Philippine Labor Law Glossary
Loss of Trust and Confidence is a just cause for termination when an employee occupying a position of trust commits a real and willful breach that makes continued reliance on the employee unreasonable.
What the Ground Requires
Article 297(c) permits dismissal for fraud or willful breach of the trust reposed in an employee. The ground is not established merely because an employer says that confidence has been lost. Two core requirements must generally be shown:
- The employee must occupy a position in which the employer legitimately places substantial trust and confidence.
- There must be an act or omission that provides a genuine, factual and work-related basis for the loss of trust.
The breach must be willful rather than accidental, imagined or based only on suspicion. Loss of trust should not be used as an afterthought or as a substitute for proof of a different ground.
Positions of Trust
Jurisprudence recognizes two broad classes:
- Managerial employees: employees entrusted with policy, personnel or significant discretionary authority.
- Fiduciary rank-and-file employees: employees who routinely handle substantial money or property, such as cashiers, auditors and property custodians.
The actual duties matter more than the job title. A title alone does not automatically make a worker a trusted employee for purposes of dismissal.
Proof Standards
For managerial employees, an employer must still present substantial evidence of a reasonable basis for believing that the employee breached the trust required by the position. For fiduciary rank-and-file employees, uncorroborated accusations are insufficient; the employer must establish the employee’s actual involvement in the acts relied upon.
The employer also bears the burden of proving the validity of the dismissal after the fact of dismissal has been established. See Burden of Proof.
Legal Basis
| Authority | Rule supported | Official source |
|---|---|---|
| Labor Code, Article 297(c) | Recognizes fraud or willful breach of trust as a just cause for termination. | Department of Labor and Employment |
| Bravo v. Urios College | Explains the two trusted-position classes and the different proof standards for managerial and fiduciary rank-and-file employees. | Supreme Court E-Library |
| Angeles v. St. Catherine Realty Corporation | Reiterates that substantial evidence is required and that actual work, not title, determines a position of trust. | Supreme Court E-Library |
Evidence That May Matter
| Evidence | Why it matters |
|---|---|
| Job description and actual duties | Shows whether the employee genuinely occupied a trusted position. |
| Audit trails, transaction records or inventory logs | May connect the employee to the alleged breach. |
| Policies and written instructions | Show the duty, rule or fiduciary obligation involved. |
| Witness statements and electronic records | May corroborate or contradict the allegation. |
| Notice to explain and written response | Document the charge, defense and procedural process. |
| Termination decision | Shows whether the employer relied on established facts and a recognized ground. |
Due Process Still Applies
Even when the employer has a valid factual basis, just-cause dismissal ordinarily requires the twin-notice process and a meaningful opportunity for the employee to answer the charge. A proper notice should identify the facts, the rule or legal ground involved and the time allowed for a response.
Practical Example
Hypothetical example: A cashier is accused of taking cash based only on a general shortage. The employer should not rely on the shortage alone. Cash counts, access records, transaction logs, explanations and corroborating evidence must be examined. If the records do not connect the cashier to a willful breach, loss of trust may not be established.
Common Misunderstandings
Misunderstanding: Trust is subjective, so an employer may dismiss whenever confidence is lost.
Correct approach: The loss must rest on a legitimate trusted position and facts supported by substantial evidence.
Misunderstanding: Every employee handling company information is automatically a fiduciary employee.
Correct approach: The nature, regularity and significance of the employee’s duties must be examined.
Sources and Legal Citations
- Labor Code of the Philippines, Article 297(c), official DOLE text.
- Bravo v. Urios College, G.R. No. 198066, June 7, 2017, Supreme Court E-Library.
- Angeles v. St. Catherine Realty Corporation, G.R. Nos. 223582 and 223788, Supreme Court E-Library.
Editorial Review and Legal-Review Status
Prepared by: LaborCode.ph Editorial Team
Editorial review: Reviewed under the LaborCode.ph Content Review Policy
Source verification: Official legal sources checked on August 2, 2026
Research coverage: This entry is based on a comprehensive and exhaustive review of relevant Philippine labor-law sources.
Editorial approach: The material is presented as a written digest prepared by labor-law researchers and experts, offering selective but broad insights for general educational use.
Disclaimer
This glossary entry is for general educational and legal-information purposes and is not legal advice. The validity of a dismissal depends on the employee’s actual position, the alleged act, the evidence and the procedure followed.