired
expertise because their jurisdiction is confined to specific
matters are accorded ded not only respect but even finality
(Asian Construction and Development Corporation vs.
NLRC, 187 SCRA 784 [July 27, 1990]; Lopez Sugar
Corporation vs. Federation of Free Workers, 189 SCRA 179
[August 30, 1990]). Judicial review by this Court does not go
so far as to evaluate the sufficiency of the evidence but is
limited to issues of jurisdiction or grave abuse of discretion
(Filipinas Manufacturers Bank vs. NLRC, 182 SCRA 848
[February 28,1990]). A careful study of the records shows no
substantive reason to depart from these established
principles.

489

VOL. 201, SEPTEMBER 11, 1991 489

PNOC-Energy Development Corp. vs. NLRC

Labor Law; Dismissal; While Ioss of trust or breach of

confidence is a valid ground for dismissing an employee,
such loss or breach of trust must have some basis.—While it
is true that loss of trust or breach of confidence is a valid
ground for dismissing an employee, such loss or breach of
trust must have some basis (Gubac v. NLRC, 187 SCRA 412
[July 13, 1990]). As found by the Labor Arbiter, the
accusations of petitioner PNOC-EDC against private
respondent Mercado have no basis. Mrs. Leonardo Nodado,
from whom the nipa shingles were purchased, sufficiently
explained in her affidavit (Rollo, p. 36) that the total
purchase price of P1,680.00 was paid by respondent
Mercado as agreed upon. The alleged discount given by Mrs.
Nodado is not supported by evidence as well as the alleged
appropriation of P8.66 from the cost of fabrication of rubber
stamps. The Labor Arbiter, likewise, found no evidence to
support the alleged violation of company rules. On the
contrary, he found respondent Mercado’s explanation in his
affidavit (Rollo, pp. 38–40) as to the alleged violations to be
satisfactory. Moreover, these findings were never
contradicted by petitioner PNOC-EDC.

PETITION for certiorari to review the resolution of

the National Labor Relations Commission.

The facts are stated in the opinion of the Court.

     Bacorro & Associates for petitioner.
     Alberto L. Dalmacion for private respondent.

PARAS, J.:

This is a ** petition for certiorari to set aside the

Resolution dated July 3, 1987 of respondent National
Labor Relations Commission (NLRC for brevity)
which affirmed the decision dated April 30, 1986 of
Labor Arbiter Vito J. Minoria of the NLRC, Regional
Arbitration Branch No. VII at Cebu City in Case No.
RAB-VII-0556–85 entitled “Danilo Mercado,
Complainant, vs, Philippine National Oil Company-
Energy Development Corporation, Respondent”,
ordering the reinstatement of complainant Danilo
Mercado and the award of various monetary claims.
The factual background of this case is as follows:
Private respondent Danilo Mercado was first
employed by

________________

** Penned by Commissioner Mirasol Viniega-Corleto.

490
490 SUPREME COURT REPORTS ANNOTATED
PNOC-Energy Development Corp. vs. NLRC

herein petitioner Philippine National Oil Company-

Energy Development Corporation (PNOC-EDC for
brevity) on August 13, 1979. He held various positions
ranging from clerk, general clerk to shipping clerk
during his employment at its Cebu office until his
transfer to its establishment at Palimpinon,
Dumaguete, Oriental Negros on September 5, 1984.
On June 30, 1985, private respondent Mercado was
dismissed. His last salary was P1 ,585.00 a month
basic pay plus P800.00 living allowance (Labor
Arbiter’s Decision, Annex “E" of Petition, Rollo, p.
52).
The grounds for the dismissal of Mercado are
allegedly serious acts of dishonesty committed as
follows:

“1. On April 12, 1985, Danilo Mercado was

ordered to purchase 1,400 pieces of nipa
shingles from Mrs. Leonardo Nodado of
Banilad, Dumaguete City, for the total
purchase price of P1, 680.00. Against
company policy, regulations and specific
orders, Danilo Mercado withdrew the nipa
shingles from the supplier but paid the
amount of P1 ,000.00 only. Danilo Mercado
appropriated the balance of P680.00 for his
personal use;
“2. In the same transaction stated above, the
supplier agreed to give the company a
discount of P70.00 which Danilo Mercado did
not report to the company;
“3. On March 28, 1985, Danilo Mercado was
instructed to contract the services of Fred R.
Melon of Dumaguete City, for the fabrication
of rubber stamps, for the total amount of
 P28.66. Danilo Mercado paid the amount of
P20.00 to Fred R. Melon and appropriated for
his personal use the balance of P8.66.

“In addition, private respondent, Danilo Mercado violated

company rules and regulations in the following instances:

“1. On June 5, 1985, Danilo Mercado was absent from

work without leave, without proper turn-over of his
work, causing disruption and delay of company
work activities;
“2. On June 15, 1985, Danilo Mercado went on
vacation leave without prior leave, against company
policy, rules and regulations.” (Petitioner’s
Memorandum, Rollo, p. 195).

On September 23, 1985, private respondent Mercado

filed a complaint for illegal dismissal, retirement
benefits, separation pay, unpaid wages, etc. against
petitioner PNOC-EDC before the NLRC Regional
Arbitration Branch No. VII docketed as

491

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PNOC-Energy Development Corp. vs. NLRC

Case No. RAB-VII-0556–85.

After private respondent Mercado filed his position
paper on December 16, 1985 (Annex “B" of the
Petition, Rollo, pp. 28–40), petitioner PNOC-EDC
filed its Position Paper/Motion to Dismiss on January
15, 1986, praying for the dismissal of the case on the
ground that the Labor Arbiter and/or the NLRC had no
jurisdiction over the case (Annex “C" of the Petition,
Rollo, pp. 41–45), which was assailed by private
respondent Mercado in his Opposition to the Position
Paper/Motion to Dismiss dated March 12,1986 (Annex
“D" of the Petition, Rollo, pp. 46–50).
The Labor Arbiter ruled in favor of private
respondent Mercado. The dispositive portion of said
decision reads as follows:

“WHEREFORE, in view of the foregoing, respondents are

hereby ordered:

“1) To reinstate complainant to his former position with

full back wages from the date of his dismissal up to
the time of his actual reinstatement without loss of
seniority rights and other privileges:
“2) To pay complainant the amount of P10,000.00
representing his personal share of his savings
account with the respondents;
“3) To pay complainants the amount of P30,000.00
moral damages; P20,000.00 exemplary damages
and P5,000.00 attormoney’s ney’s fees;
“4) To pay complainant the amount of P792.50 as his
proportionate 13th month pay for 1985.

“Respondents are hereby further ordered to deposit the

aforementioned amounts with this Office within ten days
from receipt of a copy of this decision for further disposition.
“SO ORDERED."
(Labor Arbiter’s Decision, Rollo, p, 56)

The appeal to the NLRC was dismissed for lack of

merit on July 3, 1987 and"the assailed decision was
affirmed;
Hence, this petition.
The issues raised by petitioner in this instant
petition are:

1. Whether or not matters of employment

affecting the PNOCEDC, a government-
owned and controlled corporation, are within
 the jurisdiction of the Labor Arbiter and the
NLRC.

492

492 SUPREME COURT REPORTS ANNOTATED

PNOC-Energy Development Corp. vs. NLRC

2. Assuming the affirmative, whether or not the

Labor Arbiter and the NLRC are justified in
ordering the reinstatement of private
respondent, payment of his savings, and
proportionate 13th month pay and payment of
damages as well as attorney’s fee.

Petitioner PNOC-EDC alleges that it is a corporation

wholly owned and controlled by the government; that
the Energy Development Corporation is a subsidiary
of the Philippine National Oil Company which is a
government entity created under Presidential Decree
No. 334, as amended; that being a government-owned
and controlled corporation, it is governed by the Civil
Service Law as provided for in Section 1, Article XII-
B of the 1973 Constitution, Section 56 of Presidential
Decree No. 807 (Civil Service Decree) and Article 277
of Presidential Decree No. 442, as amended (Labor
Code).
The 1973 Constitution provides:

“The Civil Service embraces every branch, agency,

subdivision and instrumentality of the government including
government-owned or controlled corporations.”

Petitioner PNOC-EDC argued that since Labor Arbiter

Minoria rendered the decision at the. time when the
1973 Constitution was in force, said decision is null
and void because under the 1973 Constitution,
government-owned and controlled corporations were
governed by the Civil Service Law, Even assuming
that PNOC-EDC has no original or special charter and
Section 2(i), Article IX-B of the 1987 Constitution
provides that:

“The Civil Service embraces all branches, subdivision,

instrumentalities and agencies of the Government , including
government-ownedor controlled corporations with original
charters/'

such circumstances cannot give validity to the decision

of the Labor Arbiter’ (Ibid., pp. 192–193).
This issue has/already been laid to rest in the case
of PNOCEDC vs. Leogardo, 175 SCRA 26 (July 5,
1989), involving the same petitioner and the same
issue, where this Court ruled that the doctrine that
employees of government-owned and/or controlled
corporations, whether created by special law or formed

493

VOL. 201, SEPTEMBER 11, 1991 493

PNOC-Energy Development Corp. vs. NLRC

as subsidiaries under the General Corporation law are

governed by the Civil Service Law and not by the
Labor Code, has been supplanted by the present
Constitution. “The present state of the law, the? test in
determining whether a government-owned or
controlled corporation is subject to the Civil Service
Law are the manner of its creation, such that
government corporations created by special charter are
subject to its provisions while those incorporated
under the General Corporation Law are not within its
coverage.”
Specifically, the PNOC-EDC having been
incorporated under the General Corporation Law was
held to be a government owned or controlled
corporation whose employees are subject to the
provisions of the Labor Code (Ibid.).
The fact that the case arose at the time when the
1973 Constitution was still in effect, does not deprive
the NLRC of jurisdiction on the premise that it is the
1987 Constitution that governs because it is the
Constitution in place at the time of the decision
(NASECO v, NLRC, G.R. No. 69870, 168 SCRA 122
[1988]).
In the case at bar, the decision of the NLRC was
promulgated on July 3, 1987. Accordingly, this case
falls squarely under the
rulings of the aforementioned cases.
As regards the second issue, the record shows that
PNOC-EDC’s accusations of dishonesty and violations
of company rules are not supported by evidence.
Nonetheless, while acknowledging the rule that
administrative bodies are not governed by the strict
rules of evidence, petitioner PNOC-EDC alleges that
the labor arbiter’s propensity to decide the case
through the position papers submitted by the parties is
violative of due process thereby rendering the decision
null and void (Ibid., p. 196). :
On the other hand, private respondent contends that
as can be seen from petitioner’s Motion for
Reconsideration and/or Appeal dated July 28, 1986
(Annex “F" of the Petition, Rollo, pp. 57–64), the
latter never questioned of facts of the Labor Arbiter
but simply limited its objection to the lack of legal
basis in view of its stand that the NLRC had no
jurisdiction over the case (Private Respondent’s
Memorandum, Rollo, p. 104).
Petitioner PNOC-EDC filed its Position
Paper/Motion to Dismiss dated January 15, 1986
(Annex “C" of the Petition Rollo,

494
494 SUPREME COURT REPORTS ANNOTATED
PNOC-Energy Development Corp. vs. NLRC

pp. 41–45) before the Regional Arbitration Branch No.

VII of Cebu City and its Motion for Reconsideration
and/or Appeal dated July 28, 1986 (Annex “F" of the
Petition, Rollo, pp. 57–64) before the NLRC of Cebu
City. Indisputably, the requirements of due process are
satisfied when the parties are given an opportunity to
submit position papers. What the fundamental law
abhors is not the absence of previous notice but rather
the absolute lack of opportunity to ventilate a party’s
side. There is no denial of due process where the party
submitted its position paper and filed its motion for
reconsideration (Odin Security Agency vs. De la
Serna, 182 SCRA 472 [February 21,1990]).
Petitioner’s subsequent Motion for Reconsideration
and/or Appeal has the effect of curing whatever
irregularity might have been committed in the
proceedings below (T.H. Valderama and Sons, Inc. vs.
Drilon, 181 SCRA 308 [January 22, 1990}).
Furthermore, it has been consistently held that
findings of administrative agencies which have
acquired expertise because their jurisdiction is
confined to specific matters are accorded not only
respect but even finality (Asian Construction and
Development Corporation vs. NLRC, 187 SCRA 784
[July 27, 1990]; Lopez Sugar Corporation vs.
Federation of Free Workers, 189 SCRA 179 [August
30, 1990]). Judicial review by this Court does not go
so far as to evaluate the sufficiency of the evidence but
is limited to issues of jurisdiction or grave abuse of
discretion (Filipinas Manufacturers Bank vs. NLRC,
182 SCRA 848 [February 28,1990]). A careful study
of the records shows no substantive reason to depart
from these established principles.
While it is true that loss of trust or breach of
confidence is a valid ground for dismissing an
employee, such loss or breach of trust must have some
basis (Gubac v, NLRC, 187 SCRA 412 [July 13,
1990]), As found by the Labor Arbiter, the accusations
of petitioner PNOC-EDC against private respondent
Mercado have no basis. Mrs. Leonardo Nodado, from
whom the nipa shingles were purchased, sufficiently
explained in her affidavit (Rollo, p. 36) that the total
purchase price of P1,680.00 was paid by respondent
Mercado as agreed upon. The alleged discount given
by Mrs. Nodado is not supported by evidence as well
as the alleged appropriation of P8.66 from the cost of
fabrication of

495

VOL. 201, SEPTEMBER 11, 1991 495

Cruz vs. Court of Appeals

rubber stamps. The Labor Arbiter, likewise, found no

evidence to support the alleged violation of company
rules. On the contrary, he found respondent Mercado’s
explanation in his affidavit (Rollo, pp. 38–40) as to the
alleged violations to be satisfactory. Moreover, these
findings were never contradicted by petitioner PNOC-
EDC.
PREMISES CONSIDERED, the petition is
DENIED and the resolution of respondent NLRC
dated July 3, 1987 is AFFIRMED with the
modification that the moral damages are reduced to
Ten Thousand (P10,000.00) Pesos, and the exemplary
damages reduced to Five Thousand (P5,000.00) Pesos.
SO ORDERED.

          Melencio-Herrera (Chairman), Padilla and

Regalado, JJ., concur.
     Sarmiento, J., On leave.

Petition denied. Resolution affirmed with

modification.
 Note.—The dismissal of employees is a
management prerogative but it must be done without
abuse of discretion (Pacific Cement Company, Inc. vs.
National Labor Relations Commission, 173 SCRA
193).

——o0o——

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