Yes. A termination for “loss of trust and confidence” can be challenged before the National Labor Relations Commission (NLRC), usually as an illegal dismissal case. This ground is often used when an employee handles money, property, confidential information, approvals, inventory, collections, company accounts, or managerial decisions. But an employer cannot simply say “we lost trust in you” and end the employment. Under Philippine labor law, loss of trust must be based on facts, proven by substantial evidence, and carried out with proper due process.

What “loss of trust and confidence” means in Philippine labor law

“Loss of trust and confidence” is a just cause for termination under Article 297(c) of the Labor Code of the Philippines. The law refers to fraud or willful breach by the employee of the trust reposed in him or her by the employer or duly authorized representative.

In simple terms, the employer claims that the employee did something serious enough to make continued employment unsafe or unreasonable because the job required trust.

Common examples include allegations of:

mishandling company funds;
unauthorized discounts or refunds;
inventory shortages;
falsified reports;
unauthorized release of company property;
conflict of interest;
misuse of confidential business information;
manipulation of company records;
unexplained cash variances; or
approving transactions for personal benefit.

But the word “willful” is important. A careless mistake, poor judgment, or a minor procedural lapse is not automatically a willful breach of trust. The employer must show that the breach was intentional, knowing, and serious enough to justify dismissal.

Can you challenge it at the NLRC?

Yes. If you believe the dismissal was unfair, unsupported by evidence, procedurally defective, or too harsh, you may file a labor complaint through the required process and eventually before the NLRC Regional Arbitration Branch.

The usual case is for:

illegal dismissal;
reinstatement;
full backwages;
separation pay in lieu of reinstatement, if reinstatement is no longer practical;
unpaid wages, 13th month pay, service incentive leave pay, commissions, or final pay;
damages and attorney’s fees, when justified by the facts.

The NLRC does not treat the employer’s claim as automatically correct. In illegal dismissal cases, the employer carries the burden of proving that the dismissal was valid. The employee does not need to prove innocence beyond all doubt. The employer must prove a valid cause and due process by substantial evidence, meaning relevant evidence that a reasonable mind may accept as adequate.

Legal basis for challenging termination for loss of trust

Article 297(c) of the Labor Code

Article 297(c) allows termination for fraud or willful breach of trust. This is the main legal basis employers cite when dismissing an employee for loss of trust.

However, Supreme Court decisions have repeatedly explained that this ground is not a blank check. The employer must show that:

the employee occupied a position of trust and confidence; and
there was an act, omission, or concealment that justified the loss of trust.

In Coca-Cola FEMSA Philippines, Inc. v. Alpuerto, the Supreme Court explained that the nature and scope of the employee’s work—not merely the job title—determine whether the employee holds a position of trust. The Court also emphasized that loss of trust must be based on an actual willful breach, not simply carelessness or a harsh reaction to a minor lapse.

DOLE Department Order No. 147-15

DOLE Department Order No. 147-15, which amended the rules implementing Book VI of the Labor Code, gives practical standards for just-cause termination. For loss of confidence, the employer must show that:

there was an act, omission, or concealment;
the act justified the loss of trust;
the employee held a position of trust and confidence;
the loss of trust was not simulated;
it was not used as a subterfuge for an improper or illegal cause; and
it was genuine, not an afterthought to justify a dismissal already decided in bad faith.

These standards matter because many illegal dismissal cases turn not on whether the employer was unhappy, but whether the employer had a factual and lawful basis for ending employment.

Supreme Court doctrine: not every employee is covered the same way

The Supreme Court distinguishes between two broad categories:

Type of employee	How loss of trust is assessed
Managerial employee	The employer has wider latitude, but still needs a reasonable factual basis. The charge cannot be arbitrary, simulated, or made in bad faith.
Fiduciary rank-and-file employee	The employer must show proof of the employee’s involvement in the alleged act. Mere accusations or uncorroborated suspicions are not enough.

A managerial employee is someone entrusted with confidential or delicate matters, policy implementation, business discretion, or management authority. A fiduciary rank-and-file employee is not a manager but regularly handles significant money or property, such as a cashier, teller, auditor, warehouse custodian, inventory controller, or collection staff.

In Lima Land, Inc. v. Cuevas, the Court recognized that managerial employees and rank-and-file employees are treated differently for this ground. For rank-and-file employees, proof of actual involvement is especially important.

In Bravo v. Urios College, the Court reiterated that the employer must establish an act justifying the loss of trust. Otherwise, employees would be at the mercy of unsupported accusations.

In PNOC Development and Management Corporation v. Gomez, the Supreme Court stated that loss of trust and confidence cannot exist “in a vacuum.” There must be an underlying act, deed, or conduct from which untrustworthiness may reasonably be inferred.

Due process: the employer must follow the two-notice rule

Even if the employer believes there is a valid ground, it must still observe procedural due process.

For just-cause termination, the employer generally must give:

First written notice, often called a Notice to Explain or NTE This must clearly state the specific acts or omissions charged, the company rule or legal ground involved, and the possible penalty of dismissal.
Reasonable opportunity to explain The employee must be given a real chance to answer, submit evidence, and request or attend a hearing or conference when needed.
Second written notice, often called the Notice of Decision This must state that the employer considered the employee’s explanation and explain why dismissal is being imposed.

In King of Kings Transport, Inc. v. Mamac, the Supreme Court emphasized that procedural due process requires written notices and a meaningful opportunity to be heard. A vague accusation, verbal confrontation, or already-decided investigation is vulnerable to challenge.

If there was a valid cause but due process was not followed, the dismissal may still be upheld, but the employer may be ordered to pay nominal damages under the doctrine in Agabon v. NLRC. If there was no valid cause, the dismissal is illegal, and the employee may be entitled to reinstatement and backwages.

Step-by-step process to challenge the dismissal

1. Secure your documents immediately

Before filing, gather everything connected to your employment and dismissal. Do this as early as possible, especially if your company email, HR portal, or workplace access has been disabled.

Useful documents include:

Document	Why it matters
Employment contract or appointment letter	Shows your position, salary, start date, and benefits
Job description	Helps prove whether your role was truly managerial or fiduciary
Payslips, payroll records, BIR Form 2316	Establishes compensation for backwages computation
Notice to Explain	Shows the exact accusation and whether it was specific
Written explanation or reply	Shows your defense and facts raised before termination
Notice of Decision	Shows the employer’s stated reason for dismissal
Company handbook or code of conduct	Shows whether the alleged violation exists and the proper penalty
Emails, chat messages, memos, screenshots	May support your side or show inconsistent treatment
CCTV request letters, inventory reports, audit reports	Important in cash, property, or inventory cases
Witness affidavits	Often crucial because NLRC cases rely heavily on written evidence
Final pay computation or quitclaim	May affect settlement, waiver, or money claims

Do not alter, fabricate, or secretly access restricted systems. Preserve what you lawfully have. If evidence is with the employer, identify it clearly in your position paper and explain why it is material.

2. File a Request for Assistance under SEnA

Most labor disputes must first pass through the Single Entry Approach, or SEnA. SEnA is a mandatory conciliation-mediation mechanism under Republic Act No. 10396, which strengthened conciliation-mediation for labor cases.

SEnA is handled through a Single Entry Assistance Desk at DOLE, NCMB, NLRC, or other implementing offices. The DOLE SEnA page describes it as a 30-calendar-day conciliation-mediation process. The DOLE Assistance for Request Management System also allows online filing of a Request for Assistance.

During SEnA, the goal is settlement. For example, the parties may discuss reinstatement, separation pay, final pay, clearance, certificate of employment, or a monetary settlement.

If no settlement is reached, you should receive a referral or endorsement that allows the case to proceed to the proper forum, usually the NLRC Regional Arbitration Branch.

3. File the verified complaint with the NLRC Regional Arbitration Branch

After SEnA, file your complaint with the NLRC branch that has jurisdiction over the workplace or the proper venue under the NLRC rules. For many employees, this means the Regional Arbitration Branch covering the place where they worked.

Under the 2025 NLRC Rules of Procedure, pleadings are more formal than many employees expect. A complaint may require a verification and certification against forum shopping, meaning you confirm the truth of the allegations and certify that you have not filed the same case elsewhere.

Bring valid ID and multiple copies of your documents. Some branches may have local filing practices, online filing options, or docket requirements, so check the specific NLRC branch handling your area.

4. Attend mandatory conferences

After filing, the case will be raffled to a Labor Arbiter. The parties are then summoned to mandatory conferences.

These conferences are important. They may cover:

settlement possibilities;
clarification of claims;
identification of issues;
submission schedules;
whether the complaint needs amendment;
whether the employer contests the existence of an employer-employee relationship;
whether reinstatement is still being sought.

Do not ignore a hearing notice. Failure to appear may result in dismissal of the complaint or waiver of certain rights, depending on the circumstances and orders issued.

5. Prepare a strong position paper

In many NLRC cases, the position paper is the heart of the case. There is usually no long courtroom-style trial. The Labor Arbiter often decides based on the written submissions, affidavits, and documents.

Under the 2025 NLRC Rules, the Labor Arbiter may direct the parties to submit verified position papers with supporting documents and affidavits within the period set by the Arbiter, commonly within 10 calendar days from the termination of mandatory conciliation and mediation conference. Replies may also be allowed within the period set by the rules or order.

A strong position paper should clearly explain:

your employment history;
your position, duties, salary, and length of service;
what happened before termination;
what the employer accused you of;
why the accusation is false, unsupported, exaggerated, or not willful;
why your position was not truly managerial or fiduciary, if applicable;
what due process defects occurred;
what reliefs you are asking for; and
the evidence supporting each point.

Attach affidavits from witnesses when possible. A witness affidavit is usually stronger than merely saying “my co-workers know the truth.”

6. Wait for the Labor Arbiter’s decision

By law and procedure, labor cases are intended to move quickly. In real life, timelines vary depending on the branch, volume of cases, number of respondents, service of summons, postponements, and whether parties file motions.

A straightforward illegal dismissal case may take several months at the Labor Arbiter level. More complicated cases involving multiple respondents, overseas parties, voluminous audit records, or service problems may take longer.

7. Appeal if necessary

If either party loses before the Labor Arbiter, the decision may be appealed to the NLRC Commission level within 10 calendar days from receipt of the decision. The NLRC’s own FAQ page states that an appeal from a Labor Arbiter’s decision is brought by ordinary appeal to the NLRC within 10 calendar days from receipt.

This deadline is strict. Calendar days include weekends and holidays, although if the last day falls on a non-working day, filing rules may move the deadline to the next working day.

For employers appealing a monetary award, an appeal bond is usually required. For employees, the appeal is normally focused on legal or factual errors in the Labor Arbiter’s decision.

After the NLRC decides, a motion for reconsideration may be available within the reglementary period. Further review usually proceeds by a Rule 65 petition for certiorari with the Court of Appeals, but that is already a judicial remedy, not another ordinary factual appeal.

What arguments can win an NLRC challenge?

The employee did not hold a position of trust

Employers sometimes label employees as “trusted” simply because they were regular employees. That is not enough.

You can challenge the dismissal if your actual duties did not involve:

management discretion;
confidential or delicate company matters;
regular handling of significant funds or property;
custody of inventory or assets;
authority to approve transactions; or
fiduciary responsibilities.

The NLRC will look at actual work performed, not just the title printed on the ID or contract.

The alleged act was not proven

Loss of trust cannot rest on suspicion. In cash shortage or inventory cases, for example, ask whether the employer can prove:

the beginning and ending balances;
who had access to the funds or items;
whether procedures were followed;
whether CCTV or audit logs support the accusation;
whether others were investigated;
whether the employee personally benefited;
whether the shortage could be caused by system error, poor controls, or shared access.

For rank-and-file employees, mere accusation is especially weak if there is no proof of actual participation.

The breach was not willful

A mistake is not always dishonesty. A lapse may justify coaching, warning, suspension, or another lesser penalty, but not necessarily dismissal.

In Coca-Cola FEMSA Philippines, Inc. v. Alpuerto, the Supreme Court found dismissal too harsh where the circumstances did not establish a willful breach of trust. The Court recognized that an employee may commit an infraction, yet dismissal may still be disproportionate.

The penalty was too harsh

Even when there was an infraction, the NLRC may examine whether dismissal was proportionate.

Relevant factors may include:

length of service;
prior clean record;
value of the alleged loss;
whether the employer suffered actual damage;
whether the act was isolated;
whether company rules prescribe a lesser penalty;
whether other employees were treated differently;
whether there was good faith or an honest mistake.

Due process was defective

Common due process defects include:

no written Notice to Explain;
vague NTE, such as “loss of trust” without facts;
no reasonable time to answer;
no chance to inspect evidence;
hearing was denied despite factual disputes;
decision was made before the employee answered;
termination letter raised new grounds not stated in the NTE;
employer relied on confidential evidence never shown to the employee.

Due process defects may not always make the dismissal illegal if there was a valid cause, but they can still affect the outcome and monetary awards.

Remedies if the NLRC finds illegal dismissal

If the dismissal is declared illegal, the usual remedies under Article 294 of the Labor Code include:

Remedy	Meaning
Reinstatement	Return to the former position without loss of seniority rights and privileges
Full backwages	Salaries and benefits lost from dismissal until actual reinstatement or finality, depending on the case
Separation pay in lieu of reinstatement	Ordered when reinstatement is no longer feasible, such as serious strained relations or closure
Unpaid benefits	Final pay, 13th month pay, unused service incentive leave, commissions, or other earned amounts
Damages and attorney’s fees	Possible when dismissal involved bad faith, oppressive conduct, or unjustified withholding

The exact computation depends on salary, benefits, date of dismissal, date of decision, feasibility of reinstatement, and evidence of unpaid claims.

Prescriptive period: how long do you have to file?

An illegal dismissal complaint is generally treated as an action based on injury to rights and must be filed within four years. The Supreme Court has applied the four-year period under Article 1146 of the Civil Code to illegal dismissal cases, including related claims for backwages and damages.

However, ordinary money claims arising from employer-employee relations are generally subject to the three-year prescriptive period under Article 306 of the Labor Code. This distinction matters when a complaint includes both illegal dismissal and separate unpaid wage or benefit claims.

Even if four years sounds long, filing early is usually better. Evidence disappears, witnesses leave, company systems change, and memories fade.

Practical tips for employees in loss-of-trust cases

Write a timeline while events are still fresh.
Keep copies of all notices, replies, and HR messages.
Identify who had access to the money, property, system, or documents involved.
Check whether the company followed its own investigation procedure.
Compare your penalty with penalties imposed on other employees for similar violations.
Avoid emotional accusations in filings; focus on facts and documents.
Do not rely only on “I did not do it.” Explain why the employer’s evidence is weak.
If you signed a quitclaim, keep a copy and note the circumstances, amount paid, and whether you understood what you signed.

Special situations for Filipinos abroad and foreign employees

A Filipino employee who is abroad may still need to sign documents for filing or representation. In practice, an authorized representative may be asked to present a Special Power of Attorney. If signed abroad, the SPA may need proper notarization, apostille, or Philippine consular authentication depending on the country where it is executed and the receiving office’s requirements.

Foreign employees working in the Philippines may also file labor claims if there is an employer-employee relationship covered by Philippine labor law. Useful documents include the employment contract, work visa or permit documents, payslips, company ID, tax records, and communications showing the work arrangement. Immigration status issues are separate from the employer’s duty to comply with labor standards and termination rules, but they can affect documentation and practical handling of the case.

OFW cases have special rules under migrant worker laws and may involve recruitment agencies, foreign principals, and different venue options. If the termination happened under an overseas employment contract, the case should be framed carefully because the proper parties and remedies may differ from an ordinary local employment dispute.

Common mistakes that weaken an NLRC case

Signing a broad quitclaim without understanding it

A quitclaim is not automatically valid or invalid. The NLRC and courts look at whether it was voluntarily signed, whether the consideration was reasonable, and whether the employee fully understood the waiver. A quitclaim signed under pressure, for a very small amount, or without a clear explanation may still be challenged, but it can complicate the case.

Missing deadlines and hearings

Many employees lose leverage because they miss mandatory conferences or submit position papers late. NLRC proceedings are more flexible than regular courts, but orders and deadlines still matter.

Failing to attach affidavits

If a co-worker can support your version, ask for a written affidavit. The Labor Arbiter may not give much weight to statements like “many employees can confirm this” if no one actually signs a sworn statement.

Ignoring the job-title issue

If the employer calls you “manager,” examine your actual powers. Could you hire, fire, discipline, approve budgets, bind the company, or access confidential strategy? If not, explain that clearly. A title alone should not convert an employee into a managerial employee for purposes of loss of trust.

Treating the case like a criminal trial

An NLRC case is not a criminal case. The employer does not need proof beyond reasonable doubt. But it still needs substantial evidence. Your goal is to show that the employer’s evidence is unreliable, incomplete, speculative, inconsistent, or insufficient under labor standards.

Frequently Asked Questions

Can I file an illegal dismissal case if my employer says I was terminated for loss of trust?

Yes. Loss of trust is a just cause only when supported by facts, substantial evidence, and due process. If the accusation is unsupported, exaggerated, not willful, or procedurally defective, you may challenge it through SEnA and the NLRC.

Is suspicion enough to dismiss an employee for loss of trust?

No. Suspicion alone is not enough. The employer must prove an act, omission, or concealment that reasonably justifies the loss of trust. For rank-and-file fiduciary employees, the employer must show proof of involvement in the alleged incident.

What if I handled company money or inventory?

Handling money or inventory may make you a fiduciary employee, but it does not automatically make the dismissal valid. The employer still must prove that you were responsible for the alleged shortage, fraud, or breach, and that the breach was willful.

What if I was not given a Notice to Explain?

That is a due process issue. If there was no valid cause, the dismissal may be illegal. If there was a valid cause but the employer failed to follow proper procedure, the dismissal may be upheld but the employer may be ordered to pay nominal damages.

Do I need a lawyer to file at the NLRC?

A lawyer is not strictly required to file a labor complaint. Many employees file on their own. However, loss-of-trust cases can be evidence-heavy, especially when they involve audits, inventory, system access, or managerial duties. The most important filing is often the position paper, so it must be clear, organized, and supported by documents.

How long do I have to file an illegal dismissal case?

Illegal dismissal cases generally prescribe in four years. Separate money claims generally prescribe in three years. Filing earlier is safer because evidence and witnesses become harder to secure over time.

Can the NLRC order reinstatement after a loss-of-trust dismissal?

Yes, if the dismissal is found illegal and reinstatement is still feasible. If reinstatement is no longer practical due to strained relations or other circumstances, separation pay in lieu of reinstatement may be ordered, along with backwages when proper.

Can I still challenge the dismissal if I already received final pay?

Receiving final pay does not automatically bar an illegal dismissal case. The issue is whether you signed a valid quitclaim or waiver, whether it was voluntary, and whether the amount was reasonable. Keep copies of everything you signed and received.

What if the employer filed a criminal complaint against me?

A criminal complaint does not automatically make the dismissal valid. The NLRC decides whether there was a valid labor-law basis for termination using substantial evidence. A criminal case has a different standard and procedure. Still, the facts in one case may affect the other, so consistency in your explanation is important.

Can a foreign employee file a labor case in the Philippines?

Yes, if the employment relationship is covered by Philippine labor law and the employer or workplace falls within Philippine jurisdiction. The foreign employee should prepare employment documents, proof of work performed, compensation records, immigration or work permit documents if available, and evidence of termination.

Key Takeaways

You can challenge termination for loss of trust at the NLRC through an illegal dismissal complaint after the required SEnA process.
Loss of trust is valid only when based on a proven, willful breach connected to a position of trust.
Job title is not controlling; the NLRC looks at the employee’s actual duties.
Managerial employees and fiduciary rank-and-file employees are assessed differently, but both are protected from arbitrary dismissal.
The employer must prove both just cause and procedural due process.
A vague accusation, weak audit, unsupported suspicion, or harsh penalty can be challenged.
The position paper is often the most important document in the NLRC case.
Illegal dismissal may result in reinstatement, backwages, separation pay in lieu of reinstatement, unpaid benefits, damages, and attorney’s fees when justified.