Breach of Trust and Confidence

As mentioned above, willful breach by the employee of the trust reposed to him by
the employer is one of the just causes to terminate employment. However, this
ground of lack of trust and confidence can only dismiss an employee who occupies
a position of confidence. By this, he must be invested with confidence on delicate
matters, such as custody, handling or care and protection of the property and
assets of the employer (Panday v. NLRC, G.R. No. 67664, 20 May 1992).
The dismissal of an employee for lack of trust and confidence must be based on
substantial evidence and not on the employers whims or caprices or suspicions;
otherwise, the employee would eternally remain at the mercy of the employer. Loss
of confidence must not be indiscriminately used as a shield by the employer against
a claim that the dismissal of an employee was arbitrary. And, in order to constitute a
just cause for dismissal, the act complained of must be work-related and shows that
the employee concerned is unfit to continue working for the employer. In addition,
loss of confidence as a just cause for termination of employment is premised on the
fact that the employee concerned holds a position of responsibility, trust and
confidence or that the employee concerned is entrusted with confidence with
respect to delicate matters such as the handling or care and protection of the
property and assets of the employer (Qurico Lopez v. Alturas Group of Companies,
G.R. No. 191008, April 11, 2011)
Managerial Employee
Loss of trust is a legal ground for terminating the services of an employee
particularly for employees holding managerial positions. To establish loss of trust,
proof beyond reasonable doubt is not required. An employer may take steps to
dismiss a managerial employee for as long as there is some basis for the loss of
confidence, such as when the employer has reasonable ground to believe that the
employee concerned is responsible for the reported misconduct and his
participation or involvement in the incident makes him unworthy of the trust of
confidence demanded by his position. Thus, in one case, the discovery of a
falsehood in the application form of a managerial employee where she claimed to
be a CPA but in fact was not, is a ground constituting loss of trust.

But having a sufficient ground for termination is not enough the Supreme Court
emphasized the need for performing the proper procedure for termination in order
to avoid the payment of damages. Thus, you must still send the managerial
employee concerned a written notice informing him of the acts or omissions leading
to his termination, give him an opportunity to explain his side AND provide him with
written notice stating the employers decision to terminate his services. Without
following due process, the employer may still be ordered to pay the employee
nominal damages (not separation pay, not backwages). In a recent case decided by
the Supreme Court, the amount of nominal damages was Php30,000. (Case of
Zenaida Mendoza vs. HMS Credit Corp. decided on April 17, 2013, GR No. 187232)

In instances in which the termination of employment by the employer is based on

breach of trust, a distinction must be made between rank-and-file employees and
managerial employees, thus:
The degree of proof required in labor cases is not as stringent as in other types of
cases. It must be noted, however, that recent decisions of this Court have
distinguished the treatment of managerial employees from that of rank-and-file
personnel, insofar as the application of the doctrine of loss of trust and confidence
is concerned. Thus, with respect to rank-and file personnel, loss of trust and
confidence as ground for valid dismissal requires proof of involvement in the alleged
events in question, and that mere uncorroborated assertions and accusations by the
employer will not be sufficient. But as regards a managerial employee, the mere
existence of a basis for believing that such employee has breached the trust of his
employer would suffice for his dismissal. Hence, in the case of managerial
employees, proof beyond reasonable doubt is not required, it being sufficient that
there is some basis for such loss of confidence, such as when the employer has
reasonable ground to believe that the employee concerned is responsible for the
purported misconduct, and the nature of his participation therein renders him
unworthy of the trust and confidence demanded by his position. (Etcuban v. Sulpicio
Lines, 489 SCRA 483)