Article 297 (c) governs acts of Fraud or Willful Breach of Trust. This is one of the most widely cited grounds for dismissal in corporate environments, but it is also one of the most strictly regulated by the courts to prevent arbitrary management lockouts.

The Legal Prerequisites for Loss of Confidence:

An employer cannot simply claim they "no longer trust" an employee. The law requires a specific framework to validate a termination under this ground:

• Position of Trust: The employee must hold a position that naturally demands a high level of institutional trust. The courts divide these into two classes: (1) Managerial employees who make high-level decisions, and (2) Cashiers, auditors, or property custodians who routinely handle company funds or assets.
• Work-Connected Act: The breach or act of fraud must be directly related to the employee’s duties, demonstrating that they are no longer dependable.
• Substantial Basis: The loss of confidence must be founded on a clear, proven incident. It cannot be based on mere rumors, abstract assumptions, or unverified workplace speculation.

Distinction for Rank-and-File: For standard rank-and-file workers who do not handle funds or management assets, "loss of confidence" is virtually non-existent as an independent ground for termination. Their actions must instead be prosecuted under Serious Misconduct or Fraud.