G.R. Nos. 86214-15 & 86224-25, March 21, 1990
Omar K. Al-Esayi and Company, Ltd. and T.C. Igna Overseas Recruitment Corporation, petitioners, vs. Hermino Flores and the National Labor Relations Commission, respondents.

FACTS

Complainants, including Herminio Flores, were hired by T.C. Igna Overseas Recruitment Corporation (IGNA) for its foreign principal, Omar K. Al-Esayi and Co., Ltd. (OMACO), to work as auto inspectors in Saudi Arabia. They signed two contracts in the Philippines but were compelled to sign a third, altered contract upon arrival in Riyadh. In July 1986, OMACO received reports that some auto inspectors were accepting bribes. Following an investigation, Flores and others were dismissed and repatriated without written notice or formal charges. Flores filed a complaint for illegal dismissal with the Philippine Overseas Employment Administration (POEA).
The POEA Administrator initially dismissed Flores’s complaint, finding the dismissal was for cause due to loss of trust and confidence. The POEA reasoned that the complainants’ positions required a high degree of integrity and that OMACO had made significant investments in their training. On appeal, the National Labor Relations Commission (NLRC) affirmed the dismissal of co-complainant Enrique De la Cruz, as evidence directly implicated him in the bribery anomaly. However, it reversed the decision regarding Flores.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in finding that Herminio Flores was illegally dismissed.

RULING

The Supreme Court dismissed the petitions and upheld the NLRC’s decision. The legal logic centers on the requirements for a valid dismissal, even for a probationary employee, and the invalidity of a substituted employment contract. The NLRC found that Flores’s dismissal was based merely on conjecture—specifically, a manager’s assumption that Flores must have known about or been involved in the bribery scheme because he was on the same inspection team—without any direct evidence of his participation. Dismissal based on loss of trust and confidence must rest on substantial evidence of an actual breach of trust, not on mere suspicion or guilt by association.
Furthermore, the Court emphasized that Flores, even if considered a probationary employee at the time of his dismissal, was entitled to procedural due process. His termination without prior notice and a hearing was illegal. The third contract signed in Riyadh, which altered the terms agreed upon in the Philippines, was declared void for being a prohibited contract substitution under Article 34(i) of the Labor Code. The POEA’s prior sanction against IGNA for this very violation confirmed the contract’s nullity. The Supreme Court accorded finality to the NLRC’s factual finding of illegal dismissal, as it was supported by substantial evidence and the petitioners failed to prove that the NLRC acted with grave abuse of discretion.