## FACTS:

In the case, the private respondent was initially employed by MGG Marine Services, Inc. (MGG) on July 1, 1988. The president of MGG appointed the private respondent as comptroller and overall supervisor, with explicit instructions to hold corporate funds in trust and pay the company's obligations as they fell due. The president and vice-president of MGG left for the United States, leaving the private respondent with 79 prepared and pre-signed checks. Out of these checks, 16 were blank and 63 had specific amounts on them. The private respondent was instructed to pay only the creditors mentioned in the cash vouchers and to write the respective amounts on the blank checks. However, upon the officers' return, it was discovered that the company's bank deposits were significantly reduced. The private respondent had disobeyed the instructions and withdrew a total amount of P1,515,823.00, paying some creditors not specified in the vouchers. As a result, MGG terminated the private respondent's employment for loss of trust and confidence. This led to a complaint for illegal dismissal filed by the private respondent against MGG. The Labor Arbiter declared the dismissal as illegal and ordered MGG to pay several monetary claims to the private respondent. The NLRC affirmed the Labor Arbiter's decision.

The petitioner, MGG Marine Services Corporation (MGG), filed a complaint for illegal dismissal against the private respondent, alleging acts of misappropriation and falsification of checks. MGG claimed that the private respondent filled in blank checks with amounts different from what was specified in the check vouchers and made payments to creditors not specified. MGG argued that these acts constituted loss of trust and confidence. The Labor Arbiter ruled in favor of MGG, finding lawful cause for the private respondent's dismissal. The NLRC affirmed the Labor Arbiter's decision. Dissatisfied, the private respondent filed a petition for certiorari before the Supreme Court, seeking the reversal of the NLRC's decision.

In the dispute between MGG and the private respondent, the private respondent was authorized to withdraw company funds as a cashier. Before leaving for the United States, MGG's senior management gave the private respondent specific instructions on fund disbursement. Upon their return, it was discovered that the company's reserve funds had significantly diminished. MGG claimed that the private respondent had over-withdrawn from the reserve funds, causing damage to the company. The private respondent argued that the funds were used to settle corporate accounts and denied fraudulent actions. The Labor Arbiter and the NLRC both ruled in favor of the private respondent, finding no evidence of embezzlement. MGG contended that the private respondent's actions had caused significant damage to the company's cash flow, endangering its financial stability.

## ISSUES:

1. Was there lawful cause for the dismissal of private respondent?

2. Did petitioners comply with the procedural requirements for valid dismissal?

3. Were petitioners accorded due process at the hearing before the Labor Arbiter?

## RULING:

1. Regarding the lawful cause for dismissal:

   • The Court found that there was a lawful cause for the dismissal of the private respondent. The basis was a significant loss of trust and confidence, substantiated by the respondent's mismanagement of funds which placed the company in financial jeopardy. Private respondent admitted to actions that violated the specific instructions given by management, which were deemed serious enough to justify dismissal.

2. On the procedural requirements for valid dismissal:

   • The Court ruled that the petitioners did not comply with procedural due process in the dismissal process. The twin requirements of notice and hearing were not adequately met. The record did not demonstrate that private respondent was provided with the necessary notices or the opportunity to defend herself in a hearing before being dismissed.

3. Due process at the Labor Arbiter's forum:

   • The Court determined that the petitioners were accorded due process at the Labor Arbiter’s forum. The claim of being unable to present additional evidence was dismissed. The Labor Arbiter had provided ample opportunity, which the petitioners failed to utilize.

## PRINCIPLES:

1. Loss of trust and confidence as a ground for dismissal of an employee must be substantiated and significant enough to justify such action.

2. The employer must observe the twin requirements of notice and hearing as part of procedural due process when dismissing an employee.

3. The quantum of proof required in cases involving loss of trust and confidence is substantial evidence rather than proof beyond reasonable doubt.

4. An employee’s acquittal in a criminal case does not automatically preclude a finding against them in administrative or employment cases.

5. Compliance with procedural due process involves providing the employee with a written notice containing the reasons for termination and a subsequent notice following an opportunity for the employee to respond.

6. Failure to observe due process in termination cases does not always entitle the employee to reinstatement or back wages, but may subject the employer to penalties or indemnity for non-compliance.

7. A valid dismissal based on just cause does not warrant the award of back wages or separation benefits even if procedural due process was not observed, but damages or indemnity may be awarded for the procedural lapses.