SECOND DIVISION

G.R. No. 200222

August 28, 2013

INTEGRATED MICROELECTRONICS, INC., Petitioner,

vs.
ADONIS A. PIONILLA, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
The Court hereby resolves the Motion for Reconsideration1 filed by petitioner Integrated Microelectronics, Inc.
(IMI) from its Resolution2 dated January 14, 2013, denying its petition for review on certiorari3 which assailed
the Decision4 dated July 28, 2011 and Resolution5 dated January 16, 2012 of the Court of Appeals (CA) in CAG.R. SP No. 113274 finding respondent Adonis A. Pionilla (Pionilla) to have been illegally dismissed. For
clarity, the Court briefly recounts the antecedents of this case.
The Facts
On November 14, 1996, Pionilla was hired by IMI as its production worker. On May 5, 2005, Pionilla received
a notice from IMI requiring him to explain the incident which occurred the day before where he was seen
escorting a lady to board the company shuttle bus at the Alabang Terminal. It was reported by the bus marshall
that the lady was wearing a company identification card (ID) which serves as a free pass for shuttle bus
passengers even if she was just a job applicant at IMI. In this regard, Pionilla admitted that he lent his ID to
the lady who turned out to be his relative. He further intimated that he risked lending her his ID to save on their
transportation expenses. Nevertheless, he apologized for his actions.6
A Conscience Committee (committee) was subsequently formed to investigate the matter. During the committee
hearing, Pionilla admitted that at the time of the incident, he had two IDs in his name as he lost his original ID
in November 2004 but was able to secure a temporary ID later. As Pionilla and his relative were about to board
the shuttle bus, they were both holding separate IDs, both in his name. Based on the foregoing, IMI found
Pionilla guilty of violating Article 6.12 of the Company Rules and Regulations (CRR) which prohibits the
lending of ones ID since the same is considered a breach of its security rules and carries the penalty of
dismissal. Subsequently, or on August 17, 2005, Pionilla received a letter dated August 16, 2005 informing him
of his dismissal from service. Three days after, he filed a complaint for illegal dismissal with damages against
IMI.7
On May 17, 2007, the Labor Arbiter (LA) rendered a Decision8 finding Pionilla to have been illegally dismissed
by IMI and, as such, ordered the latter to reinstate him to his former position and to pay him backwages in the
amount of P417,818.78. The LA held that Pionilla was harshly penalized,9 observing that the latter did not
breach the security of the company premises since his companion was not able to enter the said premises nor
board the shuttle bus.10 The LA added that the misdeed was not tainted with any wrongful intent as it was
merely impelled by a mistaken notion of comradeship ("pakikisama") and gratitude ("utang na loob") on
Pionillas part.11 Further, the LA held that no dishonesty can be attributed to Pionillas act of keeping his old ID
as this appeared to be a new charge, or at the very least, was merely incidental to the first offense of lending a

company ID to another.12Dissatisfied, IMI elevated the matter to the National Labor Relations Commission
(NLRC).
On appeal, the NLRC, through a Decision dated June 30, 2008,13 reversed the LAs ruling, finding Pionillas
dismissal to be valid. It pointed out that Pionillas act of lending his temporary ID was willful and intentional as
he, in fact, admitted and apologized for the same.14 The NLRC further ruled that Pionillas attitude in violating
the CRR could be treated as perverse as bolstered by his failure to surrender his temporary ID despite locating
the original one.15 Dissatisfied, Pionilla filed a petition for certiorari before the CA.
On July 28, 2011, the CA rendered a Decision,16 granting Pionillas petition. It found that while IMIs
regulations on company IDs were reasonable, the penalty of dismissal was too harsh and not commensurate to
the misdeed committed. It also stated that the while the right of the employer to discipline is beyond question, it,
nevertheless, remains subject to reasonable regulation.17 It further noted that Pionilla worked with IMI for a
period of nine years without any derogatory record and even observed that his performance rating had always
been "outstanding."18Undaunted, IMI moved for reconsideration which was, however, denied in a
Resolution19 dated January 16, 2012.
In view of the CAs ruling, IMI filed a petition for review on certiorari before the Court which was equally
denied in a Resolution20 dated January 14, 2013, pronouncing that there was no reversible error on the part of
the CA in finding Pionilla to have been illegally dismissed. The Court ruled that the imposition of the penalty of
dismissal was too harsh and incommensurate to the infraction he committed, this especially considering his nine
years of unblemished service. Hence, the present motion for reconsideration.
The Issue Before the Court
The essential issue for the Courts resolution is whether or not its Resolution dated January 14, 2013 should be
reconsidered. Among others, IMI contends that to award Pionilla reinstatement and full backwages would not
only be excessive and unfair, but would be contrary to existing principles of law and jurisprudence.21
The Courts Ruling
The motion for reconsideration is partly granted.
As a general rule, an illegally dismissed employee is entitled to reinstatement (or separation pay, if
reinstatement is not viable) and payment of full backwages. In certain cases, however, the Court has carved out
an exception to the foregoing rule and thereby ordered the reinstatement of the employee without backwages on
account of the following: (a) the fact that dismissal of the employee would be too harsh of a penalty; and (b)
that the employer was in good faith in terminating the employee. The aforesaid exception was recently applied
in the case of Pepsi-Cola Products, Phils., Inc. v. Molon,22 wherein the Court, citing several precedents, held as
follows:
An illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement
is no longer viable, and backwages.23 In certain cases, however, the Court has ordered the reinstatement of the
employee without backwages considering the fact that (1) the dismissal of the employee would be too harsh a
penalty; and (2) the employer was in good faith in terminating the employee. For instance, in the case of Cruz v.
Minister of Labor and Employment24 the Court ruled as follows:

The Court is convinced that petitioner's guilt was substantially established. Nevertheless, we agree with
respondent Minister's order of reinstating petitioner without backwages instead of dismissal which may be too
drastic. Denial of backwages would sufficiently penalize her for her infractions. The bank officials acted in
good faith. They should be exempt from the burden of paying backwages. The good faith of the employer, when
clear under the circumstances, may preclude or diminish recovery of backwages. Only employees
discriminately dismissed are entitled to backpay.
Likewise, in the case of Itogon-Suyoc Mines, Inc. v. National Labor Relations Commission,25 the Court
pronounced that "the ends of social and compassionate justice would therefore be served if private respondent is
reinstated but without backwages in view of petitioner's good faith."
The factual similarity of these cases to Remandabans situation deems it appropriate to render the same
disposition.26 (Emphasis and underscoring in the original)
In this case, the Court observes that: (a) the penalty of dismissal was too harsh of a penalty to be imposed
against Pionilla for his infractions; and (b) IMI was in good faith when it dismissed Pionilla as his dereliction of
its policy on ID usage was honestly perceived to be a threat to the company's security. In this respect, since
these concurring circumstances trigger the application of the exception to the rule on backwages as enunciated
in the above-cited cases, the Court finds it proper to accord the same disposition and consequently directs the
deletion of the award of back wages in favor of Pionilla, notwithstanding the illegality of his dismissal.
WHEREFORE, the motion for reconsideration is PARTLY GRANTED. The Court's Resolution dated January
14, 2013 is hereby MODIFIED, directing the deletion of the award of back wages in favor of respondent Adonis
A. Pionilla.
SO ORDERED.

THIRD DIVISION
EATS-CETERA FOOD SERVICES OUTLET
and/or SERAFIN RAMIREZ,
Petitioners,

- versus -

MYRNA B. LETRAN and MARY GRACE

ESPADERO,
Respondents.

G.R. No. 179507

Present:
YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.
Promulgated:
October 2, 2009

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

Before us is a petition for review on certiorari assailing the December 13, 2006 Decision[1] of the Court
of Appeals (CA), as well as its August 30, 2007 Resolution, [2]denying the motion for partial reconsideration
filed by petitioners in CA-G.R. SP No. 92551. The appellate court, in its assailed decision and resolution,
affirmed the July 18, 2005 Resolution[3] of the National Labor Relations Commission (NLRC) with respect to
Myrna B. Letrans complaint but modified it with respect to Mary Grace Espaderos (Espadero) complaint

declaring petitioners liable for her illegal dismissal. Petitioners are now assailing the CAs decision only with
respect to its ruling on Espaderos case.
The factual antecedents follow.
Espadero had been employed by Eats-cetera Food Services Outlet since June 30, 2001 as cashier. On
November 20, 2002, when she reported for duty, Espadero discovered that her time card was already punched
in. After asking around, she found out that a certain Joselito Cahayagan was the one who punched in her time
card. Espadero, however, failed to report the incident to her supervisor, Clarissa Reduca (Reduca). This
prompted Reduca to report the incident to the personnel manager, Greta dela Hostria. Espadero contended that
she was dismissed outright without being given ample opportunity to explain her side. She claimed that on
November 21, 2002, petitioners called her and asked her to make a letter of admission as a condition for her
reemployment. Espadero, thus, wrote:
Dear Sir/Madam,
Ako po ay humihingi ng paumanhin sa aking nagawang pagkakamali. Hindi ko po alam
na pina in po ng aking kasama sa trabaho ang aking time card. Di ko agad nasabi sa supervisor.
Nagpapasalamat din po ako kay Januarylyn Paq (some text missing) at Nida Tendenilla sa
kanilang ginawa dahil dito maituwid po ang aking pagkakamali. Sana po ako ay inyong
maunawaan.
Gumagalang,
Mary Grace Espadero[4]

After writing the letter, Espadero was told to wait for an assignment. The following day, on November 22, 2002,
the company issued a Memorandum[5] terminating her for violation of Rule 24 of the company rules and
regulations.[6] Because of this, Espadero decided to file a complaint for illegal dismissal before the NLRC.
Petitioners, however, maintained that the company rules and regulations, as well as the corresponding
penalties in case of violation thereof, were made known to Espadero before and upon her actual employment as
cashier. They also argued that contrary to her claim, petitioners gave Espadero ample opportunity to explain her
side. To prove their contention, petitioners presented the affidavit of supervisor Reduca stating thus:
On November 20, 2002, someone else punched in the respective time cards of the said
Mary Grace Espadero and Fritzie Eviota, but the said employees deliberately failed to inform her
(sic) about it, [which is] a gross violation of Rule # 24 of the companys Rules and Regulations.
The matter was immediately reported to our Personnel Manager, Ms. GRETA V. DELA
HOSTRIA. She then issued separate memorandum each for Mary Grace Espadero and Fritzie
Eviota to explain in writing, within 72 hours, why no disciplinary action should be taken[]
against them.
She personally handed over to Mary Grace Espadero and Fritzie Eviota their individual
memoranda for their acknowledgement, but they requested a little time more before returning the

duly acknowledged cop[ies] as, allegedly, they would be going over the same first. While they
were able to submit their respective written explanations anent the aforesaid incident, they never
returned the duly acknowledged cop[ies] of my (sic) memoranda to me.[7]

Petitioners also claimed that they conducted an impartial investigation of the incident and found
substantial evidence that Espadero was in cahoots with a co-worker in punching in her time card. [8] For this
reason, petitioners decided to terminate her.
On January 31, 2005, Labor Arbiter Luis D. Flores rendered a Decision [9] declaring petitioners liable for
illegally terminating Espadero. The Labor Arbiter faulted petitioners for their failure to prove that Espadero
deliberately caused another person to punch in her time card on her behalf, and said that no hearing or
investigation was conducted to prove that Espadero was in cahoots with somebody in the alleged dishonest act
prior to her dismissal.[10] Petitioners were ordered to reinstate Espadero and to pay her full backwages from the
date of dismissal up to actual reinstatement.
Upon appeal, the NLRC reversed the Labor Arbiters findings. It ratiocinated that Espadero was duly
afforded her right to due process as can be gleaned from Reducas affidavit, the contents of which were never
denied nor rebutted by Espadero.[11]
Aggrieved, respondents filed a petition for certiorari before the CA. On December 13, 2006, the CA
rendered a ruling affirming the Labor Arbiters pronouncement that Espadero was not afforded due process. The
appellate court also observed that the punishment of dismissal was too harsh and unjustified.[12]
Petitioners now come before this Court via this Rule 45 petition. It is their contention that Espaderos
infraction constitutes serious misconduct, considering that Espaderos job requires a higher degree of honesty.
There are essentially two issues to be resolved: first, whether Espadero was afforded her right to due
process prior to being dismissed from her job; and second, whether Espaderos infraction was serious enough to
warrant the penalty of dismissal.
The petition is impressed with merit.
Article 282 of the Labor Code includes serious misconduct, fraud and willful breach of trust among the
just causes for termination.[13] But prior to termination on such grounds, the employer must satisfy both
substantive and procedural due process. Not only must the employee be afforded a reasonable opportunity to be
heard and to submit any evidence he may have in support of his defense, but the dismissal must be for a just or
authorized cause as provided by law.[14]
The procedural requirements are set forth in Section 2(d), Rule I of the Implementing Rules of Book VI
of the Labor Code, to wit:

SEC. 2. Security of Tenure. x x x.

xxxx
(d) In all cases of termination of employment, the following standards of due process
shall be substantially observed:
For termination of employment based on just causes as defined in Article 282 of the
Labor Code:
(i)

A written notice served on the employee specifying the ground or grounds for
termination, and giving said employee reasonable opportunity within which to
explain his side.

(ii)

A hearing or conference during which the employee concerned, with the assistance
of counsel if he so desires is given opportunity to respond to the charge, present his
evidence, or rebut the evidence presented against him.

(iii) A written notice of termination served on the employee, indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.

Reducas affidavit avers that Espadero was notified by the personnel manager and was asked to explain
her side within 72 hours. As there was no duplicate copy, the only copy of the notice to explain remained with
Espadero. While it may be highly suspicious for a personnel manager not to keep a copy of such an important
document, Reducas averment that the only copy of the notice to explain was handed to Espadero herself was
never denied nor controverted by the latter. Wittingly or not, the averment is deemed to have been admitted by
Espadero. This being so, petitioners may be said to have sufficiently complied with the first notice
requirement, i.e., that the employee must first be given a notice to explain her side.
Petitioners likewise complied with the second notice requirement. On November 22, 2002, Greta dela
Hostria, as personnel manager, issued a Memorandum stating with clarity the reason for Espaderos dismissal. It
reads:
MEMORANDUM
TO
FROM
RE
DATE

:
:
:
:

Mary Grace Espadero CB Manila

Personnel Department
As stated
November 22, 2002

We received your explanation regarding [you] not reporting to your immediate supervisor that
somebody have (sic) punched in your Time Card last November 20, 2002. After a thorough
investigation of the incident, we found that you violated Rule # 24 which states:

Punching/Signing of timecards for other employees or requesting another employee to

punch/sign his Time Card Record, which is punishable by DISMISSAL.
Because of this we regret that we are terminating your services effective November 22, 2002 as
provided by [the] company[s] Rules and Regulations.
(Sgd.) GRETA V. DELA HOSTRIA
Personnel Manager
NOTED:
(Sgd.) SERAFIN T. RAMIREZ
Vice-President[15]

Substantively, we also sustain petitioners reasoning that Espaderos position as a cashier is one that
requires a high degree of trust and confidence, and that her infraction reasonably taints such trust and
confidence reposed upon her by her employer.
A position of trust and confidence has been defined as one where a person is entrusted with confidence on
delicate matters, or with the custody, handling, or care and protection of the employers property [16] and/or
funds.[17] One such position is that of a cashier. A cashier is a highly sensitive position which requires absolute
trust and honesty on the part of the employee. [18] It is for this reason that the Court has sustained the dismissal of
cashiers who have been found to have breached the trust and confidence of their employers. In one case, the
Court upheld the validity of the dismissal of a school cashier despite her 19 years of service after evidence
showed that there was a discrepancy in the amount she was entrusted to deposit with a bank.[19]
In Metro Drug Corporation v. National Labor Relations Commission,[20] we explained:
Loss of confidence as a ground for dismissal does not entail proof beyond reasonable
doubt of the employees misconduct. It is enough that there be some basis for such loss of
confidence or that the employer has reasonable grounds to believe, if not to entertain the moral
conviction[,] that the employee concerned is responsible for the misconduct and that the
nature of his participation therein rendered him absolutely unworthy of the trust and
confidence demanded by his position.[21]

The rule, therefore, is that if there is sufficient evidence to show that the employee occupying a position
of trust and confidence is guilty of a breach of trust, or that his employer has ample reason to distrust him, the
labor tribunal cannot justly deny the employer the authority to dismiss such employee.[22]
In the instant case, petitioners cannot be faulted for losing their trust in Espadero. As an employee
occupying a job which requires utmost fidelity to her employers, she failed to report to her immediate
supervisor the tampering of her time card. Whether her failure was deliberate or due to sheer negligence, and
whether Espadero was or was not in cahoots with a co-worker, the fact remains that the tampering was not
promptly reported and could, very likely, not have been known by petitioners, or, at least, could have been

discovered at a much later period, if it had not been reported by Espaderos supervisor to the personnel manager.
Petitioners, therefore, cannot be blamed for losing their trust in Espadero.
Moreover, the peculiar nature of Espaderos position aggravates her misconduct. Misconduct has been
defined as improper or wrong conduct; the transgression of some established or definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in
judgment. The misconduct, to be serious, must be of such a grave character and not merely trivial or
unimportant. To constitute just cause for termination, it must be in connection with the employees work. [23]With
the degree of trust expected of Espadero, such infraction can hardly be classified as one that is trivial or
unimportant. Her failure to promptly report the incident reflects a cavalier regard for the responsibility required
of her in the discharge of the duties of her position.
WHEREFORE, premises considered, the petition is GRANTED. The December 13, 2006 Decision of
the Court of Appeals, as well as its August 30, 2007 Resolution with respect to Mary Grace Espaderos case,
is REVERSED and SET ASIDE. Accordingly, the National Labor Relations Commissions Resolution dated
July 18, 2005 isREINSTATED.
SO ORDERED.
THIRD DIVISION
G.R. No. 198620, November 12, 2014
P.J. LHUILLIER, INC. AND MARIO RAMON LUDEA, Petitioners, v. FLORDELIZ
VELAYO,Respondent.
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari1 under Rule 45 of the Decision2 dated June 30, 2011 of
the Court of Appeals (CA) in CA-G.R. SP No. 03069, affirming the finding of the National Labor Relations
Commission (NLRC) that respondent Flordeliz Velayo (respondent) was illegally dismissed. The
Resolution3 dated September 14, 2011 denied the motion for reconsideration
thereof.ChanRoblesVirtualawlibrary
The Facts
The essential antecedent facts are summarized in the assailed CA decision, to wit:chanroblesvirtuallawlibrary
On June 13, 2003, (herein petitioner) PJ (CEBU) LHUILLIER, INC. (PJ LHUILLIER for brevity) hired
FLORDELIZ M. ABATAYO [sic] as Accounting Clerk at the LH-4, Cagayan de Oro City Branch with a basic
monthly salary of P9,353.00. On February 9, 2008 appellant (herein private respondent) was served with a
Show Cause Memo by MARIO RAMON LUDENA, Area Operations Manager of PJ Lhuillier (herein
petitioner), ordering her to explain within 48 hours why no disciplinary action should be taken against her for
dishonesty, misappropriation, theft or embezz[le]ment of company funds in violation of Item 11, Rule V of the

Company Code of Conduct. Thereafter, (s)he was placed under preventive suspension from February 9 to
March 8, 2008 while her case was under investigation.
The charges against the appellant (herein private respondent) were based on the Audit Findings conducted on
October 29, 2007, where the overage amount of P540.00 was not reported immediately to the supervisor, not
recorded at the end of that day.
On February 11, 2008, complainant (herein private respondent) submitted her reply and admitted that she was
not able to report the overage to the supervisor since the latter was on leave on that day and that she was still
tracing the overage; and that the omission or failure to report immediately the overage (sic) was just a simple
mistake without intent to defraud her employer.
On March 10, 2008, after the conduct of a formal investigation and after finding complainant's (herein private
respondent's) [explanations] without merit, PJ LHUILLIER (herein petitioner) terminated her employment as
per Notice of Termination on grounds of serious misconduct and breach of trust.4 (Citation omitted)
On March 14, 2008, the respondent filed a complaint for illegal dismissal, separation pay and other damages
against RJ. Lhuillier, Inc. (PJLI) and Mario Ramon Ludena, Area Operations Manager (petitioners). On July 23,
2008, the Labor Arbiter (LA) rendered judgment, the dispositive portion of which reads as
follows:chanroblesvirtuallawlibrary
WHEREFORE, in view of all the foregoing, judgment is hereby entered ordering the dismissal of the instant
complaint for lack of merit.
SO ORDERED.5chanrobleslaw
The LA found that the respondent's termination was valid and based not on a mere act of simple negligence in
the performance of her duties as cashier:chanroblesvirtuallawlibrary
This is not a case of simple negligence as the facts show that complainant, instead of reporting the matter
immediately, had set aside the P540.00 for her personal use instead of reporting the overage or recording it in
the operating system of the company.
Complainant is not entitled to moral as well as exemplary damages for lack of basis.6chanrobleslaw
On appeal, the NLRC in its Decision dated March 19, 2009 countermanded the LA, holding that the respondent
was illegally dismissed since the petitioners failed to prove a just cause of serious misconduct and willful
breach of trust:chanroblesvirtuallawlibrary
In fine, the Labor Arbiter a quo utterly disregarded the rule on proportionality that has been observed in a
number of cases, that is, "the penalty imposed should be commensurate to the gravity of his offense." x x x
xxxx
In the instant case, PJ LHUILLIER was not able to discharge the burden of proving that the dismissal of the
complainant was for valid or just causes of serious misconduct and willful breach of trust. Thus, We disagree
with the Labor Arbiter's findings and conclusion that complainant was validly dismissed from service.
xxxx
... Significantly, the complainant's omission or procedural lapse did not cause any loss or damage to the
company.7chanrobleslaw

Nonetheless, finding that the relations between the petitioners and the respondent have become strained, the
NLRC did not order the reinstatement of the respondent. Thus:chanroblesvirtuallawlibrary
WHEREFORE, the instant appeal is GRANTED. The assailed decision is hereby SET ASIDE and REVERSED,
and a new one entered declaring that complainant was ILLEGALLY DISMISSED. Accordingly, respondent PJ
(CEBU) LHUILLIER, INC. is hereby ORDERED:chanroblesvirtuallawlibrary
(a) to pay complainant separation pay equivalent to one (1) month salary for every year of service, a fraction of
at least six (6) months being considered as one (1) whole year in lieu of reinstatement due to strained
relationship, computed from June 13, 2003 up to the finality of the promulgation of this
judgment;cralawlawlibrary
(b) to pay complainant FULL BACKWAGES in accordance with Bustamante vs. NLRC ruling (265 SCRA
061); and
(c) to pay ten percent (10%) of the total money award as attorney's fees.
SO ORDERED.8chanrobleslaw
The NLRC subsequently denied the petitioners' motion for reconsideration thereof. On July 31, 2009, the
petitioners filed a petition for certiorari in the CA with prayer for issuance of a temporary restraining order
(TRO) and/or writ of preliminary injunction, invoking the following issues:chanroblesvirtuallawlibrary
I
WHETHER OR NOT THE RESPONDENT [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT DEVIATED FROM THE
FINDINGS OF FACTS OF THE HONORABLE LABOR ARBITER.ChanRoblesVirtualawlibrary
II
WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE ISSUANCE OF A TEMPORARY
RESTRAINING ORDER AND/OR WRIT OF PRELIMINARY INJUNCTION PENDING THE
RESOLUTION OF THE INSTANT PETITION.9chanrobleslaw
The respondent filed her comment on August 19, 2009. On October 8, 2009, the petitioners filed an urgent
motion to resolve their petition for certiorari and prayer for TRO and/or writ of preliminary injunction. On
November 9, 2009, the CA denied the petitioners' prayer for TRO stating that they have not shown that they
stood to suffer grave and irreparable injury if the TRO was denied. The remaining issue in the CA, then, was
whether the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it set
aside the factual conclusion and ruling of the LA. The CA ruled in the negative:chanroblesvirtuallawlibrary
We concur with the NLRC in finding for private respondent. Time and again, the Supreme Court has held that it
is cruel and unjust to impose the drastic penalty of dismissal if not commensurate to the gravity of the misdeed.
In employee termination disputes, the employer bears the burden of proving that the employee's dismissal was
for just and valid cause. In the instant case, the evidence does not support the finding of the Labor Arbiter that
private respondent is guilty of serious misconduct.
In this jurisdiction, the Supreme Court has consistently defined misconduct as an improper or wrong conduct, a
transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in

character, implies wrongful intent and not mere error of judgment. To be a just cause for termination under
Article 282 of the Labor Code of the Philippines, the misconduct must be serious, that is, it must be of such
grave and aggravated character and not merely trivial or unimportant. However serious, such misconduct must
nevertheless be in connection with the employee's work; the act complained of must be related to the
performance of the employee's duties showing him to be unfit to continue working for the employer.
Private respondent's lapse was not a "serious" one, let alone indicative of serious misconduct. In fact, she
(herein private respondent) admitted that she was not able to report the overage to the supervisor since the latter
was on leave on that day and that she was still tracing the overage; and that the omission or failure to report
immediately the overage was just a simple mistake without intent to defraud her employer. As found by
the NLRC, private respondent worked for petitioner for almost six (6) years, and it is not shown that she
committed any infraction of company rules during her employment. In fact, private respondent was once
awarded by petitioner due to her heroic act of defending her Manager, Ms. Lilibeth Cortez, while resisting a
hold-upper.
The settled rule is that when supported by substantial evidence, factual findings made by quasi-judicial and
administrative bodies are accorded great respect and even finality by the courts. These findings are not
infallible, though; when there is a showing that they were arrived at arbitrarily or in disregard of the evidence on
record, they may be examined by the courts. Hence, when factual findings of the Labor Arbiter and the NLRC
are contrary to each other, there is a necessity to review the records to determine which conclusions are more
conformable to the evidentiary facts. The case before Us shows that the finding of the NLRC is supported by
substantive evidence as compared to the finding of the Labor Arbiter with respect to the issue of illegal
dismissal. Moreover, in case of doubt, such cases should be resolved in favor of labor, pursuant to the social
justice policy of labor laws and the Constitution.
Finally, it is a time-honored principle that although it is the prerogative of management to employ the services
of a person and likewise to discharge him, such is not without limitations and restrictions. The dismissal of an
employee must be done with just cause and without abuse of discretion. It must not be done in an arbitrary and
despotic manner. To hold otherwise would render nugatory the security of tenure clause enshrined in the
Constitution.10 (Citations omitted and emphasis ours)
Invoking Article 27911 of the Labor Code, the CA agreed with the NLRC that the respondent should have been
reinstated without loss of seniority rights and other privileges, with payment of her full backwages, inclusive of
allowances and other benefits or their monetary equivalent computed from the time her compensation was
withheld up to the time of actual reinstatement. However, with the parties' relations now strained, the CA
conceded that the payment of a separation pay, along with backwages as a separate and distinct relief, is an
acceptable alternative to reinstatement. The CA further awarded the respondent attorney's fees since she was
forced to litigate and incur expenses to protect her rights and interests by reason of the unjustified acts of the
petitioners.ChanRoblesVirtualawlibrary
Petition for Review in the Supreme Court
In this petition, the petitioners raise the following issues:chanroblesvirtuallawlibrary
I.

WHETHER OR NOT THE MISAPPROPRIATION BY A PAWNSHOP PERSONNEL IN THE

AMOUNT OF [P]540.00, COUPLED WITH SUBSEQUENT DENIALS, AMOUNT TO A SERIOUS
MISCONDUCT IN OFFICE?

II.

WHETHER OR NOT THE IMPOSITION OF THE PENALTY OF TERMINATION FROM OFFICE

[UPON] A PAWNSHOP PERSONNEL WHO MISAPPROPRIATED AN AMOUNT OF P540.00
FROM THE COFFERS OF THE PAWNSHOP, AND WHO MADE SUBSEQUENT DENIALS, IS
CRUEL AND UNJUST?12

The appellate court agreed with the NLRC that the respondent's lapse was "just a simple mistake without intent
to defraud her employer;"13 that the incident was neither serious nor indicative of serious misconduct; and that
her dismissal was disproportionate to her offense. It accepted the respondent's explanation that her failure to
report her cash overage of P540.00 on October 29, 2007 to the branch manager, who was her immediate
superior, was because the latter was then on leave, and that for days thereafter, she was hard-pressed in trying to
trace and determine the cause thereof. The CA noted that the respondent had worked for PJLI for almost six
years without any previous infractions of company rules, and that she was once commended for a heroic act of
defending her former branch manager, Ms. Lilibeth Cortez, during a branch holdup.
On the other hand, the petitioners strongly maintain that under Rule V(A)(11) of its Code of Conduct on
"Dishonesty, Misappropriation, Theft or Embezzlement of Company Funds or Property," the respondent
committed a "First Level Offense" which is punishable by outright dismissal. According to the petitioners, the
respondent committed the following acts which constitute dishonesty and serious
misconduct:chanroblesvirtuallawlibrary
1. The respondent did not enter the discovered cash overage in the "operating system" (computerized cash
ledger) of the branch on October 29, 2007 notwithstanding that she was fully aware of the company's
policy that such unexplained receipt should be recorded at the end of the business
day;cralawlawlibrary
2. The respondent did not report the cash overage to her immediate superior, Branch Manager Violette
Grace Tuling (Tuling), upon the latter's return from a leave of absence on November 3, 2007. Neither
did the respondent seek Tuling's help concerning the matter, and just averred that she was afraid to be
scolded by Tuling;cralawlawlibrary
3. The respondent deliberately lied about her cash overage after Tuling confronted her on December 17,
2007;cralawlawlibrary
4. Again, the respondent falsely denied the cash overage when the company auditor asked her to explain
how it happened; and
5. The respondent concocted a cover-up by claiming that a computer glitch occurred when she was about
to post the cash overage in the operating system.14
Ruling of the Court
There is merit in the petition.
It need not be stressed that the nature or extent of the penalty imposed on an erring employee must be
commensurate to the gravity of the offense as weighed against the degree of responsibility and trust expected of
the employee's position. On the other hand, the respondent is not just charged with a misdeed, but with loss of
trust and confidence under Article 282(c) of the Labor Code, a cause premised on the fact that the employee
holds a position whose functions may only be performed by someone who enjoys the trust and confidence of
management. Needless to say, such an employee bears a greater burden of trustworthiness than ordinary
workers, and the betrayal of the trust reposed is the essence of the loss of trust and confidence which is a ground
for the employee's dismissal.15
The respondent's misconduct must
be viewed in light of the strictly fiduciary
nature of her position.

In addition to its pawnshop operations, the PJLI offers its "Pera Padala" cash remittance service whereby, for a
fee or "sending charge," a customer may remit money to a consignee through its network of pawnshop branches
all over the country. On October 29, 2007, a customer sent P500.00 through its branch in Capistrano, Cagayan
de Oro City, and paid a remittance fee of P40.00. Inexplicably, however, no corresponding entry was made to
recognize the cash receipt of P540.00 in the computerized accounting system (operating system) of the PJLI.
The respondent claimed that she tried very hard but could not trace the source of her unexplained cash surplus
of P540.00, but a branch audit conducted sometime in December 2007 showed that it came from a "Pera
Padala"customer.
To be sure, no significant financial injury was sustained by the PJLI in the loss of a mere P540.00 in cash,
which, according to the respondent she sincerely wanted to account for except that she was pre-empted by fear
of what her branch manager might do once she learned of it. But in treating the respondent's misconduct as a
simple negligence or a simple mistake, both the CA and the NLRC grossly failed to consider that she held a
position of utmost trust and confidence in the company.
There are two classes of corporate positions of trust: on the one hand are the managerialemployees whose
primary duty consists of the management of the establishment in which they are employed or of a department or
a subdivision thereof, and other officers or members of the managerial staff; on the other hand are
the fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or those who, in the
normal exercise of their functions, regularly handle significant amounts of money or property. These employees,
though rank-and-file, are routinely charged with the care and custody of the employer's money or property, and
are thus classified as occupying positions of trust and confidence.16
The respondent was first hired by the petitioners as an accounting clerk on June 13, 2003, for which she
received a basic monthly salary of P9,353.00. On October 29, 2007, the date of the subject incident, she
performed the function of vault custodian and cashier in the petitioners' Branch 4 pawnshop in Capistrano,
Cagayan de Oro City. In addition to her custodial duties, it was the respondent who electronically posted the
day's transactions in the books of accounts of the branch, a function that is essentially separate from that of
cashier or custodian. It is plain to see then that when both functions are assigned to one person to perform, a
very risky situation of conflicting interests is created whereby the cashier can purloin the money in her custody
and effectively cover her tracks, at least temporarily, by simply not recording in the books the cash receipt she
misappropriated. This is commonly referred to as lapping of accounts.17 Only a most trusted clerk would be
allowed to perform the two functions, and the respondent enjoyed this trust.
The series of willful misconduct
committed by the respondent in
mishandling the unaccounted cash
receipt exposes her as unworthy
of the utmost trust inherent in her
position as branch cashier and vault
custodian and bookkeeper.
The respondent insists that she never intended to appropriate the money but was afraid that Tuling would scold
her, and that she kept the money for a long time in her drawer and only decided to take it home after her search
for the cause of the cash overage had proved futile. Both the CA and the NLRC agreed with her, and held that
what she committed was a simple mistake or simple negligence.
The Court disagrees.
Granting arguendo that for some reason not due to her fault, the respondent could not trace the source of the
cash surplus, she nonetheless well knew and understood the company's policy that unexplained cash must be

treated as miscellaneous income under the account "Other Income," and that the same must be so recognized
and recorded at the end of the day in the branch books or "operating system." No such entry was made by the
respondent, resulting in unrecorded cash in her possession of P540.00, which the company learned about only
two months thereafter through a branch audit.
Significantly, when Tuling returned on November 3, 2007 from her leave of absence, the respondent did not just
withhold from her the fact that she had an unaccounted overage, but she refused to seek her help on what to do
about it, despite having had five days to mull over the matter until Tuling's return.
In order that an employer may invoke loss of trust and confidence in terminating an employee under Article
282(c) of the Labor Code, certain requirements must be complied with, namely: (1) the employee must be
holding a position of trust and confidence; and (2) there must be an act that would justify the loss of trust and
confidence.18 While loss of trust and confidence should be genuine, it does not require proof beyond reasonable
doubt,19 it being sufficient that there is some basis to believe that the employee concerned is responsible for the
misconduct and that the nature of the employee's participation therein rendered him unworthy of trust and
confidence demanded by his position.20
The petitioners are fully justified in claiming loss of trust and confidence in the respondent. While it is natural
and understandable that the respondent should feel apprehensive about Tuling's reaction concerning her cash
overage, considering that it was their first time to be working together in the same branch, we must keep in
mind that the unaccounted cash can only be imputed to the respondent's own negligence in failing to keep track
of the transaction from which the money came. A subsequent branch audit revealed that it came from a "Pera
Padala" remittance, implying that although the amount had been duly remitted to the consignee, the sending
branch failed to record the payment received from the consigning customer. For days following the overage, the
respondent tried but failed to reconcile her records, and for this inept handling of a "Pera Padala" remittance,
she already deserved to be sanctioned.
Further, as a matter of strict company policy, unexplained cash is recognized at the end of the day as
miscellaneous income. Inexplicably, despite being with the company for four years as accounting clerk and
cashier, the respondent failed to make the required entry in the branch operating system recognizing
miscellaneous income. Such an entry could have been easily reversed once it became clear how the overage
came about. But the respondent obviously thought that by skipping the entry, she could keep Tuling from
learning about the overage. Her trustworthiness as branch cashier and bookkeeper has been irreparably
tarnished. The respondent's untrustworthiness is further demonstrated when she began to concoct lies
concerning the overage: first, by denying its existence to Tuling and again to the company auditor; later, when
she falsely claimed that a computer glitch or malfunction had prevented her from posting the amount on
October 29, 2007; and finally, when she was forced to admit before the company's investigating panel that she
took and spent the money.[21
Mere substantial evidence is
sufficient to establish loss of trust
and confidence
The respondent's actuations were willful and deliberate. A cashier who, through carelessness, lost a document
evidencing a cash receipt, and then wilfully chose not to record the excess cash as miscellaneous income and
instead took it home and spent it on herself, and later repeatedly denied or concealed the cash overage when
confronted, deserves to be dismissed.
Article 28222 of the Labor Code allows an employer to dismiss an employee for willful breach of trust or loss of
confidence. It has been held that a special and unique employment relationship exists between a corporation and
its cashier. Truly, more than most key positions, that of a cashier calls for utmost trust and confidence,23 and it is

the breach of this trust that results in an employer's loss of confidence in the employee.24 In San Miguel
Corporation v. NLRC, et al.,25cralawred the Court held:chanroblesvirtuallawlibrary
As a rule this Court leans over backwards to help workers and employees continue in their employment. We
have mitigated penalties imposed by management on erring employees and ordered employers to reinstate
workers who have been punished enough through suspension. However, breach of trust and confidence and
acts of dishonesty and infidelity inthe handling of funds and properties are an entirely different
matter. 26 (Emphasis ours)
It has been held that in dismissing a cashier on the ground of loss of confidence, it is sufficient that there is
some basis for the same or that the employer has a reasonable ground to believe that the employee is
responsible for the misconduct, thus making him unworthy of the trust and confidence reposed in
him.27 Therefore, if there is sufficient evidence to show that the employer has ample reason to distrust the
employee, the labor tribunal cannot justly deny the employer the authority to dismiss him.[28 Indeed, employers
are allowed wider latitude in dismissing an employee for loss of trust and confidence, as the Court held in Atlas
Fertilizer Corporation v. NLRC:[29
As a general rule, employers are allowed a wider latitude of discretion in terminating the services of employees
who perform functions which by their nature require the employer's full trust and confidence. Mere existence of
basis for believing that the employee has breached the trust of the employer is sufficient and does not require
proof beyond reasonable doubt. Thus, when an employee has been guilty of breach of trust or his employer has
ample reason to distrust him, a labor tribunal cannot deny the employer the authority to dismiss him. x x
x.30 (Citations omitted)
Furthermore, it must also be stressed that only substantial evidence is required in order to support a finding that
an employer's trust and confidence accorded to its employee had been breached. As explained in Lopez v.
Alturas Group of Companies:[31
[T]he language of Article 282(c) of the Labor Code states that the loss of trust and confidence must be based
on willful breach of the trust reposed in the employee by his employer. Such breach is willful if it is done
intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. Moreover, it must be based onsubstantial evidence and not on the
employer's whims or caprices or suspicionsotherwise, the employee would eternally remain at the mercy of
the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim
that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act
complained of must be work-related and shows that the employee concerned is unfit to continue working
for the employer. In addition, loss of confidence as a just cause for termination of employment is
premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or
that the employee concerned is entrusted with confidence with respect to delicate matters, such as
the handling or care and protection of the property and assets of the employer. The betrayal of this trust is
the essence of the offense for which an employee is penalized.32 (Emphasis and underscoring in the original)
In holding a position requiring full trust and confidence, the respondent gave up some of the rigid guarantees
available to ordinary employees. She insisted that her misconduct was just an "innocent mistake," and maybe it
was, had it been committed by other employees. But surely not as to the respondent who precisely because of
the special trust and confidence given her by her employer must be penalized with a more severe sanction.33
A cashier's inability to safeguard
and account for missing cash is sufficient
cause to dismiss her.
The respondent insisted that she never intended to misappropriate the missing fund, but in Santos v. San Miguel

Corp.,34 the Court held that misappropriation of company funds, notwithstanding that the shortage has been
restituted, is a valid ground to terminate the services of an employee for loss of trust and confidence.35 Also,
in Caeda v. Philippine Airlines, Inc. ,36 the Court held that it is immaterial what the respondent's intent was
concerning the missing fund, for the undisputed fact is that cash which she held in trust for the company was
missing in her custody. At the very least, she was negligent and failed to meet the degree of care and fidelity
demanded of her as cashier. Her excuses and failure to give a satisfactory explanation for the missing cash only
gave the petitioners sufficient reason to lose confidence in her.37 As it was held in Metro Drug Corporation v.
NLRC:38
It would be most unfair to require an employer to continue employing as its cashier a person whom it
reasonably believes is no longer capable of giving full and wholehearted trustworthiness in the stewardship of
company funds.39chanrobleslaw
WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated June 30, 2011 of
the Court of Appeals in CA-G.R. SP No. 03069 is REVERSED and SET ASIDE. The Decision of the Labor
Arbiter dated July 23, 2008 is REINSTATED.
SO ORDERED.

THIRD DIVISION
G.R. No. 198620, November 12, 2014
P.J. LHUILLIER, INC. AND MARIO RAMON LUDEA, Petitioners, v. FLORDELIZ
VELAYO,Respondent.
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari1 under Rule 45 of the Decision2 dated June 30, 2011 of
the Court of Appeals (CA) in CA-G.R. SP No. 03069, affirming the finding of the National Labor Relations
Commission (NLRC) that respondent Flordeliz Velayo (respondent) was illegally dismissed. The
Resolution3 dated September 14, 2011 denied the motion for reconsideration
thereof.ChanRoblesVirtualawlibrary
The Facts
The essential antecedent facts are summarized in the assailed CA decision, to wit:chanroblesvirtuallawlibrary
On June 13, 2003, (herein petitioner) PJ (CEBU) LHUILLIER, INC. (PJ LHUILLIER for brevity) hired
FLORDELIZ M. ABATAYO [sic] as Accounting Clerk at the LH-4, Cagayan de Oro City Branch with a basic
monthly salary of P9,353.00. On February 9, 2008 appellant (herein private respondent) was served with a
Show Cause Memo by MARIO RAMON LUDENA, Area Operations Manager of PJ Lhuillier (herein
petitioner), ordering her to explain within 48 hours why no disciplinary action should be taken against her for
dishonesty, misappropriation, theft or embezz[le]ment of company funds in violation of Item 11, Rule V of the
Company Code of Conduct. Thereafter, (s)he was placed under preventive suspension from February 9 to
March 8, 2008 while her case was under investigation.
The charges against the appellant (herein private respondent) were based on the Audit Findings conducted on
October 29, 2007, where the overage amount of P540.00 was not reported immediately to the supervisor, not

recorded at the end of that day.

On February 11, 2008, complainant (herein private respondent) submitted her reply and admitted that she was
not able to report the overage to the supervisor since the latter was on leave on that day and that she was still
tracing the overage; and that the omission or failure to report immediately the overage (sic) was just a simple
mistake without intent to defraud her employer.
On March 10, 2008, after the conduct of a formal investigation and after finding complainant's (herein private
respondent's) [explanations] without merit, PJ LHUILLIER (herein petitioner) terminated her employment as
per Notice of Termination on grounds of serious misconduct and breach of trust.4 (Citation omitted)
On March 14, 2008, the respondent filed a complaint for illegal dismissal, separation pay and other damages
against RJ. Lhuillier, Inc. (PJLI) and Mario Ramon Ludena, Area Operations Manager (petitioners). On July 23,
2008, the Labor Arbiter (LA) rendered judgment, the dispositive portion of which reads as
follows:chanroblesvirtuallawlibrary
WHEREFORE, in view of all the foregoing, judgment is hereby entered ordering the dismissal of the instant
complaint for lack of merit.
SO ORDERED.5chanrobleslaw
The LA found that the respondent's termination was valid and based not on a mere act of simple negligence in
the performance of her duties as cashier:chanroblesvirtuallawlibrary
This is not a case of simple negligence as the facts show that complainant, instead of reporting the matter
immediately, had set aside the P540.00 for her personal use instead of reporting the overage or recording it in
the operating system of the company.
Complainant is not entitled to moral as well as exemplary damages for lack of basis.6chanrobleslaw
On appeal, the NLRC in its Decision dated March 19, 2009 countermanded the LA, holding that the respondent
was illegally dismissed since the petitioners failed to prove a just cause of serious misconduct and willful
breach of trust:chanroblesvirtuallawlibrary
In fine, the Labor Arbiter a quo utterly disregarded the rule on proportionality that has been observed in a
number of cases, that is, "the penalty imposed should be commensurate to the gravity of his offense." x x x
xxxx
In the instant case, PJ LHUILLIER was not able to discharge the burden of proving that the dismissal of the
complainant was for valid or just causes of serious misconduct and willful breach of trust. Thus, We disagree
with the Labor Arbiter's findings and conclusion that complainant was validly dismissed from service.
xxxx
... Significantly, the complainant's omission or procedural lapse did not cause any loss or damage to the
company.7chanrobleslaw
Nonetheless, finding that the relations between the petitioners and the respondent have become strained, the
NLRC did not order the reinstatement of the respondent. Thus:chanroblesvirtuallawlibrary

WHEREFORE, the instant appeal is GRANTED. The assailed decision is hereby SET ASIDE and REVERSED,
and a new one entered declaring that complainant was ILLEGALLY DISMISSED. Accordingly, respondent PJ
(CEBU) LHUILLIER, INC. is hereby ORDERED:chanroblesvirtuallawlibrary
(a) to pay complainant separation pay equivalent to one (1) month salary for every year of service, a fraction of
at least six (6) months being considered as one (1) whole year in lieu of reinstatement due to strained
relationship, computed from June 13, 2003 up to the finality of the promulgation of this
judgment;cralawlawlibrary
(b) to pay complainant FULL BACKWAGES in accordance with Bustamante vs. NLRC ruling (265 SCRA
061); and
(c) to pay ten percent (10%) of the total money award as attorney's fees.
SO ORDERED.8chanrobleslaw
The NLRC subsequently denied the petitioners' motion for reconsideration thereof. On July 31, 2009, the
petitioners filed a petition for certiorari in the CA with prayer for issuance of a temporary restraining order
(TRO) and/or writ of preliminary injunction, invoking the following issues:chanroblesvirtuallawlibrary
I
WHETHER OR NOT THE RESPONDENT [NLRC] COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION WHEN IT DEVIATED FROM THE
FINDINGS OF FACTS OF THE HONORABLE LABOR ARBITER.ChanRoblesVirtualawlibrary
II
WHETHER OR NOT PETITIONERS ARE ENTITLED TO THE ISSUANCE OF A TEMPORARY
RESTRAINING ORDER AND/OR WRIT OF PRELIMINARY INJUNCTION PENDING THE
RESOLUTION OF THE INSTANT PETITION.9chanrobleslaw
The respondent filed her comment on August 19, 2009. On October 8, 2009, the petitioners filed an urgent
motion to resolve their petition for certiorari and prayer for TRO and/or writ of preliminary injunction. On
November 9, 2009, the CA denied the petitioners' prayer for TRO stating that they have not shown that they
stood to suffer grave and irreparable injury if the TRO was denied. The remaining issue in the CA, then, was
whether the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it set
aside the factual conclusion and ruling of the LA. The CA ruled in the negative:chanroblesvirtuallawlibrary
We concur with the NLRC in finding for private respondent. Time and again, the Supreme Court has held that it
is cruel and unjust to impose the drastic penalty of dismissal if not commensurate to the gravity of the misdeed.
In employee termination disputes, the employer bears the burden of proving that the employee's dismissal was
for just and valid cause. In the instant case, the evidence does not support the finding of the Labor Arbiter that
private respondent is guilty of serious misconduct.
In this jurisdiction, the Supreme Court has consistently defined misconduct as an improper or wrong conduct, a
transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in
character, implies wrongful intent and not mere error of judgment. To be a just cause for termination under
Article 282 of the Labor Code of the Philippines, the misconduct must be serious, that is, it must be of such
grave and aggravated character and not merely trivial or unimportant. However serious, such misconduct must
nevertheless be in connection with the employee's work; the act complained of must be related to the

performance of the employee's duties showing him to be unfit to continue working for the employer.
Private respondent's lapse was not a "serious" one, let alone indicative of serious misconduct. In fact, she
(herein private respondent) admitted that she was not able to report the overage to the supervisor since the latter
was on leave on that day and that she was still tracing the overage; and that the omission or failure to report
immediately the overage was just a simple mistake without intent to defraud her employer. As found by
the NLRC, private respondent worked for petitioner for almost six (6) years, and it is not shown that she
committed any infraction of company rules during her employment. In fact, private respondent was once
awarded by petitioner due to her heroic act of defending her Manager, Ms. Lilibeth Cortez, while resisting a
hold-upper.
The settled rule is that when supported by substantial evidence, factual findings made by quasi-judicial and
administrative bodies are accorded great respect and even finality by the courts. These findings are not
infallible, though; when there is a showing that they were arrived at arbitrarily or in disregard of the evidence on
record, they may be examined by the courts. Hence, when factual findings of the Labor Arbiter and the NLRC
are contrary to each other, there is a necessity to review the records to determine which conclusions are more
conformable to the evidentiary facts. The case before Us shows that the finding of the NLRC is supported by
substantive evidence as compared to the finding of the Labor Arbiter with respect to the issue of illegal
dismissal. Moreover, in case of doubt, such cases should be resolved in favor of labor, pursuant to the social
justice policy of labor laws and the Constitution.
Finally, it is a time-honored principle that although it is the prerogative of management to employ the services
of a person and likewise to discharge him, such is not without limitations and restrictions. The dismissal of an
employee must be done with just cause and without abuse of discretion. It must not be done in an arbitrary and
despotic manner. To hold otherwise would render nugatory the security of tenure clause enshrined in the
Constitution.10 (Citations omitted and emphasis ours)
Invoking Article 27911 of the Labor Code, the CA agreed with the NLRC that the respondent should have been
reinstated without loss of seniority rights and other privileges, with payment of her full backwages, inclusive of
allowances and other benefits or their monetary equivalent computed from the time her compensation was
withheld up to the time of actual reinstatement. However, with the parties' relations now strained, the CA
conceded that the payment of a separation pay, along with backwages as a separate and distinct relief, is an
acceptable alternative to reinstatement. The CA further awarded the respondent attorney's fees since she was
forced to litigate and incur expenses to protect her rights and interests by reason of the unjustified acts of the
petitioners.ChanRoblesVirtualawlibrary
Petition for Review in the Supreme Court
In this petition, the petitioners raise the following issues:chanroblesvirtuallawlibrary
I.

WHETHER OR NOT THE MISAPPROPRIATION BY A PAWNSHOP PERSONNEL IN THE

AMOUNT OF [P]540.00, COUPLED WITH SUBSEQUENT DENIALS, AMOUNT TO A SERIOUS
MISCONDUCT IN OFFICE?

II.

WHETHER OR NOT THE IMPOSITION OF THE PENALTY OF TERMINATION FROM OFFICE

[UPON] A PAWNSHOP PERSONNEL WHO MISAPPROPRIATED AN AMOUNT OF P540.00
FROM THE COFFERS OF THE PAWNSHOP, AND WHO MADE SUBSEQUENT DENIALS, IS
CRUEL AND UNJUST?12

The appellate court agreed with the NLRC that the respondent's lapse was "just a simple mistake without intent
to defraud her employer;"13 that the incident was neither serious nor indicative of serious misconduct; and that

her dismissal was disproportionate to her offense. It accepted the respondent's explanation that her failure to
report her cash overage of P540.00 on October 29, 2007 to the branch manager, who was her immediate
superior, was because the latter was then on leave, and that for days thereafter, she was hard-pressed in trying to
trace and determine the cause thereof. The CA noted that the respondent had worked for PJLI for almost six
years without any previous infractions of company rules, and that she was once commended for a heroic act of
defending her former branch manager, Ms. Lilibeth Cortez, during a branch holdup.
On the other hand, the petitioners strongly maintain that under Rule V(A)(11) of its Code of Conduct on
"Dishonesty, Misappropriation, Theft or Embezzlement of Company Funds or Property," the respondent
committed a "First Level Offense" which is punishable by outright dismissal. According to the petitioners, the
respondent committed the following acts which constitute dishonesty and serious
misconduct:chanroblesvirtuallawlibrary
1. The respondent did not enter the discovered cash overage in the "operating system" (computerized cash
ledger) of the branch on October 29, 2007 notwithstanding that she was fully aware of the company's
policy that such unexplained receipt should be recorded at the end of the business
day;cralawlawlibrary
2. The respondent did not report the cash overage to her immediate superior, Branch Manager Violette
Grace Tuling (Tuling), upon the latter's return from a leave of absence on November 3, 2007. Neither
did the respondent seek Tuling's help concerning the matter, and just averred that she was afraid to be
scolded by Tuling;cralawlawlibrary
3. The respondent deliberately lied about her cash overage after Tuling confronted her on December 17,
2007;cralawlawlibrary
4. Again, the respondent falsely denied the cash overage when the company auditor asked her to explain
how it happened; and
5. The respondent concocted a cover-up by claiming that a computer glitch occurred when she was about
to post the cash overage in the operating system.14
Ruling of the Court
There is merit in the petition.
It need not be stressed that the nature or extent of the penalty imposed on an erring employee must be
commensurate to the gravity of the offense as weighed against the degree of responsibility and trust expected of
the employee's position. On the other hand, the respondent is not just charged with a misdeed, but with loss of
trust and confidence under Article 282(c) of the Labor Code, a cause premised on the fact that the employee
holds a position whose functions may only be performed by someone who enjoys the trust and confidence of
management. Needless to say, such an employee bears a greater burden of trustworthiness than ordinary
workers, and the betrayal of the trust reposed is the essence of the loss of trust and confidence which is a ground
for the employee's dismissal.15
The respondent's misconduct must
be viewed in light of the strictly fiduciary
nature of her position.
In addition to its pawnshop operations, the PJLI offers its "Pera Padala" cash remittance service whereby, for a
fee or "sending charge," a customer may remit money to a consignee through its network of pawnshop branches

all over the country. On October 29, 2007, a customer sent P500.00 through its branch in Capistrano, Cagayan
de Oro City, and paid a remittance fee of P40.00. Inexplicably, however, no corresponding entry was made to
recognize the cash receipt of P540.00 in the computerized accounting system (operating system) of the PJLI.
The respondent claimed that she tried very hard but could not trace the source of her unexplained cash surplus
of P540.00, but a branch audit conducted sometime in December 2007 showed that it came from a "Pera
Padala"customer.
To be sure, no significant financial injury was sustained by the PJLI in the loss of a mere P540.00 in cash,
which, according to the respondent she sincerely wanted to account for except that she was pre-empted by fear
of what her branch manager might do once she learned of it. But in treating the respondent's misconduct as a
simple negligence or a simple mistake, both the CA and the NLRC grossly failed to consider that she held a
position of utmost trust and confidence in the company.
There are two classes of corporate positions of trust: on the one hand are the managerialemployees whose
primary duty consists of the management of the establishment in which they are employed or of a department or
a subdivision thereof, and other officers or members of the managerial staff; on the other hand are
the fiduciary rank-and-file employees, such as cashiers, auditors, property custodians, or those who, in the
normal exercise of their functions, regularly handle significant amounts of money or property. These employees,
though rank-and-file, are routinely charged with the care and custody of the employer's money or property, and
are thus classified as occupying positions of trust and confidence.16
The respondent was first hired by the petitioners as an accounting clerk on June 13, 2003, for which she
received a basic monthly salary of P9,353.00. On October 29, 2007, the date of the subject incident, she
performed the function of vault custodian and cashier in the petitioners' Branch 4 pawnshop in Capistrano,
Cagayan de Oro City. In addition to her custodial duties, it was the respondent who electronically posted the
day's transactions in the books of accounts of the branch, a function that is essentially separate from that of
cashier or custodian. It is plain to see then that when both functions are assigned to one person to perform, a
very risky situation of conflicting interests is created whereby the cashier can purloin the money in her custody
and effectively cover her tracks, at least temporarily, by simply not recording in the books the cash receipt she
misappropriated. This is commonly referred to as lapping of accounts.17 Only a most trusted clerk would be
allowed to perform the two functions, and the respondent enjoyed this trust.
The series of willful misconduct
committed by the respondent in
mishandling the unaccounted cash
receipt exposes her as unworthy
of the utmost trust inherent in her
position as branch cashier and vault
custodian and bookkeeper.
The respondent insists that she never intended to appropriate the money but was afraid that Tuling would scold
her, and that she kept the money for a long time in her drawer and only decided to take it home after her search
for the cause of the cash overage had proved futile. Both the CA and the NLRC agreed with her, and held that
what she committed was a simple mistake or simple negligence.
The Court disagrees.
Granting arguendo that for some reason not due to her fault, the respondent could not trace the source of the
cash surplus, she nonetheless well knew and understood the company's policy that unexplained cash must be
treated as miscellaneous income under the account "Other Income," and that the same must be so recognized
and recorded at the end of the day in the branch books or "operating system." No such entry was made by the
respondent, resulting in unrecorded cash in her possession of P540.00, which the company learned about only

two months thereafter through a branch audit.

Significantly, when Tuling returned on November 3, 2007 from her leave of absence, the respondent did not just
withhold from her the fact that she had an unaccounted overage, but she refused to seek her help on what to do
about it, despite having had five days to mull over the matter until Tuling's return.
In order that an employer may invoke loss of trust and confidence in terminating an employee under Article
282(c) of the Labor Code, certain requirements must be complied with, namely: (1) the employee must be
holding a position of trust and confidence; and (2) there must be an act that would justify the loss of trust and
confidence.18 While loss of trust and confidence should be genuine, it does not require proof beyond reasonable
doubt,19 it being sufficient that there is some basis to believe that the employee concerned is responsible for the
misconduct and that the nature of the employee's participation therein rendered him unworthy of trust and
confidence demanded by his position.20
The petitioners are fully justified in claiming loss of trust and confidence in the respondent. While it is natural
and understandable that the respondent should feel apprehensive about Tuling's reaction concerning her cash
overage, considering that it was their first time to be working together in the same branch, we must keep in
mind that the unaccounted cash can only be imputed to the respondent's own negligence in failing to keep track
of the transaction from which the money came. A subsequent branch audit revealed that it came from a "Pera
Padala" remittance, implying that although the amount had been duly remitted to the consignee, the sending
branch failed to record the payment received from the consigning customer. For days following the overage, the
respondent tried but failed to reconcile her records, and for this inept handling of a "Pera Padala" remittance,
she already deserved to be sanctioned.
Further, as a matter of strict company policy, unexplained cash is recognized at the end of the day as
miscellaneous income. Inexplicably, despite being with the company for four years as accounting clerk and
cashier, the respondent failed to make the required entry in the branch operating system recognizing
miscellaneous income. Such an entry could have been easily reversed once it became clear how the overage
came about. But the respondent obviously thought that by skipping the entry, she could keep Tuling from
learning about the overage. Her trustworthiness as branch cashier and bookkeeper has been irreparably
tarnished. The respondent's untrustworthiness is further demonstrated when she began to concoct lies
concerning the overage: first, by denying its existence to Tuling and again to the company auditor; later, when
she falsely claimed that a computer glitch or malfunction had prevented her from posting the amount on
October 29, 2007; and finally, when she was forced to admit before the company's investigating panel that she
took and spent the money.[21
Mere substantial evidence is
sufficient to establish loss of trust
and confidence
The respondent's actuations were willful and deliberate. A cashier who, through carelessness, lost a document
evidencing a cash receipt, and then wilfully chose not to record the excess cash as miscellaneous income and
instead took it home and spent it on herself, and later repeatedly denied or concealed the cash overage when
confronted, deserves to be dismissed.
Article 28222 of the Labor Code allows an employer to dismiss an employee for willful breach of trust or loss of
confidence. It has been held that a special and unique employment relationship exists between a corporation and
its cashier. Truly, more than most key positions, that of a cashier calls for utmost trust and confidence,23 and it is
the breach of this trust that results in an employer's loss of confidence in the employee.24 In San Miguel
Corporation v. NLRC, et al.,25cralawred the Court held:chanroblesvirtuallawlibrary

As a rule this Court leans over backwards to help workers and employees continue in their employment. We
have mitigated penalties imposed by management on erring employees and ordered employers to reinstate
workers who have been punished enough through suspension. However, breach of trust and confidence and
acts of dishonesty and infidelity inthe handling of funds and properties are an entirely different
matter. 26 (Emphasis ours)
It has been held that in dismissing a cashier on the ground of loss of confidence, it is sufficient that there is
some basis for the same or that the employer has a reasonable ground to believe that the employee is
responsible for the misconduct, thus making him unworthy of the trust and confidence reposed in
him.27 Therefore, if there is sufficient evidence to show that the employer has ample reason to distrust the
employee, the labor tribunal cannot justly deny the employer the authority to dismiss him.[28 Indeed, employers
are allowed wider latitude in dismissing an employee for loss of trust and confidence, as the Court held in Atlas
Fertilizer Corporation v. NLRC:[29
As a general rule, employers are allowed a wider latitude of discretion in terminating the services of employees
who perform functions which by their nature require the employer's full trust and confidence. Mere existence of
basis for believing that the employee has breached the trust of the employer is sufficient and does not require
proof beyond reasonable doubt. Thus, when an employee has been guilty of breach of trust or his employer has
ample reason to distrust him, a labor tribunal cannot deny the employer the authority to dismiss him. x x
x.30 (Citations omitted)
Furthermore, it must also be stressed that only substantial evidence is required in order to support a finding that
an employer's trust and confidence accorded to its employee had been breached. As explained in Lopez v.
Alturas Group of Companies:[31
[T]he language of Article 282(c) of the Labor Code states that the loss of trust and confidence must be based
on willful breach of the trust reposed in the employee by his employer. Such breach is willful if it is done
intentionally, knowingly, and purposely, without justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently. Moreover, it must be based onsubstantial evidence and not on the
employer's whims or caprices or suspicionsotherwise, the employee would eternally remain at the mercy of
the employer. Loss of confidence must not be indiscriminately used as a shield by the employer against a claim
that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act
complained of must be work-related and shows that the employee concerned is unfit to continue working
for the employer. In addition, loss of confidence as a just cause for termination of employment is
premised on the fact that the employee concerned holds a position of responsibility, trust and confidence or
that the employee concerned is entrusted with confidence with respect to delicate matters, such as
the handling or care and protection of the property and assets of the employer. The betrayal of this trust is
the essence of the offense for which an employee is penalized.32 (Emphasis and underscoring in the original)
In holding a position requiring full trust and confidence, the respondent gave up some of the rigid guarantees
available to ordinary employees. She insisted that her misconduct was just an "innocent mistake," and maybe it
was, had it been committed by other employees. But surely not as to the respondent who precisely because of
the special trust and confidence given her by her employer must be penalized with a more severe sanction.33
A cashier's inability to safeguard
and account for missing cash is sufficient
cause to dismiss her.
The respondent insisted that she never intended to misappropriate the missing fund, but in Santos v. San Miguel
Corp.,34 the Court held that misappropriation of company funds, notwithstanding that the shortage has been
restituted, is a valid ground to terminate the services of an employee for loss of trust and confidence.35 Also,
in Caeda v. Philippine Airlines, Inc. ,36 the Court held that it is immaterial what the respondent's intent was

concerning the missing fund, for the undisputed fact is that cash which she held in trust for the company was
missing in her custody. At the very least, she was negligent and failed to meet the degree of care and fidelity
demanded of her as cashier. Her excuses and failure to give a satisfactory explanation for the missing cash only
gave the petitioners sufficient reason to lose confidence in her.37 As it was held in Metro Drug Corporation v.
NLRC:38
It would be most unfair to require an employer to continue employing as its cashier a person whom it
reasonably believes is no longer capable of giving full and wholehearted trustworthiness in the stewardship of
company funds.39chanrobleslaw
WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated June 30, 2011 of
the Court of Appeals in CA-G.R. SP No. 03069 is REVERSED and SET ASIDE. The Decision of the Labor
Arbiter dated July 23, 2008 is REINSTATED.
SO ORDERED.

SECOND DIVISION
G.R. No. 200729, September 29, 2014
TEMIC AUTOMOTIVE (PHILIPPINES), INC., Petitioner, v. RENATO M. CANTOS, Respondent.
DECISION
BRION, J.:
We resolve the present petition for review on certiorari1 which seeks the reversal of the decision2dated
September 28, 2011 and resolution3 dated February 16, 2012 of the Court of Appeals (CA) in CA-G.R. SP No.
117171.
The Antecedents
On March 9, 2009, respondent Renato M. Cantos (Cantos) filed a complaint for illegal dismissal against
petitioner Temic Automotive (Phils.), Inc. (Temic) based in Taguig City and its General Manager (GM), Martin
Wadewitz (Wadewitz).4 Cantos started his employment with Temic on July 16, 1993 as Special Projects Officer
of the company's Materials Department. Sometime in 1998, he was appointed Purchasing & Import-Export
Manager (Purchasing Manager) of the Logistics Department and, on December 1, 2007, he was named
Warehouse & Import-Export Manager (Wimpex Manager), the last position he held before he was allegedly
dismissed illegally.
Temic is a member firm of Continental Corporation, a multinational company (with head office in Germany),
with over sixty facilities worldwide. It is engaged in vehicle safety applications, comfort and powertrain, as well
as in the networking of active and passive driving systems.5 In September and December 2008, a team from the
head office audited Temic's operations. The audit team allegedly discovered several irregularities, particularly
with respect to Temic's purchasing transactions supposedly attended by "fraudulent activities."6 Some purchase
orders (POs), it was claimed, were ensured to go to some suppliers, thereby systematically avoiding a
competitive tender process. Temic believed the irregularities could only have happened with the participation of
personnel in the Purchasing and Manufacturing departments. It stressed that initial findings indicated that
Cantos, as former Purchasing Manager, "was likely involved in said transactions."7cralawred
On December 11, 2008, Temic issued a Show Cause and Preventive Suspension Notice8 to Cantos, requiring

him to explain in writing several infractions which he allegedly committed during his stint as Purchasing
Manager. He was charged principally with having violated Temic's procedures on purchases, particularly the
Purchase Activities in System, Application, Products in Data Processing (FV 9-F0081) and the NonProduction/Indirect Material Purchasing Procedures (FV9-F0158).
Allegedly, Cantos failed to meet the required number of purchase quotations, in violation of paragraph
10.6.1 of FV 9-F0158 under which purchases of all articles must conform with Continental Temic
Electronics (Phils.), Inc. (CTEPI,) Procurement Policy and that of Temic as a general rule. 9 Cantos would
claim10 that from 2005 to early 2008, he was tasked to also serve the Purchasing Department of CTEPI
(without additional compensation), a sister firm of Temic located in Calamba, Laguna and that it was in relation
with his work in CTEPI that his dismissal was chiefly based. He would also claim that the purchasing
procedures are essentially the same for CTEPI and for Temic, except that in CTEPI's case, the signature of the
GM is not required for the Process Deviation Temporary Authority (PDTA).
Under par. 10.6.1 of FV 9-F0158, before a purchase is made in Temic, quotations must be secured based on the
purchasing value as follows: (1) P1.00-P50,599.00 (1 quotation/bid); (2) P51,000.00-P200,999.00 (min.
2 quotations/bids); and (3) P201,000-above (min. 3 quotations/bids). Cantos allegedly allowed the
proliferation of deviations from the established procedures and resorted instead to the PDTAs favoring
suppliers Globaltech Automation, Inc. (Globaltech) and Maxtronix, Inc. (Maxtronix) without a valid
reason and despite the lapse of a substantial lead time (up to three months between the date of receipt of the
quotation and date of validity of the PDTA). Under both the Temic and CTEPI purchasing procedures, the
acquisition of machines without the three quotations/bids is allowed through the PDTA.
Temic maintained that by favoring Globaltech and Maxtronix, Cantos violated the provisions of pars. 10.6.1 and
10.6.3 of FV 9-F0158 requiring that "in general, [djecision has to be made in favor of theaccredited
supplier/vendor or bidder with the lowest total cost, based on the fulfillment of the specification," insinuating
that the two suppliers were not accredited. As none of the PDTAs was approved and signed by the GM, Cantos
was also charged of deviating from the normal protocol in the tender process (par. 10.6.3 of FV-9-F0158) which
requires that the PDTA should be signed by the department manager, senior manager, purchasing manager,
controlling manager and GM.
Additionally, Cantos was charged with the: (1) disappearance of optional items supposed to be part of purchase
orders; (2) engagement of customs brokers Airfreight 2100 and Diversified Cargowithout contracts; (3)
unauthorized engagement of personnel of the two customs brokers to work for Temic; and (4) failure to
consolidate deliveries from the same point of origin, resulting in higher costs for the company. Cantos
supposedly also violated the Employee Handbook and Code of Discipline, particularly Group II on
Insubordination, No. 9 and Group III on Fraud, Acts of Dishonesty and/or Breach of Trust, No. 14, and the
Code of Conduct on Personal Ethics provisions on "suppliers," "internal controls" and "conflict of interest."
On December 12, 2008, Cantos asked for copies of documents he considered necessary for his reply to the
show-cause notice,11 but he was given only copies of the POs. He was advised that the other documents were
"irrelevant" or "can be presented at the proper time if deemed necessary by the company."12cralawred
Cantos submitted his explanation on December 18, 2008.13 The salient points of the submission are as
follows:14cralawred
1. There are three instances when a deviation from the three- quotation requirement is allowed and they are: (a)
when skeleton agreements or global contracts are available; (b) when "accredited suppliers/vendors are
approved;" or (c) when there is an immediate need for the item to be purchased. The POs in question which
number only twelve (12),15 out of more than thirty thousand (30,000)16 processed during his tenure as
Purchasing Manager, were all covered by duly- accomplished PDTAs.

2. He was not to blame for the missing optional items because he handled only the purchasing aspect of the
transactions. The items were delivered to Temic's Receiving Section to determine whether they are complete
and then sent to the end-user department which determines if the deliveries are indeed complete and, when an
item is missing, informs the Purchasing Department about it. He never received information on missing
deliveries.
3. The contracts with Airfreight 2100 and Diversified Cargo were just awaiting the signatures of the customs
brokers. Said contracts were upon the initiative of Temic management who had been dealing with the two
customs brokers even before he became head of the Imports-Exports Department.
4. The hiring of the personnel of the two customs brokers was at the behest of his superior Rosalie Isaac (Isaac)
and former Warehouse Manager Antonio Gregorio in order to respond to Temic's need for additional manpower
without incurring the costs usually entailed for regular employees.
5. The non-consolidation of shipments coming from the same point of origin happens only when the other
shipments are under DDU or DDP terms or when the delivery charges are for the account of the suppliers.
During his tour of duty, he significantly lowered shipment costs by reducing evening shipments, thus avoiding
special customs fees for night or backdoor releases.
Temic then conducted an administrative investigation17 where Cantos appeared, together with his counsel.
Cantos believed he was able to establish his compliance with Temic's procurement procedures during his term
as Purchasing Manager and was confident he would be found innocent of the charges against him.18 Even so, he
bewailed Temic's suspicion, aired during the investigation, that he connived with CTEPI's Raul Navarro
(Navarro), Senior Manager for Manufacturing, and Navarro's subordinate, Arnold Balita (Balita), Process
Engineering & Maintenance Manager, as well as Globaltech and Maxtronix, in favoring the two suppliers' bids.
Cantos explained that sometime in 2008, Temic's former foreign expatriate GM, Eynollah Rahideh(GM
Rahideh), was audited due to a conflict of interest incident involving the planned purchase of a FUJI NXT
machine from Japan for P30,000,000.00. The purchase was cancelled and transferred to a European firm, FUJIGermany, where his son worked. GM Rahideh suspected Navarro and Balita to have given the information to
the head office in Germany about the incident. Cantos was asked by the head office for copies of documents on
the planned purchase. He complied with the request and since then he had never been in good terms with GM
Rahideh.
Thereafter, according to Cantos, rumors circulated that Navarro and Balita were conniving with Globaltech and
Maxtronix for the two suppliers to corner Temic's equipment purchases, for a commission. Then, word spread
that Cantos was complicit with the alleged fraudulent act, despite the fact that he was not close to Navarro and
Balita.
In October 2008, flowers for the dead were sent to Temic's Purchasing Manager, Gemma Ignacio (Ignacio) who
had taken over Cantos' position as Purchasing Manager. Navarro and Balita were suspected to be behind the
sending of the flowers. Ignacio allegedly tried to get back at the two, but she was pre-empted by their
resignation. She thus trained her attention on Cantos whose position as Wimpex Manager she coveted.
The new foreign expatriate GM, Wadewitz, took the cudgels for Ignacio who had assumed the position of
Wimpex Manager. Wadewitz wanted Cantos to provide the company information about the "fraudulent
activities" of Navarro and Balita, but since Cantos had no knowledge of their activities, he could not tell Temic
anything. This proved to be his undoing as he was dismissed for charges that he claimed remained
unsubstantiated.
On February 16, 2009, Temic issued a notice of termination of employment19 to Cantos, with immediate effect,

on grounds of loss of trust and confidence. It stressed that while Cantos initially denied any wrongdoing, he
eventually admitted having bypassed some purchasing procedures and/or local controls, although
allegedly due to simple oversight on his part. It added that after a careful deliberation and based on his own
admission, as well as the evidence, it had been established that he committed the acts he was charged with.
The Compulsory Arbitration Rulings
In a decision20 dated November 27, 2009, Labor Arbiter Jaime M. Reyno (LA Reyno) dismissed the complaint
for lack of merit. LA Reyno declared that Cantos, a managerial employee, had lost the trust and confidence of
his employer for the various infractions he committed as company Purchasing Manager.
Cantos appealed the dismissal. Through its decision21 of July 30, 2010, the National Labor Relations
Commission (NLRC) affirmed LA Reyno's ruling and dismissed the appeal. Cantos then moved for
reconsideration, but the NLRC denied the motion,22 prompting him to seek relief from the CA by way of a
petition for certiorari under Rule 65 of the Rules of Court.
The CA Proceedings
Cantos argued before the CA that the NLRC committed grave abuse of discretion in upholding his dismissal. He
maintained that he committed no act that violated the purchasing procedures of either CTEPI or Temic since
both procedures allow the acquisition of machines from a supplier even without the three-quotations/bids
requirement, through the due. accomplishment of PDTAs. Contrary to the pronouncement of the NLRC, he
never admitted violating the company rules on purchases as there was no proof of his wrongdoing. He decried
the absence of the minutes of the investigation since only an attendance sheet was presented in
evidence.23cralawred
He pointed out that his supposed admission was mentioned only in Ignacio's affidavit.24 He disputed the
probative value of the affidavit because it came from a company official who had been hostile to him, rendering
her declarations suspect; no other employee corroborated her story and she merely "parroted" the words used in
the termination-of-employment letter25 issued to him by Temic through Human Resource Manager Artemio Del
Rosario (Del Rosario).
For its part, Temic argued that the NLRC correctly ruled that the complaint is devoid of merit as Cantos patently
violated the company's purchasing procedures. It maintained that he was caught red-handed in the act and his
belated presentation of separate purchasing rules for CTEPI and Temic would not do him any good as the
documents should have been presented as early as during the administrative investigation.
It argued that Cantos cannot rely on mere unsubstantiated arguments to refute the valid and admissible evidence
it presented. It insisted that he was afforded due process before he was dismissed.
In its decision under review, the CA granted the petition. It reversed the NLRC rulings and declared that Cantos
had been illegally dismissed. It found no valid cause for his dismissal and he was not accorded due process.
Consequently, the CA ordered Temic to pay Cantos full backwages and separation pay (in lieu of reinstatement
since it is no longer viable), moral and exemplary damages, plus attorney's fees. However, it absolved Wadewitz
from liability for Cantos' dismissal as no malice or bad faith on his part was "sufficiently proven."26cralawred
While the CA noted that Cantos occupied a position of trust and confidence as Purchasing Manager (so as to
satisfy one of the requisites of a dismissal for breach of trust), it found that Temic "utterly" failed to establish
the requirements under the law and jurisprudence for his dismissal on that ground. It noted that the principal
charge Temic lodged against Cantos arose from his violation of its purchasing procedures (FV 9-F0158), yet it
adduced in evidence POs for CTEPI, an entity separate and distinct from it and had a different set of purchasing
procedures.

The CA stressed that nowhere in the records could evidence be found showing that Cantos deliberately failed to
secure at least three quotations (under par. 10.6.1 of FV 9-F0158) for the supply of equipment covered by the
eleven (11) POs. It upheld his position that there are exceptions to the rule and that he relied on this excepting
clause for the PDTAs in question. The CA further pointed out that Temic failed to prove its allegation that the
purchases were not from accredited suppliers or bidders with the lowest total cost. It also faulted Temic for
blaming Cantos for not securing the GM's approval (signature) for the subject PDTAs as the GM's signature is
not required for CTEPI purchases, although it is a requirement for Temic PDTAs.
The CA disagreed with the NLRC's finding that based on the minutes of the administrative hearing, Cantos
admitted having violated company rules. The "minutes," the CA clarified, were a mere attendance
sheet.27cralawred
In sum, the CA concluded that Temic's charges against Cantos "were never substantiated by any evidence other
than the barefaced allegations in the Affidavit of Ignacio which must be taken with a grain of salt considering
that she is an employee of the company who harbored hostility against [the] petitioner x x x."28 The CA believed
that Cantos' "imputed guilt" was based on Temic's claim that he was complicit in the "anomalous transactions of
CTEPI employees Balita and Navarro,"29 but which had never been proven.
On the due process issue, the CA found Temic to have "almost" complied with the procedural requirements
under the law30 as indicated by the following: (1) a show-cause notice to Cantos of the charges against him; (2)
conduct of an administrative investigation on said charges; and (3) a notice of termination of his employment.
Nonetheless, it still found Temic's compliance insufficient since charges B, C, D and E in the show-cause notice
were not stated with particularity.31cralawred
The Petition
Temic seeks a reversal of the CA judgment for being contrary to law and jurisprudence. It contends that the
appellate court should have accorded respect to the labor tribunals' rulings because they were supported by
overwhelming evidence consisting of affidavits of key officers and pertinent documents as compared with
Cantos' bare assertions. It submits that Cantos affirmed that he knew the company's purchasing procedures fully
well, having co-authored the procedures himself. It adds that when asked by the investigating committee about
his acts being violative of the company procedures, he made an admission that they were, but said that it was
merely due to oversight.
The Case for Cantos
By way of a Comment,32 Cantos asks for the petition's dismissal for lack of merit.
He argues that the CA committed no error in finding that Temic failed to afford him due process on account of
its refusal to provide him with copies of relevant documents he needed in his defense, especially the purchasing
procedures of both Temic and CTEPI which Temic dismissed as irrelevant. Through his own efforts, however,
he was able to secure a copy each of Temic's and CTEPI's purchasing procedures and accordingly submitted
copies of the documents to LA Reyno, but the latter rejected the documents for late submission.33 Further, he
insists that Temic also failed to prove that there was a valid cause for his dismissal.
Cantos urges the Court to make Temic accountable for its refusal to furnish him copies of the purchasing
procedures because the documents are material to his defense that he did not violate Temic's purchasing
procedures. He maintains that all the PDTAs and POs for which he was charged pertained to CTEPI, a distinct
and separate corporation from Temic. He points out that the set of procedures for Temic is pre-numbered
9;34 whereas, that for CTEPI is pre-numbered 8.35 He bewails Temic's resorting to "foul trickery" when it denied
him access to the documents he was asking, the obvious reason being the fact that under Temic's purchasing

procedures (par. 10.6.3.2 of FV 9-F0158 in relation to par. 10.6.3.2.5),36 a PDTA has to be signed by the GM;
whereas, it is not a requirement under CTEPI's purchasing procedures (par. 10.6.3.1 of FV 8-F0007).37cralawred
He contends that Temic was not telling the truth when it alleged that Globaltech and Maxtronix from whom the
machines covered by questioned PDTAs were purchased are not Temic accredited suppliers, the truth being that
Temic and CTEPI had long been buying machines from the two suppliers even before he was hired by Temic. In
fact, he adds, the items covered by the subject PDTAs were repeat orders and "many earlier purchases from
these companies" were made "in the past without requiring three (3) prior bidders, and the [petitioner never
raised a howl about them."38cralawred
Cantos further contends that Temic singled him out for dismissal at all costs with respect to the PDTAs in
question, to the extent of resorting to misrepresentations, denying him access to relevant documents and passing
off generalizations as evidence in the form of affidavits of its key officers, such as Ignacio and Del Rosario,39 to
pin him down. He asserts that Temic is aware, as it is written in the purchasing procedures of both Temic and
CTEPI, that a PDTA starts from an end-user unit of either firm. The subject PDTAs, he explains, came from the
Manufacturing Department headed by Navarro and Balita who were suspected to have received "kickbacks"
from suppliers and yet, they were allowed to retire with full benefits. He laments that he, a mere conduit of the
two, was dismissed and his benefits withheld, without proof that he profited from the POs covered by the
PDTAs.
Moreover, Cantos points out, Navarro and Balita were not the only ones who participated in the execution of the
PDTAs. He names Purchasing Officer Clave Campos (Campos), Controlling Manager Susan Aranilla (Aranilla)
and their "over-arching" officer, his superior Isaac, who all took part in consummating the transactions covered
by the subject PDTAs,. but the said employees were never investigated, let alone charged. Neither was there
evidence that Temic filed charges against Globaltech and Maxtronix for the damage that it caused the company,
as it claims, resulting from the questioned POs.
Cantos takes exception to Temic's submission that his "sterling sixteen (16) years of service" for the company
should work against him because with such a long exemplary tenure with the company, he should not have
deliberately violated the company's purchasing procedures. He stresses that one year after he allegedly
participated in the purported anomalous purchase transactions, Temic recognized his excellent service,
evidenced by its letters of commendations which the CA acknowledged.40cralawred
In fine, Cantos maintains that the burden of proof that his dismissal was for a just cause was hardly, if ever,
discharged by Temic.
The Court's Ruling
We deny the petition for patent lack of merit.
Like the CA, we are convinced that the NLRC committed grave abuse of discretion in upholding Cantos'
dismissal. We find no substantial evidence in the records in support of its ruling. In Ilagan v. Court of
Appeals,41 we re-echoed the principle in employee dismissals that it is the employer's burden to prove that the
dismissal was for a just or authorized cause. Temic failed to discharge this burden of proof in Cantos' case.
First. The POs Temic offered in evidence to prove the principal charge against Cantos pertained to its sister
company CTEPI,42 most of which, except for two POs, were made in 2005 and 2006 as listed in the show-cause
notice. In the face of Cantos' submission that the two entities are separate and distinct from each other, it is
puzzling that Temic did not bother to explain why it proceeded against Cantos based on purchase transactions
entered into by CTEPI and not by itself; it did not also explain the precise relationship between it and CTEPI
with respect to the POs in question. The reason for this, we believe, was Temic's undue haste to dismiss Cantos,
such that it did not even check on the documentary support for the charges it laid against him.

Thus, and apparently without being aware that it was referring to CTEPI's purchasing procedures, it faulted
Cantos for resorting to the PDTAs without the signature and approval of the GM. Under Temic rules, the GM
approves and signs the PDTA; it is not a requirement under CTEPI rules. There is no basis therefore for making
Cantos accountable for the absence of the GM's signature for CTEPI's PDTAs.
Also, Temic faulted Cantos for belatedly presenting to the LA the purchasing procedures of Temic and CTEPI to
prove his point, which the labor official rejected for not having been raised during the company
investigation.43 This is rather unfortunate considering that the NLRC and the LAs are mandated by law to "use
every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard
to technicalities of law or procedure; all in the interest of due process. "44 LA Reyno overlooked the fact that
Cantos requested Temic for copies of documents which he considered vital to his defense.
Second. The foregoing notwithstanding and, as the CA declared, nowhere in the records is there evidence that
directly pointed to Cantos as having deliberately violated the company procedures for the procurement of
services and materials by allowing the proliferation of PDTAs.
We agree with the CA pronouncement. Other than the fact that Cantos was the Purchasing Manager at the
time and was a signatory to the PDTAs in question, we find no other indication of his involvement in the
execution of the subject PDTAs. More importantly, his position as Purchasing Manager and his signature
appearing on the PDTAs do not prove that the PDTAs [eleven (11) out of thirty thousand (30,000) POs during
his term as Purchasing Manager)] were executed in violation of Temic's purchasing procedures and that he was
responsible for their execution.
Indeed, there is no evidence on record that it was Cantos who caused the execution of the subject PDTAs or that
he did it for his personal gain or in collusion with Navarro and Balita of CTEPIs Manufacturing Department
who were suspected to be involved in fraudulent purchase transactions discovered by the audit team from
Germany in favor of certain suppliers. In fact, as the records show, Temic never refuted Cantos' submission
that under the purchasing procedures of both Temic and CTEPI, a PDTA starts at an end-user department and
that the PDTAs in question came from the Manufacturing Department as the end-user.
Further, there were others who participated in the execution of the PDTAs Purchasing Officer Campos,
Controlling Manager Aranilla and Cantos' superior Isaac yet they were never investigated for their
involvement in the supposed violation of the company's purchasing procedures and meted a similar dismissal
action. Again, Temic is silent with respect to this particular assertion of Cantos.
As we see it, the overwhelming evidence45 which Temic claims supported the rulings of LA Reyno and the
NLRC that Cantos was validly dismissed does not exist. This purported overwhelming evidence consists largely
of generalizations, suppositions and bare conclusions of Cantos' direct involvement or participation in the
alleged anomalous execution of PDTAs for eleven (11) POs, mostly between 2005 and 2006, which as the
evidence shows,46even pertained to CTEPI and not to Temic. We thus wonder how Temic arrived at its
conclusion that Cantos was caught red-handed to have patently violated the company's clear policies,
particularly its purchasing procedures, which he even co-authored.47cralawred
Third. Temic's contention that Cantos made an admission of guilt during the administrative
investigation48 likewise has no evidentiary support. The supposed "admission" could have sealed the company's
case against him had it backed up its claim with what transpired during the investigation. It could have been
done by simply presenting the minutes of the investigation. No such investigation minutes were ever presented,
only an attendance sheet.49 This was a serious lapse on Temic's part since in her affidavit,50 Ignacio (a member
of the investigating committee and who succeeded Cantos as purchasing manager) deposed that Cantos
admitted that he violated the company's purchasing procedures. In the absence of the minutes, we can
understand why the CA dismissed Ignacio's affidavit as nothing but "barefaced allegations."51cralawred

To our mind, the minutes of the investigation are crucial, especially since Cantos has persistently denied that he
made the admission of wrongdoing during the investigation. Ignacio's affidavit, as well as that of Human
Resource Manager Del Rosario in the same tenor,52 cannot substitute for the minutes of the investigation whose
absence in the evidence presented remains unexplained. Under the circumstances, we cannot accept the
affidavits of Ignacio and Del Rosario as evidence of Cantos' purported admission that he violated Temic's
purchasing procedures.
In sum, we reiterate and emphasize that the NLRC committed grave abuse of discretion in validating the
dismissal of Cantos as we find no substantial evidence in support of this pronouncement. We thus find the due
process question academic.
In conclusion, we quote with approval the following CA observation:chanRoblesvirtualLawlibrary
xxx [the petitioner] did not commit any act which was dishonest or deceitful. He did not use his authority
as the Purchasing Manager to misappropriate company property and derive benefits therein nor did he
abuse the trust reposed in him by respondent Temic with respect to his responsibilities. There was no
demonstration of moral perverseness that would justify the claimed loss of trust and confidence attendant
to [the] petitioner's job. Temic failed to adduce any proof that [the] petitioner ever profited from the
transactions involved in the purchase orders. The supplies described in the purchase orders are still with
the company even up to the time when petitioner's services were terminated. And neither was there
evidence shown that the same deviates from the specifications of the company or has no more use to the
company.53(Emphases supplied)
WHEREFORE, premises considered, the petition is DENIED for lack of merit. The assailed decision and
resolution of the Court of Appeals are AFFIRMED.
Costs against petitioner Temic Automotive (Phils.), Inc.
SO ORDERED.cralawlawlibrary