Before us is a petition for review on certiorari assailing the Decision^[1] dated November 29, 2000 of the Court of Appeals in CA-G.R. SP No. 51405, entitled "Shangri-la Hotel vs. National Labor Relations Commission and Silverio Picar."

The facts are:

On November 11, 1993, Shangri-La Hotel, respondent, employed Silverio T. Picar, petitioner, as repair and maintenance supervisor of its Engineering Department. As such, he was in charge of respondent's employees as well as the workers provided by KC Agency, an independent contractor.

Sometime in November 1995, an employee of respondent and three workers of KC Agency filed complaints against petitioner. They alleged that he required them to work in the renovation of his house in Tondo, Manila; that when one of the complainants applied for work, he conducted the "trade test" in his house; that in renovating his house, he used materials belonging to respondent; and that he extended loans with exorbitant interest rates to his subordinates.

In a letter dated December 14, 1995, respondent asked petitioner to comment on the complaint and placed him under preventive suspension for 15 days.

In his comment, petitioner denied using respondent's materials in the renovation of his house. He admitted though that he hired several employees of respondent to work for him during their days off.

Thereafter, a formal administrative investigation was conducted where the parties were given an opportunity to present their respective evidence.

On February 22, 1996, respondent dismissed petitioner from the service. While petitioner did not use its materials for the renovation of his house, however, in requiring its employees to work for him and in lending money with high interest rates to his subordinates, petitioner disregarded respondent's Code of Discipline and breached the trust it reposed in him, thus violating Article 282 of the Labor Code,^[2] specifying the causes for terminating one's employment.

Aggrieved, petitioner, on February 28, 1996, filed with the National Capital Region Arbitration Branch, Quezon City, a complaint for illegal dismissal against respondent, docketed as NLRC NCR Case No. 00-02-01461-96.

On September 30, 1996, the Labor Arbiter rendered a Decision^[3] finding that petitioner was legally dismissed from the service.

On appeal, the NLRC reversed the Labor Arbiter's Decision, holding that the dismissal of petitioner from employment is illegal, thus:

"WHEREFORE, in view thereof, the appealed decision is hereby reversed and set aside and a new one entered finding the dismissal illegal.

Consequently, respondent is hereby ordered to pay complainant full backwages from the time of his dismissal up to the time this judgment becomes final and executory.

Likewise, complainant is entitled to his separation pay equivalent to his ½ month salary for every year of service.

Ten (10) percent of the total award is also recoverable by complainant as attorney's fees.

SO ORDERED."

Respondent filed its motion for reconsideration but was denied by the NLRC in a Resolution^[4] dated November 10, 1998. This prompted respondent to file with the Court of Appeals a petition for certiorari.

On November 29, 2000, the Appellate Court rendered its Decision reversing that of the NLRC, thus:

"The two (2) requisites in order to constitute a valid dismissal are: (a) the dismissal must be for any of the causes expressed in Article 282 of the Labor Code, and (b) the employee must be accorded due process, basic of which are the opportunity to be heard and defend himself. (Santos, Jr., vs. NLRC, 287 SCRA 117). In the case at bench, there is no dispute that the second requisite has been complied with. Records reveal that petitioner was asked to answer the written charges against him and after which a formal investigation and hearing was conducted where the complainants against petitioner were asked to testify. Private respondent was allowed to cross-examine the complainants, and more importantly, allowed to present witnesses in his behalf. Clearly, there was observance of due process.

The remaining issue to be resolved therefore is, was the cause for termination in accordance with the Labor Code and was the same sufficiently established.

It is the contention of petitioner, which was upheld by the Labor Arbiter, that private respondent was guilty of violating its code of discipline by committing an abuse of status, power, or discretion, as a superior, and therefore constituted serious misconduct as provided for in Article 282 (A) of the Labor Code. This conclusion was arrived at after consideration of the testimonies, given during the investigation conducted by petitioner, by the witnesses, not only of complainants against private respondent but also those of the latter's own witnesses.

We find therefore no reason to disagree with the disquisition of the Labor Arbiter on the matter, which We quote with conformity, thus:

'Complainant denied that he forced the contractual workers to work in remodeling his house claiming they worked voluntarily and on their days off. However, as supervisor in the repair and maintenance section of the respondent hotel, the Complainant could decide which of the contractor's employees could continue to work at the hotel. The Complainant did not deny this. The worker therefore had to be in the good graces of the Complainant, otherwise, he loses a job. Those who worked on the Complainant's house were assigned by their employer to the Hotel. They worked on remodeling the complainant's house for many weekends on their days off. An applicant was even made to take his trade test helping others do the remodeling at the Complainant's house. The Hotel was justified in believing that the casual workers helped remodel the Complainant's house out of fear for their jobs, rather than love for the Complainant.

The Complainant during the investigation admitted that he lent money to the contractual workers and received interest voluntarily given to him by the casual workers. In a subsequent statement, however, he denied receiving interest. This contradiction affects his credibility. Those who complained against him said that they had to pay interest. Considering that the Complainant was also a salaried employee, it is doubtful that he would lend money to many low-salaried casual workers who would insist on paying interest even if not required. His borrowers, like those who worked on his house, depended on him for continued work. The Hotel had reasons for believing that the complainant abused his power by lending money and charging exorbitant rates to the casual workers.' (pp. 4 & 5 Labor Arbiter's Decision, pp. 26-27, Rollo)

There is also no dispute that private respondent is a supervisor or if not, a managerial employee, in whom petitioner has reposed trust and confidence. As such therefore, loss of trust and confidence is a valid basis for termination. In the case of supervisors or personnel occupying positions of responsibility, the Supreme Court has held that loss of trust and confidence justifies termination. This ground for terminating employment, springs from the voluntary or willful act of the employee or by reason of some blameworthy act or omission on the part of the employee. (Caoile vs. NLRC, 299 SCRA 71).

Additionally, as regards managerial employee, mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal (supra). In the case at bench, private respondent has undoubtedly breached the trust of petitioner by requiring casual workers of petitioner, whose continued employment depended upon the authority of the former to work in remodeling his house. As if that was not enough, private respondent lent money at usurious interest thus aggravating the economic misery of the lowly paid casual workers.

It ought to be pointed out that loss of confidence as ground for dismissal does not require proof beyond reasonable doubt of the employees misconduct. (Jamer vs. NLRC, 278 SCRA 632) but it only requires substantial evidence (Pampanga Sugar Dev. Co., Inc. vs. NLRC, 272 SCRA 737). That requirement of substantial evidence was complied with in the case of private respondent, as evidenced by the letters of Armando Sunga, and Arnillo T. Nalog, and from the Minutes of the Formal Administrative Investigation conducted by the petitioner Annexes 2, 3, & 7, respectively, of the latter�s Position Paper submitted to the Labor Arbiter.

Based on the foregoing, the basis for the loss of confidence as a ground for terminating private respondent was not simulated nor was it used as a subterfuge as erroneously suggested by the NLRC decision. Such loss of confidence was anchored on a factual finding after observance of due process.

WHEREFORE, foregoing premises considered, THE APPEAL IS HEREBY GIVEN DUE COURSE, and the decision of the National Labor Relations Commission (First Division) REVERSED AND SET ASIDE and the Decision of the Labor Arbiter AFFIRMED. No costs.

SO ORDERED."

Hence, the instant petition for review on certiorari raising the following assignments of error:

THE COURT OF APPEALS GRAVELY ERRED IN FINDING THE DISMISSAL OF PETITIONER JUSTIFIED ON GROUND OF LOSS OF TRUST AND CONFIDENCE.

II

THE COURT OF APPEALS GRAVELY ERRED IN REVERSING AND SETTING ASIDE THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION AND AFFIRMING THE DECISION OF THE LABOR ARBITER."

The basic issue for our determination is whether petitioner was illegally dismissed from employment.

After a close review of the records, we sustain the findings of the Court of Appeals that petitioner disobeyed respondent's rules and abused his authority by requiring respondent's employees to work in remodeling his house and by lending money with high interest rates to his subordinates.  Under Article 282 of the Labor Code, willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work and breach of the employer's trust in the employee are grounds for terminating an employment.

In Gustilo vs. Wyeth Philippines, Inc.,^[5] we held:

"It is the employer's prerogative to prescribe reasonable rules and regulations necessary or proper for the conduct of its business or concern, to provide certain disciplinary measures to implement said rules and to assure that the same be complied with. At the same time, it is one of the fundamental duties of the employee to yield obedience to all reasonable rules, orders, and instructions of the employer, and willful or intentional disobedience thereof, as a general rule, justifies rescission of the contract of service and the preemptory dismissal of the employee."

In Maquiling vs. Philippine Tuberculosis Society, Inc.,^[6] we held:

"Recent decisions of this Court distinguish the treatment of managerial from that of rank-and-file personnel insofar as the application of the doctrine of loss of trust and confidence is concerned. With respect to rank-and-file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question and that mere uncorroborated assertions and accusations by the employer will not suffice. But as regards a managerial employee, mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal."

In sum, we find that the dismissal of petitioner from the service is in accordance with the law.

WHEREFORE, the petition is DENIED. The assailed Decision dated November 29, 2000 of the Court of Appeals in CA-G.R. SP No. 51405 is hereby AFFIRMED.

SO ORDERED.

Panganiban, (Chairman), Corona, Carpio-Morales, and Garcia, JJ., concur.

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[1] Penned by Associate Justice Jose L. Sabio, Jr. and concurred in by Associate Justice Buenaventura J. Guerrero (retired) and Associate Justice Eliezer R. De Los Santos; Rollo at 10-19.

^[2] "ART. 282. Termination by employer. – An employer may terminate an employment for any of the following causes:


^[3] Annex "E", Rollo at 72-77.

^[4] Annex "K", id. at 124-127.

^[5] G.R. No. 149629, October 4, 2004, 440 SCRA 67, citing Philippine Journalists, Inc. vs. Mosqueda, G.R. No. 141430, May 7, 2004, 428 SCRA 369.

^[6] G.R. No. 143384, February 4, 2005, 450 SCRA 465.