Loss of confidence arising from fraud or willful breach of trust by employee of the trust reposed in him by his employer or his duly authorized representative is a just cause for termination of employment under Article 282 of the Labor Code of the Philippines.

Fraud Meaning.

Fraud is any act, omission, or concealment which involves a breach of legal duty, trust, or confidence justly reposed and is injurious to another.

Breach of Trust Meaning.

Breach of trust refers to the violation by the employee of the trust and confidence reposed in him by his employer or duly authorized representative.

Elements of Loss of Confidence.

To determine whether the termination of employment based on loss of confidence is justified, the following elements are generally considered:

  1. Whether the fraud or breach of trust is in connection to the employee’s work; and
  2. Whether the employee concerned is holding a position of trust and confidence.

Fraud or Breach must be in Connection to Employee’s Work.

To constitute just cause, fraud or breach of trust must be committed in connection with the employee’s work or related to the performance of the employee’s functions.

Employee must Hold Position of Trust and Confidence.

The basic premise for dismissal on the ground of loss of confidence is that the employee concerned holds a position of trust and confidence. It is the breach of this trust that results in the employer’s loss of confidence in the employee. (See Nat’l Sugar Refineries Corp. vs. NLRC, G.R. No. 122277 February 24, 1998.)

Thus, loss of confidence ideally applies only to cases involving employee occupying positions of trust and confidence, e.g., managerial employees, and those situations where the employee is routinely charged with the care and custody of the employer’s money or property, e.g., cashiers, auditors, property custodian, etc.

Title not Conclusive Indicator of Trust and Confidence.

However, the title or appellation of the employee’s position is not a conclusive indicator as to whether or not an employee holds a position of trust and confidence. The determination should hinge on the authority actually possessed by employee.

Breach of Trust must be Willful.

Ordinary breach will not suffice. It must be willful and without justifiable excuse, there must be basis therefor, and it must be supported by substantial evidence and not merely by the whims or caprice of the employer. (See Falguera vs. Linsangan, G.R. No. 114848 December 14, 1995.)

Last Edited: Friday, August 19, 2011

Caveat: Subsequent court and administrative rulings, or changes to, or repeal of, laws, rules and regulations may have rendered the whole or part of this article inaccurate or obsolete.
breach of trust, grounds for dismissal, just causes, loss of confidence, Termination of Employment
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25 comments

  1. Hi,
    my husband received a NOTICE TO EXPLAIN letter from HR due to not providing the correct dates of his previous employers… After conducting a background check, his employer found out that the previous employer hired dates are different & contradicting….

    my question:
    1. where does this offense fall under?
    2. is it under breach of trust or fraud?
    3. after NTE, will he be terminated or suspended?

    super thanks!

    [Reply]

  2. hi Ted,

    Im a foreigner hired by local companies to manage their business here as a consultant. i have a few cases which is already settled, but i would like to understand the procedure and better understanding in terms of ‘Breach of Trust’

    Case 1.
    A messenger was assign to bring 9,000 peso to process some government related process. (all messenger will assign to handle some cash related issue like withdrawal of petty cash and etc) what happen to him is after that day, he just told the secretary that is done but the receipt is hold by the officer of the said department and will provide after a week. So after 1 week only we find out that he did not process, HR issued NTE and he reply the money is lost while he went to photocopy some document and willing to pay for the lost. we can’t do any investigation due to that is only his own statement. we have no choice but to ask him to resign. he gave us 1 month notice and we paid all his quit claim including the 1 month notice
    Do you think this is the right way to ask him to go and pay so much money for him since he’s a regular and after all he did such thing? (As we know he is asking financial help from his co worker before he lost that money)

    Case 2.

    I have a supervisor who collected 10k deposit from customer and submitted to the cashier only 8k. when the cashier found out that he amended the official receipt, so he immediately issue another Official receipt with 2k deposit and submit to the cashier. we ask him back and question about the incident also serving him the NTE. as per my HR, we cannot terminate him because he deny the charges and he did submitted the balance of 2k to the cashier. i have no choice but ask him to resign due to ‘breach of trust’ which we cannot trust the said supervisor furthermore he’s at cebu branch. i ask him to resign and of course paid all he’s salary (additional 1 month) plus all his quit claim.
    I wan to know, is these 2 cases is consider under ‘breach of trust’ which actually i can terminate them without giving them 1 month additional salary plus all the compensation?

    thank you in advance,

    danny

    [Reply]

    Ted Ferrolino Reply:

    “Willful” breach of trust of loss of confidence is a valid ground to terminate employee. The caveat is, it is generally hard to sustain (see that “willful” attached to it).

    As in all cases of termination, it is the employer’s burden to prove that the dismissal is justified.

    To be a ground for termination, the law requires that the breach must be willful, i.e., that the act must have been done “intentionally” and “knowingly” without justifiable excuse. Ordinary breach would not suffice. If the act complained of arose only out of carelessness or inadvertence, it is only ordinary breach and outright dismissal may be indefensible.

    Additionary, the following must be present:

    1. That the fraud or breach of trust is in connection to the employee’s work; AND
    2. That the employee concerned is holding a position of trust and confidence.

    Now, to your question.

    Case 1. IMO, there might not be sufficient evidence to establish willful breach of trust. But he may be liable for lesser penalty (warning/suspension) for failure to report the incident promptly.

    Case 2. Normally, employer has greater leeway when the employee involved holds managerial/supervisory position. IMO, if the tampering of the OR can be established (which will nullify his bare denial), it may be sufficient to hold him liable for breach. The fact that he submitted the balance of 2k after discovery of the incident is not a valid defense.

    [Reply]

  3. Aaron Paul Carreon Comment:
    August 3rd, 2011 at 01:14 am

    can we use the reason “Loss of Confidence” as a basis for our reasignation? ex. supervisor told us that the company might close due to non-profit, i filed for immediate resignation. is that valid?

    [Reply]

    maya Reply:

    Article 285 of the labor code states: “An employee may terminate without just cause the employee-employer relationship by serving a written notice on the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the employee liable for damages.” In short, you dont need to justify yourself why you are resigning from work. All you have to do is to notify your employer and submit a letter of resignation at least a month before your scheduled separation from them. :)

    [Reply]

  4. Aaron Paul Carreon Comment:
    August 3rd, 2011 at 05:11 am

    Can we use the “Loss of Confidence” as a reason for immediate resignation? The situation is the supervisor told us that the process/account (BPO Industry) will close and we will lose our job if we can’t meet the client’s requirements. Given the opportunity if ever there is immediate offer from other companies, I would like to resign my employment immediately since my employment/income is at risk.

    [Reply]

  5. Ella Garcia Comment:
    October 18th, 2011 at 05:50 pm

    Hi,

    I recently had a friend who was terminated at a BPO because she asked somebody to clock-in for her to work (records found she did it 3x) to avoid being late…

    She was termed on the gounds of “Fraud; Breach of Trust”… is that correct? or is it legally appropiate?

    And during the Case Conference,the HR personnel was so rude, saying she is a criminal, and that she was forced to name people who did the clocking-in. Is that the right procedure to conduct during a conference?

    I am feeling so bad with what my friend told me, because shes feeling so depressed. She lost her job and felt ‘insulted and humiliated’ by the process.

    I hope you can help shed light on her situation, i want to help clear her mind. Maraming Salamat

    [Reply]

    Nina P. Reply:

    Since you weren’t there, we can’t really say that the HR personnel was rude based on hearsay. But since HR had evidence that she asked someone else to clock in for her, it is a clear case of fraud and a just cause for termination because the company paid her right based on the logins and she wasn’t even working those hours.

    [Reply]

  6. Hi Sir,

    Just want to know your opininion on this situation. I am from a BPO company, recently we are working on building a new project that will require me to hire 34 employees and 2 assistant managers. Ok, so one of the hired a. Managers that we hired turned out to be negative on the Background check that we did. Due to our limitations at that time we made a decision to sogn off the existing red bgc and decided to on board him. We have documents that we our HR leader signed him off and let him go on board. After a couple of months, HR went back at us and adviced that we need to end the employment of that person which is stronlgy refused, the mere fact that we alredy invested on that manager and he has already established relationship with our clients makes it hard for the team. He found out that he was terminated by previous employer on Fraud and submitting fraudulent reciepts to his employer before. Now my point is can we discrimnate people like this? he has shown tremendous passion and commitment and i do not want to lose that manager. do we have a chance of saving that employee?..

    Please ted i need you professional advice on this

    Thanks,
    Marcus
    Operations Manager

    [Reply]

    The Great Itlog Reply:

    Your company need to address some issues in recruiting your personnel. This could had been prevented if both the HR and the Operations could had resolved their areas of responsibilities.

    [Reply]

  7. Hi Sir,

    I am a single mom of 2 working in an advertising company. We had a photo shoot for a liquor brand where the talent happened to be my daughter’s idol. She asked me if she could have a picture with him. During the break she had our chance. But I made sure that there is no hint of the product, not even a drinking glass in the background. Excited for my daughter, I posted the pics in facebook. I was careful to not mention about the brand, no mention also that it is work related. The photos and posts look as plain as FAN PICS.

    The following day, I received an unexpected text message from our company president telling me to delete all those photos. He is afraid that if the client finds out, it will violate the confidentiality of the project prior to the launch of the ad materials. I complied immediately.
    __________________________________________________________________________

    3 days after. I received a memo from our managing director stating that I have committed a GRAVE OFFENSE. This is what was written in exact words:

    CATEGORY OF OFFENSES AND DISCIPLINARY ACTION

    – GRAVE OFFENSE (Immediate dismissal from the company equivalent to termination with cause)

    D. Your Fraud or Willful Breach of the Trust Placed upon You by Your Employer or Representative

    5. You revealing confidential information or spying on confidential records.

    Please explain in writing within 7 days why management shall not take its option of imposing disciplinary action on you.

    _______________________________________________________________________

    First of all, I had no willful malicious intent of whatsoever. I will not deliberately do anything that would jeopardize my job and the company I work for. Secondly, I was careful that no brand gets exposed. Thirdly, the photos and posts in facebook look like FAN PICS. I don’t think I have committed Fraud or Willful Breach of Trust offense.

    My question is, DO THEY HAVE THE RIGHT TO IMPOSE DISCIPLINARY ACTION ON ME? The photos are my proof, Sir.

    *PLEASE, I NEED YOUR ADVISE*

    [Reply]

    admin Reply:

    Hi! It seems the only thing you can do for now is answer the show-cause memo and explain your side. The memo is part of procedural due process the employer is required to afford every employee before any disciplicany action may be meted against him/her. It is not yet a punishment. But due to the severity of the possible penalty, I also suggest the you obtain the services of a lawyer to assist you in preparing your answer.

    [Reply]

  8. Hi,
    I was hired by one of the biggest call center companies here in the philippines and was asked to relocate north of luzon. I’m just about to cross my 2nd month with the company. I hold an Account Manager Position where we handle real time operations as well as client interactions as we are under client services. When I 1st came in I was advised that I will be handling Customer Relations LOB because of the CSAT Manager and Operations Manager Posts that i held prior to my current employer. When I came in, i was asked to reachout to an outgoing Account Manager for account endorsements and buddy up to familiarize with all that’s expected of me.

    To make the story short, I was left without a clue of what to do, what’s expected of me and performance goals. Because I want to make sure that i will be successful in this endeavor, I worked my way and reach out to people in the company who I can get vital information and assistance to make myself competent to the role that i hold. I was able to role out some documentation and developmental process for the supervisors to adhere to and help them achieve goals and required objectives and give them direction.
    I even worked with HR to make sure that policies in terms of specific performance of the whole account are not met and make everyone know and signed a document of commitment and acknowledgment of the policy.

    I had one incident that because I was cc’d in the email that our client was (us being the vendor) asking for our feedback re the quality sent by our team. Because of my deep back ground of the client’s concern, I immediately replied to the email with all the recipient in the email, including our client.

    Immediately after, i was removed from my current account and was moved to an account where i know nothing about. the sr. account manager came in after me but i was advised that i have to report to her. From my understanding, most of our sites’ organizational chart dictates that all account managers reports to the site director. But since i was new i chose not to oppose and just follow.

    Again, when moved to the new LOB, i was never given any endorsement nor specific goals to achieve and i constantly am communicating with the clients as i am usually asked by our client for feedback and updates.

    Last friday, I was tasked to handle all 3 lobs by the SR Acct. Manager as the Sr Team manager that they are grooming to promote and replace me was on leave. Due to the number of tasks that has to be done, and hour after hour of meetings, i was multi-tasking that I was drafting an email response to our client while listening to an on call conference meeting. Because I was already on my 11th hour (and i usually am expected to work 12hrs a day) I accidentally and unknowingly sent the draft instead of the edited and correct email, thereby making the email looks like I have grammar and communication issues. As soon as my manager called me out on it by talking to me about it and saying that she escalated the issue to our superiors and that because of that email, they will decide this week or next if i will still last in the company. Despite my explanation of how it happened, i also asked what are my options and she said – none, because how can i defend you, i don’t even know you that much as we only worked together for less than 60 days. No documentation of the said call out or coaching was presented to me to sign. I was even advised not to help on answering correspondence or inquiry of customers to our agents as I am incapable of anything because of the email draft that i accidentally sent our clients.

    And because I am trained to address issues immediately, i apologized to the client and carefully explained that it was an unfortunate mishap and attached the correct email that should have been sent.

    I also reached out to the site director through email voicing out my concern and making them understand that the reason I agreed to join the company, thought i welcome the challenge of the new LOB that I’m assigned to, I need more guidance in terms of processes and procedures as the master of the LOB is a supervisor, that I feel should have been chosen and empowered to be promoted and be given the chance to lead the lob. I also advised him that since the start of my employment no formal documentation of endorsement has been given to me and all of the things i rolled out in the account were created and submitted by me. And of course when the SR AM came in, she scratched it out and ignored it because I was moved to the other LOB. And advised my Site director that if we are training our team supervisors to document, coach and motivate our people to succeed, we should do the same for our managers as without which, i feel that they are setting me to fail. I have yet to receive any formal nor documented feedback of issue, nor policy or procedure that applies in the account. I expressed my drive to succeed in the previous LOB as I know I can give more value to the team and the account to stay there as i have been working with all my passion and dedication for the team manager to be better at they do and making sure that everything is emulated by their agents.

    When I came in today, I was asked by the Sr. AM to attend a meeting with her and that its urgent. In the meeting I was presented with a Notice To Explain within 5 days and was charged with Grave Misconduct due to insubordination – because of my direct apology of my mishap, with the SR AM cc’s in that email. I was told that I should have not emailed them as it is against company policy to directly email the client. I know that I just needed to present my notice of explanation but what she said was ‘the guard will escort you our and I should surrender my company ID. I declined to be ushered out as I said that would be so humiliating for me as it would look like i stole or present danger to the company and to others. When I left the IT Manager was advised by the Sr. AM to deactivate my ID and all of my access to emails and network logins.

    I checked my webmail and screen captured it that my email has been disabled already and the IT manager is willing to give a written documentation that he was asked by the Sr. AM to disable it.

    I want to seek legal help already as I know and researched that this is against labor code for several reasons.

    Should I hire a lawyer immediately and file a case against the company immediately and not wait for me to present my notice to explain? Or present my notice to explain, and wait for their next action. If in the event that they want to talk to me about the issue and I have yet to hire a lawyer, what are my options to protect my rights and my employment. I want to stay with the company as I have grown to love working with the people but its unfortunate that I have to report to someone like my Sr. AM.

    I want to fight because though i have been doing what i am tasked regardless for which LOB the task is required, this Sr. AM has been very condescending and subjective and has not given me any coaching or direction, has been the aggravating factor to my everyday stress at work – and feels she has the right to just dismiss people at her whim.

    hope you can help me draft the step by step things that i need to do, prepare and present to be able to support my case should you advise me to push through with the case. And where can i find someone from DOLE to help me as I am new in here in Bicol and knows very few people.

    hope you can give me a response as soon as possible. looking forward. thank you.

    [Reply]

  9. I have an employee who called in sick. after a day we learned from his twitter account that he is just “tinatamad” and wanted to just resign. He posted that he was enjoying his being absent.

    Is this within the “breach of trust” clause? Is this a ground for termination?

    Thanks!

    [Reply]

  10. Good afternoon!

    May I request for some clarifications regarding the situation below:

    I have a friend who has a high position in a certain company. To prepare for their future, he is helping his wife in her business which is in a “legal” multi-level marketing. Since this MLM business is really the best business for the future of their family, there are several employees in the company who also opted to start the business, as part time only, meaning done after office hour. In this regard, when the company found out that he is part of the part time business, he was given immediately (without any verbal warning) a memo stating breach of trust and confidence; abuse of authority (eventhough the staff joined because they saw the vision of MLM and not because they were forced to join). In this kind of situation, I have several questions in mind:
    1. Can the company terminate him just like that (just by doing a part time job)?
    2. Can the company demote him?
    3. Can the company reduce his salary?

    Can the company do the above penalties just because he is doing a part time job with his wife?

    He is a very dedicated employee, giving so much time, concern and service to the company. He loves his company. Can the company really do the above penalties in its worst situation?

    Just want to ask these questions as a concerned friend because I believe and many believe that he doesn’t deserve it if ever one of the penalties will be given.

    Hoping for your kind reply. Please reply thru email. Thank you very much.

    [Reply]

  11. Hi,
    I have a friend who happens to be a payroll master, he process payroll for head office employees including himself. One of his processing, he didnt deduct his own loan due to his net pay will not be enough for his other obligation. Because of this, his boss called his attention and serve a notice to explain under NOT COMPLYING in COMPANY RULES & POLICY and my boss also stated that she loss her TRUST to my friend. Would it be a ground for TERMINATION of his employment? Would it be under BREACH OF LOSS OF TRUST AND CONFIDENCE?

    [Reply]

  12. hi i am dina previously worked as a cashier in goldspelt corporation. i already received termination notice due to releasing cash to my co worker without the knowledge of my employer.. is this can be called illegal dismissal?

    [Reply]

    The Great Itlog Reply:

    If they terminated you without due process it is illegal. Nonetheless, please consider that what you did (releasing cash to my co worker…) could be a point against you in a criminal case. Tread with a lawyer with all the facts.

    [Reply]

  13. can u pls advise me of what i have to do?

    [Reply]

  14. i just started working last may6,2013.Can i terminate my employment?just because i’ve realized that i don’t like the job?

    [Reply]

  15. Good day Sir! I’m jun currently working and I have a problem with this employee. He is a regular employee. Later on, the management want to terminate him. The main reason is that, he did not remit the the exact amount after his liquidation. But the said amount was paid through installment which was paid by his manager just to cover up the amount.

    My question sir Ted if we have the right to terminate this employee due to fraud and loss of confidence?

    Please help me!!

    [Reply]

  16. hi,

    I need your help regarding my termination.

    I work for an online travel agency as a team leader. I was terminated by my employer a month ago under article 282, 3: Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.

    What happened was, one client had canceled his reservation and was asking for a refund for the deposit paid for the campervan rental. As per terms and conditions of the company, deposit is non-refundable. No guidelines was given nor proper training on handling cancellation was implemented. So when client was unhappy, we give him two options: claim the non-refundable deposit from his travel insurance and we will get back to him on a Monday since I am not authorized to process refunds. Request for refund was received by phone on a Saturday.

    I have elevated his concern to my manager through her work email and she was informed that same day when she called me up in the afternoon of the same day as well. Client is unhappy about it when he had set his expectation that we can only get back to him about his claim on Monday. On Sunday, he went to the media spread such a bad review of the company’s policy. Only then, that I have an approval from the owner to refund the money. WE had informed the client through phone and email that he has been refunded but still we got bad reviews on the net and television.

    The company’s reputation was at stake the following Monday. WE received a lot of hate emails and calls about what had happened. The media had sensationalized the situation.

    With that, I got terminated. But I’ve done the process which we have been implementing ever since I started with the company. I’ve handled a lot of cancellations following the same process, but this one is exceptional due to a fact that he went straight to the media. I believe I’ve done my duty as a team leader.

    Moreover, if the company had given it’s team leaders a guideline regarding processing refunds and authority to process it, it could not have happened. Furthermore, they could have given it’s employees proper training to avoid such cases.

    Please let me know if I could file a case against the company and what are the chances of winning the case?

    Thanks in advance.

    [Reply]

  17. feigning sickness to be absent is a usual case most companies face. since you have a proof (if you had screenedshot his twitter post) you can give him maybe a warning first before sacking him. in that way, you’ll have some documentation.

    [Reply]

  18. hard working room attendant Comment:
    July 4th, 2014 at 09:14 am

    good day po. I’m a room boy sa isang 5 star hotel sa pasay. almost 23 years of service na sa hotel. kinakasuhan po ako ng lost of trust & confidence ng aking employers last week lang. nag explain nako in writing. may cabinet po kase kami sa floors. nagkaroon ng spot check. nahulihan po ako ng supplies na ginagamit ko naman pang set up sa room at wala po akong kabalak balak na ilabas ang mga yun. ayoko lang po kase bumaba pa sa store room para kumuha ng gamit kung kinapos ako kase po may hinahabol po kaming quota. 11 room per day po sa loob ng 8 hours of work with no OT pay kaya po medyo dumidiskarte para maka tapos agad. ang malala pa nito, may mga ilang alak at beer ang natagpuan po doon. ito po ay binigay ng mga guest ko bago po sila mag check out. eh hinde naman po ako nainom. actually hinde ko po alam kung anu gagawin ko sa mga alak na yun kase nanghihinayang din po akong itapaon ang mga yun. wala po akong kinukuhang property ng hotel. napa tambak lang po talaga yun sa cabinet sa nakalipas na 2 taon nah. subject for dismissal po ang kinakaharap kong kaso ngayon. nagpapaaral po ako ng mga anak ko ngayon including college. inaasahan nila po ako. wala po ako sa posistion ng cashier na tumatanggap ng pera o bayad ng mga guest. ang trabaho ko po ay tagalinis lang ng mga kwarto. grounds for termination na po ba ito??? aasahan ko po ang sagot ninyo. just let me know via email. maraming maraming salamat po. God bless us all.

    [Reply]

  19. Engr. Del Mundo Comment:
    December 3rd, 2014 at 03:40 pm

    Dear Sir/Madam,

    What to know lang po kung allowed po ba un dual function, like kung Driver ka po tapos yun isa ay Mechanic, pag wala or absent po yun Mechanic ay magiging dalawa po yun function mo for that day… pwede po bang huwag mong sundin yun employer mo pag-inutusan ka na mag-Mechanic after kagagaling mo lang sa mahabang byahe, besides wala naman yun sa job description ko at Driver lang talaga ang in-aplayan ko…. maaari ba ito na grounds sa pagkakatanggal ko sa trabaho?

    Thanks po & Hopefully maliwanagan po ako sa ganitong bagay.

    [Reply]

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  1. […] care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Fraud or willful breach of trust / Loss of confidence. Fraud is any act, omission, or concealment which involves a breach of legal duty, trust, or […]