FIRST DIVISION

[G.R. No. 75740. January 15, 1988.]

CITYTRUST FINANCE CORPORATION doing business as FNCB

FINANCE, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION AND MARCIAL A. VIDAL, respondents.

SYLLABUS

1. REMEDIAL LAW; EVIDENCE; RIGHT OF CROSS-EXAMINATION,

HELD WAIVED WHERE OPPORTUNITY TO EXERCISE IT NOT ASSERTED. — The
Court is not persuaded that petitioner was not afforded due process when it
failed to cross-examine witness Dr. Dacuycuy. When petitioner was allowed
to submit sur-rebuttal evidence and failed to do so, the Labor Arbiter
correctly found that there was a waiver on the part of the petitioner. No
doubt petitioner was afforded due process. It was given all opportunity to be
heard and to adduce its evidence. Even if it failed to cross examine an
adverse witness, public respondent or the labor arbiter could very well
evaluate the evidentiary value of the retraction of said witness as it did in
this case.
2. LABOR AND SOCIAL LEGISLATION; LABOR CODE; LOSS OF
CONFIDENCE; A VALID GROUND FOR DISMISSING AN EMPLOYEE. — Loss of
confidence is a valid ground for dismissing an employee and proof beyond
reasonable doubt of the employee's misconduct is not required to dismiss
him on this charge. It is sufficient if there is 'some basis' for such loss of
confidence or if the employer has reasonable ground to believe or to
entertain the moral conviction that the employee concerned is responsible
for the misconduct and that the nature of his participation therein rendered
him absolutely unworthy of the trust and confidence demanded by his
position. In this case, petitioner has not established nor presented sufficient
basis for the dismissal of private respondent on the ground of loss of
confidence. Thus the finding of public respondent that private respondent
was illegally dismissed is well-taken.
3. ID.; ID.; REINSTATEMENT; NOT POSSIBLE WHERE EMPLOYER-
EMPLOYEE RELATIONSHIP IS SO STRAINED; AWARD OF BACKWAGES
ACCORDED INSTEAD. — In this case there is no doubt that the relationship of
employer to employee is so strained and ruptured as to preclude a
harmonious working relationship should reinstatement of private respondent
be decreed. Instead private respondent should be afforded the right to
separation pay so that he can be spared the agony of having to work anew
with petitioner under an atmosphere of antipathy and antagonism and the
petitioner does not have to endure the continued services of private
respondent in whom it has lost confidence. The appealed resolution is
hereby modified in that private respondent is not to be reinstated but is
entitled to back wages for three (3) years, and separation pay equivalent to
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 one (1) month for every year of service, P5,000.00 for moral damages with
costs against petitioner.

DECISION

GANCAYCO, J : p

In the herein petition for certiorari with application for preliminary

injunction and/or restraining order, the petitioner seeks the annulment of the
resolutions of the public respondent in NLRC-RAB II Case No. 0214-82 dated
June 4, 1986 and July 29, 1986.
The facts of the case as stated in the questioned resolution of June 4,
1986 which are borne by the records are as follows:
"This case was certified for compulsory arbitration on December
16, 1982 for the issues of illegal dismissal and separation pay, non-
payment of 13th month pay, housing allowance, vacation and sick
leave benefits, and unpaid salaries. The complaint was first filed on
November 3, 1982 at the MOLE Ilagan District Labor Office at Ilagan,
Isabela and it was amended on January 17, 1983 to include
complainant's claim for damages. The case was scheduled for hearing
on its merits twenty times. Complainant was represented by Atty.
Florentino Abadilla while respondents were represented by Atty.
Roberto D. Romanillos, Atty. Tranquilino Gale, and/or Atty. Ramon O.
Gonzaga, Jr.
'Complainant testified and presented documentary evidence in
his desire to substantiate his claims. Among other things, he declared
that he was first hired by respondent on February 24, 1976: that
since then he served in different capacities — as Credit
Investigator/Collector, Dealer Coordinator, Assistant Credit Control
Officer, Assistant Manager in the Cabanatuan Branch, Credit Officer
and at the time of his dismissal, Officer-In-Charge of respondent's
Santiago Extension Office. He further disclosed that from January 6,
1982, he started to receive a salary of P2,531.00 and that in
recognition of his meritorious performance, he was also a recipient of
a 'Reward Bonus' of P1,419.00 on February 15, 1982. With respect to
his dismissal, he explained that sometime in July 1982, respondent
hired the services of Atty. Salome Canas as External Legal Counsel;
that she was assigned to assist complainant in the collection
operations and foreclosure of delinquent accounts; that said Atty.
Canas allegedly misappropriated for herself amounts she collected
and to cover up for her misbehavior, she made baseless and fictitious
reports to respondents against complainant which were apparently
readily accepted by higher management as complainant was never
given a chance to be heard. He presented as Exhibit A the
termination letter to him October 26, 1982 by respondent Stephen S.
Andaya, FNCB Finance Vice-President. From the Exhibit, he explained
that the causes of his dismissal appearing therein like the release of
the real estate (sic) mortgage which he signed last March 2, 1982
over a property located at Cauayan, Isabela, was not taken up in the
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 investigation; that he noted upon the go-signal of his direct superior,
Manager Jun Juanino and in fact Juanino who was furnished a copy of
the release of real estate (sic) mortgage had no adverse action
regarding the matter. Then, with respect to the third paragraph of the
investigation report which called his attention to the fact that in spite
of instruction he reported and showed up at the Santiago Office on
September 6, 1982 and approved a petty cash expenditure, he
declared that the approval of the petty cash was made before he
received the long distance instruction of Mr. Andaya that he was
temporarily under preventive suspension. He averred that while he
was verbally informed of his suspension on September 6, 1982, he
received by mail the memorandum of suspension dated September
27, 1982 by M.A. Marcelo — Exhibit B — stating therein that his
suspension was effective September 28, 1982. However, he did not
report to Office during the period September 6-28, 1982 in
compliance with the verbal message of Andaya. He recalled that he
duly answered the memorandum on September 30, 1982 — Exhibit F
and F-1 explaining lengthily his actions. Among other things, he said
that the appointment of Buenviaje was with the verbal approval of
Manager Juanino and this was also a practice in Cabanatuan
considering that if a legal Sheriff is utilized, the Sheriff would be paid
more or less P1,000.00 and the amount paid to Buenviaje was only
P500.00 and this was duly audited. Then, with regards to the
allegation of Atty. Canas that the P3,000.00 attorney's fee paid to her
was returned without having been reflected in the company records,
he swore that he had no knowledge about it for what he knows is that
Atty. Canas collected P3,309.00 and not P3,000.00 and she never
gave this to complainant. On the P25,000.00 as payment of one unit
Lambda Colt Galant and another P25,000.00 as down payment for a
ten-wheeler Isuzu Cargo Truck, the P25,000.00 payment of the Colt
Galant was actually reflected in the books of the company with official
receipt which was in turn deposited at the depository bank as
evidenced by Exhibit E, E-1 to E-4. However, he swore that the
alleged another P25,000.00 down payment for a ten-wheeler Isuzu
Cargo Truck is non-existent. He supported this as he submitted as
rebuttal evidence among other documents Exhibits R, R-1 and R-2, an
affidavit of Doctor Rolando Dacuycuy which in effect withdrew his
statement appearing in Exhibit 6 of respondent and states that in
reality he only paid P25,000.00 and not P50,000.00. Complainant
likewise presented Exhibit J which is an affidavit of Buenviaje to attest
to the foolishness of Atty. Canas and Exhibits and L to further
strengthen his position that it is in fact Atty. Canas who collected
amounts for respondent FNCB Finance without remitting the same.
'Complainant also claims for non-payment of his two months
year-end bonus for 1982, non-payment of his housing allowance of
P600.00 a month since September 1982 and non-payment of his
vacation and sick leave for 1982.
'Respondents in turn presented evidence in their desire to
offset the claims of complainant. In their position paper, they
presented that respondent Stephen Andaya is not a real party-in-
interest for he merely acted as the agent of the respondent company
being its Senior Vice-President and hence, he should not be held
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 liable in dismissing herein complainant. They accepted the fact that
complainant was hired on February 24, 1976 and that from a mere
Credit Investigator/Collector he rose from the ranks and became a
managerial employee when on January 6, 1982, he was appointed
Officer-In-Charge of the company operations in Isabela, fully clothed
with all the duties and responsibilities of a managerial employee; that
as such, he was appraised of the nature and extent of his
responsibilities and it was impressed upon him that he was holding a
sensitive position requiring him to conduct himself in a manner that
would reflect well on the dependability and quality service of
respondent to its clientele. They countered that barely a few months
after complainant's appointment as Officer-In-Charge, they already
received reports of malpractices and breach of operation; that they
did not act on the reports immediately to give the benefit of the
doubt to complainant, in the hope that as he is given a longer period
in his job, he would show his worth and correct the complaints about
him. They presented as evidence letter-complaint of Jaime G. Castillo,
an employee, who complained about complainant's unjustified and
dictatorial manner. They further disclosed that complainant
committed a series of serious misconduct in the performance of his
duties which served as basis for the company to lose its trust and
confidence in him. They specified that complainant unlawfully shared
in the attorney's fee of the company's external lawyer, Atty. Salome
Canas as evidenced by the letter-reports and/or affidavits of the latter
— Exhibits 3 to 5. In addition to these, they revealed that complainant
was directly involved in the anomalous foreclosure and sale of
mortgaged properties as evidenced by the affidavit of one Rolando
Dacuycuy — Exhibit 6. It further alleged that complainant also
released a real estate (sic) security without authority and which is in
complete violation of existing company policies and guidelines; that
in view of the foregoing, higher management conducted a thorough
investigation and when complainant's written explanation was found
unsatisfactorily (sic), he was terminated in a letter memorandum —
Exhibit 7.
'Respondent presented as witness Jose B. Tomas, its Assistant
Vice-President who had the supervision and control over Cabanatuan
Branch as well as Isabela Extension Office where complainant was
Officer-In-Charge. He testified and identified respondent's Exhibits 1
to 7. Mario Basilio, another Assistant Vice-President who declared to
be a member of the internal audit and was responsible for the audit
conducted in Santiago also testified. He identified Exhibits 8 to 10 of
respondent. Among other things, Basilio explained that vacation/sick
leave credits of employees cannot be converted to cash pursuant to
company policy and that complainant had been placed under
preventive suspension in September so he was not entitled to any
housing allowance. He further disclosed that complainant was offered
a check in the amount of P1,526.54 — Exhibit 10 — which is the net
amount due him as 13th month pay for 1982 after some deductions
but that complainant refused to accept the said check.'"
Thus by the said resolution public respondent affirmed in toto the
decision of the Executive Labor Arbiter of November 22, 1984, the
dispositive part of which reads as follows:
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 "WHEREFORE, IN VIEW OF ALL THE FOREGOING, a DECISION
should be, as it is hereby entered, in the above-entitled case
DISMISSING the claim of complainant for housing allowance, for lack
of merit but ORDERING respondent FNCB FINANCE, within ten (10)
calendar days from receipt hereof to reinstate complainant MARCIAL
VIDAL to his former position without loss of seniority rights and to pay
him, the following:
1. SIXTY-EIGHT THOUSAND THREE HUNDRED
THIRTY-SEVEN PESOS (P68,337.00) as full backwages for the
period September 1982 to November 1984;
2. FIVE HUNDRED ONE PESOS & 20/100 (P501.20)
as incentive leave pay for 1982;
3. ONE THOUSAND ONE HUNDRED TWENTY-SIX
PESOS & 54/100 (P1,126.54 as 13th month pay; and
4. FIVE THOUSAND PESOS (P5,000.00) as moral
damages.
THUS, a total of SEVENTY-FIVE THOUSAND THREE HUNDRED SIXTY
FOUR PESOS & 74/100 (P75,364.74) plus SEVEN THOUSAND FIVE
HUNDRED THIRTY-SIX PESOS & 47/100 (P7,536.47) to his lawyer,
Florentino Abadilla as attorney's fee, the sum being ten percent
(10%) of the total award or a TOTAL of EIGHTY-TWO THOUSAND
NINE HUNDRED ONE PESOS & 21/100 (P82,901.21) with legal
interest of 12% per annum to start upon the finality of this
decision."
On September 29, 1986, the Court without giving due course to the
petition required respondents to comment thereon within ten (10) days from
notice and issued a temporary restraining order against the enforcement of
the questioned resolutions.
Petitioner contends that public respondent issued said resolutions with
grave abuse of discretion amounting to lack of jurisdiction and in grave
violation of petitioner's right to procedural due process. cdrep

At the time private respondent was dismissed from the service for loss
of confidence he was a managerial employee of petitioner. On September
27, 1982, petitioner served on private respondent a memorandum requiring
him to explain within three (3) days some alleged irregularities in the
performance of his duties such as the appointment of special sheriff for the
repossession efforts of petitioner and payment of cash vouchers to said
sheriff whose appointment was unauthorized, his alleged sharing of the
attorney's fees collected by Atty. Salome Canas from petitioner, and the
alleged sale to Dr. Rolando Dacuycuy of one (1) unit Lambda, Colt Galant for
P25,000.00 which is reflected in the books, whereby another P25,000.00 was
delivered by Dr. Dacuycuy to private respondent as down payment for a ten-
wheeler Isuzu cargo truck which however does not appear in the books. 1
On September 30, 1982, private respondent submitted his written
explanation. 2 In a letter of October 26, 1982 petitioner wrote private
respondent that it is not satisfied with his explanation and that furthermore
private respondent released a real estate mortgage on March 2, 1982 over a
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 property located at Cauayan, Isabela in violation of the company policy
requiring previous approval of the credit committee at the head office. Thus
he was informed that for lack of trust and confidence his employment was
terminated effective immediately. 3
A review of the records of this case shows that public respondent did
not commit any grave abuse of discretion in affirming the decision of the
Labor Arbiter. The imputation against private respondent that he shared in
the attorney's fees of Atty. Salome Canas has not been substantiated. As
aptly observed by the Labor Arbiter, petitioner failed to present said witness
during the investigation. By the same token, Dr. Dacuycuy was not made to
testify to establish the alleged anomalous sale of the Colt Galant and Isuzu
truck to him. On the contrary what appears in the record is that Dr.
Dacuycuy retracted his previous affidavit attributing said irregularity to
private respondent. Neither was then Manager Jun Juanino produced by
private respondent who allegedly authorized the release of the mortgaged
property subject of the charge against private respondent.
The hearing of the case was conducted for over one year and was set
for about twenty (20) times. Both parties were given all opportunity to
adduce evidence. Private respondent presented rebuttal evidence while
petitioner reserved the right to present its sur-rebuttal evidence. Instead,
petitioner requested that it be allowed to cross-examine Dr. Dacuycuy but it
was overruled because of the objection of the private respondent's counsel.
The Court is not persuaded that petitioner was not afforded due
process when it failed to cross-examine witness Dr. Dacuycuy. When
petitioner was allowed to submit sur-rebuttal evidence and failed to do so,
the Labor Arbiter correctly found that there was a waiver on the part of the
petitioner. Thus the Labor Arbiter held:
"Respondent was unable to substantiate very well its
allegations and it failed to submit sur-rebuttal evidence to strengthen
its position because even as the parties agreed to submit affidavits
and counter affidavits within an equal period of time, and
respondent's move for an extension of time to file its opposition to the
rebuttal affidavits of complainant was granted, respondents failed to
counter or comment on the rebuttal evidence and instead they
moved to cross-examine complainant's rebuttal witnesses and to
defer the admission of such evidences. Said motion was vigorously
opposed by complainant through counsel with the circumstances
mentioned above as grounds. The same was found to meritorious and
hence, the respondents were estopped to cross-examine the affiants
in the rebuttal affidavits."
No doubt petitioner was afforded due process. It was given all
opportunity to be heard and to adduce its evidence. Even if it failed to cross
examine an adverse witness, public respondent or the labor arbiter could
very well evaluate the evidentiary value of the retraction of said witness as it
did in this case. cdphil

Loss of confidence is a valid ground for dismissing an employee and

proof beyond reasonable doubt of the employee's misconduct is not required
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 to dismiss him on this charge. It is sufficient if there is 'some basis' for such
loss of confidence or if the employer has reasonable ground to believe or to
entertain the moral conviction that the employee concerned is responsible
for the misconduct and that the nature of his participation therein rendered
him absolutely unworthy of the trust and confidence demanded by his
position. 4
In this case, petitioner has not established nor presented sufficient
basis for the dismissal of private respondent on the ground of loss of
confidence. Thus the finding of public respondent that private respondent
was illegally dismissed is well-taken.
However, in this case there is no doubt that the relationship of
employer to employee is so strained and ruptured as to preclude a
harmonious working relationship should reinstatement of private respondent
be decreed. Instead private respondent should be afforded the right to
separation pay so that he can be spared the agony of having to work anew
with petitioner under an atmosphere of antipathy and antagonism and the
petitioner does not have to endure the continued services of private
respondent in whom it has lost confidence. 5
WHEREFORE the appealed resolution is hereby modified in that private
respondent is not to be reinstated but is entitled to back wages for three (3)
years, and separation pay equivalent to one (1) month for every year of
service, P5,000.00 for moral damages with costs against petitioner.
SO ORDERED.
Teehankee, C.J., Narvasa, Cruz and Paras, JJ., concur.

Footnotes
1. Annex 2, Petition, pages 71-72, Rollo.
2. Supra, pages 73-74, Rollo.
3. Annex 22, Supra, page 75, Rollo.
4. Nevans vs. Court of Industrial Relations, 23 SCRA 1321; National
Organization of Laborers and Employees vs. MRR, 21 SCRA 191; Galsim vs.
PNB, 29 SCRA 293; Reyes vs. Zamora, 90 SCRA 92; San Miguel Corp. vs.
Deputy Minister of Labor and Employment, G.R. No. 61232-33, Dec. 29,
1983.

5. Article 284, Labor Code; Panay Railways Inc. vs. National Labor Relations
Commission , 137 SCRA 480; Flexo Manufacturing Corp. vs. NLRC, 135 SCRA
145; Lepanto Consolidated Mining Co. v. Hon. Labor Arbiter, G.R. Nos. 67002-
03, 136 SCRA 256; Medical Doctors Inc. vs. NLRC, 130 SCRA 1.

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