G.R. No. 111173 September 4, 1996
PHILIPPINE SAVINGS BANK, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and VICTORIA T. CENTENO, respondents.

FACTS

Private respondent Victoria T. Centeno was an assistant cashier at petitioner bank’s Taytay branch. From September to November 1984, she acted as branch cashier. Upon the regular cashier’s return, Centeno turned over the cash accountability. An audit later revealed a P15,000.00 shortage incurred on the turnover date, November 16, 1984. The bank alleged Centeno falsified a deposit slip to conceal the shortage.
The bank issued a memorandum on January 7, 1985, charging Centeno with deliberate falsification of documents related to the shortage and placing her under preventive suspension. She requested and was granted an extension to file her explanation but ultimately failed to submit one. Consequently, on February 4, 1985, the bank dismissed her for loss of trust and confidence, citing her failure to explain as tantamount to an admission of guilt. Centeno filed a complaint for illegal dismissal.

ISSUE

Was the dismissal of Victoria T. Centeno for loss of trust and confidence valid and lawful?

RULING

No, the dismissal was illegal. For a dismissal based on loss of trust and confidence to be valid, the breach of trust must be willful and founded on substantial evidence. The employer must establish the employee’s participation in the alleged misconduct with clear and convincing evidence. In this case, the bank’s evidence was insufficient and merely circumstantial.
The Supreme Court found no substantial proof that Centeno misappropriated the funds or falsified documents. The alleged falsification of the cash proof sheet was not conclusively established, and the bank failed to prove Centeno personally benefited from the shortage. Her 19 years of unblemished service militated against a finding of guilt based on weak circumstantial evidence. Furthermore, her failure to submit an explanation to the charges, while noted, cannot by itself constitute proof of guilt or serve as a substitute for the required substantial evidence of misconduct. The dismissal, therefore, lacked just cause.
Regarding due process, while the bank complied with the rudimentary requirements of notice and hearing, the fundamental flaw was the absence of a valid cause for termination. Consequently, the NLRC’s decision finding illegal dismissal was affirmed. Centeno was entitled to reinstatement without loss of seniority rights and to payment of backwages, which, under the law applicable at the time of her dismissal in 1985, was correctly limited by the NLRC to three years.