LOSS OF TRUST AND CONFIDENCE AS A JUST CAUSE FOR TERMINATION
Article 297 [282] of the Labor Code provides that an employer may terminate the services of its employee for “fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.” But what is willful breach of trust really? Can this ground be used against any employee? Or are there strict requisites that employers must comply with?
In the recent case of San Miguel Corporation v. Gomez (G.R. No. 200815, 24 August 2020), the Supreme Court reiterated the principles involved in termination cases for breach of trust. In that case, San Miguel Corporation (SMC), a company engaged in the business of manufacturing fermented beverages, particularly beer, dismissed Gomez, a coordinator in its mailing department, for receiving commissions from SMC’s courier service provider C2K and allowing another courier service provider to use fake C2k receipts to collect the fees. This caused tremendous losses to SMC. After an administrative investigation and hearing, Gomez was found guilty and her employment was terminated. She questioned her dismissal.
In ruling in favor of SMC, the Supreme Court held that as a rule, employers have the discretion to manage its own affairs, which includes the imposition of disciplinary measures on its employees. 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.
Nonetheless, employers may not arbitrarily dismiss their employees by simply invoking Article 297 [282](c). The loss of confidence must be genuine and cannot be used as a subterfuge for causes which are improper, illegal or unjustified. Loss 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.
Guidelines When Loss of Confidence Constitutes a Valid Ground for Dismissal
The language of Article 297 [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.
Requisites
The requisites for dismissal on the ground of loss of trust and confidence are: 1) the employee concerned must be holding a position of trust and confidence; (2) there must be an act that would justify the loss of trust and confidence; and (3) such loss of trust relates to the employee's performance of duties.
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.
The Supreme Court held that Gomez indeed 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.
Gomez was also to have found to have acted willfully, intentionally, knowingly, purposely, and without justifiable excuse disregarded SMC's rules and regulations in the workplace. The High Court noted Gomez’s act of intervening in the transaction involving the fake receipts, as well as collecting a 25% commission from the total payment received by C2K.
In termination cases, the employer bears the burden of proving that the employee’s dismissal was for a valid and authorized cause. Consequently, the failure of the employer to prove that the dismissal was valid, would mean that the dismissal was unjustified, and thus illegal.
In this case, SMC was able to fully discharge its burden.
The foregoing article is for general informational and educational purposes only. It should not be treated and is not to be considered as legal advice or opinion. The views expressed in this article are those only of the author.
Eric M. Menchavez, Jr. is a Partner at Cokaliong Menchavez & Senining-Judilla Law Offices (CMS LAW), Cebu.
