China City Restaurant Corp. v. National Labor Relations Commission
REITERATIONFacts
The Antecedents: Petitioner China City Restaurant employed private respondents Monico Dieto and Junilito Cablay. A union, with Dieto as President, was organized and demanded recognition. Abe Fuentes, a steamer helper, was detained for allegedly stealing P2,000.00 worth of dried scallops. Fuentes later gave a statement implicating Dieto and Cablay in a conspiracy to steal scallops since April 1988, with the proceeds divided among them. A criminal charge for qualified theft was filed, and an amended information included Dieto and Cablay. Fuentes turned state witness. On March 22, 1989, petitioner terminated Dieto and Cablay's services for loss of trust and confidence. Procedural History: Private respondents filed a complaint for illegal dismissal, professing ignorance of the crime and claiming they were implicated due to their union activities. The Labor Arbiter declared their dismissal illegal, ordering reinstatement with full backwages and attorney's fees. Petitioner appealed to the NLRC, which affirmed the Labor Arbiter's decision but modified the award to separation pay with full backwages instead of reinstatement. Petitioner's motion for reconsideration was denied. The Petition: Petitioner seeks to annul the NLRC Resolutions, arguing that the preliminary investigation findings by the City Fiscal sufficiently accorded due process and that the award of separation pay with backwages was unduly harsh.
Issue(s)
Whether the respondent Commission acted with grave abuse of discretion in holding that the petitioner failed to observe due process in dismissing the private respondents due to lack of substantial evidence. Whether the respondent Commission acted with grave abuse of discretion in declaring the dismissal illegal and awarding separation pay with backwages.
Ruling
The petition is DISMISSED. The Resolution of the National Labor Relations Commission dated November 29, 1990 is AFFIRMED in toto with the modification that the amount of backwages be reckoned from the actual date of dismissal up to the date of this decision, which in no case should exceed three (3) years.
Ratio Decidendi
On the issue of due process and substantial evidence for dismissal: The Court held that while a preliminary investigation by the City Fiscal can generally satisfy the due process requirement, it is not an all-embracing rule. In this case, the fiscal's finding of a prima facie case was based solely on the affidavit of Abe Fuentes, the co-accused who turned state witness. The Court noted that Fuentes implicated the private respondents only after a series of talks with petitioner's representatives and after petitioner facilitated his release on bail. Furthermore, the Regional Trial Court, which acquitted the private respondents of qualified theft, doubted the veracity of Fuentes' testimony due to the delay in implication, the employer's role in Fuentes' release, the lack of corroborating evidence, and the fact that the private respondents were union officers. The Court emphasized that due process requires substantial evidence, which means evidence that a reasonable mind would accept as adequate to support a conclusion. The implication by Fuentes, under these circumstances, did not constitute substantial evidence to justify dismissal for loss of trust and confidence. The Court also pointed to the Labor Arbiter's finding that the implication was not enough basis for termination. The Court reiterated that the constitutional mandate of security of tenure requires that the employer's right to dismiss must not be exercised arbitrarily or without just cause. On the award of separation pay with backwages: The Court found the petitioner's contention that the award was unduly harsh to be without merit. It distinguished the present case from Wenphil Corporation vs. NLRC, where a lesser indemnity was awarded because the employer in that case had conclusively shown the employee's guilt of grave misconduct and insubordination. In this case, there was no sufficient basis to justify the dismissal. The Court affirmed that employees who are illegally dismissed are entitled to reinstatement and full backwages. However, when reinstatement is not feasible due to antagonism and strained relations, an award of separation pay plus backwages is proper. The Court modified the NLRC's award by stating that backwages should be reckoned from the actual date of dismissal up to the date of the decision, not exceeding three years, as a more equitable disposition.
Main Doctrine
A preliminary investigation finding of a prima facie case, based solely on the affidavit of an accused-turned-state witness who implicated others after conferring with management and after the employer facilitated his release, does not constitute substantial evidence to justify dismissal for loss of trust and confidence, especially when the accused were union officers and were subsequently acquitted. Due process requires substantial evidence, not merely reliance on a potentially tainted implication.