Loss of trust and confidence - G.R. No. 185255

G.R. No. 185255

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We dismiss the petition for lack of merit. 

Loss of trust and confidence as a ground for termination of an employee under Article 282[18] of the Labor Code requires that the breach of trust be willful, meaning it must be done intentionally, knowingly, and purposely, without justifiable excuse.[19]  The basic premise for dismissal on the ground of loss of confidence is that the employees concerned holds a position of trust and confidence.  It is the breach of this trust that results in the employer’s loss of confidence in the employee. 

Here, there is no question that as petitioners’ Branch Manager in Iligan City, respondent was holding a position of trust and confidence.  He was responsible for the administration of the branch, and exercised supervision and control over all the employees.  He was also incharge of sales and collection. 

Now, petitioners terminated his employment on the ground of loss of trust and confidence for supposedly committing acts inimical to the company’s interests. However, in termination cases, the burden of proof rests upon the employer to show that the dismissal is for a just and valid cause and failure to do so would necessarily mean that the dismissal was illegal.[20]  The employer’s case succeeds or fails on the strength of its evidence and not on the weakness of the employee’s defense. If doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.  Moreover, the quantum of proof required in determining the legality of an employee’s dismissal is only substantial evidence or such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.[21]  Thus, it is incumbent upon petitioners to prove by substantial evidence that valid grounds existfor terminating respondent’s employment on the ground of loss of trust and confidence. However, our review of the records of this case reveals that the CA correctly held that petitioners failed to discharge this burden. 

In terminating respondent’s services, petitioners relied on several grounds.  First, petitioners relied on the affidavit of customer Ludy Gamboa.  In her affidavit, Ludy Gamboa accused respondent of refusing to accept payment of P7,000 to redeem a motorcycle unit sometime on May 21-23, 2001.[22]  However, respondent was able to prove by submitting the Monthly Inventory Report[23] that the motorcycle unit had already been repossessed by the company due to Gamboa’s failure to settle her account. Respondent’s refusal to receive the partial payment was therefore undeniably justified. And the motorcycle already having been repossessed, it could also be sold to any person who might like to buy it including respondent’s nephew.

Second, petitioners also allege that respondent charged customer Amy Pastor an excessive amount.  In her affidavit, Pastor claimed that sometime on January 2002, respondent required her to pay the amount of P5,566, while her outstanding balance was only P378.[24]  However, a closer look at the audit report conducted by the internal auditor of petitioner Norkis, Joelito L. Florenosos, would show that there was no over-collection.[25]  Said exculpatory finding was also made after the internal auditor noted that the official receipt respondent issued to cover the said collection showed no such over-collection.  Why petitioners chose to believe Pastor’s affidavit over the findings of its own internal auditor which was duly supported by documentary evidence is perplexing.

Third, petitioners accuse respondent of giving unauthorized commissions to Mr. Gary Bellen.  Respondent however asserted, and petitioners did not rebut, that Bellen is a legitimate Personalized Sales Representative of Norkis Distributors, as evidenced by the contract they signed.[26]  Respondent also explained, and petitioners again did not rebut, that Bellen tutored the staff in computer programming and operation free of charge, on the condition that he may entertain customers and receive commissions. Clearly, therefore, the arrangement made with Bellen was even beneficial to the company.  Hence, in giving commissions to Bellen, as sales representative, it cannot be said that respondent willfully breached petitioners’ trust and confidence in him.

Fourth, petitioners argue that respondent’s failure to reach his monthly sales quota is a valid basis for loss of trust and confidence.  In his explanation, respondent asserted that certain factors were to be considered for the low sales performance in their branch such as the existence of other competitors which offered low down payments, low monthly installments, and other promotional items.  Respondent also emphasized that the customers’ capacity to pay had been affected by the financial crisis at the time, thus making it more difficult to collect from them. 

To our mind, the failure to reach the monthly sales quota cannot be considered an intentional and unjustified act of respondent amounting to a willful breach of trust on his part that would call for his termination based on loss of confidence.  This is simply not the willful breach of trust and confidence contemplated in Article 282(c) of theLabor Code.  Indeed, the low sales performance could be attributed to several factors which are beyond respondent’s control.  To be a valid ground for an employee’s dismissal, loss of trust and confidence must be based on a willful breach.^[27]  To repeat, a breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse.^[28] 

Petitioners having failed to establish by substantial evidence any valid ground for terminating respondent’s services, we uphold the finding of the Labor Arbiter and the CA that respondent was illegally dismissed.

But did the CA award correct reliefs to respondent? We likewise rule in the affirmative.

An illegally dismissed employee is entitled to two reliefs: back wages and reinstatement. The two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement if such is viable, or separation pay if reinstatement is no longer viable, and to back wages.

The normal consequences of respondent’s illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of back wages computed from the time compensation was withheld from him up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to payment of back wages.[29]

Petitioners question the CA Resolution dated October 24, 2008, arguing that it modified its March 31, 2008 Decision which has already attained finality insofar as respondent is concerned.  Petitioners point out that the October 24, 2008 CA Resolution clarified that the payment of separation pay and back wages shall be reckoned from the time respondent was illegally suspended until finality of the March 31, 2008 CA Decision.  But petitioners point out that when the Labor Arbiter declared that the payment of back wages shall be “until the promulgation of this Decision,” he was referring to his own Decision promulgated on March 14, 2003.

We do not agree.

Such contention is misplaced.  The CA merely clarified the period of payment of back wages and separation pay up to the finality of its decision (March 31, 2008)modifying the Labor Arbiter’s decision. In view of the modification of monetary awards in the Labor Arbiter’s decision, the time frame for the payment of back wages and separation pay is accordingly modified to the finality of the CA decision.  The clarification thus made on motion of the respondent was not an amendment of the March 31, 2008 Decision.  Even assuming that the CA indeed corrected or amended the dispositive portion of its decision, it is well within its appellate jurisdiction to treat respondent’s motion for clarification as a partial motion for reconsideration[30] insofar only as to declare until when the payment of such back wages and separation pay shall be made.

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