PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, PETITIONER, VS. ROLANDO MATIAS, RESPONDENT.

Philippine National Construction Corporation versus Matias

The Case

This is a labor case about the most elastic of the just causes for dismissal: loss of trust and confidence. The Philippine National Construction Corporation, the employer, dismissed Rolando Matias, its project controller, for allegedly assigning to the company a parcel of land that had already been conveyed to the government, while warranting that the land was free from any lien or encumbrance. Matias cried illegal dismissal. The case matters because the Supreme Court uses it to fence in the employer's prerogative: loss of confidence must rest on clearly and convincingly proven facts, and the act complained of must be connected to the employee's duties. It also teaches that an employer who itself engineered the anomalous scheme cannot invoke the law's protection with unclean hands.

Procedural History

Matias filed a complaint for illegal dismissal and money claims before the labor arbiter. The labor arbiter ruled in his favor, finding him illegally dismissed, and ordered his reinstatement without loss of seniority rights, benefits and privileges, plus back wages and attorney's fees. On appeal, the National Labor Relations Commission reversed, found sufficient basis for loss of trust and confidence, and dismissed the complaint. Matias then went to the Court of Appeals on a petition for certiorari. The Court of Appeals granted the petition, annulled the Commission's decision and resolution, and reinstated the labor arbiter's decision. It also denied the company's motion for reconsideration. The company then came to the Supreme Court on a petition for review on certiorari under Rule 45.

Facts

Rolando Matias was employed in 1975 by the Construction and Development Corporation of the Philippines as chief accountant and administrative officer. During his employment, parcels of land in Bukidnon were placed in the names of certain employees as trustees, so that the corporation could hold tracts larger than the limit a corporation may own. A parcel of 117,750 square meters was registered in Matias's name in 1980. In 1984 the corporation's loans from government entities were converted to equity, making it a government owned or controlled corporation, and its name was changed to the Philippine National Construction Corporation. Matias availed of a retrenchment program and left on December 31, 1984.

In 1992, two former co-employees came to his house with accomplished documents and a special power of attorney, telling him the Bukidnon lands were covered by the Comprehensive Agrarian Reform Program and that his name was on the list of landowners. He reluctantly signed. In November 1992 the Land Bank of the Philippines paid him manager's checks and a bond as land transfer acquisition payment, and in December 1992 the title in his name was cancelled and a new title was issued in the name of the Republic of the Philippines.

In August 1996 the company rehired Matias as project controller. Later, the head of its Realty Management Group, Felipe Alday, showed him a listing of lands held in various names and told him the transfer of the property in his name had not yet been consummated by the Land Bank. Alday asked him to execute a deed of assignment in favor of the company. In September 1997 Matias signed a prepared deed of assignment for a consideration of 5,900 pesos, warranting that the land was free from any lien or encumbrance. In April 1998 he was directed to explain why he should not be sanctioned for falsification, estafa, dishonesty, and breach of trust and confidence. He explained. He was then asked to resign in lieu of termination, and was terminated effective June 15, 1998 on the ground of loss of trust and confidence. He filed his complaint in July 1998.

Issues

• Whether or not the Court of Appeals erred in giving due course to the petition for certiorari although it was filed one day late.
• Whether or not the Court of Appeals erred in finding that Rolando Matias was illegally dismissed.
• Whether or not the Court of Appeals erred in disregarding the finding of the National Labor Relations Commission that Matias was guilty of breach of trust.

Applicable Provisions

Article 282 of the Labor Code, as amended, provides:

An employer may terminate an employment for any of the following causes: Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative.

This is the ground invoked by the company, and the Court reads it to require fraud or willful breach, not ordinary breach.

Ruling

On the first issue, the Court held that the Court of Appeals justifiably gave due course to the petition despite the one day delay. The prevailing trend is to accord litigants the amplest opportunity for the just determination of their causes, free from needless technicalities, especially in a labor matter to which the Constitution gives utmost priority and full protection.

On the second and third issues, the Court held that there was no just cause for dismissal. In termination cases the employer bears the burden of proving a just or authorized cause; failure to discharge it means the dismissal is unlawful and the employee is entitled to reinstatement, back wages and accruing benefits. Dismissed employees need not prove their innocence. The Court stressed that the breach must be willful, done intentionally and knowingly without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly or inadvertently. Here the company neither denied nor repudiated the acts of its former employees and of Alday, whose office related directly to the management of its real properties. The documents were prepared in advance for Matias's signature, negating any claim that he planned the transfer for personal benefit. He was a mere employee used as a dummy, signing for no consideration other than continued employment.

The Court also held that the act complained of must be related to the employee's duties, as would show that he is unfit to continue working for the employer. Matias's position as project controller did require trust and confidence, but the questioned act was not related to his official functions. It pertained to an unlawful scheme of the company itself to evade the agrarian reform mandate. An employer who seeks relief must come with clean hands, and since there was doubt as to the real party at fault, it is equitable to resolve it in favor of labor. Loss of confidence must be genuine, not a mere afterthought, and must be proven clearly and convincingly by substantial evidence.

Doctrine

Loss of trust and confidence, to be a just cause for dismissal under Article 282 of the Labor Code, must be based on fraud or willful breach of the trust reposed by the employer. Ordinary breach does not suffice. The breach is willful if done intentionally and knowingly without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly or inadvertently. The employer bears the burden of proving the just cause by substantial evidence, clearly and convincingly; failure to do so renders the dismissal illegal, entitling the employee to reinstatement, back wages and accruing benefits. The act complained of must be directly related to the employee's duties, showing that he or she is unfit to continue working for the employer. Loss of confidence must not be used as a subterfuge for illegal, improper or unjustified causes, and an employer who itself engineered the anomalous scheme cannot invoke the law's protection with unclean hands.

Disposition

The petition was denied and the decision and resolution of the Court of Appeals were affirmed, with costs against the Philippine National Construction Corporation; Matias thus won, and his reinstatement with back wages and attorney's fees stood.

Remember This

Memorize this line: loss of trust and confidence must be genuine, proven clearly and convincingly by substantial evidence, and tied to the employee's duties. Examiners use this case to test the burden of proof in dismissal cases and the limits of the employer's prerogative, especially where the employer's own hands are unclean.