Loss of trust and confidence as a ground for dismissal must be real, i.e., founded on clearly established facts, and the employee’s breach of the trust must be willful, i.e., it was done intentionally, knowingly and purposely, without justifiable excuse.

Thus, the Supreme Court held that:

Distribution & Control Products, Inc. vs. Jeffrey Santos
G.R. No. 212616, July 10, 2017


Petitioner Distribution & Control Products (DCP) is a domestic corporation engaged in the business of selling and distributing electrical products and equipment. Santos Jeffrey Santos, on the other hand, was employed as company driver.

Santos claimed that he received a notice informing him that he was being placed under preventive suspension for a period of thirty (30) days because he was one of the employees suspected of having participated in the unlawful taking of circuit breakers and electrical products of Distribution & Control Products.

A criminal complaint was filed against him and several other persons with the Prosecutor’s Office of Mandaluyong City. Santos immediately inquired from petitioner company’s Human Resources Department as to the exact reason why he was suspended because he was never given the opportunity to explain his side before he was suspended but the said Department did not give him any concrete explanation. After the lapse of his 30-day suspension· he was no longer allowed to return to work without any justification for such disallowance.

On their part, DCP claimed that they employed Santos as their company driver whose job included the delivery of items purchased by customers, receipt documentation and recording of previously purchased products which were returned by customers and coordination   with the company warehouseman and the accounting department concerning all items which are subject of delivery and receipt by the company.

On February 19, 2010, DCP, through its hired auditors, conducted a physical stock inventory of all materials stored in the company’s warehouse and in its office building. It was found out that a number of electrical materials and products with an estimated value of P457,394.35, were missing.

A subsequent inventory likewise revealed that a 2000-ampere circuit breaker worth P106,341.75 was also missing, as well as thirty-seven (37) pieces of 40-ampere circuit breakers which had a total value of P39,940.04. Distribution & Control Products claim that Santos and the company warehouseman were the only persons who had complete access to the company warehouse as they were entrusted with the handling of all products from the company’s suppliers; considering the size and weight of the missing items, they can only be carried by no less than two (2) persons.

DCP demanded an explanation from Santos and the warehouseman, but they failed to make an account as to how these products had gone missing from the warehouse and office building. As such, Distribution & Control Products filed a criminal complaint for qualified theft and, thereafter, they suspended herein Santos. After the lapse of his suspension, Santos no longer returned to work.

LA Ruling:

The LA found Santos to be illegally terminated from his employment, thus, ordering his reinstatement and payment of his full backwages amounting to P297,916.67.

The LA held that herein Distribution & Control Products had the burden of proving that Santos’s dismissal was valid and their failure to discharge this burden only means that the dismissal was not justified and, therefore, illegal.

Distribution & Control Products appealed.

NLRC Ruling:

The NLRC promulgated its Decision dismissing Distribution & Control Products’ appeal and affirming, with modification, the decision of the LA. In addition to the payment of backwages, the NLRC ordered Distribution & Control Products to pay Santos separation pay equivalent to one (1) month for every year of service, instead of reinstatement.

Distribution & Control Products filed a Motion for Reconsideration but the NLRC denied it. Aggrieved, Distribution & Control Products filed a petition for certiorari with the CA.

CA Ruling:

The CA rendered its assailed Decision denying the certiorari petition and affirming the questioned NLRC Decision and Resolution. Distribution & Control Products filed a Motion for Reconsideration, but it was likewise denied by the CA.

Hence, the present petition for review on certiorari


Whether or not the employee who was not allowed to return to work after preventive suspension was dismissed from service

Whether or not dismissal for loss of trust and confidence for theft without evidence of employee’s direct involvement is valid

SC Ruling:

The SC did not find merit in the petition.

Get a copy of a Guide to Valid Dismissal of Employees

Loss of trust and confidence is a just cause for dismissal under Article 282 (c) of the Labor Code, which 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.

To be a valid cause for dismissal, the act that betrays the employer’s trust must be real, i.e., founded on clearly established facts, and the employee’s breach of the trust must be willful, i.e., it was done intentionally, knowingly and purposely, without justifiable excuse.

Moreover, 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.

Stated differently, proof beyond reasonable doubt is not needed to justify the loss as long as the employer has reasonable ground to believe that the employee is responsible for the misconduct and his participation therein renders him unworthy of the trust and confidence demanded of his position.

Nonetheless, the right of an employer to dismiss employees on the ground of loss of trust and confidence, however, must not be exercised arbitrarily and without just cause. Unsupported by sufficient proof, loss of confidence is without basis and may not be successfully invoked as a ground for dismissal.

The SC found that Distribution & Control Products failed to present substantial evidence to support their allegations that Santos had, in any way, participated in the theft of the company’s stolen items and that after his preventive suspension he no longer reported for work. In other words, Distribution & Control Products were not able to establish the existence of an act justifying their alleged loss of trust and confidence in Santos.

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