08/10/2025
LOSS OF TRUST and CONFIDENCE as a valid ground for termination of employment.
The Philippine Supreme Court recognizes loss of trust and confidence as a valid ground for terminating employment, but with specific requirements and limitations.
Here's a breakdown:
• Requirements for valid termination:
◦ The loss of trust must be based on a willful breach of trust by the employee. The breach must be done intentionally, knowingly, and purposely, without justifiable excuse.
◦ The loss of trust must be based on substantial evidence and not on the employer's whims or suspicions.
◦ The act complained of must be work-related and demonstrate that the employee is unfit to continue working for the employer.
◦ The employee must hold a position of trust and confidence.
• Managerial vs. Rank-and-File Employees:
◦ The dismissal of a managerial employee based on loss of trust is generally easier to justify than that of a rank-and-file employee. The law grants employers wider latitude when dealing with managerial employees because their roles demand utmost fidelity.
◦ For managerial employees, proof beyond reasonable doubt is not required. What is needed is a genuine and reasonable basis for the employer to believe that the employee has breached their trust.
• Due Process:
◦ Even high-ranking employees are entitled to due process and fair dealing.
• Examples from Supreme Court Cases:
◦ In one case, the Supreme Court declared the termination of a managing director invalid because it rested on unsubstantiated claims. The employer failed to identify any specific act that eroded trust.
◦ In another case, the dismissal of a shift superintendent in a power plant was upheld because he failed to report a subordinate's misconduct.
• Key Considerations:
◦ Employers cannot rely on broad accusations or generalized dissatisfaction.
◦ Management prerogatives must never be exercised arbitrarily. Dismissal affects not only livelihood but also dignity.
In summary, while loss of trust and confidence is a valid ground for termination, it must be exercised with fairness, good faith, and due regard for evidence. The specific facts and circumstances of each case are critical in determining the validity of the termination