Dismissal must be based on willful breach of trust


A bank manager was promoted to the position of vice president of Allied Business Ventures Department of the bank after just five years.

When one of the bank’s branch managers resigned, the VP was asked to sign the branch manager’s standard employment clearance pertaining to the latter’s accountabilities with the bank. The VP, however, issued a clearance only for the branch manager’s paid cash advances and salary loan, after being shown receipts by the bank’s cashier.

Seven months later, the VP was informed that the resigned bank manager was involved in a questionable transaction involving P11 million for which the bank was being sued. Because the clearance issued by the VP effectively barred the bank from going after the bank manager, the bank terminated the services of the VP for loss of trust and confidence as was demanded by his position.

Aggrieved, the VP filed a complaint for illegal dismissal. He insisted that there was a plot to oust him from his position, which was why they blamed him for clearing all of the bank manager’s financial clearances even though he only cleared the latter for paid cash advances and salary loan. The reasoning that there was loss of trust and confidence was a mere afterthought given the gap between the issuance of the clearance and the bank firing him, he said.

The Labor Arbiter ruled in favor of the VP holding that the act of issuing the clearance was not a valid and justifiable ground for the bank to lose trust and confidence in him.

The Labor Arbiter was affirmed by the National Labor Relations Commission (NLRC).

The Court of Appeals however held that the VP was dismissed for just cause as “he failed to exercise prudence in clearing [the bank manager]of his accountabilities given that the same were yet to be audited.”

On appeal, the Supreme Court (SC) affirmed the Labor Arbiter and the NLRC, and found that the VP was illegally dismissed. First, it explained the rules on a dismissal based on willful breach of loss and confidence –

As provided in Article 282 of the Labor Code, an employer has the right to dismiss an employee by reason of willful breach of the trust and confidence reposed in him. To temper the exercise of such prerogative, the law imposes the burden of proof upon the employer to show that the dismissal of the employee is for just cause failing which would mean that the dismissal is not justified.

The law mandates that before validity can be accorded to a dismissal premised on loss of trust and confidence, two requisites must concur, viz: (1) the employee concerned must be holding a position of trust; and (2) the loss of trust must be based on willful breach of trust founded on clearly established facts.

Although the VP held a position of trust, the SC ruled that the act of issuing the clearance could not be considered a willful breach of that trust –

The Court has repeatedly emphasized that the act that breached the trust must be willful such that it was done intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.

The conditions under which the clearance was issued exclude any finding of deliberate or conscious effort on the part of the petitioner to prejudice his employer. Also, the petitioner did not commit an irregular or prohibited act. He did not falsify or misrepresent any company record as it was officially confirmed by [the cashier](Torres v. Rural Bank of San Juan, G.R. No. 184520, 13 March 2013, J. Reyes).


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