However, this constitutional commitment to the policy of social justice does not mean that every labor dispute shall be automatically decided in favor of labor. It must also be remembered that in protecting the rights of the workers, the law does not authorize the oppression of the employer.

Hence, due regard is likewise given to the right of an employer to manage its operations according to reasonable standards and norms of fair play. This means that an employer has free reign over every aspect of its business, including the dismissal of its employees, as long as the exercise of its management prerogative is done reasonably, in good faith, and in a manner not otherwise intended to defeat or circumvent the rights of workers.

Accordingly, Article 297 of the Labor Code affirms the right of an employer to dismiss a miscreant employee on account of the latter’s willful disobedience.

Significantly, jurisprudence ordains that for an employee to be validly dismissed on the ground of willful disobedience, the employer must prove by substantial evidence that: (i) “the employee’s assailed conduct must have been willful or intentional, the willfulness being characterized by a wrongful and perverse attitude; and (ii) the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.

In the case of Mamaril vs. The Red System Company, Inc. [G.R. No. 229920, July 04, 2018], the Supreme Court (SC) held, in ruling for the validity of the dismissal of the employee, that the lifeblood of Red

System’s business is the safe transport and delivery of Coca-Cola products from the warehouse to the customers. As such, Red System imposed stringent guidelines to ensure the safe and efficient delivery of all the products.

Specifically, drivers were repeatedly reminded to place a tire choke, shift the engine to first gear, and pull the hand brake, upon parking the truck. Compliance with these safety measures was essential to prevent the sudden movement of the truck while parked and pushed by a forklift during loading and unloading operations. Likewise, caution was necessary to avoid damage to the new trucks. Moreover, extra-care was mandated in hauling Coca-Cola products to avoid accidents which would result in needless delays and unnecessary expenses and ruin Red System’s good will.

The SC further noted that the Red System was not remiss in reminding its drivers of the importance of abiding by their safety regulations. To ensure a strict observance of the rules, the company required its drivers to attend various safety seminars, in addition to a mandated pre-employment orientation. In fact, the complainant in said case attended a pre-orientation seminar and five safety seminars over the course of his two-year stint with Red System.

Added to this, the safety rules were also written in Red System’s Code of Conduct. There can be no doubt as to the lawfulness, reasonableness and necessity of Red System’s safety instructions. Moreover, the rules pertained to the duties performed by complainant. Accordingly, complainant was duty-bound to comply with such safety orders, as his main task consisted in driving and delivering fragile products. This notwithstanding, the complainant still willfully and negligently failed to abide by the safety rules.

The records show that three days after complainant was employed, he failed to put a tire choke, and worse, shifted the truck’s gear to neutral. As a result, the parked vehicle moved causing damage to Coca-Cola products valued at Php 14,556.00, in addition to the damage he caused to the truck. To make matters worse, instead of reporting the incident to his supervisor, as mandated under Red System’s rules, complainant deliberately concealed the incident. If not for his belated admission in an administrative hearing on a different incident, Red System would not have learned about his prior misdeed.

To make matters worse, complainant was again found to have committed the same violation of Red System’s safety rules. On November 12, 2011, he parked the truck with plate number PIK 726, without again putting a tire choke and engaging the hand brake. Due to his failure to perform the required safety standards, the truck moved backwards and hit another vehicle. This caused damage amounting to Php 25,500.00.

Brazenly, the complainant again purposely concealed the incident. Red System belatedly learned of the accident only after conducting an investigation, after it was surprised to receive Job Order from Motormall Davao Corporation for the repair of the said truck.

Clearly, complainant’s acts constituted a violation of Red System’s company policy. Rule 5, Section 2(b)(3) of Red System’s Code of Conduct penalizes other acts of negligence or inefficiency in the performance of duties or in the care, custody and/or use of company property, funds and/or equipment, where the amount of loss or damage amounts of more than Php 25,000.00. A violation of such rule warrants a penalty of dismissal.

Notably, the complainant violated Red System’s safety rules twice, and caused damage amounting to over Php 40,000.00. To make matters worse, he even deliberately and willfully concealed his transgressions. Such flagrant violation of the rules, coupled with the perversity of concealing the incidents, patently show a wrongful and perverse mental attitude rendering his acts inconsistent with proper subordination. Indubitably, this shows that complainant was indeed guilty of willful disobedience of Red System’s lawful orders.

Guided by the ruling in St. Luke’s Medical Center, Inc. v. Sanchez, the SC held that the deliberate disregard or disobedience by an employee of the rules, shall not be countenanced, as it may encourage him or her to do even worse and will render a mockery of the rules of discipline that employees are required to observe. To allow a recalcitrant employee to remain in employ shall amount to coddling an obstinate employee at the expense of the employer.

Thus, taking all the circumstances collectively, the Court is convinced that Red System had sufficient and valid reason for terminating complainant’s services, as his continued employment would be patently inimical to its interest. It is evident from the circumstances that Red System’s decision to terminate him was exercised in good faith, for the advancement of its interest and not for the purpose of defeating or circumventing the latter’s rights.

The SC finally held that this valid exercise of management prerogative must be upheld.

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.

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An employee who alleges to have been dismissed from service has the burden of proof. The rule is that before resolving the legality or illegality of dismissal, the fact of dismissal must first be established.

It is axiomatic that in illegal dismissal cases, the employer bears the burden of proving that the termination was for a valid or authorized cause. However, there are cases wherein the facts and the evidence do not establish prima facie that the employee was dismissed from employment.

Before the employer is obliged to prove that the dismissal was legal, the employee must first establish by substantial evidence the fact of his dismissal from service. If there is no dismissal, then there can be no question as to the legality or illegality thereof.

In a case where the employee alleged that when he failed to report for work on December 24, 2014, he was verbally terminated by the company. The employee claimed that company’s representative confirmed his termination. On the other hand, the company contended that the he just stopped reporting for work after he left his work on December 23, 2014.

The employee’s bare claim of having been dismissed from employment by the company, unsubstantiated by impartial and independent evidence, is insufficient to establish such fact of dismissal.

Bare and unsubstantiated allegations do not constitute substantial evidence and have no probative value. It must be emphasized that aside from the allegation that he was verbally terminated from his work, respondent failed to present any competent evidence showing that he was prevented from returning to his work.

The alleged representative did not issue any statement to corroborate the claimed termination of the employee. That he was refused to be given his salary covering the period from December 15, 2014 to December 22, 2014 did not at all prove the fact of his termination.

The Supreme Court (SC) ruled that it must be taken into account that salaries of employees may not be released for myriad of reasons. Termination may only be one of them. The basic rule of evidence that each party must prove his affirmative allegation, that mere allegation is not evidence. The Court must also stress that the evidence presented to show the employee’s termination from employment must be clear, positive, and convincing.

Absent any showing of an overt or positive act proving that the company had dismissed the employee, the latter’s claim of illegal dismissal cannot be sustained — as the same would be self-serving, conjectural, and of no probative value. [See Atienza vs. Saluta, June 17, 2019, G.R. No. 233413]

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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.

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Article 297 of the Labor Code enumerates the just causes for termination. It provides:

ARTICLE 297. Termination by employer. – An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

x x x

(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; x x x

Misconduct is defined as “the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment.

For serious misconduct to justify dismissal under the law,

(a) it must be serious,

(b) must relate to the performance of the employee’s duties; and

(c) must show that the employee has become unfit to continue working for the employer.

In a case where the employees illegally sold in Tarlac excess broilers and crates and were involved in the anomalous transactions, the Supreme Court held that these acts constitute Serious Misconduct which would warrant the supreme penalty of dismissal. (JR Hauling Services vs. Solamo, G.R. No. 214294, September 30, 2020)

Below is a sample Notice to Explain (NTE) for serious misconduct involving theft of company property with preventive suspension.

To:             MAGNO N. AKAO       

                  Sales Representative

From:         HR

Date:          _____ September _____

Subject:     NOTICE TO EXPLAIN (NTE) WITH PREVENTIVE SUSPENSION

It appears in our records that the company had excess broilers and crates that you delivered to Tarlac on ____.

As a matter of procedure, any excess of the company products and property should be turned over accordingly within twenty-four (24) hours. However, no such turnover was made on your part.

In this regard, please explain in writing within five (5) calendar days from receipt of this notice why no disciplinary action should be taken against you for the above, the penalty of which may result in dismissal if the evidence warrants.

Likewise, you are placed on preventive suspension effective immediately considering that your acts constitute serious and imminent threat on the property of the company.

Failure on your part to submit your written explanation within the prescribed period shall be deemed as waiver of your right to due process.

For your strict compliance.

GALICHA K. AWATAN

HR Manager

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Previous offenses may be used to aggravate a subsequent infraction to justify an employee’s dismissal only if they are related to the subsequent offense upon which termination is  decreed. (Celis vs. Bank of Makati (A Savings Bank), Inc., G.R. No. 250776. June 15, 2022)

In the Celis case, the Supreme Court (SC) reckons that in 2016, the company previously found the employee liable for the following infractions: (1) improper conduct and acts of gross discourtesy or disrespect to fellow employees; and (2) personal borrowing from the bank’s clients.

On account of these infractions, the company placed Celis under a 10-day and 15-day suspension, respectively.

The SC ratiocinated that while Celis had committed two previous offenses, the Principle of Totality of Infractions cannot be utilized against her as she committed no subsequent violation of respondent’s Code of Conduct. She did not commit the subject infraction. Simply put, there is no subsequent offense which her previous infractions could aggravate.

But even assuming that Celis had committed the subject infraction, the CA still erred in applying the Principle of Totality of Infractions considering that her previous infractions and the subject offense

upon which her termination was decreed were in no way related to each other.

Instructive on this matter is the case of Sy vs. Neat, Inc., wherein the SC ruled that the Principle of Totality of Infractions cannot be used against the employee because his transgression for wearing an improper uniform was not related to his latest infractions of insubordination and purported poor performance evaluation.

Previous offenses may be used as valid justification for dismissal only if they are related to the subsequent offense upon which the basis of termination is decreed, or if they have a  bearing on the proximate offense warranting dismissal.

In the case of De Guzman vs. NLRC, the SC ruled that the Principle of Totality of Infractions applies when prior infractions are similar to the subsequent offense. In such case, the SC instructs that the previous offense that employee involved had committed on 3 July 1993 for willful refusal to perform one’s assigned work or to comply with instruction of supervisor, for which she had been administered a sufficient disciplinary sanction of six days suspension, could no longer be utilized to aggravate the present offense.

De Guzman’s previous offense was an entirely separate and distinct violation of company rules. The SC held that the correct rule is that previous infractions may be used as justification for an employee’s dismissal from work in connection with a subsequent similar offense.

For the SC, in the Celis case, the first offense of Celis, i.e., discourtesy or disrespect to fellow employees, was an offense concerning improper behavior towards co-workers. On the other hand, her second offense, i.e., personal borrowing from the   bank’s clients, was a transgression relating to conflict of interest. The subject infraction differs from the aforementioned offenses in that, the subject infraction concerns dishonesty.

Celis’ infractions not being related or similar in nature to the present charge, the CA erred in applying the Principle of Totality of Infractions against her. Indubitably, the company failed to substantially prove that her dismissal from employment was for a just cause.

All told, the SC found substantial evidence to support the finding that the company illegally dismissed Celis from employment. Thus, the CA erred in imputing grave abuse of discretion against the NLRC. The SC agreed with the labor tribunals that Celis was indeed illegally terminated from her job.

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Among these grounds are as follows: (See citations in Atty. Elvin’s Book Guide to Valid Dismissal of Employees Second Edition, p. 212)

1. Any union officer who knowingly participates in an illegal strike may be declared to have lost his employment status. In this instance, the union officer must have knowledge that the strike to which he participates in is illegal;
2. Any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status. This is the case whether the strike is legal or illegal;
3. Strikers, who violate orders, prohibitions and/or injunctions as are issued by the Secretary of Labor and Employment or the NLRC, may be imposed immediate disciplinary action, including dismissal or loss of employment status;
4. Violation of the union security clause stipulated in the CBA pursuant to Article 248 [e] of the

   

   Labor Code may result in termination of employment. The contracting union can demand from the employer the dismissal of an employee who commits a breach of union security arrangement, such as failure to join the union or to maintain his membership in good standing there- in. The contracting union can also demand for the dismissal of a member who commits an act of disloyalty to the union, such as when the member organizes a rival union.

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Hence, it does not seem to be in accord with the decision of the management to charge an employee for loss of trust and confidence after he was being promoted.

The promotion of an employee who was dismissed for loss of trust and confidence contradicts the claim of the company that the employee deserves to be terminated. This self-contradictory position of the employer negates its claim of loss of confidence in its employee. (See the case of Easycall Communications Phils., Inc. vs. King, G.R. No. 145901, December 15, 2005.)

Further, an employee who was promoted several times and was given bonuses for his collection efforts and a compensation adjustment for his excellent performance cannot be validly dismissed on the ground of loss of trust and confidence. Such promotion, bonuses and compensation negate the allegations of inefficiency and loss of trust and confidence.

Loss of confidence has no basis if the fact shows that:

1. The employee was the recipient of numerous awards, commendations and promotions from the

   

   employer which he had served for two (2) decades; and

2. In his entire service to the company, he was never implicated in any irregularity or anomaly.

But in another case, the employee’s claim of having served the company for 16 years backfired because the long years of service reflected a regrettable lack of loyalty on the part of the employee. Loyalty should have been strengthened instead of betrayed.

If an employee’s length of service is to be regarded as a justification for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all undesirables.

Unlike other just causes for dismissal, trust in an employee, once lost is difficult, if not impossible, to regain. (Salvador vs. Philippine Mining Service Corporation, G.R. 148766, January 22, 2003.)

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In the case of a managerial employee who is faced with investigation for willful breach of trust, he gives up the guarantee considering the rule that an employee who is reposed with trust and confidence can be easily dismissed for willful breach of such trust given the proven circumstances and substantial evidence.

While the rule in the case of Villanueva vs. National Labor Relations Commission (Rolia Villanueva vs. National Labor Relations Commission, G.R. No. 129413, July 27, 1998.) espouses that a rank and file employee who ascends to managerial position sheds off certain guaranties of his lower position, he must still be accorded the rights in relation to his security of tenure.

Thus, the right of the management to dismiss must be balanced against the managerial employee’s right to security of tenure which is not one of the guaranties he gives up.

Although the standards for their dismissal are less stringent, the loss of trust and confidence must be substantial and founded on clearly established facts sufficient to warrant the managerial employee’s separation from the company. Substantial evidence is of critical importance and the burden rests on the employer to prove from the company.

Due to its subjective nature, it can easily be concocted by an abusive employer and used as a subterfuge for causes which are improper, illegal or unjustified. In the termination of managerial employees based

on loss of trust and confidence, the employer’s evidence must clearly and convincingly establish the facts and incidents upon which the loss of confidence may fairly be made to rest.

One of the nightmares of a manager is to be held responsible for acts which he never committed or which he was not part of. But things like that happen due to his command responsibility.

His liability in such instance boils down to his neglect of duty. Thus, on the principle of respondeat superior or command responsibility alone, managerial employees may be held liable for negligence in the performance of their managerial duties, unless they can positively show that they were not involved. Their position requires a high degree of responsibility that necessarily includes unearthing of fraudulent and irregular activities.

In a case where a manager for the Healthcare Division was charged for her failure to report the anomalous transaction within her division involving fictitious invoices, her dismissal was upheld on account of command responsibility. Her duties, among others, were to detect fraudulent activities and irregularities within her Division and thereafter report the same to management.

Her position demands that she manage, control and take responsibility over activities in her department. It requires a high degree of responsibility that necessarily includes unearthing of fraudulent and irregular activities. This, she

failed to do. Her ‘bare, unsubstantiated and uncorroborated denial’ of her participation in the anomalies does not prove her innocence nor disprove her alleged guilt. On the contrary, such denial or failure to rebut the serious accusations hurled against her militate against her innocence and strengthened the adverse averments of the company.

The ordinary rule is that one who has knowledge peculiarly within his control, and refuses to divulge it, cannot complain if the court puts the most unfavorable construction upon his silence, and infers that a disclosure would have shown the fact to be as claimed by the opposing party.

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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 to work for the employer.

Also, the act complained of should have arisen from the performance of the employee’s duties.

Thus, an accounting clerk of a bank whose duty in- volves opening of savings, current and/or time deposits and the payment of withdrawals cannot be dismissed for acts related to bank guarantees, which is the responsibility of the branch manager and the management personnel of the company’s head office.

In order to constitute as just cause for dismissal, loss of confidence should relate to acts inimical to the interests of the employer. Breach must be related to the performance of the employee’s function.

The position itself should require trustworthiness from an employee for breach of trust to prosper as a valid ground for dismissal. It must be a position reposed with trust and confidence.

Loss of confidence applies to: (1) employees occupying positions of trust and confidence, the managerial employees; and (2) employees who are routinely charged with the care and custody of the employer’s money or property which may include rank-and-file employees.

Examples of rank-and-file employees who may be dismissed for loss of confidence are cashiers, auditors, property custodians, or those who, in the normal routine exercise of their functions, regularly handle significant amounts of money or property.

The law defines position of trust and confidence as one where a person is entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employer’s property.

As held in the case of Eats-Cetera Food Services vs. Myrna B. Letran And Mary Grace Espadero, a position of trust and confidence has been defined as one where a person is entrusted with confidence on delicate matters, or with the custody, handling, or care and protection of the employer’s property and/or funds.

One such position is that of a cashier. A cashier is a highly sensitive position which requires absolute trust and honesty on the part of the employee.

It pertains to an employee where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. The betrayal of this trust is the essence of the offense for which an employee is penalized.

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Fraud is never presumed. It must be proved. It cannot be based on nebulous facts.

Fraud and misrepresentation are, therefore, never presumed; it must be proved by clear and convincing evidence and not mere preponderance of evidence. (Solidbank Corporation v. Mindanao Ferroalloy Corporation, G.R. No. 153535, July 28, 2005, 464 SCRA 409, 426; Republic of the Philippines v. Institute for Social Concern, G.R. No. 156306, January 28, 2005, 449 SCRA 512, 521-522; Spouses Morandarte v. Court of Appeals, G.R. No. 123586, August 12, 2004, 436 SCRA 213, 223; and Maestrado v. Court of Appeals, 384 Phil. 418, 435 (2000).)

Hence, the Supreme Court does not sustain findings of fraud upon circumstances which, at most, create only suspicion; otherwise, it would be indulging in speculations and surmises.

In a case where the employee questions her dis- missal due to the fact that the company failed to prove damage or losses on its part, the Supreme Court held that:

“The fact that private respondent did not suffer losses from the dishonesty of the petitioner because of their timely discovery does not excuse the latter from any culpability. Indeed, the law, in protecting the rights of workers, authorizes neither oppression nor self-destruction of the employer. In this regard, a company has the right to dismiss its employees as a measure of self-protection.” (Rolia Villanueva vs. National Labor Relations Commission, G.R. No. 129413 July 27, 1998.)

Further, the fact that the employer failed to show it suffered losses in revenue as a consequence of em- ployee’s questioned act is immaterial. The fact that the employee attempted to deprive petitioner of its lawful revenue is tantamount to fraud against the company, which warrants dismissal from the service.

Actual loss against the company is not necessary to establish fraud as an offense. It must be stressed that actual defraudation is not necessary in order that an employee may be held liable under the aforequoted rule. That employee attempted to deprive employer of its lawful revenue is already tantamount to fraud against the company, which warrants dismissal from the service.

Even if it is to be argued that the employer suffered no damage since the employee has settled his account, the rule is clear that it is betrayal of trust and confidence that is the reason for termination. The fact that there was ultimately no monetary damage is of no moment.

Restitution of property taken by the errant employee does not erase the offense committed.

Hence, even if the shortages have been fully restituted, the fact that the employee has misappropriated company funds is a valid ground to terminate his services for loss of trust and confidence.

In another case, misappropriation of company funds, although the shortages had been fully restituted, is a valid ground to terminate the services of an employee of the company for loss of trust and confidence.

In the final analysis, an employer cannot be compelled to retain in his service an employee who is guilty of acts inimical to its interest. A company has the right to dismiss its employees as a measure of protection.

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