G.R. No. L-58927 - San Miguel Corp. vs. Deputy Minister of Labor and Employment

Two petitions for certiorari were filed seeking the annulment of the Order of the Deputy Minister of Labor, dated November 12, 1981, in the case involving San Miguel Corporation (SMC) and its employees.
Petitioner San Miguel Corporation, in one instance (G.R. No. 58927), sought to have the complaint of its employees (Rodolfo Jolingan, Mariano Goiti, Jr. and Jesus Fuentes, Jr.) dismissed and to secure clearance for terminating their services.
In the consolidated case (G.R. No. 59870), the petitioners (the employees) prayed for reinstatement with full backwages.

The employees held positions within the Bacolod Beer Region, Beer Marketing Division, at the Cadiz Sales Office and had rendered service for substantial periods—sixteen, six, and ten and a half years, respectively.
On July 6, 1979, the employees were accused of misappropriating company funds due to their failure to remit the full collections received from dealers.
An investigation confirmed that the employees admitted to misappropriating the shortages for personal benefit.

Following this, Jolingan and Goiti, Jr. were placed under preventive suspension effective September 24, 1979, and Fuentes, Jr. effective September 25, 1979.

On October 1, 1979, the employees filed an action with the Bacolod District Office of the Ministry of Labor alleging arbitrary dismissal; the complaint was later amended.
The Assistant Regional Director, Dante G. Ardinilla, ruled on February 12, 1980, that SMC violated the clearance requirement by dismissing the employees outright, ordering their reinstatement with full backwages.
After a motion for reconsideration by SMC was denied (April 9, 1980), the corporation appealed the decision with the Ministry of Labor and Employment, arguing grave abuse of discretion by the Assistant Regional Director.
The Ministry’s investigation revealed:

The employees were on preventive suspension and had committed misappropriation, substantiated by documentary evidence.
Specific instances of deficiencies were enumerated for each employee along with dates and amounts involved.

The Order by the Deputy Minister of Labor dated May 24, 1981 provided contrasting directives:

Reinstatement for Rodolfo Jolingan without backwages.
Clearance to terminate the services of Mariano Goiti, Jr. and Jesus Fuentes, Jr., dismissing their claims for damages.

Dissatisfied with the Ministry’s decisions, Fuentes and Goiti filed motions for reconsideration, asserting that they had repaid their deficiencies and that such payment amounted to a condonation of their acts.
The procedural history included the filing of petitions for certiorari by SMC and the employees, subsequent replies, comments, and consolidation of the cases in the administrative and judicial proceedings.

Jolingan was shown to have committed the misappropriation on more than one occasion.
Goiti, Jr. admitted to defrauding the company on eight separate occasions, and Fuentes, Jr. on two occasions.

Despite arguments that the employees acted under duress when admitting their misdeeds, the factual record established their culpability and the breach of trust inherent in their roles.

Whether an employer may be compelled to continue employing employees who have committed acts leading to a loss of trust and confidence.
Whether the order of the Deputy Minister of Labor, which allowed for reinstatement of employees—even after established misappropriation of funds—constitutes grave abuse of discretion and exceeds the bounds of administrative jurisdiction.

Whether the granting of further administrative remedy to the employees (allowing another chance for employment) while denying such remedy to the corporation violates principles of equal protection.
The issue of whether the reinstatement with or without backwages, particularly in the context of their breaches, is legally sustainable.

Whether, based on relevant Philippine jurisprudence and precedents, misappropriation of funds—even if remedied financially—warrants dismissal rather than reinstatement.
The scope of the employer’s discretion in dismissing an employee whose conduct renders him unworthy of the employer’s trust.