G.R. No. L-58958 July 16, 1984
Grand Motor Parts Corporation, petitioner, vs. The Minister of Labor, The Regional Director, Ministry of Labor, Region VI, and Narciso Belicena, Jr., respondents.

FACTS

Private respondent Narciso Belicena, Jr. was hired by petitioner Grand Motor Parts Corporation as Branch Manager of its Iloilo office in April 1980. Belicena alleged he was hired on a regular basis with a monthly salary, allowances, and a profit-sharing agreement, and could only be terminated for gross incompetence or dishonesty. He claimed he was illegally dismissed via a letter dated August 31, 1980. He filed a complaint for illegal dismissal, seeking reinstatement with backwages and other monetary claims.
The petitioner corporation, in its position paper, contended that Belicena was hired on a probationary basis for six months. It asserted that his dismissal was justified due to loss of confidence, citing his overall unsatisfactory performance, failure to meet sales quotas, and conduct that eroded management’s trust during his probationary period. The Regional Director, relying solely on the parties’ position papers without a formal hearing, ordered Belicena’s reinstatement with full backwages. The Minister of Labor affirmed this order.

ISSUE

Whether the public respondents committed grave abuse of discretion in ordering the reinstatement of Belicena, a probationary managerial employee dismissed on the ground of loss of confidence.

RULING

Yes. The Supreme Court reversed the orders of the labor officials. The legal logic centers on the nature of probationary employment and the valid ground of loss of confidence for a managerial employee. Under Article 282 of the Labor Code, a probationary employee may be terminated for a just cause or upon failure to qualify as a regular employee. The Court found that Belicena was a probationary employee, and his dismissal occurred within the six-month probationary period.
While loss of confidence must have a factual basis and cannot be arbitrary, the standard of proof is not stringent. For managerial employees, loss of confidence is a recognized valid ground for dismissal. The employer need not prove the misconduct beyond reasonable doubt; it is sufficient if there is some basis for the loss of trust. The Court examined the petitioner’s allegations regarding Belicena’s performance failures and conduct and found these provided a substantive basis for the loss of confidence. His dismissal was not shown to be whimsical or unfounded.
The Court emphasized management’s prerogative to hire employees under terms set to ensure business success, which includes assessing a probationary manager’s qualifications and trustworthiness. The labor tribunals’ order for reinstatement, issued without a hearing and based merely on position papers, constituted grave abuse of discretion as it disregarded the valid grounds presented by the employer and unjustly impaired management rights. The petition was granted.