G.R. No. 97196 January 22, 1993
CHINA CITY RESTAURANT CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, MONICO DIETO and JUNILITO CABLAY, respondents.

FACTS

Petitioner China City Restaurant Corporation employed private respondents Monico Dieto and Junilito Cablay as chief steamer and roasting helper, respectively. In 1988, the China City Employees Union, with Dieto as President, was organized and demanded recognition. On October 17, 1988, a co-employee, Abe Fuentes, was detained for allegedly stealing dried scallops. After posting bail paid by the petitioner on January 20, 1989, Fuentes gave a statement implicating the private respondents in a conspiracy to steal and sell dried scallops since April 1988. A criminal charge for qualified theft was filed against the private respondents. On March 22, 1989, petitioner terminated the services of the private respondents via a memorandum on the ground of loss of trust and confidence. The private respondents filed a complaint for illegal dismissal. The Labor Arbiter declared the dismissal illegal and ordered reinstatement with full backwages. The NLRC affirmed but modified the award to separation pay plus backwages in lieu of reinstatement. Meanwhile, on March 25, 1991, the Regional Trial Court acquitted the private respondents of qualified theft on the ground of reasonable doubt.

ISSUE

Whether or not the National Labor Relations Commission committed grave abuse of discretion in holding the dismissal of private respondents illegal for lack of due process and in ordering the payment of separation pay plus backwages.

RULING

The Supreme Court dismissed the petition and affirmed the NLRC Resolution with modification regarding the computation of backwages. The Court held that the dismissal was illegal. The petitioner’s reliance on the preliminary investigation by the City Fiscal as sufficient compliance with due process, citing Batangas Laguna Tayabas Bus Co. vs. NLRC, was misplaced. In that case, the fiscal’s finding was based on voluminous documentary evidence and affidavits from a mass fraud. In the present case, the fiscal’s finding of a prima facie case was based solely on the affidavit of Abe Fuentes, whose testimony was later discredited by the trial court upon the private respondents’ acquittal. The circumstances—such as Fuentes implicating the private respondents only after talks with management and after his bail was posted by the petitioner, the lack of corroborating evidence, and the private respondents’ union activities—showed that the implication was unreliable and the dismissal was likely retaliatory. The information for qualified theft, based solely on Fuentes’ affidavit, did not constitute the substantial evidence required to establish loss of trust and confidence. The factual findings of the Labor Arbiter and the trial court on the insufficiency of the basis for dismissal are conclusive. Due process requires that the evidence for dismissal must be substantial. The award of separation pay in lieu of reinstatement was proper due to the antagonism caused by the dismissal. The backwages were to be reckoned from the date of dismissal up to the date of the decision, not exceeding three years. The Wenphil case, which awarded only indemnity for procedural due process violation, was not applicable because here the dismissal was for a cause not proven by substantial evidence.