When loss of confidence is valid ground for dismissal

June 15, 2013 10:57 pm

by Benchpress
DAILY COURTSIDE REPORT

An alleged Certified Public Accountant (CPA) has been working as a chief accountant in a credit
corporation for three years. It was only after this time that the credit corporation found out that she
was not a CPA and misrepresented herself as one in her application and personal data sheet. She
was also supposedly helping pirate employees of the credit corporation for a rival corporation. After
confronting her, the credit corporation deemed it best to let her go that same day. When she tried to
collect her belongings the very next day, she was no longer allowed to enter the premises.
The accountant filed a case for illegal dismissal with the National Labor Relations Commission
(NLRC), where the Labor Arbiter ruled that she had been illegally dismissed and that her dismissal
was done in violation of due process requirements. On appeal, the NLRC found that there was no
illegal dismissal as the parties entered into a compromise agreement where the accountant would
voluntarily resign in exchange for separation benefits. This decision was affirmed by the Court of
Appeals.
The Supreme Court (SC) overturned the CA, holding that there was nothing in the records to prove
that the accountant had voluntarily resigned from her position in the company. It further ruled that
there was no illegal dismissal despite the company’s failure to follow the two-notice rule.
Article 282 of the Labor Code provides that an employer may terminate an employment for fraud or
willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative.
The Court made a distinction between managerial and rank and file employees when it comes to the
termination of employees based on breach of trust. For managerial employees, the mere existence
that there is basis to believe that such employee has breached the trust of the employer would
suffice his dismissal. For rank and file employees, proof of involvement in the alleged events in
question is necessary. The accountant, being a managerial employee, was validly terminated for
loss of confidence –
In securing this position, she fraudaulently misrepresented her personal qualifications by stating in
her Personal Information Sheet that she was a CPA… [t]his deceitful action alone was sufficient
basis for respondent’s loss of confidence in her as a managerial employee.
The SC, however, explained that in labor cases, the existence of just cause is not enough to comply
with procedural due process.
In the case of termination by the employer, it is not enough that there exists a just cause therefor, as
procedural due process dictates compliance with the two-notice rule in effecting a dismissal: (a) the
employer must inform the employee of the specific acts or omissions for which his dismissal is
sought, and (b) the employer must inform him of the decision to terminate employment after
affording the latter the opportunity to be heard.
Despite the existence of a just cause for termination, the accountant was dismissed from service in
violation of procedural due process, because she did not receive any notice of her termination and
was fired on the spot. Nevertheless, the failure to comply with procedural due process does not
render a dismissal for valid cause illegal. Instead, the employees remedy is to be granted damages.
It is evident that although there was a just cause in terminating the services of Mendoza,
respondents were amiss in complying with the two-notice requirement. Following prevailing
jurisprudence on the matter, if the dismissal is based on just cause, then the non-compliance with
non-procedural due process should not render the termination from employement illegal or
ineffectual. Instead, the employer must indemnify the employee in the form of nominal damages
(Mendoza v. HMS Credit Corporation, G.R. No. 187232, 17 April 2013, C.J. Sereno).