G.R. No. L-56554 July 20, 1982
San Miguel Corporation, petitioner, vs. National Labor Relations Commission, Dante M. Aguinaldo and Manuel Nacionales, respondents.

FACTS

San Miguel Corporation (SMC) sought to dismiss employees Dante Aguinaldo and Manuel Nacionales from its Magnolia Poultry Plant based on serious misconduct, willful breach of trust, and violation of company rules. The dismissal stemmed from a confidential complaint by registered dealers alleging that plant officers, through favoritism, constrained them to purchase chickens through certain favored individuals (“chicks”), including Rosemarie Lara, who had an intimate relationship with Aguinaldo. Sworn statements implicated Aguinaldo and Nacionales in engaging in the wholesale sale of products through relatives and third parties, granting them special treatment and violating quota allocation and sanitation rules. Following an investigation, which also led to the resignation of the plant manager, SMC transferred, preventively suspended, and subsequently filed for clearance to terminate the respondents’ employment.
The Labor Arbiter dismissed the charges, finding no factual and legal justification for the dismissal. He ruled that quota allocation was not the respondents’ responsibility and that the evidence did not substantiate the alleged violations. The Arbiter ordered reinstatement with full backwages. The National Labor Relations Commission (NLRC) affirmed this decision. SMC then elevated the case to the Supreme Court via a petition for certiorari.

ISSUE

Whether the Labor Arbiter and the NLRC committed grave abuse of discretion in ordering the reinstatement of Aguinaldo and Nacionales with backwages, thereby disregarding the evidence presented by SMC to justify their dismissal for serious misconduct and breach of trust.

RULING

The Supreme Court granted the petition, finding that the Labor Arbiter acted with grave abuse of discretion in disregarding the substantial evidence of irregularities. The Court held that the sworn complaints and statements from dealers were not fabricated and provided a reasonable basis for SMC to lose trust and confidence in the employees. Under Article 283 of the Labor Code, an employer may terminate employment for serious misconduct or willful breach of trust. The law does not require proof beyond reasonable doubt as in criminal cases; it is sufficient that the employer has ample reason to distrust the employee. The Court emphasized that while the law protects labor, it does not authorize the oppression of the employer or compel the continuation of employment when the employee’s conduct is patently inimical to the employer’s interests.
However, considering the respondents’ length of service (Aguinaldo for nearly twelve years and Nacionales for over three years) and their lack of a previous bad record, the Court modified the decision on grounds of social and compassionate justice. The Court ordered the immediate reinstatement of Aguinaldo and Nacionales to substantially equivalent positions but without the award of backwages. This balanced the employer’s right to dismiss for just cause with equitable considerations for the employees.