G.R. No. 211443, December 01, 2021
EAST ASIA UTILITIES CORP., ROGELIO Q. LIM, MACARIO P. BALALI, AND NOEL T. FERNANDEZ, PETITIONERS, VS. JOSELITO Z. ARENAS, RESPONDENT.

FACTS

Petitioner East Asia Utilities Corp. (EAUC) is a power distribution company, and petitioners Lim, Balali, and Fernandez are its President/General Manager, Human Resource Manager, and Plant Manager, respectively. Respondent Joselito Z. Arenas was hired by EAUC in 1994 and promoted to Shift Superintendent in 1999. On August 3, 2010, respondent discovered employee Romeo Cabili cutting a scrapped retainer ring. Respondent verbally reprimanded Cabili and warned he would report him, but did not immediately submit a written report to management. He later saw Cabili welding and painting the ring to conceal the cut. Respondent narrated the incident to several co-workers but expressed pity for Cabili, stating he did not want to formalize a complaint. On August 7, 2010, Plant Manager Fernandez learned of the incident via an anonymous text message. On August 10, respondent verbally reported to Fernandez, who instructed a written report. An Employee Behavior Action Review Panel (EBARP) was formed, which, after investigation, recommended respondent’s dismissal for late reporting, tolerating the wrongdoing, and covering up the infraction. On September 2, 2010, respondent was dismissed. Cabili resigned on September 3, 2010. Respondent filed an illegal dismissal case. The Labor Arbiter ruled for respondent, but the NLRC reversed, finding valid dismissal. The Court of Appeals then reinstated the Labor Arbiter’s decision with modification. Petitioners filed a Motion for Reconsideration with the Supreme Court after its initial Resolution dated July 3, 2019 upheld the CA’s finding of illegal dismissal.

ISSUE

Whether respondent Joselito Z. Arenas was validly dismissed on the ground of loss of trust and confidence.

RULING

The Supreme Court GRANTED the Motion for Reconsideration, SET ASIDE its prior Resolution dated July 3, 2019, and REINSTATED the NLRC Decision and Resolution which found the dismissal valid. The Court held that as a managerial employee holding a position of trust and confidence, respondent’s failure to promptly report a serious infraction (theft of company property) constituted a willful breach of that trust. His actions—delaying the report, expressing his intention not to formalize a complaint, and his knowledge of Cabili’s attempt to cover up the act without preserving evidence—demonstrated a degree of culpability beyond mere negligence. The Court ruled that his conduct was inimical to the employer’s interests and justified the loss of confidence. The employer’s right to dismiss an employee under such circumstances was upheld.