The Supreme Court in Rexie A. Hormillosa v. Coca-Cola Bottlers Phils., Inc., G.R. No. 198699, October 9, 2013, affirmed that an employee holding a position of trust can be validly dismissed for a willful breach of that trust. The ruling clarifies the grounds for termination under Article 282 of the Labor Code, emphasizing the importance of honesty and integrity in employment, especially when handling company assets.

Coca-Cola Route Salesman’s Falsified Invoices: Was Dismissal Justified?

This case revolves around Rexie A. Hormillosa, a route salesman for Coca-Cola Bottlers Phils., Inc. (CBPI). Hormillosa’s duties involved selling products, collecting payments, and issuing sales invoices. An audit revealed discrepancies, including fictitious sales and falsified invoices. CBPI terminated Hormillosa’s employment based on these findings. Hormillosa then filed a complaint for illegal dismissal, claiming union harassment. The Labor Arbiter initially ruled in favor of CBPI, but the National Labor Relations Commission (NLRC) ordered a remand. The Labor Arbiter then ruled Hormillosa was illegally dismissed due to lack of evidence presented by CBPI. The NLRC affirmed this decision, prompting CBPI to elevate the case to the Court of Appeals (CA). The CA reversed the NLRC’s decision, finding Hormillosa’s dismissal valid, leading to the Supreme Court appeal.

The core legal issue is whether CBPI had just cause to terminate Hormillosa’s employment. Article 282 of the Labor Code provides the grounds for termination by an employer. Of particular relevance is paragraph (c), which allows termination for “fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.” The concept of loss of trust and confidence is central to this provision. It applies to employees in positions where trust is paramount, such as those handling significant amounts of money or property.

The Supreme Court addressed whether the requirements for a valid dismissal on the ground of loss of trust and confidence were met in Hormillosa’s case. Citing Bristol Myers Squibb (Phils.), Inc. v. Baban, the Court reiterated that the employee must hold a position of trust, and there must be an act justifying the loss of trust. The Court emphasized that the loss of trust must be based on a willful breach, founded on clearly established facts, although proof beyond reasonable doubt is unnecessary. Willful breach of trust implies that the act was done intentionally, knowingly, and purposely, without justifiable excuse.

The Court determined that Hormillosa, as a route salesman, indeed occupied a position of trust. His responsibilities included handling money and property, thus requiring a high degree of confidence from CBPI. The falsified invoices submitted by Hormillosa constituted substantial evidence of a breach of this trust. The evidence showed that Hormillosa issued sales invoices to Arnold Store, a store not registered with CBPI, using the account of Virgie Bucaes, a registered customer. By doing so, he misrepresented that the account was Bucaes’ when it was actually for an unauthorized entity. The Court emphasized,

As earlier stated, the evidence in this regard was supplied by Hormillosa himself when he submitted copies of the sales invoices. For this reason, the stipulation under Section 2(d), Article III of the CBA, which provides that the company shall coordinate with the Union’s authorized representative to witness the account verification that the company would conduct with respect to questionable accounts issued to Company customers by route salesman or relief salesmen under investigation, is not applicable.

Building on this principle, the Supreme Court also considered Hormillosa’s lack of good faith in dealing with his employer. When asked to provide a written explanation for the discrepancies, Hormillosa falsely claimed to have already filed a case against CBPI for unfair labor practice (ULP). The Court observed that his act of “filing a complaint” to avoid the investigation only reinforced CBPI’s distrust. The court noted that the investigation would have been the appropriate venue for him to clarify the accounts he managed and refute the findings of the audit team. However, he declined this opportunity, further eroding the company’s trust in him.

The Supreme Court also addressed the lower courts’ decisions regarding separation pay. Citing Central Philippines Bandag Retreaders, Inc. vs. Prudecio J. Diasnes, the Court clarified that separation pay is generally not awarded when termination is based on just causes under Article 282 of the Labor Code. Separation pay is typically granted only when termination results from factors such as labor-saving devices, redundancy, retrenchment, cessation of business, or employee illness. Since Hormillosa’s dismissal was due to a willful breach of trust, he was not entitled to separation pay.

The Court upheld the CA’s decision, emphasizing that Hormillosa’s actions constituted a willful breach of the trust reposed in him by CBPI, thereby justifying his dismissal. Because Hormillosa’s employment was justly terminated, he was not entitled to backwages or separation pay. This case underscores the importance of honesty and integrity in employment, especially in positions involving the handling of company assets. Employees in such roles must adhere to company rules and regulations and act in good faith in their dealings with their employers.

FAQs

What was the key issue in this case?	The key issue was whether Coca-Cola had just cause to terminate Rexie Hormillosa’s employment due to a breach of trust, based on falsified sales invoices and other discrepancies. The court assessed whether these actions met the legal requirements for termination under Article 282 of the Labor Code.
What is ‘loss of trust and confidence’ as a ground for dismissal?	‘Loss of trust and confidence’ is a valid ground for dismissing an employee when the employee holds a position of trust and has committed an act that justifies the employer’s loss of confidence. This ground requires that the breach of trust be willful and based on clearly established facts.
What constitutes a ‘willful breach of trust’?	A ‘willful breach of trust’ is an act that is done intentionally, knowingly, and purposely, without justifiable excuse. It demonstrates a deliberate violation of the trust placed in the employee by the employer, justifying termination.
Was Hormillosa considered to be in a position of trust?	Yes, as a route salesman for Coca-Cola, Hormillosa was considered to be in a position of trust. His duties included handling significant amounts of money and company property, which required a high degree of confidence from his employer.
What evidence did Coca-Cola present against Hormillosa?	Coca-Cola presented evidence of falsified sales invoices, including instances where Hormillosa issued invoices to unregistered stores using the accounts of registered customers. They also cited Hormillosa’s lack of good faith in dealing with the company during the investigation.
Why was Hormillosa denied separation pay?	Hormillosa was denied separation pay because his dismissal was based on a just cause, specifically a willful breach of trust. Separation pay is typically not awarded in cases where the employee is terminated for a just cause under Article 282 of the Labor Code.
What is the significance of Article 282 of the Labor Code?	Article 282 of the Labor Code enumerates the just causes for which an employer may terminate an employee. These include serious misconduct, willful disobedience, gross neglect of duty, fraud or willful breach of trust, and commission of a crime.
What was the Court of Appeals’ ruling in this case?	The Court of Appeals reversed the NLRC’s decision, finding that Hormillosa’s dismissal was valid due to a willful breach of trust. The CA emphasized the substantial evidence presented by Coca-Cola, which the NLRC had disregarded.
How does this case relate to union activities?	Hormillosa initially claimed that his dismissal was due to union harassment, but the court found no evidence to support this claim. The court focused on the falsified invoices and breach of trust as the primary reasons for the dismissal, unrelated to his union activities.

This case serves as a reminder of the importance of trust and integrity in the workplace. Employers have the right to terminate employees who breach that trust, especially when the employees are responsible for handling company assets. The ruling reinforces the legal grounds for termination under the Labor Code and provides clarity on the concept of loss of trust and confidence.

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: Rexie A. Hormillosa v. Coca-Cola Bottlers Phils., Inc., G.R. No. 198699, October 09, 2013