Dismissal due to resentment

Employers indeed have wider discretion in terminating managerial employees on the ground of loss of confidence compared to rank and file employees. However a mere allegation of such ground is not sufficient as illustrated in this case of Carmen.

On March 19, 1983, Carmen was employed by a pharmaceutical company (IPI) as medical director of its research and development department. At the time of her hiring, the government had just launched a program encouraging the development of herbal medicine and IPI ventured into it on an experimental basis. Carmen’s written contract of employment was for a period of one year subject to renewal by mutual consent of the parties at least 30 days before its expiration. The parties agreed that Carmen could continue teaching at a Medical College where she was then a full-time faculty member.

Upon the expiration of her contract on March 19, 1984, she remained in the employ of IPI without the benefit of a written contract. Apparently, she was prevailed upon by its president and general manager to stay, assuring her of security of tenure, despite an offer from a University to be the chairperson of its pharmacology department. She continued as medical director and even given the additional function of company physician undertaking various civic activities for and in behalf of the company such as conducting free clinics and giving out IPI products all of which were necessary and desirable in relation to IPI’s trade and business.

Two years later, the relation between Carmen and IPI management turned sour. She was perceived as having sided with the employees who were complaining about the inequality in the imposition of interest rates on the loans of low salaried employees from the company’s Savings and Loan Association. Her participation in the demand for the full disclosure of the association’s financial statement was resented by the officers who were all appointees of Management. She was even berated and humiliated in front of some laborers. She was then replaced as head of the research and development department and two days later her services was terminated.

Carmen sued the company for illegal dismissal, praying for reinstatement with full back wages and moral damages. IPI claimed that there was no illegal dismissal because Carmen was only a project employee involving the development of herbal medicine. It further alleged that Carmen’s employment which lasted for more than two years after the original contract expired, was by virtue of an oral agreement with the same terms as the written contract, or at the very least by virtue of implied extensions of said contract which lasted until the company decided that nothing would come out of the project.

The NLRC however debunked IPI’s claims and ruled that when Carmen was allowed to continue working without the benefit of a written contract after the one year period therein provided, she became a regular employee. So IPI must respect her security of tenure. Nevertheless, IPI still questioned this ruling and contended that, assuming Carmen became a regular employee, she was a managerial employee and can also be separated from service for loss of confidence. Was the company correct?

No. Loss of confidence is a valid ground for dismissal of managerial employees. But even managerial employees enjoy security of tenure and can only be dismissed after cause shown in an appropriate proceeding. The loss of confidence must be substantiated by evidence. The burden of proof is on the employer to show grounds justifying the loss of confidence. IPI failed to discharge this burden. The record is bereft of any evidence showing the existence of such loss of confidence. Mere allegation of such ground is not sufficient. So Carmen is entitled to back wages, damages and attorney’s fee (International Pharmaceuticals Inc. vs. NLRC 287 SCRA 213).

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