LOSS OF TRUST AND CONFIDENCE ARISES WHERE THE SUPERVISOR, ALTHOUGH DID NOT COMMIT THE ACTS OF FALSIFICATION, KEPT SILENT OVER HER SUBORDINATE’S ACTS OF FALSIFICATION

Del Rosario vs. CW Marketing & Development Corporation
G.R. No. 211105, February 20, 2019

Loss of trust and confidence; Immateriality of the amount involved in loss of trust; Nonchalant attitude of supervisor over acts of falsification of her subordinates

Facts:

Petitioner Ruly Del Rosario (Del Rosario) had been in the employ of Respondent CW Marketing (CW Marketing) since 2007. She was initially engaged as Sales Consultant and eventually as Sales Supervisor, detailed at its Home Depot, Balintawak Branch.

As Sales Supervisor, she was assigned a computer which is part of a shared network of computer users of CW Marketing and is connected to a printer/scanner. Del Rosario alone was taught by CW Marketing’s Information Technology (IT) personnel how to operate the machine although the network connection enabled other computer users to print documents through the printer/scanner connected to Del Rosario’s computer.

Sometime in October 2010, CW Marketing received a report from Hongkong and Shanghai Banking Corporation (HSBC) that several individuals applying for credit cards submitted ostensibly falsified payslips and identification cards issued by CW Marketing’s Balintawak Branch. The questionable documents indicated higher positions and salaries of purported CW Marketing employees.

Based on the report prepared by its IT Department, which conducted an investigation on the information given by HSBC, CW Marketing issued a Notice to Explain dated November 4, 2010 addressed to Del Rosario. This notice gave her 48 hours to explain in writing her alleged participation in the falsification of various documents which pertain to her subordinates at Home Depot, namely Elaine Hernandez, Mary Rose Cruz, and Jomarie Cayco; and were obtained by the IT Department from her (Del Rosario’s) computer.

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The following day Del Rosario wrote an email to CW Marketing, addressed to the HR Manager with carbon copies (CCs) addressed to five of the company’s officers. While Del Rosario admitted that she knew the three mentioned individuals and the occasions they used her computer and the printer/scanner, she denied that she had a hand in the falsification of the documents.

CW Marketing issued a second Notice to Explain requiring her to answer why she should not be dismissed for additional violations of CW Marketing’s Employee Handbook: (1) Section 3.5 – offenses against company property: negligence or misuse of company properties, machines, and equipment; and (2) Section 3.7 – unauthorized use or allowing unauthorized persons to use company supplies, materials, facilities, tools and/or equipment resulting in loss or damage. CW Marketing pointed out Del Rosario’s presence on the floor, as allegedly seen on the CCTV footage, while the concerned individuals used the computer and printer/scanner assigned to Del Rosario to scan and print documents.

In another email, Del Rosario explained further that she did not falsify the questioned documents nor was she the sole user of the computer assigned to her. Thereafter, Del Rosario attended the administrative inquiry on the charges against her, signed her conformity on the handwritten minutes of the meeting, and made various admissions.

CW Marketing found Del Rosario liable for three violations of its Employee Handbook and terminated her employment. Forthwith, Del Rosario filed before the Arbitration Branch of the NLRC the complaint for illegal dismissal; non-payment of wages/salary, overtime pay, holiday pay, service incentive leave pay, 13th month pay, separation pay, emergency cost of living allowance (ECOLA), and commission; and other causes of action.

Essentially, Del Rosario maintained that she did not falsify the documents reported by HSBC to CW Marketing and that, although copies of the document were found in the computer assigned to her, she could not constantly monitor the use of her computer whilst she attended to her other responsibilities. CW Marketing countered, on the other hand, that it validly dismissed Del Rosario for gross incompetence, dishonesty, and negligence tantamount to loss of trust and confidence. It argued that the dismissal of Del Rosario for violating the said provisions of its Employee Handbook, which is punishable by lawful termination of employment, is a legitimate exercise of management prerogative.

CW Marketing emphasized Del Rosario’s sensitive position as a supervisor and her admission that she freely allowed others to use her computer and that she was aware of her subordinates’ activities to fabricate employee documents in connection with their credit card applications. On the whole, it decried the falsification of documents which happened under the watch of Del Rosario and its negative effect to CW Marketing’s reputation and credit standing with banks.

LA Ruling:

The LA held that CW Marketing failed to establish that Del Rosario directly committed the falsification of the questioned documents. It granted the complaint of Del Rosario, ruling that her dismissal was illegal, and ordered CW Marketing to pay her backwages in the amount of P195,335.83 and separation pay in the amount of P65,000.00, in lieu of reinstatement.

However, the LA denied Del Rosario’s other money claims for “lack of particulars” and failure to deny CW Marketing’s claim of her outstanding obligation in the amount of P24,083.20.

Both CW Marketing and Del Rosario appealed the ruling of the LA to the NLRC, the former questioning the finding that it illegally dismissed Del Rosario, and the latter questioning the denial of her other money claims.

NLRC Ruling:

The NLRC reversed the ruling of the LA and found that CW Marketing correctly dismissed Del Rosario for loss of trust and confidence.

Contrary to the LA’s holding that there was no cause for Del Rosario’s dismissal, the NLRC highlighted the following: (1) Del Rosario admitted accountability over the assigned computer, thus, her lack of participation in the falsification of the documents did not exculpate her from liability for the acts of her subordinates; (2) Del Rosario’s negligence in handling and protecting company property; (3) Del Rosario’s apathy towards the activities and acts of her subordinates relating to their use of company property assigned to her; and ( 5) the falsification of documents by her subordinates, which were effected without her supervision, would not have prospered had Del Rosario exercised care and control over the use of her computer.

Ultimately, the NLRC held that Del Rosario’s actions rendered her unworthy of the trust and confidence demanded by her position. Thereafter, Del Rosario filed a petition for certiorari under Rule 65 of the Rules of Court before the CA, alleging grave abuse of discretion in the NLRC’s reversal of the LA’s ruling.

CA Ruling:

The CA ruled that there is no grave abuse of discretion in the NLRC’s ruling that Del Rosario was validly dismissed for loss of trust and confidence.

Echoing the pronouncements of the NLRC, the CA noted Del Rosario’s awareness of the following facts: (1) the computer assigned to her was her accountability; (2) the transactions and documents found therein were her responsibility; (3) as supervisor, she was the lone employee given access to the printer/scanner; (4) yet, her subordinates were able to freely use the computer and printer/scanner unsupervised; and (5) the falsified documents were submitted by her subordinates to HSBC to support their credit card applications.

For the CA, Del Rosario should have at least called the attention of the concerned subordinates and instructed them to stop using company property for personal transactions, more so for editing and falsifying documents issued by CW Marketing.

Hence, the appeal by certiorari of Del Rosario under Rule 45 of the Rules of Court. Del Rosario is adamant that it was a grave error for the CA to affirm the NLRC’s Decision to dismiss her complaint for illegal dismissal. In short, CW Marketing did not have just cause to dismiss her.

Issue/s:

Whether or not the supervisory employee can be validly dismissed for loss of trust and confidence over falsification acts of her subordinates which she has knowledge of but kept silent

SC Ruling:

The SC denied the petition.

Two requisites must concur to constitute a valid dismissal from employment: (1) the dismissal must be for any of the causes expressed in Article 282 (now Article 297) of the Labor Code; and (2) the employee must be given an opportunity to be heard and to defend himself.

Article 282 (now Article 297) of the Labor Code lists loss of trust and confidence in an employee, who is entrusted with fiducial matters, or with the custody, handling, or care and protection of the employer’s property, as a just cause for an employee’s dismissal. (Grab a copy of the updated and re-numbered Labor Code here)

In these cases, the SC recognized the employer’s authority to sever the relationship with an employee. The right to terminate employment based on just and authorized causes stems from a similarly protected constitutional guarantee to employers of reasonable return on investments.

According to the SC in the case of supervisors or personnel occupying positions of responsibility, loss of trust justifies termination. Loss of confidence as a just cause for termination of employment is premised on the fact that an employee concerned holds a position of trust and confidence. Specifically in this instance, Del Rosario was entrusted with the custody, handling, or care and protection of the employer’s property. In fact, she was assigned the lone computer at the Home Depot Branch, which was connected to the printer/scanner, and as a result, she was the only user taught by the company’s IT personnel how to operate the machine.

Although loss of trust and confidence constitutes a valid cause for termination, it must, nonetheless, rest on solid grounds that reasonably evince an actual breach thereof by an employee. The burden of proof lies on the employer to first convincingly establish valid bases for that loss of trust and confidence.

In this case, Del Rosario herself unwittingly provided proof of her infractions. At the outset and repeatedly thereafter, Del Rosario admitted to the assignment to her of the main computer connected to a shared network and a printer/scanner which became her accountability. She then admitted knowledge and awareness of others’ usage of her computer; the edited and falsified documents authored by her subordinates through the same computer; and even their submission of these falsified documents to HSBC in connection with their credit card applications.

Del Rosario attempted to extricate herself from liability by insisting that she never falsified any of the questioned documents and that only her subordinates who used her computer effected the falsification thereof. Unfortunately for Del Rosario, the charge against her is not the criminal act of falsification but the totality of her acts as supervisor, including her negligence and want of care for company property entrusted to her.

At the very least, this nonchalance caused CW Marketing damage to its reputation and standing with banks since the individuals pretending to be in its employ, or have higher salaries, might have no real capacity to pay for purchases made with the credit card. Worse, CW Marketing may even be held liable by the credit card companies for allowing the falsifications.

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In the case of Etcuban, Jr. v. Sulpicio Lines, Inc., the amount is immaterial in determining the culpability of the employee for the fraudulent scheme on which his dismissal for loss of trust and confidence was based. Neither was the minuscule value of the financial prejudice to the employer considered.

Clearly, while the actions of Del Rosario do not point to her direct participation in the fraudulent scheme, which negatively bore on CW Marketing’s reputation and credit standing with banks, in general, and HSBC in particular, her actions evinced that she knew fully well that some of her subordinates were falsifying documents using company property.

From this point on, Del Rosario deliberately kept silent over her subordinates’ actions resulting in damage to CW Marketing. Moreover, her awareness of the identities of the culprits and her insistence that she did not herself falsify documents demonstrate her sheer apathy to CW Marketing not worthy of her position as Sales Supervisor.