Casco vs. NLRC

An employee may not be dismissed for gross and habitual negligence or loss of trust and confidence where the employer fails to prove by substantial evidence that the employee was the custodian of the lost property or committed willful and deliberate acts leading to the loss, even if the employee holds a managerial position.

Capitol Medical Center is a private hospital with Dr. Thelma N. Clemente as its President and Chief Executive Officer. Petitioner Josephine Casco began working at Capitol as a Staff Nurse in the Recovery Room on 29 March 1984 and was promoted through the ranks, ultimately becoming Nurse Supervisor of the Operating Room on 3 September 2002. Her job summary included responsibility for the supervision and management of nurses and services at the Operating and Recovery Room, accountability for losses and equipment malfunction, and conducting inventory of fixed assets and supplies — but did not expressly include the custody, safekeeping, or physical protection of hospital equipment.

Petitioner Josephine Casco was employed at Capitol Medical Center beginning 29 March 1984 as a Staff Nurse in the Recovery Room. She was promoted to Head Nurse of the OB-Gyne Surgical Ward on 16 February 1989, then to Nurse Supervisor of the Surgical Ward on 30 November 1991, and finally to Nurse Supervisor of the Operating Room on 3 September 2002. Her job summary as Nurse Supervisor of the Operating Room described her as responsible for the supervision and management of nurses and services at the Operating and Recovery Room, planning all nursing activities and exercising personnel management within the area, and being accountable for losses, equipment malfunction, breakage, patients, and personnel. Her detailed duties included consistently monitoring the use of supplies, checking proper endorsement of supplies, equipment, and machines and reporting malfunctions, receiving newly purchased instruments and equipment, and conducting inventory of fixed assets and supplies.

On 19 June 2006 and 3 July 2006, petitioner received from Capitol various equipment such as vaporizers, patient monitors, and Pulse Oximeters for the Operating Room. On 25 January 2008, a representative of Abbot Laboratories conducted a calibration of the Operating Room's vaporizers, during which it was discovered that several pieces of hospital equipment in the Operating Room were missing. Petitioner filed an Incident Report dated 31 January 2007 stating that several vaporizers were missing inside the Operating Complex, including two Mundray Monitors and two Pulse Oximeters. On 7 February 2008, Capitol issued a First Notice of Investigation charging petitioner with gross negligence in connection with the loss of hospital equipment and requiring a written explanation.

In her Explanation dated 11 February 2008, petitioner stated that she had worked for 23 years at Capitol without a single instance of neglect; that she had verbally suggested installing surveillance cameras in all Operating Theaters, Central Supply, and important areas of the Operating Room Complex, but management had placed only two cameras in the OR hallway; that she had reviewed the surveillance footage and contacted colleagues in other hospitals to inquire about the missing equipment; and that the theft was beyond her control because everybody had access to the machine room area and all Operating Room theaters, with seven doors in the sterile area that could not be permanently locked. On 18 December 2008, Capitol issued a Letter of Termination, finding petitioner guilty of gross negligence resulting in the loss of two PM 600 Mindray monitors, two Pulse Oximeters, three Vaporizers, and one Endoscopy Camera with a total value of ₱2.9 million, and dismissing her on the ground that management had lost its trust and confidence in her as Supervisor.

On 2 February 2009, petitioner filed a complaint for illegal dismissal and damages with the NLRC. Labor Arbiter Daniel J. Cajilig rendered a decision on 14 October 2009 ordering reinstatement without loss of seniority rights and payment of backwages amounting to ₱220,298.58, finding that the records did not show habitual neglect and that an isolated case of negligence did not justify termination. The employer appealed to the NLRC, which on 22 July 2010 reversed the Labor Arbiter and dismissed the complaint, declaring that petitioner had committed a series of negligent acts and was validly dismissed on the ground of loss of trust and confidence. The CA upheld the NLRC on 12 October 2011, concluding that petitioner was grossly negligent because she only discovered the missing equipment when the vaporizers were scheduled for calibration, that she had not regularly conducted inventory, and that despite knowing the operating room was accessible to anyone, she had taken no appropriate measures to secure the equipment.

• Scope of Duties: Petitioner contended that the care and custody of the equipment and machinery devolved upon the Head Nurse who was specifically tasked to secure and oversee their care and use, and that such responsibility was not her chief task as Nurse Supervisor.
• Diligence in Performance: Petitioner maintained that she regularly conducted an inventory of the fixed assets and supplies of the operating room, the latest of which was done a few months prior to the loss of the equipment, and that she diligently performed her duties, even advocating the installation of surveillance cameras.
• Length of Service: Petitioner argued that she had rendered loyal, dedicated, and efficient service to the hospital for 25 years, which should have been considered a mitigating circumstance.
• Absence of Willfulness: Petitioner asserted that loss of trust and confidence required willfulness on her part, which was lacking; that she could only be guilty of simple negligence, if at all; and that under Capitol Medical Center's Manual on Employee Regulation, her offense was not punishable with dismissal.

• Failure to Conduct Inventory: Respondent countered that petitioner did not discharge her responsibility by regularly conducting inventory of the equipment.
• Failure to Institute Control Measures: Respondent argued that petitioner did not institute control measures to secure the equipment under her custody and did not actively pursue leads as to the possible perpetrator.
• Willfulness and Blameworthiness: Respondent maintained that the lost equipment was never released to the Head Nurse, that petitioner's acts warranting dismissal were voluntary, willful, and blameworthy for having resulted in financial loss to the employer, and that her length of service aggravated rather than mitigated her liability because she had become grossly complacent and careless.

• Grave Abuse of Discretion — Validity of Dismissal: Whether the CA erred in finding that the NLRC did not gravely abuse its discretion in declaring the petitioner's dismissal valid on the ground of loss of trust and confidence and gross negligence.
• Gross Negligence — Custodial Responsibility: Whether the care and custody of the lost equipment was part of the petitioner's duties as Nurse Supervisor such that her failure to secure them constituted gross and habitual negligence.
• Loss of Trust and Confidence — Basis for Dismissal: Whether there was a sufficient basis to justify the petitioner's dismissal on the ground of loss of trust and confidence as a managerial employee.

• Grave Abuse of Discretion — Validity of Dismissal: Yes. The CA erred in upholding the NLRC, the employer having failed to discharge its burden of proving a valid cause for dismissal by substantial evidence.
• Gross Negligence — Custodial Responsibility: No. The petitioner's job description did not vest her with the task of taking care, handling, and keeping of hospital property; being "accountable for losses" did not automatically make her the custodian of the equipment.
• Loss of Trust and Confidence — Basis for Dismissal: No. Although the petitioner was a managerial employee, the employer adduced no evidence showing that she had committed willful and deliberate acts that led to the loss, or that she was somehow responsible for the missing property in a manner rendering her unworthy of the trust demanded by her position.

• Grave Abuse of Discretion — Validity of Dismissal: In a Rule 45 review of a CA decision in a labor case, the Court examines whether the CA correctly determined the presence or absence of grave abuse of discretion in the NLRC decision, not whether the NLRC decision on the merits was correct. While the Court is generally limited to questions of law, it may review factual issues where the findings of the CA and the labor tribunals are contradictory, as in this case. The CA and NLRC both erroneously concluded that petitioner was remiss in her duty to secure hospital equipment, basing this on her Job Summary's reference to accountability for losses. This conclusion was gravely abusive because it misread the facts and misappreciated the evidence regarding the scope of her duties.
• Gross Negligence — Custodial Responsibility: Neglect of duty as a ground for dismissal must be both gross and habitual. Gross negligence implies the entire absence of care, evincing a thoughtless disregard of consequences. Habitual neglect implies repeated failure to perform one's duties over a period of time. The employer bears the burden of proving by substantial evidence that the dismissal was for a valid cause. The petitioner's job description — including supervision of patient care, personnel management, monitoring use of supplies, checking proper endorsement of equipment, reporting malfunctions, receiving newly purchased instruments, and conducting inventory — nowhere vested her with the task of taking care, handling, and keeping of hospital property. Being "accountable for losses" did not automatically make her the custodian; the job description did not specify what kind of loss she would be liable for, and accountability for equipment malfunction arose from her duty to promptly report such malfunction, not from custody of the equipment. Even assuming she was made custodian, the employer failed to establish that she had willfully and deliberately intended to be mindless of her responsibilities or that she had been reckless. She could not be responsible for conducting annual inventory if no standard was laid down by the employer; the blame for failing to secure the equipment could not fall on her if access to the operating room was not under her control but that of management; and the responsibility of investigating the loss could not be expected from her, as any action against the perpetrator should have been initiated by the employer.
• Loss of Trust and Confidence — Basis for Dismissal: Loss of trust and confidence is premised on the employee holding a position whose functions may only be performed by someone enjoying management's trust. A perusal of the petitioner's job description showed she was a managerial employee, tasked with daily supervision of other nurses and operational management of the operating room. For managerial employees, proof beyond reasonable doubt is not required; the mere existence of a basis for believing the employee breached the employer's trust suffices. However, loss of trust and confidence has never been intended to afford an occasion for abuse due to its subjective nature; it must be genuine, not a mere afterthought. The employer could not simply dismiss the petitioner on account of her position alone. There must still be some basis to justify that she was somehow responsible for the loss and that her participation rendered her unworthy of the trust demanded of her position. As discussed, she was not vested with responsibility for safekeeping of hospital equipment, and the employer adduced no evidence of willful and deliberate acts leading to the loss. The misdeed attributed to the employee must be a genuine and serious breach of established expectations, not a mere distaste or petty misunderstanding. Employment and tenure cannot be bargained away for the convenience of attaching blame when no such accountability exists.

• Gross and Habitual Negligence as Ground for Dismissal — Neglect of duty must be both gross and habitual to justify termination. Gross negligence implies a want or absence of or a failure to exercise slight care or diligence, or the entire absence of care, evincing a thoughtless disregard of consequences without exerting any effort to avoid them. Habitual neglect implies repeated failure to perform one's duties for a period of time depending on the circumstances. The employer bears the burden of proving by substantial evidence that the dismissal was for a valid cause. In this case, the employer failed to prove either element: there was no evidence that the employee was the custodian of the lost property, and no showing of repeated neglect.
• Loss of Trust and Confidence — Managerial vs. Rank-and-File Employees — Loss of trust and confidence as a just cause for termination is premised on the employee holding a position of trust. Two classes of positions of trust exist: (1) managerial employees, vested with powers to lay down management policies and to hire, transfer, suspend, lay off, recall, discharge, assign, or discipline employees; and (2) cashiers, auditors, property custodians, etc., who regularly handle significant amounts of money or property. For rank-and-file personnel, proof of involvement in the alleged events is required, and mere uncorroborated assertions by the employer are insufficient. For managerial employees, proof beyond reasonable doubt is not required; the mere existence of a basis for believing the employee breached the employer's trust suffices. However, even for managerial employees, the ground must not be invoked arbitrarily — there must be some basis to justify that the employee was responsible for the misconduct and that the nature of participation renders the employee unworthy of the trust demanded by the position. Loss of trust and confidence must be genuine, not a subterfuge for illegal, improper, or unjustified causes, and not a mere afterthought to justify an earlier action taken in bad faith.
• Rule 45 Review of CA Decisions in Labor Cases — In a Rule 45 review of a CA decision in a labor case, the Court examines whether the CA correctly determined the presence or absence of grave abuse of discretion in the NLRC decision, not whether the NLRC decision on the merits was correct. The Court is generally limited to questions of law, but may review factual issues by way of exception where the findings of the CA and the labor tribunals are contradictory.
• Burden of Proof in Termination Cases — The burden of proving that the dismissal was for a valid and authorized cause rests on the employer, who must show by substantial evidence that the termination was validly made. Failure to discharge this burden means the dismissal was not justified and therefore illegal.

• "Her job description nowhere vested her with the task of taking care, handling and keeping of hospital property. Clearly, her job description did not include her acting as the custodian of hospital property and equipment. Her being held accountable for losses and equipment malfunction did not automatically make her the custodian thereof." — This passage articulates the ratio decidendi on the gross negligence issue, distinguishing accountability for losses from actual custodial responsibility, and is central to the Court's reversal of the CA and NLRC findings.

• "Loss of trust and confidence as a ground of dismissal has never been intended to afford an occasion for abuse because of its subjective nature. It should not be used as a subterfuge for causes which are illegal, improper, and unjustified. It must be genuine, not a mere afterthought intended to justify an earlier action taken in bad faith." — This is the canonical formulation (quoting Lima Land vs. Cuevas) of the limitation on the employer's prerogative to dismiss for loss of trust and confidence, frequently cited in subsequent jurisprudence to guard against arbitrary terminations of managerial employees.

• "Employment and tenure cannot be bargained away for the convenience of attaching blame and holding one accountable when no such accountability exists." — This passage encapsulates the Court's broader policy rationale for reversing the dismissal, emphasizing that security of tenure cannot be sacrificed to an employer's desire to assign blame without evidentiary basis.

• Montoya vs. Transmed Manila Corporation, G.R. No. 183329, August 27, 2009 — Controlling framework for Rule 45 review of CA decisions in labor cases; established that the Court examines whether the CA correctly determined the presence or absence of grave abuse of discretion in the NLRC decision, and that factual review is permitted where findings are contradictory.
• Bristol Myers Squibb (Phils.), Inc. vs. Baban, G.R. No. 167449, December 17, 2008 — Established the two classes of positions of trust (managerial employees and cashiers/auditors/property custodians) and the requisites for valid dismissal on the ground of loss of trust and confidence; followed in determining that petitioner was a managerial employee.
• Lima Land vs. Cuevas, G.R. No. 169523, June 16, 2010 — Distinguished the treatment of managerial employees from rank-and-file personnel in applying loss of trust and confidence; followed for the rule that for managerial employees, the mere existence of a basis for believing the employee breached trust suffices, but the ground must not be invoked arbitrarily and must be genuine.
• Leus vs. St. Scholastica's College Westgrove, G.R. No. 187226, January 28, 2015 — Cited for the proposition that the burden of proving valid dismissal rests on the employer, who must show by substantial evidence that the termination was validly made.
• Nissan Motors Phils., Inc. vs. Angelo, G.R. No. 164181, September 14, 2011 — Cited for the definition of neglect of duty as a ground for dismissal requiring both gross and habitual negligence.

• Article 294, Labor Code (formerly Article 279) — Provides that an employee unjustly dismissed is entitled to reinstatement without loss of seniority rights and to backwages covering the period from illegal dismissal until actual reinstatement. Applied to order the petitioner's reinstatement and payment of backwages upon the finding of illegal dismissal.

Presbitero J. Velasco, Jr. (Chairperson, Third Division), Marvic M.V.F. Leonen, Samuel R. Martires, and Alexander G. Gesmundo concurred. No separate concurring opinions were rendered.