Yonzon vs. Coca-Cola Bottlers Philippines, Inc.

A dismissal for loss of trust and confidence is valid only when two conditions concur: the employee occupies a position of trust and confidence, and there is some basis for the loss of trust; the first condition is absent where the employee is neither a managerial nor a fiduciary rank-and-file employee under the nature and scope of the work. A company rule prohibiting disclosure of confidential information cannot sustain dismissal where it is vague and provides no standards for determining what information is confidential, and doubts in labor contracts are construed in favor of the laborer.

Coca-Cola Bottlers Philippines, Inc. employed Anniebel B. Yonzon in an HR capacity. The employment relationship was governed by Coca-Cola's Disciplinary Rules and Regulations (Red Book), Code of Business Ethics (COBE), and the Labor Code, including Article 282 on termination for just cause. The Red Book contained Rule 3, Section 31 on disclosure of confidential information, and Rule 5, Sections 2 and 3 on negligence and disregard of policies. The dispute also implicated the Data Privacy Act of 2012 in relation to employee salary information.

Yonzon alleged that Coca-Cola hired her as an HR Generalist on December 1, 2010, but she was terminated from employment on April 30, 2011 for failure to qualify according to the company's standard, which was not made known to her. She filed a complaint for illegal dismissal, regularization, damages, and attorney's fees against Coca-Cola, its Human Resources Head Domingo Lazaro Carranza, and its HR Executive Sarah O. Villa, docketed as NLRC-NCR-05-08155-11. The Labor Arbiter dismissed the complaint for lack of merit, but the NLRC reversed the Labor Arbiter and declared Yonzon's dismissal illegal, ordering Coca-Cola to reinstate her as a regular employee and to pay full backwages from the date of her dismissal until finality.

Yonzon filed a Motion for Partial Reconsideration dated July 5, 2012, seeking moral and exemplary damages and attorney's fees on the ground of Coca-Cola's bad faith in effecting her termination; she claimed that her health condition, having myomas, precipitated her dismissal. In the meantime, Coca-Cola reinstated Yonzon to the position of HR Staff and not HR Generalist. This prompted Yonzon to file a Motion for Execution dated October 22, 2012, praying for reinstatement in her original position with corresponding salary adjustment and for a pre-execution conference to determine the correct amount of backwages. The Motion for Partial Reconsideration and the Motion for Execution remained unacted, causing Yonzon to file a Motion dated March 14, 2014 (Third Motion), asking the NLRC to inquire into the correctness of her reinstatement and recomputation of her wages, order Coca-Cola to pay moral and exemplary damages, attorney's fees, and litigation costs, and declare Carranza and Villa in contempt. To substantiate her claim of discrimination, Yonzon cited the salaries of the other four HR Generalists who were her junior; while they received monthly salaries ranging from P23,309.00 to P29,193.00, Yonzon received only P18,576.00.

On March 21, 2014, Coca-Cola issued a Notice to Explain and Preventive Suspension placing Yonzon on a 30-day preventive suspension without pay due to her unauthorized disclosure of her co-employees' salaries in her Motion to Resolve before the NLRC. The Notice to Explain stated that Yonzon violated Coca-Cola's Disciplinary Rules and Regulations (Red Book), Code of Business Ethics (COBE), and the Labor Code. On March 25, 2014, Yonzon explained that she did not disclose any trade secret or confidential information to Coca-Cola's competitors or any third party; rather, she revealed the information to an officer of the court and embodied it in a pleading filed with the NLRC. On April 23, 2014, Coca-Cola dismissed Yonzon through a Notice of Decision, finding her guilty of unauthorized disclosure of confidential company information to third parties and loss of trust and confidence.

On May 21, 2014, Yonzon filed the present complaint against Coca-Cola, Carranza, and Villa. She argued that her disclosure of the salaries of her co-employees is not a valid ground for termination; the NLRC and her counsel are not business competitors of Coca-Cola; she is not privy to any of the company's trade secrets, confidential materials or information, formulae, processes, or studies; and Coca-Cola's interpretation of the pertinent portions of the Red Book and its use against her is absurd. She prayed that her termination be declared illegal and sought P300,000.00 moral damages, P1,000,000.00 exemplary damages, P50,000.00 attorney's fees, and P50,000.00 litigation costs. Coca-Cola, Carranza, and Villa alleged that Yonzon occupied the position of HR Administration Analyst tasked to perform various HR Services processes within her Region, including the sensitive duty of employment data management and masterfile accuracy, and was inevitably exposed to confidential or commercially sensitive employee data not readily available to competitors, third parties, or the general public. They asserted that Yonzon was dismissed with just cause and with due process, and that her disclosure without consent constituted serious misconduct and willful breach of trust and confidence under Article 282 of the Labor Code; Carranza and Villa could not be held liable absent proof of malice or bad faith.

The Labor Arbiter found that while no company trade secret was divulged by Yonzon, she had no authority to disclose confidential information such as the salary of her co-employees and should have sought their consent before using the information for personal use; her act violated company rules and the right of her co-employees. The NLRC found that Rule 3, Section 31 of the Red Book did not specifically list salary data as confidential and was too generic or vague, giving Coca-Cola leeway to categorize any information as classified or confidential, and that the disclosure posed no threat to Coca-Cola's interests. The Court of Appeals found that there was enough reason for Coca-Cola to dismiss Yonzon for loss of trust and confidence because she used her position to secure a favor for herself against the company and could have obtained the consent of the company or her co-employees.

• Vagueness of Red Book Rule 3, Section 31: Yonzon reiterated the NLRC ruling that Rule 3, Section 31 of the Red Book is not fair and reasonable since it neither provided a specific list of data, information, or document nor indicated parameters in determining that a data, information, or document is classified, restricted, or confidential in nature.
• No Disclosure of Trade Secrets or Confidential Information: Yonzon maintained that she did not disclose any company trade secret or confidential information or studies to any competitor or entity that may even be remotely interested in the salaries of rank-and-file employees for gain or whatever mercantile or sinister purpose which may put Coca-Cola, its employees, processes, products, or patronage in any possible jeopardy; the NLRC and Yonzon's counsel are not business competitors of Coca-Cola and are not interested in taking advantage of any information gained on the salaries beyond the merits of the subject labor case.
• Data Privacy Act: Yonzon alleged that her disclosure of the salaries of her co-employees did not violate the Data Privacy Act of 2012 since under Section 13 thereof, the processing of personal information and privileged information is allowed if it concerns personal information necessary for the protection of lawful rights and interests of natural or legal persons in court proceedings, or the establishment, exercise, or defense of legal claims, or when provided to government or public authority.
• Illegal Dismissal and Damages: Yonzon prayed that her termination be declared illegal and sought payment of P300,000.00 moral damages, P1,000,000.00 exemplary damages, P50,000.00 attorney's fees, and P50,000.00 litigation costs.

• Position of Trust and Confidence: Coca-Cola repleaded its arguments before the Labor Arbiter that Yonzon held a position of trust and confidence and that she substantially committed a breach of trust when she disclosed employee salary, which is either confidential or commercially sensitive information.
• Confidentiality of Salary Information: Coca-Cola argued that salaries of employees and other employee data are vital components of every business operation, represent a large portion of the company's operating budget, contribute to the success and downfall of an enterprise, and are not readily available to competitors, third parties, or the public.
• Rule 3, Section 31 Not Vague: Coca-Cola countered that Rule 3, Section 31 is not vague; its negative covenant refers to confidential information, secrets, or data other than that which is within the public domain concerning the organization, finances, or transactions of affairs of the company, its employees, or its clients; it is absurd to require that every kind of information must be specifically categorized as confidential or sensitive before it can be classified as such; the ascertainable standard is whether the salary information of Yonzon and her co-employees is readily available to other persons.
• Data Privacy Act: Coca-Cola alleged that employee salary is protected by the Data Privacy Act of 2012; only salaries of government employees are excluded from the law's coverage; and processing of personal information is subject to the requirement that the data subject has given consent.
• Just Cause and Due Process: Coca-Cola asserted that Yonzon was dismissed with just cause and with due process; her act of disclosing salary information without authorization or consent constitutes serious misconduct and willful breach of the company's trust and confidence under Article 282 of the Labor Code; Carranza and Villa cannot be held liable absent proof that they acted maliciously or in bad faith.

• Validity of Dismissal for Loss of Trust and Confidence: Whether Yonzon was validly dismissed on the ground of loss of trust and confidence.
• Position of Trust and Confidence: Whether Yonzon occupied a position of trust and confidence.
• Basis for Loss of Trust and Confidence: Whether there was some basis for the loss of trust and confidence.
• Violation of Red Book Rule 3, Section 31: Whether Yonzon violated Coca-Cola's Red Book Rule 3, Section 31.
• Damages: Whether Yonzon is entitled to moral and exemplary damages.
• Relief: Whether Yonzon is entitled to reinstatement, backwages, separation pay, attorney's fees, and legal interest.

• Validity of Dismissal for Loss of Trust and Confidence: No. The dismissal was illegal because the first condition for valid loss of trust and confidence—that the employee occupy a position of trust and confidence—was absent.
• Position of Trust and Confidence: No. Yonzon was neither a managerial employee nor a fiduciary rank-and-file employee; the nature and scope of her HR Administration Analyst functions did not involve handling significant amounts of money or property.
• Basis for Loss of Trust and Confidence: No. Without a position of trust and confidence and without a valid violation of the Red Book, there was no basis for loss of trust and confidence.
• Violation of Red Book Rule 3, Section 31: No. The rule was vague and unfair because it did not provide specific standards for classifying information as confidential; salary data did not fall within its first category, and the broad residual categories allowed arbitrary classification.
• Damages: No. Yonzon failed to prove by clear and convincing evidence that Coca-Cola was motivated by bad faith in terminating her.
• Relief: Yes. Illegal dismissal entitled Yonzon to reinstatement and backwages, but reinstatement was impossible and unreasonable due to the length of time; separation pay of one month salary per year of service in lieu of reinstatement, attorney's fees of 10% of the total monetary award, and 6% legal interest per annum from finality were proper.

• Validity of Dismissal for Loss of Trust and Confidence: For termination due to loss of trust and confidence to be valid, two conditions must concur: (1) the employee must occupy a position of trust and confidence; and (2) there must be some basis for the loss of trust and confidence, that is, the employer must establish the existence of an act justifying the loss of trust and confidence. The first condition was missing, so the dismissal could not stand.
• Position of Trust and Confidence: Case law recognizes two classes of positions in which trust and confidence are reposed by the employer: managerial employees and fiduciary rank-and-file employees. Managerial employees are vested with the powers or prerogatives to lay down management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions. Fiduciary rank-and-file employees include those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property, such as cashiers, auditors, and property custodians. The nature and scope of the work, not the job title or designation, determines whether an employee holds a position of trust and confidence. A finance clerk positioned at the gates of a warehouse whose duties included goods receipt inventory, full goods verification, and encoding and recording duties of assets trafficked in and out of the warehouse was held to hold a position of trust and confidence. Here, per the job description form, the functions of an HR Administration Analyst included handling company information through generation and monitoring of communication campaigns and media used locally; supporting implementation of activities derived from organizational climate survey; preparation and dissemination of communications campaigns or specific media; supporting Social Development Plan and Social Responsibility activities; and on-time and accurate HR Services processes for the Region, namely payroll and benefits administration; timekeeping, absenteeism, and leave availments; employee data management and masterfile accuracy; and tools of trade administration. Yonzon, in the normal and routine exercise of her functions, did not handle significant amounts of money or property. Coca-Cola asserted that Yonzon held a confidential position because she had access to the company's payroll system, but in San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union, a payroll master and other employees who have access to salary and compensation data were declared not confidential employees since the nature of their work does not pertain to company rules and regulations and confidential labor relations. Thus, the Court of Appeals erred in ruling that Yonzon was validly dismissed based on loss of trust and confidence.
• Basis for Loss of Trust and Confidence: Because Yonzon did not occupy a position of trust and confidence, the first requisite failed. The Court also found that Yonzon did not violate Rule 3, Section 31 of the Red Book, so the charges of serious misconduct and willful breach of trust and confidence had no leg to stand on. There was therefore no basis for loss of trust and confidence.
• Violation of Red Book Rule 3, Section 31: The provision prohibits giving, supplying, and disclosing to unauthorized persons or competitors classified trade secrets and other confidential materials, information, data or documents relating to the company's operations, programs formulae, processes, market studies, surveys, and other company classified, restricted, or confidential information, or other data, documents, or information similar to those enumerated. The NLRC correctly noted that the prohibition pertains to three different categories: (a) classified trade secrets and other confidential materials, information, data or documents relating to the company's operations, program formulae, processes, market studies, surveys; (b) other company classified, restricted, or confidential information; or (c) other data, documents, or information similar to those enumerated. Employee salary does not fall in the first category. It may pertain to the second or third category because they are broad enough to accommodate any information which Coca-Cola may deem or treat as confidential, classified, or restricted. For this reason, Rule 3, Section 31 is unfair and unreasonable and suffers from vagueness. While adoption and enforcement of the Red Book is a valid exercise of Coca-Cola's management prerogative, such exercise is not absolute and unbridled; the employer must ensure that its rules and regulations on work-related activities are fair and reasonable and that the corresponding penalties are commensurate to the offense involved and the degree of infraction. In Mirant (Philippines) Corp. vs. Caro, the term "unjustified refusal" was unclear with respect to a random drug testing policy because management did not clarify what types of acts would fall under it. Similarly, Coca-Cola did not give any examples or standards on how information may be considered confidential, classified, or restricted, leaving the matter subject to the company's whims and caprices. Article 1702 of the New Civil Code states that in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer; hence, the ambiguous provision of the Red Book should not prejudice Yonzon's rights against an illegal dismissal. Even assuming that Coca-Cola had a legitimate company policy against disclosure of employee salary, Yonzon could not be held liable because she revealed the salary of her co-employees to the NLRC for the sole purpose of comparison, that is, to show that she was unjustly discriminated against by her employer, notwithstanding the order of reinstatement without loss of seniority rights in her favor in the first labor case. Yonzon had no sinister motive in disclosing the salaries of her co-employees who she alleged to be her junior in rank but whose salaries were higher than hers.
• Damages: Yonzon failed to prove by clear and convincing evidence that Coca-Cola was motivated with bad faith in effecting her termination. Her claim for moral and exemplary damages was therefore denied.
• Relief: Since Yonzon was illegally dismissed, she was entitled to reinstatement without loss of seniority rights and other privileges and to her full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time her compensation was withheld up to the time of her actual reinstatement. However, reinstatement was rendered impossible and unreasonable given the length of time that passed since the controversy started on March 21, 2014. Thus, separation pay equivalent to one month salary for every year of service, in lieu of reinstatement, was proper. Since Yonzon was compelled to litigate her case to protect her rights and interests, she was entitled to attorney's fees equivalent to 10% of the total monetary award. The total monetary awards were subject to legal interest at the rate of six percent (6%) per annum from the date of finality of the Decision until full payment.

• Loss of Trust and Confidence as a Just Cause for Dismissal — For termination based on loss of trust and confidence to be valid, two conditions must concur: (1) the employee must occupy a position of trust and confidence; and (2) there must be some basis for the loss of trust and confidence, meaning the employer must establish an act justifying the loss. Both conditions are conjunctive. In this case, the first condition was absent because Yonzon did not occupy such a position, so the dismissal was illegal.
• Two Classes of Positions of Trust and Confidence — Case law recognizes managerial employees and fiduciary rank-and-file employees. Managerial employees are vested with powers or prerogatives to lay down management policies and to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions. Fiduciary rank-and-file employees are those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property, such as cashiers, auditors, and property custodians. The nature and scope of the work, not the job title or designation, determines whether an employee holds a position of trust and confidence. Yonzon's HR Administration Analyst functions did not involve handling significant amounts of money or property, and mere access to salary and compensation data did not make her a confidential employee.
• Management Prerogative Subject to Fairness and Reasonableness — An employer's adoption and enforcement of company rules is a valid exercise of management prerogative, but it is not absolute or unbridled. Rules on work-related activities must be fair and reasonable, and prescribed penalties must be commensurate to the offense and degree of infraction. A vague rule that gives the employer leeway to classify any information as confidential and imposes dismissal cannot support termination. Coca-Cola's Rule 3, Section 31 was vague and unfair because it provided no specific list or parameters for confidential information, leaving classification to the company's whims and caprices.
• Construction of Labor Legislation and Labor Contracts in Favor of the Laborer — Article 1702 of the New Civil Code provides that in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. The Court applied this principle to the ambiguous Red Book provision, holding that it should not prejudice Yonzon's rights against illegal dismissal.
• Illegal Dismissal Relief; Separation Pay in Lieu of Reinstatement — An illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges and to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time compensation was withheld up to actual reinstatement. Where reinstatement is rendered impossible and unreasonable by the length of time that has passed, separation pay equivalent to one month salary for every year of service, in lieu of reinstatement, is proper. Attorney's fees equivalent to 10% of the total monetary award may be awarded when the employee is compelled to litigate to protect rights and interests, and the total monetary awards are subject to legal interest at 6% per annum from finality until full payment.
• Moral and Exemplary Damages Require Clear and Convincing Proof of Bad Faith — Moral and exemplary damages cannot be awarded absent clear and convincing evidence that the employer was motivated by bad faith in effecting the termination. Yonzon failed to prove such bad faith, so her claims for moral and exemplary damages were denied.

• "For her termination to be valid, two conditions must concur: (1) she must occupy a position of trust and confidence; and (2) there must be some basis for the loss of trust and confidence, that is, the employer must establish the existence of an act justifying the loss of trust of trust and confidence." — This passage states the conjunctive requisites for a valid dismissal based on loss of trust and confidence, which the Court applied to find the first condition absent.
• "Nevertheless, it is the nature and scope of the work and not the job title or designation which determines whether an employee holds a position of trust and confidence." — This is the controlling rule used to assess Yonzon's HR Administration Analyst functions and to conclude that she was neither a managerial nor a fiduciary rank-and-file employee.
• "For this very reason, Rule 3, Section 31 of the Red Book is unfair and unreasonable. It suffers from vagueness. While the adoption and enforcement of the provisions of the Red Book is a valid exercise of Coca-Cola's management prerogative, such exercise is not absolute and unbridled." — This passage invalidates the company rule as a basis for dismissal and defines the limits of management prerogative over work-related rules.
• "Article 1702 of the New Civil Code states that "[i]n case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer." Hence, the ambiguous provision of the Red Book should not prejudice the rights of Yonzon against an illegal dismissal." — This excerpt applies the labor-friendly construction rule to the ambiguous Red Book provision.

• Coca-Cola Femsa Philippines, Inc. vs. Alpuerto, G.R. No. 226089, March 4, 2020 — Cited for the two conditions for valid dismissal based on loss of trust and confidence and for the example of a finance clerk whose duties involved goods receipt inventory, full goods verification, and encoding and recording of assets trafficked in and out of a warehouse, which was held to be a position of trust and confidence.
• Bravo vs. Urios College, 810 Phil. 603 (2017) — Cited in Coca-Cola Femsa Philippines, Inc. vs. Alpuerto as authority for the requisites of loss of trust and confidence and the nature of positions of trust.
• University of Manila vs. Pinera, G.R. No. 227550, August 14, 2019 — Cited for the rule that the nature and scope of the work, not the job title or designation, determines whether an employee holds a position of trust and confidence.
• Wesleyan University Phils. vs. Reyes, 740 Phil. 297, 311 (2014) — Cited in University of Manila vs. Pinera for the same rule on determining positions of trust and confidence by the nature and scope of work.
• San Miguel Foods, Inc. vs. San Miguel Corp. Supervisors and Exempt Union, 670 Phil. 421 (2011) — Cited for the holding that a payroll master and employees with access to salary and compensation data are not confidential employees because the nature of their work does not pertain to company rules and regulations and confidential labor relations.
• Mirant (Philippines) Corp. vs. Caro, 734 Phil. 160 (2014) — Cited as analogous precedent where the term "unjustified refusal" in a company policy was unclear because management did not clarify what acts fell under it; the Court used it to support the finding that Coca-Cola's Red Book Rule 3, Section 31 was vague.
• Doctor vs. NII Enterprises, 821 Phil. 251, 270 (2017) — Cited in support of the award of separation pay in lieu of reinstatement.
• PNOC Development and Management Corp. vs. Gomez, G.R. Nos. 220526-27, July 29, 2019 — Cited in relation to the denial of moral and exemplary damages absent clear and convincing evidence of bad faith.

• Article 282, Labor Code — Cited by Coca-Cola as the basis for termination due to serious misconduct and willful breach of trust and confidence. The Court analyzed the dismissal under the loss of trust and confidence framework and found the first requisite absent.
• Article 1702, New Civil Code — Provides that in case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the laborer. The Court applied it to construe the ambiguous Red Book provision against Coca-Cola and in favor of Yonzon.
• Rule 3, Section 31, Coca-Cola Disciplinary Rules and Regulations (Red Book) — Prohibits giving, supplying, or disclosing to unauthorized persons or competitors classified trade secrets and other confidential materials, information, data or documents relating to company operations, programs formulae, processes, market studies, surveys, and other company classified, restricted, or confidential information, or similar data, documents, or information. The Court held it vague and unfair because it provided no specific list or parameters and could cover employee salary data, and thus could not sustain Yonzon's dismissal.
• Rule 5, Sections 2 and 3, Red Book — Cited in the Notice to Explain for other acts of negligence or inefficiency and disregard or deviation from established control and policies. The Court did not rely on these provisions in invalidating the dismissal.
• KOF COBE, General Rules of Ethics No. 14 — Cited in the Notice to Explain for the obligation not to disclose confidential information regarding processes, methods, strategies, plans, projects, technical or market data, or information of any kind. The Court did not rely on this provision in its ruling.
• Data Privacy Act of 2012, Section 13 — Invoked by Yonzon to argue that processing personal information is allowed when necessary for the protection of lawful rights and interests in court proceedings or for the establishment, exercise, or defense of legal claims; Coca-Cola countered that employee salary is protected and consent is required. The Court did not resolve the dismissal on this provision.

Gesmundo, C.J. (Chairperson); Caguioa, J.; Zalameda, J.; and Gaerlan, J., concurred.