Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated FEB 14 2005.

G.R. No. 166178 (Days Hotel Philippines, Inc., Omnisource Management, Inc. and Reynaldo Conception vs. Herbert Williams.)

Before us is this petition for review on certiorari assailing the August 31, 2004 decision[1] of the Court of Appeals in CA-G.R. SP No. 73421, which reversed that of the National Labor Relations Commission (NLRC) and reinstated with modification the original decision of the labor arbiter in an action for illegal dismissal filed by respondent Herbert Williams against the herein petitioners.

Petitioner Days Hotel Philippines, Inc. (Days Hotel) is a domestic corporation engaged in hotel business while petitioner Omnisource Management, Inc. (Omnisource) operates Days Hotel's chain of hotels. Petitioner Reynaldo Concepcion (Concepcion) is the chairman of the board of directors of both corporations.

Record shows that respondent Herbert Williams (Williams) was enticed by Concepcion into joining Days Hotel as executive vice-president and chief operating officer. Williams worked as such from May 24, 1999 to the time of his dismissal on September 21,1999.

On September 7, 1999, Williams was summoned to the office of Concepcion where he was allegedly verbally dismissed by the latter in the presence of Lettie L. Delarmente, petitioners' vice president for human resources, and Mr. Matthew Reeves, sales and marketing manager. Williams claimed that Concepcion screamed at him and told him "get out", "you're fired", and "I don't need you anymore".

On September 8, 1999, Williams received a notice from Delarmente informing him of his preventive suspension for allegedly having uttered derogatory remarks against Concepcion in front of prospective clients.

On September 17, 1999, a notice of termination was served on Williams. On September 21, his services were terminated on ground of loss of trust and confidence. On November 11, 1999, Williams lodged with the Labor Arbiter a complaint for illegal dismissal and non-payment of benefits with claims for moral and exemplary damages and attorney's fees.

In defense, petitioners contended that Williams was validly dismissed on ground of loss of trust and confidence. They averred that contrary to company policy, Williams meddled in the negotiation process with a prospective client; that he uttered unsavory comments against Concepcion; and that during his stint with Days Hotel, he was not able to contribute any significant improvement in the operation of their hotels.

On June 1, 2001, the Labor Arbiter rendered a decision[2] in favor of Williams, thus:

WHEREFORE, premises considered, judgment is hereby rendered declaring respondent Days Hotel, Inc., Omnisource Management, Inc. and Reynaldo A. Concepcion guilty of illegal dismissal, and they are hereby ordered as follows:

1. To pay complainant backwages reckoned from his dismissal up to the date of this decision in the amount of P2,033,000.00;

2. To pay complainant separation pay in an amount equivalent to one half month pay for every year of service reckoned from the time he was employed up to the time he will actually be paid his separation pay in accordance with the doctrine of imputed service, which was as of this date is in the amount of P100,000.00;

3. To pay money claims of complainant in the amount of P751,286.00;

4. To pay moral and exemplary damages in the amount of P500,000.00; and

5. To pay complainant attorney's fees in an amount equivalent to 10% of whatever he may receive by virtue of this decision.

SO ORDERED.

On petitioners' appeal, the NLRC, in a decision dated March 26, 2002,[3] reversed that of the Labor Arbiter and dismissed Williams' complaint, to wit:

WHEREFORE, all the foregoing duly considered, the decision appealed from is hereby REVERSED and SET ASIDE and a new one entered DISMISSING the complaint for lack of merit.

SO ORDERED.

The NLRC took Williams' non-denial of the accusations against him as an implied admission thereof. It ratiocinated:

To begin with, there has been no denial emanating from the complainant as to the utterances made by him to third persons concerning the management style, i.e. work habits or decision-making processes of Mr. Reynaldo Concepcion. All that is heard from him is that his statements were without malice and taken out of context.

xxx xxx xxx

Thus, with the bare answer of the complainant to the charges, there was no need to secure and present the affidavits of either Mr. Concepcion or Mr. Matthew Reeves, the latter being the person whom the complainant dissuaded from joining the companies headed by Mr. Concepcion.

xxx xxx xxx

xxx. We can conceive of no justifiable reason why the complainant should utter the remarks attributed to him to Ms. Cristy Bollos, President of Maria Plaza Suites and with whom the respondents were negotiating. By his actuation, complainant has recklessly placed in disrepute the character and person of Mr. Reynaldo Concepcion. xxx. By making known to other persons his misgivings about his immediate superior, complainant has acted in a manner contrary to and inimical to the best interests of the hotel. Hence, it is Our view that the respondents were justified in discontinuing the services of the complainant.[4]

Williams moved for a reconsideration but the NLRC denied his motion in a resolution of May 30, 2002.

Aggrieved, Williams elevated the case to the Court of Appeals via petition for certiorari. There, Williams argued that the NLRC gravely abused its discretion when it reversed the Labor Arbiter's decision on the ground that NLRC perceived his failure to deny the charges against him as an implied admission, sufficient to cause his dismissal for loss of trust and confidence.

In the herein assailed decision[5] dated August 31, 2004, the Court of Appeals reversed that of the NLRC and reinstated with modification the earlier decision of the Labor Arbiter, as follows:

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the NLRC are ANNULED. The Labor Arbiter's Decision is hereby REINSTATED with MODIFICATION as follows:

a) The award of back wages in the amount of P2,033,000.00 is DELETED and in lieu thereof, petitioner should be paid his unpaid salary in the amount of P50,000.00;

b) The separation/termination pay payable to petitioner shall be in the fixed amount of P100,000.00 pursuant to the employment contract;

c) The monetary value of petitioner's vacation, sick and rest/recreation leave benefits embedded in his money claims is DELETED.

All other orders of the Labor Arbiter stand.

SO ORDERED.

With the appellate court having denied their motion for reconsideration in its resolution of November 23, 2004,[6] petitioners are now with us via the present recourse.

The petition is unavailing.

The appellate court observed that petitioners failed to substantiate the charge of loss of confidence against respondent to warrant the latter's dismissal. It afforded greater weight on the observations and conclusion of the Labor Arbiter, viz:

"The records show that respondents invoke two reasons to justify complainant's dismissal. These reasons are spelled out in the show cause letter of September 7, 1999. Complainant allegedly instructed a client not to communicate to the Chairman, respondent Concepcion, but to him directly, complainant allegedly criticized the management capability of respondent Concepcion and that he even dissuaded a certain Mr. Matthew Reeves from pursuing his career in the company by telling him negative things about the organization. These accusations are serious and could have provided the just cause upon which complainant's dismissal could have been provided the just cause upon which complainant's dismissal could have been validly premised. Unfortunately for respondents, they failed to substantiate the charges they have hurled against the complainant. It is highly noticeable that Ms. Cristy Bollos, owner of Ma. Luisa Suites, who was allegedly told by the complainant to course all her communications to him and that respondent Concepcion did not execute an affidavit.

"There is also no proof that Ms. Bollos sent respondents a written communication denouncing complainant for the utterances attributed to him. Could it be that statements imputed to complainant reached respondent Concepcion's ears in the course of a conversation between him and Ms. Bollos? If it is so, then why did respondent Concepcion not execute an affidavit to recount the details of the conversation which he shared with Ms. Bollos? His affidavit which could have laid the basis upon which respondent's theory of loss trust and confidence could have been anchored.

"Respondent Concepcion's affidavit could have likewise enlightened this office on how the complainant allegedly dissuaded one Mr. Matthew Reeves from pursuing a career with respondent company by peddling lies about it. It is patent from the records of this case that respondent Concepcion did not at all execute an affidavit. Why did he not do so? The answer we will never know because it cannot be found in the records of this case. It is highly noticeable that Mr. Matthew Reeves did not also execute an affidavit to validate or confirm the verity of the charge against complainant. All these things taken collectively gave rise to the conclusion that the charges against the complainant no matter how serious they may appear to be have not been proven with clear and convincing proof that a reasonable mind would accept. Complainant for his part tackled the issues raised against him point by point and in so doing persuasively showed that there is no reason to sever his employment in the guise of loss of confidence".

We agree with the above finding.

It bears stressing that while an employer has its own interest to protect, and pursuant thereto, it may terminate a managerial employee, such prerogative to dismiss or lay off an employee must be exercised without abuse of discretion. Its implementation should be tempered with compassion and understanding. The employer should bear in mind that in the exercise of its dismissal prerogative, what is at stake is not only the employee's position but his livelihood. The fact that one is a managerial employee does not, by itself, exclude him from the protection of the constitutional guarantee of security of tenure.[7]

Loss of trust and confidence to be a valid cause for dismissal must be based on a willful breach of trust and founded on clearly established facts. To justify dismissal for loss of confidence, there should naturally be some basis for it, and although proof beyond reasonable doubt is not necessary, still the basis for the dismissal must be clearly and convincingly established.[8]

Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal is arbitrary. To be a valid ground for dismissal, loss of trust and confidence must be based on a willful breach of trust and founded on clearly established facts. While an employee's dishonesty or disloyalty is not to be condoned, neither should a condemnation on that ground be tolerated if based on suspicions spawned by speculative inferences.[9]Unsubstantiated suspicions, accusations and conclusions of an employer do not provide legal justifications for dismissing an employee.[10]

As correctly ruled by the appellate court, respondent Williams is entitled only to an amount corresponding to his unpaid earned salary in the amount of P50.000 and separation/termination pay in the fixed amount of P100,000 pursuant to the parties' contract of employment.

WHEREFORE, the petition is hereby DENIED DUE COURSE,

SO ORDERED.

Very truly yours,

(Sgd.) LUCITA ABJELINA-SORIANO

Asst. Clerk of Court

[1] Penned by Associate Justice Ruben T. Reyes and concurred in by Associate Justice Perlita J. Tria Tirona and Jose C. Reyes, Jr. of the Sixth Division.

[7] Maglutac vs. NLRC, G.R. No. 78345, 189 SCRA 767 [1990]; Michael Lawrence vs. NLRC, G.R. No. 87421, 205 SCRA 737 [1992].

[9] San Miguel Corporation vs. NLRC, 180 SCRA 281 [1989].