G.R. No. 76272 July 28, 1999
JARDINE DAVIES, INC., petitioner, vs. THE NATIONAL LABOR RELATIONS COMMISSION, JARDINE DAVIES EMPLOYEES UNION (FFW) and VIRGILIO REYES, respondents.

FACTS

Petitioner Jardine Davies, Inc., a distributor of “Union 76” lubricants, engaged a private investigation agency due to reports of illegal manufacturing and distribution of its products. The investigation implicated its sales representative, Virgilio Reyes, in the illegal activity. Based on this, a search warrant was secured, leading to the seizure of alleged fake items from an apartment complex reportedly occupied by Reyes. A criminal complaint for unfair competition and an administrative charge for serious misconduct were subsequently filed against him, resulting in his termination on February 23, 1983.
However, the seized materials were later released by court order after Donato Reyes, Virgilio’s brother, successfully petitioned the court, proving he was the legal tenant and proprietor of Lubrix Conglomerate, a licensed business, and presented receipts for the purchased Unoco products. Relying on this development, Virgilio Reyes filed a complaint for illegal dismissal. The Labor Arbiter dismissed the complaint, finding Reyes involved in the illegal activity, constituting serious misconduct and breach of trust. The NLRC reversed this decision on appeal.

ISSUE

Whether the NLRC committed grave abuse of discretion in reversing the Labor Arbiter’s decision and finding the dismissal of Virgilio Reyes illegal.

RULING

The Supreme Court denied the petition and affirmed the NLRC’s decision, with modification regarding the award of backwages and separation pay. The Court held that the NLRC did not commit grave abuse of discretion. In a certiorari proceeding under Rule 65, the Court’s review is limited to jurisdictional issues and does not extend to re-evaluating the evidence or correcting alleged errors in judgment, absent a showing of capricious or whimsical exercise of judgment.
The Court found the NLRC’s conclusion—that the evidence failed to establish, by substantial evidence, that Reyes committed serious misconduct or breach of trust—was supported by the record. The release of the seized items by the court, based on Donato Reyes’ lawful ownership and business, severely undermined the basis for the accusation. The employer’s case rested largely on the initial investigation and seizure, which was later invalidated. The burden of proving just cause for dismissal rests on the employer, and the standard required is substantial evidence, not proof beyond reasonable doubt. The NLRC correctly found this burden was not met, as the evidence did not provide a reasonable basis for the loss of trust and confidence. Consequently, the dismissal was illegal. The Court modified the award to limit backwages to three years and granted separation pay in lieu of reinstatement due to the strained relations and the lapse of time.