When an Employee's Unauthorized Acts Justify Dismissal: Meralco v. Dejan

The Supreme Court's 2012 decision in Manila Electric Company v. Dejan (G.R. No. 194106) clarifies an important point in Philippine labor law: when an employee's unauthorized actions go beyond simple negligence and amount to serious misconduct, dismissal is justified. The case involved a Meralco branch representative who released 20 meter sockets without proper authorization, leading to his termination. The ruling provides valuable guidance on how courts distinguish between good-faith errors and fraudulent conduct that warrants the ultimate penalty.

The Facts of the Case

Herminigildo Dejan worked as a branch representative for Meralco's San Pedro, Laguna branch, earning P30,500 monthly. His duties included accepting payments for electric service installation and issuing meter sockets after deposit payments. On March 18, 2005, a security guard observed a private electrician taking 20 meter sockets from the branch premises, which were then loaded into a Meralco-contracted jeep and brought to the driver's house.

When asked to explain, Dejan admitted releasing the sockets because deposit fees had been paid. He claimed this followed accepted office practice, provided the deposit was settled. However, Meralco's investigation revealed that Dejan released the items without written authorization or a special power of attorney from the customers—a violation of company policy.

The Procedural History

The Labor Arbiter dismissed Dejan's complaint, finding his dismissal valid. The NLRC reversed, holding Dejan liable only for simple negligence and ordering reinstatement without backwages. The Court of Appeals affirmed the NLRC but added backwages. Meralco then appealed to the Supreme Court.

The Supreme Court's Ruling

The Supreme Court reversed the lower courts, reinstating Dejan's dismissal. The Court found that Dejan's actions constituted serious misconduct, fraud, and willful breach of trust—just causes for termination under Article 282 of the Labor Code.

The Court emphasized several key facts. Dejan released the meter sockets without the required written authorization. The service identification numbers he submitted covered applications that had already been inspected and installed with meters before the release date—undermining his claim that the sockets were for legitimate pending applications. Most tellingly, the evidence suggested Dejan acted in concert with another Meralco employee engaged in private electrical contracting, using the company's property for unauthorized purposes.

The Court rejected the argument that Dejan merely followed accepted practice, noting that he was the one preparing the contracts and should have known their status. His submission of already-completed SINs appeared designed to create a semblance of regularity and avoid liability.

The Standard for Loss of Trust and Confidence

The ruling reinforces that loss of trust and confidence is a valid ground for dismissal when the employee holds a position of responsibility. As a branch representative tasked with accepting payments and issuing equipment, Dejan was required to act with the highest degree of honesty and integrity. The Court noted that Meralco, as a public utility, cannot be compelled to continue employing someone who committed fraudulent acts, as this would harm the company's interests.

Practical Takeaways

• Unauthorized acts with fraudulent intent justify dismissal. When an employee's actions go beyond mere negligence and show intent to deceive the employer, termination is warranted under Article 282 of the Labor Code.
• Documentation matters. Employees who release company property without required authorization—such as a special power of attorney—expose themselves to liability, even if they claim good faith.
• Accepted practice is not a defense to fraud. Claiming that an irregular act followed "office practice" will not protect an employee when the evidence shows deliberate deception.
• Employers may validly terminate for loss of trust. Positions of responsibility, particularly those involving handling company property or money, require a higher standard of integrity.
• Courts will scrutinize suspicious patterns. When an employee's explanations are contradicted by documentary evidence, courts may infer fraudulent intent.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.