G.R. No. 190559 ; March 7, 2012
BLUE SKY TRADING COMPANY, INC., JOSE TANTIANSU and LINDA TANTIANSU, Petitioners, vs. ARLENE P. BLAS and JOSEPH D. SILVANO, Respondents.

FACTS

Petitioner Blue Sky Trading Company, Inc. dismissed respondents Arlene P. Blas and Joseph D. Silvano, a stock clerk and a warehouse helper, for alleged gross dishonesty and loss of trust and confidence. The dismissal stemmed from the loss of six intensifying screens from the company warehouse. After an inventory discrepancy was reported, the company issued notices to explain and placed the respondents under preventive suspension. In their written explanations, both respondents denied any knowledge of or involvement in the theft. The company, however, found their explanations unsatisfactory and terminated their employment, citing conspiracy and loss of trust. The respondents, along with other dismissed co-workers, filed a complaint for illegal dismissal.
The Labor Arbiter ruled the dismissals were illegal, a decision reversed by the NLRC, which found just cause. The Court of Appeals reinstated the Labor Arbiter’s decision, prompting the petitioners to elevate the case to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

Whether the Court of Appeals erred in ruling that the respondents were illegally dismissed.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision, holding that the respondents were illegally dismissed. The legal logic centered on the employer’s failure to satisfy the twin requirements for a valid dismissal: substantive and procedural due process. On substantive grounds, loss of trust and confidence must be based on willful breach of trust by an employee charged with duties requiring trust and confidence. The Court found no substantial evidence proving the respondents’ participation in the theft. Their mere access to the warehouse, without proof of actual dishonest act or conspiracy, was insufficient to establish just cause. The affidavits of desistance executed by their co-accused did not implicate the respondents.
On procedural grounds, the investigation conducted was deemed insufficient. The company relied solely on the written explanations of the employees without conducting a thorough, impartial hearing where the respondents could confront evidence against them. The notices of dismissal were issued merely a day after the respondents submitted their explanations, indicating a pre-determined outcome. Consequently, the dismissal was declared illegal for lack of both just cause and proper procedure. The respondents were awarded full backwages, separation pay in lieu of reinstatement due to strained relations, and attorney’s fees.