G.R. No. 213128 February 7, 2018
LOURDES SCHOOL QUEZON CITY, INC., Petitioner vs. LUZ V. GARCIA, Respondent

FACTS

Petitioner Lourdes School Quezon City, Inc. (LSQC) terminated the employment of respondent Luz V. Garcia, its Chief Accountant, for loss of trust and confidence. The school formed committees to investigate irregularities concerning an oversupply of notebooks and missing proceeds from a book sale. The investigation found Garcia culpable for the oversupply, concluding she exercised supervision over the purchasing officer, was privy to the transactions, and failed in her fiduciary duty to protect the school’s financial interests by not properly advising management despite knowing of the existing surplus.
Garcia was formally charged and required to submit a written explanation. After her submission, LSQC found her explanations unsatisfactory and terminated her employment. Garcia filed a complaint for illegal dismissal. The Labor Arbiter dismissed her complaint, a decision affirmed by the National Labor Relations Commission (NLRC). However, the Court of Appeals (CA) reversed these rulings, finding the dismissal illegal. The CA held that the school failed to prove Garcia’s participation in the irregularities was willful or in bad faith, noting she was not the purchasing officer and had raised concerns about the oversupply to her superior.

ISSUE

Whether the Court of Appeals erred in reversing the NLRC and finding that LSQC failed to substantiate its dismissal of Garcia for loss of trust and confidence.

RULING

The Supreme Court denied the petition and affirmed the CA’s decision. The legal logic centers on the stringent requirements for dismissing an employee for loss of trust and confidence. For a managerial employee like Garcia, such dismissal requires proof that the breach of trust is willful, founded on actual participation in the alleged misconduct, and supported by substantial evidence. The employer bears the burden of proving the factual basis for the loss of confidence.
The Court found LSQC’s evidence insufficient. The investigation primarily attributed fault to the direct purchasing officer. While Garcia, as Chief Accountant, had oversight responsibilities, the findings did not establish that her alleged negligence or failure to act was deliberate, fraudulent, or in willful disregard of her duties. Her act of informing her superior about the existing notebook supply, even if not accompanied by a formal report, indicated a lack of fraudulent intent. Loss of trust and confidence cannot be based on mere conjecture or tenuous inferences; it must rest on a willful breach. Since LSQC failed to demonstrate Garcia’s willful misconduct or bad faith, the dismissal was unjustified. The termination was therefore declared illegal, entitling Garcia to reinstatement and full backwages.