Rules to Remember in Dismissal of Employee for Loss of Trust and Confidence

Dismissal of employment based on loss of trust and confidence is one of the just causes under Article 297 of the Labor Code, as amended.

Loss of trust and confidence is a just cause for dismissal under Article 282(c) [now 297] of the Labor Code, which provides that an employer may terminate an employment for fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. [Distribution & Control Products, Inc. vs. Santos, July 10, 2017, G.R. No. 212616]

However, according to the Supreme Court (SC), in order for the employer to properly invoke this ground, the employer must satisfy two conditions.

First, the employer must show that the employee concerned holds a position of trust and confidence. Jurisprudence provides for two classes of positions of trust.

The first class consists of managerial employees, or those who, by the nature of their position, are entrusted with confidential and delicate matters and from whom greater fidelity to duty is correspondingly expected. The second class includes cashiers, auditors, property custodians, or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of the employer’s money or property.

Second, the employer must establish the existence of an act justifying the loss of trust and confidence. To be a valid cause for dismissal, the act that betrays the employer’s trust must be real, i.e., founded on clearly established facts, and the employee’s breach of the trust must be willful, i.e., it was done intentionally, knowingly and purposely, without justifiable excuse.

Moreover, 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 be sufficient.

Stated differently, proof beyond reasonable doubt is not needed to justify the loss as long as the

employer has reasonable ground to believe that the employee is responsible for the misconduct and his participation therein renders him unworthy of the trust and confidence demanded of his position.

Nonetheless, the right of an employer to dismiss employees on the ground of loss of trust and confidence, however, must not be exercised arbitrarily and without just cause. Unsupported by sufficient proof, loss of confidence is without basis and may not be successfully invoked as a ground for dismissal. 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 and the loss must be founded on clearly established facts sufficient to warrant the employee’s separation from work.

Thus, when the breach of trust or loss of confidence alleged is not borne by clearly established facts, as in this case, such dismissal on the cited grounds cannot be allowed.

For instance, in a charge of theft of company property, the company should be able to discharge the burden of proving that their termination of employee’s employment was for a just and valid cause. This is a question of fact and it is settled that findings of fact of quasi-judicial agencies are accorded great respect, even finality.

Where the company failed to present substantial evidence to support their allegations that the employee had, in any way, participated in the theft of the company’s stolen items and that after his preventive suspension he no longer reported for work. In other words, if the company is not able to establish the existence of an act justifying their alleged loss of trust and confidence in employee, the dismissal can be held illegal.

See here the procedure to observe when the employee refuses to receive employer’s notice.

In addition, the company should send another copy by registered mail and keep the registry receipt for future reference.

Learn how to Validly Terminate Employee in the Philippines with this Tutorial Video of Atty. Elvin

Read more on procedural due process discussion by Atty. Elvin:

Read more on procedural due process by Atty. Villanueva:

Twin Requirements of Notice and Hearing

Procedural Due Process for Other Types of Employment

Notice to Explain: Contents and Requirements