In the Philippines, an employer can legally terminate an employee for just cause, including fraud or a willful breach of trust. This principle was affirmed in Schering Employees Labor Union (SELU) vs. Schering Plough Corporation, where the Supreme Court upheld the dismissal of an employee found to have falsified company records. This decision underscores the importance of honesty and integrity in the workplace, and provides employers with a clear legal basis for dismissing employees who violate this trust. The case highlights the balance between protecting workers’ rights and allowing companies to maintain ethical standards.

Falsified Records and Broken Trust: Can a Company Terminate an Employee?

The case began with a complaint filed by Schering Employees Labor Union (SELU) and its president, Lucia P. Sereneo, against Schering Plough Corporation. Sereneo, a field sales training manager, was terminated after being accused of misappropriating company funds and falsifying company records. SELU claimed this was an act of unfair labor practice and union busting, as Sereneo’s termination occurred after she became union president and initiated collective bargaining agreement renegotiations.

The company defended its actions by stating that Sereneo failed to adequately perform her duties as a medical representative. They further alleged that she falsified call cards, altering dates of visits to physicians and submitting false expense reports. Two memos were issued to Sereneo, directing her to explain her actions. However, she did not comply with these requests.

The Labor Arbiter initially ruled in favor of SELU, declaring that Schering Plough Corporation was guilty of unfair labor practice and ordering Sereneo’s reinstatement with backwages. This decision was then appealed to the National Labor Relations Commission (NLRC), which reversed the Labor Arbiter’s ruling. The NLRC found that Sereneo’s dismissal was justified due to her dishonesty and breach of trust. The Court of Appeals affirmed the NLRC’s decision.

The central issue before the Supreme Court was whether Sereneo’s dismissal was illegal. Article 282 of the Labor Code provides the legal framework, specifying that an employer may terminate an employee for fraud or willful breach of the trust reposed in them. This provision acknowledges the importance of trust in the employer-employee relationship and allows for termination when this trust is violated.

After reviewing the records, the Supreme Court agreed with the NLRC and the Court of Appeals, finding substantial evidence that Sereneo had falsified company call cards and misappropriated company funds.

“After a close review of the records, we sustain the findings of the NLRC, affirmed by the Court of Appeals, that she falsified company call cards by altering the dates of her actual visits to physicians. On August 27, 1997, she was found guilty of misappropriation of company funds by falsifying food receipts. These infractions show that she is dishonest. Clearly, she breached the trust reposed in her by respondents. Hence, her dismissal from the service is in order.”

The Court emphasized that Sereneo’s actions constituted a breach of the trust reposed in her by the company. Since she held a position requiring honesty and integrity, the Court held that her dismissal was a valid exercise of the employer’s right to protect its interests.

SELU also alleged that the dismissal was an act of union busting, but the Court found no evidence to support this claim. It emphasized that the union bears the burden of proving unfair labor practices with substantial evidence. The Court determined that the union failed to present any credible evidence of union busting.

The ruling underscores the importance of honesty and integrity in the employer-employee relationship. It also reaffirms the right of employers to terminate employees who engage in fraudulent or dishonest activities. For employees, it emphasizes the need to maintain ethical standards and adhere to company rules and regulations. For employers, it validates the right to protect company assets and maintain a trustworthy workforce.

The Court emphasized that while the right to self-organization is protected, this does not shield employees from disciplinary actions for just causes. The ruling in Schering Employees Labor Union vs. Schering Plough Corporation provides clarity on the boundaries of employee protection and employer rights, reinforcing the principle that breach of trust is a valid ground for termination.

FAQs

What was the key issue in this case?	The key issue was whether the dismissal of Lucia P. Sereneo, the president of Schering Employees Labor Union (SELU), was legal, specifically focusing on whether it constituted unfair labor practice or a valid termination for breach of trust.
What did the company accuse Lucia Sereneo of?	The company accused Lucia Sereneo of misappropriation of company funds, falsification, alteration, and tampering of company call cards, submission of false reports, and willful refusal to return company call cards.
What did the Labor Arbiter initially decide?	Initially, the Labor Arbiter ruled in favor of SELU, declaring Schering Plough Corporation guilty of unfair labor practice and ordering Sereneo’s reinstatement with backwages.
How did the NLRC rule on the case?	The National Labor Relations Commission (NLRC) reversed the Labor Arbiter’s decision, finding that Sereneo’s dismissal was justified due to her dishonesty and breach of trust.
What was the Supreme Court’s final decision?	The Supreme Court affirmed the NLRC’s decision, holding that Sereneo’s dismissal was legal based on the evidence of falsification of records and misappropriation of funds, which constituted a breach of trust.
What is the legal basis for terminating an employee for breach of trust?	Article 282 of the Labor Code allows an employer to terminate an employment for fraud or willful breach of the trust reposed in the employee.
What evidence did the court consider in its decision?	The court considered evidence that Sereneo had falsified company call cards by altering dates and had misappropriated company funds by falsifying food receipts.
What must a union prove in a claim of unfair labor practice?	A union must present substantial evidence to support its allegations of unfair labor practices committed by management; mere belief is insufficient.

This case emphasizes the critical role of trust in employment relationships and the legal consequences of breaching that trust through dishonest actions. The ruling serves as a reminder to employees regarding the importance of upholding ethical standards and to employers about the legal avenues available to address employee misconduct.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: SCHERING EMPLOYEES LABOR UNION (SELU) VS. SCHERING PLOUGH CORPORATION, G.R. NO. 142506, February 17, 2005