The Supreme Court affirmed an employer’s right to dismiss an employee for violating company rules and breaching the trust reposed in them, particularly when the employee holds a supervisory position. This ruling underscores that while labor laws protect employees, they also recognize the employer’s prerogative to manage its affairs and enforce company policies. It serves as a reminder to employees in positions of trust about the importance of upholding company rules and maintaining the confidence placed in them.

When Trust is Broken: Examining the Boundaries of Employee Conduct and Employer’s Disciplinary Power

The case revolves around Zuelo Apostol, a Motor Pool Over-All Repairs Supervisor at Central Azucarera de Bais (CAB), who was terminated for using company equipment and facilities to repair private vehicles. The central legal question is whether CAB validly dismissed Apostol, considering both procedural and substantive due process requirements, and whether the penalty of dismissal was commensurate to the offense committed.

The controversy began when a security guard discovered Apostol using company resources, including his company-provided house and CAB’s equipment, to repair personal vehicles. CAB issued a memorandum to Apostol, citing a violation of the company’s Rules of Discipline, specifically Rule 9, which prohibits the unauthorized use of company materials or equipment for private work. Apostol submitted a written explanation admitting to repairing his vehicle but claimed he only used a trouble light and his personal acetylene and oxygen tanks. Subsequently, CAB terminated Apostol’s employment. This action led to a legal battle, with Apostol claiming constructive dismissal, illegal suspension, and unfair labor practices, among other grievances.

The Labor Arbiter initially dismissed Apostol’s complaint, finding that CAB had complied with due process and had reasonable grounds for dismissal. However, the National Labor Relations Commission (NLRC) reversed this decision, arguing that Apostol should have been given a hearing and that the dismissal was too harsh a penalty. The Court of Appeals (CA) affirmed the NLRC’s decision, stating that while CAB had met the procedural requirements, Apostol’s violation was not grave enough to warrant dismissal. The petitioners then elevated the case to the Supreme Court, seeking a reversal of the CA’s decision.

The Supreme Court emphasized that while it generally defers to the factual findings of labor tribunals, it can make its own determination when there are conflicting findings. It found that CAB had indeed complied with procedural due process by issuing two notices to Apostol: one informing him of the charges and requiring an explanation, and another notifying him of the decision to terminate his employment. The Court reiterated that a formal hearing is not always mandatory, as long as the employee is given a meaningful opportunity to respond to the charges.

The test for the fair procedure guaranteed under Article 277(b) [now, Article 292(b)] cannot be whether there has been a formal pretermination confrontation between the employer and the employee. The “ample opportunity to be heard” standard is neither synonymous nor similar to a formal hearing.

Regarding substantive due process, the Court agreed that Apostol had violated company rules by using CAB’s equipment and facilities for personal purposes. The critical issue, however, was whether this violation justified dismissal. The Court referred to Article 297(c) of the Labor Code, which allows for termination in cases of “fraud or willful breach by the employee of the trust reposed in him.” Citing precedent, the Court noted that employers have the right to dismiss employees, especially those in positions of responsibility, for loss of trust and confidence.

Following the ruling in The Coca-Cola Export Corporation v. Gacayan, the employers have a right to impose a penalty of dismissal on employees by reason of loss of trust and confidence. More so, in the case of supervisors or personnel occupying positions of responsibility, loss of trust, justifies termination of employment.

The Court highlighted that Apostol, as a motor pool supervisor, held a position of trust and confidence, responsible for the custody and care of CAB’s equipment. His unauthorized use of company resources constituted a breach of this trust, justifying his dismissal. The Court emphasized that this violation, especially coming from a supervisor, had a significant impact on the company’s operations and management. Because of this, the employer’s decision to terminate the employment was valid.

Given the validity of Apostol’s dismissal, the Court concluded that he was not entitled to backwages or separation pay. It emphasized that social justice is not intended to protect those who have acted wrongly or abused their positions. This ruling serves as a stern reminder that employees in positions of trust must uphold company policies and maintain the confidence placed in them, lest they face severe consequences, including termination.

FAQs

What was the key issue in this case?	The key issue was whether Central Azucarera de Bais (CAB) validly dismissed Zuelo Apostol, a motor pool supervisor, for using company equipment and facilities for personal use. The Court examined whether the dismissal met the requirements of both procedural and substantive due process.
What is procedural due process in termination cases?	Procedural due process requires that an employee be given notice of the charges against them and an opportunity to be heard. The Supreme Court clarified that a formal hearing is not always required, as long as the employee has a meaningful chance to respond.
What is substantive due process in termination cases?	Substantive due process means that there must be a just cause for the termination, as defined by the Labor Code. This can include serious misconduct, willful disobedience, or breach of trust.
Why was Apostol’s position considered one of trust and confidence?	Apostol, as the motor pool over-all repairs supervisor, was responsible for the custody, handling, and protection of CAB’s equipment. His role involved significant discretion and trust, making him a key employee in the company’s operations.
What was the company rule that Apostol violated?	Apostol violated Rule 9 of CAB’s Rules of Discipline, which prohibits the unauthorized use of company materials or equipment for private work. The rule aimed to prevent employees from misusing company resources for personal gain.
What is the significance of an employee’s admission of wrongdoing?	In this case, Apostol admitted to repairing his vehicle using company resources, which was a significant factor in the Court’s decision. The admission underscored his violation of company policy and his breach of the trust reposed in him.
Can an employer dismiss an employee for loss of trust and confidence?	Yes, Article 297(c) of the Labor Code allows for termination in cases of breach of trust. However, this usually applies to employees in positions of trust and requires that there be an act that justifies the loss of trust.
What is the impact of this ruling on employees in supervisory roles?	This ruling emphasizes the higher standards of conduct expected from employees in supervisory roles. They are held to a stricter standard of accountability and can be terminated for actions that might not warrant dismissal for lower-level employees.
Are employees entitled to backwages and separation pay if they are validly dismissed?	No, employees who are validly dismissed for just cause are not entitled to backwages or separation pay. These benefits are typically awarded only in cases of illegal or unjustified dismissal.

The Supreme Court’s decision in this case reinforces the importance of upholding company policies and maintaining the trust reposed in employees, especially those in positions of responsibility. It serves as a clear message that violations of company rules, particularly when coupled with a breach of trust, can lead to valid termination of employment.

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: CENTRAL AZUCARERA DE BAIS AND ANTONIO STEVEN L. CHAN VS. HEIRS OF ZUELO APOSTOL, G.R. No. 215314, March 14, 2018