Manrique vs. Delta Earthmoving, Inc.

Loss of trust and confidence as a ground for dismissing a managerial employee requires both that the employee holds a position of trust and that there is a genuine act justifying the loss of trust, supported by substantial evidence — not mere uncorroborated assertions or after-the-fact documentation never furnished to the employee. Compliance with the two-notice rule is likewise indispensable; verbal termination relayed through an on-site supervisor does not satisfy procedural due process.

Noel Manrique was hired on January 2, 2013 by Delta Earthmoving, Inc. as Assistant Vice President for Mining Services, tasked with overseeing the company's human resources department and performing other administrative functions at the mine site in Didipio, Kasibu, Nueva Vizcaya. In June 2013, he was assigned as Officer-in-Charge of the Oceana Gold Philippines, Inc. — Didipio Gold Project to assist operations while his immediate supervisor, Ian Hansen, was on roster break. Ed Anyayahan served as Delta Earth's Executive Vice President and Chief Operating Officer. The parties do not dispute that Manrique occupied a managerial position, placing him in a category of employee from whom greater fidelity is expected and for whom the standard of proof for loss of trust and confidence is less stringent than for rank-and-file employees.

On January 2, 2013, Delta Earthmoving, Inc. hired Noel Manrique as Assistant Vice President for Mining Services, charging him with oversight of the company's human resources department and other administrative functions at the Didipio mine site in Kasibu, Nueva Vizcaya. In June 2013, the company assigned him as Officer-in-Charge of the Oceana Gold Philippines, Inc. — Didipio Gold Project to assist in operations while his immediate supervisor, Ian Hansen, was on roster break.

On December 29, 2013, Manrique was instructed to pack his things and not to report back to work. Hansen relayed that the head office of Delta Earth had decided to terminate him. On January 6, 2014, Manrique went to the head office in Quezon City to verify, and Ed Anyayahan, the Executive Vice President and Chief Operating Officer, confirmed the termination. Manrique was asked to tender a voluntary resignation, which he refused. He instead filed a complaint for illegal dismissal, reinstatement with full backwages and benefits, non-payment of salary, 13th month pay, vacation and sick leave credits, moral, exemplary and nominal damages, and attorney's fees.

Delta Earth, Anyayahan, and Hansen maintained that Manrique was validly dismissed for poor performance resulting in loss of trust and confidence. Delta Earth cited a Performance Evaluation and various memoranda allegedly indicating gross neglect and inefficiency: (a) neglect of instructions from superiors such as truck hauling and volume studies, (b) failure to improve KM 20 to serve as employees' accommodation, (c) failure to submit the 2013 mine operations budget, (d) delay in submission of cost reports and billings resulting in delayed collection, and (e) failure to perform duties despite constant reminders. Delta Earth stated that Manrique refused to receive the performance evaluation, insisting he was performing well. It also argued that as a managerial employee, Manrique was not entitled to 13th month pay, vacation leave, and sick leave credits since he enjoyed rotation leave.

The Labor Arbiter found Manrique illegally dismissed, noting that the Performance Evaluation was suspect — its date and period covered were not indicated, it was conducted by Gaddi who was not Manrique's immediate supervisor, and it was never shown to have been furnished to Manrique. The LA likewise discredited the memoranda because there was no proof they were served on Manrique. By contrast, the LA pointed to the January 11, 2014 email of Hansen, Manrique's immediate supervisor, commending him for all the good work he had done at the Didipio Gold Project. The NLRC reversed, crediting the performance evaluation and memoranda and finding valid dismissal for loss of trust and confidence; the CA affirmed. The Supreme Court ultimately reversed the CA and reinstated the LA's findings.

• Appeal Bond Reduction: Manrique claimed that Delta Earth's appeal should not have been given due course because there was no meritorious ground justifying the reduction of the appeal bond.
• Loss of Trust and Confidence: Manrique insisted that there was no competent evidence to prove alleged loss of trust and confidence, as he was never apprised of his superiors' alleged dissatisfaction with his performance, was not given copies of the memoranda and the Performance Management Form, and was therefore deprived of the opportunity to submit his explanation.
• Credibility of Immediate Supervisor: Manrique pointed to Hansen's remarks that he did a good job on the mining site, contending that Hansen, having worked with him closely on-site, was in a better position to evaluate his performance than superiors stationed at the Delta Earth main office.
• Procedural Due Process: Manrique alleged that his termination was aggravated by Delta Earth's failure to give the required notices, as he was simply told by Hansen to leave the company premises after the Christmas break and to stop reporting for work upon instruction from management. He further noted that Anyayahan tried to convince him to execute a letter of voluntary resignation in exchange for one month's salary.
• Afterthought: Manrique contended that the alleged abandonment and desire to resign were mere afterthoughts.

• Just Cause — Poor Performance: Delta Earth maintained that Manrique was validly dismissed due to poor performance resulting in loss of trust and confidence, citing a Performance Evaluation and various memoranda indicating gross neglect of duty and inefficiency, including neglect of instructions, failure to improve employee accommodation, failure to submit the 2013 mine operations budget, delay in cost reports and billings, and failure to perform duties despite constant reminders.
• Refusal to Receive Evaluation: Delta Earth stated that Manrique refused to receive the performance evaluation as he was insisting that he was performing well.
• Procedural Due Process Compliance: Delta Earth argued that management complied with procedural due process in terminating Manrique's employment.
• Non-Entitlement to Benefits: Delta Earth argued that as a managerial employee, Manrique was not entitled to 13th month pay, vacation leave, and sick leave credits since he enjoyed rotation leave.

• Appeal Bond Reduction: Whether the NLRC properly granted Delta Earth's motion to reduce appeal bond.
• Loss of Trust and Confidence: Whether substantial evidence exists to establish loss of trust and confidence as a valid ground for Manrique's dismissal.
• Procedural Due Process: Whether Delta Earth complied with the two-notice rule in terminating Manrique's employment.

• Appeal Bond Reduction: Yes. The NLRC has full discretion to determine the existence of a meritorious ground in granting a motion to reduce appeal bond, and its preliminary determination that Delta Earth had a valid claim justified the reduction.
• Loss of Trust and Confidence: No. The performance evaluation and memoranda were suspect, undated, conducted by a non-supervisor, and never furnished to Manrique, making them appear to be afterthoughts rather than genuine bases for dismissal.
• Procedural Due Process: No. Delta Earth failed to comply with the two-notice rule; Manrique's termination was verbally relayed through his on-site supervisor without any written notices containing the causes for termination or affording him opportunity to be heard.

• Appeal Bond Reduction: Under Article 229 (formerly Article 223) of the Labor Code and Section 6, Rule VI of the 2011 NLRC Rules of Procedure, a motion to reduce bond must satisfy two conditions: (1) the motion must be based on meritorious grounds, and (2) a reasonable amount of bond in relation to the monetary award must be posted. The "meritorious ground" may pertain to the merits of the main appeal, the appellant's lack of financial capability, absence of employer-employee relationship, prescription of claims, or other valid issues. The NLRC made a preliminary determination that Delta Earth had a valid claim — that there was no illegal dismissal — and posted 10% of the monetary award. The determination of the presence of a "meritorious ground" is fully within the NLRC's discretion, and the CA could not be faulted for sustaining it. While the Court ultimately disagreed with the NLRC on the merits, the procedural step of granting the bond reduction was not itself erroneous.

• Loss of Trust and Confidence: Article 297(c) of the Labor Code authorizes dismissal for fraud or willful breach of trust. Two conditions must concur: (1) the employee must hold a position of trust and confidence, and (2) there must be an act justifying the loss of trust. The first requisite was satisfied, as the parties admitted Manrique was a managerial employee. For the second requisite, while proof beyond reasonable doubt is not required for managerial employees — mere existence of a basis for believing the employee breached trust suffices — jurisprudence is firm that loss of trust and confidence must be genuine and not a mere afterthought. The LA identified several markers of bad faith: the Performance Evaluation lacked a date and covered period, was conducted by Gaddi who was not Manrique's immediate supervisor, and was never shown to have been furnished to Manrique. The memoranda were likewise discredited because there was no proof of service on Manrique. By contrast, Hansen, Manrique's immediate supervisor, commended him via a January 11, 2014 email for good work at the Didipio Gold Project. The documents appeared to be a belated attempt to justify a termination that had been verbally relayed. The employer's allegation of poor performance was not clearly and convincingly supported by established facts.

• Procedural Due Process: Article 292(b) of the Labor Code requires the two-notice rule: the first notice must contain the reasons for termination and afford the employee ample opportunity to be heard and defend himself; the second must indicate that grounds exist to justify termination upon due consideration of all circumstances. Neither notice was given to Manrique. His termination was only verbally relayed by his on-site supervisor, Hansen, upon instructions from the main office. Manrique had to go to the Quezon City office himself to verify whether his employment had been terminated. The absence of both substantive just cause and procedural due process rendered the dismissal illegal.

• Loss of Trust and Confidence — Two Requisites — To justify a valid dismissal based on loss of trust and confidence under Article 297(c) of the Labor Code, two conditions must concur: (1) the employee concerned must be holding a position of trust and confidence; and (2) there must be an act that would justify the loss of trust and confidence. The Court applied this test by finding the first requisite satisfied (Manrique was a managerial employee) but the second wanting (the evidence was suspect, undated, conducted by a non-supervisor, and never furnished to the employee).

• Standard of Proof for Managerial Employees — In terminating managerial employees based on loss of trust and confidence, proof beyond reasonable doubt is not required; the mere existence of a basis for believing that the employee has breached the trust of the employer is enough. This degree differs from that required for rank-and-file employees, which demands proof of involvement in the alleged events and renders mere uncorroborated assertions by the employer insufficient. Despite this less stringent standard, the Court emphasized that loss of trust and confidence must be genuine and not a mere afterthought intended to justify an earlier action taken in bad faith.

• Motion to Reduce Appeal Bond — Two Conditions — Under McBurnie vs. Ganzon, a motion to reduce bond must comply with two conditions: (1) the motion must be based on meritorious grounds; and (2) a reasonable amount of bond in relation to the monetary award is posted. The "meritorious ground" takes into account the respective rights of the parties and attending circumstances, and may pertain to the appellant's lack of financial capability, the merits of the main appeal, absence of employer-employee relationship, prescription of claims, or other valid issues. The NLRC has full discretion to determine the existence of a meritorious ground.

• Two-Notice Rule — Under Article 292(b) of the Labor Code, the first notice must contain the reasons for termination and afford the employee ample opportunity to be heard and defend himself with the assistance of a representative; the second notice must indicate that grounds exist to justify termination upon due consideration of all circumstances. Verbal termination relayed through an on-site supervisor does not satisfy this requirement.

• "Loss of trust and confidence as a ground for dismissal has never been intended to afford an occasion for abuse due to its subjective nature. It must be genuine, not a mere afterthought intended to justify an earlier action taken in bad faith." — This passage articulates the controlling standard for the genuineness requirement in loss of trust and confidence dismissals, distinguishing a valid exercise of management prerogative from a post hoc rationalization.

• "The misdeed attributed to the employee must be a genuine and serious breach of the established expectations required by the exigencies of the position regardless of its designation, and not a mere distaste, apathy, or petty misunderstanding. What is at stake are the employee's reputation, good name, and source of livelihood, at the very least. Employment and tenure cannot be bargained away for the convenience of attaching blame and holding one accountable when no such accountability exists." — This passage serves as the Court's closing admonition, framing the stakes of loss of trust and confidence dismissals and cautioning employers against using the doctrine as a tool for arbitrary termination.

• "The NLRC has full discretion to determine the existence of meritorious ground in granting a motion to reduce appeal bond." — This statement defines the scope of NLRC authority over appeal bond reduction, clarifying that its preliminary assessment of the merits is a matter committed to its discretion and not subject to override by the CA absent grave abuse.

• McBurnie vs. Ganzon, 719 Phil. 688 (2013) Resolution; 616 Phil. 629 (2009) — Cited as controlling authority for the two conditions governing a motion to reduce appeal bond: (1) meritorious grounds and (2) posting of a reasonable bond amount. The Court applied this framework to uphold the NLRC's grant of Delta Earth's motion.

• Philux, Inc. vs. National Labor Relations Commission, 586 Phil. 19 (2008) — Cited for the principle that the posting of a cash or surety bond by the employer is mandatory and indispensable to perfect an appeal from the LA to the NLRC, designed to assure workers they will receive the money judgment and to discourage employers from using appeals to delay or evade obligations.

• SM Development Corp. vs. Ang, G.R. No. 220434, July 22, 2019 — Cited for the two-requisite test for valid dismissal based on loss of trust and confidence: (1) the employee holds a position of trust and confidence, and (2) there is an act justifying the loss of trust.

• Casco vs. National Labor Relations Commission (Sixth Div.), G.R. No. 200571, February 19, 2018 — Cited twice: first, for the proposition that a managerial employee's main duty consists of the management of the establishment or a department thereof, confirming the first requisite; second, for the principle that loss of trust and confidence must be genuine and not a mere afterthought, and for the closing admonition regarding the seriousness of the breach required.

• Pacios vs. Tahanang Walang Hagdanan, G.R. No. 229579, November 14, 2018 — Cited for the definition of "meritorious ground" in the context of a motion to reduce appeal bond, encompassing the respective rights of the parties and attending circumstances.

• Punongbayan and Araullo (P & A) vs. Lepon, G.R. No. 174115, November 9, 2015, 772 Phil. 311 — Cited for the requirements of the two-notice rule: the first notice must contain the reasons for termination and afford opportunity to be heard; the second must indicate grounds justifying termination upon due consideration.

• Article 297 [formerly 282], Labor Code — Enumerates the just causes for termination by employer, including (c) fraud or willful breach of trust reposed in the employee by the employer. The Court applied this provision to test whether Delta Earth established loss of trust and confidence, finding the second requisite unmet.

• Article 292 formerly 277, Labor Code — Requires the employer to furnish the worker a written notice containing the statement of causes for termination and to afford ample opportunity to be heard and defend himself, with a second notice indicating the decision to terminate upon due consideration. The Court found that neither notice was given to Manrique, violating procedural due process.

• Article 229 [formerly 223], Labor Code — Governs appeals from the Labor Arbiter to the NLRC, requiring the posting of a cash or surety bond equivalent to the monetary award in judgments involving monetary awards. The Court applied this provision in upholding the NLRC's discretion to grant a motion to reduce appeal bond upon a showing of meritorious grounds.

• Section 6, Rule VI, 2011 NLRC Rules of Procedure — Allows reduction of appeal bond upon motion based on meritorious grounds with a reasonable amount of bond posted. The Court relied on this provision in affirming the procedural validity of the NLRC's grant of Delta Earth's motion to reduce bond.

• Section 4(b), Rule VI, 2011 NLRC Rules of Procedure — Provides that a mere notice of appeal without complying with the other requisites shall not stop the running of the period for perfecting an appeal. The Court cited this to underscore the mandatory nature of the bond requirement.

Perlas-Bernabe, Senior Associate Justice (Chairperson), Gesmundo, Lazaro-Javier, and Rosario, JJ., concurred.