COMMERCIAL MOTORS CORPORATION, PETITIONER, VS. COMMISSIONERS, SECOND DIVISION, NATIONAL LABOR RELATIONS COM­MISSION, AND PEDRO UMLAS, RESPONDENTS.

This special civil action of certiorari treats of a
decision of the National Labor Relations Commission dated April 7, 1986,
declaring illegal the dismissal of Pedro Umlas from
employment by the Commercial Motors Corporation (hereafter, simply CMC), and directing
Umlas‘ reinstatement to his former position without
loss of seniority rights and benefits with full back wages computed from the
time of dismissal on November 16, 1983 until actually reinstated.

CMC is engaged in the sale, marketing and distribution of
Mercedes Benz vehicles and spare parts, as well as in the servicing, repair and
maintenance of said vehicles.  It has
branches in various parts of the country, including one in Davao.^[1]
Pedro Umlas had been working with CMC since May,
1973, first as Spare Parts Checker at the Manila Office; later, as
Warehouse-in-Charge in the Davao Branch; and still
later, Spare Parts Supervisor in the same Branch.^[2]

Sometime in September, 1983, Umlas was
required by his superiors to attend a seminar at the Manila Office, to be held
from September 24, to October 3, 1983.  Before leaving, and on instructions of Nestor
Santos, the Manager of the Davao Branch, Umlas gave the keys of the warehouse to Rosalio
Lacaba, the Spare Parts Counter Salesman.^[3]

Apparently Branch Manager Nestor Santos learned afterwards of
some irregularities in the Spare Parts Department.  After preliminary verification, he asked Umlas to make an initial listing of missing parts, at the
same time reporting the matter to the Head Office.  Umlas failed to
submit any list, so Santos called
him and asked him directly about the reportedly missing spare parts.  Thereafter, Santos
instructed Umlas to make a report directly to the
Manila Office, which the latter did, on October 22, 1983.^[4]

On October 27, 1983,
an audit team from the Manila Office arrived in Davao and proceeded to conduct an
audit and physical inventory of spare parts in the Branch.  Branch Manager Santos received information
that Umlas not only refused to cooperate with the
audit team, as instructed, but attempted to delay, disrupt and confuse the
auditors.^[5] Santos
then issued an inter-office memorandum stating the following, among others:^[6]

” * * * *.

Please be informed further that no local Davao spare parts personnel will
participate in the audit.  Davao personnel will, however,
continue with the normal activities of selling, posting, recording, picking and
etc.  Davao personnel therefore should
not interfere in any way with the audit team assignment/job unless properly
requested.”

The audit team discovered that spare parts were indeed missing or
otherwise unaccounted for with a total value of P244,825.59.  This finding was set out in an Affidavit of
Loss executed on December 7, 1983
by Branch Manager Nestor Santos.^[7]

An investigation on the same matter of missing spare parts was
also conducted among the employees.  One
of them, Raul Morandante, the Service Counter Requisitionist of the Davao
Branch, gave a sworn statement on November
3, 1983 setting out the following:^[8]

1) on October 12, 1983,
he saw Rosalio Lacaba, the
Spare Parts Counter Salesman,^[9]
bring out a sealed carton (cardboard box) which he believed to contain a
Mercedes Benz drive-shaft; Lacaba placed it in his
jeep, parked inside the CMC compound;

2) to confirm his suspicion, Morandante
made a check of spare parts in the warehouse the following day and then and
there discovered that several spare parts were actually missing;

3) he reported this to his superior, who happened to be Pedro Umlas; the latter told him he would conduct his own investigation.

On November 8, 1983,
five days later, Morandante executed a supplemental
statement,^[10]
additionally declaring the following:

1) Umlas had told him not to inform
Branch Manager Nestor Santos about the missing spare parts; and

2) on or about October 17, 1983, after Umlas
had talked privately with Lacaba in the spare parts
office, Umlas had instructed him (Morandante)
to break the back door so as to give the impression that burglars had broken
into the building and taken the missing spare parts, but Morandante
had refused to do so.

On November 16, 1983,
Umlas was served with a notice of preventive
suspension and termination of his services, to take effect on December 16, 1983 on grounds of
serious misconduct and dishonesty in the performance of duties, and fraud and wilful breach and/or loss of trust as Branch Spare Parts
Supervisor.  The notice reserved to
management all actions for restitution and recovery of its losses.^[11]

On December 14, 1983,
CMC filed a criminal complaint with the Office of the Fiscal of Davao City charging Umlas, Lacaba, and a certain Rosalio Yap
with qualified theft and violation of the Anti-Fencing Law (PD 1612).  The preliminary investigation resulted in the
dropping of all the charges against Umlas on the
ground of insufficiency of evidence, on the one hand and the filing of
corresponding indictments against Lacaba and Yap,
on the other.^[12]
The dismissal of the accusations against Umlas was
sustained after a reinvestigation undertaken at CMC’s instance.  A petition by CMC to have the resolutions of
dismissal reviewed by the Ministry of Justice was rejected because filed out of
time.^[13]

On January 3, 1984, Umlas filed with
the Regional Arbitration Branch at Davao City a
complaint against CMC for illegal dismissal, illegal suspension, and for
recovery of back wages and damages. 
After due proceedings, the Labor Arbiter found that he had been legally
and properly dismissed from employment. 
The Arbiter thus dismissed Umlas‘ complaint
but directed the payment to him of “his 13th month pay (P1,715.00) and
service incentive leave pay (P522.80)” in the total amount of P2,237.80.^[14]

On appeal seasonably taken by Umlas,
however, the National Labor Relations Commission (Second Division) reversed the
judgment of the Arbiter insofar as the latter had ruled Umlas‘
separation legal.  The Commission’s
decision rendered on April 7, 1986
contained the following dispositive portion, to wit:

“WHEREFORE, in view of the foregoing, respondent is hereby
ordered to immediately reinstate complainant to his former position without
loss of seniority rights and benefits, with full backwages
computed form the time he was illegally terminated/suspended on November 16, 1983 until actually
reinstated.

The claim for moral and exemplary damages ** (is) denied for want
of proof and arguments.

Except as herein MODIFIED, the appealed Decision is affirmed in all
other dispositions.”

In the action at bar CMC would have this Court annul the NLRC
decision of April 7, 1986, contending that the NLRC had gravely abused its
discretion when it reversed the Labor Arbiter’s judgment “merely because
the criminal charges filed against ** (Umlas) were
dropped by the Office of the City Fiscal.”^[15]

The contention is untenable. 
The Commission’s reversal of the Arbiter’s decision was not in truth grounded
on the dismissal by the public prosecutor of the criminal charges proferred by CMC against Umlas.  It was primarily premised on the failure of
CMC to establish by adequate evidence its avowed ground for the termination of Umlas‘ services: 
loss of confidence.  More
specifically, like the City Fiscal of Davao, the
Commission found the evidence given by Morandante, on
which the Labor Arbiter appears to have relied quite heavily, to be unworthy of
credit in the light of all the attendant circumstances.

Now, there is no gainsaying that loss of confidence is a
recognized ground for the discharge of an employee from employment.  But such a ground must be founded from facts
established by substantial evidence.  And
the burden of establishing such facts as reasonably cause loss of confidence in
an employee — such facts as reasonably generate belief by the employer that
the employee is connected with some misconduct and the nature of his
participation therein is such as to render him unworthy of the trust and
confidence demanded of his position — is on the employer.^[16]
The fact that the employee has been absolved in a criminal prosecution
involving said misconduct does not preclude the employer from attempting to
prove the same before the labor arbiter or the latter from accepting that
evidence as sufficient foundation for a finding of lawful termination of
employment.  Withal, the employer’s
evidence, although not required to be of such degree as is required in criminal
cases, i.e., proof beyond reasonable doubt, must be substantial, must clearly
and convincingly establish the facts upon which loss of confidence in the
employee may fairly be made to rest.^[17]

The NLRC analyzed the employer’s proofs and came to the reasoned
conclusion that they did not adequately demonstrate Umlas‘
connection with the loss of spare parts. 
The petitioner tries hard to convince the Court of the faultiness of the
Commission’s appreciation of the proofs. 
The question, however, is not whether the Commission erred in its
assessment of the evidence, but whether that error, if error it be, was one
that may be characterized as whimsical, capricious, or arbitrary.  Whatever other things may be said about the
Commission’s disputed assessment of the evidence, it cannot be said to have
been done whimsically, capriciously, or arbitrarily, a proposition that must
necessarily cause dismissal of the action at bar, for failure of the petitioner
to satisfactorily show any grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the respondent Commission, as required by
Rule 65 of the Rules of Court on which said petitioner’s plea for review is
founded.

The record shows, moreover, that Umlas‘
separation from employment was effected without according him due process.  He was not given notice of the charges
against him and an opportunity to be heard thereon.  The pronouncement by the NLRC of the
illegality of Umlas’s dismissal must thus be
sustained.

It would seem, however, that the circumstances of this case
render inappropriate Umlas‘ reinstatement to his
former position, as an item of relief.  A
more equitable disposition is that which this Court has more than once made in
other cases of the same nature:  the
award, in lieu of reinstatement, of separation pay at the rate of one month’s
salary for every year of service, “so that ** (the employee) can be spared
the agony of having to work anew with ** (the employer) under an atmosphere of
antipathy and antagonism, and the ** (latter) does not have to endure the
continued service of ** (the former) in whom it has lost confidence.”^[18]

WHEREFORE, the Decision of the National Labor Relations
Commission dated April 7, 1986 in NLRC Case No. 1356-LR-Xl-84 is AFFIRMED as
regards its basic findings and conclusions, but MODIFIED as to its dispositive part in that the requirement for the
reinstatement of private respondent Pedro Umlas is
DELETED, and petitioner Commercial Motors Corporation is hereby, ORDERED:  (1) to give separation pay to said private
respondent Pedro Umlas at the rate of one month’s
salary for every year of service; (2) to pay said Pedro Umlas
back wages for three (3) years without qualification or deduction computed from
the time of his illegal suspension and dismissal from employment; and (3) to
pay Pedro Umlas the additional amount of P2,237.80,
representing the aggregate of his 13th month pay in the sum of P1,715.00 and
service incentive leave pay in the sum of P522.80, with interest thereon at the
legal rate from the filing of the complaint. 
Costs against petitioner.

SO ORDERED.

Cruz, Gancayco, Griño-Aquino,
and Medialdea,
JJ., concur.

^[1] Rollo, p. 279

^[2] Id.,
p. 242

^[3] Id.,
pp. 242-243

^[4] Id.,
p. 47

^[5] Id.,
p. 10

^[6] Id.,
p. 243

^[7] Id.,
pp. 39-42

^[8] Rollo, pp. 36-37

^[9] To
whom, it will be recalled, Umlas had delivered the
keys to the warehouse prior to his departure to attend a seminar in the Manila
Office from September 24 to October 3, 1983, supra

^[10] Rollo, p. 38

^[11] Id.,
pp. 11-12

^[12] Id.,
pp. 145-150

^[13] Id.,
p. 46

^[14] Id.,
pp. 46A-52

^[15] Id.,
p. 6

^[16]
SEE Egyptair v. NLRC, 148 SCRA 125

^[17]
SEE Starlite Plastic Industrial Corporation v.
NLRC, 171 SCRA 315 (1989); General Bank & Trust Co. v. C.A.,
135 SCRA 569 (1985)

^[18] Citytrust Finance Corporation v. NLRC, 157 SCRA 87
(1988), cited in Quezon Electric Cooperative v.
NLRC, 172 SCRA 88, 97-98 (1989)