G.R. No. L-75997 August 18, 1988
Hospicio de San Jose de Barili and Romulo Cui, petitioners, vs. National Labor Relations Commission and Douglas R. Sanson, respondents.

FACTS

Petitioner Hospicio de San Jose de Barili is a charitable institution, with petitioner Romulo Cui as its administrator. Private respondent Douglas R. Sanson was appointed Director of its home for the aged and disabled (HOME) in October 1982. On October 25, 1983, Cui wrote Sanson terminating his services effective retroactively to May 1, 1983. The dismissal was based on alleged habitual drunkenness on duty, uttering defamatory remarks against Cui and his family, and undermining the institution by instigating two employees to file a complaint against it. Sanson contested his dismissal as illegal and filed a complaint with the NLRC.
The Labor Arbiter ruled in favor of Sanson, ordering his reinstatement with full backwages, damages, and other benefits. The NLRC affirmed this decision with modifications. Petitioners appealed to the Supreme Court, initially arguing the dismissal was justified due to loss of trust and confidence in a confidential managerial employee. During oral arguments, they raised for the first time the jurisdictional issue, contending that as a public charitable institution, its employees fall under the Civil Service Commission, not the NLRC.

ISSUE

The issues are: (1) Whether the NLRC had jurisdiction over the case; and (2) Whether the dismissal of Sanson was legal and justified.

RULING

The Supreme Court dismissed the petition, affirming the NLRC’s jurisdiction and finding the dismissal illegal. On jurisdiction, the Court ruled that while Hospicio is a public charitable institution, it is not a government instrumentality or agency. Therefore, its employees are not covered by the Civil Service Law and remain under the jurisdiction of the NLRC. Moreover, petitioners voluntarily submitted to the NLRC’s jurisdiction by participating in the proceedings and seeking affirmative relief; they are thus estopped from questioning its jurisdiction belatedly.
On the merits, the Court upheld the NLRC’s finding that the dismissal was unjustified. For a dismissal based on loss of trust and confidence to be valid, it must be founded on willful breach of trust by the employee, not on mere caprice. The alleged grounds—drunkenness, defamatory remarks, and instigation of complaints—were not substantiated by direct or competent evidence. The affidavits presented were based on hearsay and uncorroborated reports. The termination letter was issued without granting Sanson any opportunity to be heard or defend himself, violating his constitutional right to due process. His documented satisfactory performance further negated the claim of loss of confidence. The Court modified the damages awarded, limiting backwages to two years and reducing moral and exemplary damages, considering Sanson’s short tenure and the charitable nature of the institution. Reinstatement was upheld.