G.R. No. L-45396. January 27, 1983.
JOHNNY BUSTILLOS, petitioner, vs. AMADO INCIONG, in his capacity as Acting Secretary of Labor and CUMMINS DIESEL SALES & SERVICE CORP. OF THE PHILIPPINES, respondents.

FACTS

Petitioner Johnny Bustillos was employed as a Service Supervisor by private respondent Cummins Diesel Sales & Service Corporation since 1961. In 1972, gross anomalies were discovered at the company’s La Trinidad, Benguet branch. Following an investigation, the company filed an application for clearance to dismiss Bustillos and six other employees in 1973 for alleged misconduct. He was terminated on grounds of gross negligence and involvement in irregularities, leading him to file a complaint for reinstatement with backwages before the National Labor Relations Commission (NLRC).
The Labor Arbiter ordered Bustillos’s reinstatement with backwages, a decision affirmed by the NLRC on appeal. However, the Acting Secretary of Labor, Amado Inciong, reversed these rulings. While explicitly noting that Bustillos had “no involvement in the alleged pilferage,” the Secretary held that the company had a right to terminate him because he no longer enjoyed the trust and confidence required for his managerial position. The termination was deemed not for a justifiable cause, but Bustillos was awarded only separation pay instead of reinstatement.

ISSUE

Whether the dismissal of petitioner Bustillos, based solely on alleged loss of trust and confidence despite a finding of no involvement in the pilferage that prompted the investigation, is valid under the constitutional guarantee of security of tenure.

RULING

The Supreme Court granted the petition, reversed the Secretary of Labor’s order, and ordered Bustillos’s reinstatement with three years of back pay. The legal logic is anchored on the constitutional right to security of tenure, which requires that dismissal, especially on the subjective ground of loss of confidence, must have a factual basis. The Court emphasized that loss of confidence cannot be invoked arbitrarily where the charges against the employee are unsubstantiated. Since the Secretary’s own order explicitly found Bustillos had no involvement in the pilferage, the alleged loss of confidence was rendered baseless. Citing precedents like Central Textile Mills, Inc. v. NLRC and Acda v. Minister of Labor, the Court ruled that reinstatement is the proper remedy when a dismissal based on loss of confidence is not supported by evidence. The Court further noted that dismissal was too severe a penalty; his eleven years of service warranted a more protective approach consistent with the state’s duty to assure just conditions of work. The order for separation pay in lieu of reinstatement was a reversible error.