GR No. 123456, *Garcia v. Reyes* (2020)

FACTS: Petitioner Juan Garcia was a regular employee of XYZ Corporation. On January 15, 2019, he was served a notice of termination for “loss of trust and confidence” after the company alleged he was involved in a scheme to pilfer office supplies, based on an anonymous tip and circumstantial evidence. Garcia denied the allegations and demanded a formal hearing, which the company refused, stating that the decision of management was final. He filed a complaint for illegal dismissal. The Labor Arbiter ruled in Garcia’s favor, finding the dismissal illegal due to lack of substantive proof and procedural due process. On appeal, the National Labor Relations Commission (NLRC) reversed the decision, holding that loss of trust and confidence is a valid ground for dismissal of a regular employee and that the company’s investigation was sufficient. The Court of Appeals affirmed the NLRC decision.

ISSUE

Whether or not Garcia was illegally dismissed.

RULING

YES, Garcia was illegally dismissed. For a dismissal based on loss of trust and confidence to be valid, two requisites must concur: (1) the employee must be holding a position of trust and confidence, and (2) there must be an act justifying the loss of trust and confidence, supported by substantial evidence. While Garcia, as an employee handling company property, held a position of trust, the employer failed to present substantial evidence of his actual participation in the pilferage. Mere accusations, anonymous tips, and unsubstantiated reports do not constitute substantial evidence. Furthermore, the employer violated Garcia’s right to procedural due process by not affording him a meaningful opportunity to be heard and defend himself. The twin requirements of notice and hearing are indispensable. The refusal to grant a hearing was a fatal procedural flaw. Therefore, the dismissal was both substantively and procedurally infirm. The Court REINSTATED the decision of the Labor Arbiter declaring the dismissal illegal and ordering Garcia’s reinstatement with full backwages.