AS OPPOSED TO FIDUCIARY RANK-AND-FILE EMPLOYEES, A MANAGERIAL EMPLOYEE COULD BE TERMINATED ON THE GROUND OF LOSS OF CONFIDENCE BY MERE EXISTENCE OF A BASIS FOR BELIEVING THAT HE HAD BREACHED THE TRUST OF HIS EMPLOYER

How to Craft Disciplinary Notices for Loss of Trust and Confidence

hr-forms-volume-twoPJ Lhuillier, Inc. vs. Hector Oriel Cimagala Camacho
G.R. No. 223073, February 22, 2017

Facts:

Petitioner P.J. Lhuillier, Inc. (PJLI), the owner and operator of the “Cebuana Lhuillier” chain of pawnshops, hired petitioner Feliciano Vizcarra (Vizcarra) as PLJI’s Regional Manager for Northern and Central Luzon pawnshop operations and respondent Hector Oriel Cimagala Camacho (Camacho) as Area Operations Manager (AOM) for Area 213, covering the province of Pangasinan.

Camacho was assigned to administer and oversee the operations of PJLI’s pawnshop branches in the area. On May 15, 2012, Vizcarra received several text messages from some personnel assigned in Area 213, reporting that Camacho brought along an unauthorized person, a non-employee, during the QTP operation (pull-out of “rematado” pawned items) from the different branches of Cebuana Lhuillier Pawnshop in Pangasinan.

On May 18, 2012, Vizcarra issued a show cause memorandum directing Camacho to explain why no disciplinary action should be taken against him for violating PJLI’s Code of Conduct and Discipline which prohibited the bringing along of non-employees during the QTP operations.

Camacho, in his Memorandum, apologized and explained that the violation was an oversight on his part for lack of sleep and rest. With busy official schedules on the following day, he requested his mother’s personal driver, Jose Marasigan (Marasigan) to drive him back to Pangasinan. He admitted that Marasigan rode with him in the service vehicle during the QTP operations.

During the formal investigation, Camacho admitted that he brought along a non-employee, Marasigan, during the QTP operations on May 15, 2012. He explained that on May 12, 2012, he went home to Manila to celebrate Mother’s Day with his family on May 13, 2012. He drove himself using the service vehicle assigned to him and arrived in Manila at around 11 :00 o’clock in the evening. As he was expecting a hectic work schedule the following day and was feeling tired due to lack of sleep for the past few days, he asked Marasigan to drive him back to Pangasinan so he could catch some sleep on the way.

Marasigan was supposed to return to Manila on May 15, 2012, but because he was scheduled to go back to Manila on May 18, 2012, to attend a regional conference in Antipolo, he asked the former to remain in Pangasinan so that they could travel back together to Manila on May 17, 2012.

On the day of the QTP operations, Marasigan drove the service vehicle from his apartment to the Area Office. Upon reaching the Area Office, the Area Driver took over while Marasigan sat in the backseat of the vehicle. Camacho admitted that he knew that it was prohibited to bring unauthorized personnel, especially a non-employee, during the QTP operations because this was discussed in the seminars facilitated by the company’s Security Service Division. He only realized his mistake at the end of their 13-branch stop when he noticed that his companions were unusually quiet throughout the trip. It was also discovered that Camacho committed another violation of company policy when he allowed an unauthorized person to drive a company vehicle.

The Formal Investigation Committee issued the Report of Formal Investigation concluding that Camacho was guilty as charged. It could not accept his explanation that the confidentiality of the QTP operation slipped his mind because of his exhausting travel to Manila and, thus, recommended that his services be terminated.

According to the report, his act of bringing along an unauthorized person, a non-employee, during the QTP operation was a clear violation of an established company policy designed to safeguard the pawnshop against robberies and untoward incidents. His act was a “willful neglect of duty which cause[ d] prejudice to the Company.” On the basis of the Report of Formal Investigation, Vizcarra issued to Camacho the Notice of Disciplinary Action where he was meted the penalty of Termination. This prompted him to file a complaint before the Labor Arbiter (LA) against the petitioners for illegal dismissal, money claims, damages, and attorney’s fees.

LA Ruling:

The LA sustained Camacho’s termination holding that the fact that the Complainant admitted that he violated the rules and regulations of the Respondents by bringing along his driver, a non-employee and an unauthorized person, during the “QTP” operations, despite being fully aware that the same was prohibited, the Respondents were clearly justified to terminate the employment of the Complainant on the ground of loss of trust and confidence.

Aggrieved, Camacho appealed the LA decision to the NLRC, questioning the harshness of the penalty meted out by P JLI. He argued that the infractions were purely unintentional and no more than an oversight on his part.

NLRC Ruling:

The NLRC reversed and set aside the Decision of the LA.

It declared the dismissal of Camacho as illegal. It opined that there was no indication that Camacho, in allowing his mother’s driver to be present during the conduct of the QTP operation, was motivated by malicious intent so as to construe the infraction as serious misconduct punishable by dismissal. The infraction, if at all, constituted “nothing more than an oversight or inadvertence, if not a necessity for him to conserve his energy and stay alert during the QTP Operation”.

The conduct could not be considered as gross so as to warrant the imposition of the supreme penalty of dismissal.

Dissatisfied with the said pronouncement, PJLI filed its Motion for Reconsideration praying that the Decision of the LA be reinstated. After a re-evaluation of the case, in its December 27, 2013 Resolution, the NLRC found cogent reason to set aside its August 30, 2013 Decision.

It ruled that Camacho’s transgression of the company policy warranted his termination from the service.

Camacho moved for reconsideration but his motion was denied in the NLRC Resolution of February 10, 2014. Aggrieved, Camacho filed a petition for certiorari under Rule 65 of the Rules of Court before the CA.

CA Ruling:

The CA reversed the NLRC resolutions.

It held that contrary to the findings of the LA and the NLRC, the misconduct of Camacho was not of a serious nature as to warrant a dismissal from work. At most, said the CA, he was negligent and remiss in the exercise of his duty as an AOM. There was no evidence that would show that said act was performed with wrongful intent.

Moreover, Camacho’s termination from work could not be justified on the ground of loss of trust and confidence. For loss of trust and confidence to be a valid ground, explained the CA, it must be based on willful breach of the trust reposed in the employee by his employer. The breach must have been made intentionally, knowingly, and purposely without any justifiable excuse as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently.

In this case, the CA found that Camacho’s act of bringing along his mother’s driver during the QTP operation was not willful as it was not done intentionally, knowingly and purposely. It was committed carelessly, thoughtlessly, heedlessly or inadvertently.

Even Camacho himself admitted that it was merely a case of human error on his part, the same being prompted by his desire to finish his work as soon as possible. In sum, the CA held that Camacho was illegally dismissed.

The CA denied PJLI’s motion for reconsideration. Hence, the petition before the SC.

Issue/s:

Whether or not the act of a managerial employee of bringing along an unauthorized person in a confidential operation of the company, in violation of its policy, warrants the termination for loss of trust and confidence.

SC Ruling:

The SC found merit in the petition.

A managerial employee could be terminated on the ground of loss of confidence by mere existence of a basis for believing that he had breached the trust of his employer. Proof beyond reasonable doubt is not required. It would already be sufficient that there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the concerned employee is responsible for the purported misconduct and the nature of his participation therein.

Related Reading: Loss of Trust and Confidence Should not be Simulated

Loss of Trust and Confidence must be from dishonest or deceitful conduct

Totality of Circumstances May Establish the Dismissal for Breach of Trust

This distinguishes a managerial employee from a fiduciary rank-and-file where loss of trust and confidence, as ground for valid dismissal, requires proof of involvement in the alleged events in question, and that mere uncorroborated assertion and accusation by the employer will not be sufficient.

In this case, there was such basis. It was established that Camacho had breached PJLI’s trust when he took an unauthorized person with him to the QTP operation which was already a violation of company existing policy and security protocol. His explanation that his alleged misdeed was brought about by his poor physical and health condition on that day could not prevail over two significant details that PJLI pointed out in its petition:

  1. Camacho is not authorized to drive the vehicle. He is not expected to perform any heavy physical work during this procedure. Thus, whether Respondent was not in his best health condition that day is immaterial. There was no excuse at all for Respondent to bring his personal driver. As a matter of fact, all that Respondent’s driver did during the May 15, 2012 pull-out of rematado items was to sit back and watch while the highly-confidential operation was in progress.
  1. Further, a day prior to the May 15, 2012 QTP operations, Respondent’s personal driver was left behind in his (Respondent’s) apartment in Pangasinan while Respondent went through his usual work routine. If he was able to do this on May 14, 2012, why did he bring his driver to work on May 15, 2012?

Simply put, Camacho’s act was without justification. For this transgression, petitioner PJLI was placed in a difficult position of withdrawing the trust and confidence that it reposed on respondent Camacho and eventually deciding to end his employment.

Unlike other just causes for dismissal, trust in an employee, once lost is difficult, if not impossible, to regain. The employer cannot be compelled to retain an employee who committed acts inimical to its interests. A company has the right to dismiss its employees if only as a measure of self-protection.

How to Validly Dismiss Employees for Loss of Trust and Confidence

valid-dismissal-of-emloyees-by-atty-elvin-b-villlanueva-2nd-edition-2-300x300Finally, although it may be true that PJLI did not sustain damage or loss on account of Camacho’s action, this is not reason enough to absolve him from the consequence of his misdeed. The fact that an employer did not suffer pecuniary damage will not obliterate the respondent’s betrayal of trust and confidence reposed on him by his employer.