Loss of trust and confidence to be a valid cause for dismissal must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established but proof beyond reasonable doubt is not necessary.

Thus, the SC held as follows:

The Peninsula Manila vs. Jara

G.R. No. 225586, July 29, 2019

Willful breach of trust; Loss of trust and confidence; Position of trust; Second class of position of trust


Respondent Edwin Jara (Jara) worked at Petitioner The Peninsula Manila (Peninsula) from 2002 until his dismissal in 2011. He became its captain waiter in 2009. He was terminated in 2011.

Assigned then to the closing shift of Jara’s buffet restaurant Escolta, Jara was tasked to tally the actual cash count with the cash transaction receipts and match the same with the data in the micros system, a touch-screen computer system which records all transactions in a  particular outlet in the hotel, including cash and credit card payments.

On said date, around 11:45 in the evening, Jara discovered a discrepancy between the actual cash on hand and cash transaction receipts. He found that there was an error in the entries for cash settlement of Table 32 – the sales receipt reflected payment of P7,113.08. In the official receipt of the cash register, however, the payment reflected was only P613.00, while in the tape receipt (transaction receipt), the amount of P7,113.08 was reflected as payment. Due to the discrepancy, Jara had an overage of P6,500.00 cash.

Assistant Supervisor Michelle Jardines tried to correct the error but there was still an excess cash on hand. Consequently, Jara informed his supervisor Jimmy Tabamo of his failure to balance the actual cash on hand and the transaction receipts. Per Tabamo’s incident report, he instructed Jara to double check all his cash transactions and inform him if the problem about the account balances would persist.

By 12:30 in the morning, Tabamo allegedly asked Jara if the cash transactions had already been reconciled. Jara answered in the affirmative, submitted his report, and remitted the cash collections. In truth, however, Jara was unable to reconcile the excess cash on hand with the cash transaction receipts but he did not turn over the excess cash of P6,500.00 and kept the same in his office locker. What Jara did to remedy the discrepancy was post the P613.00 amount appearing on the tape receipt, instead of the entire P7,113.08 appearing in the sales receipt. This way, the cash count tallied with the data posted in the micros system.

The following day, July 23, was Jara’s birthday so he did not report for work. He, however, dined at the Escolta. On July 24, Jara again did not report for work because it was his day-off. When he reported for work on July 25, he informed the hotel’s internal auditor about the overage of P6,500.00. The latter advised Jara to surrender the excess cash to his supervisor. Instead of complying with this directive, Jara turned over the money to the captain waitress instead, for safekeeping in the safety deposit box.

Peninsula issued a Memorandum to Explain, requiring Jara to explain why he should not be sanctioned for dishonesty for: (1) failing to promptly inform his supervisor of the overage of P6,500.00; (2) for misrepresenting that he had already reconciled the cash transaction records; and (3) falsifying the tape receipt to be able to balance his cash settlement report.

In his written explanation, Jara stated that he posted the P613.00 payment because he thought that there was only a micros error due to the tax exemption on the original check of Table 32. Jara, however, admitted that he kept the overage of P6,500.00 in his office locker and failed to inform his supervisor of such overage.

Later, Jara was informed of his termination for misappropriation or falsification of hotel receipts and dishonesty in violation of the Hotel’s Code of Discipline. Consequently, Jara filed a complaint for illegal dismissal against Jara.

LA Ruling:

The Labor Arbiter (LA) found Jara to have been illegally dismissed.

Jara was ordered to reinstate Jara and pay him full backwages, proportionate 13th month pay, accrued service charges, and other monetary benefits under the existing CBA. The labor arbiter found that Jara was not motivated by any dishonest intention and his mistake was due to a lapse in judgment.

NLRC Ruling:

On appeal, the NLRC reversed. It found the dismissal valid, resulting from Jara’s dishonesty and misrepresentation.

CA Ruling:

On petition for certiorari, the Court of Appeals (CA) reversed.

The CA held that Jara’s lapses cannot be considered grave, let alone, indicative of intentional or willful breach of his employer’s trust. Peninsula’s motion for reconsideration was denied under Resolution.


Whether or not a rank-and-file employee tasked to handle significant amounts of money from sales holds a position of trust

Whether or not the irreconcilable cash count and transaction receipts that the employee deliberately made it appear that the same tallied and even misrepresented such fact to his supervisor constitutes loss of trust and confidence

SC Ruling:

The SC granted the petition.

The SC held that there are two (2) classes of positions of trust. The first class consists of managerial employees, or those vested with the powers or prerogatives to lay down management policies and to hire, transfer suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions. While the second class consists of cashiers, auditors, property custodians, etc. or those who, in the normal and routine exercise of their functions, regularly handle significant amounts of money or property.

As for the first requirement, Jara indisputably comes within the second class of employees as he is tasked to handle significant amounts of money from sales in Peninsulas’ restaurant Escolta. Jara cannot claim otherwise for he would not be entrusted with the duty to balance the sales transactions and actual cash on hand from restaurant sales if he did not have the trust of the management.

Loss of trust and confidence to be a valid cause for dismissal must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established but proof beyond reasonable doubt is not necessary. Here, record bears significant details pointing to the willfulness of Jara’s action showing the breach of the trust reposed in him by Peninsula.

That due to the irreconcilable cash count and transaction receipts, Jara deliberately made it appear that the same tallied and even misrepresented such fact to his supervisor. To be able to do this, Jara tampered with the transaction and sales receipts to come up with a balanced cash sales record at the end of his shift. This is pure dishonesty and clearly a violation of the trust reposed in him by his employer.

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By willful, it is meant that the action was voluntary and intentional. To be sure, Jara never claimed that he was forced to do what he did. He committed the dishonest act of his own free will and despite knowledge that he may face liability therefor, even the extreme penalty of losing his job. He maintains that he kept the money in his office locker because in a previous similar incident involving a hotel employee, the employee was excused for keeping the money and turning it over only afterwards.

As pointed out by Peninsula, however, the employee involved in that incident was exculpated by the Court of Appeals because his supervisor had knowledge of the excess cash on hand and was even the one who actually instructed the captain waiter to safekeep the overage in the meantime. In Jara’s case, there was no such instruction. On the contrary, the supervisor himself was completely unaware that Jara did not remit the complete cash sales for the day and had even kept the money in his locker.

It is of no moment that Jara did not actually cart away the money or misappropriated it. The breach of Jara’s trust occurred at the precise moment that Jara tampered with the sales record and misrepresented to his supervisor that he was able to balance the cash transactions with the cash on hand. Keeping of the money in Jara’s office locker was just a result of his dishonest act.

More, Jara did not immediately report the overage which he kept in his custody. He waited for two days before finally informing Jara’s internal auditor about the incident. This casts doubt on Jara’s real intention and compromised his alleged good faith. Notably, he was in the hotel the day after the incident in question for he dined at the Escolta to celebrate his birthday. And on the following day was his scheduled day off from work. He, thus, had, enough time to report to his supervisor about the unreconciled cash sales record. He did not. He cannot bank on his length of service and supposed pristine track record with the company to save the day for him. On the contrary, as a senior employee, Jara should have been an example to the hotel’s younger staff members for honesty and integrity. Jara failed in this respect.

We are mindful of the fact that loss of confidence as a ground for dismissal is prone to abuse because of its subjective nature. It is necessary that the loss of confidence must be founded on clearly established facts sufficient to warrant the employee’s separation from work. Hence, when the breach of trust or reason for the loss of confidence is clearly borne by the records, as in this case, the right of the employer to dismiss an employee based on this ground must be upheld.

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