G.R. No. 169523; June 16, 2010
LIMA LAND, INC., LEANDRO JAVIER, SYLVIA DUQUE, and PREMY ANN BELOY, Petitioners, vs. MARLYN CUEVAS, Respondent.

FACTS

Petitioner Lima Land, Inc. discovered irregularities in its “arriendo” or lease collections from its coconut lands in Batangas. An investigation panel was formed, which found that collections after September 1999 were not remitted to the head office. Respondent Marlyn Cuevas, the Finance and Administration Manager, was charged with failure to exercise reasonable diligence in monitoring the unremitted collections, approving a false reimbursement, and failing to institute sufficient accounting standards. After administrative proceedings where she submitted a written reply but failed to attend scheduled hearings, she was dismissed for loss of trust and confidence.
Cuevas filed a complaint for illegal dismissal. The Labor Arbiter dismissed her complaint, finding the dismissal valid. On appeal, the National Labor Relations Commission (NLRC) reversed the decision, declaring the suspension and dismissal illegal and ordering reinstatement with full backwages and benefits. The Court of Appeals affirmed the NLRC’s ruling, prompting the petitioners to elevate the case to the Supreme Court via a petition for review on certiorari.

ISSUE

Whether the Court of Appeals erred in affirming the NLRC’s decision that Cuevas was illegally dismissed on the ground of loss of trust and confidence.

RULING

The Supreme Court denied the petition and affirmed the rulings of the NLRC and the Court of Appeals. The legal logic is anchored on the principle that for dismissal based on loss of trust and confidence to be valid, the breach of trust must be willful, founded on clearly established facts, and the employee concerned must hold a position of trust. The Court found that Cuevas, as Finance and Administration Manager, was indeed a fiduciary employee. However, the charges against her pertained to alleged negligence and poor judgment in supervision, not to a deliberate or willful act of dishonesty or breach of trust.
The Court emphasized that loss of trust and confidence cannot be based on mere conjectures or suspicions. The petitioners failed to present substantial evidence proving that Cuevas participated in the fraudulent scheme or acted in bad faith. Her alleged failure to exercise diligence was a matter of unsatisfactory performance, not an intentional breach justifying dismissal for loss of confidence. The employer’s burden to prove just cause was not discharged. Consequently, her dismissal was illegal, warranting reinstatement with backwages and other benefits.