G.R. No. L-58927 and L-59870, October 27, 1986
San Miguel Corporation vs. Deputy Minister of Labor and Employment, et al.; and Rodolfo Jolingan, et al. vs. San Miguel Corporation, et al.

FACTS

Petitioners Rodolfo Jolingan, Mariano Goiti Jr., and Jesus Fuentes Jr. were employees of San Miguel Corporation (SMC) assigned to the Cadiz Sales Office. In July 1979, they were accused of misappropriating company funds by failing to fully remit their collections from dealers. After an investigation where they admitted to using the shortages for personal benefit, they were placed under preventive suspension. The employees filed a complaint for illegal dismissal, arguing SMC dismissed them without the required prior clearance from the Ministry of Labor. The Assistant Regional Director ordered their reinstatement with full backwages, finding a violation of the clearance requirement.
SMC appealed to the Ministry of Labor. The Deputy Minister found the employees were under preventive suspension, not dismissed, and that the charges of misappropriation were substantiated. The initial appellate order reinstated Jolingan without backwages but granted SMC clearance to terminate Goiti and Fuentes. Upon motion for reconsideration, the Deputy Minister modified the order, directing the reinstatement of Goiti and Fuentes as well, also without backwages, treating their cases similarly to Jolingan’s. Both SMC and the employees filed separate petitions for certiorari before the Supreme Court.

ISSUE

Whether the Deputy Minister of Labor committed grave abuse of discretion in ordering the reinstatement of employees who were found to have misappropriated company funds.

RULING

Yes. The Supreme Court set aside the Deputy Minister’s order. The legal logic centers on the principle of loss of trust and confidence. Employees holding positions of responsibility, such as sales personnel handling company collections, owe a high degree of fidelity. Their admitted misappropriation of funds constitutes a breach of this trust, which is a valid ground for dismissal under Article 283 of the Labor Code. The Court emphasized that the act of misappropriation creates both civil and criminal liability; subsequent restitution does not extinguish the betrayal of trust or exempt the employee from disciplinary action.
The finding that the employees committed the acts not just once, but repeatedly, demonstrated a pattern of deception incompatible with the demands of their positions. Citing precedents, the Court ruled that requiring SMC to reinstate such employees would be unjust, as their continuance in service is inimical to the employer’s interest. However, in recognition of their years of service (sixteen, ten and a half, and six years, respectively), the Court balanced the employer’s right to dismiss with equitable considerations, ordering SMC to grant them separation pay in lieu of reinstatement. The grant of clearance to terminate their employment was thus affirmed.