G.R. No. 185255 ; March 14, 2012
NORKIS DISTRIBUTORS, INC. AND ALEX D. BUAT, Petitioners, vs. DELFIN S. DESCALLAR, Respondent.

FACTS

Respondent Delfin S. Descallar was a Branch Manager for petitioner Norkis Distributors, Inc. In June 2002, he was suspended for 15 days for alleged unauthorized absences. While serving this suspension, an internal audit of his branch revealed several irregularities attributed to him, including refusal to accept a customer’s redemption payment, unauthorized use of a deposited motorcycle, requiring excessive payment from a customer, and improper disbursement of sales commissions. He was subsequently placed under preventive suspension and later issued a “Notice to Show Cause” which also cited his branch’s failure to meet sales and collection quotas. On August 21, 2002, petitioners terminated his employment for loss of trust and confidence and gross inefficiency.
Descallar filed a complaint for illegal dismissal. The Labor Arbiter ruled in his favor, finding the dismissal illegal. The National Labor Relations Commission (NLRC) reversed this decision, upholding the validity of the dismissal. On appeal, the Court of Appeals reinstated the Labor Arbiter’s decision, prompting petitioners to elevate the case to the Supreme Court via a petition for review on certiorari.

ISSUE

Whether the Court of Appeals erred in finding that respondent Descallar was illegally dismissed.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision. The Court held that the dismissal was illegal as petitioners failed to prove that the alleged acts constituting loss of trust and confidence were based on substantial evidence and that they were committed with willful or dishonest intent. Loss of trust and confidence, to be a valid ground for dismissal under Article 282(c) of the Labor Code, requires that the employee holds a position of trust and that the alleged breach is willful. The employer must present substantial evidence of the employee’s participation in the alleged misconduct.
The audit findings, while serious, were not sufficiently proven. For instance, the allegation regarding the unauthorized use of a motorcycle was contradicted by evidence showing the unit was properly released from the warehouse. Other charges, like disbursing commissions to unauthorized persons, were not supported by concrete proof of fraudulent intent or personal gain. Furthermore, the charge of gross inefficiency based on unmet sales quotas was invalid, as these quotas were unilaterally imposed by management without being agreed upon as a performance standard. The Court emphasized that an employee’s failure to meet such unilaterally set targets does not automatically constitute gross inefficiency warranting dismissal. Consequently, the termination was declared illegal, and the award of backwages and separation pay was upheld.