This case emphasizes that while managerial employees can be dismissed for loss of trust, employers must provide substantial evidence, not just suspicion, to justify the termination. The Supreme Court sided with the employee, Arturo Tolentino, reinforcing the principle that even managerial staff have security of tenure, and dismissal requires clear, convincing proof of wrongdoing, balancing management’s prerogative with employee rights. PLDT’s failure to convincingly prove Tolentino’s involvement in a subordinate’s anomalous dealings led the Court to reinstate him. This means employers can’t act on mere suspicions but must prove managerial misconduct.

Can ‘Loss of Trust’ Justify Dismissal? Examining PLDT’s Grounds for Firing Tolentino

Arturo Tolentino, a division manager at PLDT, faced dismissal following an ‘internal arrangement’ made by his subordinate, Jonathan de Rivera. PLDT argued that Tolentino’s position as a managerial employee warranted dismissal based on loss of trust and confidence. This case brings into focus the degree of evidence required to terminate a managerial employee versus an ordinary worker. The court balanced PLDT’s right to manage its business with Tolentino’s right to security of tenure.

While managerial employees can be dismissed for loss of trust, the Supreme Court stressed that the dismissal must be founded on clearly established facts. The mere existence of a basis for suspicion is not enough. The court acknowledged that higher-level employees in positions of trust can face stricter disciplinary action than ordinary workers. But, this does not eliminate their fundamental right to job security.

The Supreme Court referenced previous rulings to support the idea that managerial employees relinquish some rigid employment guarantees. Actions that might be overlooked for other employees may warrant stricter penalties. Yet, **substantial evidence** is crucial when loss of trust is cited. The burden lies with the employer to provide clear and convincing proof supporting the dismissal.

PLDT presented Jonathan de Rivera’s sworn statement and Quirino Donato’s affidavit as primary evidence of Tolentino’s involvement. However, these pieces of evidence did not explicitly implicate Tolentino in the illicit scheme. Tolentino’s authority to approve real estate acquisitions was also limited to parcels valued below ₱200,000. The Labor Arbiter noted that suspicion and speculation are insufficient grounds for terminating an employee. Despite the illicit activity originating from his division, the investigation failed to prove any direct involvement on Tolentino’s part.

Although Tolentino failed to uncover his subordinate’s ‘internal arrangement,’ the court deemed dismissal too harsh a penalty for his oversight. In line with this thinking, a prior case, *Hongkong Shanghai Bank Corporation vs. NLRC*, suggested proportionality in penalties. Dismissal is seen as the most severe penalty, requiring thoughtful consideration of an employee’s circumstances, especially given Tolentino’s 23 years of service.

According to Article 279 of the Labor Code, illegally dismissed employees are entitled to reinstatement without loss of seniority and full backwages. Although a managerial employee, the Court ordered Tolentino’s reinstatement, reasoning PLDT had not proven strained relations adequately. Strained relations must be raised before the labor arbiter and substantiated with evidence, consistent with *Quijano vs. Mercury Drug Corporation*.

The ruling took note of PLDT’s change in ownership since Tolentino’s dismissal. This change to the First Pacific group eliminates any animosity from previous conflicts. PLDT Vice-President Sacdalan’s initial offer for Tolentino to resign further cast doubt on claims of strained relations, since it suggested the conflict had not escalated to irreparable animosity. The option would have been implausible with deeply damaged work relations.

Furthermore, the Court reinforced that the strained relations doctrine requires strict application. It stated in *Quijano* that the concept cannot deprive unjustly dismissed employees from their reinstatement rights. Finally, the moral and exemplary damages initially awarded to Tolentino were eliminated because there was no evidence his termination occurred because of malicious intent or deliberate oppression.

FAQs

What was the key issue in this case?	The central issue was whether PLDT had sufficient grounds to dismiss Arturo Tolentino, a managerial employee, based on loss of trust and confidence after a subordinate was found to have engaged in an anomalous transaction. The Court looked at whether the evidence sufficiently linked the manager to the subordinate’s conduct.
What does “loss of trust and confidence” mean in this context?	“Loss of trust and confidence” allows employers to dismiss employees in positions of responsibility when they believe the employee can no longer be trusted. However, this must be based on substantial evidence and not merely on suspicion, especially for employees with long tenures.
What evidence did PLDT present against Tolentino?	PLDT relied on a sworn statement from de Rivera, the subordinate involved in the ‘internal arrangement’, and an affidavit from Donato implicating Tolentino. However, the court found this evidence insufficient to prove Tolentino’s direct involvement in the anomalous transaction.
Why did the Court reinstate Tolentino?	The Court reinstated Tolentino because PLDT failed to provide substantial evidence proving his direct participation in the anomalous activities of his subordinate. His years of service and the lack of clear evidence tipped the scales in his favor, reinforcing that managerial employees also possess security of tenure.
What is the “strained relations” doctrine?	The “strained relations” doctrine allows a court to forego reinstatement if the working relationship between the employer and employee is damaged to the point that a harmonious workplace is impossible. In this case, the court ruled that PLDT failed to prove the relationship was irrevocably damaged.
Why were moral and exemplary damages not awarded?	Moral and exemplary damages were not awarded because there was no evidence that PLDT acted in bad faith or with malicious intent in dismissing Tolentino. The Court decided the action was based on genuine concern.
What does this case say about an employer’s responsibility when dismissing an employee?	This case emphasizes that employers must act with compassion and understanding when dismissing employees, especially those with long and dedicated service. It underscores that the right to dismiss should not be abused and requires sufficient cause substantiated by solid evidence.
What is the significance of Article 279 of the Labor Code?	Article 279 of the Labor Code, as amended, provides that an employee who is unjustly dismissed is entitled to reinstatement without loss of seniority and to full backwages. This legal principle was central to Tolentino’s reinstatement and compensation.

This case reinforces that security of tenure extends to managerial positions, requiring employers to demonstrate concrete proof when terminating employees based on loss of trust. Mere suspicion or unsubstantiated claims are insufficient grounds for dismissal. This decision serves as a reminder to employers to handle employee terminations with fairness and provide concrete evidence of any wrongdoing.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Philippine Long Distance Telephone Company vs. Arturo Raymundo Tolentino, G.R. No. 143171, September 21, 2004