G.R. No. L-51809 December 19, 1980
Abraham Razon, petitioner, vs. Hon. Amado G. Inciong as Deputy Minister of Labor; National Labor Relations Commission (NLRC); and Philips Electrical Lamps, Inc., respondents.

FACTS

Petitioner Abraham Razon was employed as a Supervisor by Philips Electrical Lamps, Inc. on April 17, 1974. On January 8, 1976, the company filed an application to terminate his services, citing grounds of animosity with colleagues and subordinates, misrepresentation of his qualifications as an electronic expert, and a weird disposition involving shouting and challenging subordinates to fights. Razon filed a complaint for illegal dismissal. The Labor Arbiter, in a decision dated December 29, 1976, ruled that Razon was not guilty of the charges. However, the Arbiter did not order reinstatement, stating that the company’s trust and confidence in Razon was already in doubt, and instead awarded separation pay equivalent to his salary from dismissal to the decision date.
The company appealed to the NLRC, arguing that if reinstatement was not warranted, then separation pay should not be granted either. The NLRC, in a resolution dated December 6, 1977, modified the award to separation pay of one-half month pay per year of service. Razon then appealed to the Secretary of Labor, praying for reinstatement with backwages, but the Deputy Minister of Labor dismissed his appeal on February 1, 1979. This prompted the petition for certiorari to the Supreme Court.

ISSUE

Whether the Labor Arbiter and the NLRC committed a grave abuse of discretion or error in law in merely awarding separation pay instead of ordering reinstatement with backwages, despite a finding that the employee was not guilty of the charges for dismissal.

RULING

The Supreme Court granted the petition and ordered reinstatement with backwages. The Court agreed with the position of the Solicitor General, representing the public respondents, which highlighted the absence of a clear, positive finding that the company had completely lost trust and confidence in Razon or that he willfully breached such trust under Article 283(d) of the Labor Code. The mere existence of interpersonal antagonisms and consultations with superiors did not constitute substantial evidence to justify loss of trust, especially for a managerial employee.
The Court emphasized that the only serious charge was incompetence, which the company allegedly discovered nearly two years after employment, undermining its credibility. The ruling that Razon was not guilty of the charges fundamentally negated the legal basis for termination. While the Labor Arbiter denied reinstatement citing doubtful trust, this conclusion was unsupported by factual findings of willful breach, oppression, or self-destruction of the employer business, which are necessary to override the statutory right to reinstatement upon a finding of illegal dismissal. The principle of res judicata was also deemed inapplicable due to the non-litigious and summary nature of labor proceedings. Consequently, the orders were reversed, and Philips Electrical was ordered to reinstate Razon with backwages from the time of his dismissal.