WILLFUL BREACH OF TRUST AS GROUND FOR DISMISSAL OF MANAGERIAL EMPLOYEE REQUIRES ONLY MERE EXISTENCE OF THE BASIS FOR BELIEVING THAT THE EMPLOYEE HAS BREACHED THE TRUST OF EMPLOYER

Willful breach of trust requires only mere existence of a basis for believing that the employee has breached the trust and confidence of the employer” for managerial employees to be dismissed.

Yolando T. Bravo vs. Urios College (Now Father Saturnino Urios University) and/or Fr. John Christian U. Young
G.R. No. 198066, June 7, 2017

Facts:

Yolando Bravo was employed as a part-time teacher in 1988 by Urios College. In addition to his duties as a part-time teacher, Bravo was designated as the school’s comptroller from June 1, 2002 to May 31, 2002.

Urios College organized a committee to formulate a new “ranking system for non-academic employees for school year 2001-2002. Under the proposed ranking system, the position of Comptroller was classified as an office head while the position of Vice-President for Finance was classified as middle management.

The proposed ranking system for school year 2001-2002 was presented to Bravo for comments. Bravo recommended that “the position of Comptroller should be classified as a middle management position because it was informally merged with the position of Vice-President for Finance.”

The committee allegedly agreed with Bravo and accepted his recommendations. Bravo was then directed to arrange a salary adjustment schedule for the new ranking system. Later, Bravo obtained his employee ranking slip which showed his evaluation score and the change of his rank “from office head to middle manager-level IV.” The change, however, was merely superimposed. The employee ranking slip bore the signatures of the Human Resources Department Head, the Vice-President for Administration, and the President of Urios College.

The implementation of the new ranking system for non-academic employees and administrators for school year 2001-2002 and the corresponding schedule of salary adjustments were reflected on the October 15, 2001 payroll although opposed by employees.

Urios College formed another committee to adopt a new ranking system for school year 2002-2003. After deliberation, the committee decided to maintain the ranking system used in the previous school year for school year 2002-2003. In the employee’s ranking profile report, the position of Comptroller was classified as middle management.

Meanwhile, Urios College decided to undertake a structural reorganization. During this period, Bravo occupied the Comptroller position in a “hold-over” capacity until May 31, 2003. He was reappointed to the same position, which expired on May 31, 2004. In October 2004, Urios College organized a committee to review the ranking system implemented during school year 2001-2002. In its report, the committee found that the ranking system for school year 2001-2002 caused salary distortions among several employees. There were also discrepancies in the salary adjustments of Bravo and of two (2) other employees.

The committee discovered that the Comptroller’s Office, which was ran by Bravo, solely prepared and implemented the salary adjustment schedule without prior approval from the Human Resources Department.

The committee recommended, among others, that Bravo be administratively charged for serious misconduct or willful breach of trust. Bravo allegedly misclassified several positions and miscomputed his and other employees’ salaries. Bravo received a show cause memo requiring him to explain in writing why his services should not be terminated for his alleged acts of serious misconduct.

A committee was organized to investigate the matter. Hearings were conducted, after which the parties submitted their respective position papers. In his Position Paper, Bravo alleged that he did not prepare the ranking system. It was the ranking committee which categorized the position of Comptroller as middle management.

The committee found that Bravo floated the idea of his salary adjustment, which Urios College never formally approved. The committee also discovered an irregularity in the implementation of the ranking system.

Bravo was found guilty of serious misconduct. Urios College notified Bravo of its decision to terminate his services for serious misconduct and loss of trust and confidence. Upon receipt of the termination letter, Bravo immediately filed a complaint for illegal dismissal with a prayer for the payment of separation pay, damages, and attorney’s fees.

LA Ruling:

The LA dismissed the complaint for lack of merit. He ruled that Bravo’s act of “assigning to himself an excessive and unauthorized salary rate while working as a Comptroller” constituted serious misconduct and willful breach of trust and confidence for which he may be dismissed.

Bravo appealed the Decision to the NLRC.

NLRC Ruling:

The National Labor Relations Commission found that Bravo’s dismissal from service was illegal.

The NLRC held that there was no clear showing that Bravo violated any school policy. Moreover, Bravo received the increased salary in good faith.

Urios College assailed National Labor Relations Commission’s Resolution through a petition for certiorari before the Court of Appeals.

CA Ruling:

The Court of Appeals reversed the National Labor Relations Commission’s Resolution and reinstated the decision of the LA.

The Court of Appeals ruled that Urios College had substantial basis to dismiss Bravo from service on the ground of serious misconduct and loss of trust and confidence. Bravo occupied a highly sensitive position as the school’s Comptroller. “In the course of his duties, he granted himself additional salaries” without proper authorization. For managerial employees, it is sufficient that the employer has reasonable ground to believe that the employee is responsible for the alleged misconduct. Bravo moved for reconsideration but his motion was denied.

Issue/s:

Whether or not an employee who believed in good faith that the act for which he was charged was authorized can be dismissed for serious misconduct

Whether or not an employee who cannot be dismissed for serious misconduct cannot also be dismissed for willful breach of trust

Whether or not lack of chance of employee to select members of investigating committee amounts to lack of due process

Whether or not separation pay and backwages should be given to employee who was terminated for just cause

SC Ruling:

The SC denied the petition.

The employer must adduce proof of actual involvement in the alleged misconduct for loss of trust and confidence to warrant the dismissal of fiduciary rank-and-file employees. However, “mere existence of a basis for believing that the employee has breached the trust and confidence of the employer” is sufficient for managerial employees.

To warrant termination of employment under Article 297(a) of the Labor Code, the misconduct must be serious or “of such grave and aggravated character.” Trivial and unimportant acts are not contemplated under Article 297(a) of the Labor Code. In addition, the misconduct must “relate to the performance of the employee’s duties” that would render the employee “unfit to continue working for the employer.”

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There is no evidence that the position of Comptroller was officially reclassified as middle management by Urios College. Hence, Bravo could not summarily assign to himself a higher salary rate without rendering himself unfit to continue working for Urios College. However, Bravo was neither induced nor motivated by any wrongful intent. He believed in good faith that Urios College had accepted and approved his recommendations on the proposed ranking scale for school year 2001-2002.

Due to the nature of his occupation, Bravo’s employment may be terminated for willful breach of trust under Article 297(c), not Article 297(a), of the Labor Code. A dismissal based on willful breach of trust or loss of trust and confidence under Article 297 of the Labor Code entails the concurrence of two (2) conditions. First, the employee whose services are to be terminated must occupy a position of trust and confidence. The second condition that must be satisfied is the presence of some basis for the loss of trust and confidence. This means that “the employer must establish the existence of an act justifying the loss of trust and confidence.” Otherwise, employees will be left at the mercy of their employers.

Although a less stringent degree of proof is required in termination cases involving managerial employees, employers may not invoke the ground of loss of trust and confidence arbitrarily. The prerogative of employers in dismissing a managerial employee “must be exercised without abuse of discretion.”

Bravo was validly dismissed based on loss of trust and confidence. Bravo was not an ordinary rank-and-file employee. His position of responsibility on delicate financial matters entailed a substantial amount of trust from Urios College. The entire payroll account depended on the accuracy of the classifications made by the Comptroller. It was reasonable for the employer to trust that he had basis for his computations especially with respect to his own compensation. The preparation of the payroll is a sensitive matter requiring attention to detail. Not only does the payroll involve the company’s finances, it also affects the welfare of all other employees who rely on their monthly salaries.

Bravo’s act in assigning to himself a higher salary rate without proper authorization is a clear breach of the trust and confidence reposed in him. There was no reason for the Comptroller’s Office to undertake the preparation of its own summary table because this was a function that exclusively pertained to the Human Resources Department. Bravo offered no explanation about the Comptroller’s Office’s deviation from company procedure and the discrepancies in the computation of other employees’ salaries. Bravo’s position made him accountable in ensuring that the Comptroller’s Office observed the company’s established procedures. It was reasonable that he should be held liable by Urios College on the basis of command responsibility.

Ordinarily, employees play no part in selecting the members of the investigating committee. That Bravo was not given the chance to comment on the selection of the members of the investigating committee does not mean that he was deprived of due process. In addition, there is no evidence indicating that the investigating committee was biased against Bravo. Hence, there is no merit in Bravo’s claim that he was deprived of due process.

Under Article 294 of the Labor Code, the reliefs of an illegally dismissed employee are reinstatement and full backwages. “Backwages is a form of relief that restores the income that was lost by reason of the employee’s dismissal” from employment. It is “computed from the time that the employee’s compensation was withheld until his or her actual reinstatement.”

Considering that there was a just cause for terminating Bravo from employment, there is no basis to award him separation pay and backwages. There are also no factual and legal bases to award attorney’s fees to Bravo.