The principles

§ Just causes for termination

§ Theft of company property is akin to serious misconduct or willful disobedience by the employee
§ Serious Misconduct as a just cause for the dismissal of an employee
§ Loss of trust and confidence as a valid ground for dismissal
§ Guidelines for the application of the doctrine of loss of confidence

FIRST DIVISION
G.R. No. 226089, March 4, 2020
COCA-COLA FEMSA PHILIPPINES, INC., 
v. JESSE L. ALPUERTO
REYES, J. JR., J.:
Respondent Alpuerto worked for petitioner Coca-Cola Bottlers Phils., Inc. as a Finance Clerk,
and was assigned at petitioner’s warehouse. When respondent was on leave due to a trip to
Batangas, respondent, together with his family, went to petitioner’s warehouse to pick up nine
cases of coke zero products that were classified as bad orders since he was told by Rodel Padua
that it was alright to drink the said soft drinks.
Later, he was required to explain why he should not be subjected to disciplinary action or
dismissed for violation of company's policies and rules, particularly for theft or unauthorized taking
of funds or property.
Despite respondent’s explanation and after hearing, petitioner dismissed respondent for theft
of company products, serious misconduct and loss of trust and confidence.
Respondent filed for illegal dismissal and unfair labor practices against petitioner.
The Labor Arbiter ruled dismissed the complaint and upheld the legality of respondent's
dismissal. The National Labor Relations Commission affirmed the Labor Arbiter’s ruling.
The Court of Appeals reversed the decision of the NLRC. Hence, this petition.

§ Just causes for termination

Q. What are the just causes for termination?
Article 282 (now Article 297) of the Labor Code enumerates the just causes for termination:
Art. 282. Termination by employer. An employer may terminate an employment for any of the
following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of
his employer or representative in connection with his work;
b. Gross and habitual neglect by the employee of his duties;
c. Fraud or willful breach by the employee of the trust reposed in him by his employer
or duly authorized representative;
d. Commission of a crime or offense by the employee against the person of his
employer or any immediate member of his family or his duly authorized representatives; and
e. Other causes analogous to the foregoing.
 Respondent's dismissal was too harsh a penalty for the infraction he committed. Respondent
was dismissed by petitioner on the ground of theft, serious misconduct, and willful breach of trust
and confidence. We agree with the CA that respondent's dismissal was too harsh a penalty for the
infraction he committed. Thus, such dismissal is invalid. While petitioner's company rules provide for
the penalty of dismissal in case of theft or unauthorized taking of company property, "such cannot
preclude the State from inquiring whether the strict and rigid application or interpretation thereof
would be harsh to the employee."
§ Theft of company property is akin to serious misconduct or willful disobedience by the
employee
Q. Is theft of company property a just cause for termination of employment?
In Caltex Philippines, Inc. v. Agad (G.R. No. 162017 : April 23, 2010), it was held that theft of
company property is akin to serious misconduct or willful disobedience by the employee of the
lawful orders of his employer in connection with his work, which is a just cause for termination of
employment.
§ Serious Misconduct as a just cause for the dismissal of an employee
Q. What constitutes misconduct to justify dismissal?
In Nagkakaisang Lakas Ng Manggagawa sa Keihin v. Keihin Philippines Corp. (G.R. No.
171115, August 9, 2010), the Court laid down what constitutes misconduct to justify dismissal:
Misconduct is defined as "the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere
error in judgment." "For serious misconduct to justify dismissal under the law, "(a) it must be serious,
(b) must relate to the performance of the employee's duties; and (c) must show that the employee
has become unfit to continue working for the employer."
Taking into consideration the particular circumstances of this case, the Court is of the view
that respondent's act of taking company property without compliance with the proper procedure may
not be considered as tantamount to serious misconduct to warrant dismissal. As aptly found by
the CA, the following circumstances negate a finding that respondent was impelled by a wrongful
intent: (1) he asked the checker a day before he took them if he can have some bad orders; (2) he
brought his family with him when they took the soft drinks; (3) he replaced the old bottles with new
bottles; (4) he picked up the beverages despite knowing that the security guard will note it down;
(5) the beverages taken were for his family trip in Batangas; and (6) he readily admitted to the taking
when he was required to explain. Surely, if respondent's taking wasdriven by a wrongful intent, he
would not have taken the Coke Zeros in this case knowing very well that other people would have
easily noticed what he was doing. Hence, rather than being impelled by wrongful intent, the Court
finds that respondent's act was a mere exercise of bad judgment, considering that he believed that
the verbal permission given by Padua and Guamos to drink the Coke Zero products were sufficient
for him to be able to take them out for the family trip.
§ Loss of trust and confidence as a valid ground for dismissal
Q. What are the parameters so that loss of trust and confidence may be invoked as a
valid ground for dismissal?
As regards loss of trust and confidence, in Bravo v. Urios College (G.R. No. 198066, June 07,
2017), the Court discussed the parameters when such may be invoked as a valid ground for
dismissal, to wit:
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.
There are two (2) types of positions in which trust and confidence are reposed by the
employer, namely, managerial employees and fiduciary rank-and-file employees. Managerial
employees are considered to occupy positions of trust and confidence because they are "entrusted
with confidential and delicate matters." On the other hand, fiduciary rank-and file employees refer to
those employees, who, "in the normal and routine exercise of their functions, regularly handle
significant amounts of [the employer's] money or property." Examples of fiduciary rank-and-file
employees are "cashiers, auditors, property custodians," selling tellers, and sales managers. It must
be emphasized, however, that the nature and scope of work and not the job title or designation
determine whether an employee holds 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.
As to the first requisite, the question of whether an employee "occupied a position of trust and
confidence or was routinely charged with the care and custody of the employer's money or property"
is factual. Notably, while the LA and the NLRC upheld the validity of respondent's dismissal for
causes invoked by petitioner (including lost of trust and confidence or willful breach of trust and
confidence), it did not discuss in detail whether respondent's position as Finance Clerk is one of
trust and confidence. The CA, on the other hand, also did not discuss this particular point and
instead focused the discussion on the taking of the Coke Zero products. Nevertheless, respondent
does not appear to dispute the petitioner's assertion that the position of Finance Clerk is one of trust
and confidence. From the pleadings submitted by the parties as well as the findings of the labor
tribunals and the CA as to the nature of the respondent's work and functions as a Finance Clerk,
this Court concludes that respondent occupied a position of trust and confidence. As mentioned, he
was positioned at the gates of the warehouse and his duties, among others, involved goods receipt
inventory, full goods verification at the office's gate, and encoding and recording duties of assets
trafficked in and out of said warehouse. He also oversaw that all levels of control and procedures
regarding company assets were in order. Furthermore, his specific tasks revealed that aside from
conducting physical checking, inventory, and recording, he was also tasked with monitoring and
directing the movements of assets to various locations and with safeguarding company assets from
unauthorized removal. In the case, however, respondent falls within the second class of positions of
trust and confidence, namely, fiduciary rank-and-file employees, since in the course of his work, he
regularly handled significant amounts of the employer's property and was entrusted with its care and
protection.
As to the second requisite, respondent argues in his Comment to the present Petition that
there can be no such breach, much less a willful one, when he acted in good faith when he took the
Coke Zero products. We find merit in respondent's assertion and hold that the second requisite for
loss of trust and confidence is not present considering that from the circumstances of this case, the
breach of trust was not willful.
§ Guidelines for the application of the doctrine of loss of confidence
Q. What are the guidelines for the application of the doctrine of loss of confidence?
In Inocente v. St. Vincent Foundation For Children and Aging, Inc. (G.R. No. 202621, June 22,
2016), we stated that the loss of trust and confidence must be through a willful breach thereof:
Significantly, loss of confidence is, by its nature, subjective and prone to abuse by the
employer. Thus, the law requires that the breach of trust - which results in the loss of confidence -
must be willful. The breach is willful if it is done intentionally, knowingly and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, or
inadvertently.
We clarify, however, that it is the breach of the employer's trust, not the specific employee
act/s which the employer claims caused the breach, which the law requires to be willful, knowingly
and purposefully done by the employee to justify the dismissal on the ground of loss of trust and
confidence.
In Vitarich Corp. v. NLRC, we laid out the guidelines for the application of the doctrine of loss
of confidence, namely:(1) the loss of confidence should not be simulated; (2) it should not be used
as a subterfuge for causes which are improper, illegal or unjustified; (3) it should not be arbitrarily
asserted in the face of overwhelming evidence to the contrary; and (4) it must be genuine, not a
mere afterthought to justify earlier action taken in bad faith. In short, there must be an actual breach
of duty which must be established by substantial evidence.
Although it is already not disputed that he failed to comply with the proper procedure for the
taking out of the Coke Zeros, the circumstances of the case negate a finding that his infraction
constitutes a willful breach of the trust reposed in him by petitioner. The Court finds that
respondent's infraction was brought about by carelessness rather than by willful and intentional act
of stealing from his employer. His failure to comply with proper procedures was brought about by his
erroneous belief that the actions he had undertaken (such as securing permission from Padua and
Guamos, whom he regarded as "big bosses") were enough for him to validly take the Coke Zeros in
question.
Of course, this is not to say that respondent was entirely faultless in this case. As correctly
held by the CA, while respondent committed an act which should not go unpunished, the penalty of
dismissal was too harsh and disproportionate. Infractions committed by an employee should merit
only the corresponding penalty demanded by the circumstance, and the penalty must be
commensurate with the act, conduct or omission imputed to the employee. Hence, the Court holds
that a lesser penalty would have been sufficient for the infraction he committed, taking also into
consideration that he had no previous derogatory record in his 11 years in petitioner's employ. While
this Court is aware that there is jurisprudence to the effect that "in cases of breach of trust and loss
of confidence, the length of time, if considered at all, shall be taken against the employee, x x x" for
'[u]nlike other just causes for dismissal, trust in an employee, once lost is difficult, if not impossible,
to regain," such must be understood to mean that when loss of trust and confidence has been duly
established, length of service may be considered as an aggravating circumstance instead. Such is
not applicable in this case since as already discussed, the second requisite for loss of trust and
confidence is lacking.