G.R. No. L-75755 November 24, 1988
ATLAS CONSOLIDATED MINING & DEVELOPMENT CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND JAIME BASANEZ, respondents.

FACTS

Jaime Basanez, a supervisor, was dismissed by Atlas Consolidated Mining & Development Corporation on January 25, 1982, following an investigation by a company board. The dismissal was based on charges of serious misconduct, willful breach of trust, and acts of dishonesty. These charges stemmed from complaints by three rank-and-file employees who alleged that Basanez demanded P100.00 from each of them to avoid termination and that they had given chickens to his step-mother, a barangay captain, to facilitate their employment. The company’s Special Investigating Board found Basanez guilty, concluding that management had lost trust and confidence in him as a managerial employee.
Basanez filed a complaint for illegal dismissal. The Labor Arbiter initially ruled in his favor, ordering reinstatement without backwages. The NLRC, on appeal, first reversed this decision and dismissed the complaint, but upon Basanez’s motion for reconsideration, it issued a new resolution on June 26, 1986. This resolution set aside the prior NLRC decision and ordered Atlas to pay Basanez separation pay in lieu of reinstatement and one year of backwages. Atlas filed this petition for review, arguing that the NLRC committed grave abuse of discretion.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in finding that the dismissal of Jaime Basanez on the ground of loss of confidence was illegal.

RULING

The Supreme Court dismissed the petition, affirming the NLRC’s finding of illegal dismissal. The legal logic centers on the requirement for a valid dismissal based on loss of confidence. For such a dismissal to be justified, especially for a supervisory employee, the loss of trust must be genuine and founded on clearly established facts supported by substantial evidence. The Court emphasized that loss of confidence must not be indiscriminately used as a pretext for termination, as it is subjective and easily susceptible to abuse, contravening the constitutional mandate for labor protection.
In this case, both the Labor Arbiter and the NLRC found the charges against Basanez unsubstantiated. The evidence, primarily the uncorroborated allegations of the three employees, was deemed insufficient to prove by strong and convincing evidence that Basanez had knowledge of the chickens given to his step-mother or that he made the monetary demands. The Court noted the absence of direct or positive proof to sustain the charges. Since the alleged acts constituting the breach of trust were not proven, the invoked “loss of confidence” had no factual basis. Consequently, the dismissal was illegal. While the Court noted that the proper remedy for an illegally dismissed employee is generally reinstatement with full backwages (capped at three years per prevailing jurisprudence), it could not modify the NLRC’s specific award of separation pay and one year of backwages because Basanez did not appeal for a correction of the judgment. Thus, the NLRC resolution was sustained.