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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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

Project employees, generally, cannot be dismissed, prior to the completion of the project or a phase thereof. Fixed- term employee cannot be terminated prior to the end of the term stipulated by the parties.

Seasonal employees cannot be dismissed before the end of the season. Casual employees cannot be terminated before the end of the contracted unrelated work.

Hence, even dismissal of probationary employees requires observance of due process. Probationary workers cannot be dismissed except for failure to qualify, just cause or authorized cause. In any of these cases, procedural due process required should likewise be observed to avoid payment of indemnity.

Thus, if the cause for dismissal is due to the failure to meet the standards of the employer, the probationary employee should be served a written notice within a reasonable time from the effective date of termination.

Can the employer argue that although it did not give notice to the employee the defect is cured by the consultation or conference?

In the case of Pepsi-cola Bottling Co., et al. vs. NLRC, et al., the Supreme Court ruled in the negative. According to the court, the consultations or conferences are not a substitute for the actual observance of notice and hearing.

Likewise, preventive suspension and investigation do not replace the two-notice requirement of due process. Such defect cannot even be cured by the hearings conducted in the NLRC. The employer is mandated to furnish the employee sought to be dismissed two notices, the written charge, and the notice of dismissal, if, after hearing, dismissal is warranted.

Employer’s prior consultation with the labor union for the dismissal of an affiliated employee is not likewise sufficient compliance with the due process. Such consultation or consent is not a substitute for actual observance of those rights of the employee.

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In a case where the company is organized (unionized) and the CBA provides for a union security clause, expulsion from the union still requires compliance with procedural due process before an employee can be dismissed by the company. Having security clause in the CBA ordinarily means an employee may be dismissed if he ceases to be affiliated with the union. There should be no automatic termination from the company upon expulsion from the union. The expelled member should be given a chance to explain his side.

An owner of a business enterprise is given considerable leeway in managing his business because it is deemed important to society as a whole that he should succeed.  Our law, therefore, recognizes certain rights as inherent in the management of business enterprises.  These rights are collectively called management prerogatives or acts by which one directing a business is able to control the variables thereof so as to enhance the chances of making a profit. (Homeowners Savings and Loan Association, Inc. vs. National Labor Relations Commission, G.R. No. 97067,  September 26, 1996)

An employer has the right to exercise its management prerogative in dealing with its company’s affairs including its right to dismiss its erring employees. The Court recognized the right of the employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of workers. In fact, it is a general principle of labor law to discourage interference with an employer’s judgment in the conduct of his business.

Even as the law is solicitous of the welfare of the employees, it also recognizes employer’s exercise of management prerogatives. Thus, for as long as the company’s exercise of judgment is in good faith to advance its interest and not for the purpose of defeating or circumventing the rights of employees under the laws or valid agreements, such exercise will be upheld. (Gaite vs. Filipino Society of Composers, et al., G.R. No. 219324, August 8, 2018)

The courts will decline to interfere in legitimate business decisions of employers. Labor laws discourage interference in employer’s judgment concerning the conduct of their business. (Philippine Industrial Security Agency Corporation vs. Aguinaldo, G.R. No. 149974, June 15, 2005)

Learn how to Validly Terminate Employee in the Philippines with this Tutorial Video of Atty. Elvin In general, the management has prerogative to discipline, free reign to regulate all aspects of employment, prerogative to impose penalties, and prerogative to dismiss. (The Coca-Cola Export Corporation vs. Gacayan, G.R. No. 149433, December 15, 2010)