G.R. No. L-61272 September 29, 1989
Bagong Bayan Corporation, Realty Investors & Developers, petitioner, vs. National Labor Relations Commission, Antonio A. Rabe and Ernani T. Magpusao, respondents.

FACTS

Private respondents Antonio Rabe and Ernani Magpusao were regular dishwashers at petitioner’s El Grande Tropical Palace Resort Hotel. On April 11, 1980, they were preventively suspended based on a sworn statement by Milo Mitra, a janitor from a contractor agency, implicating them in an alleged pilferage of hotel plates discovered on April 8, 1980. Mitra’s statement, executed while in police custody, claimed Rabe asked him to deliver a box on April 10. Petitioner subsequently filed an application for clearance to terminate the employees’ services. The employees, in turn, filed a complaint for illegal dismissal.
The Labor Arbiter ruled in favor of the employees, ordering reinstatement with backwages, finding the evidence of guilt insufficient. Petitioner appealed to the NLRC. During the appeal, the investigating fiscal recommended dropping the criminal complaint for lack of probable cause. The NLRC affirmed the Arbiter’s decision, noting glaring inconsistencies: Mitra’s statement about delivering a box at 1:00 PM on April 10 contradicted police affidavits stating the apprehension of implicated persons occurred at 11:30 AM that same day, making the sequence of events impossible.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in affirming the finding that the dismissal of the employees was illegal due to lack of sufficient evidence to establish loss of trust and confidence.

RULING

The Supreme Court dismissed the petition, upholding the NLRC’s decision. The legal logic centers on the quantum of proof required for dismissal based on loss of confidence. While such dismissal does not require proof beyond reasonable doubt, it must be supported by substantial evidence, meaning such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. The Court found no grave abuse of discretion in the NLRC’s evaluation that the evidence was insufficient.
The sworn statement of Milo Mitra was deemed unreliable due to its inherent incredibility and the fatal chronological impossibility highlighted by the commission. The subsequent dismissal of the criminal case by the fiscal, while not determinative, bolstered the conclusion of a lack of substantial evidence. The employer’s claim of acting in good faith was rejected, as good faith in this context requires a reasonable basis supported by facts, which was absent. Consequently, the dismissal was illegal. The award of reinstatement with backwages (limited to three years) and seniority rights was proper, with separation pay as an alternative if reinstatement was no longer feasible. The absence of a finding of unfair labor practice did not negate the illegality of the dismissal.