SMC employed RAG on 16 September 1986 as a researcher in the Security Department and concurrently as Executive Secretary to the Head of the Security Department. Sometime in October 1994, RAG was assigned as coordinator in the Mailing Department of SMC.
Sometime in January 2001, C2K, a corporation engaged in courier and delivery services, entered into business with SMC as the latter’s courier. Although the relationship between the two companies started smoothly, C2K soon encountered difficulty in collecting its service fee from SMC.
Investigation yielded a finding that C2K’s former manager formed another courier services entity, used fake C2K receipts, and collected the C2K fees. C2K claimed that it was through RAG’s intervention that the other courier services group was able to transact business with SMC. RAG was also found to have collected 25% commission from the total payment received by C2K and was allegedly involved in anomalies which caused tremendous losses to SMC.
SMC conducted an administrative investigation and hearing where RAG was able to present her evidence and witnesses to disprove the charges against her. After the investigation, RAG was found guilty of committing fraud against SMC and of receiving commissions in connection with the performance of her function. On 20 December 2002, SMC terminated her services on the ground of willful breach of trust. RAG thus filed a case for illegal dismissal against SMC.
Was RAG’s employment validly terminated on the ground of loss of trust and confidence?
The Supreme Court ruled in the affirmative, as SMC was able to discharge the burden of proving that just cause attended RAG’s dismissal from employment.
Article 2971Formerly Article 282 of the Labor Code of the Philippines provides that an employer may terminate the services of its employee for “(f)raud or willful breach x x x of the trust reposed in him by his employer or duly authorized representative.” As a rule, employers have the discretion to manage its own affairs, which includes the imposition of disciplinary measures on its employees.2Manila Hotel Corp. v. De Leon, G.R. No. 219774, July 23, 2018. Thus, “employers are generally given wide latitude in terminating the services of employees who perform functions which by their nature require the employer’s full trust and confidence.”3University of the Immaculate Conception v. Office of the Secretary of Labor and Employment, G.R. Nos. 178085-178086, September 14, 2015, 769 PHIL 630-665; Wuerth Phils., Inc. v. Ynson, G.R. No. 175932, February 15, 2012, 682 PHIL 143-163; and Ancheta v. Destiny Financial Plans, Inc., G.R. No. 179702, February 16, 2010, 626 PHIL 550-565.
Nonetheless, jurisprudence4The Coca-Cola Export Corp. v. Gacayan, G.R. No. 149433, December 15, 2010, 653 PHIL 45-71 teaches that “(l)oss of confidence as a ground for dismissal has never been intended to afford an occasion for abuse by the employer of its prerogative, as it can easily be subject to abuse because of its subjective nature.” Furthermore, it dictates that employers may not arbitrarily dismiss their employees by simply invoking Article 297. The loss of confidence must be genuine and cannot be used as a “subterfuge for causes which are improper, illegal or unjustified.”5Matis v. Manila Electric Co., G.R. No. 206629, September 14, 2016
The Court reiterated the guidelines to determine whether loss of confidence would constitute a valid ground for dismissal:
(T)he language of Article 282(c) of the Labor Code states that the loss of trust and confidence must be based on willful breach of the trust reposed in the employee by his employer. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. Moreover, it must be based on substantial evidence and not on the employer’s whims or caprices or suspicions otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer. In addition, loss of confidence as a just cause for termination of employment is premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or that the employee concerned is entrusted with confidence with respect to delicate matters, such as the handling or care and protection of the property and assets of the employer. The betrayal of this trust is the essence of the offense for which an employee is penalized.6University of the Immaculate Conception v. Office of the Secretary of Labor and Employment, G.R. Nos. 178085-178086, September 14, 2015, 769 PHIL 630-665, citing Cruz, Jr. v. Court of Appeals, G.R. No. 148544, July 12, 2006, 527 PHIL 230-248
Thus, the requisites for dismissal on the ground of loss of trust and confidence are:
- The employee concerned must be holding a position of trust and confidence;7What constitutes a “position of trust and confidence”? Loss of confidence should ideally apply only to cases involving employees occupying positions of trust and confidence or to those situations where the employee is routinely charged with the care and custody of the employer’s money or property. To the first class belong managerial employees, i.e., those vested with the powers or prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions; and to the second class belong cashiers, auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property. (Mabeza v. National Labor Relations Commission, G.R. No. 118506, April 18, 1997, 338 PHIL 386-402; Philippine Auto Components, Inc. v. Jumadla, G.R. Nos. 218980 & 219124, November 28, 2016, 801 PHIL 170-186; and University of the Immaculate Conception v. Office of the Secretary of Labor and Employment, G.R. Nos. 178085-178086, September 14, 2015, 769 PHIL 630-665)
- There must be an act that would justify the loss of trust and confidence;8Loss 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. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. (Cadavas v. Court of Appeals, G.R. No. 228765, March 20, 2019) and
- Such loss of trust relates to the employee’s performance of duties.
In the present case, the Court found:
- RAG occupied a position of trust and confidence, since she was entrusted with SMC’s property, in particular its mail matter which included weighing and determining volumes of documents to be shipped. Thus, she was routinely charged with custody of SMC’s mail matter.
- RAG willfully, intentionally, knowingly, purposely, and without justifiable excuse disregarded SMC’s rules and regulations in the workplace. It was through RAG’s intervention that the other courier services entity was able to transact business with SMC, wherein such entity used fake receipts and collected the fees pertaining to C2K. The Court stated that RAG, as the coordinator in SMC’s Mailing Department, should have known or noticed said fake receipts since she had previously transacted with C2K.
- Moreover, RAG was found to have collected 25% commission from the total payment received by C2K. SMC’s investigation revealed that RAG was guilty of committing fraud against SMC and of receiving bribes through commissions in connection with the performance of her function.
Further reading:
- San Miguel Corp. v. Gomez, G.R. No. 200815, August 24, 2020.
