Aluag vs. BIR Multi-Purpose Cooperative

A cashier occupying a position of trust and confidence may be dismissed on the ground of loss of that confidence if the employer has reasonable ground to believe that the employee committed an act directly related to her duties that rendered her unfit to continue in the stewardship of company funds; it is sufficient that some basis exists for the loss of confidence, and labor tribunals should not deny the employer the authority to dismiss when evidence supports the employer’s reasonable belief. Compliance with the twin-notice rule and an opportunity to explain satisfies procedural due process even without a formal hearing.

Grace R. Aluag was employed as cashier of BIR Multi-Purpose Cooperative (BIRMPC) from November 16, 1994. Her duties included receiving remittances and payments, depositing all collections daily, recording fixed deposits, determining cash positions, issuing checks for loans, and collecting cash receipts. In 2013, BIRMPC discovered widespread irregularities in loan documents. An external audit confirmed that Aluag failed to regularly report post-dated checks and did not monitor due dates for deposit, with some checks remaining undeposited. Aluag admitted that she refrained from depositing matured checks when the member-debtors requested more time, albeit with the general manager’s alleged knowledge.

• Employment and Duties: Aluag served as BIRMPC’s cashier from November 16, 1994. Her responsibilities included receiving remittances and payments, depositing all collections daily, recording fixed deposits, determining cash positions, issuing checks for loans, collecting cash receipts, and performing other duties assigned by the general manager. She gave only verbal weekly reports on BIRMPC funds until 2010, when written reports were required.

• Loan Processing Practices: Starting in 2011, BIRMPC loan processors accepted post-dated checks with the prior approval of the general manager, Gerardo Flores. Aluag claimed that, upon Flores’ instruction, she submitted a report of bounced checks in July 2013 and deposited remaining checks in her possession.

• Investigation and Preventive Suspension: On July 16, 2013, ten days before giving birth, Aluag received a letter temporarily relieving her from her position pending an investigation into suspicious loans involving her and two loan processors. She submitted her explanation on July 29, 2013, admitting that she: (a) was tasked to have all collections deposited daily; (b) received verified post-dated checks for safekeeping and deposit when due; and (c) opted not to deposit matured checks upon request of the debtors, saying she informed the general manager but would eventually deposit them when funds were available. She then went on maternity leave from July 30 to September 30, 2013, during which BIRMPC preventively suspended her from August 1 to October 31, 2013.

• Termination: On October 31, 2013, Aluag received a letter terminating her employment effective November 1, 2013, on the ground of loss of trust and confidence. The letter cited: (a) acceptance of accommodation checks; (b) failure to deposit checks on due dates at the debtor’s request; (c) failure to report checks with no sufficient funds or closed accounts; and (d) failure to act upon returned checks.

• External Audit: BIRMPC engaged an external accountant whose report confirmed that the cashier failed to regularly report post-dated checks received, did not observe proper monitoring of checks’ due dates for deposit, and that some checks were not deposited at all.

• Aluag’s Position: Aluag claimed she was illegally dismissed, contending that deposit of checks was not among her ministerial duties, that she merely received accommodation checks previously verified by loan processors and approved by the general manager, and that acting upon returned checks was the general manager’s function, not hers.

• Labor Arbiter’s Findings: The Labor Arbiter found that Aluag held a position of trust and confidence as cashier. Her various infractions, which contributed to financial damage of ₱35,526,599.77, constituted sufficient basis for loss of trust and confidence. Procedural due process was observed through the service of two written notices.

• NLRC Findings: The NLRC found that Aluag’s infractions were insufficient to dismiss her because depositing checks, monitoring them, and acting on returned checks were not among her routine or ministerial duties. No evidence was presented to prove that the general manager assigned the task of depositing checks to her, nor that her failure resulted from debtor requests.

• Scope of Duties: Aluag maintained that the tasks of depositing checks, monitoring their due dates, and acting upon returned checks were not part of her responsibilities as cashier. She argued that she only received checks already verified by loan processors and approved by the general manager, and that the decision to hold or deposit matured checks was made with the general manager’s knowledge.

• Lack of Just Cause: She contended that the infractions cited did not constitute a valid ground for loss of trust and confidence because they were not violations of her ministerial duties and she had no discretion to refuse accommodation checks or to override the general manager’s instructions.

• Illegality of Dismissal: She asserted that her termination was illegal, as there was no substantial evidence of misconduct warranting loss of confidence, and that the NLRC correctly reversed the Labor Arbiter’s ruling.

• Position of Trust and Confidence: Respondents argued that as cashier, Aluag occupied a fiduciary position regularly handling company funds, thereby subjecting her to a higher standard of trustworthiness. Her admissions in her explanation letter directly established her failure to deposit matured checks.

• Substantive Due Process: They maintained that Aluag’s acts — particularly her failure to deposit checks on due dates at the request of debtors — were directly related to her duties and caused substantial financial damage, thereby providing ample basis for loss of trust and confidence. The external auditor’s report confirmed the irregularities.

• Procedural Due Process: Respondents contended that Aluag was served with a written notice specifying the charges and was given an opportunity to explain her side, followed by a written notice of termination, thus complying with the twin-notice rule.

• Effect of Failure to Serve Copy on CA: Whether the petition should be dismissed outright for failure to serve a copy on the Court of Appeals as required by Section 3, Rule 45 of the Rules of Court.

• Validity of Dismissal — Loss of Trust and Confidence: Whether the Court of Appeals correctly determined that the NLRC gravely abused its discretion in finding that Aluag was illegally dismissed, given the evidence that she failed to deposit checks on due dates, an act directly related to her duties as cashier.

• Procedural Due Process: Whether BIRMPC complied with the twin-notice and hearing requirements before terminating Aluag’s employment.

• Effect of Failure to Serve Copy on CA: The failure to serve a copy of the petition on the CA was a sufficient ground for outright dismissal under Sections 3 and 5 of Rule 45, in relation to Section 5(d), Rule 56, and item 2 of Revised Circular No. 1-88. The omission even led to the CA’s entry of judgment. Nonetheless, the merits were addressed to finally resolve the controversy.

• Validity of Dismissal — Loss of Trust and Confidence: The CA correctly found grave abuse of discretion on the part of the NLRC, as the NLRC’s ruling was not supported by substantial evidence and deviated from settled legal principles. Aluag, as a cashier, belonged to the class of fiduciary rank-and-file employees occupying a position of trust and confidence because she regularly handled company funds. The act that caused the loss of confidence — her failure to deposit checks on their due dates — was directly related to her duties. Her own explanation letter admitted that she was tasked to deposit collections daily and that she opted not to deposit matured checks upon the debtor’s request. The external auditor’s report confirmed the failure to monitor and deposit checks. Thus, the employer had reasonable ground to believe that she was no longer worthy of the trust reposed in her. It would be unfair to compel the employer to retain a cashier it reasonably believed was no longer capable of full and wholehearted trustworthiness in the stewardship of company funds.

• Procedural Due Process: BIRMPC substantially complied with the standard of procedural due process under Section 2(I), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, as refined in Unilever Philippines, Inc. v. Rivera. It served a first written notice specifying Aluag’s infractions and directing her to submit a written explanation, thereby giving her reasonable opportunity to be heard. She in fact submitted her explanation. After verifying the infractions, a written notice of termination was served. A formal hearing is not indispensable; the opportunity to explain suffices.

• Two Classes of Positions of Trust — Position of trust and confidence covers: (1) managerial employees; and (2) fiduciary rank-and-file employees, such as cashiers, auditors, and property custodians, who regularly handle significant amounts of money or property. A cashier charged with collection of remittances and payments belongs to the second class.

• Requisites for Dismissal on Ground of Loss of Trust and Confidence — Under Article 297(c) (formerly Article 282[c]) of the Labor Code, the employer must prove: (a) the employee holds a position of trust and confidence; and (b) the employee performed an act that would justify the loss of trust and confidence. The act must be directly related to the employee’s duties and render her woefully unfit to continue. It is sufficient that the employer has some basis or a reasonable ground to believe the employee is responsible for the misconduct.

• Review of CA Decision in Labor Cases — In a Rule 45 petition, the Court examines the legal correctness of the CA’s decision by reviewing whether the CA correctly determined the presence or absence of grave abuse of discretion in the NLRC decision. Grave abuse of discretion exists when the NLRC’s findings and conclusions are not supported by substantial evidence.

• Standard of Procedural Due Process — Under Section 2(I), Rule XXIII, Book V of the Omnibus Rules, as refined in Unilever Philippines, Inc. v. Rivera, the employer must: (1) serve a first written notice containing specific causes or grounds for termination and a directive for the employee to submit a written explanation within a reasonable period (at least five calendar days); (2) conduct a hearing or conference where the employee may explain, present evidence, and rebut the employer’s evidence, with the assistance of counsel if desired; and (3) after determining that termination is justified, serve a written notice of termination indicating that all circumstances were considered and grounds were established. A formal hearing is not strictly required; it is sufficient that the employee is given an opportunity to explain her side.

• “In dismissing a cashier on the ground of loss of confidence, it is sufficient that there is some basis for the same or that the employer has a reasonable ground to believe that the employee is responsible for the misconduct, thus making [her] unworthy of the trust and confidence reposed in [her]. If there is sufficient evidence showing that the employer has ample reason to dismiss her, labor tribunals should not deny the employer the authority to dismiss her from employment.”

• “Being a cashier charged with the collection of remittances and payments, Aluag undoubtedly occupied a position of trust and confidence. Notably, in holding a position requiring full trust and confidence, Aluag ‘gave up some of the rigid guarantees available to ordinary employees.’”

• “Verily, her failure to deposit the checks on their due dates means that she failed to deliver on her task to safeguard BIRMPC’s finances. It is also well to note that she was not given any discretion to determine whether or not to deposit the checks. Under these circumstances, BIRMPC had ample reason to lose the trust and confidence it reposed upon her and thereby, terminate her employment.”

• “Procedural due process is met even without an actual hearing as long as the employee is accorded a chance to explain her side of the controversy.” [Citing Perez v. Philippine Telegraph and Telephone Company]

• Puncia v. Toyota Shaw/Pasig, Inc., G.R. No. 214399, June 28, 2016 — Exhaustively discussed the procedural due process requirements in termination cases and was applied to evaluate BIRMPC’s compliance with the twin-notice rule and the opportunity to be heard.

• Unilever Philippines, Inc. v. Rivera, 710 Phil. 124 (2013) — Refined the standard of procedural due process, detailing the content of the first notice, the conduct of a hearing or conference, and the final notice of termination. The Court relied on this articulation to find substantial compliance.

• Cebu People’s Multi-Purpose Cooperative v. Carbonilla, Jr., G.R. No. 212070, January 27, 2016 — Cited for the two classes of positions of trust and confidence and for the ruling that cashiers belong to the fiduciary rank-and-file class.

• P.J. Lhuillier, Inc. v. Velayo, 746 Phil. 781 (2014) — Applied for the principle that a fiduciary employee gives up some rigid guarantees available to ordinary employees, and that it would be unfair to compel an employer to retain a cashier it reasonably believes is no longer trustworthy.

• University of Santo Tomas v. Samahang Manggagawa ng UST, G.R. No. 184262, April 24, 2017 — Set out the standard of review in labor cases elevated via Rule 45: the Court examines whether the CA correctly determined the presence of grave abuse of discretion in the NLRC decision.

• Perez v. Philippine Telegraph and Telephone Company, 602 Phil. 522 (2009) — Relied upon for the rule that an actual hearing is not indispensable to procedural due process as long as the employee is given a chance to explain her side.

• Article 297(c) [formerly Article 282(c)] of the Labor Code — Allows termination of employment for loss of trust and confidence. The Court held that the employer validly invoked this ground because Aluag held a cashier position requiring trust and committed acts directly related to her duties that justified the loss of that trust.

• Section 2(I), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code — Prescribes the standards of due process for termination based on just causes: (a) a written notice specifying the grounds and giving reasonable opportunity to explain; (b) a hearing or conference; and (c) a written notice of termination. The Court found these standards substantially observed.

Carpio (Chairperson), Peralta, Caguioa, and Reyes, Jr., JJ., concur.