G.R. No. L-67880 September 15, 1989
FELIX ESMALIN, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (3rd Division) and CARE PHILIPPINES, respondents.

FACTS

Petitioner Felix Esmalin was employed as a warehouseman by private respondent CARE Philippines, a non-profit organization handling relief commodities. His duties involved monitoring deliveries and reporting on shipments at the Transcon Warehouse. A large-scale theft of relief goods (soy fortified flour and corn soya milk) occurred from the warehouse. An investigation by the Criminal Investigation Service (CIS) and the Tanodbayan implicated Esmalin, citing his role as Officer-in-Charge. The reports alleged he cooperated in retesting commodities to alter their classification, facilitated irregular withdrawals, and failed in his duty to monitor deliveries properly, thereby enabling the diversion of goods. Based on this, CARE Philippines filed an application for clearance to suspend and later dismiss Esmalin on the ground of loss of trust and confidence, placing him under preventive suspension.
The Labor Arbiter ruled in favor of Esmalin, ordering his reinstatement with back wages, finding no substantial evidence of his participation in the theft. This was reversed by the National Labor Relations Commission (NLRC), which declared the dismissal justified. The NLRC found that Esmalin, occupying a position of trust, committed acts constituting breach of that trust based on the investigative findings. Esmalin elevated the case to the Supreme Court via certiorari.

ISSUE

Whether the NLRC committed grave abuse of discretion in upholding the dismissal of petitioner Felix Esmalin on the ground of loss of trust and confidence.

RULING

The Supreme Court dismissed the petition and affirmed the NLRC decision, finding the dismissal for loss of trust and confidence valid. The legal logic rests on the nature of the employee’s position and the standard of proof required. For dismissal on this ground, the law requires that the employee holds a position of trust and confidence, and that there is a showing of an act justifying the loss of such trust. The Court clarified that proof beyond reasonable doubt is not necessary; substantial evidence, or such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, suffices in labor cases.
The Court found that Esmalin, as warehouseman and OIC, undeniably occupied a position of trust, responsible for safeguarding valuable relief commodities. The detailed findings of the CIS and the Tanodbayan, which implicated him in a scheme to divert goods through acts like cooperating in irregular retesting and failing to secure delivery documents, constituted substantial evidence of breach. His alleged acts were directly related to his fiduciary duties. The employer’s loss of confidence, given these circumstances, was reasonable. The Court also modified the NLRC’s reinstatement order, awarding separation pay in lieu of reinstatement due to the eroded relationship of trust, following the doctrine that reinstatement is not viable when such a relationship has been severed.