Sta. Ana vs. Manila Jockey Club, Inc.

An employee occupying a position of trust and confidence may not be validly dismissed on the ground of loss of trust and confidence where the employer fails to establish by clear and convincing evidence that the employee committed a willful breach of trust based on clearly established facts, and where the alleged loss of trust does not relate to the employee's performance of duties.

Manila Jockey Club, Inc. (MJCI) is a domestic corporation with legislative franchise to operate horse race betting, maintaining off-track betting (OTB) stations at various locations. Julieta B. Sta. Ana was hired in May 1977 as an outlet teller at MJCI's OTB station in Tayuman, Manila, where her duties included selling betting tickets, handling cash, balancing registers, and remitting daily cash sales. Her work schedule was 12 days per month, with shifts from 5 p.m. to 10:30 p.m. on weekdays and 1 p.m. to 7 p.m. on weekends, owing to horse racing not being conducted daily. In November 2008, MJCI discovered that its Treasury Department had been illegally appropriating corporate funds and lending them to employees, prompting an internal investigation that revealed unaccounted check remittances of ₱44,377,455.00 at the OTB Agudo Branch — a branch to which Sta. Ana was never assigned.

In May 1977, MJCI hired Julieta B. Sta. Ana as an outlet teller at its off-track betting station in Tayuman, Manila (OTB Tayuman). Her work schedule was 12 days per month — shifts from 5 p.m. to 10:30 p.m. on weekdays and 1 p.m. to 7 p.m. on weekends — because horse racing was not conducted daily. As teller, she waited at the tellers' booth, sold betting tickets, processed cash payments, balanced registers, prepared daily ticket sales reports, and remitted cash sales to the official collection team or assigned banks. She could also be assigned to different OTBs as necessary.

On November 13, 2008, MJCI issued a memorandum stating that its Treasury Department had been illegally appropriating corporate funds and lending them to employees, requiring all officers and employees to report any loan obtained from that department. On December 21, 2008, MJCI's Internal Auditing Department submitted a preliminary report indicating unaccounted check remittances of ₱44,377,455.00 at the OTB Agudo Branch for the period January 10, 2008 to November 30, 2008. On January 8, 2009, MJCI's Special Disciplinary Committee (SDC) formally charged Sta. Ana with dishonesty and other fraudulent acts — specifically stealing or attempting to steal corporate property, malversation, and engaging in anomalous transactions — all first offenses punishable by dismissal. Sta. Ana denied the charges, contending that she had been engaged in the lending business even before the new management's takeover.

MJCI then served Sta. Ana a Notice of Investigation alleging that Josephine Tejada, MJCI's Assistant Head/Cashier of the Treasury Department, had been lending large amounts of corporate funds to MJCI personnel without authority, and that Sta. Ana was either abetting Tejada or herself lending to employees using corporate funds. The Notice also informed Sta. Ana of a 30-day suspension without pay effective January 16, 2009. At the January 30, 2009 hearing, Sta. Ana and Tejada submitted a Joint Affidavit in which Tejada denied doing business with Sta. Ana, while Sta. Ana asserted she had been in the money lending business for 15 years, funded by the sale of her fishing boats. In a Supplement Affidavit, Sta. Ana recounted that in August 2008, Benjie Sunga proposed to borrow money from her; unable to attend to him personally, she requested Tejada to give Sunga the money, and she repaid Tejada the next day — her only transaction with Tejada.

The SDC's February 13, 2009 Report found that Sta. Ana extended loans to MJCI employees during office hours using company personnel as messengers, and on one occasion used corporate funds without authority with Tejada's assistance. The SDC found Sta. Ana guilty of conspiring to defraud MJCI, declared that the company had lost its trust in her, and alternatively found her guilty of gross inexcusable negligence. It recommended dismissal and the filing of criminal cases. On February 16, 2009, MJCI issued a Notice of Termination. Sta. Ana filed a complaint for illegal dismissal on February 25, 2009.

In her Position Paper, Sta. Ana stressed her 31 years of service and maintained that her lending business was funded by bank deposits, real properties, and fishing vessels — not MJCI's funds. She pointed out that she had no direct access to MJCI's vaults or bank accounts, never incurred a shortage at OTB Tayuman, and that no company rule prohibited employees from engaging in personal businesses. MJCI countered that Sta. Ana's salary of ₱6,700.00 per month was insufficient to fund a lending business, and that the only logical conclusion was that the money lent to Sunga came from corporate funds. MJCI relied on the affidavits of Santos, Pimentel, and Sunga to support its claim that Sta. Ana used MJCI personnel as conduits and that Tejada was her business partner. The SDC's April 22, 2009 Report reiterated the charges, citing the statements of Santos and Pimentel — who borrowed money from Sta. Ana that was delivered by driver Lito Maingat — and Sunga's affidavit alleging that Sta. Ana told him Tejada was her business partner.

• No Conspiracy Established: Petitioner maintained that MJCI failed to substantiate its allegation of conspiracy between her and Tejada, stressing that the SDC found shortages only at OTB Agudo, not at OTB Tayuman where she was assigned, and that she was never assigned to the Agudo Branch.
• No Shortage at Assigned Branch: Petitioner argued that she never incurred any shortage in her remittances of OTB Tayuman's income, and that her relationship with Tejada as "magkumare" should not be used as a basis to conclude she was involved in Tejada's infractions.
• Financial Capacity: Petitioner insisted she had the financial capacity to engage in a lending business, supported by bank loans secured by real estate mortgage, income from her fishing business, and proceeds from the sale of her fishing vessels, and that MJCI conducted no investigation into her financial background.
• No Access to Corporate Funds: Petitioner asserted she had no direct access to MJCI's vaults and bank accounts, making it impossible for her to have used corporate funds.
• No Prohibition on Personal Business: Petitioner contended that she did not conduct her lending business during office hours or use MJCI's employee as conduit, that her work schedule permitted her to conduct the business outside office hours, and that the Employee's Handbook contained no prohibition on extending loans to co-employees.

• Improper Remedy: Respondent countered that the Petition for Review on Certiorari ascribing grave abuse of discretion must be dismissed because only questions of law may be raised in a petition under Rule 45 of the Rules of Court.
• Sufficient Basis for Dismissal: Respondent argued that the Petition lacked merit because the CA committed no reversible error, as MJCI had sufficient basis for dismissing Sta. Ana on the ground of loss of trust and confidence.
• Theft and Connivance: Respondent reiterated that Sta. Ana stole money from MJCI and abetted the commission of defalcation by Tejada in furtherance of their illegal lending business.

• Validity of Dismissal: Whether Sta. Ana was validly dismissed on the ground of loss of trust and confidence.

• Validity of Dismissal: No. The dismissal was unwarranted because MJCI failed to discharge its burden of proving that Sta. Ana willfully breached its trust, and that such loss of trust related to her performance of duties. The uniform findings of the LA, NLRC, and CA were unjustified because salient facts were overlooked, which if properly considered would prove the absence of just cause.

• Validity of Dismissal: As a rule, a petition under Rule 45 covers only questions of law, as the factual findings of the CA are final and binding. This rule admits of exceptions, however, including where the CA manifestly overlooked undisputed relevant facts which, if properly considered, would support a different conclusion — as occurred here. To legally dismiss an employee on the ground of loss of trust, the employer must establish three requisites: (a) the employee occupied a position of trust and confidence; (b) the employee committed a willful breach of trust based on clearly established facts; and (c) such loss of trust relates to the employee's performance of duties. The first requisite was satisfied: pursuant to Manila Jockey Club, Inc. vs. Trajano, the position of a selling teller is a position of trust and confidence because it requires the handling and custody of tickets issued and bets made at the teller's station. Procedural due process was likewise afforded. However, the second and third requisites were not met. MJCI alleged that Sta. Ana used its personnel in her lending business during office hours, but the statements of Santos and Pimentel only proved they borrowed money from Sta. Ana delivered by driver Lito Maingat — with no narration as to when the money was delivered, and thus no evidence that the service was rendered during office hours. MJCI did not refute Sta. Ana's assertion that company rules did not prohibit employees from engaging in personal businesses. The investigation pertained only to OTB Agudo, where Sta. Ana was never assigned, and no shortage was shown at OTB Tayuman. As to the allegation that Sta. Ana used corporate funds to lend to Sunga, Sunga's affidavit stated only that Tejada gave him the money and that Sta. Ana referred to Tejada as her business partner — but there was neither allegation nor proof that the amount was derived from MJCI's funds. The mere allegation of a business partnership does not establish that Tejada was involved in Sta. Ana's business, and even assuming involvement, no credible evidence showed the business derived capital from corporate funds. The lower tribunals' conclusion of conspiracy rested on two grounds: Sta. Ana's allegedly inconsistent declarations about her capital source, and her insufficient salary. Both were untenable. The SDC itself acknowledged that Sta. Ana admitted owning fishing vessels, sold them, and used the proceeds in her business. She submitted documentary evidence — a PSBank certification, a permit to operate fishing vessels, credit card statements, and TCT annotations showing real estate mortgages since 2003 — demonstrating capital from sources other than her monthly salary. No direct linkage was shown between her business and the alleged stolen funds. Loss of trust and confidence must be genuine, must arise from dishonest or deceitful conduct, and must not be arbitrarily asserted in the face of overwhelming contrary evidence. Because MJCI failed to prove a willful breach, the dismissal was unwarranted. Sta. Ana was accordingly entitled to backwages and separation pay in lieu of reinstatement, as approximately eight years had passed since the filing of her complaint, rendering reinstatement impractical. Moral and exemplary damages were also awarded because MJCI acted in bad faith: despite receiving in evidence documents establishing Sta. Ana's financial capacity and the absence of fraud, it dismissed her on mere allegation of loss of trust.

• Loss of Trust and Confidence — To legally dismiss an employee on the ground of loss of trust and confidence, the employer must establish three requisites: (a) the employee occupied a position of trust and confidence, or has been routinely charged with the care and custody of the employer's money or property; (b) the employee committed a willful breach of trust based on clearly established facts; and (c) such loss of trust relates to the employee's performance of duties. There must be an actual breach of duty. Loss of trust must be genuine and not simulated, must arise from dishonest or deceitful conduct, and must not be arbitrarily asserted in the face of overwhelming contrary evidence. While proof beyond reasonable doubt is not required, the loss of trust must have some basis or reasonable ground to believe the employee committed the infraction.

• Position of Trust — Selling Teller — Pursuant to Manila Jockey Club, Inc. vs. Trajano, the position of a selling teller at a horse race betting operation is a position of trust and confidence because it requires the handling and custody of tickets issued and bets made at the teller's station.

• Exception to the Rule 45 Factual Finality Doctrine — While a petition under Rule 45 covers only questions of law and the factual findings of the CA are final and binding, this rule allows exceptions, including where the CA manifestly overlooked undisputed relevant facts which, if properly considered, would support a different conclusion.

• Separation Pay in Lieu of Reinstatement — Where reinstatement is no longer a practical option, payment of separation pay is justified. The Court considers the lapse of eight years or more from the filing of the complaint up to the resolution of the case as "considerable time" supporting the grant of separation pay in lieu of reinstatement.

• Moral and Exemplary Damages in Illegal Dismissal — Moral damages are allowed where the employer acted in bad faith or in a manner oppressive to labor. Exemplary damages may be awarded to deter other employers from committing the same or similar acts. Attorney's fees are recoverable where the employee was compelled to litigate to protect her rights.

• "It is a cardinal rule that loss of trust and confidence should be genuine, and not simulated; it must arise from dishonest or deceitful conduct, and must not be arbitrarily asserted in the face of overwhelming contrary evidence." — This passage articulates the standard of genuineness required for a loss of trust and confidence dismissal, serving as the ratio decidendi for the Court's finding that MJCI's dismissal of Sta. Ana was unwarranted.

• "While proof beyond reasonable doubt is not required, loss of trust must have some basis or such reasonable ground for one to believe that the employee committed the infraction, and the latter's participation makes him or her totally unworthy of the trust demanded by the position." — This formulation defines the evidentiary threshold for loss of trust dismissals, distinguishing the standard from criminal proof while still requiring a reasonable factual basis.

• "The mere allegation that Tejada is the business partner of Sta. Ana does not by itself establish that Tejada is involved in the business of Sta. Ana. Even granting for argument's sake that Tejada is involved in said business, no evidence worthy of credence was adduced showing that this business derived capital from the funds of MJCI." — This passage illustrates the Court's application of the evidentiary burden on the employer, demonstrating that bare allegations of conspiracy and corporate fund usage are insufficient absent credible proof.

• Manila Jockey Club, Inc. vs. Trajano, 712 Phil. 254 (2013) — Controlling precedent applied to establish that the position of a selling teller at MJCI is a position of trust and confidence, satisfying the first requisite for a loss of trust dismissal. Also relied upon for the rule on separation pay in lieu of reinstatement where considerable time has elapsed.

• Cocoplans, Inc. vs. Villopando, G.R. No. 183129, May 30, 2016 — Cited for the principle that there must be an actual breach of duty on the part of the employee to justify dismissal on the ground of loss of trust and confidence.

• Leo's Restaurant and Bar Café vs. Densing, G.R. No. 208535, October 19, 2016 — Cited for the proposition that dismissal on the ground of loss of trust and confidence is unwarranted where the employer fails to prove the employee's willful breach, and for the standard governing moral and exemplary damages where the employer acted in bad faith.

• Nacar vs. Gallery Frames, 716 Phil. 267 (2013) — Cited for the rule that legal interest of 6% per annum shall be imposed on total monetary awards from the finality of the Decision until full satisfaction.

• Rule 45, Rules of Court — Governs petitions for review on certiorari before the Supreme Court, limited to questions of law. The Court recognized an exception where the CA manifestly overlooked undisputed relevant facts that would support a different conclusion, allowing review of the factual findings in this case.

• Labor Code — Just Causes for Termination — The decision applies the doctrine of loss of trust and confidence as a just cause for dismissal under the Labor Code, requiring the employer to prove both just cause and observance of procedural due process.

Chief Justice Maria Lourdes P.A. Sereno (Chairperson), Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Estela M. Perlas-Bernabe, and Associate Justice Alfredo Benjamin S. Caguioa concurred.