Del Rosario vs. CW Marketing & Development Corporation

An employee occupying a position of trust and confidence who knowingly permits subordinates to misuse company property entrusted to her care, and deliberately remains silent about their fraudulent activities conducted through that property, may be validly dismissed for loss of trust and confidence even without direct participation in the fraudulent act, where her acquiescence and negligence evince a willful breach of trust founded on clearly established facts.

Since 2007, Del Rosario was employed by CW Marketing, initially as Sales Consultant and eventually as Sales Supervisor, detailed at its Home Depot, Balintawak Branch. As Sales Supervisor, she was assigned a computer connected to a shared network and a printer/scanner, and she alone was taught by the company's IT personnel how to operate the machine. The network connection enabled other computer users to print documents through the printer/scanner connected to her computer, but the USB port and scanner were accessible only through her unit. CW Marketing maintained an Employee Handbook prescribing disciplinary rules for offenses against company property and unauthorized use of company equipment.

Sometime in October 2010, CW Marketing received a report from Hongkong and Shanghai Banking Corporation (HSBC) that several individuals applying for credit cards had submitted ostensibly falsified payslips and identification cards issued by CW Marketing's Balintawak Branch. The questionable documents indicated higher positions and salaries of purported CW Marketing employees. CW Marketing's IT Department conducted an investigation on the information provided by HSBC and traced the falsified documents to the computer assigned to Del Rosario. The falsified documents pertained to her subordinates at Home Depot, namely Elaine Hernandez, Mary Rose Cruz, and Jomarie Cayco.

On November 4, 2010, CW Marketing issued a Notice to Explain addressed to Del Rosario, giving her 48 hours to explain in writing her alleged participation in the falsification of the documents obtained from her computer. The following day, Del Rosario sent an email to HR Manager Barbara M. Aragon, with copies to five company officers. She admitted knowing the three individuals and the occasions they used her computer and the printer/scanner, but denied any hand in the falsification. She claimed that she alone was given access to the USB and scanner by IT, which was why others used her computer. She identified Ailene Duldulao as the one who edited payslips, and stated that Mary Rose Cruz's friend, who was not connected to the depot, was the subject of a falsified ID and payslip. She insisted that the scheme originated with them and that she had no involvement.

CW Marketing issued a second Notice to Explain on November 9, 2010, requiring Del Rosario to answer why she should not be dismissed for additional violations of the Employee Handbook: Section 3.5, covering negligence or misuse of company properties, machines, and equipment; and Section 3.7, covering unauthorized use or allowing unauthorized persons to use company supplies, materials, facilities, tools, and equipment resulting in loss or damage. CW Marketing pointed out that CCTV footage showed Del Rosario present on the floor while the concerned individuals used her computer and printer/scanner to scan and print documents. In a further email dated November 10, 2010, Del Rosario reiterated that she was not the sole authorized user of the scanner and USB port, that her computer had to remain open for others to print through the network, and that while she was visible on CCTV, she was attending to her duties as the lone supervisor and could not monitor everything her subordinates did.

On November 18, 2010, Del Rosario attended the administrative inquiry and signed her conformity on the handwritten minutes. Among her admissions were that the computer was her accountability and that any transaction or item found therein was her responsibility; that she was the only one given access to the scanner, printer, and network connections; that she allowed all CS Consultants/Coordinators to use her computer even when she was not around; that she had attended a coordination meeting in July 2010 where she was reminded that only supervisors must have access to their computers; and that she was aware of her subordinates' activities in scanning and editing payslips and identification cards and emailing them to HSBC. She denied direct involvement in the falsification and in distributing HSBC credit card application forms, but insisted that the final decision on her negligent acts be left to management.

On November 30, 2010, CW Marketing found Del Rosario liable for three violations of its Employee Handbook and terminated her employment. Del Rosario thereupon filed a complaint before the NLRC Arbitration Branch for illegal dismissal, non-payment of wages, overtime pay, holiday pay, service incentive leave pay, 13th month pay, separation pay, ECOLA, and commission. She maintained that she did not falsify the documents and that she could not constantly monitor the use of her computer while attending to her other supervisory responsibilities. CW Marketing countered that it validly dismissed her for gross incompetence, dishonesty, and negligence tantamount to loss of trust and confidence, emphasizing her sensitive position, her admissions during the administrative hearing, and the damage to its reputation and credit standing with banks. The Labor Arbiter initially ruled in Del Rosario's favor, finding no direct participation in the falsification, but the NLRC reversed, and the CA affirmed the NLRC's finding that Del Rosario held a fiduciary position and that her actions rendered her unworthy of the trust and confidence demanded by her role.

• No Direct Participation in Falsification: Del Rosario maintained that she did not falsify the documents reported by HSBC to CW Marketing and that only her subordinates who used her computer effected the falsification.
• Inability to Monitor Computer: She argued that she could not constantly monitor the use of her computer whilst she attended to her other responsibilities as the lone supervisor at the branch.
• Grave Error by the CA: She contended that it was a grave error for the CA to affirm the NLRC's decision dismissing her complaint, asserting that CW Marketing did not have just cause to dismiss her.

• Valid Dismissal for Loss of Trust and Confidence: CW Marketing argued that it validly dismissed Del Rosario for gross incompetence, dishonesty, and negligence tantamount to loss of trust and confidence, as her dismissal for violating the Employee Handbook provisions was a legitimate exercise of management prerogative.
• Sensitive Supervisory Position: CW Marketing emphasized Del Rosario's sensitive position as supervisor and her admission that she freely allowed others to use her computer and that she was aware of her subordinates' activities to fabricate employee documents in connection with their credit card applications.
• Damage to Reputation: CW Marketing decried the falsification of documents which happened under Del Rosario's watch and its negative effect on the company's reputation and credit standing with banks.
• Denial of Money Claims: CW Marketing denied Del Rosario's entitlement to other money claims based on her outstanding obligation of ₱24,083.20 and her group's failure to reach the set quota for payment of commission.

• Validity of Dismissal: Whether Del Rosario was validly dismissed for loss of trust and confidence based on her acquiescence and negligence in allowing subordinates to use her assigned computer to falsify company documents, notwithstanding her lack of direct participation in the falsification.

• Validity of Dismissal: Yes. The dismissal was valid, Del Rosario's deliberate silence and acquiescence toward her subordinates' fraudulent use of company property entrusted to her care constituting a willful breach of trust under Article 297 (formerly Article 282) of the Labor Code, sufficient to justify loss of confidence in a fiduciary position.

• Validity of Dismissal: Two requisites must concur for a valid dismissal: (1) the dismissal must be for any of the causes expressed in Article 282 (now Article 297) of the Labor Code; and (2) the employee must be given an opportunity to be heard and to defend himself. Article 297 lists loss of trust and confidence in an employee entrusted with fiducial matters, or with the custody, handling, or care and protection of the employer's property, as a just cause for dismissal. The NLRC's finding that Del Rosario held a fiduciary position as Sales Supervisor was supported by substantial evidence. She was the sole employee assigned a computer with USB port and scanner access at the Home Depot Branch, and was the only user taught by IT personnel to operate the machine. While loss of trust and confidence must rest on solid grounds and the burden of proof lies on the employer, Del Rosario herself provided proof of her infractions through her admissions. She acknowledged that the computer was her accountability, that any transaction or item found therein was her responsibility, that she was the only one given access to the scanner and printer, and that she was aware her subordinates were scanning and editing payslips and identification cards and emailing them to HSBC. The charge against her was not the criminal act of falsification but the totality of her acts as supervisor, including her negligence and want of care for company property. Her deliberate silence after gaining knowledge of the fraudulent activities, her failure to call her subordinates' attention, and her insistence that she did not herself falsify documents demonstrated sheer apathy not worthy of her position. The loss of trust was work-related and based on a willful breach — done intentionally, knowingly, and purposely — as distinguished from a careless or inadvertent act. The damage to CW Marketing's reputation and credit standing with banks, and the potential liability to credit card companies, further established the gravity of the breach.

• Loss of Trust and Confidence as Just Cause for Dismissal — Loss of confidence as a just cause for termination is premised on the fact that the employee concerned holds a position of trust and confidence, specifically one entrusted with fiducial matters or with the custody, handling, or care and protection of the employer's property. In the case of supervisors or personnel occupying positions of responsibility, loss of trust justifies termination. The doctrine requires that the loss of trust rest on solid grounds that reasonably evince an actual breach by the employee, with the burden of proof on the employer to convincingly establish valid bases. In this case, the Court applied the doctrine by finding that Del Rosario's fiduciary position as Sales Supervisor, combined with her admissions of accountability, knowledge, and deliberate silence, constituted a willful breach of trust.
• Willful Breach of Trust — The loss of trust and confidence must be work-related and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or inadvertently. The loss of trust must spring from the voluntary or willful act of the employee, or by reason of some blameworthy act or omission. The Court found Del Rosario's deliberate silence and acquiescence after gaining knowledge of the fraud to be willful, not inadvertent.
• Two Requisites for Valid Dismissal — (1) The dismissal must be for any of the causes expressed in Article 282 (now Article 297) of the Labor Code; and (2) the employee must be given an opportunity to be heard and to defend himself. Both requisites were satisfied in this case.
• Amount Immaterial in Loss of Trust Cases — Whether or not the employer was financially prejudiced is immaterial; what matters is not the amount involved but the fraudulent scheme in which the employee was involved, which constitutes a clear betrayal of trust and confidence. When an employee accepts a promotion to a managerial position or to an office requiring full trust and confidence, he gives up some of the rigid guaranties available to an ordinary worker.

• "Although loss of trust and confidence constitutes a valid cause for termination, it must, nonetheless, rest on solid grounds that reasonably evince an actual breach thereof by an employee. The burden of proof lies on the employer to first convincingly establish valid bases for that loss of trust and confidence." — This passage states the standard the employer must meet to justify dismissal on the ground of loss of trust and confidence, a formulation frequently cited in labor jurisprudence.
• "The loss of trust must be based on a willful breach of trust and founded on clearly established facts. Such breach is willful if it is done intentionally, knowingly, and purposely, without justifiable excuse as distinguished from an act done carelessly, thoughtlessly, heedlessly, or inadvertently." — This defines the canonical formulation of "willful breach" as distinguished from negligent conduct, a critical distinction in loss of confidence cases.
• "Whether or not the respondent was financially prejudiced is immaterial. Also, what matters is not the amount involved, be it paltry or gargantuan; rather the fraudulent scheme in which the petitioner was involved, which constitutes a clear betrayal of trust and confidence." — Quoted from Etcuban, Jr. vs. Sulpicio Lines, Inc., this passage articulates the principle that the gravity of the breach, not the quantum of damage, determines culpability in loss of trust cases.

• Etcuban, Jr. vs. Sulpicio Lines, Inc., G.R. No. 148410, January 17, 2005, 448 SCRA 516 — Controlling precedent on the immateriality of the amount involved in loss of trust and confidence cases and on the principle that employees accepting positions of full trust give up certain rigid guaranties available to ordinary workers. The Court applied its rationale directly to Del Rosario's supervisory position.
• Moya vs. First Solid Rubber Industries, Inc., G.R. No. 184011, September 18, 2013, 706 SCRA 58 — Cited for the proposition that in the case of supervisors or personnel occupying positions of responsibility, loss of trust justifies termination, and for the constitutional guarantee to employers of reasonable return on investments.
• Mapalo vs. National Labor Relations Commission, G.R. No. 107140, June 17, 1994, 233 SCRA 266 — Cited for the rule that the burden of proof lies on the employer to convincingly establish valid bases for loss of trust and confidence.
• Bluer than Blue Joint Ventures Company vs. Esteban, G.R. No. 192582, April 7, 2014, 720 SCRA 765 — Cited for the formulation that loss of trust must be based on a willful breach founded on clearly established facts, and for the definition of "willful" as intentional, knowing, and purposeful conduct.
• Condo Suite Club Travel, Inc. vs. NLRC, G.R. No. 125671, January 28, 2000, 323 SCRA 679 — Cited for the proposition that loss of trust and confidence in an employee entrusted with fiducial matters or with custody of employer's property is a just cause for dismissal under the Labor Code.

• Article 282 (now Article 297), Labor Code — Lists the just causes for termination by employer, including paragraph (c): fraud or willful breach by the employee of the trust reposed in him by his employer. The Court applied this provision to find that Del Rosario's willful breach of trust through deliberate silence and acquiescence constituted just cause for dismissal.
• Sections 2 and 5, Rule XIV, Book V, Omnibus Rules Implementing the Labor Code — Cited in connection with the requirement that the employee be given an opportunity to be heard and to defend himself, the second requisite for valid dismissal.
• Section 3, Article XIII, 1987 Constitution — Cited for the constitutional guarantee to employers of reasonable return on investments, from which the right to terminate employment based on just causes stems.
• Sections 3.5 and 3.7, CW Marketing Employee Handbook — Section 3.5 covers offenses against company property, including negligence or misuse of company properties, machines, and equipment. Section 3.7 covers unauthorized use or allowing unauthorized persons to use company supplies, materials, facilities, tools, and equipment resulting in loss or damage. Del Rosario was found to have violated both provisions by acquiescing to her subordinates' unauthorized use of her assigned computer and scanner.

Bersamin, C.J. (Chairperson), Del Castillo, Gesmundo, and Carandang, JJ. concurred. No separate concurring opinions were written.