Metro Drug Corporation vs. National Labor Relations Commission

A cashier occupies a position of trust and confidence; loss of confidence as a ground for dismissal does not require proof beyond reasonable doubt — it suffices that the employer has some basis or reasonable ground to believe the employee is unworthy of trust, and a verified shortage of entrusted funds constitutes such reasonable basis, even if criminal charges arising from the same facts are dismissed.

Respondent Tita C. Edaño served as cashier at Metro Drug Corporation’s Pasig branch, with duties encompassing the custody and remittance of cash and check collections, control of petty cash, issuance of official receipts, and preparation of payrolls. In March 1982, the company’s branch auditor discovered a shortage in the funds under her responsibility, initially computed at P30,605.38 and later increased to P66,512.43 for the period from September 1981 to February 1982. The employer placed her under preventive suspension and subsequently terminated her employment for loss of confidence.

• Employment and Position: Respondent Tita C. Edaño began working for petitioner Metro Drug Corporation as a stock clerk on November 9, 1966. She was promoted over the years and, on July 1, 1978, appointed cashier at the company’s Pasig branch. Her principal duties included controlling petty cash disbursements, accepting and depositing cash and check collections from sales agents and delivery men, issuing official receipts, computing salaries and allowances, preparing payrolls, and distributing salaries on payday.

• Discovery of the Shortage: In March 1982, a preliminary audit conducted by the company’s branch auditor revealed a shortage of P30,605.38 in funds under Edaño’s custody for the period September 1981 to February 1982. Upon conclusion of the examination, the missing amount increased to P66,512.43. The shortage corresponded to ninety-three (93) invoices covering December 20, 1980 to February 24, 1982 that were stamped “Paid” and initialed by Edaño, indicating she had received the funds. The corresponding amounts were not reflected in the EDP Collection Reports that list invoices paid and deposited by the cashier, nor in the company’s bank deposit slips.

• Preventive Suspension and Dismissal: By letter dated March 16, 1982, petitioner’s president informed Edaño that she was placed under preventive suspension pending investigation. On March 31, 1982, she received another letter stating that her employment had been terminated as of March 16, 1982.

• Criminal Complaint: On June 1, 1982, a complaint for misappropriation of the P66,512.43 was filed against Edaño with the Office of the Provincial Fiscal of Pasig, Rizal. The complaint was dismissed for lack of a prima facie showing.

• Labor Arbiter’s Findings: The Labor Arbiter found the evidence of shortages inadequate because Edaño had no participation in the preparation and verification of the EDP Collection Reports; copies of those reports were sent to the branch statistician, not to her. Nevertheless, the Arbiter held that the petitioner’s loss of confidence in Edaño’s integrity was not entirely groundless. He found the dismissal precipitate but concluded that the relationship between the parties had become so strained that reinstatement was not feasible. The Arbiter ordered payment of backwages for six months, separation pay equivalent to one-half month pay for every year of service, and unpaid wages.

• NLRC Modification: On appeal, the NLRC affirmed the finding of illegal dismissal but modified the relief by ordering reinstatement with full backwages from the date of dismissal until actual reinstatement.

• Breach of Trust and Loss of Confidence: Petitioner contended that as a cashier, Edaño occupied a position of the highest trust and confidence, and the verified shortage of P66,512.43 provided a reasonable and ample basis for loss of confidence, constituting a just cause for termination.

• Proof of the Shortage: Petitioner maintained that the shortage was established by ninety-three invoices stamped “Paid” and initialed by Edaño, the delivery men’s notebooks and salesmen’s collection reports she initialed, and bank deposit slips that did not reflect the corresponding remittances.

• Inadequacy of Accounting Procedures Not a Bar: Petitioner argued that any laxity in its accounting procedures could not defeat the employer’s right to terminate an employee occupying a position of trust on the ground of loss of confidence.

• Effect of Dismissal of Criminal Case: Petitioner asserted that the dismissal of the criminal complaint for lack of prima facie evidence did not automatically nullify the employer’s loss of confidence or bar administrative dismissal.

• Propriety of Separation Pay: Petitioner urged that, given the strained relations and animosity between the parties, the Labor Arbiter correctly denied reinstatement and awarded separation pay in lieu thereof.

• Lack of Just Cause: Edaño contended that her dismissal was without just cause, being based on mere speculations and conjectures of the company auditor, and thus constituted a deprivation of her constitutional and statutory rights to security of tenure.

• Flawed Audit Findings: She argued that the alleged shortage was not adequately proven because she had no role in preparing or verifying the EDP Collection Reports that supposedly showed discrepancies; copies were furnished to the branch statistician, not to her.

• Dismissal of Criminal Case: Edaño maintained that the dismissal of the criminal misappropriation charge for lack of a prima facie case cleared her of any wrongdoing and should eliminate any basis for loss of confidence.

• Unsatisfactory Accounting Procedures: She challenged the soundness of petitioner’s accounting and internal control procedures, implying that the shortage could be attributed to systemic deficiencies rather than her personal dishonesty.

• Validity of Dismissal: Whether the termination of Edaño’s employment on the ground of loss of confidence or breach of trust was valid.
• Appropriate Relief: Whether the NLRC correctly ordered reinstatement with full backwages instead of the Labor Arbiter’s award of separation pay and limited backwages.

• Validity of Dismissal: The dismissal was valid. A cashier occupies a position that demands the utmost trust and confidence. Loss of confidence as a just cause for termination does not require proof beyond reasonable doubt; it is enough that there is “some basis” for the employer’s loss of trust — that the employer has reasonable grounds to believe, even if not to entertain a moral conviction, that the employee is responsible for the misconduct and is unworthy of the trust demanded by the position. The existence of a verified shortage of P66,512.43 in Edaño’s accounts, supported by invoices she stamped “Paid” and initialed but which were not deposited, provided that reasonable basis. The dismissal of the criminal complaint did not automatically eliminate the loss of confidence because acquittal from criminal charges does not bar administrative action. Likewise, alleged laxity in accounting procedures could not defeat the employer’s prerogative to dismiss a cashier for breach of trust; internal controls premised on trust and confidence further underscore the fiduciary nature of the position. The termination was therefore for a just cause.

• Appropriate Relief: Reinstatement was not proper. The Labor Arbiter correctly found that the relationship between the parties had become strained due to bitter exchanges during the proceedings, resulting in animosity and ill-feeling. Under such circumstances, the award of separation pay equivalent to one-half month pay for every year of service, backwages equivalent to six months’ basic pay, and unpaid wages was the appropriate relief. The NLRC’s order of reinstatement with full backwages was set aside.

• Loss of Confidence as a Just Cause for Dismissal — Where an employee holds a position of trust and confidence, loss of confidence is a valid ground for termination. It does not require proof beyond reasonable doubt; it suffices that there is “some basis” for the loss, meaning the employer has reasonable grounds to believe the employee is responsible for the misconduct and is unworthy of the trust reposed in her. This standard is satisfied when entrusted funds are verified to be missing and the employee’s connection to the shortage is established by documentation she acknowledged or initiated.

• Cashier as a Position of Utmost Trust and Confidence — A cashier occupies a special and unique employment relationship with the employer. The position demands the highest degree of loyalty, integrity, and wholehearted trustworthiness because it involves custody, handling, and stewardship of company funds. Consequently, the employer is accorded wider latitude in terminating the employment of a cashier for acts that betray that trust.

• Effect of Acquittal on Administrative Dismissal — Acquittal from criminal charges arising from the same facts does not automatically eliminate loss of confidence as a basis for administrative termination. The quantum of evidence in criminal cases (proof beyond reasonable doubt) differs from the standard for loss of confidence (reasonable basis).

• Strained Relations as Bar to Reinstatement — Where the relationship between the employer and employee has become so strained by ill-feeling and animosity that a harmonious working environment can no longer be restored, reinstatement may be denied and separation pay awarded in lieu thereof.

• “Managerial personnel and other employees occupying positions of trust and confidence are entitled to security of tenure, fair standards of employment, and the protection of labor laws. However, the rules on termination of employment, penalties for infractions, and resort to concerted action are not necessarily the same as those for ordinary employees.”

• “A special and unique employment relationship exists between a corporation and its cashiers. More than most key positions, that of cashier calls for the utmost trust and confidence.”

• “Loss of confidence as a ground for dismissal does not entail proof beyond reasonable doubt of the employee's misconduct. It is enough that there be ‘some basis’ for such loss of confidence or that ‘the employer has reasonable grounds to believe, if not to entertain the moral conviction that the employee concerned is responsible for the misconduct and that the nature of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position.’”

• “When an employee accepts a promotion to a managerial position or to an office requiring full trust and confidence she gives up some of the rigid guaranties available to ordinary workers. Infractions which if committed by others would be overlooked or condoned or penalties mitigated may be visited with more severe disciplinary action.”

• San Miguel Corporation v. National Labor Relations Commission, 128 SCRA 180 — Followed. Breach of trust and confidence and acts of dishonesty in handling funds constitute a just cause for dismissal; laxity in accounting procedures does not hamper the right to terminate on this ground.
• Lepanto Consolidated Mining Co. v. Court of Appeals, 1 SCRA 1251 — Followed. Where an employee occupies a position of trust and confidence, acts tending to show untrustworthiness may constitute just cause for dismissal.
• Dole Philippines Inc. v. National Labor Relations Commission, 123 SCRA 673 — Followed. Loss of confidence does not require proof beyond reasonable doubt; some basis or reasonable ground suffices.
• Reyes vs. Zamora, 90 SCRA 92 and Galsim vs. PNB, 29 SCRA 293 — Cited for the definition that loss of confidence requires only that the employer has reasonable grounds to believe the employee is unworthy of trust.
• Philippine Long Distance Telephone Co. v. National Labor Relations Commission, 129 SCRA 163 — Followed. Acquittal from criminal charges does not automatically eliminate loss of confidence as a basis for administrative action.
• Reynolds Philippine Corporation v. Eslava, 137 SCRA 259 — Followed. If sufficient evidence shows breach of trust or ample reason to distrust the employee, the labor tribunal cannot deny the employer the authority to dismiss.

• Article 282 (now Article 297) of the Labor Code of the Philippines (Just Causes for Termination) — Though not explicitly cited by number, the decision applies the just cause of loss of trust and confidence for employees occupying positions of trust and confidence. The Court construed the standard of proof required to establish this cause, holding that it is satisfied by a reasonable basis rather than proof beyond reasonable doubt.

Feria (Chairman), Fernan, Alampay, and Paras, JJ., concurred.